Document:

exv10w10

 

EXHIBIT
10.10

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.

COLLABORATION AND LICENSE AGREEMENT

between

MICROLOGIX BIOTECH INC.

and

STRATA PHARMACEUTICALS INC.

Dated: July 30, 2004

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	Article 1 DEFINITIONS
	 	 	1	 
	Section 1.1 “Acceptance for Filing”
	 	 	1	 
	Section 1.2 “Act”
	 	 	1	 
	Section 1.3 “Affiliate”
	 	 	2	 
	Section 1.4 “Applicable Law(s)”
	 	 	2	 
	Section 1.5 “Approval Letter”
	 	 	2	 
	Section 1.6 “Books and Records”
	 	 	2	 
	Section 1.7 “CFR”
	 	 	2	 
	Section 1.8 “cGMP”
	 	 	2	 
	Section 1.9 “Collaboration”
	 	 	2	 
	Section 1.10 “Commercially Reasonable Efforts”
	 	 	3	 
	Section 1.11 “Common Shares”
	 	 	3	 
	Section 1.12 “Competent Authority(ies)”
	 	 	3	 
	Section 1.13 “Compound”
	 	 	3	 
	Section 1.14 “Confidential Information”
	 	 	3	 
	Section 1.15 “Control”
	 	 	4	 
	Section 1.16 “Costs”
	 	 	4	 
	Section 1.17 “CRBSI”
	 	 	4	 
	Section 1.18 “Development”
	 	 	4	 
	Section 1.19 “Development Plan(s)”
	 	 	4	 
	Section 1.20 “Development Subcontract”
	 	 	4	 
	Section 1.21 “DMF”
	 	 	5	 
	Section 1.22 “Europe”
	 	 	5	 
	Section 1.23 “Exclusivity Fee”
	 	 	5	 
	Section 1.24 “Exclusivity Period”
	 	 	5	 
	Section 1.25 “Extended Field”
	 	 	5	 
	Section 1.26 “FDA”
	 	 	5	 
	Section 1.27 “Field”
	 	 	5	 
	Section 1.28 “First Commercial Sale”
	 	 	5	 
	Section 1.29 “First Phase III Study”
	 	 	6	 
	Section 1.30 “GAAP”
	 	 	6	 
	Section 1.31 “Good Clinical Practices” or “GCP”
	 	 	6	 
	Section 1.32 “Governmental Approval(s)”
	 	 	6	 
	Section 1.33 “IMS Data”
	 	 	6	 
	Section 1.34 “Improvements”
	 	 	6	 
	Section 1.35 “IND(s)”
	 	 	6	 
	Section 1.36 “Know-How”
	 	 	7	 
	Section 1.37 “knowledge” or “best of its knowledge”
	 	 	7	 
	Section 1.38 “Labelled” or “Labelling”
	 	 	7	 
	Section 1.39 “LCSI”
	 	 	7	 
	Section 1.40 “Major European Market Country”
	 	 	7	 
	Section 1.41 “manufacture(d)” or “manufacturing”
	 	 	7	 
	Section 1.42 “Manufacturing Development Costs”
	 	 	7	 
	Section 1.43 “Market Price”
	 	 	7	 

 

 

- 2 -

	 	 	 	 	 
	Section 1.44 “Marketing Authorization”
	 	 	7	 
	Section 1.45 “MBI 594AN”
	 	 	8	 
	Section 1.46 “Micrologix Know-How”
	 	 	8	 
	Section 1.47 “Micrologix Patent Rights” or “Micrologix Patent”
	 	 	8	 
	Section 1.48 “Micrologix Technology”
	 	 	8	 
	Section 1.49 “NDA”
	 	 	8	 
	Section 1.50 “Negotiation Period”
	 	 	8	 
	Section 1.51 “Net Sales”
	 	 	8	 
	Section 1.52 “Notification Period”
	 	 	9	 
	Section 1.53 “packaging”
	 	 	9	 
	Section 1.54 “Patent Rights”
	 	 	9	 
	Section 1.55 “Phase III Study”
	 	 	10	 
	Section 1.56 “Phase IV Study”
	 	 	10	 
	Section 1.57 “Post Marketing Commitments”
	 	 	10	 
	Section 1.58 “Pricing and Reimbursement Approvals”
	 	 	10	 
	Section 1.59 “Prime Rate of Interest”
	 	 	10	 
	Section 1.60 “Product”
	 	 	10	 
	Section 1.61 “Promotional Material(s)”
	 	 	11	 
	Section 1.62 “raw materials and components”
	 	 	11	 
	Section 1.63 “Regulations”
	 	 	11	 
	Section 1.64 “Reimbursable Costs”
	 	 	11	 
	Section 1.65 “Representatives”
	 	 	11	 
	Section 1.66 “Royalty Term”
	 	 	11	 
	Section 1.67 “Second Phase III Study”
	 	 	12	 
	Section 1.68 “Subcontractors”
	 	 	12	 
	Section 1.69 “Territory”
	 	 	12	 
	Section 1.70 “Third Party”
	 	 	12	 
	Section 1.71 “Trading Day”
	 	 	12	 
	Section 1.72 “U.S.” or the “United States”
	 	 	12	 
	Section 1.73 “U.S. Dollar Equivalent”
	 	 	12	 
	Section 1.74 “U.S. PTO”
	 	 	12	 
	Section 1.75 “Valid Claim”
	 	 	12	 
	 
	 	 	 	 
	Article 2 PRODUCT DEVELOPMENT
	 	 	13	 
	Section 2.1 Objectives
	 	 	13	 
	Section 2.2 Collaboration Guidelines; Amendments to the Development Plan(s)
	 	 	13	 
	Section 2.3 Development
	 	 	14	 
	Section 2.4 Joint Development Management Committee
	 	 	15	 
	Section 2.5 Technology Transfer
	 	 	17	 
	 
	 	 	 	 
	Article 3 LICENSE
	 	 	18	 
	Section 3.1 License Terms
	 	 	18	 
	Section 3.2 Micrologix’s Reservation of Rights
	 	 	18	 
	Section 3.3 Third Party Licensees of Micrologix
	 	 	18	 
	Section 3.4 Work Product and Intellectual Property
	 	 	18	 
	Section 3.5 Sublicenses
	 	 	19	 

 

 

 - 3 -

	 	 	 	 	 
	Section 3.6 Certain Improvements
	 	 	20	 
	Section 3.7 Exclusive Option to Extend Field
	 	 	21	 
	 
	 	 	 	 
	Article 4 ADDITIONAL PAYMENTS
	 	 	22	 
	Section 4.1 License Fee
	 	 	22	 
	Section 4.2 Product Milestone Payments
	 	 	23	 
	Section 4.3 Milestones for a Second Phase III
	 	 	23	 
	Section 4.4 Milestones for the First Phase III
	 	 	24	 
	Section 4.5 Burns or Surgical Infections milestones
	 	 	24	 
	Section 4.6 Commercial Milestone Payments
	 	 	24	 
	Section 4.7 Royalties
	 	 	24	 
	 
	 	 	 	 
	Article 5 COMMERCIALIZATION OF THE PRODUCT
	 	 	27	 
	Section 5.1 Marketing Efforts
	 	 	27	 
	Section 5.2 Marketing Update
	 	 	27	 
	Section 5.3 Manufacturing
	 	 	28	 
	Section 5.4 Patent Marking
	 	 	31	 
	 
	 	 	 	 
	Article 6 REGULATORY COMPLIANCE
	 	 	32	 
	Section 6.1 Ownership and Maintenance of Governmental Approvals
	 	 	32	 
	Section 6.2 Rights of Reference
	 	 	32	 
	Section 6.3 Adverse Drug Event Reporting and Post Marketing Surveillance
	 	 	33	 
	Section 6.4 Post Marketing Commitments
	 	 	35	 
	Section 6.5 Assistance
	 	 	35	 
	Section 6.6 Compliance
	 	 	35	 
	Section 6.7 General Regulatory Matters
	 	 	36	 
	 
	 	 	 	 
	Article 7 PATENTS
	 	 	37	 
	Section 7.1 Maintenance of Patents or Marks
	 	 	37	 
	Section 7.2 Cooperation and Procedures Relative to Actions Brought Under Section 7.3 and Section 7.4
	 	 	38	 
	Section 7.3 Prosecution of Infringement
	 	 	40	 
	Section 7.4 Infringement Claimed by Third Parties
	 	 	41	 
	Section 7.5 Co-operation with Other Licensees
	 	 	41	 
	 
	 	 	 	 
	Article 8 CONFIDENTIALITY
	 	 	42	 
	Section 8.1 Confidentiality
	 	 	42	 
	Section 8.2 Publicity Review
	 	 	44	 
	 
	 	 	 	 
	Article 9 REPRESENTATIONS, WARRANTIES AND COVENANTS
	 	 	44	 
	Section 9.1 Corporate Power
	 	 	44	 
	Section 9.2 Due Authorization
	 	 	44	 
	Section 9.3 Binding Obligation/No Conflict
	 	 	45	 
	Section 9.4 Ownership of Micrologix Technology
	 	 	45	 

 

 - 4 -

	 	 	 	 	 
	Section 9.5 Patent and Other Intellectual Property Rights Proceedings
	 	 	46	 
	Section 9.6 Micrologix’s Additional Warranties
	 	 	46	 
	Section 9.7 Strata’s Additional Warranties
	 	 	47	 
	Section 9.8 Pre-Clinical and Clinical Studies Prior to Effective Date
	 	 	47	 
	Section 9.9 Debarment
	 	 	47	 
	Section 9.10 Limitation on Warranties
	 	 	47	 
	 
	 	 	 	 
	Article 10 INDEMNIFICATION AND INSURANCE
	 	 	48	 
	Section 10.1 Strata Indemnified by Micrologix
	 	 	48	 
	Section 10.2 Micrologix Indemnified by Strata
	 	 	48	 
	Section 10.3 Prompt Notice Required
	 	 	49	 
	Section 10.4 Indemnitor May Settle
	 	 	49	 
	Section 10.5 Insurance
	 	 	50	 
	 
	 	 	 	 
	Article 11 ADDITIONAL COVENANTS OF THE PARTIES
	 	 	51	 
	Section 11.1 Micrologix Covenant Not To Compete
	 	 	51	 
	Section 11.2 Launch of Competitive Product by Strata
	 	 	51	 
	Section 11.3 Limitation To The Territory
	 	 	51	 
	Section 11.4 Records and Audits
	 	 	52	 
	Section 11.5 Marketing Expenses
	 	 	54	 
	Section 11.6 Further Actions
	 	 	54	 
	 
	 	 	 	 
	Article 12 PRODUCT RECALL
	 	 	54	 
	Section 12.1 Product Recalls or Withdrawal
	 	 	54	 
	Section 12.2 Recall Costs
	 	 	54	 
	Section 12.3 Notification Of Complaints
	 	 	55	 
	Section 12.4 Notification Of Threatened Action
	 	 	55	 
	 
	 	 	 	 
	Article 13 TERM AND TERMINATION
	 	 	55	 
	Section 13.1 Term
	 	 	55	 
	Section 13.2 Termination by Either Party
	 	 	55	 
	Section 13.3 Termination by Strata
	 	 	56	 
	Section 13.4 Termination by Micrologix
	 	 	57	 
	Section 13.5 Effect of Termination
	 	 	57	 
	Section 13.6 Remedies
	 	 	61	 
	Section 13.7 License Following Expiration
	 	 	61	 
	 
	 	 	 	 
	Article 14 DISPUTE RESOLUTION/DAMAGES
	 	 	61	 
	Section 14.1 Disputes
	 	 	61	 
	Section 14.2 Performance to Continue
	 	 	62	 
	Section 14.3 Determination of Patents and Other Intellectual Property
	 	 	62	 
	Section 14.4 Injunctive Relief
	 	 	63	 
	Section 14.5 No Consequential Damages
	 	 	63	 
	Section 14.6 Attorney’s Fees
	 	 	63	 

 

 - 5 -

	 	 	 	 	 
	Article 15 MISCELLANEOUS
	 	 	63	 
	Section 15.1 No Solicitation
	 	 	63	 
	Section 15.2 Assignment; Binding Effect
	 	 	64	 
	Section 15.3 Force Majeure
	 	 	64	 
	Section 15.4 Governing Law
	 	 	64	 
	Section 15.5 Waiver
	 	 	65	 
	Section 15.6 Severability
	 	 	65	 
	Section 15.7 No Right to Use Names
	 	 	65	 
	Section 15.8 Notices
	 	 	65	 
	Section 15.9 Independent Contractors
	 	 	66	 
	Section 15.10 Rules of Construction
	 	 	66	 
	Section 15.11 Entire Agreement; Amendment
	 	 	66	 
	Section 15.12 Counterparts; Facsimile
	 	 	66	 
	Section 15.13 Interpretation
	 	 	67	 
	 
	 	 	 	 
	Exhibit A            Development Plan
	 	 	 	 
	Exhibit B            Patents
	 	 	 	 
	Exhibit C            Inventory
	 	 	 	 
	Exhibit D            Governmental Approvals
	 	 	 	 

 

COLLABORATION AND LICENSE AGREEMENT

This Collaboration and License Agreement (this “Agreement”) is made as of July 30, 2004 (the
“Effective Date”) by and between Micrologix Biotech Inc., a British Columbia corporation having its
offices at BC Research Complex, 3650 Wesbrook Mall, Vancouver, BC, Canada V6S 2L2 (“Micrologix”)
and Strata Pharmaceuticals Inc., a corporation having its offices at 10923 Coverhurst Way, San
Diego, California 92130, USA (“Strata”). Micrologix and Strata are sometimes referred to
collectively herein as the “Parties” or singly as a “Party”.

R E C I T A L S

WHEREAS, Micrologix has developed and owns or controls certain proprietary technology, patents,
patent applications, and know-how relating to Micrologix’s proprietary Compound (as defined below);

WHEREAS, on June 2, 2004, the Parties signed a term sheet (the “Term Sheet”), whereby Strata paid
Micrologix the Exclusivity Fee, in exchange for, among other things, Micrologix’s agreement to
negotiate solely and exclusively with Strata with respect to any license to the Compound and the
Micrologix Technology for development and commercialization in the Field in the Territory (as such
terms are defined herein); and

WHEREAS, Micrologix wishes to grant to Strata, and Strata wishes to obtain from Micrologix, an
exclusive license under the Micrologix Technology to use, market, advertise, promote, distribute,
offer for sale, sell, manufacture, have manufactured, export and import, and co-develop with and/or
in addition to Micrologix, the Compound in the Field in the Territory, or have the foregoing done
on its behalf, subject to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual covenants and agreements
contained herein, the Parties hereby agree as follows:

ARTICLE 1

DEFINITIONS

As used in this Agreement, the following terms shall have the meanings set forth below:

     Section 1.1 “Acceptance for Filing”

means notification from the FDA indicating receipt of an NDA submission in the United States or
equivalent marketing application pursuant to Applicable Laws in each country in the Territory.

     Section 1.2 “Act”

means the Federal Food Drug and Cosmetic Act (21 U.S.C. Section 301 et seq.) in the United States
and any other comparable, applicable legislation in any other country in the Territory.

 

 

 - 2 -

     Section 1.3 “Affiliate”

means any company or entity controlled by, controlling or under common control with a Party. As
used in this Section 1.3, “control” means (a) that an entity or company owns, directly or
indirectly, fifty percent (50%) or more of the voting stock of another entity, or (b) that an
entity, person or group has the actual ability to control and direct the management of the entity,
whether by contract or otherwise.

     Section 1.4 “Applicable Law(s)”

means the Act, Regulations and all other applicable laws, rules, regulations and guidelines within
the Territory that apply to the import, export, research and development, manufacture, marketing,
distribution or sale of the Product in the Field in the Territory or the performance of either
Party’s obligations under this Agreement (including disclosure obligations as required by the
United States Securities and Exchange Commission or other comparable exchange or securities
commission having authority over a Party) to the extent applicable and relevant to such Party.

     Section 1.5 “Approval Letter”

means a letter issued by the FDA indicating approval of a product for commercialization, as defined
in 21 CFR § 314.105 in the United States, or equivalent letter issued by the applicable Competent
Authority in any other country in the Territory, pursuant to Applicable Laws in each country in the
Territory.

     Section 1.6 “Books and Records”

means, in whatever media, any and all books and records, documents, reports and accounts in
connection with or relative to: any Reimbursable Costs, any costs Strata or Micrologix is obligated
to reimburse or pay to the other Party under this Agreement; the Development; the Development Plan;
as well as any other books and records as may be required from time to time by Applicable Laws or
this Agreement. Books and Records shall not include any market research and competitive reports,
marketing reports and data.

     Section 1.7 “CFR”

means the United States Code of Federal Regulations in the United States and any other comparable,
applicable code of regulations in any other country in the Territory.

     Section 1.8 “cGMP”

means the current good manufacturing protocols as defined in 21 CFR § 210 and § 211 in the United
States or other comparable, applicable regulations in other countries in the Territory.

     Section 1.9 “Collaboration”

means the activities of the Parties carried out in performance of, and the relationship between the
Parties established by this Agreement.

 

 - 3 -

     Section 1.10 “Commercially Reasonable Efforts”

means, except as otherwise explicitly set forth in this Agreement, [***] shall be fairly determined based upon
relevant factors, including [***]. Except as expressly set out in this Agreement, “Commercially
Reasonable Efforts”, as applied to development and commercialization efforts, shall be as applied
to, and assessed upon, [***], and therefore, Strata shall not be required to:

     (a) [***]; or

     (b) [***];

except as may be required in respect of the Product and uses of the Product when using Commercially
Reasonable Efforts [***]. In addition to the foregoing, during the [***] immediately following the
Effective Date, when assessing whether Commercially Reasonable Efforts have been applied by a Party
to an obligation under this Agreement other than the obligations set out in Section 2.1(b), in
addition to the foregoing considerations, the Parties shall take into account [***].

     Section 1.11 “Common Shares”

means common shares in the capital of Micrologix.

     Section 1.12 “Competent Authority(ies)”

means collectively the entities in each country in the Territory responsible for: (i) the
regulation of medicinal products intended for human use, including the FDA; or (ii) the
establishment, maintenance and/or protection of rights related to the Micrologix Patent Rights, or
any other successor entities thereto.

     Section 1.13 “Compound”

means [***].

     Section 1.14 “Confidential Information”

means any and all information (including the Micrologix Technology) of a Party relating to any
trade secret, Reimbursable Costs, Books and Records, process, method, compound, research project,
work in process, future development, scientific, engineering, manufacturing, marketing, sales,
business plan, financial or personnel matter relating to the disclosing Party, its present or
future products, sales, suppliers, customers, employees, investors or business, whether in oral,
written, graphic or electronic form. Confidential Information shall not include any information
which the receiving Party can prove by competent evidence:

 

			
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 - 4 -

	 	(a)	 	is now, or hereafter becomes, through no act or failure to act on the part of
the receiving Party, generally known or available;
	 
	 	(b)	 	is known by the receiving Party at the time of receiving such information, as
evidenced by its written records maintained in the ordinary course of business;
	 
	 	(c)	 	is hereafter furnished to the receiving Party by a Third Party, as a matter of
right and without restriction on disclosure;
	 
	 	(d)	 	is independently developed by the receiving Party, as evidenced by its written
records, without knowledge of, and without the aid, application or use of, the
disclosing Party’s Confidential Information; or
	 
	 	(e)	 	is the subject of a written permission to disclose provided by the disclosing
Party.

     Section 1.15 “Control”

means the possession of the ability to grant a license or sublicense as provided for herein without
violating the terms of any agreement or other arrangement with any Third Party, licensee or
sublicensee or the payment of any material licensing fees or royalties to any Third Party, licensee
or sublicensee.

     Section 1.16 “Costs”

means any and all costs, expenses, fees (including attorneys’ fees and costs), charges, monies,
license fees, upfront fees and royalties paid in connection with any proceeding, action, suit or
claim and/or paid to any Third Party.

     Section 1.17 “CRBSI”

means catheter related blood stream infection.

     Section 1.18 “Development”

means work conducted under the Development Plan(s) and as set out in Section 2.3.

     Section 1.19 “Development Plan(s)”

means the detailed plan(s) related to the research and the development (including work to obtain
Governmental Approvals, including Marketing Authorizations), and the budget therefor as amended
from time to time pursuant to which the Parties shall conduct the Development under the terms of
this Agreement. The initial Development Plan is attached hereto as Exhibit “A”.

     Section 1.20 “Development Subcontract”

has the meaning set out in Section 2.1.

 

 - 5 -

     Section 1.21 “DMF”

means drug master file.

     Section 1.22 “Europe”

means the European Union as of the Effective Date, European Union Candidate Countries (namely,
Bulgaria, Croatia, Romania and Turkey), and the following European Countries: Albania, Andorra,
Belarus, Bosnia-Herzegovina, Former Yugoslav Republic of Macedonia, Iceland, Liechtenstein,
Moldova, Monaco, Norway, Russia, San Marino, Serbia & Montenegro, Switzerland, Ukraine, and Vatican
City.

     Section 1.23 “Exclusivity Fee”

means the $200,000 payment made by Strata to Micrologix under the Term Sheet which Micrologix
acknowledges it received in two $100,000 payments, the first on June 3, 2004 and the second on July
6, 2004.

     Section 1.24 “Exclusivity Period”

has the meaning set out in Section 3.7(b).

     Section 1.25 “Extended Field”

has the meaning set out in Section 3.7(a).

     Section 1.26 “FDA”

means the United States Food and Drug Administration in the United States and any other comparable,
applicable administrative agency in any other country in the Territory, or any successor entity
thereto.

     Section 1.27 “Field”

means any or all of the following: [***]. For the avoidance of doubt, the Field specifically excludes [***].

     Section 1.28 “First Commercial Sale”

means (a) with respect to a country in the Territory, the first sale for use, consumption or resale
of the Product by Strata, its sublicensees or its Affiliates in such country (excluding any sales
for clinical trials or other non-commercial purposes) and (b) with respect to the Territory, the
First Commercial Sale in any country within the Territory. A sale to a sublicensee or an Affiliate
shall

 

			
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 - 6 -

not constitute a First Commercial Sale unless the sublicensee or Affiliate is the end user of the
Product.

     Section 1.29 “First Phase III Study”means the Phase III Study for the Product completed prior to
the Effective Date, namely #226-98-002.

     Section 1.30 “GAAP”

means United States generally accepted accounting principles, as consistently applied in the
Territory.

     Section 1.31 “Good Clinical Practices” or “GCP”

means good clinical practices as defined in 21 CFR § 50 et seq., § 56 et seq., and § 312 et seq. in
the United States or other comparable, applicable regulations in other countries in the Territory.

     Section 1.32 “Governmental Approval(s)”

means any and all permits, licenses and authorizations, including Marketing Authorizations required
by any Competent Authority as a prerequisite to the development, manufacturing, packaging,
marketing and selling of the Product in the Field in the Territory; excluding however import
permits.

     Section 1.33 “IMS Data”

means the data reported from IMS Health Incorporated of Plymouth Meeting, PA, or any successor to
IMS Health Incorporated or any other independent reporting service used by Strata to provide
information related to the marketing of the Product and other pharmaceutical products.

     Section 1.34 “Improvements”

means, subject to Section 3.6, any and all developments, derivative works, enhancements,
modifications, inventions or discoveries relating to the Compound, the Product, for use in the
Field and under the Control of Micrologix or developed, created or acquired by Micrologix at any
time during the Term, whether patentable or not, and shall include, but not be limited to,
developments, inventions or discoveries intended to enhance the safety or efficacy of the Product
and all intellectual property rights related thereto.

     Section 1.35 “IND(s)”

means an investigational new drug application as defined in 21 C.F.R. Section 312 et seq for the
FDA in the United States or equivalent application to the Competent Authorities of other countries
in the Territory, to commence clinical testing of a drug in humans, as defined by the FDA in the
United States, or other applicable Competent Authority, as the same may be amended, supplemented or
replaced from time to time.

 

 - 7 -

     Section 1.36 “Know-How”

means any and all know-how, trade secrets, inventions, data, processes, techniques, procedures,
compositions, devices, methods, formulas, protocols, any and all pre-clinical and clinical data,
and information, whether or not patentable, which are not generally publicly known, including but
not limited to any and all chemical, biochemical, toxicological, and scientific research
information, whether in written, electronic, graphic or video form or any other form or format.

     Section 1.37 “knowledge” or “best of its knowledge”

means, with respect to each Party, the actual knowledge of the senior officers of such Party,
without the duty of inquiry.

     Section 1.38 “Labelled” or “Labelling”

means any and all labels and other written, printed or graphic matter, including artwork, upon (a)
the Product or any container utilized with the Product; (b) packaging; or (c) the package inserts.

     Section 1.39 “LCSI”

means local catheter site infection.

     Section 1.40 “Major European Market Country”

means France, Germany and United Kingdom.

     Section 1.41 “manufacture(d)” or “manufacturing”

means the storage, handling, assembly, production, processing, Labelling, testing, disposition,
packaging and quality control of raw materials and components and the Product.

     Section 1.42 “Manufacturing Development Costs”

has the meaning set out in Section 5.3(f).

     Section 1.43 “Market Price”

of the Common Shares means the U.S. Dollar Equivalent of the weighted average of the trading prices
of the Common Shares on The Toronto Stock Exchange, for the five consecutive Trading Days ending on
the last Trading Day prior to the Effective Date.

     Section 1.44 “Marketing Authorization”

means all necessary and appropriate regulatory approvals, including NDAs and Pricing and
Reimbursement Approvals, where applicable, to allow the Product to be marketed and sold in the
Field in a particular country in the Territory.

 

 - 8 -

     Section 1.45 “MBI 594AN”

means [***].

     Section 1.46 “Micrologix Know-How”

means any and all Know-How related to the Compound or the Product, including research and
development and clinical studies hereunder and other obligations of Micrologix hereunder, and which
is under the Control of Micrologix as of the Effective Date and any and all Improvements thereto,
which is not covered by the Micrologix Patent Rights, but is necessary or useful to the use,
development, manufacture, marketing, promotion, distribution, sale and/or commercialization of the
Product in the Territory for use in the Field.

     Section 1.47 “Micrologix Patent Rights” or “Micrologix Patent”

means any and all Patent Rights that claim Micrologix’s proprietary technology for the Product or
the Compound which is under the Control of Micrologix as of the Effective Date and any and all
Patent Rights covering Improvements thereto, which are necessary or useful to the use, development,
manufacture, marketing, promotion, distribution, sale and/or commercialization of the Product in
the Territory for use in the Field. The Micrologix Patent Rights as of the Effective Date are set
forth on Exhibit “B”. Any Micrologix Patent Rights issued after the Effective Date shall be added
to Exhibit “B”.

     Section 1.48 “Micrologix Technology”

means the Micrologix Patent Rights and the Micrologix Know-How.

     Section 1.49 “NDA”

means a New Drug Application, and all amendments and supplements thereto, for regulatory approval
by the FDA as defined in 21 CFR § 314.50 et seq., as such act or regulations may be amended,
supplemented or replaced from time to time, to commence commercial sale of the Product in the
United States and any other comparable term and act as applicable with regard to a new drug
application and all amendments, supplements or replacements to such act or regulations in any other
country in the Territory.

     Section 1.50 “Negotiation Period”

has the meaning set out in Section 3.7(c).

     Section 1.51 “Net Sales”

means collectively, the gross amount invoiced by Strata, its sublicensees, or its Affiliates for
sales of the Product to a Third Party (excluding sales among Strata and a sublicensee or Affiliate

 

			
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of Strata for resale, but including the subsequent final sales to Third Parties by such
sublicensees or Affiliates), less the following as they pertain to the Product:

     (a) [***].

     (b) [***].

The Product shall be considered “sold” when billed out or invoiced.

No deductions shall be made from Net Sales for items (a) and (b) above except to the extent of
amounts for such items actually granted or paid with respect to the Product; provided that a Party
may reconcile all such amounts within a given calendar quarter regardless of when such amounts were
actually granted or paid.

No deductions shall be made from Net Sales [***].

Components of Net Sales shall be determined in the ordinary course of business using the accrual
method of accounting in accordance with GAAP, provided that a Party may reconcile all such amounts
within a given calendar quarter regardless of when such amounts were actually granted or paid.

In the event a Party transfers Product to a Third Party in a bona fide arm’s length transaction,
for consideration, in whole or in part, other than cash or to a Third Party in other than a bona
fide arm’s length transaction, the Net Sales price for such Product shall be deemed to be the
standard invoice price then being invoiced by a Party in an arm’s length transaction with similar
customers.

Notwithstanding anything herein to the contrary, the transfer of a Product to a Third Party without
consideration to Strata in connection with the development or testing of a Product shall not be
considered a sale of a Product under this Agreement.

     Section 1.52 “Notification Period”

has the meaning set out in Section 3.7(c).

     Section 1.53 “packaging”

means any and all containers, cartons, shipping cases, inserts, package inserts or other similar
material used in packaging or accompanying the Product.

     Section 1.54 “Patent Rights”

means any and all rights under patents and patent applications, and any and all patents issuing
therefrom (including utility, model and design patents and certificates of invention), together

 

			
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with any and all substitutions, extensions (including supplemental protection certificates),
registrations, confirmations, reissues, divisionals, continuations, continuations-in-part,
re-examinations, renewals, and foreign counterparts of the foregoing and all supplements and
modifications thereto.

     Section 1.55 “Phase III Study”

means that portion of the clinical development program that provides for human clinical trials,
performed after preliminary evidence suggesting dose and effectiveness of a Product has been
obtained, which is intended to gather the additional information about the effectiveness and safety
that is needed to evaluate the overall benefit-risk relationship of the Product and to provide
adequate basis for labelling, performed in accordance with the U.S.A. Federal Food, Drug and
Cosmetic Act and applicable regulations promulgated thereunder (including 21 CFR Part 312), as
amended from time to time.

     Section 1.56 “Phase IV Study”

means, as applicable, a study or program, designed to: (a) obtain additional safety or efficacy
data in support of the Product; or (b) determine effectiveness for additional labelled indications,
in either case commenced after Governmental Approval of the Product in the subject country in the
Territory.

     Section 1.57 “Post Marketing Commitments”

means any post-approval commitments required by the FDA in the United States or any other Competent
Authority in any other country in the Territory.

     Section 1.58 “Pricing and Reimbursement Approvals”

means any pricing and reimbursement approvals which must be obtained before placing the Product on
the market in the Field in any country in the Territory in which such approval is required.

     Section 1.59 “Prime Rate of Interest”

means the prime rate of interest published from time to time in The Wall Street Journal as the
prime rate; provided, however that if The Wall Street Journal does not publish the Prime Rate of
Interest, then the term “Prime Rate of Interest” shall mean the rate of interest publicly announced
by Bank of America, N.A., as its prime rate, base rate, reference rate or the equivalent of such
rate, whether or not such bank makes loans to customers at, above, or below said rate.

     Section 1.60 “Product”

means any and all pharmaceutical formulations containing any and all concentrations, sizes of
volume, configurations and combinations of the Compound.

 

 

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     Section 1.61 “Promotional Material(s)”

has the meaning set out in Section 6.6(a).

     Section 1.62 “raw materials and components”

means any and all raw materials and components (such as bulk drug, chemicals, containers, closures,
packaging, Labelling, etc.) needed to manufacture the Product.

     Section 1.63 “Regulations”

means regulations, statutes, rules, guidelines and procedures promulgated by the FDA or other
Competent Authority pursuant to the Act or other Applicable Laws, including current Good Clinical
Practices, current Good Manufacturing Practices, as well as those regulations currently contained
in Title 21 of the CFR.

     Section 1.64 “Reimbursable Costs”means the fees and costs owed by Strata pursuant to Section 2.5.
Reimbursable Costs do not include [***]. Marketing Authorizations will be paid for by Strata in accordance with
Section 2.3(c).

     Section 1.65 “Representatives”

means, in respect of a Party, its Affiliates, licensees, sublicensees, and their respective
employees, agents, consultants, Subcontractors, and other representatives.

     Section 1.66 “Royalty Term”

means the period of time commencing on the First Commercial Sale of the Product in a particular
country in the Territory and ending on the expiration of the last to expire of the Micrologix
Patent Rights containing Valid Claims covering such Product in such country in the Territory;
provided, however, that with respect to a country in the Territory in which a Micrologix Patent has
not been issued at the time of the First Commercial Sale in that country, the Royalty Term shall
commence on the First Commercial Sale in such country and continue for the greater of (i) the
period in which a Valid Claim covering such Product exists in the United States; or (ii) if a
Micrologix Patent is subsequently issued in such country, for the period of time in which a Valid
Claim covering such Product exists in such country. The Royalty Term shall apply on a
country-by-country basis. Notwithstanding anything to the contrary provided in this Section 1.66,
if no Valid Claim covering such Product exists in a given country in the Territory, then the
Royalty Term in such country shall be for a period of ten (10) years from the date of the First
Commercial Sale in that country.

 

			
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     Section 1.67 “Second Phase III Study”

means a Phase III Study to support a Marketing Authorization for a LCSI, and if reasonably prudent
to pursue same, for CRBSI.

     Section 1.68 “Subcontractors”

means Third Parties engaged to perform obligations of the Parties as permitted by this Agreement.

     Section 1.69 “Territory”

means North America (including the United States, Canada and Mexico) and Europe, and as may be
expanded or reduced pursuant to the terms of this Agreement.

     Section 1.70 “Third Party”

means any entity, other than Micrologix or Strata.

     Section 1.71 “Trading Day”

means any day on which the Toronto Stock Exchange is open for business.

     Section 1.72 “U.S.” or the “United States”

means the 50 states of the United States of America, its territories or possessions, and the
District of Columbia and Puerto Rico.

     Section 1.73 “U.S. Dollar Equivalent”

means the equivalent amount of U.S. dollars calculated from Canadian currency using the Bank of
Canada noon rate for such conversion as reported on the Bank of Canada’s website on the business
day prior to the applicable date.

     Section 1.74 “U.S. PTO”

means the Unites States Patent and Trademark Office or any successor entity thereto.

     Section 1.75 “Valid Claim”

means a claim of an issued and unexpired Micrologix Patent that, with respect to a specific country
in the Territory: (i) has not been revoked, declared unenforceable or unpatentable, or held invalid
by a court or other governmental agency of competent jurisdiction that is unappealable or
unappealed within the time allowed for appeal, (ii) has not been admitted to be rendered invalid or
unenforceable through reissue, disclaimer or otherwise, and (iii) has not been finally cancelled,
withdrawn, abandoned, allowed to lapse, or rejected by any governmental agency of competent
jurisdiction.

 

 

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ARTICLE 2

PRODUCT DEVELOPMENT

     Section 2.1 Objectives.

	 	(a)	 	Pursuant to the Development Plan(s) and under the oversight of the JDMC,
Strata, (along with the collaboration and assistance of Micrologix as described in any
applicable development subcontract (“Development Subcontract”)), shall use Commercially
Reasonable Efforts to obtain Marketing Authorizations for the Product in the Field in
the Territory.
	 
	 	(b)	 	Strata shall use Commercially Reasonable Efforts:

	 	(i)	 	to submit a protocol and request a special protocol assessment
for the Second Phase III Study in the US, in sufficient time to obtain feedback
from the FDA, on or before the end of the [***]; and
	 
	 	(ii)	 	within [***] after receiving satisfactory feedback from the FDA
on such protocol, provided that Strata has secured an adequate supply of
Product ready for use in human trials, enrol a patient in the Second Phase III
Study;
	 
	 	(iii)	 	within [***] after filing an NDA in the US, provided that no
Competent Authority in Europe requires an additional phase III clinical study
in order to file a common technical document in Europe, file a common technical
document in Europe.

	 	(c)	 	After receiving satisfactory feedback from the FDA on the protocol referred to
in Section 2.1(b)(ii), Strata shall use Commercially Reasonable Efforts to [***].
	 
	 	(d)	 	In addition, in its absolute discretion, Strata may file an NDA and seek
Marketing Authorization for CRBSI based on [***].
	 
	 	(e)	 	Strata shall use Commercially Reasonable Efforts to market and sell the Product
as contemplated hereunder.

     Section 2.2 Collaboration Guidelines; Amendments to the Development Plan(s).

	 	(a)	 	In all matters related to the Collaboration, the Parties shall strive to
balance as best they can the legitimate interests and concerns of the Parties and to
realize the economic potential of the Product.
	 
	 	(b)	 	Any Development Plan may only be modified by the JDMC. The Development Plan(s)
and any modifications thereto, as each may be approved by the JDMC in

 

			
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	 	 	 	accordance with this Section 2.2(b), shall be incorporated into this Agreement as
though fully set forth herein and without requiring formal or additional amendment
to this Agreement.

     Section 2.3 Development.

	 	(a)	 	Strata shall have responsibility for the Development under the oversight and
based on the Development Plan, including a timeline, as approved by the JDMC. In
addition to any other responsibilities as may be provided in the Development Plan(s),
Strata shall:

	 	(i)	 	use Commercially Reasonable Efforts to develop the Product in
accordance with the Development Plan(s) and as otherwise in accordance with the
terms and conditions of this Agreement;
	 
	 	(ii)	 	use Commercially Reasonable Efforts to secure the Marketing
Authorizations, in accordance with the Development Plan(s) and/or otherwise in
accordance with Article 6;
	 
	 	(iii)	 	promptly advise Micrologix of any issues of which Strata
becomes aware that materially and adversely affect Strata’s ability to develop
the Product or meet the timelines on the critical path set out in the
Development Plan(s);
	 
	 	(iv)	 	use Commercially Reasonable Efforts to manufacture or have
manufactured the Compound and the Product to supply the Product to carry out
the Development Plan(s).

	 	(b)	 	Strata may from time to time and where appropriate, engage Micrologix to
perform regulatory, clinical and other development work pursuant to a Development
Subcontract consistent with the provisions of this Article 2.
	 
	 	(c)	 	Strata shall pay [***] of the Reimbursable Costs incurred by
Micrologix, including those arising under Section 2.5. Micrologix shall invoice Strata
for such Reimbursable Costs on a quarterly basis within forty-five (45) days after the
end of each calendar quarter and such invoices shall be accompanied by the appropriate
documentation, including a listing of expenditures, in reasonably specific detail.
Strata shall pay such invoices within thirty (30) days after receipt of the invoice.
Micrologix shall keep Books and Records as necessary to document the inclusion of the
out-of-pocket and internal costs within the Reimbursable Costs including time sheets,
invoices, etc. Pursuant to Section 11.4, Strata has the right to inspect such Books
and Records upon request and

 

			
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	 	 	 	during normal business hours, and Micrologix shall provide copies of such Books and
Records to Strata.

	 	(d)	 	Notwithstanding anything to the contrary contained in this Agreement, if the
Second Phase III Study is commenced, Strata shall not terminate such study except on
notice to Micrologix:

	 	(i)	 	at any time within [***] after
Strata’s receipt of any interim results or the executive summary following
database lock of the LCSI endpoint;
	 
	 	(ii)	 	if Strata elects to continue such study by enrolling patients
thereafter, at any time within [***] after Strata’s receipt of any subsequent
interim results or the executive summary following database lock of the CRBSI
endpoint;

	 	 	 	unless Strata terminates this Agreement for Micrologix’s breach pursuant to Section
13.2.

     Section 2.4 Joint Development Management Committee.

	 	(a)	 	Creation of JDMC; Scope. Within ten (10) days after the Effective Date, the
Parties will form a Joint Development Management Committee (“JDMC”), which shall
oversee, review and coordinate the Development under the Development Plan(s) and
otherwise under the terms and conditions of this Agreement. The JDMC may delegate
certain responsibilities to the Parties. The JDMC shall be responsible for (i)
coordinating the Parties’ respective duties and efforts under this Article 2; (ii)
overseeing the Development, including responsibility for all regulatory strategies
involving Marketing Authorizations, meetings with the FDA and other Competent
Authorities, review of draft submissions to the FDA and other Competent Authorities, as
well as shelf-life and other manufacturing issues; (iii) making all decisions related
to development, clinical trials and budgets in connection with the Development and the
Development Plan(s); (iv) managing the Development conducted under the Development
Plan(s); (v) coordinating the Parties’ respective obligations under Section 2.3(a) and
Section 2.3(b); (vi) managing the manufacturing development for the Compound referred
to in Section 5.3(a)(i)(C); (vii) monitoring the progress and results of such work, all
based on the principles of prompt, diligent and commercially reasonable development of
the Product consistent with generally accepted practices in the pharmaceutical
industry; and (viii) performing any Post Marketing Commitments. Any changes to any
Development Plan shall be approved in advance by the JDMC. Notwithstanding the
foregoing and anything to the contrary in this Agreement, the JDMC shall have a
consulting role only in regard to, and no right to vote upon, any matters relating to
burns and surgical

 

			
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	 	 	 	infections indications for the Product. The JDMC shall not have any
responsibilities in connection with: (i) any Phase IV Study; (ii) any
commercialization or marketing activities in connection with the Product; or (iii)
subject to Section 2.4(a)(vi), any manufacturing of commercial supplies of the
Compound or the Product. Subject to the obligations to make Commercially Reasonable
Efforts set out in Section 2.1 and Section 2.3 of this Agreement: (i) any such
commercialization, marketing and manufacturing activities shall be the sole right
and responsibility of Strata; and (ii) any Phase IV Study(ies) shall be the sole
right and responsibility, but not obligation, of Strata.

	 	(b)	 	Membership. The JDMC shall be comprised of three (3) voting representatives of
each of Micrologix and Strata. Each Party may change its representatives on the JDMC
at any time upon written notice to the other Party. Strata shall select one (1) member
of the JDMC to act as the chairperson of the JDMC and Micrologix shall select one
member of the JDMC to act as the secretary of the JDMC.
	 
	 	(c)	 	Meetings of the JDMC. The JDMC shall meet on a quarterly basis or at such
other frequency and at such time (and place, as applicable) as agreed to by the members
of the JDMC or upon the reasonable request of either Party. Such meetings may be
conducted in person or via teleconference. The JDMC Secretary will be responsible for
calling meetings, preparing and circulating an agenda in advance of each meeting, and
preparing and issuing minutes of each meeting within thirty (30) days thereafter. Any
such agenda or minutes shall be approved by the other Party in advance of any issuance.
A reasonable number of additional representatives of a Party may attend meetings of
the JDMC in a non-voting observer capacity.
	 
	 	(d)	 	Decisions of the JDMC. A quorum of the JDMC shall be deemed to be present at
any meeting of the JDMC if at least two (2) JDMC members or their designees of each
Party are present at such meeting in person or by telephone. If a quorum exists at any
meeting, a majority vote of the members of the JDMC present at such meeting is required
to take any action on behalf of the JDMC. In the event that any vote within the JDMC
results in a tie, Strata shall have the tie-breaking vote, which shall be exercised in
good faith, and make the final determination. Such final determination shall be
binding upon the Parties.
	 
	 	(e)	 	Limitation of Powers. The JDMC shall not have the right to amend or interpret
this Agreement. Issues regarding the interpretation of this Agreement shall be
referred to the respective Chief Executive Officers of each Party, or their designees
(who must be members of a Party’s senior management), as provided in Section 14.1. The
actions or decisions of the JDMC shall not substitute for either Party’s ability to
exercise any right set forth herein or excuse the performance of any obligation set
forth herein.
	 
	 	(f)	 	Liaisons. Each Party will designate an individual to serve as the liaison
between the Parties to undertake and coordinate any day-to-day communications as may be

 

 

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	 	 	 	required between the Parties relating to their respective activities under this
Agreement. Each Party may change such liaison from time to time during the Term
upon written notice thereof to the other Party.

