exv10w1



 





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



 





DEVELOPMENT AND SUPPLY AGREEMENT




By and Between




CADENCE PHARMACEUTICALS, INC.




and




BAXTER HEALTHCARE CORPORATION




 





 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	SECTION	 	 	 	PAGE	 
	1.0
	 	BACKGROUND 	 	 	4	 
	 
	 	 	 	 	 	 
	2.0
	 	DEFINITIONS 	 	 	50	 
	 
	 	 	 	 	 	 
	3.0
	 	COOPERATIVE ORGANIZATION 	 	 	4	 
	 
	 	 	 	 	 	 
	4.0
	 	DEVELOPMENT PROGRAM 	 	 	5	 
	 
	 	 	 	 	 	 
	5.0
	 	PRODUCT REGISTRATIONS 	 	 	8	 
	 
	 	 	 	 	 	 
	6.0
	 	COMMERCIAL SUPPLY 	 	 	9	 
	 
	 	 	 	 	 	 
	7.0
	 	MANUFACTURING FEE 	 	 	12	 
	 
	 	 	 	 	 	 
	8.0
	 	API 	 	 	13	 
	 
	 	 	 	 	 	 
	9.0
	 	EQUIPMENT      	 	 	14	 
	 
	 	 	 	 	 	 
	10.0
	 	QUALITY MANAGEMENT               	 	 	15	 
	 
	 	 	 	 	 	 
	11.0
	 	MARKETING 	 	 	17	 
	 
	 	 	 	 	 	 
	12.0
	 	REPRESENTATIONS AND WARRANTIES 	 	 	17	 
	 
	 	 	 	 	 	 
	13.0
	 	CONFIDENTIALITY 	 	 	20	 
	 
	 	 	 	 	 	 
	14.0
	 	INTELLECTUAL PROPERTY 	 	 	21	 
	 
	 	 	 	 	 	 
	15.0
	 	INDEMNIFICATION 	 	 	25	 
	 
	 	 	 	 	 	 
	16.0
	 	ALTERNATE DISPUTE RESOLUTION 	 	 	27	 
	 
	 	 	 	 	 	 
	17.0
	 	FORCE MAJEURE 	 	 	27	 
	 
	 	 	 	 	 	 
	18.0
	 	RELATIONSHIP OF THE PARTIES 	 	 	28	 
	 
	 	 	 	 	 	 
	19.0
	 	TERM AND TERMINATION 	 	 	28	 
	 
	 	 	 	 	 	 
	20.0
	 	EFFECTS OF TERMINATION 	 	 	29	 
	 
	 	 	 	 	 	 
	21.0
	 	NOTICES 	 	 	32	 







 









 








	 	 	 	 	 	 	 
	SECTION	 	 	 	PAGE	 
	22.0

	 	EXPORT
	 	 	32	 
	 
	 	 	 	 	 	 
	23.0

	 	MISCELLANEOUS
	 	 	33	 






2









 





TABLE OF CONTENTS (Continued)




EXHIBITS




	 	 	 
	EXHIBIT A

	 	•   API SPECIFICATIONS 

	 

	 	•    PRODUCT SPECIFICATIONS

	 

	 	•    FORMULATION SPECIFICATIONS 

	 

	 	•   CONTAINER DESCRIPTION 

	 
	 	 
	 

	 	(Formulation Specifications and Product Specifications are Preliminary as of the
Effective Date of the Agreement and will be agreed upon by the Parties prior to
NDA stability batch production pursuant to Section 4.3.1.)
	 
	 	 
	EXHIBIT B

	 	DEVELOPMENT PLAN (Section 4.1)
	 
	 	 
	EXHIBIT C

	 	REGULATORY STRATEGY (Section 4.2)
	 
	 	 
	EXHIBIT D

	 	DEVELOPMENT FEE SCHEDULE (Section 4.1.4)
	 
	 	 
	EXHIBIT E

	 	BAXTER FACILITY IMPROVEMENTS (Section
4.1.5.2) AND BAXTER OWNED EQUIPMENT (Section 9.1)
	 
	 	 
	EXHIBIT F

	 	MINIMUM BATCH SIZES (Section 6.3) AND
MANUFACTURING FEE (Section 7.1)
	 
	 	 
	EXHIBIT G

	 	QUALITY AGREEMENT (Section 10.0)
	 
	 	 
	EXHIBIT H

	 	COST OF API AND METHODOLOGY FOR CALCULATING
MANUFACTURING YIELD LOSSES (Sections 8.3, 8.4 and
12.3.6)
	 
	 	 
	EXHIBIT I

	 	ADVERSE EVENT HANDLING PROCEDURE (Section 10.4)
	 
	 	 
	EXHIBIT J

	 	CONFIDENTIAL DISCLOSURE AGREEMENT (Sections 13.1)
	 
	 	 
	EXHIBIT K

	 	CADENCE OWNED EQUIPMENT (Section 9.2)
	 
	 	 
	EXHIBIT L

	 	DEFINITIONS (Section 2.0)






3









 





DEVELOPMENT AND SUPPLY AGREEMENT




     This DEVELOPMENT AND SUPPLY AGREEMENT, (the “Agreement”) is
effective as of July 18, 2007 (the “Effective Date”) 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 and manufacturing process of the Compound, (collectively the
“Formulation”). Cadence is seeking a contract manufacturing organization that is capable of
producing the Formulation in a market-ready form as the Product, suitable for marketing in the
Territory. Cadence currently plans to market the Product in the Territory.



     Baxter manufactures and markets sterile products in glass containers for parenteral
administration of pharmaceutical preparations. Baxter is interested in providing sterile product
manufacturing services to Cadence.



     Cadence and Baxter entered into a Letter of Intent dated November 27, 2006, as amended
(collectively, the “LOI”), to establish their intent to enter into this Agreement, and the terms
upon which both Parties would begin purchasing certain capital equipment, in addition to Baxter
commencing certain technology transfer-related activities prior to the execution of this Agreement.
Upon the Effective Date, the LOI is superseded in its 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 L.