     Section 2.5 Technology Transfer.

	 	(a)	 	Micrologix shall, upon Strata’s request, transfer to or make available to
Strata the then most-current version of all relevant Micrologix Know-How to enable
Strata’s reasonably capable personnel to understand such Micrologix Know-How as
reasonably necessary to undertake the manufacture, development and commercialization of
the Compound and generally any Product in the Field under this Agreement. Such transfer
shall include:

	 	(i)	 	transfer of the results of the clinical trials conducted prior
to and as of the Effective Date relating to the Product to Strata (including
all regulatory information, clinical data, hard-copy CRFs and reports together
with any patient samples (such as blood samples, microbiology samples, and
tissue samples), if available, without regard to the condition of such
samples);
	 
	 	(ii)	 	transfer of any communications with the FDA and the minutes of
any meetings with the FDA relating to the Product to Strata;
	 
	 	(iii)	 	transfer of the data and results of any CMC related activities
incident to Section 2.5(a)(i) and Section 2.5(a)(ii);
	 
	 	(iv)	 	coordination of communication between Strata and the clinical
trial groups that conducted the clinical trials referred to in Section
2.5(a)(i) prior to and as of the Effective Date; and
	 
	 	(v)	 	providing Strata reasonable access to Micrologix personnel with
relevant clinical and regulatory expertise to explain the information
transferred pursuant to Section 2.5(a)(i), Section 2.5(a)(ii) and Section
2.5(a)(iii).

	 	(b)	 	Micrologix shall update the Micrologix Know-How related to the Compound and
Products previously transferred to Strata regularly at JDMC meetings.
	 
	 	(c)	 	Micrologix shall work cooperatively with and provide reasonable assistance to
Strata upon Strata’s request, under the oversight of the JDMC, to prepare the first NDA
filing in the United States pursuant to a Development Subcontract.
	 
	 	(d)	 	Strata shall pay for the maintenance by Micrologix of the certain Governmental
Approvals in connection with the research and development of the Product pursuant to
Section 6.7(b) and the services of Micrologix personnel provided pursuant to this
Section 2.5, as follows:

	 	(i)	 	For the first three months from the Effective Date, Strata
shall pay to Micrologix Micrologix’s documented out-of-pocket costs of
providing such services.

 

 

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	 	(ii)	 	Commencing after the expiry of three months from the Effective
Date, Strata shall pay to Micrologix the hourly rate of [***] ($[***]) per hour, plus the documented out-of-pocket costs of
providing such services.
	 
	 	(iii)	 	Strata is responsible for, and will pay all reasonable,
documented, actual travel and associated accommodation expenses of Micrologix
personnel who, at Strata’s request, travels to provide transition support under
this Section.

ARTICLE 3

LICENSE

     Section 3.1 License Terms.

Subject to the terms and conditions of this Agreement, Micrologix hereby grants to Strata an
exclusive, royalty-bearing license under the Micrologix Technology to use, market, advertise,
promote, distribute, offer for sale, sell, make, manufacture, have manufactured, export and import,
and develop the Product in the Territory for use in the Field with the right to sublicense (as
provided in Section 3.5), and/or assign (as provided Section 15.2) the foregoing.

     Section 3.2 Micrologix’s Reservation of Rights.

Except as otherwise licensed to Strata hereunder and subject to Section 11.1, Micrologix may
exploit the Micrologix Technology for any purpose, including to use, develop, market, advertise,
promote, distribute, offer for sale, make, manufacture, sell, export and import the Product:

	 	(a)	 	outside the Territory; and
	 
	 	(b)	 	inside the Territory but outside the Field.

     Section 3.3 Third Party Licensees of Micrologix.

In the event that Micrologix or a licensee of Micrologix develops and/or markets a Product outside
the Territory but inside the Field, Micrologix shall use Commercially Reasonable Efforts to work
cooperatively with Strata to coordinate the development and marketing activities of Micrologix or
such licensee of Micrologix with the development and marketing activities hereunder.

     Section 3.4 Work Product and Intellectual Property.

	 	(a)	 	Strata acknowledges that it shall have no right, title or interest in or to the
Micrologix Technology except as set forth in this Agreement. Nothing in this Agreement
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	 	 	 	intellectual property of Micrologix other than as expressly set forth in this
Agreement.

	 	(b)	 	Except as set forth in Section 5.2 and the termination Sections of this
Agreement

	 	(i)	 	Micrologix acknowledges that it shall have no right, title or
interest in or to any data, inventions, discoveries, improvements, derivative
works, and/or any other work product, whether patentable or not, developed
hereunder by Strata or on behalf of Strata by its Representatives (“Strata Work
Product”).
	 
	 	(ii)	 	Nothing herein shall be construed to grant Micrologix any
rights or license to the Strata Work Product or any other intellectual property
of Strata (collectively, “Strata Intellectual Property”). Strata reserves all
rights in and to any such Strata Work Product and the Strata Intellectual
Property.

     Section 3.5 Sublicenses.

	 	(a)	 	Strata shall have the right to sublicense rights granted in Section 3.1 to its
Affiliates. Strata shall cause its Affiliates to comply with and be bound by those
terms and conditions of Strata under this Agreement that by their terms are intended to
obligate Strata or its Affiliates commercializing the Product as permitted hereunder,
including Section 3.4, Section 3.5, Article 5, Article 6, Article 7, Article 8, Article
9, Article 10, Article 11 (excluding however Section 11.1), Article 12 and Section
14.5. Notwithstanding the foregoing, Strata shall remain primarily responsible for
complying with such applicable terms and conditions. A breach by any such Affiliate of
any such obligation shall constitute a breach by Strata of this Agreement and shall
entitle Micrologix to exercise its rights hereunder, in addition to any other rights
and remedies to which Micrologix may be entitled.
	 
	 	(b)	 	Strata shall also have the right to sublicense rights granted in Section 3.1 to
Third Parties, subject to the following: Strata shall give Micrologix prompt notice of
the execution of any sublicense. Within ten (10) calendar days after execution of a
sublicensing agreement, Strata shall provide Micrologix with a copy thereof (provided
that Strata shall be permitted to redact the financial terms and other confidential
information in such agreement). Each sublicense shall contain covenants by the
sublicensee for such sublicensee to observe and perform materially the same terms and
conditions as those set out for Strata in this Agreement to the extent applicable. In
the event Strata grants sublicenses to others to sell Product, such sublicenses shall
include an obligation for the sublicensee to account for and report its Net Sales on
the same basis as if such sales were Net Sales by Strata, and Micrologix shall receive
royalties from Strata in the same amounts as if the Net Sales of the sublicensee were
Net Sales of Strata. In the event that Strata becomes aware of a material breach of
any such sublicense by the sublicensee, Strata shall promptly notify Micrologix of the
particulars of same and use its Commercially Reasonable Efforts to enforce the

 

 

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	 	 	 	terms of such sublicense. Upon the request of Micrologix, Strata shall act
reasonably in considering any request of Micrologix for Strata to terminate such
sublicense for cause, but Strata shall have the final and sole right and
responsibility and decision making authority with respect to any such sublicense
(provided that Strata acts reasonably in such regard).
	 
	 	(c)	 	The terms of this Section 3.5 shall apply to each subsequent sublicensee or
sub-sublicensee, as if same were Strata’s original sublicensee.
	 
	 	(d)	 	Micrologix will, upon request by any sublicensee of Strata, provide such
sublicensee with a letter whereby Micrologix agrees that if Micrologix gives notice of
default to Strata pursuant to Section 13.2 or Section 13.4, then, prior to any
termination of this Agreement, Micrologix will give such sublicensee written notice of
such default or intention to terminate this Agreement, and in the event of any breach
or default by Strata, which may be cured pursuant to Section 13.2 or Section 13.4, will
for 60 days from the date of such notice to the sublicensee, give the sublicensee the
opportunity to cure such default or breach on the terms provided in Section 13.2 or
Section 13.4, mutatis mutandis. Further, such letter shall evidence Micrologix’s
agreement that if this Agreement is terminated, and provided that the sublicense
between Strata and the sublicensee is in good standing at such time, Micrologix will
then grant to the sublicensee a license of the same rights conferred on the sublicensee
by the sublicense agreement on substantially those same terms and conditions as are
contained in this Agreement as would correspond to the sublicense rights granted in the
sublicense agreement, on the financial terms set out in the relevant sublicense
agreement.

     Section 3.6 Certain Improvements.

	 	(a)	 	When Micrologix enters into any agreement or other arrangement with a Third
Party or licensee or sublicensee that may result in the development, creation or
acquisition by Micrologix of any developments, derivative works, enhancements,
modifications, inventions or discoveries relating to the Compound or the Product for
use in the Field (collectively, “Certain Improvements”), Micrologix will use
Commercially Reasonable Efforts not to limit or otherwise restrict Micrologix’s ability
to grant a license or sublicense to any such Certain Improvements as provided for
herein without violating the terms of any such agreement or other arrangement.
	 
	 	(b)	 	If Micrologix develops, creates or acquires any developments, derivative works,
enhancements, modifications, inventions or discoveries relating to the Compound or the
Product for use in the Field, where the grant of a license or sublicense to same as
provided for herein requires the payment of material licensing fees or royalties to any
Third Party, licensee or sublicensee, then Micrologix shall in a timely fashion offer
to Strata in writing a license or sublicense to the rights to such developments,
derivative works, enhancements, modifications, inventions or

 

 

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	 	 	 	discoveries. Within a reasonable period of time (but not to exceed [***] after receipt of Micrologix’s offer), Strata shall either accept the license or
sublicense of same and pay to Micrologix the amount of such material licensing fees
or royalties owed by Micrologix to such Third Party due to Strata’s activities under
such license or sublicense, or advise Micrologix that Strata does not wish to obtain
such rights.

	 	(c)	 	In the event that:

	 	(i)	 	Micrologix, using Commercially Reasonable Efforts, fails to
obtain the ability to grant a license or sublicense as provided for in Section
3.6(a) without violating the terms of any such agreement or other arrangement,
then the rights to any such Certain Improvements shall be excluded from the
definition of Improvements under this Agreement; or
	 
	 	(ii)	 	Strata advises Micrologix that Strata does not wish to obtain
the rights referred to in Section 3.6(b), or if Strata fails to notify
Micrologix within a reasonable period of time (not to exceed [***] as noted
above) that it accepts such license or sublicense, then such rights shall be
excluded from the definition of Improvements under this Agreement; or
	 
	 	(iii)	 	Strata advises Micrologix that Strata does wish to obtain the
rights referred to in Section 3.6(b) within a reasonable period of time (not to
exceed [***] as noted above) and pays such licensing fees or royalties, then
such rights shall be included in the definition of Improvements under this
Agreement without further formality.

     Section 3.7 Exclusive Option to Extend Field.

	 	(a)	 	Subject to the terms and conditions of this Section, Micrologix hereby grants
to Strata the right of first negotiation to obtain an exclusive license under the
Micrologix Technology to use, market, advertise, promote, distribute, offer for sale,
sell, make, manufacture, have manufactured, export and import, and develop the Product
to reduce or eliminate the nasal carriage of infectious organisms (the “Extended
Field”) in the Territory.
	 
	 	(b)	 	From the Effective Date and for a period of [***] thereafter (the “Exclusivity
Period”), Micrologix shall notify Strata in writing prior to any:

	 	(i)	 	use, marketing, advertising, promotion, distribution, offer for
sale, sale, making, manufacturing, having manufactured, exporting, importing or
developing the Product or the Compound for the Extended Field in all or any
part of the Territory for itself or through its Affiliates, or

 

			
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	 	(ii)	 	grant to any Third Party any rights to do any of the foregoing.

	 	(c)	 	Strata shall have a period of [***] from its receipt of a notice described
in Section 3.7(b) (the “Notification Period”) to notify Micrologix in writing if Strata
is interested in obtaining such license for the Extended Field for such territory. If,
by the end of the Notification Period, Micrologix receives written notice from Strata
that it desires to obtain such a license, then Micrologix and Strata for a period of
[***] or such longer period of time as mutually agreed to by the Parties in writing
(the “Negotiation Period”) shall negotiate in good faith, on an exclusive basis, a
definitive license agreement(s) for an exclusive license to the Extended Field upon
such terms and conditions as are mutually agreeable to the Parties.
	 
	 	(d)	 	If the Parties fail to execute such definitive license agreement(s) as
described in Section 3.7(c), by the end of the Negotiation Period or if Strata fails to
give notice of its interest in obtaining a license to the Extended Field before the
expiry of the Notification Period, then Strata’s right of first negotiation with
respect to the Extended Field shall terminate; provided, however, that if Micrologix
disposes of rights to the Micrologix Technology for the Extended Field to a Third Party
prior to the end of the Exclusivity Period, then the financial terms of such
transaction shall not be substantially less favorable to Micrologix in the aggregate
than the best terms offered to Strata by Micrologix in writing during the Negotiation
Period. If, prior to the end of the Exclusivity Period, Micrologix desires to offer a
Third Party rights to the Extended Field on financial terms substantially less
favorable to Micrologix in the aggregate than the best terms offered to Strata by
Micrologix in writing during the Negotiation Period, then Micrologix shall first offer
such terms to Strata, and if within [***] of such offer, Strata informs Micrologix that
it is prepared to enter into an agreement with Micrologix in accordance with such
terms, Micrologix shall conclude such agreement with Strata upon such terms. If no
such statement is made by Strata within said [***], Micrologix shall be free to enter
into an agreement in accordance with such terms with a Third Party.

ARTICLE 4

ADDITIONAL PAYMENTS

     Section 4.1 License Fee.

	 	(a)	 	Upfront Payment to Micrologix. In partial consideration for the licenses
granted under Section 3.1, Strata shall pay to Micrologix a one-time, non-refundable
license fee equal to One and One Half Million Dollars ($1,500,000) one business day
after the Effective Date by wire transfer of immediately available funds to an account
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	 	 	 	to the Effective Date (the “Upfront Fee”). Strata may deduct the Exclusivity Fee
from the Upfront Fee.

	 	(b)	 	Upfront Equity Investment in Micrologix. Strata shall purchase from Micrologix
on the Effective Date such number of Common Shares as equals Five Hundred Thousand
Dollars ($500,000), based on the Market Price plus a [***] ([***]) premium, and as issued pursuant to a separate stock purchase agreement.

     Section 4.2 Product Milestone Payments.

Strata shall pay to Micrologix, as licensing fees, the following non-refundable milestone payments
as follows:

	 	(a)	 	for milestones referred to in Section 4.3 and Section 4.4,

	 	(i)	 	if Strata can make the payment respecting such milestone within
45 days of the date on which Strata receives a copy of the applicable letter or
notice from the FDA in the U.S. or from a foreign equivalent in the Territory,
Strata shall pay to Micrologix such milestone within [***] of achieving such
milestone;
	 
	 	(ii)	 	if Strata cannot make the payment respecting such milestone
within [***] of the date on which Strata receives a copy of the applicable
letter or notice from the FDA in the U.S. or from a foreign equivalent in the
Territory, Strata shall:

	 	(A)	 	within [***] of achieving such milestone,
notify Micrologix in writing that it cannot make the payment respecting
such milestone; and
	 
	 	(B)	 	provided that Micrologix receives such notice
within the period for the receipt of same, Strata shall pay to
Micrologix such milestone within [***] of achieving such milestone,
[***].

	 	(b)	 	for milestones referred to in Section 4.5, [***] after Strata receives a copy
of the applicable letter or notice from the FDA in the U.S. or from a foreign
equivalent in the Territory.

     Section 4.3 Milestones for a Second Phase III.

For NDA Filings and Marketing Authorizations for either LCSI or CRBSI based upon a second Phase III
trial, the following milestones shall apply:

 

			
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[***]

     Section 4.4 Milestones for the First Phase III.

For an NDA Filing and Marketing Authorization for CRBSI based upon the First Phase III Study, the
following milestones shall apply; provided however that notwithstanding anything in this Agreement
to the contrary, the milestone for receipt of [***] in the United States in this Section 4.4 shall
only be payable when the milestone for [***] in the United States in this Section 4.4 becomes
payable:

[***]

The CRBSI milestones set forth in Section 4.3 and Section 4.4 regarding the CRBSI indication in the
United States are alternative milestones and as such only one milestone shall be due and payable
for [***] and [***], as applicable, under Section 4.3 and Section 4.4, but not both.

     Section 4.5 Burns or Surgical Infections milestones.

For Marketing Authorizations for burns or surgical infection indications, the following milestones
shall apply:

[***]

     Section 4.6 Commercial Milestone Payments.

Strata shall pay to Micrologix, as additional licensing fees, the following one-time,
non-refundable milestone payments within [***] following the end of the calendar quarter in which the relevant
commercial milestone is achieved.

[***]

     Section 4.7 Royalties.

	 	(a)	 	Royalty Payment. During the Royalty Term, Strata shall owe and pay to
Micrologix the following royalties on Net Sales:

	 	(i)	 	[***]% of Net Sales, on aggregate Net Sales in each calendar
year which does not exceed [***] ($[***]);
	 
	 	(ii)	 	[***]% of Net Sales, on aggregate Net Sales in each calendar
year which is greater than [***] ($[***]) but does not exceed [***] ($[***]);
and

 

			
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	 	(iii)	 	[***]% of Net Sales, on aggregate Net Sales in each calendar year which
is greater than [***]($[***]).

	 	(b)	 	Reductions in Royalty Rates. Strata’s royalty obligation under Section 4.7(a)
shall be [***] in the manner herein described:

	 	(i)	 	In the event (and for the period that) a non-proprietary
version or versions of the Product enters the market in a country in the
Territory in any calendar quarter during the Term, [***]. For the purposes of
this Section, “non-proprietary” means a product containing the amino acid
sequence [***] for use in the Field which does not infringe a Valid Claim. The
[***] shall be effective beginning on the first calendar quarter of the launch
of such generic product. The royalty rate shall be adjusted quarterly and
shall be reconciled quarterly at such time as the applicable IMS Data has been
made available to Strata.
	 
	 	(ii)	 	Any such [***] in Section 4.7(b)(i) shall be credited against
the next payment(s) owed Micrologix. [***].

	 	(c)	 	Certain Recoveries. If Micrologix owes Strata Micrologix’s share of the Costs
pursuant to Section 7.3, Section 7.4 or Section 10.4, Strata shall recover such amounts
[***]. The Parties acknowledge and agree that the maximum amount of any such [***]
in accordance with Section 7.3, Section 7.4 and Section 10.4 from any royalty payments
due Micrologix hereunder in a given quarter shall not exceed [***] of the royalty
payment owed in such quarter (the [***]). Any amounts in excess of [***] for any
quarter(s) shall be [***] against subsequent quarterly royalty payments owed to
Micrologix, subject to the [***] limitation for any such subsequent quarter, [***].
	 
	 	(d)	 	After Royalty Term. After the expiration of the Royalty Term in any relevant
country, Strata shall have no further obligation to pay royalties to Micrologix in such
country.
	 
	 	(e)	 	Payment of Royalties and Reports. Within [***] of the end of each calendar
quarter following the First Commercial Sale, Strata shall provide Micrologix with a
written report, in a form to be agreed between the parties, acting reasonably,
accompanied by full payment of all royalties accrued and owing to Micrologix during
such quarter, of: (i) Net Sales during such quarter and cumulative Net Sales for the
current calendar year; (ii) deductions from Net Sales; (iii) withholding taxes, if any,
required by Applicable Laws to be deducted with
respect to such sales; (iv) the dates of the First Commercial Sale of the Product in
any country in the Territory during the reporting period; (v) the exchange rates, if
any used to determine the amount of United States dollars; and (vi) the calculation

 

			
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	 	 	 	of the royalties owed (collectively, the “Royalty Statement”). The Royalty
Statement shall be in reasonably specific detail, on a country-by-country basis, and
segmented according to sales by Strata, each Affiliate and each sublicensee.
	 
	 	(f)	 	Exchange Rate; Manner and Place of Payment. All payments hereunder shall be
payable in United States dollars. With respect to each month in each calendar quarter,
whenever conversion of payments from any foreign currency shall be required, such
conversion shall be made at the rate of exchange reported in The Wall Street Journal on
the last business day of such month within the applicable calendar quarter. All
payments owed under this Agreement shall be made by wire transfer to a bank account
designated in writing by the receiving Party.
	 
	 	(g)	 	Late Payments. In the event that any payments due hereunder are not made when
due, each such payment shall accrue interest from the date due until paid at the Prime
Rate of Interest. The payment of such interest shall not limit or otherwise be deemed
to be in satisfaction of a Party exercising any other rights it may have under this
Agreement arising from the other Party’s failure to make such payment when due.
	 
	 	(h)	 	Taxes. All taxes levied on account of the payments accruing to either Party
(the “Receiving Party”) under this Agreement shall be paid by the Receiving Party for
its own account, including taxes levied thereon as income to the Receiving Party. If
provision is made under Applicable Laws for withholding, such tax shall be deducted
from the payment made by the other Party paid to the proper taxing authority and a
receipt of payment of the tax secured and promptly delivered to the Receiving Party,
provided that it is understood that if this Agreement is assigned by Strata, Micrologix
should be no worse off than if this Agreement was made and remained with a United
States company and the payments to Micrologix were made from the United States to
Canada. Each Party agrees to assist the other Party in claiming exemption from such
deductions or withholdings under any double taxation or similar agreement or treaty
from time to time in force.
	 
	 	(i)	 	Prohibited Payments. Notwithstanding any other provision of this Agreement, if
either Party is prevented from paying any payments by virtue of the Applicable Laws of
the country from which the payment is to be made, then such payment may be paid by
depositing funds in the currency in which it accrued to the Receiving Party’s account
in a bank acceptable to the Receiving Party in the country whose currency is involved.
	 
	 	(j)	 	Non-Monetary Consideration. In the event Strata, its sublicensee(s) or its
Affiliate(s) receive any non-monetary consideration in connection with the sale of the
Product, the Net Sales of such Product shall be calculated based on the fair market
value of such other consideration. Strata shall disclose the terms of such
arrangement to Micrologix and the Parties shall endeavour in good faith to agree on
such fair market value as promptly as possible.

 

 

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	 	(k)	 	Manufacturing Development Costs. Strata shall recover Manufacturing
Development Costs owed by Micrologix pursuant to Section 5.3(f) [***].

ARTICLE 5

COMMERCIALIZATION OF THE PRODUCT

     Section 5.1 Marketing Efforts.

	 	(a)	 	Subject to Section 2.4(a) and Section 5.3(f), Strata shall: (i) have the
exclusive right, at its cost, to make, manufacture, market, advertise, promote, sell,
distribute, and commercialize the Product in the Field in the Territory; (ii) be solely
responsible using Commercially Reasonable Efforts, for the making, manufacture,
marketing, advertising promotion, sale, distribution and commercialization of the
Product in the Field in the Territory; and (iii) have the sole responsibility and
decision making authority using Commercially Reasonable Efforts with regard to any and
all aspects of the making, manufacturing, marketing, advertising, promotion, sale,
distribution and commercialization of the Product in the Field in the Territory,
including all Labelling, marketing plans, marketing strategy, pricing decisions, and
the nature and type of advertising and marketing materials, including all Promotional
Materials.
	 
	 	(b)	 	Subject to the terms of this Agreement, Strata agrees to: (i) use Commercially
Reasonable Efforts to market, advertise, promote, sell, distribute, and commercialize
the Product in the Field in the Territory; and (ii) commence commercial sales of the
Product in each country in the Territory within six (6) months after receiving a copy
of each of the relevant Marketing Authorization.
	 
	 	(c)	 	Strata shall promptly advise Micrologix of any issues of which Strata becomes
aware that materially and adversely affect Strata’s ability to market or sell the
Product in the Territory. In such event, senior executives of Strata and Micrologix
shall meet and in good faith discuss what actions should be taken in light of such
issues. If the Parties cannot resolve any such issue, either Party may invoke the
dispute resolution procedure in Article 14.
	 
	 	(d)	 	Strata shall provide Micrologix prompt notice of the following events during
the Term: (i) the First Commercial Sale of Product in each country in the Territory,
if and when such occurrence takes place; and (ii) when any milestone referred to in
Section 4.3, Section 4.4, Section 4.5, or Section 4.6 has occurred.

     Section 5.2 Marketing Update.

	 	(a)	 	Following receipt of an Approval Letter from the FDA for the Product or an
equivalent letter from a Competent Authority, Strata shall provide Micrologix on

 

			
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	 	 	 	an annual basis during the Term, through the JDMC or otherwise, with reports in reasonable
detail describing Strata’s material marketing efforts with respect to the Product in
the Territory during the preceding year and forecasts and plans for such efforts for
the following year.
	 
	 	(b)	 	Strata agrees to consider Micrologix’s input and comments that Micrologix may
provide related to any such report for any applicable period; provided, however, Strata
shall have the right to either accept or reject such input and/or comments in whole or
in part in Strata’s sole discretion for any reason whatsoever, and Strata shall have
the final and sole right and responsibility and decision-making authority for all
matters related to any such report(s).

     Section 5.3 Manufacturing.

	 	(a)	 	Unless Strata is prevented, restricted, interfered with or delayed in making
such sales by reason of: (i) Force Majeure; or (ii) otherwise due to any breach of this
Agreement by Micrologix; Strata shall use Commercially Reasonable Efforts to:

	 	(i)	 	identify, select, qualify, and enter into definitive
agreement(s) with Third Party(ies) to:

	 	(A)	 	manufacture commercial supplies of the Product
for use in the Field in the Territory; and
	 
	 	(B)	 	supply raw materials and components for such
commercial supply, including the Compound; and
	 
	 	(C)	 	conduct manufacturing and process development
activities, including manufacturing scale up and start up process
development, and analytical and quality assurance and control method
development, and activities related to the foregoing, for the Compound;
and
	 
	 	(D)	 	conduct manufacturing and process development
activities, including manufacturing scale up and start up process
development, and analytical and quality assurance and control method
development, and activities related to the foregoing, for the Product
(excluding the Compound) for use in the Field in the Territory; and

	 	(ii)	 	manufacture or have manufactured adequate supplies of the
Product for use in the Field in the Territory.

	 	(b)	 	Strata shall use its Commercially Reasonable Efforts to resolve any shelf-life,
regulatory and other manufacturing issues respecting the Product.
	 
	 	(c)	 	Strata agrees that: (i) Micrologix and its Representatives shall be entitled to
contract directly with any Third Party with whom Strata has entered into such

 

 

 - 29 -

	 	 	 	definitive agreement(s) under Section 5.3(a) and (ii) such definitive agreement(s)
shall not contain any contractual provision that would prohibit Micrologix and its
Representatives from contracting directly or otherwise having access to any such Third
Party(ies) as part of either manufacturing any product for use outside the Territory or
any product for use inside the Territory, but outside the Field. Strata further agrees
that, if there is any Strata Intellectual Property developed by Strata or such Third
Party(ies) in the course of the activities described in Section 5.3(a), Micrologix
shall have a non-exclusive, royalty free license to use such Strata Intellectual
Property as part of either manufacturing any product for use outside the Territory or
any product for use inside the Territory, but outside the Field. Strata will use
Commercially Reasonable Efforts not to limit or restrict Strata’s ability to grant
Micrologix such license as provided for herein without violating the terms of any
agreement or other arrangement with any such Third Party. The Parties acknowledge that
if Strata is required to pay material license fees or royalties to any such Third
Party(ies) in order to grant Micrologix such license to use the Strata Intellectual
Property, then Strata shall in a timely fashion offer to Micrologix in writing a
license or sublicense to such Strata Intellectual Property. Within a reasonable period
of time (but not to exceed [***] after receipt of Strata’s offer), Micrologix
shall either accept the license or sublicense of same and pay to Strata the amount of
such material licensing fees or royalties, or advise Strata that Micrologix does not
wish to obtain such rights.
	 
	 	(d)	 	In the event that:

	 	(i)	 	Strata, using Commercially Reasonable Efforts, fails to obtain
the ability to grant a license or sublicense as provided for in Section 5.3(c)
without violating the terms of any such agreement or other arrangement, then
Strata shall have no obligation to grant such license to Micrologix under
Section 5.3(c); or
	 
	 	(ii)	 	Micrologix advises Strata that Micrologix does not wish to
obtain the rights referred to in Section 5.3(c), or if Micrologix fails to
notify Strata within a reasonable period of time (not to exceed [***] as noted
above) that it accepts such license or sublicense, then Strata shall have no
obligation to grant such license or sublicense to Micrologix under Section
5.3(c); or
	 
	 	(iii)	 	Micrologix advises Strata that Micrologix does wish to obtain
the rights referred to in Section 5.3(c) within a reasonable period of time
(not to exceed [***] as noted above) and pays such licensing fees or royalties
then Strata shall be deemed to have granted such license or sublicense to
Micrologix under Section 5.3(c) without further formality.

 

			
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	 	(e)	 	If Strata manufactures the Product itself, rather than through Third Part(ies),
Strata will provide reasonable technical assistance, at Micrologix’s cost and expense
to provide Micrologix and its Representatives the technology and Know How necessary to
permit Micrologix or its Representatives to manufacture or have manufactured any
product for use outside the Territory or any product for use inside the Territory, but
outside the Field.
	 
	 	(f)	 	Strata and Micrologix shall share in the manufacturing development costs for
the Compound. Strata shall recover such costs from Micrologix as set forth in Section
4.7(k) for [***] of Strata’s documented out-of-pocket costs of conducting the
activities set out in Section 5.3(a)(i)(C) up to a maximum of [***] (the “Manufacturing
Development Costs”).
	 
	 	(g)	 	Transfer of Micrologix Compound and Product Inventory.

	 	(i)	 	Subject to Section 5.3(g)(vi), at the request of Strata, such
request to be made within six (6) months after the Effective Date, Micrologix
shall make available to Strata at Micrologix’s documented out-of-pocket cost,
all or any part of Micrologix’s inventory of “MBI 226 – GMP Inventory” as set
out in Exhibit “C” conforming to the specifications mutually agreed upon by the
Parties to the extent such inventory has not been used or dedicated for use by
Micrologix for other purposes.
	 
	 	(ii)	 	Subject to Section 5.3(g)(vi), at the request of Strata, such
request to be made within six (6) months after the Effective Date, Micrologix
shall make available to Strata at [***] of
Micrologix’s documented out-of-pocket cost, all or any part of Micrologix’s
inventory of “MBI 266 Reference Standard” as set out in Exhibit “C” to the
extent such inventory has not been used or dedicated for use by Micrologix for
other purposes.
	 
	 	(iii)	 	At the request(s) of Strata, such request(s) to be made within
twelve (12) months after the Effective Date, Micrologix shall make available to
Strata at [***] of Micrologix’s documented out-of-pocket cost, all or any part
of Micrologix’s inventory of “MBI 226 non-GMP Inventory”, all for use as
contemplated hereunder, as set out in Exhibit “C”.
	 
	 	(iv)	 	As soon as practical, and in any event before the expiry of
three (3) months from after the Effective Date, Micrologix shall transfer to
Strata at [***], all of Micrologix’s inventory of “MBI 266 1.0% Gel Inventory”,
on an “as is” basis, all for use as contemplated hereunder, as set out in
Exhibit “C”.

 

			
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	 	(v)	 	Pursuant to Micrologix making Compound available to Strata in
Section 5.3(g)(i), Micrologix shall cause its Representative to release or
re-release such Compound to Strata with all release documentation including all
certificates of analyses confirming the identity, strength, quality and purity
of the lots of Compound, certificates of compliance confirming that the same
lots of Compound were manufactured, tested, stored and supplied in compliance
with cGMPs and all Applicable Laws, each such certificate signed by an
authorized signatory of Micrologix’s Representative, any deviation or
discrepancy reports pertaining to Compound relating to deviations that may
require reporting to the FDA, and all such other documentation and information
as is reasonably required by Strata.
	 
	 	(vi)	 	With respect to the inventories that are made available by
Micrologix pursuant to Section 5.3(g)(i) and Section 5.3(g)(ii), until the
expiry of three (3) months from the Effective Date, Micrologix will not use or
dedicate for use any of such inventory. Thereafter, until the expiry of six (6)
months from the Effective Date, Micrologix will not use or dedicate for use any
of such inventory without first giving Strata ten (10) days prior written
notice of same. If Strata gives notice in writing within such period of its
intention to purchase such inventory, Micrologix shall sell such inventory to
Strata and same shall not be used or dedicated for use by Micrologix. If Strata
gives notice in writing within such period that it does not intend to purchase
such inventory, or if Strata fails to give notice within such period,
Micrologix may use or dedicate such inventory, and same shall not be sold to
Strata.

	 	(h)	 	Co-negotiation for Commercial Supply of the Compound. In the event that both
Parties require commercial supplies of the Compound and it is in the best interests of
each Party to obtain a single source of supply for both Parties, the Parties
acknowledge that they intend to approach jointly and co-negotiate with Third Party
suppliers for the manufacture of commercial supplies of the Compound. Any such
co-negotiation shall be under the oversight of the JDMC. The Parties acknowledge and
agree that any benefits from any economies of scale recognized from such co-negotiation
for commercial supplies of the Compound shall be shared by the Parties. Nothing in this
Section will oblige either Party to enter into any agreement with any Third Party, or
restrict either Party’s ability to enter into any agreement with a Third Party without
the other Party.

     Section 5.4 Patent Marking.

Each Party shall use Commercially Reasonable Efforts to ensure that where permissible under
Applicable Law(s) and provided there is adequate space available on any such packaging, such Party
shall identify by number any applicable Micrologix Patent Rights and applicable patent rights
within the Strata Intellectual Property with any reasonable patent marking notification(s).

 

 

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ARTICLE 6

REGULATORY COMPLIANCE

     Section 6.1 Ownership and Maintenance of Governmental Approvals.

	 	(a)	 	Strata will own all Marketing Authorizations for each country in the Territory
for use in the Field. Without limiting the generality of the foregoing, Strata shall
prepare and submit in its own name and at its expense the NDA with the FDA in the U.S.
and any other equivalent application with the Competent Authorities in other countries
in the Territory. Without acting as a limitation to any other provision under this
Agreement, Strata shall maintain a current and valid DMF on the Compound and the
Product, whether as an independent document or as part of the NDA, which it shall keep
up to date at all times during the Term and shall cause any Subcontractor to similarly
maintain the same or grant the Subcontractor reference rights to Strata’s DMF for the
Product.
	 
	 	(b)	 	Other than those required to be maintained by Micrologix under Section 6.7(b),
Strata shall secure and maintain in good standing, at its sole cost and expense, any
and all Governmental Approvals (including, Marketing Authorizations, licenses, permits
and consents, facility licenses and permits required by Applicable Laws or by the
applicable Competent Authorities) necessary and/or required for Strata to perform its
obligations under this Agreement and use Commercially Reasonable Efforts at its cost
and expense to secure and maintain any variations and renewals thereof.
	 
	 	(c)	 	Excluding Marketing Authorizations and subject to Section 6.7(b), Micrologix
shall secure and maintain, at its sole cost and expense, any and all Governmental
Approvals (including, licenses, permits and consents, facility licenses and permits
required by Applicable Laws or by the applicable Competent Authorities) necessary
and/or required for Micrologix to perform its obligations under this Agreement and any
Development Subcontract and use Commercially Reasonable Efforts, at its cost and
expense to secure and maintain any variations or renewals thereof.

     Section 6.2 Rights of Reference.

	 	(a)	 	For the Products in the Field in the Territory, Micrologix shall grant and
hereby grants to Strata and its Representatives (subject to the terms of Section 3.5),
a free-of-charge right to reference and use and have full access to all Governmental
Approvals and all other regulatory documents owned or Controlled by Micrologix to the
extent relating to the Compound, the Product, and MBI 594AN, including
any IND, any NDA and any DMF (whether as an independent document or as part of any
NDA, and all chemistry, manufacturing and controls information), and any
supplements, amendments or updates to the foregoing.
	 
	 	(b)	 	For use outside the Territory, or for any Product for use inside the Territory
but outside the Field, Strata shall grant and hereby grants to Micrologix and its

 

 

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	 	 	 	Representatives a free-of-charge right to reference and use and have full access to all
Governmental Approvals and all regulatory documents owned or Controlled by Strata to
the extent relating to the Compound or the Product, including any NDA and DMF (whether
as an independent document or as part of any NDA, and all chemistry, manufacturing and
controls information), and any supplements, amendments or updates to the foregoing.
	 
	 	(c)	 	For the Products in the Field in the Territory, Micrologix shall make
Commercially Reasonable Efforts to grant or have granted to Strata (subject to the
terms of Section 3.5), a free-of-charge right of reference and use and have full access
to all Governmental Approvals and all other regulatory documents owned or Controlled by
Fujisawa Healthcare, Inc. or by any Third Party licensee of Micrologix to the extent
related to the Compound, the Product, and MBI 594AN, including any IND, any NDA and any
DMF (whether as an independent document or as part of any NDA, and all chemistry,
manufacturing and controls information), and any supplements, amendments or updates to
the foregoing.
	 
	 	(d)	 	For use outside the Territory, or for any Product for use inside the Territory
but outside the Field, Strata shall make Commercially Reasonable Efforts to grant or
have granted to Micrologix and its Representatives a free-of-charge right of reference
and use and have full access to all Governmental Approvals and all other regulatory
documents owned or Controlled by any Third Party licensee of Strata to the extent
related to the Compound or the Product, including any IND, any NDA and any DMF (whether
as an independent document or as part of any NDA, and all chemistry, manufacturing and
controls information), and any supplements, amendments or updates to the foregoing.
Such rights of reference, use and access shall survive termination of this Agreement.
	 
	 	(e)	 	For avoidance of doubt, no transfer by a Party of Control in respect of any
Governmental Approvals or other regulatory documents referred to in this Section shall
limit the rights of the other Party to the most current version of same up to the time
of such transfer.

     Section 6.3 Adverse Drug Event Reporting and Post Marketing Surveillance.

	 	(a)	 	Each Party, on behalf of itself, its Affiliates and any permitted sublicensees,
shall advise the other Party, by telephone or facsimile, promptly but in no event later
than seventy-two (72) hours or such shorter time period as may be required by a
Competent Authority after a Party, its Affiliates and/or sublicensees becomes aware of
any serious adverse drug event (as defined in 21 CFR Section 312.32(a) or its
equivalent under Applicable Law(s) as the same may be amended,
supplemented or replaced from time to time) (a “SADE”) involving the Product or the
Compound. Such advising Party shall provide the other Party with a written report
delivered by confirmed facsimile of any SADE, stating the full facts known to such
Party, including customer name, address, telephone number, batch, lot and serial
numbers, and other information as required by Applicable Laws. After receipt by the
Parties of an Approval Letter in any country, Strata

 

 

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	 	 	 	shall have full responsibility
in such country for: (i) monitoring such SADEs; (ii) data collection activities that
occur between Strata and the patient or medical professional, as appropriate,
including any follow-up inquiries which Strata deems necessary or appropriate; and
(iii) meeting the requirements of the Competent Authorities, including the
submission of SADE individual reports and periodic reports as necessary. As the
holder of the Marketing Authorizations, any reporting (and follow-up thereto) to the
Competent Authorities relating to the Compound and the Product in the Field in the
Territory shall remain the responsibility of Strata.
	 
	 	(b)	 	In the event either Party requires information regarding SADEs with respect to
reports required to be filed by it in order to comply with Applicable Laws, including
obligations to report SADEs to the Competent Authorities, each Party agrees to provide
such information to the other in sufficient time to enable each Party to report such
SADEs to the Competent Authorities in accordance with Applicable Laws.
	 
	 	(c)	 	If the report of an SADE causes a Competent Authority to request a Labelling
revision and/or any other corrective action, or if Strata believes it is necessary to
have a Labelling revision or conduct a post marketing surveillance program as a result
of an SADE, then Strata shall determine all of the material terms and conditions of
such Labelling revision, corrective action or post marketing surveillance program in
consultation with the applicable Competent Authority. Upon Strata’s request, Micrologix
will cooperate with Strata with respect to any of the foregoing. The costs of such
Labelling revision, corrective action or post marketing surveillance program shall be
borne one hundred percent (100%) by Strata. Notwithstanding the foregoing, however,
the Parties agree that if any such Labelling revision or corrective action or post
marketing surveillance program is due to the negligence or willful misconduct in the
conduct by Micrologix and/or its Representatives of the pre-clinical and clinical
research and development activities in connection with the Product prior to and after
the Effective Date, then, in such event, the costs of any such Labelling revision,
corrective action, or post marketing surveillance program, as the case may be, shall be
borne one hundred percent (100%) by Micrologix. Subject to Section 5.3 and Section 6.2,
the Parties agree that Strata shall own the results and underlying data from any Phase
IV Study.
	 
	 	(d)	 	Within thirty (30) days of the filing of each report with the FDA on drug
related adverse events associated with the Compound as may be required under Applicable
Laws, each Party will provide to the other Party particulars of such adverse events.

 

 

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     Section 6.4 Post Marketing Commitments.If the FDA or other Competent Authority requires a Post Marketing
Commitment for the Product, then Strata shall use Commercially Reasonable Efforts to implement such
Post Marketing Commitment at Strata’s expense.

     Section 6.5 Assistance.

Each Party shall provide reasonable assistance to the other at the other’s request, in connection
with their obligations pursuant to this Article 6, the requesting Party shall reimburse all of the
other Party’s reasonable documented out-of-pocket costs of such assistance, subject to the
allocation of costs determined pursuant to this Article 6.

     Section 6.6 Compliance.

Subject to the other terms and conditions of this Agreement, the Parties agree to the following
general compliance provisions:

	 	(a)	 	Strata shall be responsible for compliance in all material respects with
Applicable Laws and the Governmental Approvals relating to its activities under the
Development, the making, manufacturing, marketing, advertising, promoting, selling,
distributing, and commercializing the Product, including the maintenance of the
Marketing Authorizations and other requirements of a Competent Authority applicable
thereto, obtaining and holding all necessary permits and any other requirements
relating to its activities under the Development, the making, manufacture, import,
export, storage, sale and distribution of the Product. Any and all Labelling, packaging
and artwork and any and all proposed change to any such Labelling, packaging and/or
artwork shall be determined by Strata, which shall have the sole right and
decision-making authority with respect thereto. Strata shall have the sole right and
decision making authority with respect to any and all advertising, sales and marketing
materials (collectively the “Promotional Material(s)”) and shall be responsible for all
interactions with the Competent Authorities in connection with such Promotional
Materials. Strata shall submit any required changes to the Labelling, packaging and/or
artwork to the Competent Authorities in a timely fashion at Strata’s expense.
	 
	 	(b)	 	Micrologix shall be responsible for compliance in all material respects with
Applicable Laws and Governmental Approvals relating to Development to be conducted by
Micrologix pursuant to any Development Subcontract. Strata shall be responsible for
compliance in all material respects with Applicable Laws and Governmental Approvals
relating to the Development to be conducted by Strata. Each Party shall cause their
respective Subcontractors to comply with this Section 6.6(b).
	 
	 	(c)	 	As provided in this Agreement with regard to each Party’s obligations
hereunder, Strata and Micrologix (as the case may be) shall each comply in all material
respects with all Applicable Laws within the Territory, including the provision of
information by Strata and Micrologix to each other necessary for Micrologix and
Strata, as the case may be, to comply with any applicable reporting requirements

 

 

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	 	 	 	and Governmental Approvals required; and maintaining any and all licenses, permits and
consents necessary and/or required for complying with such Party’s obligations under
this Agreement. During the Term, each Party agrees to execute and deliver to the
other Party any certifications that may be required by Applicable Laws, including
any debarment certification.
	 