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 Team Leader. 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



4









 




the Parties’ relationship under this Agreement (each a “Team Leader”). Baxter will identify a
Team Leader for the Development Program, and a Team Leader for the commercialization phase. Each
Team Leader will be responsible for obtaining cooperation and input from other individuals within
such Team Leader’s organization whose expertise and ability may be required from time to time to
maximize the potential for successful collaboration under this Agreement.




     3.2 Team Leader Responsibilities. Without limiting the scope of the Team Leader’s
responsibilities, particular consideration will be given to key operational aspects of the
relationship, including but not limited to (i) Product development, regulatory matters highlighted
in the Development Plan (Exhibit B) and Regulatory Strategy (Exhibit C); (ii) transitioning team
leadership responsibilities to a corresponding Team Leader once commercialization of the Product is
undertaken, including such matters as Product manufacturing, quality and marketing considerations;
(iii) coordinating manufacturing activities to launch the Product into the marketplace; (iv)
reviewing the status of ongoing contractual commitments under the Agreement; and (v) identifying
and implementing actions which would improve the value of the Product to customers and the Parties.
The Team Leaders will develop a process and procedures to optimize communication and collaboration
between the Parties in order to timely refine the Development Plan and Regulatory Strategy and
achieve the objectives set forth therein. The Team Leaders will communicate regularly during the
Term of the Agreement at mutually agreeable times, and when necessary hold meetings at mutually
agreeable places, to review progress and the challenges and opportunities for effective
collaboration under this Agreement. The Team Leaders will analyze issues that arise during the
Development Program and subsequent commercialization of the Product and attempt to resolve any
differences as to the most appropriate course of action. If the Team Leaders are unable to resolve
any such differences, the matter(s) shall be escalated to the Senior Vice President, Manufacturing
for Cadence and with respect to Baxter, for matters arising prior to release of the first
commercial (salable) batch of Product to the Vice President, Project Management for Baxter’s
BioPharma Solutions’ business and for matters arising or after release of the first commercial
(salable) batch of Product to the Plant Manager at Baxter’s facility in Cleveland, Mississippi (the
“Senior Executives”). If the Senior Executives are unable to resolve any such differences, the
matter shall be handled pursuant to Section 16.0 of this Agreement.



4.0 DEVELOPMENT PROGRAM




     4.1 Development Plan. The Parties desire to collaborate and to mutually agree to a Development
Program and an associated Development Plan, including without limitation, defining upfront
requirements and design parameters. Each Party shall use Commercially Reasonable Efforts to timely
accomplish the tasks that it is assigned under the Development Plan.



          4.1.1 General. The activities and key milestones to occur during the Development Program
include, but are not limited to, the following activities or topics: (i) technical feasibility
assessment; (ii) formulation and analytical development; (iii) stability studies and Product batch
production to support Regulatory Submissions; (iv) Regulatory Submissions, and (v) Regulating
Groups’ review and approval.




5









 








     In general, during the Term of the Agreement, Cadence will be responsible for (i) providing
technical information about the API, (ii) timely providing the API and applicable reference
standards required for implementation of the activities described in the Development Plan, (iii)
compliance with Regulatory Submission reporting requirements regarding manufacture and control of
the API, and (iv) timely review, drafting and filing of all necessary submissions with Regulating
Groups.



     In general, during the Term of the Agreement, Baxter will be responsible for (a) conducting
all development studies identified as a Baxter Development Deliverable in the Development Plan, (b)
manufacturing Product for Regulatory Submissions and as otherwise provided in the Development Plan
and pursuant to the Regulatory Strategy set forth as part of Exhibits B and C, respectively, (c)
preparing those portions of necessary submissions with Regulating Groups consistent with Baxter’s
obligations under the Regulatory Strategy, (d) supporting Cadence in its efforts to obtain and
maintain approval of the Regulating Groups to sell the Product in the Territory, and (e) supplying
Cadence’s Requirements.



          4.1.2 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 Plan
(“Baxter Development Deliverables”) which include such interim progress reports 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 Plan (“Cadence Development
Deliverables”).




          4.1.3 Additional Development Deliverables. If the Development Deliverables set forth in
Exhibit B 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 Section 5.0 or
to complete the FDA’s Annual Report and similar reports required by other Regulating Groups in the
Territory, or to obtain patent protection in accordance with Section 14.0, the Parties will in good
faith negotiate an amendment of Exhibit B 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.




          4.1.4 Development Fees.





               4.1.4.1 General. Development Fees payable by Cadence to Baxter for the Baxter Development
Deliverables are described in Exhibit D, together with payment milestones.




               4.1.4.2 Additional Work. The activities described in Exhibits B and C are the basis for
determination of the Development Fee. Baxter will not be required to perform, nor be entitled to
reimbursement for, any work beyond that described in Exhibits B and C unless and until the Parties
reach written agreement (coordinated through the Team Leaders under Section 3.2) on the scope of
any additional work and the related additional expenses.



6









 




Notwithstanding the foregoing, if any tests, studies or other activities beyond those encompassed
by Exhibits B and C are requested pursuant to Section 3.2 which are required for obtaining or
maintaining approvals or registrations of the Product in the Territory, then such tests, studies or
other activities will be conducted at Cadence’s expense. To the extent Baxter assists Cadence in
conducting such additional tests, studies or other activities, Cadence will pay Baxter a fee to be
negotiated in good faith between the Parties. By way of example, additional development work might
be required in response to Regulating Group requests during review of Regulatory Submissions (such
as laboratory work or environmental assessment), additional tests to demonstrate compliance with
other compendia, or country specific import testing requirements.




          4.1.5 Letter of Credit. Prior to the Effective Date, Cadence has established for Baxter’s
benefit an irrevocable Letter of Credit in a face amount of Three Million Two Hundred Sixty Eight
Thousand Dollars ($3,268,000) in the form delivered and with Silicon Valley Bank (the “Letter of
Credit”). The Letter of Credit shall secure Cadence’s performance of its obligations to reimburse
Baxter for costs associated with the equipment to be purchased and facility improvements outlined
in Section 4.1.5.2 (“Baxter Capex”). In the event Cadence fails to perform its obligations as set
forth in Section 4.1.5.2, Baxter may, in its sole discretion, draw down all or a portion of the
Letter of Credit to satisfy such payment obligation. Baxter’s remedy described in this paragraph
shall be in addition to any other remedy described herein or under applicable law.




               4.1.5.1 Reduction Process. On a calendar quarterly basis, beginning after the Effective Date,
Cadence shall review invoices paid against items in the Baxter Capex for that quarter and provide
Baxter with a letter indicating Cadence’s intention to reduce the face value of the Letter of
Credit, by amendment, for the total amount of the invoices paid in the prior periods (and not yet
credited). If Baxter agrees with the amount of Cadence’s proposed reduction, Baxter will send a
letter to the designated contact of the issuer of the Letter of Credit authorizing the reduction,
with a copy to Cadence. The issuance and maintenance of the Letter of Credit and its amendments
will be at the sole cost and expense of Cadence. Any Letter of Credit amendments shall be in form
and substance satisfactory to Baxter, and shall be implemented with no lapse in coverage.



               4.1.5.2 Equipment Purchases and Facility Improvements. Cadence will fund certain facility
improvements which are attached hereto as Exhibit E and incorporated herein by reference. The
Parties shall mutually agree in writing to any expenditures relating to equipment purchases and
facility improvements in excess of Three Million Two Hundred Sixty-Eight Thousand Dollars
($3,268,000). At the end of each calendar quarter, Baxter shall provide Cadence with an invoice
representing the costs of equipment purchases and facility improvements made by Baxter during the
then calendar quarter. Cadence agrees to pay Baxter in accordance with Section 4.1.6.


          4.1.6 Payment. Development Fees (under Section 4.1.4.1), authorized additional Development Fees
(under Section 4.1.4.2), and costs for equipment purchases and facility improvements (under Section
4.1.5.2) 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




7









 




completion of the designated activities. 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.




     4.2 Regulatory Strategy. Exhibit C sets forth Cadence’s Regulatory Strategy associated with
development of the Product. Cadence shall be solely responsible for the Regulatory Strategy, which
must be finalized prior to commencement by Baxter of Product stability batch production; provided,
Cadence will discuss with Baxter any elements of its Regulatory Strategy which may reasonably be
expected to have an impact on Baxter’s obligations under this Agreement.



     4.3 Product.



          4.3.1 Product Specifications. Exhibit A includes Product Specifications in provisional form
as of the Effective Date of this Agreement and will be refined and agreed upon by the Parties prior
to NDA stability batch production as part of the Development Program. The Quality Agreement shall
govern the procedures for making changes to Product Specifications for commercial Product or in
connection with further refinements of the Product. Cadence will be responsible for and must
provide final approval of Product Specifications and Formulation Specifications and all changes
thereto prior to implementation.




          4.3.2 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.




     4.4 Technical Issues. “Technical Failure” is defined as [***]. In the event there (i) is a
Technical Failure, (ii) are technical issues that do not constitute a Technical Failure that arise
during the Development Program, or (iii) the integration of the [***] equipment purchased by
Cadence with respect to the Development Program has an adverse effect on the production process
(including, but not limited to, the timing or cost of production) (an “Integration Failure”), the
Parties will negotiate in good faith appropriate amendments to this Agreement, including without
limitation, amendments to the Development Plan, to attempt to develop a technically feasible
product.



5.0 PRODUCT REGISTRATIONS




     5.1 Product Registration Application Ownership. Cadence will be the sole





 




			
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8









 




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 for the Product in the Territory and for completing the FDA Annual Report and
similar reports required by other Regulating Groups for Product, with support from Baxter in
providing any information required from Baxter in order to complete such reports. Communications to
and from the FDA and other Regulating Groups that involve the NDA or any other Regulatory
Submissions to Regulating Groups for the Product are subject to the provisions of Section 5.4.




     5.2 Product Registration in the United States.




          5.2.1 Right of Reference – Drug Master File. Baxter acknowledges that it holds a Type III DMF
(DMF Number[***]. Baxter will provide a Letter of Authorization for this Type III DMF to Cadence
to support an intended proposal to conduct parametric release in lieu of end-product testing of the
Product.




          5.2.2 Additional Filing Data. During the Term of the Agreement, Baxter will, following prior
written agreement with Cadence, provide the FDA and all other Regulating Groups in the Territory,
with additional data and information related to the Product which 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 FDA and other Regulating
Groups that such information is confidential and to advise the FDA and such Regulating Groups that
Cadence will be entitled to reference such information on a confidential basis during the Term of
the Agreement.




     5.3 Communications to/from Regulating Groups. Baxter will promptly notify Cadence of any
communication from or to the FDA, or any other Regulating Groups, in connection with the Product
(collectively “Communications”), and Cadence will notify Baxter of Communications that are relevant
to Baxter’s activities under this Agreement, and will use reasonable efforts to agree on (i)
whether copies of such Communications and/or other Information should be provided to each other as
additional Development Deliverables pursuant to Section 4.1.3; and (ii) which individuals need to
collaborate on a response to Communications received. Cadence shall have primary responsibility to
respond to all Communications. In the event that Baxter and Cadence are unable to agree on the
foregoing items, then Cadence’s position will prevail as it pertains to all Communications sent to
Regulating Groups relating to the API, Formulation, and the Product.



     5.4 User Fees. Cadence will pay all user and/or filing fees charged to Cadence by Regulating
Groups in the Territory which 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






 




			
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9









 





     6.1 Supply and Purchase Obligations. Subject to Baxter’s ability to timely provide the
specified volumes of the Product, during the first three Contract Years (as defined in Section
19.1) of this Agreement, Baxter will be sole supplier to Cadence in the Territory for the first
[***] units of Product produced per Contract Year, and for Contract Years four (4) and five (5),
Baxter will be the supplier for [***] units of Product produced per Contract Year, and Cadence will
purchase from Baxter such purchase requirements of Product, for use or sale in the Territory
(“Requirements”). For the purpose of this Section 6.1, “timely” shall mean that, within any
consecutive [***] period, Baxter has delivered Product sufficient to cover [***] of Cadence’s firm
purchase orders scheduled for delivery during that period.