	 	(d)	 	Each Party shall promptly notify the other Party of any written or oral notices
received from, or inspections by, the FDA, or other Competent Authority, which
materially impact the Product, the Development and/or the Marketing Authorizations, and
shall promptly inform the other Party of any responses to such written notices or
inspections and the resolution of any issue raised by the FDA or other Competent
Authority.

     Section 6.7 General Regulatory Matters.

	 	(a)	 	Subject to Micrologix’s obligations under Section 6.7(b) and Applicable Laws
during the period in which it is the IND holder, Strata shall have all regulatory
responsibility with respect to and relative to the Product and has the sole right and
decision making authority with respect to all such regulatory matters, including
without limitation reaching agreement on all regulatory matters with the FDA and/or any
other Competent Authority.
	 
	 	(b)	 	The Parties acknowledge that Micrologix, as of the Effective Date, owns and
holds certain Governmental Approvals in connection with the research and development of
the Product, including without limitation the IND listed in Exhibit “D”. Micrologix
shall be responsible for the filing and maintenance in good standing of all such
Governmental Approvals, with costs and expenses associated therewith to be included in
Reimbursable Costs. During the time that Micrologix is the holder of the IND,
Micrologix shall comply with all Applicable Laws applicable to the holder of the IND,
including, without limitation, process, track and report all IND Safety Reports (as
defined by the FDA). Upon Strata’s request, such request to be made as soon as
reasonably possible, Micrologix shall transfer to Strata, without any additional
consideration, those Governmental Approvals (including without limitation the IND)
requested by Strata.
	 
	 	(c)	 	During the time that Micrologix is the holder of such Governmental Approvals,
Strata shall be entitled to attend any and all meetings and participate in telephone
calls with the Competent Authorities, including without limitation any meeting
preparation, meeting co-ordination, preparation of minutes and pre-NDA meeting with the
FDA. During such time as Micrologix is the holder of such Governmental Approvals,
subject to Micrologix’s obligations under Section 6.7(b) and Applicable Laws during the
period of time in which it is the IND holder:

	 	(i)	 	Strata has the sole right and decision making authority for all
regulatory matters with respect to or relative to the Product.

 

 

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	 	(ii)	 	While it is still the holder of the IND in the United States,
Micrologix shall give Strata no less than three (3) business days notice
following the scheduling of any such meeting and/or telephone call with the FDA
and/or other Competent Authority (or such shorter period of time, if the
meeting and/or telephone call is scheduled within such three (3) business days
and in such event such notice shall be in sufficient time so that Strata shall
be able to attend and/or participate in such meeting and/or telephone call).
	 
	 	(iii)	 	Micrologix shall provide Strata copies of any materials
relating to any regulatory matter prior to their presentation to the FDA or
other Competent Authority during the Development, so that Strata shall have an
opportunity to review and comment thereon.
	 
	 	(iv)	 	The JDMC shall approve all such materials prior to
presentation.

ARTICLE 7

PATENTS

     Section 7.1 Maintenance of Patents or Marks.

	 	(a)	 	Micrologix shall, at Micrologix’s expense and on a timely basis in each country
in the Territory: (i) use Commercially Reasonable Efforts to obtain Micrologix Patent
Rights in all countries in the Territory; (ii) pay all fees and file all documentation
and other materials required by any Competent Authority in each applicable country to
maintain and/or renew Micrologix Patent Rights; and (iii) shall use Commercially
Reasonable Efforts to otherwise maintain the Micrologix Patent Rights in all countries
in which Strata has the right and elects to exercise any or all of its rights hereunder
related to the Product; provided however, that upon written request by Micrologix,
Strata shall, at no cost or expense to Strata, provide such reasonable assistance as
may be necessary to enable Micrologix to comply with the administrative formalities
necessary to register or maintain any Micrologix Patent Rights.
	 
	 	(b)	 	In the event Micrologix intends to abandon the prosecution or maintenance of
all or any part of Micrologix Patent Rights claiming the Product or the Compound (which
it shall only be permitted to do in the event it has a bona fide belief that obtaining
or maintaining rights are not possible using Commercially Reasonable Efforts),
Micrologix shall notify Strata no less than [***] (or such shorter period of time
if there is a shorter period of time required by a Competent Authority) prior to the
date it intends to abandon the prosecution or maintenance, as applicable, of any such
Micrologix Patent Rights.

 

			
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	 	(c)	 	In the event Micrologix notifies Strata within the period provided in Section
7.1(b), Strata has the right but not the obligation to assume such prosecution and/or
maintenance and shall notify Micrologix if, and when, Strata wishes to assume the
responsibility for prosecuting and maintaining such Micrologix Patent Rights, as
applicable, whereupon Micrologix shall permit Strata, at Strata’s expense, to take over
such prosecution and/or maintenance, as applicable, and Micrologix shall cooperate in
any such transfer of responsibilities and rights as necessary or prudent for the
benefit of Strata to prosecute and/or maintain the foregoing rights. Thereafter,
Strata shall have the right but not the obligation to prosecute or maintain any such
Micrologix Patent Right, as the case may be, at its expense; provided that Strata keep
Micrologix reasonably informed of the progress of any such prosecution. Micrologix
shall have the right to review all such pending applications and other proceedings and
make recommendations to Strata concerning them and their conduct, but the final
decision with respect thereto shall rest with Strata, provided that Strata acts
reasonably.
	 
	 	(d)	 	Each Party shall make available to the other Party or its authorized attorneys,
agents or representatives, its employees, agents or consultants necessary or
appropriate to enable the other Party to file, prosecute and maintain its patent
applications covering the Product for a reasonable period of time sufficient for the
other Party to obtain the assistance it needs from such personnel. Micrologix shall
provide Strata with copies of all material correspondence, documentation and/or
submissions provided to, and received from, U.S. PTO and comparable Competent
Authorities that may materially affect Strata’s rights under this Agreement.

     Section 7.2 Cooperation and Procedures Relative to Actions Brought Under Section 7.3 and
Section 7.4.

	 	(a)	 	The Parties shall reasonably cooperate with each other with respect to any
litigation, action, suit, claim or other proceeding under Section 7.3 or Section 7.4
(an “Article 7 Proceeding”). Without limiting the generality of the foregoing, the
“Non-Litigating Party” (as hereinafter defined) agrees to cooperate reasonably in any
Article 7 Proceeding, as may be requested by or necessary to the “Litigating Party” (as
hereinafter defined) including, joining any Article 7 Proceeding as a party, executing
all necessary documents, supplying essential documentary evidence and making available
essential witnesses then in its employment or engaged as a consultant.
	 
	 	(b)	 	The Party prosecuting any Article 7 Proceeding under Section 7.3 or controlling
the defence of any Article 7 Proceeding under Section 7.4 shall be referred to in this
context, as the “Litigating Party”). The other Party in this context shall be referred
to as the “Non-Litigating Party”. Except as provided in Section 7.2(e) or Section
7.4(b), the Litigating Party shall have the right to control any Article 7 Proceeding.
In addition, the Litigating Party shall have the right to control the settlement or
compromise of any Article 7 Proceeding and may so settle or compromise without the
Non-Litigating Party’s prior written consent, provided

 

 

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	 	 	 	that the terms of any such settlement or compromise: (i) does not materially impair
the Non-Litigating Party’s rights hereunder (including each Party’s rights in the
Micrologix Technology or the validity or enforceability thereof); (ii) would not
require the Non-Litigating Party to be subject to an injunction or to make a
monetary payment or would restrict the claims in or admit any invalidity or
unenforceability of the Micrologix Patent Rights; (iii) provide for the
unconditional release of the Non-Litigating Party; and (iv) expressly state that
neither the fact of settlement, nor the settlement agreement shall constitute or be
construed or interpreted, as, an admission by the Non-Litigating Party of any issue,
fact, allegation or any other aspect of the claim being settled. In all other cases,
the Litigating Party may not settle any Article 7 Proceeding without the prior
written consent of the Non-Litigating Party, which consent shall not be unreasonably
withheld or delayed. The Non-Litigating Party may not pay or voluntarily permit the
determination of any liability which is subject to any such Article 7 Proceeding
while the Litigating Party is negotiating the settlement thereof or contesting the
matter, except with the prior written consent of the Non-Litigating Party, which
consent shall not be unreasonably withheld or delayed.
	 
	 	(c)	 	Upon learning of any actual, contemplated or threatened Article 7 Proceeding
involving any of the Micrologix Patent Rights that claims the Product or the Compound,
each Party shall promptly notify the other Party of such and shall, upon request,
provide to the other Party an assessment of the status of any such proceeding.
	 
	 	(d)	 	To the extent any cooperation provided by Micrologix hereunder requires
Micrologix to disclose information that would be deemed Micrologix Confidential
Information (other than any information which shall become the property and right of
Strata under Section 3.4), Strata shall treat such information in accordance with
Section 8.1.
	 
	 	(e)	 	The Parties acknowledge and agree that circumstances may arise in which a Party
hereto may desire to protect its interests by joining or intervening in litigation or
other proceeding involving the Micrologix Patent Rights, which proceeding has neither
been brought by that Party nor levied against that Party. Accordingly, neither Party
shall object or oppose any effort by the other Party, at its own expense, to join or
intervene in such litigation or other proceedings involving the Micrologix patent
Rights. In the event the Non-Litigating Party seeks to join or intervene in any
litigation or other proceeding where such joining or intervention is neither requested
by nor necessary to the Litigating Party, then (i) the Litigating Party’s right to
control the litigation under Section 7.3 or Section 7.4 (as the case may be) shall not
be extended to the conduct of the Non-Litigating Party after intervention or joining;
and (ii) notwithstanding anything to the contrary contained in Section 7.3 and Section
7.4, the Non-Litigating Party shall bear its own costs associated with its involvement
in any such litigation or other proceeding after intervening or joining.

 

 

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     Section 7.3 Prosecution of Infringement.

	 	(a)	 	During the Term, each Party shall give prompt notice to the other of any Third
Party act which may infringe one or more claims of the Micrologix Patent Rights that
claims the Product or the Compound.

	 	(b)	 	Infringement within the Field.

	 	(i)	 	Strata may (but shall have no obligation to do so) prosecute
any Article 7 Proceeding under this Section 7.3 against such Third Party
infringement of any claims of Micrologix Patent Rights where such infringement
primarily relates to such Third Party activities in the Field in the Territory
in accordance with the terms of Section 7.2 and this Section 7.3 and in such
event Strata shall become the Litigating Party.
	 
	 	(ii)	 	In the event Strata fails to institute any Article 7 Proceeding
and terminate any Third Party infringement of the claims of Micrologix Patent
Rights that the claim the Product or the Compound within thirty (30) days of
the later of: (i) receiving notification from Micrologix of any such
infringement or (ii) sending notice to Micrologix of such action, Micrologix
may take (but shall have no obligation to do so) such action as it deems
appropriate, including the filing of a lawsuit against such Third Party. In
such event Micrologix shall promptly notify Strata of any such Article 7
Proceeding and shall become the Litigating Party.

     (c) Infringement outside the Field.

	 	(i)	 	Micrologix may (but shall have no obligation to do so)
prosecute any Article 7 Proceeding under this Section 7.3 against such Third
Party infringement of any claims of Micrologix Patent Rights where such
infringement does not primarily relate to such Third Party activities in the
Field in the Territory in accordance with the terms of Section 7.2 and this
Section 7.3 and in such event Micrologix shall become the Litigating Party.
	 
	 	(ii)	 	In the event Micrologix fails to institute any Article 7
Proceeding and terminate any Third Party infringement of the claims of
Micrologix Patent Rights that claim the Product or the Compound within thirty
(30) days of the later of: (i) receiving notification from Strata of any such
infringement or (ii) sending notice to Strata of such action, Strata may take
(but shall have no obligation to do so) such action as it deems appropriate,
including the filing of a lawsuit against such Third Party. In such event
Strata shall promptly notify Micrologix of any such Article 7 Proceeding and
shall become the Litigating Party.

 

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	 	(d)	 	Micrologix and Strata shall share all Costs in connection with any Article 7
Proceeding under this Section 7.3, on the basis of [***] % paid by the
Litigating Party and [***]% paid by the Non-Litigating Party, provided that Micrologix
and Strata shall first recover their respective actual documented out-of-pocket Costs,
or equitable proportions thereof, associated with any Article 7 Proceeding under
this Section 7.3, or settlement thereof from any recovery made by the Litigating
Party. Any excess amount recovered by the Litigating Party shall be shared between
Strata and Micrologix on the basis of [***]% to the Litigating Party and [***]% to
the Non-Litigating Party. In the event there is no recovery from a Third Party or if
any such recovery does not cover all of the Costs of the Litigating and/or
Non-Litigating Party, as the case may be, then the Parties agree to share any such
unrecovered Costs on the basis of [***]% to the Litigating Party and [***]% to the
Non-Litigating Party. If Strata is the Litigating Party, Strata shall recover such
amounts by [***].

     Section 7.4 Infringement Claimed by Third Parties.

	 	(a)	 	In the event a Third Party commences, or threatens to commence, any Article 7
Proceeding against a Party to this Agreement alleging infringement of a Third Party’s
intellectual property rights by the making, manufacture, use, sale, offer for sale,
export and/or import by Strata, its Affiliates or sublicensees of the Product, the
Party against whom such proceeding is threatened or commenced shall give prompt notice
to the other Party (“Infringement Notice”).
	 
	 	(b)	 	Strata shall control the defense and settlement of any such Article 7
Proceeding under this Section 7.4 in accordance with the terms of Section 7.2 and this
Section 7.4 and shall become the Litigating Party; provided that, in the event that the
validity and enforceability of the claims of Micrologix Patent Rights are in issue in
any such Article 7 Proceeding under this Section 7.4, Micrologix may (but shall have no
obligation to do so) control the defense and settlement of any such Article 7
Proceeding under this Section 7.4 in accordance with the terms of Section 7.2 and this
Section 7.4 solely to the extent that such defense and settlement relates to validity
and enforceability of the claims of the Micrologix Patent Rights.
	 
	 	(c)	 	Micrologix shall be liable for its own Costs in connection with any Article 7
Proceeding under this Section 7.4.

     Section 7.5 Co-operation with Other Licensees.

Strata acknowledges that Micrologix may grant to licensees rights in the Micrologix Technology in
the Territory in respect of fields outside the Field, and may grant to other licensees rights

 

			
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outside the Territory. If Micrologix grants such rights to other licensees, in the event of any
litigation in respect of:

	 	(a)	 	fields outside of the Field that may reasonably affect Strata’s use of the
Micrologix Technology in the Field or the use or sale of Products by Strata; or
	 
	 	(b)	 	the Field that may reasonably affect Micrologix or one or more of Micrologix’s
licensee’s use of the Micrologix Technology outside the Field or the making,
manufacture, use or sale of products outside the Field by Micrologix or one or more
other such licensee(s);

then Micrologix, Strata and such other licensee(s) will use good faith efforts to determine jointly
the course of action, if any, necessary or appropriate to prosecute or defend the litigation.
Micrologix will use Commercially Reasonable Efforts to include in its other license agreements,
provisions that allow the participation of Strata as contemplated herein. If Micrologix is unable
to include in any such other license agreement such provisions, then with respect to the licensee
under such other license agreement, Strata shall not be bound by the terms and conditions of this
Section 7.5.

ARTICLE 8

CONFIDENTIALITY

     Section 8.1 Confidentiality.

	 	(a)	 	During the Term and for a period of five (5) years thereafter, each Party shall
maintain all Confidential Information of the other Party as confidential and shall not
disclose any such Confidential Information to any Third Party or use any such
Confidential Information for any purpose, except (i) as expressly authorized by this
Agreement or with the prior written consent of the other Party, which consent shall not
be unreasonably withheld or delayed, (ii) as required by Applicable Laws or court order
of a court of competent jurisdiction (provided that the disclosing Party shall first
notify the other Party to afford the other Party, for a period of ten (10) business
days or such lesser period as may be provided by Applicable Law, an opportunity to seek
whatever protective relief it deems appropriate, and the disclosing Party shall use
Commercially Reasonable Efforts to obtain confidential treatment of any such
information required to be disclosed), (iii) to its Representatives to accomplish the
purposes of this Agreement, so long as such Representatives are under an obligation of
confidentiality no less stringent than as set forth herein, (iv) to bona fide potential
investors and their respective advisors during financing or an acquisition, merger or
other like reorganization, so long as such investors and advisors are under an
obligation of confidentiality no less stringent than as set forth herein, except as
otherwise provided herein, and (v) as is required to exercise its rights and perform
its obligations under this Agreement, so long as the recipients of such information are
under an obligation of confidentiality no less stringent than as set forth herein.
Each Party may use such Confidential Information only to the extent required to
accomplish the purposes of this Agreement.

 

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	 	(b)	 	Notwithstanding any provision to the contrary herein or in any confidentiality
or nondisclosure agreement between the Parties, from time to time, either Party may
disclose to bona fide potential investors and their respective advisors during
financing or an acquisition, merger or other like reorganization the following
Confidential Information:

	 	(i)	 	[***];
	 
	 	(ii)	 	[***];
	 
	 	(iii)	 	[***];
	 
	 	(iv)	 	[***];
	 
	 	(v)	 	[***];
	 
	 	(vi)	 	[***];
	 
	 	(vii)	 	[***];
	 
	 	(viii)	 	this Agreement, in the form as redacted and filed with the SEC and available
for disclosure, as may be modified by SEC filings, press releases or other
public disclosures, or if not filed with the SEC, as executed with the
financial particulars in Article 4 redacted to the extent not publicly
disclosed; and
	 
	 	(ix)	 	such additional information and materials as may be agreed-to
by the Parties;

all without obtaining written agreement of confidence and non-use from the
recipient. The disclosing Party remains liable to the other Party for any use or
disclosure made of such information by such investors and advisors, as if such
investors and advisors were bound by the terms of this Article 8. No information
disclosed pursuant to this Section 8.1(b) that becomes generally known or available,
directly or indirectly as a result of a disclosure permitted by this Section, shall
be excluded from the definition of Confidential Information pursuant to the
exclusion set out in Section 1.14(a).

	 	(c)	 	Each Party shall use at least the same standard of care as it uses to protect
its own Confidential Information to ensure that it and its Affiliates and
Representatives do not disclose or make any unauthorized use of the other Party’s
Confidential Information. Each Party shall be responsible for any breach of this
Agreement by its Representatives. Each Party shall promptly notify the other Party
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discovery of any unauthorized use or disclosure of the other Party’s Confidential
Information.

	 	(d)	 	Micrologix acknowledges and agrees that the Micrologix Know-How licensed to
Strata has value to Strata in being maintained as confidential. Therefore, Micrologix
shall keep the Micrologix Know-How confidential as if it were Confidential Information
of Strata as set forth in this Article 8.

     Section 8.2 Publicity Review.

The Parties agree that the public announcement of the execution of this Agreement shall be in the
form of a press release to be mutually agreed upon by the Parties on or before the Effective Date
and thereafter each Party shall be entitled to make or publish any public statement consistent with
the contents thereof. Thereafter, except as allowed in the preceding sentence, the Parties will
jointly discuss and agree, based on the principles of this Section 8.2, on any statement to the
public regarding this Agreement or any aspect of this Agreement, and the results of clinical
studies conducted as part of the Development, subject in each case to disclosure otherwise required
by Applicable Laws. When a Party elects to make any such statement or disclosure required under
Applicable Law, it will give the other Party at least five (5) business days notice to review and
comment on such statement, unless the applicable Competent Authority requires disclosure such that
a Party is prohibited by Applicable Law to provide such advance review by the other Party (in which
case it shall be disclosed according to such requirement and notice will be provided as soon as
possible). The terms of this Agreement may also be disclosed to Competent Authorities, including
the United States Securities and Exchange Commission or any other exchange or securities commission
having authority over a Party, where required by Applicable Law, with redaction of financial
information not otherwise required to be disclosed under Applicable Laws in which event the
disclosing Party shall provide in advance of submission to the other Party for review and comment a
copy of such redactions made to this Agreement.

ARTICLE 9

REPRESENTATIONS, WARRANTIES AND COVENANTS

     Section 9.1 Corporate Power.

Each Party hereby represents, warrants and covenants that such Party is, and will remain through
the Term, duly organized and validly existing under the laws of the state of its incorporation and
has full corporate power and authority to enter into this Agreement and to carry out the provisions
hereof.

     Section 9.2 Due Authorization.

Each Party hereby represents and warrants that such Party is duly authorized to execute and deliver
this Agreement and covenants to perform its obligations hereunder.

 

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     Section 9.3 Binding Obligation/No Conflict.

Each Party hereby represents, warrants and covenants that: (i) this Agreement is a legal and valid
obligation binding upon it and is enforceable in accordance with its terms; and (ii) the execution,
delivery and performance of this Agreement by such Party does not, and will not during the Term,
conflict with any agreement, instrument or understanding, oral or written, to which it is a party
or by which it may be bound, nor to the best knowledge of each Party as of the Effective Date,
violate any Applicable Laws.

     Section 9.4 Ownership of Micrologix Technology.

Micrologix represents, warrants, and covenants, as the case may be, that:

	 	(a)	 	as of the Effective Date and during the Term, it is and shall remain the sole
owner of all right, title and interest in and to the Micrologix Technology, subject to
Micrologix’s ability to license and assign as permitted hereunder; and, to the best of
the knowledge of Micrologix as of the Effective Date, no Representative of Micrologix
or any Third Party has any rights to the Micrologix Technology;
	 
	 	(b)	 	as of the Effective Date, it has not granted and will not grant after the
Effective Date any license under the Micrologix Technology for any product in the
Territory for use in the Field to any Third Party, and is under no obligation to grant
any such license, except to Strata, and there are, and will be, no rights granted to
any Third Party and/or no agreements, either written or oral, regarding either the
Micrologix Technology which are inconsistent or in conflict with this Agreement;
	 
	 	(c)	 	as of the Effective Date, there are no outstanding liens, judgments,
injunctions, decrees, rulings, security interests, or other encumbrances on the
Micrologix Technology, and through the Term, there shall be no liens, judgments,
injunctions, decrees, rulings, security interests, or any other encumbrances (other
than security interests filed by Micrologix’s lender(s) and licensee(s) in the ordinary
course of business) on the Micrologix Technology which could materially affect Strata’s
interests in the Micrologix Technology;
	 
	 	(d)	 	as of the Effective Date and during the Term, it has taken and will take
Commercially Reasonable Efforts to ensure that all Micrologix Know-How has been and
will continue to be fully protected and maintained in accordance with appropriate
procedures for its protection;
	 
	 	(e)	 	(i) as of the Effective Date, Micrologix has made available to Strata all
material information in its possession or Control relating to the Product in the Field;
and (ii) as of the Effective Date, to the best of Micrologix’s knowledge, all art that
Micrologix believes to be material to the patentability of any claims within the
Micrologix Patent Rights claiming the Product or the Compound has been cited by
Micrologix to the U.S. PTO for U.S. patent rights or to the comparable Competent
Authority in such other jurisdictions in the Territory that require disclosure of
material information in possession or Control of the patentee; and

 

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	 	(f)	 	Exhibit “B” is a true, complete and current listing of the Micrologix Patents
as of the Effective Date.

     Section 9.5 Patent and Other Intellectual Property Rights Proceedings.

As of the Effective Date, Micrologix represents and warrants that:

	 	(a)	 	to the best of its knowledge, no patent within the Micrologix Patent Rights, or
patent application with regard to the Micrologix Patent Rights, as the case may be, is
the subject of any pending interference, opposition, cancellation or other protest
proceeding, or judicial proceeding;
	 
	 	(b)	 	to the best of its knowledge, the Micrologix Technology and any process,
procedure or method used to manufacture the Compound and the Product do not infringe,
interfere with, or misappropriate the intellectual property rights of any Third Party;
	 
	 	(c)	 	to the best of its knowledge, the practice of the Micrologix Patent Rights and
any process, procedure or method used to manufacture the Compound and the Product in
the Territory do not and will not infringe, interfere with, or misappropriate any
intellectual property rights of any Third Party;
	 
	 	(d)	 	there has been no lapse of any claims within the Micrologix Patents in the
Territory;
	 
	 	(e)	 	Micrologix has not received any: (i) notices or communications that the
development, making, manufacture, use, marketing, advertising, promoting, distributing,
offer for sale, selling, importation or exportation of the Compound or the Product or
use of the Micrologix Technology would infringe or misappropriate any intellectual
property rights of any Third Party; or (ii) allegation regarding the legality,
enforceability, or validity of the Micrologix Technology, other than those made by the
U.S. PTO or other comparable Competent Authorities in other countries in the
prosecution of the Micrologix Patent Rights and previously disclosed to Strata;
	 
	 	(f)	 	Micrologix is not aware of any Third Party having infringed or misappropriated
the Micrologix Technology and has not sent any notices or communications to any Third
Party that the activities of such Third Party infringe or misappropriate the Micrologix
Technology.

     Section 9.6 Micrologix’s Additional Warranties.

As of the Effective Date, Micrologix represents and warrants that:

	 	(a)	 	Exhibit “D” is a true, complete and current listing of the regulatory filings
relating to Product or Compound owned or Controlled by Micrologix as of the Effective
Date, including, all INDs; and

 

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	 	(b)	 	Micrologix has not deliberately withheld any material information or data known
to Micrologix relating to:

	 	(i)	 	the results of preclinical and clinical studies of the Compound
and the Product conducted by or on behalf of Micrologix;
	 
	 	(ii)	 	Micrologix’s ongoing clinical development activities in the
United States for the Product, including the status of all such studies; and
	 
	 	(iii)	 	the manufacturing, testing and release of the Compound and
Product, including CMC information therefor.

     Section 9.7 Strata’s Additional Warranties.

As of the Effective Date, Strata represents and warrants that upon completion of transactions
related to this Agreement, which transactions are conditional only upon the execution and delivery
of this Agreement, Strata shall be entitled to receive proceeds of a financing of not less than $5
million.

     Section 9.8 Pre-Clinical and Clinical Studies Prior to Effective Date.

Micrologix represents and warrants that all of the pre-clinical and clinical trials related to the
Product prior to the Effective Date have been conducted in accordance with Applicable Laws.

     Section 9.9 Debarment.

During the Term, neither of the Parties shall knowingly utilize any employee, representative,
agent, assistant or associate who has been debarred by the FDA pursuant to 21 U.S.C. Section 335a
(a) or (b) of the Act in connection with any of the activities to be carried out under this
Agreement. Micrologix further represents and warrants that, as of the Effective Date, to the best
of its knowledge, none of the entities, laboratories or clinical sites participating in the
clinical studies prior to the Effective Date had been debarred at the relevant time.

     Section 9.10 Limitation on Warranties.

	 	(a)	 	EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT:

	 	(i)	 	NOTHING HEREIN SHALL BE CONSTRUED AS A REPRESENTATION OR
WARRANTY BY MICROLOGIX TO STRATA THAT THE MICROLOGIX TECHNOLOGY IS NOT
INFRINGED BY ANY THIRD PARTY, OR THAT THE PRACTICE OF SUCH RIGHTS DOES NOT
INFRINGE ANY PUBLISHED INTELLECTUAL PROPERTY RIGHTS OF ANY THIRD PARTY.
	 
	 	(ii)	 	NEITHER PARTY MAKES ANY WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED, WITH
RESPECT TO THE PRODUCT.

 

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	 	(b)	 	NEITHER PARTY MAKES ANY OTHER WARRANTIES HEREUNDER, EXPRESS OR IMPLIED,
INCLUDING WARRANTIES CONCERNING THE SUCCESS OF THE DEVELOPMENT PROGRAM, THE SUCCESS OF
THE MARKETING AND COMMERCIALIZATION OF THE PRODUCT OR THE COMMERCIAL UTILITY OF THE
PRODUCT.

ARTICLE 10

INDEMNIFICATION AND INSURANCE

     Section 10.1 Strata Indemnified by Micrologix.

	 	(a)	 	Micrologix shall indemnify, defend and hold Strata, and its Representatives (in
respect of each Party, its “Indemnitees”), harmless from and against any Third Party
liabilities, obligations, damages, losses, claims, encumbrances, costs or expenses
(including attorneys’ fees) (any or all of the foregoing herein referred to as “Loss”)
insofar as a Loss or actions in respect thereof, occurred subsequent to the Effective
Date (except as provided in Section 10.1(a)(iii) below), and arises out of or is based
upon:

	 	(i)	 	any breach by Micrologix of its representations, warranties,
covenants, obligations or agreements under this Agreement; or
	 
	 	(ii)	 	the negligence or willful misconduct of Micrologix and/or any
of Micrologix’s Indemnitees, including violation of Applicable Laws in their
performance under this Agreement; or
	 
	 	(iii)	 	Micrologix’s (or any Subcontractor’s) conduct of the
pre-clinical and clinical research and development activities in connection
with the Product prior to and after the Effective Date; provided however,
Micrologix’s duty to indemnify under this Section 10.1(a)(iii) shall not
include product liability claims unless Micrologix’s liability for same arises
pursuant to Section 10.1(a)(i) or Section 10.1(a)(ii).

	 	(b)	 	Micrologix’s obligations to indemnify Strata hereunder shall not apply to the
extent any such Loss arises out of or is based on the:

	 	(i)	 	inactions or actions of Strata or its Indemnitees for which
Strata is obligated to indemnify Micrologix under Section 10.2; or
	 
	 	(ii)	 	negligence or willful misconduct of Strata and/or its Indemnitees.

     Section 10.2 Micrologix Indemnified by Strata.

	 	(a)	 	Strata shall indemnify, defend and hold harmless Micrologix and its Indemnitees
from and against any Loss insofar as such Loss or actions in respect thereof occurred
subsequent to the Effective Date, and arises out of or is based upon:

 

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	 	(i)	 	any breach by Strata of its representations, warranties,
covenants, obligations or agreements under this Agreement; or
	 
	 	(ii)	 	the negligence or willful misconduct of Strata and/or any of
Strata’s Indemnitees, including any violation of Applicable Law in their
performance under this Agreement; or
	 
	 	(iii)	 	Strata’s or its Indemnitees’ making, manufacture, marketing,
sale, distribution, storage or promotion of the Product, including any injury
or death to any person or damage to any property caused by any Product provided
by Strata or its Indemnitees, whether by reason of breach of warranty,
negligence, product defect or otherwise, and regardless of the form in which
any such claim is made.

	 	(b)	 	Strata’s obligations to indemnify Micrologix hereunder shall not apply to the
extent any such Loss arises out of or is based on the:

	 	(i)	 	inactions or actions of Micrologix or its Indemnitees for which
Micrologix is obligated to indemnify Strata under Section 10.1; or
	 
	 	(ii)	 	the negligence or willful misconduct of Micrologix and/or its
Indemnitees.

     Section 10.3 Prompt Notice Required.

No claim for indemnification hereunder shall be valid unless notice of the matter which may give
rise to such claim is given in writing by the Party seeking indemnification (the “Indemnified
Party”) to the persons against whom indemnification may be sought (the “Indemnitor”) as soon as
reasonably practicable after such Indemnified Party becomes aware of such claim. Such notice shall
state that the Indemnitor is required to indemnify the Indemnified Party and its Indemnitees for a
Loss and shall specify the amount of Loss, if available, and relevant details thereof. The
Indemnitor shall notify Indemnified Party no later than thirty (30) days from such notice of its
intention to assume the defense of any such claim. Failure of the Indemnified Party to notify
Indemnitor within such notice period shall not relieve Indemnitor of any liability hereunder,
except to the extent the Indemnitor reasonably demonstrates that the defense of such Third Party
claim is prejudiced by such failure.

     Section 10.4 Indemnitor May Settle.

The Indemnitor shall, at its expense, have the right to settle and defend any action which may be
brought in connection with all matters for which indemnification is available. In such event the
Indemnified Party shall cooperate with the Indemnitor as reasonably requested by the Indemnitor in
connection with such action; provided that the Indemnified Party shall have the right to fully
participate in such defence at its own expense. The defence by the Indemnitor of any such actions
shall not be deemed a waiver by the Indemnitor of its right to assert a claim with respect to the
responsibility of the Indemnified Party with respect to the Loss in question. The Indemnitor shall
have the right to settle or compromise any claim against the Indemnified Party without the consent
of the Indemnified Party provided that the terms of any settlement or compromise: (a) does not
materially impair the Indemnified Party’s rights hereunder (including

 

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each Party’s rights in the Micrologix Technology); (b) would not require the Indemnified Party to be subject to an injunction
or to make a monetary payment or would restrict the claims in or admit any invalidity or
unenforceability of the Micrologix Patent Rights; (c) provide for the unconditional release of the
Indemnified Party; and (d) expressly state that neither the fact of settlement nor the settlement
agreement shall constitute, or be construed or interpreted as, an admission by the Indemnified
Party of any issue, fact, allegation or any other aspect of the claim being settled. In all other cases, the Indemnitor may not settle any such action without the prior
written consent of the Indemnified Party, which consent shall not be unreasonably withheld or
delayed. No Indemnified Party shall pay or voluntarily permit the determination of any liability
which is subject to any such action while the Indemnitor is negotiating the settlement thereof or
contesting the matter, except with the prior written consent of the Indemnitor, which consent shall
not be unreasonably withheld or delayed. If the Indemnitor fails to give Indemnified Party notice
of its intention to defend any such action as provided herein, the Indemnified Party involved shall
have the right to assume the defence thereof with counsel of its choice and defend, settle or
otherwise dispose of such action. If Strata is the Indemnified Party in such case, Strata shall
recover its Costs by deducting its Costs from any royalty payments or any other amounts payable to
Micrologix hereunder in accordance with Section 4.7(c).

     Section 10.5 Insurance.

Each Party shall, at its sole cost and expense, obtain and keep in force during the Term and for a
period of not less than three (3) years after termination, cancellation or expiration of this
Agreement the following insurance: (a) general liability insurance, including blanket contractual
liability coverage with bodily injury, death and property damage with limits of $[***] per occurrence and $[***] in
the aggregate within six months after the Effective Date; and (b) clinical studies and product
liability insurance with bodily injury death and property damage limits of not less than $[***] per occurrence and
$[***] in the aggregate; provided, however, each Party’s obligation to maintain such product
liability insurance shall not commence until immediately prior to the First Commercial Sale of the
Product in the first country in the Territory and each Party’s obligation to maintain such clinical
studies insurance shall not commence until immediately prior to the first human dosing by such
Party. Upon execution of this Agreement, and upon the other Party’s request thereafter, each Party
shall furnish the other with a certificate of insurance signed by an authorized representative of
such Party’s insurance underwriter evidencing the insurance coverage required by this Agreement and
providing for at least thirty (30) days prior written notice to the other Party of any
cancellation, termination or reduction of such insurance coverage. Each Party shall use its
Commercially Reasonable Efforts to cause Third Parties engaged by a Party to perform its
obligations under this Agreement to maintain such types of insurance coverages and for such period
of time as are customary for such Third Parties given the nature of the services to be provided.

 

			
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ARTICLE 11

ADDITIONAL COVENANTS OF THE PARTIES

     Section 11.1 Micrologix Covenant Not To Compete.

Micrologix hereby covenants and agrees, and shall cause its Affiliates to agree, not to, in whole
or in part, develop, in-license, market, make, manufacture or have manufactured, sell, promote,
distribute or have marketed, have sold or have distributed any product in the Territory in the
Field (in this Section, a “Section 11.1 Competitive Product”) during the Term and for a period of
[***] thereafter. Notwithstanding the foregoing, if Micrologix acquires an entity or all or
substantially all of the assets of an entity during such period of time and such entity distributes
or such assets include a Section 11.1 Competitive Product, Micrologix or its Affiliate shall have
[***] in which to divest itself of such Section 11.1 Competitive Product or to otherwise cease
distribution of such Section 11.1 Competitive Product, and Micrologix shall not be in breach of
this Section 11.1 if it so divests or ceases distribution within such [***] period. Strata and
Micrologix hereby agree that the covenants set forth in this Section 11.1 are a material and
substantial part of the transactions contemplated by this Agreement.

     Section 11.2 Launch of Competitive Product by Strata.

Strata hereby agrees that in the event Strata and/or its Affiliates develop, in-license, market,
sell, promote, distribute or have marketed, or have sold any product in the Field in a particular
country in the Territory that is not a Product hereunder (in this Section, a “Competitive Product”)
during the Term, directly for themselves or by a Third Party, licensee or sublicensee on behalf of
Strata and/or its Affiliates, then pursuant to Section 13.4, Strata’s rights with respect to such
country under this Agreement shall terminate and revert to Micrologix. No termination pursuant to
this Section shall terminate this Agreement with respect to any other country in the Territory.
Notwithstanding the foregoing, if Strata or an Affiliate acquires an entity or all or substantially
all of the assets of an entity during such period of time and such entity distributes or such
assets include a Competitive Product, Strata, or its Affiliate(s), shall have [***] in which to divest itself of
such Competitive Product or to otherwise cease distribution of such Competitive Product, and Strata
shall not be in violation of this Section 11.2 if it so divests or ceases distribution within such
[***] period. The Parties mutually agree that Strata’s (or Affiliates’) commercialization, as
described above, of any Competitive Product shall not be deemed a breach of this Agreement, and
Micrologix sole recourse for such an event shall be that as described in this Section 11.2 only.

	 	 	Section 11.3 Limitation To The Territory.

Strata hereby covenants that it will not directly or indirectly, without the prior written
authorization of Micrologix: (i) promote or actively solicit the sale of the Product or advertise
the Product, outside of the Territory; (ii) purchase or cause to be purchased Product which Strata
has represented, directly or indirectly, as being for the purpose of sale in a specific country in
the

 

			
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Territory for sale in any other country outside the Territory; (iii) contact any of Micrologix’s
suppliers or vendors of the Product or element thereof for the purpose of causing the Product to be
sold outside the Territory; (iv) knowingly sell or distribute for resale the Product purchased
hereunder to a Third Party who intends to sell the Product outside of the Territory; and (vi)
knowingly sell or distribute for resale Product purchased from a Third Party outside the Territory
for resale in the Territory.

     Section 11.4 Records and Audits.

	 	(a)	 	Each Party shall keep or cause to be kept true, accurate and complete Books and
Records as are required to determine, in a manner consistent with accrual method of
accounting in accordance with GAAP, any sums or credits due under this Agreement during
the Term and for a period of three years thereafter or as otherwise required to comply
with Applicable Laws. Without limiting the generality of the foregoing, the Parties
agree that such Books and Records shall include the following:

	 	(i)	 	Strata shall keep such Books and Records to permit Micrologix
to confirm the completeness and accuracy of (A) the information presented in
each Royalty Statement and all payments due hereunder; (B) the calculation of
Net Sales; (C) any payments due Micrologix under this Agreement; and (D) any
other payment obligations of Strata hereunder.
	 
	 	(ii)	 	Micrologix shall keep such Books and Records to permit Strata
to confirm the completeness and accuracy of (A) Reimbursable Costs; (B) any
payments due Strata under this Agreement; and (C) any other obligations of
Micrologix hereunder.

	 	(b)	 	With regard to sums or credits due or related reports, at the request (and
expense) of the requesting Party, the other Party shall permit the requesting Party
and/or such requesting Party’s independent certified public accountant selected by such
Party and reasonably acceptable to the other Party to audit and/or inspect only those
Books and Records of the other Party as may be necessary to determine, with respect to
any calendar year ending no more than three years prior to such Party’s request, the
completeness and accuracy of any reports made and/or any sums or credits due under this
Agreement. Any such independent accounting firm shall be subject to the
confidentiality provisions of this Agreement. Such inspection shall be conducted
during the Party’s normal business hours, no more than once in any twelve (12) month
period and upon at least thirty (30) days prior written notice by the requesting Party.
If such requesting Party concludes that such payments were underpaid during the
periods reviewed by such requesting Party and/or its accountants, the other Party shall
pay the requesting Party the amount of any such underpayments, plus interest at a rate
equal to the Prime Rate of Interest, within thirty (30) days of the date the requesting
Party delivers to the other Party the report so concluding that such payments were
underpaid. If such requesting Party and/or its accounting firm concludes that such
payments were overpaid during such period, the Party shall pay to the other Party the
amount of

 

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	 	 	 	any such overpayments, without interest, within thirty (30) days of the date the
requesting Party delivers to the other Party the report so concluding that such
payments were overpaid. The requesting Party shall bear the full cost of such audit
unless such audit discloses an underpayment by more than [***] of
the amount due during such period. In such case, the other Party shall bear the
full cost of such audit.
	 
	 	(c)	 	In the event the non-requesting Party does not agree with the conclusions of
such report under Section 11.4(b), (whether such payments were underpaid or overpaid),
then such Party shall notify the other Party within thirty (30) days after receipt of
such report. Thereafter, the Parties shall in good faith try and resolve such
differences. If the Parties are unable to reach a mutual agreement within fifteen (15)
days after the date of notice then independent auditors of each Party shall meet and
select an independent accounting firm (being an accounting firm not used by either
Party) to make the final determination within fifteen (15) days thereafter. The
determination of such independent accounting firm shall be binding and conclusive on
the Parties, and the cost of such firm shall be borne by the Party against whom the
determination by such firm is made.
	 
	 	(d)	 	Micrologix shall, upon prior, reasonable notice by Strata and during normal
business hours, allow Strata or its Representative to inspect and audit Micrologix’s
facilities, equipment, personnel and operating procedures (and of any Subcontractor, as
applicable) used to develop the Product and any Books and Records related thereto to
confirm compliance with the terms and conditions of this Agreement, including
compliance with Applicable Laws and Governmental Approvals; provided that Strata shall
use Commercially Reasonable Efforts to ensure that such inspection and audit shall not
interfere with Micrologix’s (or its Subcontractor’s, as applicable) normal operations.
However, notwithstanding the foregoing, Strata shall be permitted to inspect and audit
as provided above immediately on notice in the event of a bona fide belief that
(i) an Applicable Law is being, or may be, violated or (ii) there is, or may be, an
SADE or imminent and otherwise material harm to the public due to the Product. Without
limiting anything else under this Agreement, if any of the obligations of Micrologix is
performed by a Subcontractor, then Micrologix shall cause any such Subcontractor to
comply with the terms and conditions of this Section 11.4(d). If any inspection or
audit hereunder reveals that Micrologix (or its Subcontractor(s) or other
Representatives) is not in compliance in all material respects with the terms and
conditions of this Agreement, Applicable Laws, or/and applicable Governmental
Approvals, Micrologix, at its sole cost, shall use Commercially Reasonable Efforts to
promptly correct (and, as applicable, cause its Subcontractor(s) to use Commercially
Reasonable Efforts to promptly correct) any such deficiencies to ensure compliance as
required hereunder. Micrologix

 

			
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shall keep Strata informed on a regular, on-going and periodic basis as to the
status of any such deficiencies and such corrections.

     Section 11.5 Marketing Expenses.

Strata covenants and agrees that, except as otherwise specified in this Agreement, Strata shall be
solely responsible for the cost and implementation of any and all marketing, sales, promotional and
related activities concerning or related to the marketing, sale, distribution and promotion of the
Product under this Agreement.

     Section 11.6 Further Actions.

Upon the terms and subject to the conditions hereof, each of the Parties shall use its Commercially
Reasonable Efforts to take, or cause to be taken, all appropriate action and do, or cause to be
done, all things necessary or advisable under Applicable Laws or otherwise to consummate and make
effective the transactions contemplated by this Agreement.

ARTICLE 12

PRODUCT RECALL

     Section 12.1 Product Recalls or Withdrawal.