          6.1.1 Right of First Refusal. Cadence hereby grants to Baxter a right of first refusal for
the supply of any units of Product in excess of [***] per Contract Year on the terms and conditions
set forth in this Section 6.1.1. Cadence shall provide to Baxter, at least ninety (90) days in
advance of the beginning of a Contract Year, notice of its requirements in excess of [***] units of
Product for such Contract Year (“Excess Requirements”). Baxter shall have thirty (30) days
following receipt of such notice to respond to Cadence in writing of its desire to supply all or
any portion of the Excess Requirements. If Baxter declines to supply Cadence with all or any
portion of the Excess Requirements or does not respond in writing to Cadence within such thirty
(30) day period, Cadence shall be free to purchase the Excess Requirements from a third party
supplier. Any Excess Requirements supplied hereunder shall be on the same terms and conditions as
the Requirements for such Contract Year.




          6.1.2 Minimum Purchase Requirement. During the Initial Term, Cadence shall purchase from
Baxter a minimum of [***] units of Product per Contract Year Minimum Purchase Requirement”). These
units will be ordered in the minimum batch size set forth in Exhibit F. 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 amount per unit set
forth in Exhibit F 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.




     6.2 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 commencing with the first Regulatory Submission to a Regulating Group in the
Territory by Cadence for the Product and continuing thereafter 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
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





 




			
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10









 





Section 6.3.



     6.3 Firm Purchase Orders.



          6.3.1 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 Products, ordered pursuant to the process set forth in this
Section 6.3, including, but not limited to volume variations and subject to the restrictions set
forth herein. Cadence will place firm purchase orders for Product at least ninety (90) calendar
days prior to the beginning of each calendar quarter and shall specify the ship dates for Product.
Firm purchase orders will be placed in increments of no less than the minimum number of units of
Product specified in Exhibit F, or such other number of units as then corresponds to the filling
production lot sizes for Products. Subject to the provisions of Section 6.3.2, firm purchase
orders will not be less than [***] percent ([***]%) nor more than [***] percent ([***]%) of
Cadence’s Estimated Requirements of Product for the calendar quarter most recently updated.
Notwithstanding the foregoing, 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. Subject to this Section, Sections 8.3, 12.2 and 17.1, Baxter will meet
Cadence’s requested ship dates. Both Parties agree to work together to reduce lead time for orders
and deliveries. Firm purchase orders will be made on such form of documentation as Baxter and
Cadence agree from time to time, provided that 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.




          6.3.2 Cancellation of Purchase Orders and Rescheduling. Cadence may cancel a firm Product
purchase order or reschedule requested ship dates to a later date by giving Baxter prior written
notice to such effect. Baxter will use reasonable efforts to comply with Cadence’s requests. If,
however, either (i) a cancellation of a firm purchase order or (ii) a rescheduling of ship dates
for a firm purchase order that causes a rescheduling by Baxter of the Product manufacturing date
(“Cancellation/Rescheduling”), occurs prior to Baxter’s scheduled production date for such firm
purchase order, Cadence will pay Baxter a cancellation fee or rescheduling fee
(“Cancellation/Rescheduling Fee”) equal to the following amounts, based on the date of
Cancellation/Rescheduling as follows:




	 	 	 
	Number of Days prior to Baxter’s	 	 
	Scheduled Production Date	 	Cancellation/Rescheduling Fee payable
	More than sixty (60) days prior

	 	[***]
	More than thirty (30) days and less or
equal to sixty (60) days prior

	 	[***]
	Less than or equal to thirty (30) days prior

	 	[***]






     6.4 Delivery; Shipment. All Product supplied under this Agreement will be





 




			
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11









 




delivered FCA Baxter’s distribution site in Memphis. 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. Accordingly, 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 F, 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 for the Product, as provided by Baxter to support the NDA and Product
Specifications set forth in Exhibit A, as may be amended from time to time. The Quality Agreement
shall ultimately govern release of Product for delivery to Cadence.



     7.2 Adjustments. Upon each annual anniversary of a Contract Year effective on the first day
of the Contract Year, Baxter will increase the Manufacturing Fee by an amount equal to [***] per
unit or [***], whichever is greater. Additionally, the Manufacturing Fee may also be adjusted to
reflect increases in Baxter’s cost of materials for the Product. Baxter will provide Cadence with
written notice ninety (90) days prior to the effective date of any increase in the Manufacturing
Fee, which notice shall set forth the amount and elements of such increase.



     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 Product Specifications, Quality Agreement (Exhibit G) and
other Exhibits. 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, Quality Agreement, and other Exhibits. By way of
example only, additional work might be required for Product or process changes requested by the FDA
or other Regulating Groups, API source changes or 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.



     7.4 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 9.3), expenses associated with additional audits (under Section 10.9),
expenses for labeling revisions (under Section 10.10.2) 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.





 




			
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Invoices not timely paid will be subject to a late payment charge of [***] per month, or
the highest amount permitted by law, if lower. Notwithstanding the foregoing, should Cadence give
Baxter a Deficiency Notice pursuant to Section 10.5, Cadence’s obligation to pay under this Section
7.4 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 Baxter’s manufacturing
facilities designated in the Development Plan, or such other manufacturing facilities as the
Parties may agree upon from time to time. 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 A, 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.



     8.2 Change of API Source or API Manufacturing Process. Cadence will neither change its API
source nor any API Manufacturing Process unless and until such change is approved by the FDA and
all other Regulating Groups in the Territory for the Product. Cadence agrees to provide written
notice to Baxter of any proposed change no later than Cadence’s initial notice to the FDA or any
other Regulating Group. Following such written notice to Baxter, Baxter will timely undertake work
reasonably required to support Cadence’s filings with the FDA and other Regulating Groups in the
Territory to obtain approval for such change. Cadence will reimburse Baxter for all reasonable
costs incurred by Baxter directly related to Baxter work performed 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. Cadence will pay Baxter in
accordance with Sections 4.1.4 and 4.1.6 if such change occurs during the development phase and
Section 7.4 if such change occurs during the commercial phase. “API Manufacturing Process” is
defined as a process used in the manufacture of API of such a type that a change in such process
would require approval by the FDA or other Regulating Groups in the Territory in order to market,
sell and distribute the Product in the Territory.



     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 Baxter’s manufacturing 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





 




			
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including duty, freight and testing costs. Cadence will provide to Baxter appropriate
documentation evidencing such costs.





	 	8.3.1	 	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.
	 
	 	8.3.2	 	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.
	 
	 	8.3.3	 	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.
	 
	 	8.3.4	 	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 [***] 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 the Contract Year. Baxter will be responsible for calculating actual yield
loss percentage as per the methodology set forth in Exhibit H which is 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




     9.1 Baxter Owned Equipment and Risk of Loss. All equipment supplied, owned or purchased by
Baxter, including equipment purchased by Baxter and paid for by Cadence as set forth in Exhibit E
(“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,





 




			
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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.




     9.2 Cadence Owned Equipment and Risk of Loss. All equipment supplied, owned or purchased by
Cadence as set forth in Exhibit K (“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.



     9.3 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.



10.0 QUALITY MANAGEMENT




     10.1 Quality Agreement; Compliance with laws. Baxter and Cadence shall, as soon as possible
after the Effective Date but in all events within ninety (90) days following the Effective Date, in
good faith negotiate and execute a Quality Agreement concerning the Product and covering the
appropriate activities under this Agreement. Upon execution and delivery of the Quality Agreement
by both Cadence and Baxter, the Quality Agreement shall automatically become part of this
Agreement, as Exhibit G. In the event of a conflict between this Agreement and the Quality
Agreement with respect to any provisions that specifically relate to quality assurance matters, the
Quality Agreement shall govern or supersede. For clarity purposes, in the event of a conflict
between this Agreement and the Quality Agreement with respect to all other matters, this Agreement
shall govern or supersede. In performing their obligations under this Agreement, Baxter and
Cadence shall comply with any and all applicable provisions of the Quality Agreement and with all
applicable laws, rules and regulations.



     10.2 Changes to Product Specifications. Subject to Section 4.3, Cadence Product
Specifications may not be amended, changed or supplemented by Baxter without the prior written
consent of Cadence. Except as provided in Section 4.3, Cadence will give



15









 




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 4.1.4 if such change occurs during the
development phase and Section 7.4 if such change occurs during the commercial phase. Baxter will
provide Cadence with all information needed to amend the Product NDA and other Regulatory
Submissions in the Territory as a result of any approved Product Specification change. Baxter will
continue to supply Cadence with Product approved under Cadence’s existing NDA and other Regulatory
Submissions until such time as the changed Product Specifications are permitted by each of the
applicable Regulating Groups in the Territory, except as the Parties otherwise agree by separate
written agreement.




     10.3 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 Product NDA and other Regulatory Submissions in the
Territory as a result of any approved Drug Product Manufacturing Process change. Baxter will
continue to supply Cadence with Product approved under Cadence’s existing NDA and other Regulatory
Submissions until such time as the Product manufactured under the changed process is permitted by
each of the applicable Regulating Groups in the Territory, 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.



     10.4 Complaints and Adverse Event Reports. As between Baxter and Cadence, Cadence will be
solely responsible for the reporting to Regulating Groups of adverse experiences with respect to
the Product. Exhibit I sets forth certain specific provisions



16









 




regarding the handling of customer Product complaints and adverse experiences, including without
limitation adverse event or reaction reports or FDA “field alerts”.




     10.5 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 and return, at the expense of Baxter, all or any portion of any
shipment of Products that deviates from the Product Specifications or cGMPs, without invalidating
any remainder of such shipment. Cadence or its designated agent shall inspect the Products
manufactured by Baxter upon receipt of such Products and related Certificate(s) of Analysis and
shall give Baxter written notice (a “Deficiency Notice”) of all claims for Products that deviate
from the Product Specifications or cGMPs within thirty (30) days after Cadence’s receipt of such
Products and related Certificate(s) of Analysis (or, in the case of any defects not reasonably
susceptible to discovery upon receipt of the Product, within thirty (30) 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 thirty (30)-day period, then the
delivery shall be deemed to have been accepted by Cadence on the 30th day after delivery or
discovery, 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 30-day period.



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 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



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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.




               12.2.1.1 General. 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 in the Territory; (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 in the Territory; 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 in the Territory. Cadence warrants that the Cadence
Owned Equipment (as set forth in Exhibit K) will perform according to its specifications when
operated by Baxter personnel according to documented procedures and the integration of the Cadence
Owned Equipment will not have an adverse impact on the Development Program.



               12.2.1.2 Replacement.



                    (a) 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 12.2.1.1,
Cadence’s sole obligation and Baxter’s exclusive remedy will be limited to replacement of the API
(subject to the provisions of this Section).



                    (b) 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 and after activities utilizing API have commenced
under the Development Plan, then Cadence’s obligation will also include payment to Baxter of an
amount comparable to the Development Fees under Section 4.1.4 attributable to the development
activities that Baxter must repeat with non-defective API, or if during the commercialization
phase, after manufacturing activities utilizing API have commenced, payment to Baxter of the
Manufacturing Fee per unit of Product required to be replaced using non-defective API.



                    (c) 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.



     12.3 Warranties of Baxter.



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          12.3.1 General. Baxter represents, warrants and covenants that Product manufactured under
this Agreement, at the time of release at Baxter’s manufacturing 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 in the Territory; (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 in the Territory; 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 in the Territory. 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 12.2.1.1.




          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 cGMP regulations and
all other applicable laws and regulations of the FDA and other applicable Regulating Groups in the
Territory; (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.




          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






 




			
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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. 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 Section 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 Pre-Existing Confidentiality Agreement. The Parties have previously signed a
Confidentiality Agreement effective April 11, 2006, a copy of which is attached to this Agreement
as Exhibit J, 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 Confidentiality Agreement.