If at any time or from time to time during the Term: (a) any Competent Authority of any country in
the Territory requests Strata to recall or withdraw the Product; (b) a court of competent
jurisdiction issues an order or directive for the Product to be recalled or withdrawn; or (c) if a
voluntary recall or withdrawal of the Product is contemplated by Strata (individually or
collectively, a “Recall”), then Strata shall carry out any Recall in the Territory in as
expeditious a manner as reasonably possible to preserve the goodwill and reputation of the Product
and the goodwill and reputation of the Parties. Strata shall in all events be responsible for
conducting any Recall in the Territory, market withdrawals or corrections with respect to the
Product in the Territory. Strata shall maintain records of all sales and distribution of Product
and customers sufficient to adequately administer a Recall for the period required by Applicable
Law. Micrologix shall cooperate as reasonably requested by Strata in connection with any such
Recall. Strata will be responsible for complying with all Applicable Laws and Governmental
Approvals during the Recall and will be responsible for all interactions with appropriate Competent
Authorities, including, the FDA Office of Compliance in the U.S. and the appropriate FDA local
district office(s) in the U.S. Strata shall be responsible for preparing and timely submitting any
reports any other documentation required by the Competent Authorities in connection with any such
Recall.

     Section 12.2 Recall Costs.

Strata shall be responsible for conducting any Recall of the Product in the Territory and the cost
and expense therefor shall be paid by Strata, unless such Recall is due to, prior to or during the
Development: (i) any breach by Micrologix of its representations, warranties, covenants,
obligations or agreements under this Agreement; or (ii) the negligence or willful misconduct of
Micrologix and/or any of Micrologix’s Representatives under this Agreement, including violation of
Applicable Laws in their performance under this Agreement; in which case all such

 

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costs and
expenses, to the extent same are reasonable, shall be borne and paid solely by Micrologix. In such
event, Micrologix will reimburse Strata for any such costs and expenses paid by Strata within
thirty (30) days of its receipt of a reasonably detailed invoice(s) for such costs and expenses
from Strata.

     Section 12.3 Notification Of Complaints.

During the Term and for a period of four (4) years after the termination, expiration or
cancellation of this Agreement or for such longer period as may be required by Applicable Law(s),
each Party agrees to (a) notify the other Party immediately of all available material information
concerning any complaint, product defect reports, and similar notices received by either Party with
respect to the Product, whether or not determined to be attributable to the Product and (b) with
respect to an SADE, comply with the provisions of Section 6.6. Strata shall define and implement
appropriate and necessary regulatory compliance procedures for product defect reporting, including
action plans and an SOP and will handle all product complaints in the Territory. In connection
with any such product complaint Micrologix shall cooperate as reasonably requested by Strata.
Strata, at its sole cost and expense, will have the responsibility for preparing and submitting any
reports to the Competent Authorities, including FDA field alerts.

     Section 12.4 Notification Of Threatened Action.

During the Term and, for a period of four years after the termination, expiration or cancellation
of this Agreement or for such longer period as may be required by Applicable Law(s), each Party
agrees to immediately notify the other Party of any information it receives regarding any
threatened or pending action, inspection or communication by or from a concerned Competent
Authority which may affect the safety or efficacy claims of the Product or the continued marketing
or distribution of the Product. Upon receipt of such information, the Parties shall consult with
each other in an effort to arrive at a mutually acceptable procedure for taking appropriate action,
provided that, subject to Micrologix’s obligation under Section 6.1 and Applicable Laws during the
Period Micrologix is the IND holder, Strata shall have the final decision making authority with
respect thereto.

ARTICLE 13

TERM AND TERMINATION

     Section 13.1 Term.

This Agreement shall become effective on the Effective Date and shall expire on the date of the
expiration of the last to expire Royalty Term in any country in the Territory (the “Term”), unless
earlier terminated as provided in Section 13.2, Section 13.3 or Section 13.4.

     Section 13.2 Termination by Either Party.

Either Party may terminate this Agreement (in its entirety or on a country by country basis as
hereinafter provided) prior to the expiration of the Term upon the occurrence of any of the
following:

 

- 56 -

	 	(a)	 	upon or after the cessation of operations of the other Party or the bankruptcy,
dissolution or winding up of the other Party (other than dissolution or winding up for
the purposes or reconstruction or amalgamation which includes an assignment permitted
by this Agreement) or the filing of any involuntary petition for bankruptcy,
dissolution, liquidation or winding up of the affairs of the other Party which is not
dismissed within ninety (90) days after the date on which it is filed or commenced, and
in the case of any of the foregoing events, the non-defaulting Party may terminate the
Agreement in its entirety; or
	 
	 	(b)	 	upon or after the breach of any material provision of this Agreement by the
allegedly breaching Party if the allegedly breaching Party has not cured such breach
within sixty (60) days after written notice thereof by the non-breaching Party, the
non-breaching Party may, at its sole option, terminate this Agreement with respect to
the particular country in the Territory that is the subject of such breach, and this
Agreement shall remain in effect as it applies to all other countries; provided,
however, that if such breach and failure to cure occurred in the United States, the
non-breaching Party may terminate this Agreement in its entirety, and if such breach
and failure to cure occurred in a Major European Market Country, the non-breaching
Party may terminate this Agreement in respect of the whole of Europe. For the
avoidance of doubt, performance of the development and commercialization obligations
required to be performed in accordance with Commercially Reasonable Efforts hereunder
are evaluated based upon the Territory as a whole as set out in Section 1.10.

     Section 13.3 Termination by Strata.

Strata may terminate this Agreement in its entirety, or on a country-by-country basis prior to the
expiration of the Term as follows:

	 	(a)	 	subject to Section 2.3(d), prior to issuance of a Marketing Authorization in
the US, at any time on written notice to Micrologix if it is determined by Strata in
good faith, acting reasonably and in accordance with prudent scientific and business
judgment and otherwise in accordance with generally accepted practices in the
pharmaceutical industry, that the Product is not reasonably expected to demonstrate
safety or efficacy; or
	 
	 	(b)	 	if the Second Phase III Study is commenced, at any time on written notice to
Micrologix if Strata exercises its right to terminate such study pursuant to Section
2.3(d); or
	 
	 	(c)	 	if the Second Phase III Study is not commenced, or after the completion of the
Second Phase III Study, at any time upon one hundred twenty (120) days prior written
notice to Micrologix.

 

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     Section 13.4 Termination by Micrologix.

Micrologix may terminate this Agreement in its entirety or on a country by country basis prior to
the expiration of the Term upon thirty (30) days prior written notice if Strata conducts any of the
activities respecting a Competitive Product in a particular country as set forth in Section 11.2.

     Section 13.5 Effect of Termination.

	 	(a)	 	Payment Obligations. If this Agreement is terminated by either Party pursuant
to Section 13.2, Section 13.3 or Section 13.4, subject to the rights and obligations of
Strata related to selling off Product inventory as provided in Section 13.5(b)(ii) and
Section 13.5(b)(iii) and to pay Reimbursable Costs and certain wind down costs as set
forth in Sections Section 13.5(b)(iv)(A), Strata shall not be obligated to pay any
other wind down costs, milestone payments and/or other monies to Micrologix under this
Agreement, other than payments due and owing prior to the effective date of
termination.
	 
	 	(b)	 	Termination by Either Party. Upon the early termination of this Agreement by
either Party pursuant to Section 13.2, Section 13.3 or Section 13.4, the following
shall occur:

	 	(i)	 	Subject to Section 13.7, Strata, its sublicensees and
Affiliates (as the case may be) shall have no right to practice within the
Micrologix Patent Rights or use any of the Micrologix Technology, and all
rights, title or interest in, or other incidents of ownership under, the
Micrologix Technology shall revert to and become the sole property of
Micrologix, and the licenses granted to Strata under Section 3.1 shall
automatically terminate.
	 
	 	(ii)	 	Notwithstanding Section 13.5(b)(i), provided that this
Agreement is terminated other than: (A) by Micrologix due to the breach of
Strata pursuant to Section 13.2 or Section 13.4; or (B) by Strata pursuant to
Section 13.3; Strata may, in its sole discretion, elect to sell-off or
distribute, as applicable, its existing inventory of Product to which the
termination pertains in accordance with the terms set forth in Section
13.5(b)(iii), after the effective date of termination, by notifying Micrologix
of its decision within thirty (30) days after the date it receives a notice of
termination by Micrologix or the date it provides a notice of termination to
Micrologix, as the case may be.
	 
	 	(iii)	 	If Strata elects pursuant to Section 13.5(b)(ii) to sell-off
or distribute, as applicable, its existing inventory, it shall not, either
directly or indirectly, use or permit the use of the Product except as set
forth under this Section 13.5(b)(iii) and shall proceed as follows:

	 	(A)	 	continue to comply with its royalty obligations
for the Product to Micrologix under Article 4;

 

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	 	(B)	 	continue to sell off or distribute, as
applicable, existing inventory of Product until such time as the
inventory is depleted but in no event more than six (6) months after
the applicable notice of termination. At the expiration of such
period, Strata shall sell all existing inventory of Product to
Micrologix. In such case, Micrologix shall pay to Strata the full
amount of the actual cost paid by Strata, or Strata’s documented
out-of-pocket costs, as applicable, for such remaining inventory of
Product;
	 
	 	(C)	 	if Strata does not elect pursuant to Section
13.5(b)(ii) to sell-off or distribute, as applicable, any existing
inventory of Product, or if this Agreement is terminated by Micrologix
under Section 13.2 or Section 13.4 for Strata’s breach, or by Strata
pursuant to Section 13.3, Strata shall, at Micrologix’s election,
either:

	 	(1)	 	sell all existing inventory of
Product to Micrologix at Strata’s actual cost of acquisition, or
Strata’s documented out-of-pocket costs, as applicable; or
	 
	 	(2)	 	destroy all remaining inventory
of Product in accordance with Applicable Laws and provide
Micrologix with written proof of destruction sufficient to
comply with Applicable Laws.

	 	 	 	In either case, Micrologix shall pay to Strata the actual cost paid
by Strata for such remaining inventory of Product;
	 
	 	(D)	 	if Strata sells any inventory of Product to
Micrologix pursuant to this Section 13.5(b)(iii), it shall warrant that
such inventory of Product has been stored in material compliance with
the applicable specifications therefor, Governmental Approvals and all
Applicable Laws, has not been adulterated within the meaning of
Applicable Laws and has otherwise been maintained by Strata according
to such specifications, Governmental Approvals and Applicable Laws; and
	 
	 	(E)	 	any sales of Product made by Strata to
Micrologix pursuant to this Section 13.5(b)(iii) shall be made by
Strata within thirty (30) days after the date it becomes obligated to
do so and shall be shipped to Micrologix appropriately packaged and
stored. All transportation costs in connection with such sale,
including insurance, freight and duties, and all reasonable costs of
re-working the Product so that such Product is in saleable form, shall
be shared equally by Strata and Micrologix. Amounts owed by either
Party to the other pursuant to this Section 13.5(b)(iii) for the
Product shall be paid by such Party within ten (10) days after receipt
by a Party of a

 

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	 	 	 	reasonably detailed invoice from the other Party for
the amount so owing to it by the other Party under this Section
13.5(b)(iii).

	 	(iv)	 	if this Agreement is terminated prior to the completion of the
Development and the payment therefor:

	 	(A)	 	by Micrologix pursuant to Section 13.2 for
Strata’s breach or pursuant to Section 13.4, or by Strata pursuant to
Section 13.3(a) or Section 13.3(b), Strata shall, at Micrologix’s
election, pay Micrologix’s reasonable, wind-down costs under any
Development Subcontract provided that Micrologix uses Commercially
Reasonable Efforts to minimize, or if possible eliminate, such costs.
	 
	 	(B)	 	by Strata pursuant to Section 13.2 due to the
breach of Micrologix, Strata shall have no obligation to pay for any
wind-down costs, milestone payments and/or any other monies due and
owing from and after the effective date of such termination under this
Agreement.

	 	(v)	 	if this Agreement is terminated by Micrologix pursuant to
Section 13.2 for Strata’s breach or pursuant to Section 13.4, or by Strata
pursuant to Section 13.3(a) or Section 13.3(b), to the extent of its legal
right to do so, Strata shall immediately assign or transfer to Micrologix any
Governmental Approvals and trademarks for the Product held in the name of or
Controlled by Strata, if any, in any country in the Territory.
	 
	 	(vi)	 	to the extent of its legal right to do so, Strata shall, at
Micrologix’s request, grant Micrologix a worldwide royalty-bearing, license
under any Strata Work Product necessary to use, market, advertise, promote,
distribute, offer for sale, sell, make, manufacture, have manufactured, export
and import, and develop Products with the right to sublicense and assign the
foregoing, in consideration of such reasonable royalties on net sales by
Micrologix or Product to be negotiated in good faith between Micrologix and
Strata at such time, and if the Parties cannot agree on such license and
royalties, either Party may refer the matter to arbitration pursuant to Article
14. Nothing in this Section shall cause a royalty to be payable in respect of
rights obtained by Micrologix pursuant to Section 5.3 or Section 6.2.
	 
	 	(vii)	 	if this Agreement is terminated by Strata pursuant to Section
13.2 due to the breach of Micrologix, to the extent of its legal right to do
so, Strata shall immediately assign or transfer to Micrologix any Governmental
Approvals and trademarks for the Product held in the name of or Controlled by
Strata, if any, in any country in the Territory, in consideration of such
reasonable royalties on net sales by Micrologix of Product to be negotiated in
good faith between Micrologix and Strata at

 

- 60 -

	 	 	 	such time, and if the Parties
cannot agree on such license and royalties, either Party may refer the matter
to arbitration pursuant to Article 14. Nothing in this Section shall cause a
royalty to be payable in respect of rights obtained by Micrologix pursuant to
Section 6.2.

	 	(viii)	 	at the sole option and request of Micrologix, which request shall be made no
more than sixty (60) days after the effective date of termination, if
Micrologix chooses to permit Third Party sublicenses related to the Product to
survive termination of this Agreement, Strata will cooperate reasonably to
facilitate the transfer of Third Party sublicenses from Strata to Micrologix or
its designee.
	 
	 	(ix)	 	except as otherwise provided in this Agreement, expiration or
termination of this Agreement shall not relieve the Parties of any obligation
accruing prior to such expiration or termination. Except as set forth below or
elsewhere in this Agreement, the obligations and rights of the Parties under
Article 1 (as needed), Section 3.4, Section 4.7(b)(ii), Section 4.7(c), Section
5.3(c), Section 5.3(e) (for a one year period after expiration or termination
of this Agreement, in respect of the manufacture of Product for use in the
Field in the Territory), Section 6.2(b), Section 7.2, Section 7.4, Article 8,
Article 9, Article 10, Article 12, Article 13, Article 14 and Article 15, and
any other that by its terms is intended to survive, shall survive expiration or
termination of this Agreement.
	 
	 	(x)	 	subject to the provision of Section 13.7, within thirty (30)
days following the expiration or termination of this Agreement, each Party
shall return to the other Party, or destroy, upon the written request of the
other Party, any and all Confidential Information of the other Party in its
possession and upon a Party’s request, such destruction (or delivery) shall be
confirmed in writing to such Party by a responsible officer of the other Party,
except for such Confidential Information which the receiving Party is required
to keep under Applicable Laws, in which event such Confidential Information
shall be held subject to the terms and conditions of Article VIII.

	 	(c)	 	Termination on a Country-by-Country Basis. In the event any termination under
this Agreement relates solely to one or more countries in the Territory as permitted
herein, then this Agreement and the license contained in Section 3.1 shall only be
terminated to the extent it applies to such country or countries in the Territory and
this Agreement shall remain in effect as it applies to all other countries in the
Territory.
	 
	 	(d)	 	Bankruptcy Rights. In the event this Agreement is terminated or rejected by a
Party or its receiver or trustee under applicable bankruptcy laws due to such Party’s
bankruptcy, then all rights and licenses granted under or pursuant to this Agreement by
such Party to the other Party are, and shall otherwise be deemed to be, for purposes of
Section 365(n) of the Bankruptcy Code in the United States

 

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	 	 	 	and other comparable
Applicable Law in any other country in the Territory (collectively “Other Bankruptcy
Laws”), licenses of rights to “intellectual property” as defined under Section 101(52)
of the United State Bankruptcy Code. The Parties agree that all intellectual property
rights licensed hereunder, including any patents or patent applications of a Party in
any country covered by the license grants under this Agreement, are part of the
“intellectual property” as defined in Section 101(52) of the United States Bankruptcy
Code, subject to protections afforded the non-terminating Party under Section 365(n) of
United States Bankruptcy Code or Other Bankruptcy Laws.

     Section 13.6 Remedies.

All of the non-breaching Party’s remedies shall be cumulative, and the exercise of one remedy
hereunder by the non-defaulting Party shall not be deemed to be an election of remedies. These
remedies shall include the non-breaching Party’s other rights of recovery for such breach with or
without terminating this Agreement.

     Section 13.7 License Following Expiration.

Upon expiration of each of the applicable Royalty Terms in each country in the Territory, Strata
shall thereafter have an irrevocable, non-exclusive, royalty-free license in such country, with the
right to sublicense, to use, develop, market, advertise, promote, distribute, make, manufacture,
have manufactured, offer for sale, sell, export and import the Product for use in the Field in the
Territory. Upon request by Strata, Micrologix shall continue to allow Strata to manufacture and
sell the Product under the Micrologix Technology pursuant to a separate agreement to be negotiated
in good faith between the Parties.

ARTICLE 14

DISPUTE RESOLUTION/DAMAGES

     Section 14.1 Disputes.

The Parties recognize that disputes as to certain matters may from time to time arise during the
Term which relate to either Party’s rights and/or obligations hereunder or to the interpretation,
performance, breach, or termination of this Agreement, (a “Dispute”). It is the objective of the
Parties to establish procedures to facilitate the resolution of a Dispute in an expedient manner by
mutual cooperation and without resort to litigation. To accomplish this objective, the Parties
agree to follow the procedures set forth in this Article 14 if and when a Dispute arises under this
Agreement. The Parties acknowledge and agree that nothing under this Article 14 shall in any way
affect, alter, negate or modify Strata’s tie-breaking vote in the JDMC under Section 2.4(d).

Subject to Section 11.4(c), a Dispute among the Parties will be resolved as recited in this Article
14. Any Disputes relating to this Agreement shall be promptly presented to the Chief Executive
Officers of Micrologix and Strata, or their respective designees (who must be members of a Party’s
senior management) for resolution. From the date of referral of a Dispute to the Chief Executive
Officers or their designees of the Parties and until such time as any matter has been resolved by
the Parties or has been finally settled by arbitration hereunder, the running of the cure periods
(if any) as to which a Party must cure a breach that is part of the subject matter of

 

- 62 -

any Dispute
shall be suspended. In the event that the Chief Executive Officers of Micrologix and Strata, or
their respective designees, cannot after good faith negotiations resolve the Dispute within 10 days
(or such other period of time as mutually agreed to by the Parties in writing) of being requested
by a Party to resolve a Dispute, the Parties agree that such Dispute shall be resolved by binding
arbitration in accordance with this Section 14.1.

If a Party intends to begin arbitration to resolve such Dispute, such Party shall provide written
notice (the “Arbitration Notice”) to the other Party informing such other Party of such intention
and the issues to be resolved. Any arbitration hereunder shall be conducted pursuant to the
Commercial Arbitration Rules of the American Arbitration Association (“AAA”), including the
Supplementary Procedures for Large Complex Disputes (the “AAA Rule”) except as modified herein.
The arbitration shall be conducted by a panel of three (3) arbitrators (the “Panel”) to be mutually
agreed upon by the Parties and appointed by the AAA. The arbitrators shall be industry experts
experienced in the issues comprising the Dispute and shall have no past, present or anticipated
future affiliation with either Party. If the Parties are unable to agree upon all or any number of
the three (3) mutually acceptable arbitrators within thirty (30) days after the filing of the
Arbitration Notice, the AAA shall promptly appoint the arbitrator(s) to complete the Panel in
accordance with the criteria set forth in this Section 14.1. The arbitration shall take place in
Denver, Colorado. The Panel shall apply the laws of the State of Delaware, without regard to its
conflicts of laws provisions. The Panel shall issue appropriate protective orders to protect each
Party’s Confidential Information. If a Party can demonstrate to the Panel that the complexity of
the issue or other reasons warrant the extension of one or more timetables in the AAA Rules, the
Panel may extend such timetables but in no event shall the proceeding extend more than twelve (12)
months from the date of filing of the Arbitration Notice with the AAA. The Panel’s decision shall
be in writing. The Panel shall have the authority to award any remedy allowed by law or in equity,
including compensatory damages, pre-judgment interest and to grant final, complete, interim, or
interlocutory relief, including specific performance, injunctions and other equitable relief, but
not punitive or other damages set forth in Section 14.5 and each Party shall be deemed to have
waived any right to such excluded damages. Each Party shall bear its own costs, fees and expenses
in the arbitration and shall share equally the Panel’s fees, unless the Panel determines that its
fees are to be paid by the non-prevailing Party.

     Section 14.2 Performance to Continue.

Each Party shall continue to perform its obligations under this Agreement pending final resolution
of any Dispute arising out of or related to this Agreement; including continuing the Development,
provided, however, that a Party may suspend performance of its obligations during any period in
which the other Party fails or refuses to perform its obligations.

     Section 14.3 Determination of Patents and Other Intellectual Property.

Notwithstanding the foregoing, any dispute relating to the determination of validity of claims,
infringement or claim interpretation relating to Micrologix’s Patents shall be submitted
exclusively to the federal courts.

 

- 63 -

     Section 14.4 Injunctive Relief.

Nothing in this Agreement shall prevent either Party from seeking a temporary restraining order or
injunction against the other Party as required to prevent such other Party’s misuse of the
intellectual property or Confidential Information of the other Party seeking such temporary
restraining order or injunction. In addition nothing in this Agreement shall prevent Strata from
seeking a temporary restraining order or injunction against Micrologix to prevent any breach by
Micrologix under Section 11.1. The Parties understand and agree that because of the difficulty in
measuring economic losses to the non breaching Party as a result of a breach of the covenants set
forth in this Agreement respecting intellectual property and Confidential Information and because
of the immediate and irreparable damage that may be caused to the non breaching Party for which
monetary damages would not be a sufficient remedy, the Parties agree that the non breaching Party
will be entitled to seek specific performance, temporary and permanent injunctive relief, and such
other equitable remedies to which it may then be entitled against the breaching Party. This
Section 14.4 shall not limit any other legal or equitable remedies that the non breaching Party may
have against the breaching Party.

     Section 14.5 No Consequential Damages.

EXCEPT WITH REGARD TO DAMAGES ARISING UNDER SECTION 8.1(B) AND EACH PARTY’S DUTY TO INDEMNIFY THE
OTHER FOR INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES RECOVERED BY A THIRD
PARTY AS PROVIDED UNDER ARTICLE 10, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY
INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES INCURRED BY EITHER PARTY UNDER
THIS AGREEMENT OR OTHERWISE.

     Section 14.6 Attorney’s Fees.

In the event of any claim hereunder related to either Party’s infringement of the intellectual
property rights of the other Party or the misuse of Confidential Information of the other Party,
the prevailing party in any such dispute shall pay the reasonable legal fees and costs related
thereto.

ARTICLE 15

MISCELLANEOUS

     Section 15.1 No Solicitation.

Neither Party nor its Affiliates (collectively, the “Initiating Group”) shall, directly or through
its representatives, solicit for employment any officer, director, employee or consultant of the
other Party or its subsidiaries or Affiliates (collectively, the “Other Group”) with whom the
Initiating
Group has contact in connection with, or who otherwise is known by the Initiating

 

- 64 -

Group to participate in, the transactions contemplated by this Agreement for a period of [***]. The Initiating
Group shall not be precluded from hiring any such person who has been terminated by the Other Group
prior to commencement of employment discussions between such person and the Initiating Group or its
representatives. “Solicitation” shall not include any generalized public advertisement or any other
solicitation by the Initiating Group or its representatives that is not specifically directed
toward any such employee of the Other Group or toward any group of such employees of the Other
Group.

     Section 15.2 Assignment; Binding Effect.

Except as otherwise provided in this Agreement, neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the Parties hereto (whether by
operation of Applicable Laws or otherwise) without the prior written consent of the other Party,
which consent shall not be unreasonably withheld or delayed. Notwithstanding the foregoing, either
Party may sell, transfer or assign its rights under this Agreement to any Third Party, as part of a
sale or transfer of substantially all of a Party’s assets; provided that such Third Party agrees in
writing to be bound by the terms and conditions of this Agreement. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit of the Parties hereto
and their respective permitted successors and assigns. Notwithstanding anything contained in this
Agreement to the contrary, nothing herein, expressed or implied, is intended to confer on any
person other than the Parties hereto or their Representatives, respective heirs, successors,
executors, administrators and assigns any rights, remedies, obligations or liabilities under or by
reason of this Agreement. Any purported assignment, sale, transfer, delegation or other
disposition by a Party, except as permitted herein, shall be null and void.

     Section 15.3 Force Majeure.

Neither Party shall be held liable or responsible to the other Party nor be deemed to have
defaulted under or breached this Agreement for failure or delay in fulfilling or performing any
term of this Agreement when such failure or delay is caused by or results from causes beyond the
reasonable control of the affected Party, including fire, flood, embargo, war, act of war (whether
war be declared or not), act of terrorism, failure of supplier, insurrection, riot, civil
commotion, strike, lockout or other labour disturbance, act of God (a “Force Majeure”); provided
that the Party whose performance is delayed or prevented shall provide prompt notice of the Force
Majeure to the other Party. Performance shall be excused so long as the condition constituting
Force Majeure continues and the non-performing Party uses good faith diligent efforts to mitigate,
avoid or end such delay of failure in performance as soon as practicable.

     Section 15.4 Governing Law.

This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the
State of Delaware, except that no conflict of laws provision shall be applied to make the laws of
any other jurisdiction applicable to this Agreement.

 

			
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     Section 15.5 Waiver.

Except as specifically provided for herein, the waiver from time to time by either of the Parties
of any of their rights or their failure to exercise any remedy shall not operate or be construed as
a continuing waiver of same or of any other of such Party’s rights or remedies provided in this
Agreement.

     Section 15.6 Severability.

In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

     Section 15.7 No Right to Use Names.

Except as otherwise provided herein, no right, express or implied, is granted by the Agreement to
use in any manner the name “Micrologix,” “Strata” or any other trade name or trademark of the other
Party or its Affiliates in connection with the performance of the Agreement.

     Section 15.8 Notices.

All notices and other communications provided for hereunder shall be in writing and shall be mailed
by first-class, registered or certified mail, postage paid, or delivered personally, by overnight
delivery service or by facsimile, computer mail or other electronic means, with confirmation of
receipt, addressed as follows:

	 	 	 
	If to Micrologix:

	 	Micrologix Biotech Inc.
	 

	 	BC Research Complex
	 

	 	3650 Wesbrook Mall
	 

	 	Vancouver, BC Canada V6S 2L2
	 

	 	Attention: President
	 
	 	 
	With a copy to:

	 	Farris, Vaughan, Wills & Murphy
	 

	 	2600 — 700 West Georgia Street
	 

	 	Vancouver, BC Canada V7Y 1B3
	 

	 	Attention: James Hatton
	 
	 	 
	If to Strata:

	 	Strata Pharmaceuticals, Inc.
	 

	 	10923 Cloverhurst Way

San Diego, California 92130
	 

	 	Attention: CEO
	 
	 	 
	With copies to:

	 	Morrison & Foerster LLP
	 

	 	3811 Valley Centre Drive, Suite 500
	 

	 	San Diego, California 92130-2332
	 

	 	Attention: Jay de Groot

 

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Notice so given shall be deemed given and received (a) if by mail on the fourth day after posting;
(b) by cable, telegram, telex or personal delivery on the date of actual transmission, with
evidence of transmission acceptance, or (as the case may be) personal or other delivery; and (c) if
by overnight delivery courier, on the next business day following the day such notice is delivered
to the overnight delivery courier service.

     Section 15.9 Independent Contractors.

The activities and resources of each Party shall be managed by such Party, acting independently and
in its individual capacity. It is expressly agreed that Micrologix and Strata shall be independent
contractors and that the relationship between the two Parties shall not constitute a partnership or
agency of any kind. Neither Micrologix nor Strata shall have the authority to make any statements,
representations or commitments of any kind, or to take any action, which shall be binding on the
other Party, without the prior written consent of the other Party.

     Section 15.10 Rules of Construction.

The Parties hereto agree that they have been represented by counsel during the negotiation and
execution of this Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other document will be
construed against the Party drafting such agreement or document.

     Section 15.11 Entire Agreement; Amendment.

This Agreement (including the Exhibits attached hereto) sets forth all of the covenants, promises,
agreements, warranties, representations, conditions and understandings between the Parties hereto
with respect to the subject matter hereof and supersedes and terminates all prior agreements and
understandings between the Parties, including the Letter Agreement. There are no covenants,
promises, agreements, warranties, representations conditions or understandings, either oral or
written, between the Parties other than as set forth herein. No subsequent alteration, amendment,
change or addition to this Agreement shall be binding upon the Parties hereto unless reduced to
writing and signed by the respective authorized officers of the Parties. Purchase orders, purchase
order releases, confirmations, acceptances and similar documents submitted by a Party in conducting
the activities contemplated under this Agreement are for administrative purposes only and shall not
add to or modify the terms of the Agreement. To the extent of any conflict or inconsistency
between this Agreement and any such document, the terms of this Agreement shall govern.

     Section 15.12 Counterparts; Facsimile.

This Agreement may be executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument. This Agreement
may be signed and delivered to the other Party by facsimile signature; such transmission will be
deemed a valid signature.

 

- 67 -

     Section 15.13 Interpretation.

The Section headings contained in this Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Agreement. Except where the context clearly requires
to the contrary: (i) each reference in this Agreement to a designated “Section” or “Exhibit” is to
the corresponding Section or Exhibit of or to this Agreement; (ii) instances of gender or
entity-specific usage (e.g., “his” “her” “its” “person” or “individual”) shall not be interpreted
to preclude the application of any provision of this Agreement to any individual or entity; (iii)
“including” shall mean “including, without limitation”; (iv) references to Applicable Laws shall
mean such Applicable Laws in effect during the Term (taking into account any amendments thereto
effective at such time without regard to whether such amendments were enacted or adopted after the
Effective Date); (v) references to “$” or “dollars” shall mean the lawful currency of the United
States; (vi) references to “Federal” or “federal” shall be to laws, agencies or other attributes of
the United States (and not to any State or locality thereof); (vii) references to “days” shall mean
calendar days, unless it is expressly stated as “business days”; and (viii) the English language
version of this Agreement shall govern all questions of interpretation relating to this Agreement,
notwithstanding that this Agreement may have been translated into, and executed in, other
languages.

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their duly
authorized officers as of the Effective Date.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Micrologix Biotech Inc.	 	 	 	Strata Pharmaceuticals, Inc.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ James DeMesa 	 		 	By:	 	 	 	/s/ Theodore R. Schroeder 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	Name:	 	James DeMesa	 	 	 	Name:	 	Theodore R. Schroeder	 	 
	Title:	 	President and CEO	 	 	 	Title:	 	President and Chief Executive Officer	 	 

 

- 68 -

EXHIBIT A

DEVELOPMENT PLANS

Please refer to the following documents:

	 	•	 	Strata Pharmaceuticals Inc. Development Plan, Timeline and Budget for NDA for LCSI Based
on Second Phase III Study, dated July___, 2004; and

	 	•	 	Strata Pharmaceuticals Inc. Development Plan, Timeline and budget for NDA for CRBSI
Based on First Phase III Study, dated July ___, 2004.

 

- 69 -

EXHIBIT B

PATENTS

	 	 	 
	Country	 	Application or Patent No.
	USA

	 	[***]
	USA

	 	[***]
	USA

	 	[***]
	USA

	 	[***]
	USA

	 	[***]
	PCT

	 	[***]
	Canada

	 	[***]
	Europe

	 	[***]
	Belgium

	 	[***]
	Switzerland

	 	[***]
	Germany

	 	[***]
	Spain

	 	[***]
	France

	 	[***]
	Great Britain

	 	[***]
	Hong Kong

	 	[***]
	Ireland

	 	[***]
	Italy

	 	[***]
	Europe

	 	[***]
	Hong Kong

	 	[***]

 

			
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treatment has been requested with respect to the omitted
portions.

 

- 70 -

	 	 	 
	Country	 	Application or Patent No.
	USA

	 	[***]
	USA

	 	[***]
	USA

	 	[***]
	USA

	 	[***]
	PCT

	 	[***]
	Canada

	 	[***]
	Europe

	 	[***]
	Hong Kong

	 	[***]
	USA

	 	[***]
	USA

	 	[***]
	PCT

	 	[***]
	CA

	 	[***]
	Europe

	 	[***]

 

			
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treatment has been requested with respect to the omitted
portions.

 

- 71 -

EXHIBIT C

INVENTORY

[***]

 

			
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- 72 -

EXHIBIT D

REGULATORY FILINGS

[***]

 

			
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Commission. Confidential treatment has been requested with respect to the omitted portions.exv10w11

 

EXHIBIT 10.11

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.

IV APAP AGREEMENT

(US and Canada)

by and between

BRISTOL-MYERS SQUIBB COMPANY

and

CADENCE PHARMACEUTICALS, INC.

February 21, 2006

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	ARTICLE I – DEFINITIONS
	 	 	1	 
	1.1 Defined Terms
	 	 	1	 
	 
	 	 	 	 
	ARTICLE II – GRANT OF U.S. AND CANADIAN RIGHTS AND RELATED TRANSFERS
	 	 	12	 
	2.1 Grant of Sublicense and License
	 	 	12	 
	2.2 No Implied Licenses; Reservation of Rights
	 	 	13	 
	2.3 Rights of Pharmatop
	 	 	14	 
	2.4 Further Sublicenses
	 	 	15	 
	2.5 Delegation of Manufacturing
	 	 	16	 
	2.6 Development and Commercialization Arrangements
	 	 	17	 
	2.7 Improvements
	 	 	17	 
	2.8 Transfer of Regulatory Filings; Communications with Regulatory Authorities
	 	 	18	 
	2.9 Transfer of Data and Transition Arrangements
	 	 	19	 
	2.10 Tech Transfer Plan
	 	 	21	 
	2.11 Technology Documentation
	 	 	21	 
	2.12 Technical Assistance
	 	 	22	 
	2.13 Cooperation
	 	 	23	 
	2.14 Additional Assistance
	 	 	23	 
	2.15 Pharmacovigilance; Adverse Event Reporting
	 	 	23	 
	2.16 Infringement – Pharmatop Patents
	 	 	25	 
	2.17 Infringement – BMS Patents
	 	 	27	 
	2.18 Maintenance of BMS Patents
	 	 	27	 
	2.19 Noncontravention
	 	 	27	 
	2.20 Patent Extensions
	 	 	27	 
	2.21 Data Exclusivity and Orange Book Listings
	 	 	28	 
	2.22 Notification of Patent Certifications
	 	 	28	 
	2.23 Audit, Inspection and Review
	 	 	28	 
	2.24 [***] Covenant; [***]Covenant
	 	 	29	 
	 
	 	 	 	 
	ARTICLE III – ADDITIONAL COVENANTS
	 	 	30	 
	3.1 Annual Operating Plan
	 	 	30	 
	3.2 Development, Commercialization and Financial Reports and Consultations
	 	 	30	 
	3.3 Development Responsibilities and Costs
	 	 	32	 
	3.4 Obligations in respect of the Pharmatop License Agreement
	 	 	33	 
	3.5 Certain Rights and Obligations under the Pharmatop License Agreement
	 	 	33	 
	3.6 Conduct of Clinical Trials of Products by Cadence in Clinical Study
Countries
	 	 	35	 
	3.7 Conduct of US or Canadian Clinical Trials of Products by BMS
	 	 	37	 

 

			
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 ii

 

 

	 	 	 	 	 
	3.8 Existing BMS Suppliers
	 	 	38	 
	 
	 	 	 	 
	ARTICLE IV – FINANCIAL TERMS
	 	 	38	 
	4.1 Payments to BMS
	 	 	38	 
	4.2 Reduction of Certain Milestone Payments
	 	 	39	 
	4.3 Payments by Cadence to Pharmatop
	 	 	40	 
	4.4 Manner of Payment
	 	 	41	 
	4.5 Interest
	 	 	41	 
	4.6 Expenses; Taxes
	 	 	41	 
	(a) Expenses
	 	 	41	 
	(b) Transfer Taxes
	 	 	41	 
	(b) Tax Withholding
	 	 	41	 
	4.7 Sales Reports and Royalty and Other Payments
	 	 	41	 
	4.8 Sales Record Audit
	 	 	42	 
	 
	 	 	 	 
	ARTICLE V – MUTUAL COVENANTS OF THE PARTIES
	 	 	42	 
	5.1 Publicity
	 	 	42	 
	5.2 Confidentiality
	 	 	43	 
	(a) Confidentiality Obligations
	 	 	43	 
	(b) Limited Disclosure
	 	 	43	 
	(c) Authorized Disclosure
	 	 	44	 
	(d) Employees and Consultants
	 	 	45	 
	(d) Securities Filings
	 	 	45	 
	(f) Academic Publications
	 	 	45	 
	(g) Additional Confidentiality Obligations under the Pharmatop License Agreement
	 	 	46	 
	5.3 Restrictions Binding on Affiliated Companies and Investors
	 	 	46	 
	5.4 Alliance Management
	 	 	46	 
	5.5 Liens
	 	 	46	 
	5.6 BMS Confidential Disclosure Agreements
	 	 	47	 
	 
	 	 	 	 
	ARTICLE VI – REPRESENTATIONS AND WARRANTIES
	 	 	47	 
	6.1 Mutual Representations and Warranties
	 	 	47	 
	(a) Organization
	 	 	47	 
	(b) Authorization
	 	 	47	 
	(c) Binding Agreement
	 	 	47	 
	(d) No Conflicts; Consents
	 	 	48	 
	(e) Litigation
	 	 	48	 
	6.2 Additional Representations of Cadence
	 	 	48	 
	(a) Financial Statements
	 	 	48	 
	(b) Absence of Undisclosed Liabilities
	 	 	49	 
	(c) Absence of Material Adverse Effect
	 	 	49	 
	(d) Legal Matters
	 	 	50	 
	(e) Receipt of Financing; Restrictions
	 	 	50	 
	6.3 BMS Rights
	 	 	50	 
	6.4 BMS Patents and Know-How
	 	 	51	 
	6.5 DISCLAIMER
	 	 	52	 

 iii

 

 

	 	 	 	 	 
	6.6 Limitation of Liability
	 	 	52	 
	 
	 	 	 	 
	ARTICLE VII – INDEMNIFICATION; ARBITRATION
	 	 	53	 
	7.1 Mutual Indemnification
	 	 	53	 
	7.2 Additional Indemnification Obligations of Cadence
	 	 	54	 
	7.3 Additional Indemnification Obligations of BMS
	 	 	54	 
	7.4 Conditions to Indemnification; Third Party Claims
	 	 	55	 
	7.5 Insurance
	 	 	55	 
	7.6 Arbitration
	 	 	56	 
	7.7 Pharmatop Arbitration
	 	 	57	 
	 
	 	 	 	 
	ARTICLE VIII TERM AND TERMINATION
	 	 	58	 
	8.1 Term
	 	 	58	 
	8.2 Automatic Termination
	 	 	58	 
	8.3 Termination by Either Party
	 	 	58	 
	8.4 Termination by BMS
	 	 	59	 
	8.5 Termination by Cadence
	 	 	59	 
	8.6 Scope of Termination
	 	 	60	 
	8.7 Effect of Termination
	 	 	60	 
	8.8 Transition
	 	 	62	 
	8.9 Survival
	 	 	63	 
	8.10 Bankruptcy
	 	 	63	 
	 
	 	 	 	 
	ARTICLE IX – MISCELLANEOUS
	 	 	63	 
	9.1 Amendments
	 	 	63	 
	9.2 Counterparts; Facsimile Execution
	 	 	63	 
	9.3 Cumulative Remedies
	 	 	63	 
	9.4 Entire Agreement
	 	 	63	 
	9.5 Schedules
	 	 	63	 
	9.6 Force Majeure
	 	 	64	 
	(a) General
	 	 	64	 
	(b) Definition
	 	 	64	 
	(c) Duty to Mitigate
	 	 	64	 
	(d) Suspension
of Certain Obligations
	 	 	64	 
	9.7 Assignment
	 	 	64	 
	9.8 Governing Law
	 	 	65	 
	9.9 Headings
	 	 	65	 
	9.10 Notices
	 	 	65	 
	9.11 Severability
	 	 	66	 
	9.12 No Third Party Beneficiaries
	 	 	66	 
	9.13 Waivers
	 	 	66	 
	9.14 Documentary Conventions
	 	 	66	 
	9.15 Consents and Approvals
	 	 	67	 
	9.16 Absence of Presumption
	 	 	67	 
	9.17 Relationship of Parties
	 	 	67	 

 iv

 

 

Schedule 1.1 BMS Patents

Schedule 6.3(a) Pharmatop Patents

 v

 

 

INDEX OF DEFINED TERMS

	 	 	 	 	 
	 	 	Section	 
	$
	 	 	1.1	 
	Adverse Event
	 	 	1.1	 
	Affiliated Company
	 	 	1.1	 
	Agreement
	 	 	Introductory Paragraph	 
	Annual Operating Plan
	 	 	3.1	 
	[***]
	 	 	3.2	(c)
	Applicable Law
	 	 	1.1	 
	Approval
	 	 	1.1	 
	Available [***]
	 	 	2.24	 
	Balance Sheet
	 	 	6.2	(b)
	Balance Sheet Date
	 	 	6.2	(b)
	Bankruptcy
	 	 	1.1	 
	BMS
	 	 	Introductory Paragraph	 
	[***]
	 	 	1.1	 
	BMS Indemnitees
	 	 	7.2	 
	BMS Know-How
	 	 	1.1	 
	[***]
	 	 	4.1	(g)
	BMS Patent Product
	 	 	1.1	 
	BMS Patent Royalty Term
	 	 	1.1	 
	BMS Patents
	 	 	1.1	 
	[***] Covenant
	 	 	2.24	(b)
	BMS Rights
	 	 	1.1	 
	Business Day
	 	 	1.1	 
	Cadence
	 	 	Introductory Paragraph	
	Cadence Claims
	 	 	6.2	(d)
	Cadence Indemnitees
	 	 	7.3	 
	Calendar Quarter
	 	 	1.1	 
	Calendar Year
	 	 	1.1	 
	[***]
	 	 	2.1	(c)(i)
	[***]
	 	 	2.24	(d)
	[***]
	 	 	2.24	 
	[***]
	 	 	3.2	(f)
	Clinical Study Countries
	 	 	1.1	 
	Clinical Supply Agreement
	 	 	1.1	 
	Clinical Testing Product
	 	 	1.1	 
	Confidential Information
	 	 	1.1	 
	Consent
	 	 	6.1	(d)
	Contract Research Organization
	 	 	1.1	 
	Contracts
	 	 	1.1	 
	Control
	 	 	1.1	 
	Controlled
	 	 	1.1	 
	Controlling
	 	 	1.1	 
	Covenant Termination Date
	 	 	2.24(c). 1.1	 
	Derivative
	 	 	1.1	 
	Development Plan
	 	 	3.3	 
	Disclosing Party
	 	 	1.1	 
	Dispute
	 	 	7.6	 
	Dollar
	 	 	1.1	 
	Drug Regulatory Authority
	 	 	1.1	 
	Effective Date
	 	 	Introductory Paragraph	
	Equivalent Percentage
	 	 	4.1	(f)
	Exchange Act
	 	 	1.1	 
	[***] Date
	 	 	1.1	 
	[***] Period
	 	 	1.1	 
	[***] Date
	 	 	2.1	(c)
	Execution Date
	 	 	Introductory Paragraph	 
	FDA
	 	 	1.1	 
	FDCA
	 	 	1.1	 
	Financial Statements
	 	 	6.2	(a)
	Force Majeure
	 	 	9.6	(b)
	Governmental Entity
	 	 	1.1	 
	HSR Act
	 	 	1.1	 
	ICC
	 	 	7.6	(a)
	Improvement
	 	 	1.1	 
	In Accordance With GAAP
	 	 	6.2	(a)
	include
	 	 	9.14	 
	includes
	 	 	9.14	 
	including
	 	 	9.14	 
	IND
	 	 	1.1	 
	Indemnified Party
	 	 	7.4	 
	Indemnifying Party
	 	 	7.1	 
	Indemnitees
	 	 	7.1	 
	Judgments
	 	 	6.1	(d)
	License
	 	 	2.1	(a)
	Lien
	 	 	1.1	 
	Losses
	 	 	7.1	 
	Material Adverse Effect
	 	 	1.1	 
	NDA
	 	 	1.1	 
	NDA Acceptance
	 	 	1.1	 
	Net Sales
	 	 	1.1	 

 vi

 

			
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	 	 	Section	 
	[***] Date
	 	 	2.1	(c)
	[***] Date
	 	 	2.24	(d)
	Organizational Documents
	 	 	1.1	 
	Other Chemical Entity
	 	 	1.1	 
	Other Product Data
	 	 	2.9	 
	Other Reportable Information
	 	 	2.15	(e)
	Parties

	Introductory Paragraph	 
	Party

	Introductory Paragraph	 
	
Patents
	 	 	1.1	 
	Person
	 	 	1.1	 
	Pharmatop

	Background	 
	
Pharmatop Know-How
	 	 	1.1	 
	Pharmatop License Agreement

	Background	 
	
Pharmatop Patent Challenge
	 	 	2.16	(a)
	Pharmatop Patents
	 	 	1.1	 
	Pharmatop Royalty Term
	 	 	1.1	 
	Previously Disclosed
	 	 	1.1	 
	Proceedings
	 	 	6.1	(e)
	Product
	 	 	1.1	 
	Product Data
	 	 	1.1	 
	Qualifying [***]
	 	 	1.1	 
	Qualifying [***]
	 	 	1.1	 
	Receiving Party
	 	 	1.1	 
	Registrational Information
	 	 	1.1	 
	Regulatory Filings
	 	 	1.1	 
	[***] Product
	 	 	2.24	(b)
	Retained Sum
	 	 	4.2	(b)
	Royalties
	 	 	4.1	(h)
	Rules
	 	 	7.6	(a)
	[***]
	 	 	2.24	 
	Silicon Valley Loan Agreement
	 	 	6.2	(b)
	[***]
	 	 	2.24	 
	Specified Number of Days
	 	 	8.3	 
	Sublicense
	 	 	2.1	(a)
	Tax
	 	 	1.1	 
	Tech Transfer Period
	 	 	2.12	 
	Tech Transfer Plan
	 	 	2.10	 
	Technology
	 	 	1.1	 
	Technology Documentation
	 	 	1.1	 
	Territory
	 	 	1.1	 
	Third Party
	 	 	1.1	 
	[***]
	 	 	2.24	 
	Title 11
	 	 	8.10	 
	Transaction Documents
	 	 	1.1	 
	Transfer Taxes
	 	 	1.1	 
	[***]
	 	 	2.24	 
	Valid Claim
	 	 	1.1	 
	without limitation
	 	 	9.14	 

 vii

 

			
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IV APAP AGREEMENT

(US and Canada)

     This IV APAP Agreement (US and Canada) (the “Agreement”) is entered into as of February 21,
2006 (the “Execution Date”), by and between Bristol-Myers Squibb Company, a Delaware corporation
having an address at 345 Park Avenue, New York, New York 10154 (“BMS”), and Cadence
Pharmaceuticals, Inc., a Delaware corporation having an address at 12730 High Bluff Drive, San
Diego, California 92130 (“Cadence”), effective as of March 29, 2006 (the “Effective Date”).
Cadence and BMS are sometimes collectively referred to herein as the “Parties” and each
individually as a “Party.”