     13.3 Exceptions. In addition to the exceptions set forth in the Confidentiality 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.



     13.4 Publicity and SEC Filings. The Parties agree that any public announcement of the
execution of this Agreement 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 five (5) 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. Unless the prior written consent of the other Party is obtained, no Party
shall, except as may be required by law or regulations (including without limitation any United
States Securities and Exchange Commission filings required) 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
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the opinion of any employee of the other Party. In the event Cadence proposes to file with the
Securities and Exchange Commission or the securities regulators of any state or other jurisdiction
a registration statement or any 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 five (5) 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. No such notice shall be required under this Section 13.4 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. Baxter may
communicate to investors information to the extent made public by Cadence.




     13.5 Survival. The obligations under this Section 13 will extend for the longer of the term
of this 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 this
Agreement.




          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
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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 Project.



          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”), all as described in detail under the
heading “Reports” in the Development Deliverables set forth in Exhibit B The Reports may also
contain references to (i) pre-existing Baxter standard operating procedures, specifications,
material codes and their specifications, and other information developed by Baxter prior to the
execution of this Agreement, 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 (“Pre-Existing
Specifications”) that fall within Baxter Background Intellectual Property Rights and (ii) original
laboratory notebooks and other Good Laboratory Practices documentation generated by Baxter or its
agents pursuant to this 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 Section 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.
Pre-Existing 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 Section 13.0 of
this Agreement, subject to the Baxter License under Section 14.3.2.




          14.2.3 Archiving of Reports. In accordance with Section 10.11, Baxter will retain the
original Reports and Original Product Data for archival purposes.




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     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.




          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
 

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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 19.2.1.2 or 19.2.1.3.




          14.3.3 Pre-Existing Specifications and Original Product Data. Baxter will (i) make
Pre-Existing Specifications referenced in the Reports and Original Product Data available to
Regulating Groups as directed by such Regulating Groups and as provided in Section 5.0, and (ii)
upon Cadence’s reasonable request, provide copies of Pre-Existing 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 Section 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 Section 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 and 14.2 above and will be responsible for related 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

24









 







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 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 (as set
forth in Exhibit K) 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


25









 







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 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.



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     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.



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 one hundred and 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




 




			
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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.



     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 at the end of the 5th Contract Year (“Initial Term”), unless terminated
earlier as herein provided (“Term of the Agreement”). “Contract Year” is defined as (i) the twelve
(12) month period beginning with the month in which the first regulatory approval of the Product by
a Regulating Group in the Territory (including price approval if applicable in the jurisdiction in
the Territory) is received by Cadence and (ii) each successive twelve (12) month period.



          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


28









 







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 immediately upon the giving of written notice, if approval of the Product’s
NDA is not received within [***] months from the Effective Date;



               19.2.1.2 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



               19.2.1.3 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.



               19.2.1.4 effective immediately upon written notice by either Party to the other Party if the
Parties are unable to reach agreement following good faith negotiations as described in Section
4.4, if there is a Technical Failure or an Integration Failure; provided, however, that termination
under this Section 19.2.1.4 shall in no event be effective earlier than [***] from the Delivery
Date.



          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, subject to Cadence’s fulfillment
of its Minimum Purchase Requirement obligations as set forth in Section 6.1.2.




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 Pre-Commercial Activities. Without limiting the generality of Section 20.1, Cadence will
pay Baxter for any Pre-Commercial Activities performed by Baxter (as defined under the LOI) prior
to the effective date of termination hereunder, including all reasonable expenditures made by
Baxter in accordance with the terms of this Agreement for facility improvements and purchases of
capital equipment, including any non-cancelable expenditures




 




			
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which are outstanding as of the date of termination of this Agreement.



     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 Cadence’s expense if termination of the Agreement arises
under Section 19.2.1.1 (failure of Product NDA to timely issue). Return or destruction of API will
be at the other Party’s expense if termination is initiated by a Party pursuant to Sections
19.2.1.2 through 19.2.1.4 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 19.2.1.2 or 19.2.1.3,
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 Baxter’s
manufacturing facility to a location specified by Cadence.



     20.5 Restoration Costs of Baxter’s Facility. Cadence agrees to reimburse Baxter for all
reasonable costs incurred in the restoration of Baxter’s manufacturing facility to its
pre-installation condition, as set forth in Section 20.6, including, the repair of any damage to
the manufacturing facility caused by or resulting from the removal of the Cadence Owned Equipment,
despite the exercise of reasonable care.



     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 its manufacturing 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 Baxter’s
facility, and (iii) the restoration of the facility to a “four wall” condition, including 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 Baxter’s 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.



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     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 construed to give any other
manufacturer, whether or not a competitor of Baxter, access to Baxter’s manufacturing 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
term of this Agreement and any renewals hereof. At any time during the term of this Agreement,
Cadence may inform Baxter of its intention to commence negotiation with third parties regarding
distribution services to wholesale warehouses for Product in the Territory. In such event, Baxter
shall have the non-exclusive right to negotiate with Cadence for such services; however, neither
party shall be obligated to enter into such agreement and, until such time as Cadence and Baxter
may enter into a definitive written agreement for such services, nothing herein shall be construed
to prevent Cadence from entering into an agreement for such services with any third party.



     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
12.2.1.1 (Cadence Warranty regarding API), 12.3 (Baxter Warranties), 5.1 (Product Registration
Application Ownership), and Sections 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.







 




			
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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

Route 120 and Wilson Road

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

Fax No.: 847-948-2450



If to Cadence:

Cadence Pharmaceuticals, Inc.

12481 High Bluff Drive, Suite 200

San Diego, CA 92130

Attention: Senior Vice President, Pharmaceutical Development and Manufacturing

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



32









 







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, “competitor” means [***].
	 
	 	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 Confidentiality Agreement) and the Letter of Credit, 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










 




			
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33









 







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.



     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.]