BACKGROUND

     1. BMS has licensed from SCR Pharmatop, a civil law partnership organized under the laws of
France, having its head office’s address at 10, Square St. Florentin, 78150 Le Chesnay, France,
recorded with the Register of Commerce and Companies of Versailles under No. 407552702
(“Pharmatop”), rights under certain patents and patent applications relating to parenteral
paracetamol (also referred to in the United States as “acetaminophen”) formulations in the United
States, Canada and Mexico.

     2. The License Agreement dated as of December 23, 2002, between Pharmatop and BMS (the
“Pharmatop License Agreement”) sets forth such rights.

     3. BMS desires to sublicense to Cadence BMS’s intellectual property rights and related
obligations under the Pharmatop License Agreement to Cadence with respect to the Territory (as
defined below) upon the terms and conditions set forth in this Agreement and to provide for certain
other matters.

AGREEMENT

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

ARTICLE
I — DEFINITIONS

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

     “Adverse Event” means any untoward medical occurrence in a patient or clinical investigation
subject administered any Product, and which does not necessarily have a causal relationship with
such product. An adverse event can therefore be any unfavorable and unintended sign (including an
abnormal laboratory finding, for example),
symptom or disease temporally associated with the use of a medicinal product, whether or not
considered related to the medicinal product. For the avoidance of doubt, in the U.S. an Adverse
Event shall include an adverse experience or test result in connection with the use of the Product

 

 

that requires a written IND safety report in accordance with 21 CFR Part 312.32(c), as amended or
superseded from time to time.

     “Affiliated Company” of a Party means any corporation, firm, partnership or other entity that
directly or indirectly Controls, is Controlled by or is under common Control with such Party at any
time during the term of this Agreement, but only for so long as such entity directly or indirectly
Controls, is Controlled by or is under common Control with such Party.

     “Agreement” has the meaning given to such term in the introductory paragraph hereof.

     “Annual Operating Plan” has the meaning given to such term in Section 3.1 hereof.

     “[***]” has the meaning given to such term in Section 3.2 hereof.

     “Applicable Law” means any applicable federal, state, local or foreign statute, law,
ordinance, rule or regulation, judicial order, or industry standard imposed by regulation or law,
including the laws of the United States and Canada, and regulations promulgated by any other
applicable Governmental Entity or Drug Regulatory Authority.

     “Approval” means, with respect to any Product in any regulatory jurisdiction, approval from
the applicable Drug Regulatory Authority sufficient for the importation, manufacture, distribution,
use and sale of the Product in such jurisdiction in accordance with Applicable Law, including
receipt of pricing and reimbursement approvals, where applicable.

     “Available [[***]” has the meaning set forth in Section 2.24(a).

     “Balance Sheet” has the meaning given to such term in Section 6.2(b) hereof.

     “Balance Sheet Date” has the meaning given to such term in Section 6.2(b) hereof.

     “Bankruptcy” means with respect to a Party the first to occur of:

(i) such Party shall have (A) voluntarily commenced any proceeding or filed any petition seeking
relief under Title 11 of the United States Code, or any other bankruptcy, insolvency or similar law
or any law for the protection of creditors of the United States, any state thereof, or any other
applicable jurisdiction, (B) applied for or consented to the appointment of a receiver, trustee,
custodian, sequestrator, conciliator, administrator or similar official for it or a substantial
part of its property, (C) filed an answer admitting the material allegations of a petition filed
against or in respect of it in any such proceeding, (D) made a general assignment for the benefit
of creditors, (E) admitted in writing its inability, to pay its debts as they become due or (F)
taken corporate action for the purpose of effecting any of the foregoing; or

     (ii) an involuntary proceeding shall have been commenced or any involuntary petition
shall have been filed in a court of competent jurisdiction seeking (A) relief in respect of
such Party or of a substantial part of its or their property, under Title 11 of the

 

			
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2

 

United
States Code, or any other bankruptcy, insolvency or similar law of the United States, any
state thereof or any other applicable jurisdiction, (B) the appointment of a receiver,
trustee, custodian, sequestrator, conciliator, administrator or similar official for such
Party or all or substantially all of its property or (C) the winding-up or liquidation of
such Party; and such proceeding or petition shall have continued undismissed for 60 days or
an order or decree approving or ordering any of the foregoing shall have continued unstayed
and in effect for 30 days.

     “BMS” has the meaning given to such term in the introductory paragraph hereof.

     “[***]” means (i) [***]and (ii) [***].

     “BMS Indemnitees” has the meaning given to such term in Section 7.2 hereof.

     “BMS Know-How” means formulation and manufacturing know-how that is used by BMS and its
Affiliated Companies as of the Execution Date or during the Supply Term (as defined in the Clinical
Supply Agreement) to make or formulate the Product or the Clinical Testing Products (as defined in
the Clinical Supply Agreement) in the European Union.

     “BMS Patent Product” means any Product for which the manufacture, use, import, sale or offer
for sale in the United States would otherwise infringe a Valid Claim of any of the BMS Patents but
for the license rights granted by BMS in Article 2 hereof.

     “BMS Patent Royalty Term” means the date commencing upon the expiration of the Pharmatop
Royalty Term in the United States and terminating upon the date that the manufacture, use, import,
sale or offer for sale of BMS Patent Products in the United States is no longer covered by any
Valid Claim of a BMS Patent (including any patent term extensions, such as pediatric exclusivity
extensions, as may be available under Applicable Law) or covered by any data or regulatory
exclusivity.

     “BMS Patents” means the Patents listed on Schedule 1.1.

     “BMS Rights” means (i) BMS’s rights under the Pharmatop Patents and Pharmatop Know-How with
respect to the Products in the Territory licensed to BMS under the Pharmatop License Agreement
during the term of this Agreement, subject to the
limitations, terms and conditions set forth in the Pharmatop License Agreement and (ii) the
right granted to BMS in Section 2.1 of the Pharmatop License Agreement to make and have made the
Products outside the Territory for use within the Territory.

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

     “Cadence” has the meaning given to such term in the introductory paragraph hereof.

 

			
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     “Cadence Claims” has the meaning given to such term in Section 6.2(d) hereof.

     “Cadence Indemnitees” has the meaning given to such term in Section 7.3 hereof.

     “Calendar Quarter” means each of the periods of time from (a) January 1 through March 31; (b)
April 1 through June 30; (c) July 1 through September 30; and (d) October 1 through December 31.

     “Calendar Year” means a year that begins on January 1 and ends on December 31.

     “[***]” has the meaning set forth in Section 2.1(c)(i).

     “[***]” has the meaning set forth in Section 2.24(d).

     “[***]” has the meaning set forth in Section 2.24(a).

     “[***]” has the meaning set forth in Section 3.2(f).

     “Clinical Study Countries” means the countries set forth on a list of such countries that has
been Previously Disclosed, as such list is amended from time to time in accordance with the last
paragraph of Section 3.6.

     “Clinical Supply Agreement” means the Clinical Supply Agreement dated as of the Execution Date
between Lawrence Laboratories and Cadence (and BMS, as guarantor).

     “Clinical Testing Product” has the meaning set forth in the Clinical Supply Agreement.

     “Confidential Information” means (a) with respect to a Party and its Affiliated Companies
(collectively, the “Receiving Party”), all information, Technology and confidential or proprietary
materials which are disclosed by the other Party and its Affiliated Companies (collectively, the
“Disclosing Party”) to the Receiving Party hereunder or under the Clinical Supply Agreement or that
has previously been disclosed under the Mutual Confidential Disclosure Agreement between the
Parties dated July 6, 2005, as amended, or to any of its employees, consultants, Affiliated
Companies or sublicensees and any information that
is considered Confidential Information for purposes of the Clinical Supply Agreement, (b) the
Product Data, which shall be Confidential Information of BMS to the extent resulting from work,
trials or studies conducted by or on behalf of BMS and which shall be Confidential Information of
Cadence to the extent resulting from work, trials or studies conducted by or on behalf of Cadence,
(c) correspondence with Drug Regulatory Authorities, which shall be Confidential Information of the
Party that conducted such correspondence, and (d) all reports (including any development,
commercialization and/or financial reports), plans (including the Development Plan and the Annual
Operating Plan) and other documents and budgets provided by Cadence and/or its Affiliated Companies
to BMS pursuant to this Agreement, all of which shall be considered Confidential Information of
Cadence except, in each of (a), (b),(c) or (d), to the extent that any such information (i) as of
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or its Affiliated Companies, as demonstrated
by credible written documentation existing and in the possession of the Receiving Party prior to
the date of disclosure, other than by virtue of a prior confidential disclosure to such Receiving
Party; (ii) as of the date of disclosure is in, or subsequently enters, the public domain, through
no fault or omission of the Receiving Party; (iii) is obtained without restriction from a Third
Party having a lawful right to make such disclosure free from any obligation of confidentiality to
the Disclosing Party; or (iv) is independently developed by or for the Receiving Party without
reference to or reliance upon any Confidential Information of the Disclosing Party as demonstrated
by credible written documentation. The amount of the payments made to BMS under this Agreement
shall be Confidential Information of both BMS and Cadence. A Party’s Affiliated Company that has
disclosed Confidential Information to a Receiving Party
shall continue to be considered a
Disclosing Party even after it ceases to be an Affiliated Company of such Party. A Party’s
Affiliated Company that has received Confidential Information from a Disclosing Party shall
continue to be considered a Receiving Party even after it ceases to be an Affiliated Company of
such Party.

     “Consent” has the meaning given to such term in Section 6.1(d) hereof.

     “Contract Research Organization” means a reputable Third Party research or development
organization one of whose principal businesses is the provision of contract research or development
services to unrelated Persons.

     “Contracts” means all contracts, agreements, commitments and other legally binding
arrangements, whether oral or written.

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

     “Covenant Termination Date” has the meaning set forth in Section 2.24(c).

     “Derivative” of paracetamol means any compound whose chemical structure is derived from the
chemical structure for paracetamol through structural modifications and/or chemical changes that
retain those portions of paracetamol’s chemical structure that are known to contribute materially to the activity, specificity and selectivity of
paracetamol.

     “Development Plan” has the meaning given to such term in Section 3.3 hereof.

     “Disclosing Party” has the meaning given to such term in the definition of “Confidential
Information” herein.

     “Dispute” has the meaning given to such term in Section 7.6 hereof.

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

     “Drug Regulatory Authority” means any Governmental Entity with responsibility for granting any
licenses, approvals or authorizations or granting pricing and/or reimbursement approvals necessary
for the marketing and sale of pharmaceutical products in any regulatory jurisdiction.

     “Effective Date” has the meaning given to such term in the introductory paragraph hereof.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.

     “[***] Date” means [***] on which (i) [***], (ii) [***] or (iii) [***]; provided that (A)
[***] and (B) [***].

     “[***] Period” means the [***] not include any period during which [***].

     “[***] Date” has the meaning given to such term in Section 2.1(c).

     “Execution Date” has the meaning given to such term in the introductory paragraph hereof.

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

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

     “Financial Statements” has the meaning given to such term in Section 6.2(a) hereof.

     “Force Majeure” has the meaning given to such term in Section 9.6(b) hereof.“Governmental
Entity” means any Federal, state, local or foreign government or any court of competent
jurisdiction, regulatory or administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign.

     “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

     “ICC” has the meaning given to such term in Section 7.6(a) hereof.

     “Improvement” means any adaptation, improvement, enhancement or upgrade with respect to the
formulation and/or manufacture of the Products, whether such Improvement can be protected by patent
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     “In Accordance With GAAP” has the meaning given to such term in Section 6.2(a) hereof.

     “IND” means an Investigational New Drug Application (as defined in 21 CFR Part 312.3, as
amended or superseded from time to time) that is required to be filed with the FDA before beginning
clinical testing of a Product in human subjects in the United States, or any successor application
or procedure.

     “Indemnified Party” has the meaning given to such term in Section 7.4 hereof.

     “Indemnifying Party” has the meaning given to such term in Section 7.1 hereof.

     “Indemnitees” has the meaning given to such term in Section 7.1 hereof.

     “Judgments” has the meaning given to such term in Section 6.1(d) hereof.

     “License” has the meaning given to such term in Section 2.1(a) hereof.

     “Lien” means any pledge, encumbrance, mortgage, security interest, purchase option, call or
similar right.

     “Loan Agreement” has the meaning given to such term in Section 6.2(b) hereof.

     “Losses” has the meaning given to such term in Section 7.1 hereof.

     “Material Adverse Effect” means, with respect to any applicable representation and warranty of
a Party or to any other matter to which such phrase is applied, a material adverse change in or
effect on (i) such Party’s (and its subsidiaries’) business, operations, assets, condition
(financial or otherwise) taken as a whole or (ii) such Party’s ability to perform its obligations
under any Transaction Document to which it is a party.

     “NDA” means a new drug application or an abbreviated new drug application (as described in 21 CFR
314.50), including any amendments or supplements thereto, filed with
the FDA pursuant to the FDCA and includes any Common Technical Document for the Registration of
Pharmaceuticals for Human Use filed with the FDA or any Drug Regulatory Authority in Canada.

     “NDA Acceptance” means the earlier of (i) the date Cadence receives written notice from the
FDA of acceptance by the FDA of an NDA filed by or on behalf of Cadence or its licensees with
respect to any Product in the United States, or (ii) sixty (60) days following filing of such NDA
with the FDA, provided that Cadence has not received a “Notice of Refusal to File” from the FDA
with respect to such NDA.

     “Net Sales” means the total revenue invoiced by Cadence, its Affiliated Companies,
sublicensees, co-promotion and co-marketing partners and any other Person selling or promoting
Products on behalf of any such Person from the sale of a Product to independent Third Parties in
the Territory less the following amounts: (a) credits, allowances and rebates to, and chargebacks
from the account of, such customers for spoiled, damaged, out-dated and returned Product;

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(b) trade
discounts, cash discounts, quantity discounts, rebates and other price reduction programs, and
other charge back payments; (c) sales, value-added and other similar taxes (including duties or
other governmental charges levied on, absorbed or otherwise imposed on the sales of Products
including governmental charges otherwise measured by the billing amount); (d) customs duties,
surcharges and other governmental charges incurred in connection with the exportation or
importation of the Product; and (e) bad debts on Product sales written off in accordance with
generally accepted accounting principles, consistently applied. For the purposes of this
definition, samples distributed by Cadence, its Affiliated Companies, sublicensees, co-promotion
and co-marketing partners and any other Person selling or promoting Products on behalf of any such
Person to their customers free of charge, and any Product used or provided for clinical or research
purposes, shall not be included in Net Sales.

     When Products are sold for monies other than Dollars, the monies due will first be determined
in the foreign currency of the country in which such Products were sold and then converted into
equivalent Dollars, on a monthly basis, using the applicable U.S. Federal Reserve rate in effect on
the last business day of each calendar month.

     In the event that Cadence makes sales of Products to an Affiliated Company, sublicensee,
co-promotion or co-marketing partner or any other person selling or promoting Products on behalf of
any such Person, the calculation of Net Sales shall be based on the greater of (x) the revenue
received by Cadence from its sale of Products to the Affiliated Company, sublicensee, co-promotion
or co-marketing partner or other person selling or promoting Products on behalf of any such Person,
as the case may be, and (y) the revenue received by the Affiliated Company, sublicensee,
co-promotion or co-marketing partner or other person selling or promoting Products on behalf of any
such Person from its sale of Products to Third Parties.

     “[***] Date” has the meaning set forth in Section 2.1(c).

     “[***] Date” has the meaning set forth in Section 2.24(d).

     “Organizational Documents” means, with respect to any Person at any time, such Person’s
certificate or articles of incorporation, by-laws, memorandum and articles of association,
certificate of formation of limited liability company, limited liability company agreement, and other similar organizational or constituent documents, as
applicable, in effect at such time.

     “Other Chemical Entity” means any chemical entity that is not parenteral paracetamol or a
Derivative thereof.

     “Other Reportable Information” has the meaning set forth in Section 2.15(e).

     “Parties” has the meaning given to such term in the introductory paragraph hereof.

     “Party” has the meaning given to such term in the introductory paragraph hereof.

 

			
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     “Patents” means, to the extent that they have been or are filed or issued in the Territory:
(a) patents and patent applications existing as of the Execution Date and/or at any time
thereafter; and (b) any divisionals, continuations, substitutions, continuations-in-part,
extensions, renewals, re-examinations or reissues of such patents and/or applications as of the
Execution Date and/or at any time thereafter.

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

     “Pharmatop” has the meaning given to such term in Background.

     “Pharmatop Know-How” means the Know-How (as such term is defined in the Pharmatop License
Agreement) licensed to BMS under the Pharmatop License Agreement.

     “Pharmatop License Agreement” has the meaning given to such term in Background.

     “Pharmatop Patent Challenge” has the meaning given to such term in Section 2.16(a).

     “Pharmatop Patents” means the Licensed Patents (as such term is defined in the Pharmatop
License Agreement) filed or issued in the Territory and licensed to BMS under the Pharmatop License
Agreement.

     “Pharmatop Royalty Term” means, with respect to each country in the Territory on a
country-by-country basis, the date commencing with the date of first commercial sale of a Product
in such country, and terminating upon the latest of (a) the date that is ten (10) years after such
first commercial sale in such country, (b) the date that the manufacture, use and sale of a Product
in such country is no longer covered by any Valid Claim of a Pharmatop Patent in such country
(including any patent term extensions, such as pediatric exclusivity extensions, as may be
available under Applicable Law) or (c) the date that the obligation of BMS to pay royalties to
Pharmatop (or any successor licensor), pursuant to the Pharmatop License Agreement, terminates.

     “Previously Disclosed” means with respect to any document or information, a document or
information set forth in a mutually agreed letter or memorandum delivered by Cadence or BMS to the other contemporaneously with the execution of this
Agreement which identifies such document or information as “Previously Disclosed” for purposes of
this Agreement.

     “Proceedings” has the meaning given to such term in Section 6.1(e) hereof.

     “Product” means (i) any parenterally administered dosage form containing paracetamol (or any
Derivative thereof) alone or in combination with one or more other drugs (as defined, as of
December 23, 2002, in Section 201 of the FDCA), and for which the manufacture, use or sale in a
country in the Territory (x) would otherwise infringe any of the Pharmatop Patents or BMS Patents
but for the license rights granted by BMS in Article 2 hereof, and/or (y) incorporates or uses to
any material extent any Pharmatop Know-How and/or (ii) any parenterally administered dosage form
containing paracetamol (or any Derivative thereof) alone or in combination with

9

 

one or more other
drugs (as defined, as of December 23, 2002, in Section 201 of the FDCA) that is manufactured by a
process that incorporates or uses to any material extent any BMS Know-How. When used with respect
to any jurisdiction outside the Territory, “Product” shall refer to any parenterally administered
dosage form containing paracetamol (or any Derivative thereof) alone or in combination with one or
more other drugs (as defined, as of December 23, 2002, in Section 201 of the FDCA).

     “Product Data” means data, information and conclusions resulting from any analytical,
galenical, stability, toxicology or pharmacokinetic work and/or clinical studies and/or clinical
trials relating to, or conducted by or on behalf of BMS or Cadence and filed in support of,
Approval of Products in the United States.

     “Qualifying [***]” means a [***], with respect to which [***].

     “Qualifying [***]” means any [***] (i) [***], (ii) [***], and (iii) [***].

     “Receiving Party” has the meaning given to such term in the definition of “Confidential
Information” herein.

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

     “Regulatory Filings” means, collectively, any and all INDs, NDAs or any other filings
(including any foreign equivalents) as may be required by any Drug Regulatory Authority for the
development, manufacture or commercialization of Products, as applicable.

     “[***] Product” has the meaning given to such term in Section 2.24(b) hereof.

     “Royalties” has the meaning given to such term in Section 4.1(h) hereof.

     “Rules” has the meaning given to such term in Section 7.6(a) hereof.

     “[***]” has the meaning given to such term in Section 2.24(a).

     “[***]” has the meaning set forth in Section 2.24(a).

     “Specified Number of Days” has the meaning given to such term in Section 8.3.

     “Sublicense” has the meaning given to such term in Section 2.1(a) hereof.

     “Tax” means all taxes, charges, fees, levies or other assessments, and all estimated payments
thereof, including income, excise, license, severance, stamp, occupation, premium, profits,
windfall profits, customs duties, capital stock, employment, disability, registration, alternative
or add-on minimum, property, sales, use, value added, environmental, franchise, payroll, transfer,
gross receipts, withholding, social security or similar unemployment taxes, and any other tax of
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governmental authority,
including any interest, penalties and additions to tax relating to such taxes, charges, fees,
levies or other assessments.

     “Tech Transfer Period” has the meaning given to such term in Section 2.12 hereof.

     “Tech Transfer Plan” has the meaning given to such term in Section 2.10 hereof.

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

     “Technology Documentation” means a written description of the BMS Know-How.

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

     “Third Party” means any Person other than Cadence, BMS and their respective Affiliated
Companies.

     “Title 11” has the meaning given to such term in Section 8.10 hereof.

     “Transaction Documents” means this Agreement and the Clinical Supply Agreement.

     “Transfer Taxes” means taxes and assessments imposed upon the transfer, such as transfer,
sales, value added, and stamp taxes, and not Taxes measured by income or gain, but including any
interest, penalties or other additions thereto.

     “[***]” has the meaning set forth in Section 2.24(a).

     “[***]” has the meaning set forth in Section 2.24(a).

     “Valid Claim” means a claim in any unexpired issued Pharmatop Patent or BMS Patent that has
not been held invalid or unenforceable by a non-appealed or unappealable decision by a court or
other appropriate body of competent jurisdiction, and which is not admitted to be invalid through
disclaimer, dedication to the public, and which has not been cancelled or abandoned in accordance
with and as permitted by (i) both the terms of this Agreement and the Pharmatop License Agreement
in the case of the Pharmatop Patents, or (ii) the terms of this Agreement in the case of the BMS
Patents.

 

			
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ARTICLE
II — GRANT OF U.S. AND CANADIAN RIGHTS AND RELATED TRANSFERS

     2.1 Grant of Sublicense and License .

          (a) Effective as of the Effective Date and subject to Section 3.4 and the reservation of
rights set forth in Section 2.2 and subject to early termination as provided in Article VIII, BMS
hereby grants to Cadence on behalf of itself and its Affiliated Companies:

          (i) subject to the terms, conditions and limitations set forth in the Pharmatop License
Agreement and subject to Section 2.1(c):

     (A) an exclusive (even as to BMS), royalty-bearing sublicense under the BMS Rights with
the right to sublicense as provided in Section 2.4, to import, use, sell and offer for sale
Products in the Territory;

     (B) an exclusive (even as to BMS) sublicense under the BMS Rights, with the right to
sublicense as provided in Section 2.4, to make and have made the Products in the Territory
solely for (1) import, use, sale and offer for sale within the Territory or (2) import and
use in clinical trials in the Clinical Study Countries as permitted by Section 3.6; and

     (C) an exclusive (even as to BMS) sublicense under the BMS Rights, with the right to
sublicense as provided in Section 2.4, to make and have made the Products anywhere in the
world solely for (1) import, use, sale and offer for sale within the Territory, subject to
the limitations set forth in Section 2.1 of the Pharmatop License Agreement (other than the
consent of UPSA S.A., which has been obtained as of the Effective Date) and subject to
Section 3.8, or (2) import or use in Cadence’s clinical trials in the Clinical Study
Countries as permitted by Section 3.6 hereof;

          (ii) a non-exclusive license under the BMS Patents, with the right to sublicense as provided
in Section 2.4, to import, use, sell and offer for sale Products in the Territory; provided,
however, that the license granted in this paragraph shall not grant any right to the composition of
matter of any Other Chemical Entity, or the right to import, use, sell or offer for sale any Other
Chemical Entity or to any use not claimed by the BMS Patents;

          (iii) a non-exclusive license under the BMS Patents, with the right to sublicense as provided
in Section 2.4, to make and have made the Products in the Territory solely for import, use, sale
and offer for sale within the Territory; provided, however, that the license granted in this
paragraph shall not grant any right to the composition of matter of any Other Chemical Entity, or
the right to make or have made any Other Chemical Entity or to any use not claimed by the BMS
Patents;

          (iv) a non-exclusive license under the BMS Know-How, with the right to sublicense as provided
in Section 2.4, to make and have made the Products anywhere in the world solely for (1) use and
sale within the Territory and (2) import and use in clinical trials in the Clinical Study Countries
as permitted by Section 3.6; and.

12

 

          (v) a non-exclusive right to use, copy, translate, display and distribute (subject to any
confidentiality obligations), improve and make derivative works of the BMS Technology Documentation
for the purpose of making and having made the Products consistent with the license set forth above
with respect to the BMS Know-How.

          The sublicenses granted in Section 2.1(a)(i) are referred to herein collectively as the
“Sublicense”), and the licenses granted in Sections 2.1(a)(ii), (iii), (iv) and (v) are referred to
herein collectively as the “License”).

          The Sublicense granted to Cadence hereby shall only permit Cadence to sell Products that are
packaged, finished products ready for use, and the Sublicense shall not extend to any sales in bulk
or of semi-finished products except to permitted sublicensee(s) of Cadence. Except as may be
otherwise agreed in writing by BMS in its sole discretion, the License granted to Cadence hereby
shall only permit Cadence to sell Products that are packaged, finished products ready for use, and
the License shall not extend to any sales in bulk or of semi-finished products except to permitted
sublicensee(s) of Cadence.

          (b) Cadence hereby (i) accepts such Sublicense and License, (ii) acknowledges that the
Sublicense rights granted hereunder are subject and subordinate to the rights of Pharmatop under,
and all the terms and conditions of, the Pharmatop License
Agreement and (iii) agrees to comply with all the restrictions of the Pharmatop License
Agreement that relate to the exercise of the rights sublicensed to Cadence hereunder.

          (c) If on the [***], then [***]; provided that:

     (i) [***] (A) Cadence may [***] and (B) such [***]. Cadence shall provide to BMS
evidence reasonably satisfactory to BMS of the accuracy of such report. Notwithstanding the
foregoing, [***] (A) [***] or (B) [***]. In the event [***] as provided in this Section
2.1(c).

     (ii) Such [***].

     (iii) Such [***].

     Each date, if any, as of which such [***].

          (d) Any Affiliated Companies on whose behalf BMS has made any of the foregoing license grants
that hereafter ceases to be an Affiliated Company of BMS shall nevertheless continue to be
obligated under such license grants in accordance with the terms of this Agreement.

     2.2 No Implied Licenses; Reservation of Rights .

          (a) Cadence shall have no licenses or other rights other than those expressly granted in this
Agreement, and, in particular and without limiting the foregoing, nothing in this

 

			
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Agreement shall
be construed to grant Cadence any licenses or other rights in any intellectual property rights,
information or data (i) owned or Controlled by BMS or any of its Affiliated Companies, except as
expressly set forth in this Agreement or (ii) owned or Controlled by Pharmatop or any of its
Affiliated Companies that is not licensed by Pharmatop to BMS under the Pharmatop License
Agreement.

          (b) Cadence acknowledges that BMS or one or more of its Affiliated Companies holds certain
license rights from Pharmatop (whether under the Pharmatop License Agreement or otherwise) relating
to countries outside the Territory, and, except for the right of cross-reference provided for in
Section 2.8(d), the rights granted to Cadence under this Agreement do not include any license or
other rights with respect to such other rights of BMS and its Affiliated Companies, all of which
are expressly reserved to BMS and its Affiliated Companies.

          (c) Notwithstanding the [***], BMS hereby reserves the non-exclusive, sublicensable right
under the BMS Rights, BMS Patents and BMS Know-How (i) to make and have made the Products in the
Territory for supply to Cadence, or to the extent otherwise necessary or appropriate for BMS or any
of its Affiliated Companies or sublicensees to perform
its obligations, under the Clinical Supply Agreement, (ii) to make and have made the Products
anywhere in the world for import, use, sale and offer for sale outside the Territory and (iii) to
import, make, have made and use Products in the Territory for any non-clinical or clinical research
purpose of BMS and its Affiliated Companies (subject, to the extent applicable, to Section 3.7) or
in support of any Regulatory Filings or other activities outside the Territory (subject, to the
extent applicable, to Section 3.7); provided that the rights reserved pursuant to clause (iii)
above shall not be sublicensable.

          (d) BMS is not sublicensing or granting to Cadence, and Cadence acknowledges and agrees that
it is not receiving any rights under Section 2.10 or the proviso of the last sentence of Section
2.3 of the Pharmatop License Agreement, all of which are reserved to BMS.

          (e) BMS shall have no licenses or other rights other than those expressly granted in this
Agreement, and, in particular and without limiting the foregoing, nothing in this Agreement shall
be construed to grant BMS any licenses or other rights in any intellectual property rights,
information or data owned or Controlled by Cadence or any of its Affiliated Companies, except as
expressly set forth in this Agreement.

     2.3 Rights of Pharmatop .

          (a) Nothing in this Agreement shall reduce or limit any of Pharmatop’s rights under the
Pharmatop License Agreement.

          (b) Pharmatop shall have the same right to supervise the activities of Cadence hereunder as
Pharmatop has with respect to BMS’s activities under the Pharmatop License Agreement.

 

			
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          (c) Pharmatop shall have the same rights to audit Cadence’s (and any of its sublicensee’s)
activities relevant to this Agreement, and to inspect Cadence’s (and any sublicensee’s) facilities
involved in the manufacture of Products, in the same manner as Pharmatop has with respect to BMS’s
activities and facilities under the Pharmatop License Agreement.

     2.4 Further Sublicenses.

          (a) Except as set forth in Section 2.5, the rights licensed to Cadence under Section 2.1 shall
be sublicensable to a Third Party [***] (except to the extent otherwise agreed to by BMS in writing
in its sole discretion, which writing shall, to the extent applicable, specifically waive
compliance with this Section 2.4(a)): (i) such sublicense shall refer to this Agreement and shall
be subject and subordinate to this Agreement and, with respect to the Sublicense, the Pharmatop
License Agreement, (ii) the sublicensee shall assume and agree in writing to be bound by and comply
with the terms and conditions of this Agreement in the same manner as Cadence, and without limiting
the generality of the foregoing to maintain insurance coverage at the same levels and on the same
terms and conditions as set forth in Section 7.5, provide sales reports pursuant to Section 4.7
hereof and keep books and records and permit BMS to review such books and records pursuant to
Section 4.8 hereof, (iii) BMS shall be made an express third party beneficiary of the sublicensee’s
obligations under such sublicense that relate to compliance
with the terms and conditions of this Agreement with the express right to enforce the same
directly against the sublicensee, (iv) a copy of the proposed sublicense (except that any
confidential financial terms may be redacted) shall be provided to BMS at the time Cadence seeks
BMS’s consent to such sublicense as aforesaid, (v) an executed copy of the sublicense (except that
any confidential financial terms may be redacted) shall be provided to BMS promptly after
execution, (vi) each sublicense or other right granted by Cadence with respect to any right
licensed to it hereunder shall terminate immediately upon the termination of the Sublicense or
License from BMS to Cadence with respect to such right; and (vii) such sublicensees shall not have
the right to grant further sublicenses or otherwise transfer any rights sublicensed to them with
respect to the Products except in accordance with and subject to this Section 2.4 and all of the
other terms and conditions of this Agreement. The foregoing shall also apply in the event of any
subsequent amendment or modification of such sublicense agreement. In the event Cadence desires to
effect any such sublicense, it shall provide BMS with such information concerning the proposed
arrangement as BMS may reasonably request. BMS shall use reasonable efforts to provide its
response within [***] ([***])[***] (or, if BMS so requests, [***] ([***])[***]) after receiving
such information. The failure of BMS to consent to or disapprove of such proposed sublicense
within such [***] period shall not constitute a consent to such sublicense.

          (b) Cadence may grant sublicenses to its Affiliated Companies under the Sublicense and the
License [***], subject, in the case of a sublicense of rights licensed to Cadence pursuant to the
Sublicense, to compliance with the Pharmatop License, and then shall be sublicensable only as
follows (except to the extent otherwise agreed to by BMS in writing in its sole discretion, which
writing shall, to the extent applicable, specifically waive compliance

 

			
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with this Section 2.4(a)):
(i) such sublicense shall be subject and subordinate to this Agreement and, with respect to the
Sublicense, the Pharmatop License Agreement, (ii) such sublicense shall terminate immediately in
the event such Affiliated Company ceases to be an Affiliated Company of Cadence, (iii) an executed
copy of the sublicense shall be provided to BMS promptly after execution, (iv) each sublicense or
other right granted by Cadence with respect to any right licensed to it hereunder shall terminate
immediately upon the termination of the Sublicense or License from BMS to Cadence with respect to
such right and (v) such sublicensees shall not have the right to grant further sublicenses or
otherwise transfer any rights sublicensed to them with respect to the Products except in accordance
with and subject to this Section 2.4 and all of the other terms and conditions of this Agreement.
The foregoing shall also apply in the event of any subsequent amendment or modification of such
sublicense agreement. Without limiting any of Cadence’s responsibilities under Section 2.4(c),
Cadence shall cause its Affiliated Company to comply with the terms and conditions of this
Agreement in the same manner as Cadence.

          (c) Cadence shall be primarily responsible for all payments due and the making of reports
under this Agreement by its sublicensees and for compliance with all applicable terms of this
Agreement, and Cadence shall remain jointly and severally liable with each of its sublicensees
(whether or not such sublicensee is an Affiliated Company of Cadence) for any failure by such
sublicensee to perform, observe or comply with the terms and conditions of this Agreement or the
Pharmatop License Agreement.

          (d) Any purported sublicense hereunder not entered into in compliance with this Section 2.4
shall be null and void and without effect.

          (e) Cadence or its Affiliated Companies may engage a Third Party, including a contractor,
consultant, or Contract Research Organization, to perform research or development activities with
respect to Products on behalf of Cadence or its Affiliated Companies and such activities shall not
be deemed a sublicense if no rights under the BMS Rights, BMS Patents or BMS Know-How are licensed
or granted; provided, that (i) none of the rights of BMS hereunder are diminished or otherwise
adversely affected as a result of such engagement, (ii) any such Third Party shall enter into an
appropriate written agreement obligating such Third Party to be bound by obligations of
confidentiality and restrictions on use of Confidential Information that are no less restrictive
than the obligations in this Agreement; and (iii) Cadence shall at all times be responsible for the
performance of such Third Party. Cadence shall use all reasonable efforts to cause such Third
Party to agree in writing to assign to Cadence inventions made by such Third Party in performing
such services for Cadence.

     2.5 Delegation of Manufacturing. Subject to the scope of the rights granted to
Cadence in the Sublicense and the License and subject to Section 3.8, Cadence may arrange by
written agreement to have the Products manufactured by a Third Party manufacturer without the prior
consent of BMS but subject to compliance with the Pharmatop License Agreement with respect to
sublicensing, if applicable, and subject to clauses (i), (iii), (v), (vi) and (vii) of Section
2.4(a) and the provision to BMS of a copy of the agreement or agreements relating to such
manufacturing arrangement (subject to redaction of confidential financial terms) promptly after the
execution thereof. If the Products are manufactured by a Third Party manufacturer (other than
pursuant to the Clinical Supply Agreement), Cadence shall notify BMS and Pharmatop and shall
provide BMS and Pharmatop with the identity of each such manufacturer

16

 

and provide proof to BMS and
Pharmatop that (a) each such manufacturer has been informed in writing that the products to be made
are subject to the Licensed Patents (as defined in the Pharmatop License Agreement) held by
Pharmatop and (b) each such manufacturer has agreed to manufacture the Products only pursuant to a
written agreement with Cadence and solely for the benefit of Cadence and its sublicensees. In
addition Cadence shall use reasonable efforts to have such Third Party agree in writing to assign
or license to Cadence Improvements made by such Third Party with respect to the manufacture of the
Products, which license if obtained by Cadence shall include the right to sublicense such rights to
BMS and Pharmatop as contemplated by Section 2.7. The above restrictions do not apply to raw
materials, packaging items or other incidental articles from outside suppliers, or to the
performance of packing operations in accordance with customary practices in the pharmaceutical
industry.

     2.6 Development and Commercialization Arrangements. Cadence shall not enter into any
co-development or other development collaboration with any Third Party with respect to the Products
without the prior written consent of BMS. The engagement of a Contract Research Organization to
perform research or development services on behalf of Cadence or its Affiliated Companies, which
research is funded entirely by Cadence and its Affiliated Companies (and not indirectly by a Third
Party through Cadence or any of its Affiliated Companies), shall not constitute a co-development or
other development collaboration that requires the consent of
BMS. In the event Cadence enters into any co-promotion or co-marketing arrangement with any
Third Party with respect to the Products or any other arrangement with a Third Party whereby such
Third Party would distribute or commercialize any Product, Cadence shall include in the quarterly
reports provided to BMS pursuant to Section 3.2 information concerning the activities of the other
party to such co-promotion, co-marketing, distribution or commercialization arrangement. In
connection with any arrangement with a Third Party whereby such Third Party would distribute,
co-promote, co-market or otherwise develop or commercialize any Product (or collaborate with
Cadence in the development or commercialization of any Product), Cadence shall comply, and shall
cause such Third Party to comply, with all applicable terms and conditions of this Agreement and
the Pharmatop License Agreement. Cadence shall remain jointly and severally liable with any such
Third Party for any failure by such Third Party to perform, observe or comply with the terms and
conditions of this Agreement or the Pharmatop License Agreement.

     2.7 Improvements.

          (a) BMS shall inform Cadence in a timely manner of any Improvements made by Pharmatop (or any
Third Party sublicensees of Pharmatop) as to which BMS receives notice pursuant to Section 2.2 or
Article 8 of the Pharmatop License Agreement. If requested by Cadence, BMS will request that
Pharmatop license such Improvements to BMS and, upon receipt of such license, shall sublicense such
Improvements to Cadence on a non-exclusive, [***] basis ([***]), consistent with the license
thereof from Pharmatop and the Pharmatop License Agreement, to the extent not already covered by
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          (b) BMS shall notify Cadence in writing of any Improvements made in whole or in part by its
(and its Affiliated Companies’) employees, agents, sublicensees and Third Party manufacturers after
the Effective Date and Controlled and implemented by BMS and its Affiliated Companies. Upon the
request of Cadence, BMS shall grant Cadence a non-exclusive, [***] license to practice and use such
Improvements, including the right to grant sublicenses, anywhere in the world to make and have made
Products solely (i) to import, use, sale and offer for sale within the Territory and (ii) to import
and use in clinical trials in the Clinical Study Countries as permitted by Section 3.6. BMS shall
provide Cadence with such information in BMS’s possession as may be reasonably requested by Cadence
in order to practice such Improvements.

          (c) Cadence shall notify BMS and Pharmatop in writing of any Improvements made in whole or in
part by its (and its Affiliated Companies’) employees, agents, sublicensees and Third Party
manufacturers after the Effective Date and Controlled and implemented by Cadence and its Affiliated
Companies, and Cadence shall license such Improvements to Pharmatop on the basis described in
Article 8 of the Pharmatop License Agreement. In addition, upon the request of BMS, Cadence shall
grant BMS a non-exclusive [***] license to practice and use such Improvements, including the right
to grant sublicenses, anywhere in the world (i) to make and have made the Products in the Territory
for supply to Cadence, or to the extent
otherwise necessary or appropriate for BMS or any of its Affiliated Companies or sublicensees
to perform its obligations, under the Clinical Supply Agreement, (ii) to make and have made the
Products anywhere in the world for import, use, sale and offer for sale outside the Territory and
(iii) to import, make, have made and use Products in the Territory for any non-clinical or clinical
research purpose of BMS and its Affiliated Companies (subject, to the extent applicable, to Section
3.7) or in support of any Regulatory Filings or other activities outside the Territory (subject, to
the extent applicable, to Section 3.7); provided that the rights granted pursuant to clause (iii)
above shall not be sublicensable. Cadence shall provide BMS with such information in Cadence’s
possession as may be reasonably requested by BMS in order to practice such Improvements.

     2.8 Transfer of Regulatory Filings; Communications with Regulatory Authorities .

          (a) As of the Effective Date, BMS hereby cedes and assigns to Cadence all right, title and
interest in and to the Regulatory Filings with Drug Regulatory Authorities in the Territory
relating to the Products and shall use reasonable efforts to take any actions with the applicable
Drug Regulatory Authority in the Territory that are necessary to transfer ownership and control of
such Regulatory Filings to Cadence not later than five (5) days after the Effective Date.

          (b) During the [***]([***])[***] period following the Effective Date, BMS shall transfer to
Cadence copies of all Regulatory Filings with Drug Regulatory Authorities in the Territory relating
to Products and shall provide Cadence with copies of all material correspondence with Drug
Regulatory Authorities in the Territory relating to Products. Following the Effective Date,
Cadence shall have sole responsibility for (i) communicating with Drug Regulatory Authorities in
the Territory with respect to Products, including responsibility for all Regulatory Filings in the
Territory and all associated official correspondence and informal

 

			
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communications, and (ii) subject
to Section 2.15, reporting to Drug Regulatory Authorities in the Territory any Adverse Event
relating to Products in compliance with the requirements of Applicable Law in the Territory. If
BMS maintains such Regulatory Filings and correspondence in electronic form, BMS shall provide such
copies to Cadence in electronic form, but BMS shall have no obligation to reformat or otherwise
alter or modify any materials or to create or recreate any such materials in electronic form in
order to provide them to Cadence.

          (c) BMS and its Affiliated Companies and licensees and, subject to the terms of Sections 3.1
and 3.3 of the Pharmatop License Agreement, Pharmatop shall have a right to cross-reference, file
or incorporate by reference any Regulatory Filings in the Territory transferred hereunder or
subsequently made by Cadence and its Affiliated Companies and sublicensees with respect to Products
in the Territory (and any data contained therein) to support Regulatory Filings by BMS and its
Affiliated Companies and licensees for Products outside the Territory.

          (d) Cadence and its Affiliated Companies and licensees shall have a right to cross-reference,
file or incorporate by reference any Regulatory Filings made by BMS and its Affiliated Companies
and sublicensees of the BMS Rights with respect to Products outside the Territory (and any data
contained therein) to support Regulatory Filings by Cadence and its
Affiliated Companies and licensees in the Territory (or Regulatory Filings in such additional
jurisdictions where Cadence may in the future acquire rights).

     2.9 Transfer of Data and Transition Arrangements . Following the Effective Date:

          (a) During the [***] ([***])[***] period following the Effective Date, BMS shall provide to
Cadence a copy of (i) all Product Data, (ii) other written information, data and reports in BMS’s
possession that relate exclusively to the Products to the extent such information, data and reports
are necessary (in the reasonable judgment of both BMS and Cadence) to the development of the
Products in the Territory, and (iii) the full Marketing Authorization dossier submitted to Drug
Regulatory Authorities in the EU with respect to the Products (in non-Common Technical Document
format) and the variation dossiers submitted to Drug Regulatory Authorities in the EU with respect
to the Products after the initial Approval, including (1) with respect to Perfalgan (A) copies of
the applicable clinical study reports (and the appendices, tables, listings and graphs therein),
(B) copies of the raw data from the applicable clinical studies included in the Marketing
Authorization Application, (C) to the extent available, rendered PDF copies of such clinical study
reports (and such appendices, tables, listings and graphs) and (D) to the extent available, SAS
data sets containing such raw data and (2) with respect to ProDafalgan, to the extent they exist,
(A) copies of the applicable clinical study reports (and the appendices, tables, listings and
graphs therein), (B) copies of the raw data from the applicable clinical studies included in the
Marketing Authorization Application, (C) rendered PDF copies of such clinical study reports (and
such appendices, tables, listings and graphs) and (D) SAS data sets containing such raw data, but
only to the extent such information, data and reports described in clauses (i), (ii) and (iii)
above are reasonably available to BMS or its Affiliated Companies without undue searching (the
information, data and reports described in clauses (ii) and (iii) above being referred to herein as
“Other Product Data”); provided,

 

			
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however, that the foregoing shall in no event require BMS or its
Affiliated Companies to provide copies of laboratory notebooks or manufacturing run records
required to be maintained by BMS or its Affiliated Companies under Applicable Law. If BMS or its
Affiliated Company maintains such Product Data or Other Product Data in electronic form, BMS shall
provide such copies to Cadence in electronic form, but BMS shall have no obligation to reformat or
otherwise alter or modify any materials or to create or recreate any such materials in electronic
form in order to provide them to Cadence. BMS shall retain ownership of such Product Data and
Other Product Data, may retain a copy of the Product Data and Other Product Data and retains the
right to use and reference such Product Data and Other Product Data for any purpose to the extent
consistent with BMS’s other retained rights and the rights granted to Cadence hereunder, including
the right to cross-reference, file or incorporate by reference such Product Data and Other Product
Data and to assign, transfer or license to other Persons any or all of such rights of use and
reference. Cadence shall have the right to use such Product Data and Other Product Data for any
purpose in connection with the exercise of the rights granted to Cadence under this Agreement. In
the event that any such Regulatory Filing is supplemented or modified, BMS shall notify Cadence
that supplements or modifications have been made not later
than [***] ([***])[***] after such supplementation or modification, and BMS shall provide
Cadence with copies thereof upon Cadence’s request.

          (b) Cadence shall notify BMS in writing of the completion of any additional registrational
clinical trials or studies (Phase I – Phase III) or large-scale safety studies performed by or on
behalf of Cadence relating to Products within [***]([***])[***] after the final study report
relating to such trial or study has been completed and received all necessary internal Cadence
approvals in accordance with Cadence’s customary procedures. Cadence shall provide BMS
semi-annually with copies of any such final study reports and copies of the final study reports
relating to any non-registrational clinical trials or studies performed by or on behalf of Cadence
relating to Products that have received all necessary internal Cadence approvals in accordance with
Cadence’s customary procedures, in each case that have received such necessary approvals in the
preceding semi-annual period, and BMS and its Affiliated Companies and licensees shall have a right
to cross-reference, file or incorporate by reference such final study reports and any existing or
future Regulatory Filings (and any data contained therein) made or maintained by Cadence and its
Affiliated Companies for Products in the Territory (including the foreign equivalent of any NDA
relating to Products) to support Regulatory Filings by BMS and its Affiliated Companies and
licensees for Products outside the Territory and to use such final study reports, Regulatory
Filings and data for other commercially reasonable uses to support commercialization activities
outside the Territory. In the event that any such Regulatory Filing is supplemented or modified,
Cadence shall notify BMS that supplements or modifications have been made not later than
[***]([***])[***] after such supplementation or modification, and Cadence shall provide BMS with
copies thereof upon Cadence’s request.

          (c) BMS shall notify Cadence in writing of the completion of any additional registrational
clinical trials or studies (Phase I — Phase III) or large-scale safety studies done within the then
existing label performed by or on behalf of BMS relating to Products within [***]([***])[***] after
the final study report relating to such trial or study has been completed

 

			
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and received all
necessary internal BMS approvals in accordance with BMS’s customary procedures. BMS shall provide
Cadence semi-annually with copies of any such final study reports and copies of the final study
reports relating to any non-registrational clinical trials or studies performed by or on behalf of
BMS relating to Products that have received all necessary internal BMS approvals in accordance with
BMS’s customary procedures, in each case that have received such necessary approvals in the
preceding semi-annual period, and Cadence and its Affiliated Companies and licensees shall have a
right to cross-reference, file or incorporate by reference such final study reports and any
existing or future Regulatory Filings (and any data contained therein) made or maintained by BMS
and its Affiliated Companies for Products outside the Territory (including the foreign equivalent
of any NDA relating to Products) to support Regulatory Filings by Cadence and its Affiliated
Companies and licensees for Products in the Territory and to use such final study reports,
Regulatory Filings and data for other commercially reasonable uses to support commercialization
activities in the Territory.

          (d) BMS shall provide Cadence with prompt written notice of any Registrational Information of
Pharmatop made available to BMS pursuant to Article III of the
Pharmatop License Agreement. To the extent permitted by the Pharmatop License Agreement,
Cadence and its Affiliated Companies and licensees shall have a right to cross-reference, file or
incorporate by reference any such Registrational Information to support Regulatory Filings by
Cadence and its Affiliated Companies and licensees for Products in the Territory, provided [***]
reimburses [***] directly (or indirectly through payment to [***]) [***] ([***]) of the [***] to
develop or obtain such Pharmatop Registrational Information consistent with Sections 3.1 and 3.3 of
the Pharmatop License Agreement.

     2.10 Tech Transfer Plan. Within [***]([***])[***] of the Effective Date, the Parties
shall meet to develop a technology transfer plan (the “Tech Transfer Plan”) containing a plan and
schedule for transferring and otherwise providing Cadence access to the BMS Know-How and Technology
Documentation.

     2.11 Technology Documentation. Pursuant to the Tech Transfer Plan, BMS shall provide
Cadence with one (1) copy (which may be in paper or electronic form as provided below) of the
Technology Documentation to which BMS or its Affiliated Companies have access to without undue
searching (unless such documents are material to the manufacture of the Products or Clinical
Testing Products in which case BMS shall use all reasonable commercial efforts to locate such
Technology Documentation); provided, however, that the foregoing shall in no event require BMS to
provide copies of laboratory notebooks or manufacturing run records required to be maintained by
BMS under Applicable Law (other than one blank batch record which shall be provided to Cadence).
If BMS maintains such Technology Documentation in electronic form, BMS shall provide such
Technology Documentation to Cadence in electronic form. Otherwise, BMS may provide such Technology
Documentation in paper form. All Technology Documentation shall be in the English language,
reasonably comprehendible and, if any Technology Documentation requires translation, authenticated
translation shall be provided by BMS at no cost to Cadence. BMS shall not have any obligation to
translate any documentation relating to the Pharmatop Know-How. The Technology Documentation at
the

 

			
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time provided to Cadence shall be written with sufficient detail and clarity for Cadence, a
Cadence Affiliated Company or a Third Party sublicensee or supplier of Cadence to practice and/or
otherwise utilize the manufacturing processes disclosed thereunder. The Technology Documentation
shall not be used by Cadence for any purpose other than to manufacture the Products and Clinical
Testing Products as permitted under this Agreement and the Clinical Supply Agreement. The
Technology Documentation shall be Confidential Information of BMS, and Cadence shall have full
responsibility and liability to BMS for any unauthorized use or disclosure of such Confidential
Information; provided that Cadence shall have the right to disclose and otherwise provide such
Technology Documentation to one or more Third Party manufacturers and/or suppliers so long as such
Third Parties agree to maintain the confidentiality of such information. BMS shall be responsible
for the cost of providing one (1) set of copies only; provided, however, that BMS shall have no
obligation to reformat or otherwise alter or modify any such materials to the extent provided
consistent with this Section 2.11, or to create materials in electronic form, in order to provide
them to Cadence.

     2.12 Technical Assistance. During the period commencing on the Effective Date and
ending on [***] (the “Tech Transfer Period”), BMS shall provide the technical assistance provided
for in this Section 2.12. During the Tech Transfer Period, BMS shall provide Cadence with the
assistance of up to [***] of BMS employees having knowledge relevant to the Clinical Testing
Products, the Technology Documentation and the BMS Know-How to provide Cadence with a reasonable
level of technical assistance and consultation in connection with the technology transfer and
implementation of the manufacturing processes included in the Technology Documentation for the
purpose of assisting Cadence in assuming the responsibility for manufacturing the Products. The
first [***]([***])[***] of such technical assistance and consultation shall be without charge to
Cadence other than for the reasonable out-of-pocket costs of BMS and its Affiliated Companies. For
technical assistance and consultation in excess of [***]([***])[***], Cadence shall pay BMS for
such technical assistance and consultation at the rate of [***]. [***]. Cadence shall bear [***]
implementing the Technology Documentation, including all costs and expenses it incurs in connection
with such technology transfer, process development, manufacturing scale-up, quality control and
quality assurance. BMS makes no warranty, express or implied, that Cadence shall be able to
successfully implement and use the Technology Documentation. Cadence shall be responsible for
ensuring that its personnel who receive such assistance are appropriately qualified and experienced
for such purpose. At Cadence’s written request, BMS shall, during the Tech Transfer Period and
upon reasonable prior notice and subject to BMS’s customary rules and restrictions with respect to
site visits by non-BMS personnel, permit Cadence’s technical personnel to visit the facilities
utilized by BMS for the supply of Clinical Testing Products under the Clinical Supply Agreement for
the purpose of personally observing the production of the Clinical Testing Products. The time of
BMS employees expended in connection with any such visit (but not visits contemplated by the
Clinical Supply Agreement) shall be charged against the [***] of technical assistance and
consultation to be provided by BMS hereunder and compensated as provided in this Section 2.12. BMS
shall not have any obligation to provide any such technical assistance or consultation following
the expiration of the Tech Transfer Period.

 

			
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     2.13 Cooperation. The Parties shall cooperate to implement processes to ensure a
close, cooperative working relationship between the Parties and their respective technical
personnel in order to facilitate the technology transfer assistance contemplated above.

     2.14 Additional Assistance. In the event Cadence desires any additional technical
assistance or consultation, Cadence may request such additional technical assistance or
consultation from BMS. BMS shall consider such request in good faith, but BMS shall not have any
obligation to provide any such additional technical assistance or consultation unless BMS agrees in
writing in its sole discretion to provide such additional technical assistance or consultation. In
the event BMS agrees in its sole discretion to provide any such additional technical assistance or
consultation, Cadence shall pay BMS for such additional technical assistance or consultation at a
rate equal to [***].

     2.15 Pharmacovigilance; Adverse Event Reporting. Subject to the terms of this
Agreement, and within [***] ([***])[***] after the Effective Date of this Agreement, BMS and
Cadence (under the guidance of their respective Pharmacovigilance Departments, or equivalent
thereof) shall in good faith define and finalize the responsibilities the Parties shall employ to
protect patients and promote their well-being in their respective territories. These
responsibilities shall include mutually acceptable guidelines and procedures for the receipt,
investigation, recordation, communication, and exchange (as between the Parties) of adverse event
reports, pregnancy reports, and any other information concerning the safety of the Product. Such
guidelines and procedures shall be in accordance with, and enable the Parties and their Affiliated
Companies to fulfill, local and international regulatory reporting obligations to government
authorities. Furthermore, such agreed procedures shall be consistent with relevant International
Council for Harmonization guidelines, except where said guidelines may conflict with existing local
regulatory safety reporting requirements, in which case local reporting requirements shall prevail.

     Until such guidelines and procedures are set forth in an agreement between the Parties,
hereafter referred to as the Safety Data Exchange Agreement, the terms of paragraphs (a) – (d) and
(f) below, of this Section, shall apply. Following the execution of the Safety Data Exchange
Agreement, paragraphs (a) – (d) and (f) shall have no further force or effect.

          (a) Each Party shall notify the other Party as soon as practicable, but not later than
[***]([***])[***] after it receives information about the initiation of any investigation, review
or inquiry by any Drug Regulatory Authority concerning the safety of the Product.

          (b) Individual Case Safety Reports and pregnancy reports which come to the attention of either
Party shall be notified to the other Party, in English, in the form of a source document or CIOMS
Form by secure email or fax within [***]([***])[***] of receipt.

          (c) Each Party is responsible for complying with all applicable investigational and
post-marketing safety reporting regulations with respect to the use of the Product in the territory
in which its affiliated companies, its sublicensees, its agents, or its contractors promotes

 

			
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the
Product, as subject to the terms of this Agreement. This includes the submission of expedited and
periodic reports to the appropriate Drug Regulatory Authority(s).

          (d) All information to be reported to a Party under this Section shall be sent as follows (or
to such other address, contact person, telephone number, facsimile number or e-mail address as may
be specified in writing to the other Party):

	 	 	 	 	 
	 

	 	(i)
	 	To BMS, at:
	 
	 	 	 	 
	 

	 	 	 	Bristol-Myers Squibb Company
	 

	 	 	 	Global Pharmacovigilance
	 

	 	 	 	Adverse Event Processing
	 

	 	 	 	311 Pennington-Rocky Hill Road
	 

	 	 	 	Mail Stop HW 19-1.01

Pennington, NJ 08534
	 

	 	 	 	USA
	 

	 	 	 	FAX Number: 609-818-3804
	 

	 	 	 	Email:
worldwide.safety@bms.com
	 
	 	 	 	 
	 

	 	(ii)
	 	To Cadence, at:
	 
	 	 	 	 
	 

	 	 	 	Cadence Pharmaceuticals, Inc.
	 

	 	 	 	12730 High Bluff Drive, Suite 410
	 

	 	 	 	San Diego, CA 92130
	 

	 	 	 	Attention: Vice President, Regulatory Affairs and Quality Assurance
	 

	 	 	 	Telephone: [***]
	 

	 	 	 	Facsimile: 858-436-1401
	 

	 	 	 	Email: [***]

          (e) A Party’s costs incurred in connection with receiving, investigating, recording,
reviewing, communicating, and exchanging Adverse Events and Other Reportable Information shall be
borne solely by such Party. As used herein, “Other Reportable Information” means any communication
or other information that questions the purity, identity, potency or quality of the Product and all
reports of Product exposure during pregnancy and Product overdose whether or not resulting in an
Adverse Event.

          (f) If any Drug Regulatory Authority (1) should contact Cadence with respect to the improper
development, use, distribution, manufacture or commercialization of any Product, (2) conducts, or
gives notice of its intent to conduct, an inspection at Cadence’s facilities, or (3) takes, or
gives notice of its intent to take, any other regulatory action with respect to any activity of
Cadence that could reasonably be expected to adversely affect any development or commercialization
activities of any Product under this Agreement, then Cadence shall promptly notify BMS of such
contact or notice. Cadence shall provide BMS with copies of all pertinent information and
documentation issued by any such Drug Regulatory Authority within two (2) Business Days of receipt
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Authority that pertain to the Products promptly
after the submission thereof to such Drug Regulatory Authority.

     2.16 Infringement – Pharmatop Patents.

          (a) In the event either Party becomes aware that the Pharmatop Patents (or their inventorship)
have become the subject to an administrative or judicial action, suit or challenge by a Third Party
(including any reexamination or other proceeding challenging the validity or enforceability of the
Pharmatop Patents) with respect to the Territory (to the extent relating to the Territory, a
“Pharmatop Patent Challenge”), such Party shall promptly notify the other Party and BMS and Cadence
shall consult with each other in order to attempt to determine the appropriate response to such
Pharmatop Patent Challenge. If Pharmatop undertakes the defense thereof, Cadence shall have the
right, to the extent permitted by the Pharmatop License Agreement, to participate and be
represented in any such Pharmatop Patent Challenge by its own counsel [***]. To the extent Cadence
is not permitted by the Pharmatop License Agreement to participate directly in such Pharmatop
Patent Challenge, BMS shall (i) consult with Cadence during the defense of such Pharmatop Patent
Challenge and (ii) if requested by Cadence, participate in such Pharmatop Patent Challenge [***]
and cooperate with Cadence, [***], to arrange for the interests of the Parties (including Cadence)
to be represented in such Pharmatop Patent Challenge.

          If Pharmatop does not defend any such Pharmatop Patent Challenge, BMS shall provide written
notice to Cadence promptly after receiving notice of Pharmatop’s decision not to defend and shall
consult with Cadence concerning the defense of such Pharmatop Patent Challenge. BMS shall use
reasonable efforts (in light of relevant time and other deadlines) to determine whether it will
defend such Pharmatop Patent Challenge and, if BMS elects not to defend such Pharmatop Patent
Challenge, shall use reasonable efforts to provide Cadence with sufficient notice to permit Cadence
to defend such Pharmatop Patent Challenge as permitted by Section 6.3 of the Pharmatop License
Agreement and as set forth in this Section 2.16.

          If BMS elects to defend against any such Pharmatop Patent Challenge as permitted by Section
6.3 of the Pharmatop License Agreement, BMS shall consult with Cadence during the defense of such
Pharmatop Patent Challenge and BMS shall permit Cadence to participate and be represented in any
such Pharmatop Patent Challenge by its own counsel [***].

          The Parties shall reasonably assist Pharmatop and the other Party in the defense of any
Pharmatop Patent Challenge. In the event the Party defending such Pharmatop Patent Challenge
requests the assistance of the other Party, [***] shall reimburse the [***] for its [***] incurred
in connection with such assistance. BMS shall not, without the written consent of Cadence, consent
to the entry into any such settlement agreement by Pharmatop, that would restrict the scope, or
adversely affect the enforceability or validity of, any of the Pharmatop Patents in the Territory.

          If neither Pharmatop nor BMS elects to defend against a Pharmatop Patent Challenge, then BMS
shall provide written notice to Cadence promptly after the later of BMS

 

			
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receiving notice of such
decision by Pharmatop or such decision by BMS (in accordance with the last sentence of the second
paragraph of this Section 2.16(a)) and, to the extent permitted by the
Pharmatop License Agreement, Cadence shall have the right to defend [***] any such Pharmatop
Patent Challenge in accordance with Section 6.3(b) of the Pharmatop License Agreement, and BMS
shall be entitled to participate and be represented in any such Pharmatop Patent Challenge by its
own counsel [***]. Cadence shall not enter into any settlement agreement with respect to such
Pharmatop Patent Challenge, without the written consent of Pharmatop to the extent required by the
Pharmatop License Agreement, and the written consent of BMS. If Cadence is not permitted by the
Pharmatop License Agreement to defend such Pharmatop Patent Challenge, then at the written request
of Cadence, BMS shall defend such action, suit or challenge as provided above, at [***].

          (b) In the event either Party becomes aware of any infringement of a Valid Claim in the
Territory under the Pharmatop Patents, such Party shall promptly notify the other Party and BMS and
Cadence shall consult with each other and with Pharmatop in order to attempt to end such
infringement, consistent with the Pharmatop License Agreement and shall take all appropriate action
to do so. BMS shall have the right in the first instance, but not the obligation, to initiate
legal action against an infringing party. Cadence shall reasonably assist BMS and Pharmatop in any
action or proceeding prosecuted against the infringing Person by BMS or Pharmatop. If neither
Pharmatop nor BMS prosecutes a legal action against the infringing Person (or if Pharmatop or BMS
ceases to pursue or withdraws from such action), Cadence may initiate and prosecute such action (or
substitute itself for Pharmatop or BMS in such action) at its own expense to the extent permitted
by and in accordance with Section 6.5 of the Pharmatop License Agreement. Cadence shall not enter
into a settlement agreement concerning such action, suit or challenge without the written consent
of BMS.

          If neither Pharmatop nor BMS prosecutes a legal action against the infringing Person (or if
Pharmatop or BMS ceases to pursue or withdraws from such action) and Cadence is not permitted by
Section 6.5 of the Pharmatop License Agreement to initiate and prosecute such action (or substitute
itself for Pharmatop or BMS in such action), then at the written request of Cadence, BMS shall
initiate and prosecute such action at the expense of Cadence and shall not, without the written
consent of Cadence, enter into a settlement agreement with such infringing Person that would
restrict the scope, or adversely affect the enforceability or validity of, any of the Pharmatop
Patents in the Territory.

          (c) Subject to the rights of Pharmatop set forth in the Pharmatop License Agreement, in the
event either Party recovers any damages or other sums in such action in relation to any
infringement of a Valid Claim under a Pharmatop Patent in the Territory or in settlement thereof,
such damages or other sums recovered shall first be applied to all out-of-pocket costs and expenses
incurred by the Parties in connection therewith, including attorneys fees, subject to any
allocation due to Pharmatop pursuant to the Pharmatop License Agreement. If such recovery (after
giving effect to any allocation due to Pharmatop pursuant to the Pharmatop License Agreement) is
insufficient to cover all such costs and expenses of both Parties, it shall be shared in proportion
to the total of such costs and expenses incurred by each

 

			
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Party. If after such reimbursement any
funds shall remain from such damages or other sums recovered (after giving effect to any allocation
due to Pharmatop pursuant to the Pharmatop
License Agreement), such funds shall be shared [***] ([***]) by Cadence and [***] ([***]) by
BMS. In the event any such action involves patent rights outside the Territory, Cadence shall be
entitled to share only in the portion of any recovery that relates to infringement of any Pharmatop
Patents in the Territory and shall not have any right to share in any recovery with respect to
rights outside the Territory.

     2.17 Infringement – BMS Patents.

          (a) In the event the BMS Patents (or their inventorship) become the subject to an
administrative or judicial challenge by a Third Party with respect to the Territory, BMS shall
notify Cadence of such challenge within [***]([***])[***] of receipt of notice of such challenge.
BMS shall have the right, but not the obligation, to defend such action, suit or challenge, and BMS
shall notify Cadence of its decision regarding whether or not it will defend such action, suit or
challenge. If BMS decides in its sole discretion to enter into any settlement agreement with
respect to such action, suit or proceeding, BMS shall notify Cadence of such intent. If such
settlement restricts the scope, or adversely affects the license to the BMS Patents granted to
Cadence under Section 2.1, Cadence shall have the right, but not the obligation, to enter into
discussions with BMS for the purpose of renegotiating the terms of said license in view of such
settlement.

          (b) If BMS does not defend any such action, suit or challenge and Cadence disagrees with BMS’s
decision, Cadence shall have the right, but not the obligation, to (i) enter into discussion with
BMS for the purpose of renegotiating the terms of the license to the BMS Patents granted to Cadence
under Section 2.1 or (ii) notwithstanding Article 8 of this Agreement, terminate the License
granted under Sections 2.1(a)(ii) – (v) subject to the confidentiality provisions set forth in
Sections 5.2 and 5.3.

     2.18 Maintenance of BMS Patents. In the event BMS determines that it no longer
desires to maintain any of the BMS Patents, BMS shall notify Cadence in writing of the BMS Patents
that it no longer desires to maintain, and Cadence shall have the right to retain counsel of its
own choosing to prosecute and maintain such BMS Patents and to make all maintenance and other
payments as may be necessary to maintain such BMS Patents in effect.

     2.19 Noncontravention. Neither BMS nor Cadence shall be required to take any action
pursuant to Section 2.16, 2.17, 2.21 and 2.22 that it determines in its sole judgment and
discretion conflicts with or violates any court or government order or decree to which it is then
subject.

     2.20 Patent Extensions. Subject to applicable terms of the Pharmatop License
Agreement, BMS and Cadence shall each cooperate with one another to obtain patent term extensions
(including any pediatric exclusivity extensions as may be available) or supplemental protection
certificates or their equivalents in any country in the Territory with respect to a BMS Patent or
Pharmatop Patent in the Territory.

 

			
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     2.21 Data Exclusivity and Orange Book Listings. Subject to applicable terms of the
Pharmatop License Agreement: (i) with respect to data exclusivity periods in the Territory (such
as those periods listed in the FDA’s Orange Book (including any available pediatric extensions))
Cadence, as appropriate, shall use commercially reasonable efforts consistent with its obligations
under Applicable Law in the Territory to seek, maintain and enforce all such data exclusivity
periods available for Products, and (ii) with respect to filings in the FDA Orange Book for issued
patents for a Product, the appropriate Party shall, consistent with its obligations under
Applicable Law in the Territory, list (and update as appropriate) in a timely manner all applicable
Patents required to be filed by it, or that it is permitted to file, under such Applicable Law in
connection with such Product. At least [***] ([***])[***] prior to an anticipated deadline for the
filing of patent listing information for such Patents, the Party making such filing shall notify in
writing and consult with the other Party regarding the content of such filing. In the event of a
dispute between the Parties as to whether a particular Patent can be listed and/or the content of
the filing for such listing, the Parties shall take expedited steps to resolve the dispute as
promptly as possible, including seeking advice of an independent legal counsel to guide their
decision. The other Party shall provide, consistent with its obligations under Applicable Law in
the Territory, reasonable cooperation to the Party making such listing in filing and maintaining
such Orange Book (and foreign equivalent) listings.

     2.22 Notification of Patent Certifications. A Party receiving any allegation of
patent invalidity, unenforceability or non-infringement of a Pharmatop Patent or a BMS Patent
pursuant to a paragraph IV patent certification by a Third Party filing an Abbreviated New Drug
Application, an application under §505(b)(2) of the FDCA or other similar patent certification by a
Third Party, and/or any foreign equivalent thereof in connection with a Product in the Territory
shall notify the other Party and shall provide the other Party with copies of all such allegations.
Such notification and copies shall be provided to the other Party within five (5) days after
receipt of such certification. If and to the extent such allegation relates to a Pharmatop Patent,
and subject to the terms of the Pharmatop License Agreement, Cadence shall have the right (but not
the obligation) to contest such patent certification in the Territory and initiate and control
actions with respect thereto in accordance with Section 2.16, and upon request by Cadence, BMS
shall provide reasonable assistance and cooperation at Cadence’s expense in any actions reasonably
undertaken by Cadence to contest any such patent certification.

     2.23 Audit, Inspection and Review. BMS shall have the right [***] during business
hours and upon reasonable prior notice to enter, inspect and evaluate that part of any plant or
other facility that is engaged in the production, preparation, processing or storage of the
Products for compliance with applicable environmental, health and safety regulations, cGMP and
other Applicable Law in the Territory and for compliance with the terms of this Agreement; provided
that such inspections may not be made more than [***] in any [***]; and provided, further, that if
material corrective measures are necessary, BMS may [***] verify the implementation of such
corrective measures. In addition to the other rights of BMS set forth in this Agreement: (i) BMS
shall have the same
right to inspect and review the activities of Cadence hereunder as Pharmatop has with respect
to BMS under the Pharmatop License Agreement, and (ii) BMS shall have the same rights to audit
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Agreement, and to inspect
Cadence’s (and any sublicensee’s) facilities involved in the manufacture of Products, in the same
manner as Pharmatop has with respect to BMS’s activities and facilities under the Pharmatop License
Agreement. Cadence shall cause its sublicensees, suppliers, toll manufacturers and other Third
Parties involved in the production, preparation, processing or storage of the Products to provide
such access to BMS and shall include an appropriate provision in the applicable contract with any
such Third Party providing for such access and shall cause such sublicensees, suppliers, toll
manufacturers and other Third Parties to grant such access to BMS. Cadence shall notify BMS within
[***] ([***])[***] after receipt of any notice of any inquiry, inspection or legal action by any
Drug Regulatory Authority related to any aspect of the production of the Products. Cadence shall
provide to BMS, promptly after receipt by Cadence, a copy of the results of any inspection reports
and/or legal actions with or by any Drug Regulatory Authority in the Territory relating to such
matters. Cadence shall keep BMS informed on an on-going basis as to any proposed responses
regarding corrective or remedial actions to be taken as a result of any such inquiry, inspection or
legal action, including actions relating to plants and facilities of Third Parties.

     2.24 [***] Covenant; [***] Covenant.

                (a) Certain Definitions. As used herein:

     “Available [***]” means, as of any date, [***] determined In Accordance With GAAP
[***].

     “[***]” means as of any date, [***] determined In Accordance with GAAP [***]:

               (1) (A) [***], or

                     (B) [***], and

               (2) (A) [***], (B) [***] and (C) [***],

but only to the extent any such items are not already included in [***].

     “[***]” means, as of any date [***] plus [***], in each case determined In Accordance
With GAAP.

     “[***]” means, as of any date, the [***].

     “[***]” means, as of any date, the [***].

     “[***]” means, as of any date, the [***].

     (b) [***] Covenant. Provided that neither [***]:

     (A) [***]; or

 

			
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          (B) [***].

          The foregoing covenant is referred to herein as the “[***] Covenant”. [***] shall be entitled
to temporary and permanent injunctive relief in order to restrain any violation of this Section
2.24(b).

          As used herein, the term “[***] Product” means (i) [***] and/or (ii) [***].

          (c) Termination of Covenant. If on [***] Covenant shall immediately terminate without
any action on the part of [***]. Each such date of such termination is referred to herein as a
“Covenant Termination Date”. In the event [***].

          During any period in which [***] shall have the right to (i) [***] and (ii) [***].

          (d) Permanent Termination of Covenant; [***]. If [***]

          (e) Reinstatement of [***]. As set forth in Section 2.1(c), if and when [***].

ARTICLE
III — ADDITIONAL COVENANTS

     3.1 Annual Operating Plan. Not later than [***]([***])[***] prior to the beginning of
each Calendar Year, Cadence shall provide to BMS a written operating plan (each an “Annual
Operating Plan”) setting forth in reasonable detail Cadence’s plans for the continued development
(including plans for clinical and other studies and plans for obtaining any necessary Approvals in
the Territory) and commercialization of the Products for such Calendar Year, together with the
related budgets therefore and the estimated timelines for completion of key activities. The
initial Annual Operating Plan for 2006 is as Previously Disclosed. Each subsequent Annual
Operating Plan shall include a comparable level of information and detail as set forth in such
Previously Disclosed Annual Operating Plan (and following first commercial sale of the Product in
the Territory, shall include a line item for advertising and promotional expenses). Cadence shall
promptly notify BMS in writing of any material change in any such Annual Operating Plan or of any
material deviation from any Annual Operating Plan.

     3.2 Development, Commercialization and Financial Reports and Consultations.

          (a) Quarterly Development and Commercialization Reports. Cadence shall provide
quarterly written reports to BMS, within [***]([***])[***]) following the end of each Calendar
Quarter, presenting a summary in reasonable detail of the development and commercialization actions
taken by Cadence relating to the Products in the Territory and results obtained through the end of
such Calendar Quarter and a summary of any material changes to the Development Plan since the last
such quarterly report. The report with respect to commercialization activities shall include,
among other things, the number of full-time equivalent sales representatives assigned to each
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co-marketing partner or any Third Party with which
Cadence has any other arrangement for such Third Party to market, promote or sell any Product.

          (b) [***] Reports. [***]:

          (i) [***].

          (ii) [***];

          (iii) [***].

          (c) [***] Statements. If [***] shall be In Accordance With GAAP [***].

          (d) Calculations, Notifications and Consultations concerning [***]. If [***]:

          (i) [***](A) [***] and (B) [***].

          (ii) [***].

          (iii) [***].

          (e) [***] Reports. If on the [***], if any:

          (i) [***], within [***]([***])[***]:

               (A) [***],

               (B) [***],

               (C) [***],

               (D) [***],

               (E) [***],

               (F) [***] Section 3.2(b):

                    (1) the [***] In Accordance With GAAP.

                    (2) a [***];

               (G) a [***].

          (ii) [***]:

               (A) within [***]([***])[***]; and

 

			
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               (B) not later than [***] ([***])[***].

          In the event [***].

          (f) Standards for Determining [***]. All projections used to determine [***] (i)
[***] (A) [***] and (B) [***] and (ii) [***]. If any calculation of [***].

          (g) Presentations concerning Development and Commercialization Activities. In
addition, on reasonable request by BMS, Cadence shall meet with BMS to make presentations
concerning the development and commercialization activities taken relating to the Products and to
permit BMS to ask reasonable questions and receive answers from Cadence with respect to such
matters (including advertising and promotional expenditures and measures of sales effort);
provided, however, that Cadence shall not be required to make more than [***] in any Calendar Year.
[***].

          (h) Date of NDA Approval. Cadence shall notify BMS in writing as soon as reasonably
practicable of the expected date of approval by the FDA of the NDA with respect to any Product in
the United States and shall notify BMS of any such Approval not later than [***]([***])[***]
following the date on which Cadence receives written notice of such approval or receives an
“approvable letter” from the FDA with respect to any such NDA.

          (i) Correspondence with Pharmatop. Each Party shall provide to the other Party copies
of all material correspondence and reports provided by it to Pharmatop or by Pharmatop to it after
the Effective Date with respect to the Products in the Territory.

     3.3 Development Responsibilities and Costs.

          (a) Cadence’s initial plan (current as of the Execution Date) for the development of the
Products, including the clinical and other studies it contemplates as of the date of this Agreement
in order to obtain Approval of the Products in the United States and related budgets and timelines
as of the Execution Date as the same may be amended from time to time in accordance with Section
3.3(c) (collectively, the “Development Plan”) has been Previously Disclosed.

          (b) Cadence shall have sole responsibility for, and shall bear the cost of the development and
commercialization of the Products in the Territory. Cadence shall develop and commercialize the
Products in compliance with all Applicable Law. Without limiting the foregoing, Cadence shall
cause all Products manufactured, labeled, advertised and sold by it and its Affiliated Companies
and sublicensees or on its or their behalf to comply in all material respects with Applicable Law.

          (c) Without limiting Cadence’s obligations under the Pharmatop License Agreement, Cadence
shall use reasonable commercial efforts to pursue, fund and complete the development of the
Products as set forth in the Development Plan as modified from time to time in accordance with this
Agreement (including obtaining all necessary Approvals in the

 

			
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Territory). In the event that the
results of clinical or other studies or communications from Drug Regulatory Authorities require a
material modification to the Development Plan, Cadence shall consult with BMS concerning such
results or communications and potential changes to the Development Plan that would offer a
reasonable prospect for obtaining Approvals on a reasonably expeditious basis. Any modification to
the Development Plan that involves [***]. No such consent by BMS shall relieve Cadence of any
obligation under the Pharmatop License Agreement.

     3.4 Obligations in respect of the Pharmatop License Agreement. Notwithstanding any
other provision of this Agreement, Cadence (i) hereby unconditionally assumes and agrees during the
term of this Agreement to perform as and when due all the obligations of BMS under the Pharmatop
License Agreement that relate to the Territory (except (A) to the extent such obligations were
required to be performed by BMS prior to the Effective Date and (B) for any obligation to indemnify
Pharmatop for any breach by BMS of any such obligations prior to the Effective Date), the BMS
Rights or the exercise of the rights sublicensed to Cadence under this Agreement and (ii) shall
comply with all the terms and conditions of the Pharmatop License Agreement that relate to the
Territory, the BMS Rights or the exercise of the rights sublicensed to Cadence under this
Agreement, it being understood that Cadence shall be obligated to perform such obligations and
comply with such terms and conditions in respect of its activities under this Agreement and the
Pharmatop License Agreement but shall not have any obligation to cause BMS to perform such
obligations or to cause BMS to comply with such terms and conditions. Without limiting the
foregoing, Cadence shall be obligated to perform and comply, but shall not have any liability with
respect to any failure by BMS (but not its own failure) to perform and comply, with Section 4.6(a),
Article 10 or Article 12 of the Pharmatop License Agreement. Without limiting any other right or
remedy of BMS under this Agreement and in order to prevent, ameliorate, mitigate or cure a breach
of the Pharmatop License Agreement, in the event that Cadence fails to perform any of such
obligations under the Pharmatop License Agreement (except to the extent that a breach by BMS of its
obligations under this Agreement or the Pharmatop License Agreement or any other act or omission by
BMS prevents such performance by Cadence or any of its Affiliated Companies, sublicensees,
contractors or agents), which failure is not cured within ninety (90) days after written notice
from BMS, BMS may perform such obligation on behalf of Cadence at Cadence’s expense, and [***]
provided, however, that
this Section 3.4 shall not authorize BMS to control the conduct of any clinical trial or study
under the Development Plan. This Agreement sets forth the obligations of the Parties inter se, and
nothing in this Agreement (including any standard of effort set forth herein) shall limit or modify
the obligations of the Parties assumed under the Pharmatop License Agreement.

     3.5 Certain Rights and Obligations under the Pharmatop License Agreement.

          (a) BMS shall provide Cadence with copies of written communications received by BMS from
Pharmatop after the Effective Date pursuant to Section 2.2 of the Pharmatop License Agreement with
respect to the results of research and development work performed by Pharmatop and concerning any
inventions or Know-How (as defined in the Pharmatop License Agreement) made by Pharmatop relating
to the Products.

 

			
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          (b) If Pharmatop provides to BMS a copy of any application, filing or request for review and
comment by BMS, BMS shall provide a copy of each application, filing or request to Cadence promptly
after receipt thereof, and shall give reasonable consideration to any comments of Cadence in any
comments provided by BMS to Pharmatop.

          (c) If Pharmatop provides to BMS a quarterly written patent report pursuant to Section 5.1(d)
of the Pharmatop License Agreement, BMS shall provide a copy of such report to Cadence within a
reasonable period of time after receipt thereof, provided that BMS may redact information relating
to Patents outside the Territory.

          (d) To the extent that Pharmatop is obligated to indemnify sublicensees of BMS pursuant to
Section 12.1 of the Pharmatop License Agreement and Cadence desires to assert a claim for
indemnification pursuant to such section, Cadence shall have the right, to the extent permitted by
the Pharmatop License Agreement, to assert such claim for indemnification against Pharmatop. In
the event Cadence is not permitted by the Pharmatop License Agreement to assert such claim directly
against Pharmatop, BMS shall cooperate with Cadence (at Cadence’s expense and subject to Section
7.7 of this Agreement) to permit Cadence to assert such claim, including, if necessary, allowing
Cadence to bring such claim in the name of BMS, unless BMS has a reasonable objection to such
procedure; provided that Cadence shall give BMS written notice of any proposed settlement with
Pharmatop and a reasonable opportunity to review and comment on such proposed settlement, and
Cadence shall not enter into any settlement with Pharmatop that could adversely affect the rights
of BMS hereunder or under the Pharmatop License Agreement without the prior written consent of BMS
in its sole discretion.

          (e) To the extent that BMS is permitted to assert against Pharmatop a claim on behalf of
Cadence (as BMS’s sublicense) for (i) indemnification and defense pursuant to Section 3.2 of the
Pharmatop License Agreement based on any use made by Pharmatop, its Affiliated Companies or its or
their licensees of the Registrational Information or with respect to the breach of any
representation, warranty or covenant of Pharmatop contained in the Pharmatop License Agreement or
(ii) for specific performance of any covenant of Pharmatop contained in the Pharmatop License
Agreement, BMS shall use reasonable efforts to cooperate with Cadence (at Cadence’s expense and
subject to Section 7.7 of this Agreement) to permit Cadence to assert such claim or request for
specific performance by Pharmatop, including, if necessary, allowing
Cadence to bring such claim in the name of BMS, unless BMS has a reasonable objection to such
procedure; provided that Cadence shall give BMS written notice of any proposed settlement with
Pharmatop and a reasonable opportunity to review and comment on such proposed settlement, and
Cadence shall not enter into any settlement with Pharmatop that could adversely affect the rights
of BMS hereunder or under the Pharmatop License Agreement without the prior written consent of BMS
in its sole discretion. BMS makes no representation or warranty as to whether BMS is permitted to
assert any such claim on behalf of Cadence.

          (f) Whenever Cadence provides any report, notice or other communication to Pharmatop in
compliance with of any of the obligations under the Pharmatop License Agreement assumed by Cadence
pursuant to Section 3.4 (e.g., the obligation to provide quarterly updates pursuant to Section 4.3
of the Pharmatop License Agreement), Cadence shall provide a copy of

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such report or notice to BMS
at least [***] ([***])[***] prior to the time such report, notice or communication is provided to
Pharmatop or, if it is impracticable to provide such copy at least [***]([***])[***]) ahead of
time, Cadence shall provide such copy to BMS as early as practicable prior to the provision thereof
to Pharmatop.