34









 








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/ Daniel Tasse	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	Name:

	 	Theodore R. Schroeder
	 	Name:	 	Daniel Tasse	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	Title:

	 	President and Chief Executive Officer
	 	Title:	 	GM — BPT	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	Date:

	 	July 13, 2007
	 	Date:
	 	July 18, 2007	 	 







35









 








EXHIBIT A




API/FORMULATION SPECIFICATIONS




CONTAINER DESCRIPTION




PRODUCT SPECIFICATIONS




Product Definition Assumptions:




	 	 	 
	Formulation (for 100 mL)
	 	 
	[***]

	 	[***]
	[***]

	 	[***]
	[***]

	 	[***]
	[***]

	 	[***]
	[***]

	 	[***]
	[***]

	 	[***]
	[***]

	 	[***]
	Other Drug Product Specifications
	 	 
	[***]

	 	[***]
	[***]

	 	[***]
	[***]

	 	[***]
	[***]

	 	[***]
	[***]

	 	[***]
	[***]

	 	[***]
	“Container” as defined in this Agreement includes the following components
	[***]

	 	[***]
	[***]

	 	[***]
	[***]

	 	[***]
	[***]

	 	[***]
	Packaging
	 	 
	[***]

	 	[***]
	[***]

	 	[***]
	[***]

	 	[***]










 




			
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36









 






EXHIBIT A (cont)




Product Definition Assumptions(cont):




Sterilization release method. [***]



Active Ingredient. The API (paracetamol, USP) will be provided by Cadence free of charge and in a
format suitable for aqueous mixing unless otherwise agreed by Cadence and Baxter. All other
excipients will be provided by Baxter, and their cost has been incorporated into the Unit Price
provided below.







 




			
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37









 








EXHIBIT B




DEVELOPMENT PLAN




Cadence Development Activities




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Submission and
	 	 	Initiation	 	Transfer	 	Implementation	 	Approval
	[***]
	 	[***]	 	[***]	 	[***]	 	[***]
	[***]
	 	[***]	 	 	 	[***]	 	[***]









 




			
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38









 






EXHIBIT C




PROPOSED REGULATORY STRATEGY




Cadence IV APAP – Transfer to Cleveland, MS

PQA No. [***]




[***]







 




			
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39









 








[***]








 




			
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40









 








EXHIBIT D




DEVELOPMENT FEE SCHEDULE




One-time Technology Transfer/Stability Batch/Registration Activities:




	 	 	 	 	 	 	 	 	 	 	 
	All amounts in $1000s	 	 	 	Program Phase
	Activity	 	Expense	 	I	 	II	 	III	 	IV
	[***]
	 	[***]	 	[***]	 	 	 	 	 	 
	[***]
	 	[***]	 	 	 	[***]	 	 	 	 
	[***]
	 	[***]	 	 	 	[***]	 	 	 	 
	[***]
	 	[***]	 	 	 	[***]	 	 	 	 
	[***]
	 	[***]	 	 	 	[***]	 	 	 	 
	[***]
	 	[***]	 	 	 	[***]	 	 	 	 
	[***]
	 	[***]	 	 	 	[***]	 	 	 	 
	[***]
	 	[***]	 	 	 	 	 	[***]	 	 
	[***]
	 	[***]	 	 	 	 	 	 	 	[***]
	[***]
	 	[***]	 	 	 	 	 	 	 	[***]
	[***]
	 	[***]	 	 	 	 	 	 	 	[***]
	[***]
	 	[***]	 	 	 	 	 	 	 	[***]
	[***]
	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]





Timing of Development Program Payments. A total payment of [***] is required for development
program expenses, portions of which would be due at the time of the completion of each of the
following phases:



Phase I: Program initiation (signing of Letter of Intent or equivalent). Note: As of the
Effective Date of this Agreement, the [***] Program initiation fee, also described as Phase I
Development Activities, has been paid in full by Cadence.



Phase II: Activities leading up to formal scheduling of stability batch production



Phase III: Manufacture of stability batch



Phase IV: Submission of NDA



The Development program assumes the development of 2 container sizes (50 mL; 100 mL) in one
type of glass. If a second glass type is required to be validated, total expenses and required
payment would rise to [***]. The program time line would also be impacted.




* The expenses detailed in the Table above total [***], but a reduced payment of [***] has been
requested by Baxter as an incentive to confine development activities to one glass type.





 




			
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41









 








EXHIBIT E




BAXTER FACILITY IMPROVEMENTS AND BAXTER OWNED EQUIPMENT




Facility Improvements and Capital Equipment Owned by Baxter:




	 	 	 	 	 
	Facility Build-Out and Upgrades to create dedicated IV-APAP line
	 	 	 	 
	[***]
	 	 	[***]	 
	Ancillary systems for mixing, sterilization, and packing
	 	 	[***]	 
	Installation costs, taxes, shipping costs
	 	 	 	 
	[***]
	 	 	[***]	 
	TOTAL
	 	 	[***]	 





The preceding expenses are required for Baxter to create the IV-APAP production line and would be
borne entirely by Cadence.







 




			
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42









 








EXHIBIT F




MINIMUM BATCH SIZES AND MANUFACTURING FEE




Minimum Batch Size:



The batch size on which all pricing is based is the optimal batch as determined by the Development
Program. As of the Effective Date, the minimum batch size has not been determined. The parties
agree that once the minimum batch size has been established by mutual agreement, all Product will
be produced in the agreed upon batch size.




Manufacturing Fee Structure:




	 	 	 
	 	 	100 mL vial
	The first [***] units ordered
	 	[***]
	Units [***] to [***]
	 	[***]
	Units [***] to [***]
	 	[***]
	Units [***] to [***]
	 	[***]
	Units over [***]
	 	[***]






	 	 	 
	 	 	50 mL vial
	The first [***] units ordered
	 	[***]
	Units [***] to [***]
	 	[***]
	Units [***] to [***]
	 	[***]
	Units [***] to [***]
	 	[***]
	Units over [***]
	 	[***]





For the avoidance of doubt, in a year in which BAXTER accepts Cadence’s Purchase Orders for
[***] units of Product in the 100mL configuration, the first [***] units would be priced at $[***],
the next [***] at $[***], the next [***] million at $[***], the next [***] at $[***], and the
remaining [***] at $[***].