          (g) BMS agrees that it shall, if reasonably requested by Cadence and at Cadence’s expense,
take reasonable efforts to enforce the material obligations of Pharmatop under the Pharmatop
License Agreement as it relates to the Territory, including obligations under Article 5 of the
Pharmatop License Agreement.

          (h) BMS covenants that it shall not agree or consent to any amendment, supplement or other
modification to the Pharmatop License Agreement or exercise any other right of agreement or consent
thereunder, in each case as it relates to the Territory, unless Cadence has consented in its sole
discretion in writing to the same.

          (i) If Cadence is not in breach of any of its material obligations under this Agreement, BMS
shall not terminate the Pharmatop License Agreement (either unilaterally or by mutual agreement
with Pharmatop) with respect to any country in the Territory without the prior written consent of
Cadence, which consent may be given or withheld in Cadence’s sole discretion. If Cadence is in
breach of any of its material obligations under this Agreement, BMS may terminate the Pharmatop
License Agreement in its sole discretion. If BMS determines to terminate the Pharmatop Agreement,
BMS shall consult with Cadence in advance to the extent reasonably practical.

          (j) BMS shall not market a Competing Product (as defined in the Pharmatop License Agreement)
in any country in the Territory during the Pharmatop Royalty Term for such country without
obtaining a written waiver from Pharmatop of the consequences of such marketing under Section 7.4
of the Pharmatop License Agreement.

          (k) Cadence shall provide written notice to BMS of any use by Pharmatop of which Cadence is
aware of any Registrational Information of Cadence as to which BMS has the right [***] from
Pharmatop as contemplated by Sections 3.1 and 3.3 of the Pharmatop License Agreement, and, if
requested by Cadence, BMS shall thereafter request from Pharmatop [***]
contemplated by Sections 3.1 and 3.3 of the Pharmatop License Agreement. If BMS [***] from
Pharmatop for the use by Pharmatop of any Cadence Registrational Information as contemplated by
Section 3.1 and 3.3 of the Pharmatop License Agreement, BMS shall [***] over to Cadence within
[***]([***])[***] after the receipt thereof.

     3.6 Conduct of Clinical Trials of Products by Cadence in Clinical Study Countries. In
the event (i) Cadence is unable (or reasonably believes that it will be unable) to recruit in the
Territory sufficient clinical study subjects to conduct clinical trials necessary for Approval of
the Products in the Territory due to US treatment parameters that would significantly delay or
impair Cadence’s ability to recruit patients or otherwise complete the study on a timely basis and
(ii) Cadence desires to conduct all or a portion of such clinical study in any of the Clinical
Study Countries where BMS retains rights to commercialize the Product, then Cadence shall notify

 

			
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BMS in writing and provide BMS with a copy of the clinical trial study design and protocol(s) for
the conduct of such clinical study in the Clinical Study Countries in which it plans to conduct
such study and a statement of the proposed number of patients proposed to be recruited in each city
in such Clinical Study Countries. Cadence shall not conduct any such study without the prior
written consent of BMS and the license provided for below, which consent and license shall not be
unreasonably withheld if: (i) such study design and protocols are reasonably satisfactory to BMS
(and its Affiliated Companies in the Clinical Study Countries) and (ii) such study is lawful to
conduct in the regulatory jurisdictions where such study will be conducted and meets prevailing
ethical standards and guidelines (including BMS internal policies) relating to the conduct of
clinical trials and the use of the Product. In the event BMS consents to the conduct of such study
in a Clinical Study Country, BMS shall cause its applicable Affiliated Companies to grant a limited
license or sublicense to Cadence’s Affiliated Company in such Clinical Study Country where the BMS
Affiliated Companies have rights to grant such license or sublicense solely for the purpose of
permitting such clinical study solely in accordance with such study design and protocol; provided
that (1) not later than [***] ([***])[***] after [***] during such clinical trial, Cadence shall
provide BMS with a written report of the number of vials of Product administered to patients in
such clinical study in each country outside the Territory where such study is conducted and [***],
and (2) such clinical study shall be subject to such reasonable limitations as may be reasonably
satisfactory to BMS to avoid undue concentration of study subjects in a particular city.

     Neither BMS nor any of its Affiliated Companies shall have any duties or responsibilities in
connection with such clinical trial, other than (to the extent applicable) the supply of Clinical
Testing Products pursuant to the Clinical Supply Agreement, except that this provision shall not
affect the obligations of BMS and Cadence to exchange safety information as provided in Section
2.15 and the Safety Data Exchange Agreement to be entered into pursuant to Section 2.15.

     In the event Cadence desires to conduct all or a portion of such clinical study in [***], then
Cadence may request that BMS consent to the inclusion of [***] as an additional Clinical Study
Country. In the event (i) Cadence is unable (or reasonably believes that it will be unable)
to recruit in the Territory and the Clinical Study Countries sufficient clinical study
subjects to conduct clinical trials necessary for Approval of the Products in the Territory due to
treatment parameters in the US and the Clinical Study Countries that would significantly delay or
impair Cadence’s ability to recruit patients or otherwise complete the study on a timely basis and
(ii) Cadence desires to conduct all or a portion of such clinical study in any of the other
countries where BMS retains rights to commercialize the Product, then Cadence may request that BMS
consent to the inclusion of up to [***]([***]) additional countries as Clinical Study Countries;
provided that Cadence may not request the inclusion of more [***]([***]) additional countries as
Clinical Study Countries, including [***], over the term of this Agreement. In the event Cadence
makes such request, BMS shall cause its Alliance Manager to use reasonable efforts to obtain the
necessary internal BMS consents and approvals of the applicable BMS Affiliated Company in the
applicable country to the inclusion of such country as a Clinical Study Country, which consents and
approvals may be given or withheld in the sole discretion of such BMS

 

			
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Affiliated Company. In the
event such consents and approvals are obtained, the Parties shall amend the list of Clinical Study
Countries to include such country.

     Cadence acknowledges that as of the Effective Date, BMS does not commercialize, and has not
effected the registration of, Products in certain of the Clinical Study Countries and other
countries where Cadence may desire to conduct clinical trials or studies. Nothing in this
Agreement shall obligate BMS or any of its Affiliated Companies (i) to maintain, retain, obtain or
seek any rights in any Clinical Study Country or any other country where Cadence may desire to
conduct clinical trials or studies or (ii) to make, maintain, refile, renew or reinstate any
Regulatory Filing in any such country.

     3.7 Conduct of US or Canadian Clinical Trials of Products by BMS. In the event BMS is
unable (or reasonably believes that it will be unable) to recruit outside the Territory sufficient
clinical study subjects to conduct clinical trials necessary for Approval of the Products in any
jurisdiction outside the Territory due to local treatment parameters that would significantly
delay or impair BMS’s ability to recruit patients or otherwise complete the study on a timely basis
and BMS desires to conduct any clinical trials or studies of Products in the Territory, then BMS
shall notify Cadence in writing and provide Cadence with a copy of the clinical trial study design
and protocol(s) for the conduct of such clinical trial in the Territory and a statement of the
proposed number of patients proposed to be recruited in each city in the Territory. BMS shall not
conduct such study without the prior written consent of Cadence, which shall not be unreasonably
withheld if: (i) such study design and protocols are reasonably satisfactory to Cadence; and (ii)
such study is lawful to conduct in the country in the Territory where such study will be conducted
and meets prevailing ethical standards and guidelines (including Cadence internal policies)
relating to the conduct of clinical trials and the use of the Product. In the event Cadence
consents to the conduct of such study in the Territory, BMS may conduct such study solely in
accordance with such study design and protocol; provided that:

     (A) if such clinical trial or study will take place prior to the launch of the
Product by Cadence in the country where BMS proposes to conduct such clinical trial or
study, such study is subject to such reasonable limitations designed to avoid impairing
Cadence’s ability to recruit patients for its own contemporaneous clinical trials; or

     (B) if such clinical trial or study will take place after the launch of the
Product by Cadence in the country where BMS proposes to conduct such clinical trial or
study, then (1) not later than [***] ([***])[***] after [***] during such clinical trial,
BMS shall provide Cadence with a written report of the number of vials of Product
administered to patients in such clinical study in each country in the Territory where such
study is [***], and (2) such clinical study shall be subject to such reasonable limitations
as may be reasonably satisfactory to Cadence to avoid undue concentration of study subjects
in a particular city in the Territory.

     Neither Cadence nor any of its Affiliated Companies shall have any duties or responsibilities
in connection with such clinical trial by BMS or its Affiliated Companies, except that this
provision shall not affect the obligations of BMS and Cadence to exchange safety

 

			
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information as
provided in Section 2.15 and the Safety Data Exchange Agreement to be entered into pursuant to
Section 2.15.

     3.8 Existing BMS Suppliers. [***].

ARTICLE
IV — FINANCIAL TERMS

     4.1 Payments to BMS. In partial consideration of the rights granted to Cadence
hereunder:

          (a) On the Effective Date, Cadence shall pay to BMS Twenty-Five Million Dollars ($25,000,000).

          (b) Within ten (10) Business Days following the [***], Cadence shall pay to BMS [***]([***]).
Such amount shall be paid only once, regardless of [***].

          (c) Within ten (10) Business Days after [***], Cadence shall pay to BMS an amount equal to
[***]([***])[***]; provided, however, that such payment shall not exceed [***]([***]).

          (d) Not later than [***]([***][***] following the [***] in which the [***], Cadence shall pay
to BMS [***]([***]); provided, however, if [***], Cadence shall pay such amount to BMS not later
than [***]([***])[***] following the [***].

          (e) In addition to the payment provided for in Section 4.1(d) above, not later than
[***]([***][***] following the [***] in which the [***], Cadence shall pay to BMS [***]([***]);
provided, however, if such [***], Cadence shall pay such amount to BMS not later than [***]([***])
[***].

          (f) During the Pharmatop Royalty Term, Cadence shall pay to BMS royalties calculated at the
rate of:

               (i) [***] of that portion of aggregate Net Sales in each Calendar Year that is [***],

               (ii) [***] of that portion of aggregate Net Sales in each Calendar Year that is [***] and up
to and including Net Sales of [***], and

               (iii) [***] of that portion of aggregate Net Sales in each Calendar Year that is [***],

with the aggregate amount of Royalties payable pursuant to clauses (i) – (iii) above [***] by the
amount of the [***] and any [***] and [***] of this Agreement and the terms of the Pharmatop
License Agreement (which [***] provided for in [***]). In the event the amount of [***] and any
[***] with respect to any [***].

 

			
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          In the event the royalties payable to Pharmatop are reduced in respect of any Combination
Product (as defined in the Pharmatop License Agreement) sold by Cadence or its Affiliated Companies
or sublicensees in the Territory, the Royalties payable to BMS pursuant to this Section 4.1(f) in
respect of such Combination Product shall be reduced (dollar-for-dollar) by the amount of the
reduction in such royalties payable to Pharmatop.

          [***].

          (g) During the BMS Patent Royalty Term, Cadence shall pay to BMS royalties calculated at the
rate of:

               (i) [***] of that portion of aggregate Net Sales of Products that are BMS Patent Products in
each Calendar Year that is [***],

               (ii) [***] of that portion of aggregate Net Sales of Products that are BMS Patent Products in
each Calendar Year that is in [***] and up to and including Net Sales of such Products of [***],
and

               (iii) [***] of that portion of aggregate Net Sales of Products that are BMS Patent Products in
each Calendar Year that is [***].

          [***].

          The Royalties payable by Cadence to BMS pursuant to this Section 4.1(g) shall be [***] for any
Calendar Quarter if:

          (i) [***]

          (ii) [***]

          (iii) [***]

but only to the extent such Royalties are [***] as of the date of such event.

          [***].

          (h) The royalties payable pursuant to Section 4.1(f) and Section 4.1(g) are referred to herein
as “Royalties”). Such Royalties shall be paid quarterly as provided in Section 4.7 of this
Agreement.

          (i) [***].

     4.2 Reduction of Certain Milestone Payments.

          (a) If (i) after the Effective Date, a Third Party claim or action challenging the Pharmatop
Patents succeeds so as to deprive Pharmatop (and therefore BMS and Cadence) of any of its rights
under the Pharmatop Patents in the United States or (ii) after the Effective Date, Pharmatop or BMS
is unable to maintain, or a material alteration of the scope or content occurs with respect to, any
of the claims under any of the Pharmatop Patents, in the United States, then

 

			
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(1) the payment
provided for in Section 4.1(b) shall, if not yet earned, be reduced to [[***] ([***]) and (2) the
payment provided for in Section 4.1(c) shall, if not yet earned, be reduced by [***].

          (b) If a Third Party should market in the United States after the Effective Date a
parenterally-administered liquid solution product, in a stable and readily injectible form, that
(i) contains paracetamol and one or more other analgesic ingredients, (ii) uses any of the
Technology contained within any issued claim of any Pharmatop Patent in such country or any
Pharmatop Know-How, and (iii) is not considered to infringe any Pharmatop Patent or BMS Patent in
such country (whether by judicial determination or settlement, by joint agreement of either BMS and
Pharmatop or BMS and Cadence or by the failure of Pharmatop, BMS and Cadence to prosecute such
Third Party for infringement under Section 6.5 of the Pharmatop License Agreement or Section 2.16
of this Agreement), then (1) the payment provided for in Section 4.1(b) shall, if not yet earned,
be reduced to [***]([***]) and (2) the payment provided for in Section 4.1(c) shall, if not yet
earned, be reduced by [***]; provided that (A) during the pendency of any legal action against such
Third Party with respect to the possible infringement of a Pharmatop Patent or BMS Patent the
amount of such reduction (the “Retained Sum”) shall be temporarily retained by Cadence until such
litigation ends, (B) if the outcome of the litigation is the invalidation of the Pharmatop Patents
so that the Third Party is free to sell such product in the United States, [***] and (C) if the
outcome of the litigation is not as described in clause (B) above, [***].

          (c) The reductions provided for in Sections 4.2(a) and 4.2(b) shall not be [***] and (i) the
aggregate amount of the reduction in the payment provided for in Section 4.1(b) shall not exceed
[***]([***]) and (ii) the aggregate amount of the reduction in the payment provided for in Section
4.1(c) shall not exceed [***].

          (d) Notwithstanding the foregoing Sections 4.2(a) and 4.2(b), if aggregate Net Sales during
any Calendar Year [***], then (i) for the [***] such Calendar Year Cadence shall pay to BMS
[***]([***]) of the aggregate amount of the reduction [***], (ii) for the [***] such
Calendar Year Cadence shall pay to BMS an [***]([***]) of the aggregate [***] and (iii) for
the [***] such Calendar Year Cadence shall pay to BMS an [***]([***]) of the aggregate [***]. Such
[***] shall be made not later than [***]([***])[***] following the applicable Calendar Year.

     4.3 Payments by Cadence to Pharmatop. In partial consideration of the rights granted
to Cadence hereunder and without limiting any of the other obligations assumed by Cadence under the
Pharmatop License Agreement:

     (a) Within ten (10) business days (as such term is used in the Pharmatop License Agreement)
following the [***], Cadence shall pay to Pharmatop [***]([***]) in satisfaction of the obligation
set forth in Section 7.1(b) of the Pharmatop License Agreement.

 

			
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          (b) Cadence shall pay to Pharmatop all royalties payable to Pharmatop pursuant to the
Pharmatop License Agreement with respect to the Territory in the manner provided for in such
agreement.

          (c) If for any period a Guaranteed Payment is due under the Pharmatop License Agreement,
Cadence shall pay to Pharmatop the amount of such Guaranteed Payment in the manner provided for in
the Pharmatop License Agreement.

          (d) Cadence shall provide to BMS evidence reasonably satisfactory to BMS of each such payment.

          (e) The amount of the payments made to BMS under this Agreement shall be Confidential
Information of BMS and of Cadence. Cadence shall not disclose to Pharmatop in the reports provided
by Cadence to Pharmatop pursuant to the Pharmatop License Agreement or otherwise the amount of any
payments to BMS hereunder.

     4.4 Manner of Payment. All payments to be made to BMS or Cadence hereunder shall be
paid in Dollars by wire transfer of immediately available funds to a bank account designated in
writing by the payee not less than [***] ([***])[***] prior to the required payment date.

     4.5 Interest. Any payment by Cadence to BMS hereunder not made as and when due shall
bear interest at the rate of [***]([***]) per annum, compounded daily, from the due date to the
date of payment.

     4.6 Expenses; Taxes.

          (a) Expenses. Except as expressly set forth in this Agreement, all costs and expenses
incurred in connection with the preparation and negotiation of this Agreement and the other
Transaction Documents and the transactions contemplated hereby shall be paid by the Party incurring
such expense. Each Party shall bear the fees and expenses of any agent, broker, investment banker,
finder or other Person engaged by it or any of its Affiliated Companies in connection with the
transactions contemplated by this Agreement and the other Transaction Documents.

          (b) Transfer Taxes. Any Transfer Tax, if any, applicable to the transactions contemplated by
this Agreement shall be borne and paid by Cadence.

          (c) Tax Withholding. The withholding tax, duties, and other levies (if any) applied by a
government of any country of the Territory on payments made by Cadence to BMS hereunder shall be
borne by BMS. Cadence, its Affiliated Companies and sublicensees shall cooperate with BMS to
enable BMS to claim exemption therefrom under any double taxation or similar agreement in force,
shall provide to BMS proper evidence of payments of withholding tax, and shall assist BMS by
obtaining or providing in as far as possible the required documentation for the purpose of BMS’s
tax returns.

     4.7 Sales Reports and Royalty and Other Payments. The Royalties payable under Section
4.1 shall be calculated and will be payable quarterly for sales made in each Calendar

 

			
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Quarter in the Royalty Term and the BMS Patent Royalty Term, as applicable. Cadence shall
prepare and send to BMS within [***] ([***])[***] after the end of each Calendar Quarter
([***]([***])[***] after the last Calendar Quarter in a Calendar Year to allow for additional time
to determine any adjustments required to be made on an annual basis) a detailed statement, country
by country and by dosage and pharmaceutical form, of the Net Sales (and, during the BMS Patent
Royalty Term, the Net Sales of BMS Patent Products), the calculation of the Royalties payable under
Section 4.1, the calculation of any amounts payable to Pharmatop pursuant to the Pharmatop License
Agreement with respect to the Territory and the calculation of any reduction in the Royalties or
other amounts deducted from the payments to BMS as contemplated by Section 4.1 together with a
description of any facts or circumstances that Cadence believes entitles it to a reduction in, or
deduction from, the Royalties payable under this Agreement as contemplated by Section 4.1 and
information reasonably satisfactory to BMS to permit the calculation of any such reduction or
deduction, accompanied by payment in accordance with Section 4.4 of the Royalties due BMS. Cadence
shall provide to BMS a copy of each statement of Net Sales provided by Cadence to Pharmatop
contemporaneously with the provision of such statement to Pharmatop, which statements shall not
disclose the Royalties or other amounts payable to BMS under this Agreement.

     4.8 Sales Record Audit. Cadence shall keep, and shall cause each of its Affiliated
Companies, sublicensees, distributors and agents to keep, full and accurate books of accounting In
Accordance With GAAP containing all particulars that may be necessary for the purpose of
calculating all Royalties payable to BMS. Such books of accounting (including those of Cadence’s
Affiliated Companies, sublicensees, distributors and agents) shall be kept at their principal place
of business, together with all necessary supporting data. BMS may, on reasonable (but not less
than [***]([***])[***]) written notice to Cadence, have the calculation of the Royalties payable
under Section 4.1 and any calculation or reconciliation statement provided pursuant to Section 4.7
audited at its own expense by an accounting firm selected by BMS that is reasonably acceptable to
Cadence and that is bound by a written agreement of confidentiality to Cadence. The auditor’s
assignment will be limited to reviewing the accuracy of a calculation or reconciliation statement
sent by Cadence, and to disclosing only if there are any errors in payment and, if an error exists,
the amount of such error(s) and the calculation thereof, and no additional or any other
information. If an audit discloses that the amount of Royalties owed to BMS was understated by
more than [***]([***][***], then [***] must reimburse [***] for the cost of the audit, in addition
to paying the additional Royalties together with interest on the additional amounts, calculated
from the date on which the additional amount should have been paid, as provided in Section 4.5.
Such audit rights may be exercised only once in any given Calendar Year, and any such audit shall
apply [***].

ARTICLE V — MUTUAL COVENANTS OF THE PARTIES

     5.1 Publicity. Neither Party shall issue any public release or announcement
concerning this Agreement or the transactions contemplated hereby without the prior consent of the
other Party, except to the extent required by Applicable Law or the rules or regulations of any

 

			
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United States or foreign securities exchange (or inter-dealer quotation system) or regulatory
commission (in which case such Party shall, to the extent practicable, allow the other Party
reasonable time to comment on such release or announcement in advance of such issuance); provided,
however, that prior to any such disclosure, such Party shall use reasonable efforts to give advance
notice to the other Party of the timing and content of such disclosure. Nothing contained in this
Section 5.1 shall prevent either Party from making internal announcements to its and its Affiliated
Companies’ employees.

     5.2 Confidentiality.

          (a) Confidentiality Obligations. Each Party recognizes that the other Party’s Confidential
Information constitutes highly valuable and proprietary confidential information and material.
Each Party agrees that until the date that is [***]([***])[***] after the date of disclosure to it
of any given item of Confidential Information, it will keep confidential, and will cause its officers, employees, consultants,
agents, Affiliated Companies and sublicensees to keep confidential, such Confidential Information
disclosed to it by the other Party; provided that if the Pharmatop License Agreement requires a
longer period of confidentiality with respect to any Confidential Information of Pharmatop
disclosed to a Party, such Party shall also observe such longer period of confidentiality in
accordance with the Pharmatop License Agreement. Neither BMS nor Cadence nor any of their
respective employees, consultants, Affiliated Companies or sublicensees shall use Confidential
Information of the other Party for any purpose whatsoever except as otherwise expressly permitted
by this Agreement.

          (b) Limited Disclosure. Each Party agrees that any disclosure of the other Party’s
Confidential Information to any officer, employee, consultant, agent or Affiliated Company of such
Party, shall be made only if and to the extent necessary to carry out its obligations and
responsibilities, or to exercise its rights, under this Agreement, shall be limited to the maximum
extent possible consistent with such rights and responsibilities, and shall only be made to persons
who are bound by their employment (or other) contract (or, in the case of counsel or other licensed
professionals, by applicable rules of professional conduct) to maintain the confidentiality thereof
and not to use such Confidential Information except as expressly permitted by this Agreement. Each
Party further agrees not to disclose or transfer the other Party’s Confidential Information to any
Third Party under any circumstance without the prior written approval from the other Party (such
approval not to be unreasonably withheld, delayed or conditioned if such Confidential Information
is appropriately protected by the recipient), except as otherwise required by law, and except as
otherwise expressly permitted by this Agreement. Each Party shall take such action, and shall
cause its officers, employees, consultants, agents, Affiliated Companies and sublicensees to take
such action, to preserve the confidentiality of the other Party’s Confidential Information as it
would customarily take to preserve the confidentiality of its own Confidential Information, using a
level of care that shall not under any circumstances be less than reasonable care. Each of the
Receiving Party’s Affiliated Companies shall be bound by the confidentiality obligations set forth
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set forth in Section 5.2(a), including any entity that becomes an Affiliated Company after the
date of the relevant disclosure by the Disclosing Party, whether or not such Affiliated Company
ceases to be an Affiliated Company of the Receiving Party during the term of the confidentiality
obligations hereunder; and the Receiving Party shall be responsible for any unauthorized disclosure
of such Confidential Information by any of its Affiliated Companies to which such Confidential
Information is disclosed, including after such company ceases to be an Affiliated Company.

          (c) Authorized Disclosure. The Receiving Party may disclose Confidential Information
belonging to the other Party to the extent (and only to the extent) such disclosure is reasonably
necessary in the following instances:

          (i) as reasonably necessary for filing or prosecuting Patents as contemplated by this
Agreement;

          (ii) as reasonably necessary for Regulatory Filings and other communications with Drug
Regulatory Authorities as contemplated by this Agreement;

          (iii) as reasonably necessary for prosecuting or defending litigation;

          (iv) subject to Section 5.2(e) of this Agreement, as reasonably necessary to comply
with Applicable Law (including the rules and regulations of the Securities and Exchange
Commission or any national securities exchange) and with judicial process, if in the
reasonable opinion of the Receiving Party’s counsel, such disclosure is necessary for such
compliance; and

          (v) in connection with the performance of this Agreement and solely on a “reasonable
need to know basis”, to Affiliated Companies, potential collaborators (including potential
co-marketing and co-promotion contractors), sublicensees, potential sublicensees, research
collaborators, potential investment bankers, lenders, investors, employees, consultants,
medical professionals participating in the conduct of clinical trials, or agents, each of
whom prior to disclosure must be bound by similar obligations of confidentiality and non-use
at least equivalent in scope to those set forth in this Section 5.2; provided, that in the
case of disclosure to academic researchers and academic institutions, the confidentiality
period hereunder shall be the longest such period as the applicable Party may reasonably
negotiate with such researchers or institutions; and provided, that the Receiving Party
shall remain responsible for any failure by any Person who receives Confidential Information
pursuant to this Section 5.2 to treat such Confidential Information as required under this
Section 5.2;

provided, however, that nothing in this Agreement shall limit or affect the Parties’
confidentiality obligations under the Pharmatop License Agreement.

          If and whenever any Confidential Information is disclosed in accordance with this Section 5.2,
such disclosure shall not cause any such information to cease to be Confidential Information except
to the extent that such disclosure results in a public disclosure of such information (otherwise
than by breach of this Agreement). With respect to disclosures under Sections 5.2(c)(iii) and
5.2(c)(iv), where reasonably possible, the Receiving Party shall notify the

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Disclosing Party of the Receiving Party’s intent to make such disclosure sufficiently prior to
making such disclosure so as to allow the Disclosing Party adequate time to take whatever action it
may deem appropriate to protect the confidentiality of the information, and the Receiving Party
shall further reasonably assist the Disclosing Party to obtain confidential treatment of such
Confidential Information.

          The Parties acknowledge that the terms of this Agreement shall be treated as Confidential
Information of both Parties. For the avoidance of doubt, this Section 5.2 shall in no way prevent
a Party from disclosing the existence of this Agreement or any terms of this Agreement in order to
seek legal advice whenever deemed appropriate by such Party or to enforce such Party’s rights under
this Agreement, whether through arbitration proceedings, court proceedings or otherwise, or to
defend itself against allegations or claims relating to this Agreement, or to disclose such terms
as it may be advised in written opinion of outside counsel are required to be disclosed to comply
with Applicable Law (a copy of which opinion shall be provided to the other Party).

          (d) Employees and Consultants. Each Party hereby represents that all of its employees and any
consultants to such Party or its Affiliated Companies that will have access to the Confidential
Information of the other Party shall be bound by written obligations (or, in the case of counsel or
other licensed professionals, bound by rules of professional conduct) to maintain such information
in confidence consistent with the terms of this Agreement and not to use such information except as
expressly permitted herein. Each Party agrees to enforce confidentiality obligations to which its
employees and consultants (and those of its Affiliated Companies) are obligated with respect to any
such Confidential Information and agrees to be responsible for any breach or violation by such
Persons of any provisions of this Agreement or the Pharmatop License Agreement relating to the
confidentiality or non-use of any such Confidential Information by such Persons.

          (e) Securities Filings. In the event either Party 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, that Party shall notify the other Party of such intention and shall provide
such other Party 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 such other Party 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 5.2(e) if the substance of the description of or reference to this Agreement contained in
the proposed filing has been included in any previous filing made by either Party hereunder or
otherwise approved by the other Party.

          (f) Academic Publications. The Parties recognize that independent investigators have been
engaged, and will be engaged in the future, to conduct clinical trials and studies of the Products.
The Parties recognize that such investigators operate in an academic

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environment and may release information regarding such studies in a manner consistent with
academic standards and as further provided in this paragraph. In the event that any such
independent investigator of a Party desires to publish any abstract, manuscript or article or make
any presentation (including verbal presentations) or other publication that includes any
Confidential Information of the other Party, such Party shall (i) require such independent
investigator to provide the other Party and its patent counsel the opportunity to review any
proposed abstract, manuscript, article, presentation (including verbal presentations) or other
publication at least thirty (30) days prior to its intended submission for publication or such
presentation and (ii) upon request of the other Party not to submit any such abstract, article or
manuscript for publication or not to make such presentation for such additional reasonable period
of time (but not to exceed an additional thirty (30) days) to enable the other Party to secure
patent protection for any material in such publication which it believes to be patentable or to
consider the implications of publication on eventual commercialization.

          (g) Additional Confidentiality Obligations under the Pharmatop License Agreement. The
provisions of this Section 5.2 are in addition to and not in limitation of any applicable
obligation of confidentiality under the Pharmatop License Agreement.

     5.3 Restrictions Binding on Affiliated Companies and Investors. Each Party shall
require each of its Affiliated Companies and investors to which Confidential Information of the
other Party is disclosed as permitted hereunder to comply with the covenants and restrictions set
forth in Sections 5.1 and 5.2 as if each such Affiliated Company and each such investor were a
Party to this Agreement and shall be fully responsible for any breach of such covenants and
restrictions by any such Affiliated Company or investor.

     5.4 Alliance Management. Each of the Parties shall appoint one senior representative
who possesses a general understanding of development, regulatory and commercialization issues to
act as its Alliance Manager. The role of the Alliance Manager is to act as a single point of
contact between the Parties to assure a successful working relationship. Each Party may change its
designated Alliance Manager from time to time upon written notice to the other Party. Any Alliance
Manager may designate a substitute to temporarily perform the functions of that Alliance Manager.

     5.5 Liens.

          (a) Cadence shall not during the term of this Agreement (i) grant any Lien (excluding any
permitted sublicenses) with respect to this Agreement or any of the rights licensed or sublicensed
to it under this Agreement or (ii) permit such a lien, security interest or other encumbrance
(excluding any permitted sublicenses) to attach to this Agreement or any of such rights. For sake
of clarity, any breach of this Section 5.5(a) by Cadence that is not cured within ten (10) Business
Days after written notice thereof shall be deemed a material breach of this Agreement.

          (b) BMS shall not during the term of this Agreement (i) grant any Lien (excluding any
permitted sublicenses) with respect to any of the BMS Rights, BMS Patents or BMS Know-How that
would prevent BMS from granting the licenses hereunder or performing its obligations under this
Agreement, or (ii) permit such a Lien to attach to the BMS Rights,

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BMS Patents or BMS Know-How. For sake of clarity, any breach of this Section 5.5(b) by BMS
that is not cured within ten (10) Business Days after written notice thereof shall be deemed a
material breach of this Agreement.

     5.6 BMS Confidential Disclosure Agreements. Promptly following the Effective Date,
BMS shall assign to Cadence the Confidential Disclosure Agreements executed by BMS and the other
potential sublicensees considered by BMS in connection with the sublicense of the BMS Rights
contemplated hereby, to the extent assignable; provided, however, that if BMS is not permitted by
the terms of such Confidential Disclosure Agreements to so assign them, BMS shall request the other
parties to such Confidential Disclosure Agreement to (i) return or destroy all the confidential
information of BMS relating to the Products and the BMS Rights provided to them by BMS in
connection with such transaction and (ii) certify to BMS that such confidential information has
been returned or destroyed; provided, further, that BMS shall not have any obligation to bring any
suit or take any other action against any such other party to enforce the obligations thereunder.
BMS shall provide to Cadence copies of any such certifications received by BMS.

ARTICLE VI — REPRESENTATIONS AND WARRANTIES

     6.1 Mutual Representations and Warranties. Each of BMS and Cadence represents and
warrants to the other Party as follows:

          (a) Organization. Such Party is a corporation duly organized, validly existing and in good
standing (or subsisting) under the laws of the jurisdiction of its organization, is qualified to do
business and is in good standing (or subsisting) as a foreign corporation or company in each
jurisdiction in which the performance of its obligations under this Agreement requires such
qualification, and has full corporate or company power and authority and possesses all governmental
franchises, licenses, permits, authorizations and approvals (other than the termination or
expiration of any waiting periods under the HSR Act, if applicable) necessary to enable it to
perform its obligations under this Agreement, other than such franchises, licenses, permits,
authorizations and approvals the lack of which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.

          (b) Authorization. The execution, delivery and performance by such Party of this Agreement
have been duly authorized by all necessary corporate action and do not and will not require any
further consent or approval of its shareholders or members. Such Party has the power and authority
to execute and deliver this Agreement and to perform its obligations hereunder and to grant the
rights and licenses granted (or to be granted) by it in this Agreement.

          (c) Binding Agreement. Such Party has duly executed and delivered this Agreement, and this
Agreement (assuming the due authorization, execution and delivery by each other party thereto),
constitutes its legal, valid and binding obligation, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws and judicial decisions of general applicability relating to or
affecting creditors’ rights generally and to general principles of equity (regardless of whether
enforceability is sought in equity or at law).

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          (d) No Conflicts; Consents. The execution and delivery by such Party of this Agreement do
not, and the consummation of the transactions contemplated by this Agreement do not and will not,
conflict with, or result in any violation of or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or acceleration of any
obligation or to loss of a material benefit under, or to increased, additional or accelerated
rights or entitlements of any Third Party under, or result in the creation of any Lien upon any of
the assets of such Party under, any provision of (i) its Organizational Documents, (ii) any
Contract to which such Party is a party or by which any of its properties or assets is bound,
except for the rights of Pharmatop under the Pharmatop License Agreement or (iii) any judgment,
order or decree (collectively, “Judgments”) or any Applicable Law applicable to such Party or its
properties or assets. No consent, approval, license, permit, order or authorization (collectively,
“Consent”) of, or registration, declaration or filing with, any Governmental Entity (other than any
filing under the HSR Act) or any other Third Party is required to be obtained or made by or with
respect to such Party in connection with the execution, delivery and performance of this Agreement
or the consummation of the transactions contemplated by this Agreement.

          (e) Litigation. There are no (a) outstanding Judgments against or affecting such Party, or
(b) claims, actions, suits, proceedings, arbitrations, investigations, inquiries, or hearings or
notices of hearings (collectively, “Proceedings”) pending or, to the knowledge of such Party,
threatened in writing against or affecting such Party, its Affiliated Companies, by or against any
Governmental Entity or any other Person, that in any manner challenges or seeks to prevent, enjoin,
materially alter or materially delay the transactions contemplated by this Agreement or that,
individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect on
such Party or on the exploitation (including the import, use, manufacture, sale and offer for sale)
of the Products hereunder.

     6.2 Additional Representations of Cadence. Without limiting the generality of the
representations and warranties set forth in Section 6.1 above, Cadence represents and warrants to
BMS as follows:

(a) Financial Statements. True and complete copies of the audited balance sheet of Cadence as of
December 31, 2004, and the related statements of income, shareholders’ equity and cash flows for
the fiscal year ended on such date, together with the notes thereto and the unaudited consolidated
balance sheets of Cadence and its subsidiaries as of December 31, 2005, and the related statements
of income, shareholders’ equity and cash flows for the twelve (12) months ended on such date
(collectively, the “Financial Statements”) have been Previously Disclosed. The Financial
Statements are In Accordance With GAAP (as defined below). As used herein with respect to any
financial statements, “In Accordance With GAAP” means that such financial statements: (i) are in
accordance with the books and records of Cadence and its subsidiaries, if any, (ii) are true and
correct and fairly present in all material respects the financial position, results of operations,
shareholders’ equity and cash flows of Cadence and its subsidiaries, if any, on a consolidated
basis, if applicable, as of the dates and for the periods indicated, in each case in conformity
with United States generally accepted accounting principles consistently applied during the
applicable periods and (iii) if such financial statements are audited, include all required
footnotes and, if such financial statements are unaudited, include all required footnotes
concerning contingent liabilities, if any. The statements of income included

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in the Financial Statements do not contain any items of special or nonrecurring income, revenue or
expense and have not been affected by the inclusion of transactions entered into otherwise than on
normal commercial terms or by any other factors rendering such profits for all or any of such
periods exceptionally high or low, except as expressly specified therein. Except as specified in
the Financial Statements or the notes thereto, the balance sheets included in the Financial
Statements do not reflect any write-up or revaluation increasing the book value of any assets. The
books and accounts of Cadence and its subsidiaries are true and complete in all material respects
and fully and fairly reflect all of the transactions of Cadence and its subsidiaries.

          (b) Absence of Undisclosed Liabilities. To the knowledge of Cadence, Cadence and its
subsidiaries have no liability of any nature whatsoever (whether known or unknown, due or to become
due, accrued, absolute, contingent, existing, inchoate or otherwise) including any unfunded
obligation under any benefit plan (as defined in ERISA) or liabilities for Taxes, except for (i)
liabilities reflected or reserved against in the consolidated balance sheet of Cadence and its
subsidiaries as of December 31, 2005 (the “Balance Sheet Date”) included in the Financial
Statements (collectively, the “Balance Sheet”), or in the notes thereto, (ii) liabilities under the
Loan and Security Agreement among Cadence, Oxford Finance Corporation and Silicon Valley Bank dated
February 17, 2006 (the “Loan Agreement”), (iii) current liabilities incurred in the ordinary course
of business and consistent with past practice from the Balance Sheet Date to the Effective Date
which, individually and in the aggregate, do not exceed [***] and (iv) liabilities which
individually or in the aggregate would not have a Material Adverse Effect on Cadence. The
collateral pledged by Cadence pursuant to the Loan Agreement does not include any of Cadence’s
rights in, to or under this Agreement.

          (c) Absence of Material Adverse Effect. To the knowledge of Cadence, since the Balance Sheet
Date and through the Effective Date, Cadence and its subsidiaries have not experienced a Material
Adverse Effect and no event or circumstance has occurred or developed which is reasonably likely to
result in such a Material Adverse Effect or which has resulted, or is reasonably likely to result,
in any loss or liability to Cadence and its subsidiaries in excess of [***].

          Without limiting the foregoing, since the Balance Sheet Date there has not been, occurred or
arisen: (i) any declaration, setting aside or payment of any dividend or distribution (whether in
cash, stock or property) in respect of capital stock of Cadence or any of its subsidiaries, or any
direct or indirect redemption, purchase or other acquisition of shares of such capital stock or any
split, combination or reclassification of such capital stock (other than redemption of shares
issued pursuant to early-exercised options under Cadence’s 2004 Equity Incentive Award Plan), (ii)
any Lien on any of the assets or properties of Cadence and its subsidiaries (other than the pledge
of assets pursuant to the Loan Agreement); or (iii) any authorization, approval, agreement or
commitment to do any of the foregoing. The pledge of assets pursuant to the Loan Agreement does
not grant any Lien with respect to this Agreement or any of the rights licensed or sublicensed to
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          (d) Legal Matters. Since Cadence’s date of incorporation (May 26, 2004), there has not been
any, and there is no, claim, action, suit, litigation, investigation, inquiry, review or proceeding
(collectively, “Cadence Claims”) pending against Cadence or any of its subsidiaries relating to the
business or assets of Cadence or its subsidiaries before or by any court, arbitrator or

Governmental Entity; and to the knowledge of Cadence no such Cadence Claim has been threatened.
Neither Cadence nor any of its subsidiaries is subject to any judgment, decree, writ, injunction,
ruling, award or order of any Governmental Entity or any arbitrator relating to the business or
assets of Cadence and its subsidiaries.

          (e) Receipt of Financing; Restrictions. Between the Execution Date and the Effective Date,
Cadence will have received additional financing in an amount that is not less than $50 million from
the sale of equity securities. The holders of the equity securities of Cadence and its
subsidiaries do not have (by virtue of the terms of such equity securities, by contract or
otherwise) any right (mandatory or optional) to require the redemption of any of such equity
securities. On or before the Effective Date, Cadence will have entered into the Loan Agreement
obligating the lender or lenders thereunder to lend to Cadence not less than $7 million, subject to
the terms and conditions set forth therein. Cadence has provided to BMS true and complete copies
of the documents relating to such equity financing and such Loan Agreement.

     6.3 BMS Rights.

          (a) Pharmatop Patents. As of the Execution Date, BMS represents and warrants to
Cadence as follows with respect to the Pharmatop Patents and Pharmatop Know-How:

               (i) Schedule 6.3(a) sets forth a list of all the Pharmatop Patents. To the knowledge
of BMS’s in-house patent counsel after reasonable due diligence, (A) the most recent Patent report
provided to BMS pursuant to Section 5.1 of the Pharmatop License Agreement relating to the
Pharmatop Patents has been provided to Cadence, except for information that may have been redacted
relating to Patents outside the Territory, and (B) BMS has not received any written notices of
allowances for the Pharmatop Patents or written notices of interferences proceedings with respect
thereto, except as previously disclosed to Cadence.

               (ii) To the knowledge of BMS’s in-house patent counsel after reasonable due diligence, there
are no unpaid maintenance, annuity or renewal fees currently overdue for any of the Pharmatop
Patents.

               (iii) To the knowledge of BMS’s in-house patent counsel, BMS is the sole and exclusive
licensee of the Pharmatop Patents in the Territory.

               (iv) BMS has not sublicensed, granted any interest in or options to the Pharmatop Patents to
any Third Party in the Territory and covenants not do so prior to the expiration or termination of
this Agreement, except in the exercise of BMS’s retained rights pursuant to Section 2.2.

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          (b) To the knowledge of BMS’s in-house counsel, BMS is not, nor has it received any notice
that it is, in default (or that with the giving of notice or lapse of time or both it would be in
default) with respect to the BMS Rights under the Pharmatop License Agreement that would permit
Pharmatop to terminate, or exercise a right of rescission, revision or amendment of, the Pharmatop
License Agreement with respect to the Territory and covenants that it shall not take, and shall
cause its Affiliated Companies not to take, any action or omit to take any action after the
Execution Date that would permit Pharmatop to terminate, or exercise a right of rescission,
revision or amendment of, the Pharmatop License Agreement with respect to the Territory, other than
the omission of the performance of obligations assumed by Cadence hereunder.

          (c) To the knowledge of BMS’s in-house patent counsel, BMS has not received written notice of
any claim, action, suit or litigation alleging that BMS’s exploitation (including the import, use,
manufacture, sale and offer for sale) of the BMS Rights for the Product interferes with, infringes,
or misappropriates any intellectual property rights of any Third Party (including written notice of
any claim, action, suit or litigation that BMS must license or refrain from using any intellectual
property rights of any Third Party in order to exploit(including the import, use, manufacture, sale
and offer for sale) any Products. To the knowledge of BMS’s in-house patent counsel, BMS has not
received written notice that any claim, action, suit or litigation is pending or threatened which
challenges the legality, validity, enforceability, use or ownership of any BMS Rights.

          (d) BMS represents and warrants to Cadence that a true and correct copy of the Pharmatop
License Agreement as of the Effective Date, including any and all amendments, supplements or other
modifications thereto, except for the redaction of certain financial information in Section 7.1
thereof, has been Previously Disclosed. A copy of the Licensor Confirmation provided by Pharmatop
with respect to certain intellectual property and other matters as of February 6, 2006, has been
Previously Disclosed.

          (e) To the knowledge of BMS, no circumstances or grounds exist that would entitle Pharmatop to
terminate or exercise a right of rescission, revision, or amendment of the Pharmatop License
Agreement with respect to the Territory, and the execution, delivery and performance of this
Agreement will not constitute such a circumstance or ground.

          (f) BMS has protected the Pharmatop Know-How in a manner not materially different from the
manner in which it customarily protects its other proprietary know-how of comparable commercial
value.

     6.4 BMS Patents and Know-How. As of the Execution Date, BMS represents and warrants
to Cadence with respect to the BMS Patents and BMS Know-How that to the knowledge of its in-house
patent counsel:

          (a) there are no unpaid maintenance, annuity or renewal fees currently overdue for any of the
BMS Patents; and

          (b) there are no claims, judgments or settlements against or owed by BMS and no litigation
pending or threatened in writing relating to the BMS Patents; and

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          (c) BMS has protected the BMS Know-How in a manner not materially different from the manner in
which it customarily protects its other proprietary know-how of comparable commercial value.

     6.5 DISCLAIMER.

          (a) EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE VI OR IN
SECTION 5.2(D), BMS MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED,
WITH RESPECT TO THE BMS RIGHTS, BMS PATENTS OR BMS KNOW-HOW, IMPROVEMENTS, REGISTRATIONAL
INFORMATION, REGULATORY FILINGS, APPROVALS, PRODUCT DATA, OTHER PRODUCT DATA OR REPORTS, STUDIES,
PATENTS, PROCESSES, FORMULATIONS, TECHNIQUES OR OTHER TRADE SECRETS OR CONFIDENTIAL INFORMATION
PROVIDED BY BMS TO CADENCE HEREUNDER OR ANY LICENSE GRANTED BY BMS HEREUNDER, OR WITH RESPECT TO
ANY COMPOUNDS OR PRODUCTS. WITHOUT LIMITING THE FOREGOING, BMS MAKES NO EXPRESS OR IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE BMS RIGHTS,
BMS PATENTS OR BMS KNOW-HOW OR ANY LICENSE GRANTED BY BMS HEREUNDER, OR WITH RESPECT TO ANY
COMPOUNDS OR PRODUCTS. FURTHERMORE, NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS A
REPRESENTATION OR WARRANTY BY BMS THAT ANY OF THE FOREGOING IS VALID OR ENFORCEABLE OR THAT
CADENCE’S USE THEREOF CONTEMPLATED HEREUNDER DOES NOT INFRINGE ANY PATENT RIGHTS OR OTHER
INTELLECTUAL PROPERTY RIGHTS OF ANY THIRD PARTY.

          (b) EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE VI OR IN
SECTION 5.2(D), CADENCE MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, WITH RESPECT TO THE IMPROVEMENTS, REGISTRATIONAL INFORMATION, REGULATORY FILINGS,
APPROVALS, PRODUCT DATA, OTHER PRODUCT DATA OR REPORTS, STUDIES, PATENTS, PROCESSES, FORMULATIONS,
TECHNIQUES OR OTHER TRADE SECRETS OR CONFIDENTIAL INFORMATION PROVIDED BY CADENCE TO BMS HEREUNDER
OR ANY LICENSE GRANTED BY CADENCE HEREUNDER, OR WITH RESPECT TO ANY COMPOUNDS OR PRODUCTS. WITHOUT
LIMITING THE FOREGOING, CADENCE MAKES NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO ANY LICENSE GRANTED BY CADENCE HEREUNDER, OR WITH
RESPECT TO ANY COMPOUNDS OR PRODUCTS. FURTHERMORE, NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS
A REPRESENTATION OR WARRANTY BY CADENCE THAT ANY OF THE FOREGOING IS VALID OR ENFORCEABLE OR THAT
BMS’S USE THEREOF CONTEMPLATED HEREUNDER DOES NOT INFRINGE ANY PATENT RIGHTS OR OTHER INTELLECTUAL
PROPERTY RIGHTS OF ANY THIRD PARTY.

     6.6 LIMITATION OF LIABILITY. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT OR OTHERWISE,
(I) NEITHER PARTY SHALL BE LIABLE TO THE

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OTHER (OR TO ANY INDEMNIFIED PARTIES) WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT,
WHETHER UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY, FOR
ANY INCIDENTAL, INDIRECT, SPECIAL, EXEMPLARY, PUNITIVE, MULTIPLE, OR CONSEQUENTIAL DAMAGES
(INCLUDING LOST PROFITS, LOSS OF USE, DAMAGE TO GOODWILL, OR LOSS OF BUSINESS), EXCEPT THAT SUCH
LIMITATION SHALL NOT APPLY TO (A) PUNITIVE OR CONSEQUENTIAL DAMAGES PAID OR PAYABLE TO A THIRD
PARTY BY AN INDEMNIFIED PARTY FOR WHICH THE INDEMNIFIED PARTY IS ENTITLED TO INDEMNIFICATION
HEREUNDER, (B) A BREACH OF THE [***] COVENANT, (C) ANY FAILURE BY CADENCE OR ITS AFFILIATED
COMPANIES TO (1) OBSERVE OR COMPLY WITH THE TERMS OF THE PHARMATOP LICENSE AGREEMENT OR (2) PERFORM
ANY OF THE OBLIGATIONS UNDER THE PHARMATOP LICENSE AGREEMENT ASSUMED BY CADENCE HEREUNDER THAT, IN
THE CASE OF EACH OF PART (1) AND (2) OF THIS CLAUSE (C) RESULTS IN A TERMINATION OF THE PHARMATOP
LICENSE AGREEMENT WITH RESPECT TO ANY COUNTRY IN THE TERRITORY OR A TERMINATION OF THE PHARMATOP
LICENSE AGREEMENT IN ITS ENTIRETY, (D) ANY BREACH OF THE PHARMATOP LICENSE AGREEMENT BY BMS OR ITS
AFFILIATED COMPANIES (OTHER THAN WITH RESPECT TO ANY OBLIGATION TO BE PERFORMED BY CADENCE) THAT
RESULTS IN A TERMINATION OF THE PHARMATOP LICENSE AGREEMENT WITH RESPECT TO ANY COUNTRY IN THE
TERRITORY OR A TERMINATION OF THE PHARMATOP LICENSE AGREEMENT IN ITS ENTIRETY OR (E) ANY BREACH OF
[***] OF THIS AGREEMENT BY BMS OR ITS AFFILIATED COMPANIES OR OF [***] OF THIS AGREEMENT BY CADENCE
OR ITS AFFILIATED COMPANIES AS TO WHICH CADENCE OR BMS, AS THE CASE MAY BE, TERMINATES THIS
AGREEMENT PURSUANT TO SECTION 8.3(B) (IT BEING UNDERSTOOD THAT A BREACH OF ANY OF SUCH SECTIONS IS
NOT NECESSARILY A MATERIAL BREACH THAT WOULD PERMIT TERMINATION UNDER SECTION 8.3(B)), AND (II)
EXCEPT AS PROVIDED IN [***] ABOVE, BMS SHALL NOT BE LIABLE IN RESPECT OF ANY BREACH OF ANY
REPRESENTATION OR WARRANTY OF BMS CONTAINED IN THIS AGREEMENT IN AN AMOUNT GREATER THAN THE AMOUNTS
PAID BY CADENCE TO BMS UNDER SECTION 4.1 OF THIS AGREEMENT.

ARTICLE VII — INDEMNIFICATION; ARBITRATION

     7.1 Mutual Indemnification. Each Party (the “Indemnifying Party”) shall indemnify,
defend and hold harmless the other Party, its Affiliated Companies and their respective directors,
officers, employees, and agents and their respective successors, heirs and permitted assigns (the
“Indemnitees”), against any liability, damage, loss or expense (including reasonable attorneys’
fees and expenses of litigation) (collectively, but subject to Section 6.6 hereof, “Losses”)
incurred by or imposed upon the Indemnitees, or any one of them arising out of or resulting from
(or alleged to arise out of or result from) any of the following:

 

			
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               (i) any breach of any representation or warranty of the Indemnifying Party contained in this
Agreement; and

               (ii) any breach of any covenant or agreement of the Indemnifying Party contained in this Agreement.

     7.2 Additional Indemnification Obligations of Cadence. Without limiting its
obligations under Section 7.1, Cadence further agrees to indemnify, defend and hold harmless BMS,
its Affiliated Companies and their respective directors, officers, employees, and agents and their
respective successors, heirs and assigns (the “BMS Indemnitees”), against any Losses payable by the
BMS Indemnitees, or any one of them, to any Third Party arising out of or resulting from (or
alleged to arise out of or result from) (A) any breach of the Pharmatop License Agreement (other
than a breach by Pharmatop) resulting from (i) any failure of Cadence or any of its Affiliated
Companies, sublicensees, contractors or agents to perform, observe or comply with any provision of
the Pharmatop License Agreement that relates to the Territory (except to the extent that a breach
by BMS of its obligations under this Agreement or the Pharmatop License Agreement or any other act
or omission by BMS prevents such performance, observance or compliance by Cadence or its Affiliated
Companies, sublicensees, contractors or agents) or (ii) the exercise by Cadence or its Affiliated
Companies, sublicensees, contractors or agents of the BMS Rights sublicensed to Cadence under this
Agreement, (B) the development of Products by or on behalf of Cadence or any of its Affiliated
Companies or sublicensees for the Territory or any other jurisdiction as to which Cadence or any of
its Affiliated Companies has or may acquire rights with respect to Products, (C) the marketing,
promotion, sale, use, consumption of, or exposure to, Products in the Territory or any such other
jurisdiction, (D) the manufacturing (other than pursuant to the Clinical Supply Agreement) of
Products for sale, use or consumption in the Territory or any such other jurisdiction, (E) the use
by Cadence and its Affiliated Companies or any of its or their sublicensees, contractors or agents
of BMS’s Product Data, Other Product Data or Regulatory Filings or other data, information,
records, filings or Confidential Information that BMS provides to Cadence pursuant to this
Agreement or (F) any failure by Cadence and its Affiliated Companies and its and their sublicensees
to comply with Applicable Law in connection with the development and commercialization (including
the manufacture, marketing, promotion and sale) of the Products hereunder.

7.3 Additional Indemnification Obligations of BMS. Without limiting its obligations under
Section 7.1, BMS further agrees to indemnify, defend and hold harmless Cadence, its Affiliated
Companies and their respective directors, officers, employees, and agents and their respective
successors, heirs and assigns (the “Cadence Indemnitees”), against any Losses payable by the
Cadence Indemnitees, or any one of them, to any Third Party arising out of or resulting from (or
alleged to arise out of or result from) (A) any breach of the Pharmatop License Agreement (other
than a breach by Pharmatop or a failure by Cadence or any of Cadence’s Affiliated Companies or any
of their sublicensees, contractors or agents to perform, observe or comply with any of the
provisions of the Pharmatop License Agreement, except to the extent that a breach by BMS of its
obligations under this Agreement or the Pharmatop License Agreement or any other act or omission by
BMS prevents such performance, observance or compliance by Cadence or its Affiliated Companies,
sublicensees, contractors or agents) resulting from (i) any failure of BMS or any of its Affiliated
Companies or its or their sublicensees (other than Cadence), contractors or agents to perform,
observe or comply with anyprovision of the Pharmatop License
Agreement

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that relates to the Territory (except to the extent such failure results from any act or omission
of Cadence and its Affiliated Companies, sublicensees contractors and agents to perform, observe or
comply with any provision of the Pharmatop License Agreement that relates to the Territory or with
this Agreement), (B) any breach of the Pharmatop License Agreement by BMS or any of its Affiliated
Companies or its or their sublicensees (other than Cadence), contractors or agents that arises out
of activities of BMS or any of its Affiliated Companies or its or their sublicensees (other than
Cadence) outside the Territory, (C) the exploitation (including the import, use, manufacture, sale
and offer for sale) of the Products by BMS or any of its Affiliated Companies or its or their
sublicensees (other than Cadence), contractors or agents outside the Territory or inside the
Territory pursuant to the rights retained by BMS under this Agreement, (D) the exploitation
(including the import, use, manufacture, sale and offer for sale) of the Products by BMS or any of
its Affiliated Companies or its or their sublicensees (other than Cadence), contractors or agents
inside the Territory prior to the Effective Date or (E) the use by BMS and its Affiliated Companies
or any of its or their sublicensees (other than Cadence), contractors or agents of Cadence’s
Product Data, Other Product Data or Regulatory Filings or other data, information, records, filings
or Confidential Information that Cadence provides to BMS pursuant to this Agreement.

     7.4 Conditions to Indemnification; Third Party Claims. Subject to Article 12 of the
Pharmatop License Agreement, to the extent applicable, a Party seeking indemnification under this
Article VII (the “Indemnified Party”) with respect to any claim brought by any Third Party shall
give prompt notice of the claim to the Indemnifying Party and, provided that the Indemnifying Party
is not contesting the indemnity obligation, shall permit the Indemnifying Party to control and
assume the defense of any litigation relating to such claim and disposition of any such claim
unless the Indemnifying Party is also a party (or likely to be named a party) to the proceeding in
which such claim is made and the Indemnified Party gives notice to the Indemnifying Party that it
may have defenses to such claim or proceeding that are in conflict with the interests of the
Indemnifying Party, in which case the Indemnifying Party shall not be so entitled to assume the
defense of the case. If the Indemnifying Party does assume the defense of any claim or proceeding,
it (i) shall act diligently and in good faith with respect to all matters relating to the
settlement or disposition of any claim as the settlement or disposition relates to Parties being
indemnified under this Article VII, (ii) shall cause such defense to be conducted by counsel
reasonably acceptable to the Indemnified Party and (iii) shall not settle or otherwise resolve any
claim without prior notice to the Indemnified Party and the consent of the Indemnified Party if
such settlement involves anything other than the payment of money by the Indemnifying Party. The
Indemnified Party shall cooperate with the Indemnifying Party in its defense of any claim for which
the Indemnifying Party has assumed the defense in accordance with this Section 7.4, and shall have
the right (at its own expense) to be present in person or through counsel at all legal proceedings
giving rise to the right of indemnification.

     7.5 Insurance. Cadence shall, beginning with the initiation of its first clinical
trial for a Product, maintain at all times thereafter during the term of this Agreement, and until
the later of (i) [***] ([***])[***] after termination or expiration of this Agreement or (ii) the
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the sale or use of a Product have expired in all countries in the Territory, comprehensive
general liability insurance from a recognized, creditworthy insurance company having an Excellent
rating (A rating or above by A.M. Best), a financial performance rating of at least Strong (A
rating or above by A.M. Best) and an A.M. Best Class Size of at least VIII, on a claims-made basis,
with endorsements for contractual liability and product liability, and with coverage limits of not
less than [***] ([***]) per occurrence and, [***], [***]([***])in the aggregate or, [***],
[***]([***]) in the aggregate and which shall name BMS as an “additional insured” thereunder. The
minimum level of insurance set forth herein shall not be construed to create a limit on Cadence’s
liability hereunder. Within [***]([***])[***] following written request from BMS, Cadence shall
furnish to BMS a certificate of insurance evidencing such coverage as of the date. Cadence shall
provide BMS with not less than [***]([***]) days’ prior written notice of any modification or
cancellation of coverage by Cadence and shall provide written notice to BMS not less than
[***]([***])[***] after receiving notice from its insurer (or insurance broker) of any modification
or cancellation of coverage by the insurer. In the case of a modification or cancellation of
such coverage, Cadence shall promptly provide BMS with a new certificate of insurance evidencing
that Cadence’s coverage meets the requirements in the first sentence of this Section. The
collection by BMS of any proceeds under any such insurance policy shall not affect BMS’s right to
obtain indemnification or other remedies under this Agreement, except to the extent that the
collection of such proceeds reduces BMS’s Losses, and the assertion by BMS of a claim under any
such insurance policy shall not impair BMS’s right to assert a claim against Cadence or any other
Person for indemnification or otherwise pursuant to this Agreement.

     7.6 Arbitration. Except as set forth in Section 7.7, any controversy or claim arising
out of or relating to this Agreement or the validity, inducement or breach thereof (a “Dispute”)
shall be settled by binding arbitration as follows:

          (a) A Party may submit such Dispute to arbitration by notifying the other Party, in
writing, of such Dispute and demanding arbitration of such Dispute in accordance with this
Section 7.6. Any such Dispute shall, except as provided herein, be finally resolved under
the Rules of Arbitration of the International Chamber of Commerce (the “ICC”) before an
arbitration tribunal of three (3) arbitrators appointed and ruling in accordance with such
Rules of Arbitration (the “Rules”), except where the Rules conflict with this Section 7.6,
in which case this Section shall control. Each of the arbitrators shall be an attorney who
has at least fifteen (15) years of experience with a law firm or corporate law department of
over twenty-five (25) lawyers or a judge of a court of general jurisdiction. The governing
law set forth in Section 9.8 shall govern any such proceedings, unless otherwise required by
Section 7.7. The language of the arbitration shall be English.

          (b) Within thirty (30) days after the designation of the arbitrator, the arbitrator and
the Parties shall meet, and each Party shall provide to the arbitrator a written summary of
all disputed issues, such Party’s position on such disputed issues and such Party’s proposed
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          (c) The arbitrator shall set a date for a hearing, which shall be no later than thirty
(30) days after the submission of written proposals pursuant to Section 7.6(b), for the
presentation of evidence and legal argument concerning each of the issues identified by the
Parties. The Parties shall have the right to be represented by counsel.

          (d) The arbitrator shall use his or her best efforts to rule on each disputed issue
within thirty (30) days after completion of the hearing described in Section 7.6(c). The
determination of the arbitrator as to the resolution of any dispute shall be binding and
conclusive upon all Parties. All rulings of the arbitrator shall be in writing and shall be
delivered to the Parties except to the extent that the Rules provide otherwise. Nothing
contained herein shall be construed to permit the arbitrator to award punitive, exemplary or
any similar damages.

          (e) [***].

          (f) Any arbitration pursuant to this Section 7.6 shall be conducted in Chicago,
Illinois or, if such arbitration includes Pharmatop as contemplated by Section 7.7, Paris,
France. Any arbitration award may be entered in and enforced by any court with
jurisdiction.

          (g) The Parties acknowledge and agree that the breach by any Party of the provision of
this Agreement related to the protection of trade secrets or confidentiality would not be
fully compensable by money damages and would result in irreparable harm to the other Party.
Notwithstanding anything in this Article 7, each Party shall have the right to seek
injunctive or other equitable relief from a court of competent jurisdiction that may be
necessary to avoid irreparable harm, maintain the status quo or preserve the subject matter
of the arbitration, including any breach or threatened breach of Section 5.1 or 5.2.

     7.7 Pharmatop Arbitration. In the event of any controversy or claim between Pharmatop
and BMS relating to or affecting the rights thereunder with respect to the Territory arising out of
or relating to the Pharmatop License Agreement or the performance by Cadence of its obligations
under this Agreement or the Pharmatop License Agreement that is the subject of an arbitration
proceeding pursuant to Section 13.1 of the Pharmatop License Agreement, Cadence agrees that, if
requested by BMS (or if requested by Cadence to the extent such proceeding relates to the
Territory) and to the extent permitted by the Pharmatop License Agreement or by Pharmatop or the
arbitrators, (i) Cadence will (if requested by BMS) join in and participate in such proceeding;
(ii) if requested by Cadence with respect to any such proceeding that relates to the Territory, BMS
shall use reasonable efforts to seek to include Cadence in such proceeding, and (iii) if Cadence
participates or is included in such proceeding, any controversy or claim between BMS and Cadence
relating thereto shall be settled by arbitration in such proceeding to the extent possible rather
than in a proceeding under Section 7.6. In the event of any controversy or claim between Pharmatop
and Cadence arising out of or relating to the Pharmatop License Agreement or the performance by
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pursuant to Section 13.1 of the Pharmatop License Agreement or otherwise, BMS shall be
entitled to participate in such proceeding, and to the extent permitted by the Pharmatop License
Agreement or by Pharmatop or the arbitrators, any controversy or claim between BMS and Cadence
relating thereto shall be settled by arbitration in such proceeding. In the event BMS reasonably
believes that the participation of Pharmatop in any arbitration proceeding between BMS and Cadence
pursuant to Section 7.6 would facilitate the orderly resolution of such Dispute, BMS shall be
entitled to have Pharmatop participate in such arbitration proceeding.

ARTICLE VIII — TERM AND TERMINATION

     8.1 Term. This Agreement shall commence as of the Effective Date and, unless sooner
terminated in accordance with the terms hereof or by mutual written consent, shall expire in each
country in the Territory, on a country-by-country basis, upon the expiration of both the Royalty
Term and BMS Patent Royalty Term in such country.

     8.2 Automatic Termination. This Agreement shall terminate automatically in the event
of the termination of the Pharmatop License Agreement. In the event of a partial termination of
the Pharmatop License Agreement, this Agreement shall terminate in respect of the rights so
terminated under the Pharmatop License Agreement.

     8.3 Termination by Either Party. Either Party shall have the right to terminate this
Agreement on a country-by-country basis (except that any termination with respect to the United
States shall also apply to Canada), at its sole discretion, upon delivery of written notice to the
other Party, upon the occurrence of any of the following:

     (a) the Bankruptcy of the other Party; and

     (b) a material breach of this Agreement by the other Party with respect to any country
in the Territory (or, in the case of any covenant that is qualified by materiality, any
breach) that is not cured within the Specified Number of Days (as defined below) after
written notice of such breach is given; provided that such additional cure period shall not
apply to any breach of Section 5.5; and provided, further that the Parties acknowledge that
a series of breaches which are immaterial individually may, when considered in the
aggregate, result in a material breach and that such opportunity to cure shall run in
respect of each such immaterial breach from the date that the Party seeking to terminate has
given notice of such material breach.

          As used herein “Specified Number of Days” means [***] ([***]) days (or [***] in the case of a
termination based on the second proviso of the first paragraph of this Section 8.3(b)), except
that:

          (i) if [***] have not occurred:

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               (B) [***] and

               (C) [***];

     (ii) if the [***] has occurred, the Specified Number of Days shall be
[***]([***])[***]; and

     (iii) if the [***] has occurred, the Specified Number of Days shall be
[***]([***])[***].

     8.4 Termination by BMS. BMS shall have the right to terminate this Agreement, at
BMS’s sole discretion, upon delivery of written notice to Cadence, upon the occurrence of any of
the following:

          (a) the failure of Cadence or any of its Affiliated Companies, sublicensees, contractors or
agents to perform, observe or comply with any provision of the Pharmatop License Agreement that
relates to the Territory, the BMS Rights or the exercise of the rights sublicensed or licensed to
Cadence under this Agreement or any other act or omission of Cadence or any of its Affiliated
Companies or any of their sublicensees, contractors or agents that results in a material breach of
the Pharmatop License Agreement or would permit Pharmatop to terminate, or exercise a right of
rescission with respect to, the Pharmatop License Agreement (except to the extent that a breach by
BMS of its obligations under this Agreement or any other act or omission by BMS prevents such
performance, observance or compliance by Cadence or its Affiliated Companies, sublicensees,
contractors or agents);

          (b) the failure of Cadence to deliver to BMS any of the reports, statements or other
information required to be delivered to BMS pursuant to Section 3.2(e) which failure is not cured
within the [***] ([***])[***] period provided for in such Section.

     8.5 Termination by Cadence.

     (a) Upon the occurrence of any of the following, Cadence shall have the right to terminate
this Agreement on a country-by-country basis (except that, unless otherwise specifically provided
herein, any termination with respect to the United States shall also apply to Canada), at Cadence’s
sole discretion, upon delivery prior written notice to BMS of not less than (A) [***]([***])[***]
more notice than is required under the Pharmatop License Agreement or (B) [***]([***])[***] if no
notice period is specified under the Pharmatop License Agreement:

     (i) the occurrence after the Effective Date of an event that relates to the Territory
and would entitle BMS to terminate the Pharmatop License Agreement pursuant to Section 5.3,
6.2(a), 6.2(b), 6.3(a) or 6.3(b) thereof, whether or not BMS exercises such right of
termination; provided, however, that if such right of termination relates only to a specific
country in the Territory then the right of Cadence to terminate this Agreement shall apply
only to such country; and provided, further, that if any such event would permit a reduction
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License Agreement and Cadence elects to pay such reduced royalty, then Cadence shall
not have any right to terminate this Agreement as a result of such event; or

     (ii) a failure by Pharmatop to perform any of its material obligations under the
Pharmatop License Agreement with respect to the Territory that would permit BMS to terminate
the Pharmatop License Agreement with respect to the Territory and is not cured within any
cure period applicable under the Pharmatop License Agreement; provided that if such right of
termination relates only to a specific country in the Territory then the right of Cadence to
terminate this Agreement shall apply only to such country.

     (b) If the [***] Date occurs, Cadence may terminate this Agreement upon not less than ninety
(90) days’ prior written notice to BMS.

     8.6 Scope of Termination. Except as otherwise provided in this Agreement, any
termination of this Agreement pursuant to this Article 8 shall be as to all countries in the
Territory and all Products, except that in the event of a termination at the election of a Party
the terminating Party may elect by written notice to the other Party to have such termination apply
in respect to one (but not both) of the countries in the Territory, as designated by such Party in
such notice, in which case the rights and obligations of the Parties as to the remaining country of
the Territory shall be unaffected by such termination as to the non-terminated country; provided,
however, that, except for a termination pursuant to Section 8.5(ii), any termination with respect
to the United States shall also apply to Canada.

     8.7 Effect of Termination. Upon termination of this Agreement with respect to any
country or all countries in the Territory:

     (a) All rights and licenses granted to Cadence in Article 2 and Sections 3.5, 3.6 and 3.7
shall terminate with respect to each terminated country and all rights of Cadence under the BMS
Rights and the Pharmatop License Agreement, the BMS Patents and BMS Know-How shall revert to BMS,
and Cadence shall cease all use of the BMS Rights, BMS Patents and BMS Know-How with respect to
each terminated country, provided that, to the extent permitted by the Pharmatop License Agreement
and unless this Agreement is terminated as a result of a breach or failure to comply by Cadence or
any of its Affiliated Companies or their sublicensees, contractors or agents to comply with the
terms and conditions of this Agreement or the Pharmatop License Agreement, Cadence shall have the
right for [***] ([***]) days after such termination to sell off any Products already manufactured
or ordered pursuant to non-cancelable purchase orders. All Net Sales of such sold off Products
shall be subject to the Royalty payments provided for in Article IV.

     (b) Cadence shall assign to BMS or BMS’s designee [***] all INDs, NDAs and other Regulatory
Filings, Product Data, Other Product Data and Approvals owned or Controlled by Cadence relating to
the Products (and all of Cadence’s right, title and interest therein and thereto) in each
terminated country, and Cadence shall provide to BMS or BMS’s designee [***]([***])[***] of all
documents and filings contained in or referenced in any such filings, together with the raw and
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Products. Cadence shall take such actions with the applicable Drug Regulatory Authorities in
each terminated country to transfer ownership and control of such Regulatory Filings to BMS not
later than [***]([***])[***] after such termination.

          (c) Cadence shall transfer to BMS or BMS’s designee [***] all Product Data, Other Product Data
and other data generated in connection with any preclinical studies, clinical trials and other
studies conducted by or on behalf of Cadence and its Affiliated Companies relating to the Products
and within [***]([***])[***] after such termination shall transfer to BMS or BMS’s designee copies
of all Regulatory Filings with Drug Regulatory Authorities in the terminated countries with respect
to Products, rendered PDF copies of the applicable clinical study reports (and the appendices,
tables, listings and graphs therein), the SAS data sets containing the raw data from the applicable
clinical studies. If Cadence maintains such Product Data, Other Product Data and other data in
electronic form, Cadence shall provide it to BMS or BMS’s designee in electronic form, but Cadence
shall have no obligation to reformat or otherwise alter or modify any materials or to create or
recreate any such materials in electronic form in order to provide them to BMS.

          (d) Cadence shall disclose to BMS in writing its manufacturing patents, processes, techniques
and trade secrets for making the Products and BMS shall automatically have a fully paid up,
exclusive, perpetual, worldwide, transferable, sublicensable right and license under know-how and
patents Controlled by Cadence and its Affiliated Companies relating to any composition,
formulation, method of use or manufacture of any Product solely for using, importing, making,
having made, selling and offering for sale Products outside the Territory and in each terminated
country.

          (e) Cadence shall assign (or, if applicable, cause its Affiliated Company to assign) to BMS or
BMS’s designee [***] all of Cadence’s (and such Affiliated Companies’) right, title and interest in
and to any registered or unregistered trademark, trademark application, trade name or internet
domain name that is specific to a Product in each terminated country (it being understood that the
foregoing shall not include any trademarks or trade names that contain the name “Cadence”).

          (f) Cadence shall assign to BMS or BMS’s designee [***] all of Cadence’s right, title and
interest in any inventions owned by it pursuant to Section 2.7 (and any patent applications filed
thereon and patents issued thereon) pertaining to the composition of matter or method of use or
utility of any Product in each terminated country.

          (g) BMS shall be entitled to retain all amounts previously paid to BMS by Cadence under this
Agreement.

          (h) Neither Party shall be relieved of any obligation that accrued prior to the effective date
of such termination or expiration, including any obligation of Cadence with respect to any amount
due or payable to BMS that accrued or that arises out of acts or events occurring prior to the
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          (i) Unless such termination was as a result of a breach of this Agreement by Cadence or any of its
Affiliated Companies, sublicensees, agents or contractors or a failure of Cadence or any of its
Affiliated Companies, sublicensees, agents or contractors to comply with or observe the terms of
the Pharmatop License Agreement or a termination by Cadence pursuant to Section 8.5, Cadence shall
have, unless the License has been terminated pursuant to Section 2.17(b), a [***] perpetual,
noncancelable and non-exclusive license (A) under the BMS Know-How, with the right to sublicense as
provided in Section 2.4, to make and have made the Products anywhere in the world solely for use
and sale within the Territory, (B) under the BMS Patents, with the right to sublicense as provided
in Section 2.4, to import, use, sell and offer for sale Products in the Territory and (C) under
the BMS Patents, with the right to sublicense as provided in Section 2.4, to make and have made the
Products in the Territory solely for use and sale within the Territory; provided, however, that the
licenses granted in clauses (B) and (C) of this paragraph shall not grant any right to the
composition of matter of any Other Chemical Entity, or the right to make or have made any Other
Chemical Entity or to any use not claimed by the BMS Patents.

          (j) Notwithstanding the foregoing, in the event this Agreement terminates as the result of the
termination of the Pharmatop License Agreement as the result of a material breach of that agreement
by BMS (that is not the result of a breach of this Agreement by Cadence or any of its Affiliated
Companies, sublicensees, agents or contractors or a failure of Cadence or any of its Affiliated
Companies, sublicensees, agents or contractors to comply with or observe the terms of the Pharmatop
License Agreement), the assets to be transferred and information to be disclosed to BMS or its
designee pursuant to Sections 8.7(b), (c), (d), (e) and (f) shall not be transferred or disclosed
to BMS or its designee but shall, at on the written request of BMS, be transferred to Pharmatop;
provided, however, that (1) BMS shall have the right upon its request to have such assets
transferred, and such information disclosed, to it or its designee on terms to be agreed by BMS and
Cadence and (2) if Cadence obtains any damages or other remedy in respect of its cost of producing
or obtaining such assets and information, such assets shall be transferred, and such information
shall be disclosed, to BMS or its designee.

          (k) The Parties hereto recognize that the assets to be assigned and transferred to BMS or its
designee (or to Pharmatop or its designee) pursuant to this Section 8.7 are unique and are not
available on the open market and that any breach of the terms of this Section 8.7 would give rise
to irreparable harm for which money damages would not be an adequate remedy. Accordingly, the
Parties agree that, in addition to all other remedies available to it, BMS shall be entitled to
enforce the terms of this Section 8.7 by a decree of specific performance, without the necessity of
proving the inadequacy as a remedy of money damages. In the event of failure to obtain such
assignment, Cadence hereby consents and grants to BMS and its designee the right to access and
reference (without any further action required on the part of Cadence, whose authorization to file
this consent with any Regulatory Authority is hereby granted) any and all such Regulatory Filings,
Product Data, Other Product Data, information and Approvals for any regulatory or other use or
purpose in each terminated country.

     8.8 Transition. Upon termination of this Agreement with respect to any country or all
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respect to the applicable terminated countries in the Territory shall revert to the control of
BMS or its designee, and Cadence and BMS (or BMS’s designee) shall cooperate and use commercially
reasonable efforts to effect an orderly transfer and transition of such activities to BMS or its
designee, and Cadence shall take any reasonable action requested by BMS to facilitate such
transition. BMS and Cadence shall endeavor to effect such transition as promptly as reasonably
practicable.

     8.9 Survival. The following provisions shall survive termination or expiration of
this Agreement, as well as any other provisions which by their nature are intended to survive
termination or expiration: Section 2.8(c), BMS’s rights of use and reference set forth in Section
2.9, Section 2.15, Section 4.8, Section 5.1, Section 5.2, Section 5.3, Section 6.6, Article 7
(other than Section 7.5), Article 8 and Article 9.

     8.10 Bankruptcy. The Parties agree that in the event a Party becomes a debtor under
Title 11 of the U.S. Code (“Title 11”), this Agreement shall be deemed to be, for purposes of
Section 365(n) of Title 11, a license to rights to “intellectual property” as defined therein.
Each Party as a licensee hereunder shall have the rights and elections as specified in Title 11.
Any agreements supplemental hereto shall be deemed to be “agreements supplementary to” this
Agreement for purposes of Section 365(n) of Title 11.

ARTICLE IX — MISCELLANEOUS

     9.1 Amendments. This Agreement may be amended only by a writing signed by each of the
Parties, and any such amendment will be effective only to the extent specifically set forth in such
writing.

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

     9.3 Cumulative Remedies. The rights and remedies of the Parties under this Agreement
are cumulative and not exclusive of any rights or remedies which the Parties would otherwise have.
No single or partial exercise of any such right or remedy by a Party, and no discontinuance of
steps to enforce any such right or remedy, will preclude any further exercise thereof or of any
other right or remedy of such Party.

     9.4 Entire Agreement. This Agreement and the Clinical Supply Agreement contain the
entire agreement of the Parties with respect to the transactions contemplated hereby and supersedes
all prior written and oral agreements, and all contemporaneous oral agreements, relating to such
transactions.

     9.5 Schedules. The Schedules attached to in this Agreement are an integral part
hereof and all references to this Agreement include such Schedules.

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     9.6 Force Majeure.

          (a) General. No Party shall be liable for any failure to perform its obligations under this
Agreement (other than obligations to make payments of money) to the extent such performance has
been delayed, interfered with or prevented by an event of Force Majeure, except that Pharmatop
shall not be excused from performance of any obligation under the Pharmatop License Agreement
assumed by it unless such performance is excused under such agreement

          (b) Definition. As used in this Section, “Force Majeure” means any circumstances whatsoever
which are not within the reasonable control of the Party affected thereby, including an act of God,
an act of any Governmental Entity (including any Drug Regulatory Authority), war, insurrection,
riot, strike or labor dispute, shortage of materials, fire, explosion, flood, government
requisition or allocation, breakdown of or damage to plant, equipment or facilities, interruption
or delay in transportation, fuel supplies or electrical power, embargo, boycott, order or act of
civil or military authority. The Party who declares an event of Force Majeure shall give prompt
notice to the other Party of such declaration.

          (c) Duty to Mitigate. If the performance of any obligation has been delayed, interfered with
or prevented by an event of Force Majeure, then the Party affected by such event will take such
actions as are reasonably available to remove the event of Force Majeure or to mitigate the effect
of such occurrence, except that labor disputes will be settled at the sole discretion of the Party
affected thereby.

          (d) Suspension of Certain Obligations. If an event of Force Majeure occurs, the obligations
of the Parties under this Agreement (other than obligations to make payments of money) will be
suspended during, but not longer than, the continuance of the event of Force Majeure.

     9.7 Assignment.

          (a) BMS may, without Cadence’s consent, assign or transfer all of its rights and obligations
hereunder, in connection with any transfer of all of BMS’s rights under the Pharmatop License
Agreement with respect to the Territory to any Affiliated Company of BMS or to any Third Party
(including a successor in interest); provided, that such assignee or transferee agrees in a writing
provided to Cadence to be bound by the terms of this Agreement.

          (b) Upon [***] ([***])[***] advance written notice to BMS and subject to BMS’s (and, if
required by the Pharmatop License Agreement, Pharmatop’s) prior written approval, which approval
may be withheld or granted by BMS in its sole discretion (and by Pharmatop in accordance with the
Pharmatop License Agreement), Cadence may assign or transfer all of its rights and obligations
hereunder to a Third Party [***]; provided, that such Third Party shall have agreed prior to such
assignment or transfer to be bound by the terms of this Agreement in a writing provided to BMS and
Pharmatop. Cadence may assign or transfer all of its rights and obligations hereunder without such
consent to an Affiliated Company of Cadence (so long as such assignment or transfer includes all
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manufacturing assets relating to this Agreement, and all rights and obligations under this
Agreement); provided, that such Affiliated Company shall have agreed prior to such assignment or
transfer to be bound by the terms of this Agreement in a writing provided to BMS; and provided,
further, that all such rights and obligations automatically revert to Cadence free of any Liens in
the event such company ceases to be an Affiliated Company of Cadence. For the purposes of
clarification, transfers to a successor in interest by reason of merger, consolidation or sale of
substantially all of the assets of Cadence shall be governed by Section 9.7(c).

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

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

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

          (f) No assignment by any Party of any of its rights or obligations under this Agreement shall
relieve such Party from any of its obligations hereunder and the assignor shall remain jointly and
severally liable with the assignee for the performance of the assigned obligations.

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

     9.9 Headings. All titles and headings in this Agreement are intended solely for
convenience of reference and will in no way limit or otherwise affect the interpretation of any of
the provisions hereof.

     9.10 Notices. All notices, consents, requests, demands and other communications
required or permitted under this Agreement: (a) will be in writing; (b) will be sent by messenger,
certified or registered U.S. mail, a reliable express delivery service or facsimile (with a copy
sent by one of the foregoing means), charges prepaid as applicable, to the appropriate address(es)
or fax number(s) set forth below; and (c) will be deemed to have been given on the date of receipt
by the addressee (or, if the date of receipt is not a Business Day, on the first Business Day after
the date of receipt), as evidenced by (i) a receipt executed by the addressee (or a responsible
person in his or her office), the records of the Person delivering such communication or a notice
to the effect that such addressee refused to claim or accept such communication, if sent by
messenger, U.S. mail or express delivery service, or (ii) a receipt generated by the sender’s fax

65

 

machine showing that such communication was sent to the appropriate number on a specified
date, if sent by facsimile. All such communications will be sent to the following addresses or
numbers, or to such other addresses or numbers as any Party may inform the others by giving five
(5) Business Days’ prior notice:

	 	 	 	 	 	 	 
	If to Cadence:	 	With copies to:
	 
	 	 	 	 	 	 
	Cadence Pharmaceuticals, Inc.	 	Cadence Pharmaceuticals, Inc.
	12730 High Bluff Drive, Suite 410	 	12730 High Bluff Drive, Suite 410
	San Diego, CA 92130	 	San Diego, CA 92130
	Attn: President & CEO	 	Attn: Vice President, Business Development
	Fax No.: (858) 436-1401	 	Fax No.: (858) 436-1401
	 
	 	 	 	 	 	 
	If to BMS:	 	With a copy to:
	 
	 	 	 	 	 	 
	Bristol-Myers Squibb Company	 	Bristol-Myers Squibb Company
	Route 206 & Province Line Road	 	Route 206 & Province Line Road
	Princeton, NJ 08540	 	Princeton, NJ 08540
	Attn:

	 	Senior Vice President -

Corporate Business Development
	 	Attn: Vice President and Senior
Counsel, 

Licensing and Business Development

	Fax No.: (609) 252-7128	 	Fax No.: (609) 252-4232

     9.11 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining portions hereof or
affecting the validity or enforceability of such provision in any other jurisdiction.

     9.12 No Third Party Beneficiaries. This Agreement is made solely for the benefit of
the Parties hereto and their successors and permitted assigns, and, except as specifically set
forth in this Agreement, no other Person has, or is entitled to enforce, any rights, benefits or
obligations under this Agreement. Nothing set forth in this Agreement shall diminish, affect or
impair the rights of Pharmatop under the Pharmatop License Agreement.

     9.13 Waivers. The due performance or observance by the Parties of their respective
obligations under this Agreement will not be waived, and the rights and remedies of the Parties
hereunder will not be affected, by any course of dealing or performance or by any delay or failure
of any Party in exercising any such right or remedy. The due performance or observance by a Party
of any of its obligations under this Agreement may be waived only by a writing signed by the Party
against whom enforcement of such waiver is sought, and any such waiver will be effective only to
the extent specifically set forth in such writing.

     9.14 Documentary Conventions. As used in this Agreement, (a) whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and neuter forms; (b) the
words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without
limitation;” (c) the terms “hereof,” “herein,” “hereby,” “hereunder” and

66

 

derivative or similar words refer to this entire Agreement and (d) unless otherwise specified,
the terms “Section” or “Exhibit” or “Schedule” refer to the specified Section, Exhibit or Schedule
of or to this Agreement. All references to generally accepted accounting principles shall refer to
United States generally accepted accounting principles, and all accounting terms not defined in any
agreement or instrument shall have the meanings determined by United States generally accepted
accounting principles as in effect from time to time. References to a Person are also to its
permitted successors and permitted assigns. Unless otherwise expressly provided herein, any
reference to a statute, instrument or other agreement in this Agreement means such statute,
instrument or agreement as it may from time to time be amended, modified or supplemented, including
(in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by
succession of comparable successor statutes.

     9.15. Consents and Approvals. All consents or approvals of the Parties contemplated
hereunder shall not be unreasonably withheld, delayed or conditioned unless expressly stated as
otherwise.

     9.16. Absence of Presumption. Each of the Parties acknowledges and agrees that this
Agreement has been diligently reviewed by and negotiated by and between them, that in such
negotiations each of them has been represented by competent counsel and that the final agreement
contained herein, including the language whereby it has been expressed, represents the joint
efforts of the Parties hereto and their counsel. Accordingly, in interpreting this Agreement or
any provision hereof, no presumption shall apply against any Party hereto as being responsible for
the wording or drafting of this Agreement or any such provision, and ambiguities, if any, in this
Agreement shall not be construed against any Party, irrespective of which Party may be deemed to
have authored the ambiguous provision.

     9.17. Relationship of Parties. Nothing in this Agreement shall be construed to (i)
create or imply a general partnership or joint venture between the Parties, (ii) make either Party
the agent of the other for any purpose, (iii) give either Party the right to bind the other, (iv)
create any duties or obligations between the Parties except as expressly set forth herein (other
than the implied obligation of good faith), or (v) grant any direct or implied licenses or any
other right other than as expressly set forth herein.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

67

 

SIGNATURE PAGE TO IV APAP AGREEMENT

     IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the Execution Date.

	 	 	 	 	 	 	 
	 	 	BRISTOL-MYERS SQUIBB COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Tamar Howson	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Tamar Howson	 	 
	 	 	Title: SVP, Corporate & Business Development	 	 
	 
	 	 	 	 	 	 
	 	 	CADENCE PHARMACEUTICALS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Theodore R. Schroeder	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Theodore R. Schroeder	 	 
	 	 	Title: President and CEO	 	 

 

 

SCHEDULE 1.1

BMS PATENTS

US Patent Nos. 6,593,331 and 6,511,982

Any US Patent that issues pursuant to [***]

and any continuations, continuations-in-part, divisions, reissues, re-examinations, extensions and
renewals of any of the foregoing.

 

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

 

 

SCHEDULE 6.3(a)

PHARMATOP PATENTS

U.S. Patent 6,992,218

Canadian Patent (application) 2 415 403

U.S. Patent 6,028,222

Canadian Patent (application) 2 233 924

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