 




			
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43









 








EXHIBIT G




QUALITY AGREEMENT




[TO BE ATTACHED AFTER THE EFFECTIVE DATE]





44









 








EXHIBIT H




COST OF API AND METHODOLOGY FOR CALCULATING MANUFACTURING

YIELD LOSSES




	 	 	 	 	 
	Description of Cadence Material, the 	 	 	 
	Active Pharmaceutical Ingredient (API):	 	IV-APAP	 
	[***]
	 	 	[***]	 
	 
	 	 	 	 
	[***]
	 	 	[***]	 
	 
	 	 	 	 
	[***]
	 	 	[***]	 
	[***]
	 	 	[***]	 











 




			
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45









 








EXHIBIT I




ADVERSE EVENT HANDLING PROCEDURE



Each Party will notify the other Party following receipt of any information within the timeframes
specified herein, including but not limited to information regarding any threatened or pending
action by Regulating Groups, that might reasonably affect the safety or efficacy claims of the
Product, activity under the Development Program, production or marketing of the Product, or the
ability of Cadence to supply API. Promptly upon receipt of such notice, the Parties will consult
with each other in an effort to arrive at a mutually acceptable procedure for taking appropriate
action, provided, however, that nothing contained herein will be construed as restricting the right
of either Party to make a timely report of such matter to any Regulating Groups or take other
action that it deems to be appropriate or required by applicable law or regulation.



Baxter shall report to Cadence all adverse event reports on the Product as soon as possible but in
no event later than two (2) business days of notification of the event to Baxter either directly or
through Product Surveillance.



Cadence will be responsible for reporting all adverse events which relate to the Product as
required by applicable legal requirements and the requirements of any Regulating Group.









46









 











EXHIBIT J




CONFIDENTIAL DISCLOSURE AGREEMENT




[***]





 




			
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47









 





EXHIBIT K




CADENCE OWNED EQUIPMENT



The following list details the equipment required for IV-APAP production that has been
assigned as assets that Cadence will purchase and own, along with the anticipated price as of
the date of the LOI. Actual expense may be different, based on the actual specifications of
the equipment selected and any expediting expenses that Cadence may elect to pursue and are the
responsibility of Cadence.




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







* The selection and purchase of the [***] equipment was already in process at
the time of Baxter’s involvement in the IV-APAP development and commercialization program and continues to be
the responsibility of Cadence.




 




			
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48









 








EXHIBIT L




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 Specifications set forth in Exhibit A, as amended from time to
time.



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



     The term “API Manufacturing Process” will have the meaning set forth in Section 8.2.



     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 “Baxter Capex” will have the meaning set forth in Section 4.1.5.



     The term “Baxter Development Deliverables” will have the meaning set forth in Section 4.1.2.



     The term “Baxter Patent Rights” will mean the rights granted by any governmental authority
under a Patent that covers a method, apparatus, manufactured article, material or process necessary
or useful for the manufacture of Product, which Patent is owned or Controlled by Baxter.



     The term “Cadence Development Deliverables” will have the meaning set forth in Section 4.1.2.



49









 





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



     The term “Confidentiality Agreement” will mean the two-way disclosure agreement, signed by the
Parties, copies of which are attached to this Agreement as Exhibit J.



     The term “Confidential Information” will have the meaning set forth in Section 13.0.



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



     The term “Contract Year” will have the meaning set forth in Section 19.1.



     The term “Control” will mean possession of the ability to grant the licenses or sublicenses as
provided for in this Agreement without violating the terms of any agreement or arrangement with any
third party.



     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 “Development Deliverables” will have the meaning set forth in Sections 4.1.2 and
4.1.3 and include the materials set forth on Exhibit B).



     The term “Development Fees” will have the meaning set forth in Section 4.1.4.



     The term “Development Plan” will mean the plan for development of the Product, as set forth in
Exhibit B and described generally in Section 4.1.



     The term “Development Program” will mean the development effort hereunder which



50









 







will enable Cadence to file an Regulatory Submissions with Regulating Groups in the Territory
and which encompasses the tasks set forth on Exhibits B and C and the Development Deliverables set
forth on Exhibit B.



     The term “Drug Product Manufacturing Process” will have the meaning set forth in Section 10.3.



     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 6.2.



     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 for, 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 those specifications for the final release of
the premix, ready-to-use solution that are developed and finalized by the Parties as part of the
Development Program and which, together with the Container, are part of the Product Specifications.



     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.



     The term “Integration Failure” will have the meaning set forth in Section 4.4.



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



     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,



51









 







as the same may be amended from time to time.



     The term “Letter of Credit” will have the meaning set forth in Section 4.1.5.



     The term “Letter of Intent” (LOI) will have the meaning set forth in Section 1.1.



     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 F.



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



     The term “Minimum Purchase Requirements” will have the meaning set forth in Section 6.1.2.



     The term “NDA” will mean (i) 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
Baxter’s manufacturing facility.



     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 “Pre-Existing 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.



52









 





     The term “Product Specifications” will mean the Formulation Specifications together with the
Container description, which collectively describe the Product and are developed and finalized by
the Parties as part of the Development Program as provided under Section 4.3.1 and thereafter as
agreed by the Parties pursuant to the Quality Agreement. As of the Effective Date, provisional
Product Specifications are set forth in Exhibit A.



     The term “Quality Agreement” will mean the Quality Agreement, pursuant to Section 10.1, to be
set forth in Exhibit G hereto.



     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 Strategy” will mean the principal regulatory considerations that are
associated with Product development during the Development Program as set forth in Exhibit C and
described generally in Section 4.2.



     The term “Regulatory Submissions” will mean those applications and filings identified in the
Regulatory Strategy and 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, the Product 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 have the meaning set forth in Section 6.1.



     The term “Team Leaders” will have the meaning set forth in Section 3.1.



     The term “Technical Failure” will have the meaning set forth in Section 4.4.



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



     The term “Territory” will mean the United States and any additional countries added by written
agreement of the Parties.



     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.




53