EX-10.1 MANUFACTURING AND SUPPLY AGREEMENT



 





EXHIBIT 10.1




*Certain portions of this exhibit have been omitted pursuant to a request for confidential

treatment which has been filed separately with the SEC.




MANUFACTURING AND SUPPLY AGREEMENT

for

N-ACETYLCYSTEINE




CUMBERLAND PHARMACEUTICALS INC.




and




BIONICHE LIFE SCIENCES, INC.




January 15, 2002




 









 








MANUFACTURING AND SUPPLY

AGREEMENT FOR N-ACETYLCYSTEINE



THIS AGREEMENT is made and entered into as of the 15th day of January, 2002.




BY AND BETWEEN:



CUMBERLAND PHARMACEUTICALS INC., a corporation organized and existing under the laws of Tennessee,
United States, with its principal offices located at 209 Tenth Avenue South, Suite 332, Nashville,
Tennessee, 37203 (hereinafter referred to as “CUMBERLAND”)




AND:



BIONICHE LIFE SCIENCES INC., a corporation organized and existing under the laws of Ontario,
Canada, with its principal place of business located at 231 Dundas Street, East Belleville,
Ontario, Canada K8N 1E2 (hereinafter referred to as “BIONICHE”);



WHEREAS, CUMBERLAND is the owner of certain intellectual property rights with respect to a Drug
Product (as hereinafter defined);



WHEREAS, BIONICHE has the expertise and the manufacturing facility suitable for the pharmaceutical
preparation and production of the Drug Product;



WHEREAS, CUMBERLAND wishes to have BIONICHE manufacture the Drug Product on an exclusive basis for
sale in the Territory (as hereinafter defined) and BIONICHE wishes to supply the Drug Product on an
exclusive basis to CUMBERLAND on and subject to the terms and conditions set out herein;



NOW, THEREFORE, in consideration of the premises and the undertakings, terms, conditions and
covenants set forth below, the parties hereto agree as follows:




1. DEFINITIONS




     1.1 AFFILIATE shall mean, with respect to any Person, any other Person that controls, is
controlled by or is under common control with, such Person. A Person shall be regarded as in
control of another Person if such Person owns, or directly or indirectly controls, more than fifty
percent (50%) of the voting securities (or comparable equity interests) or other ownership
interests of the other Person, or if such Person directly or indirectly possesses the power to
direct or cause the direction of the management or policies of the other Person, whether
through the ownership of voting securities, by contract or any other means whatsoever.



     1.2 BUFFER SOLUTION shall mean the buffer solution used for the manufacture of the Drug
Product.



     1.3 BULK DRUG SUBSTANCE shall mean the active ingredients in the Drug Product.



     1.4 cGMP or GMP shall have the meaning set forth in Schedule I.



     1.5 CONFIDENTIAL INFORMATION shall have the meaning set forth in Article 9.



     1.6 DEVELOPMENT shall mean all work necessary to develop a process to manufacture the Drug
Product in full accord with cGMP and to supply the Drug Product conforming to the Specifications.
Development activities shall include, but not be limited to, pilot batches, scale-up batches,
validation of the manufacturing process, and successful completion of the Drug Product manufacture
and delivery as defined in Schedule I attached hereto.



 









 





     1.7 DRUG PRODUCT shall mean the N-Acetylcysteine pharmaceutical product developed by
CUMBERLAND and marketed under the trade name ACETADOTE or any other trade name selected by
CUMBERLAND.



     1.8 EXCIPIENT shall mean any inert substance selected by CUMBERLAND and used to give the Drug
Product proper consistency.



     1.9 FACILITY shall mean the manufacturing facility and the real property underlying such
manufacturing facility operated by Bioniche Teoranta, an Affiliate of BIONICHE, located at
Inverin, Co. Galway, Republic of Ireland.



     1.10 FDA shall mean the United States Food and Drug Administration (FDA) or any successor
entity thereto.



     1.11 IN-PROCESS SOLUTION shall mean all Buffer Solutions and Excipients needed to produce
Drug Product in the finished dosage form set forth in Schedule I.



     1.12 INVENTION shall have the meaning set forth in Paragraph 9.4.



     1.13 LABELING shall mean all labels and other written, printed, or graphic matter upon: (i)
the Drug Product or any container or wrapper utilized with the Drug Product and (ii) any written
material accompanying the Drug Product, including without limitation, package inserts.



     1.14 MANUAL shall mean the Manufacturing Project Manual attached as Schedule II to this
Agreement and reviewed and accepted by CUMBERLAND and BIONICHE, the terms and provisions of which
are incorporated by reference as though fully set forth herein.



     1.15 MANUFACTURE shall mean the act of compounding, component preparations, filling,
packaging, testing and any other pharmaceutical manufacturing procedures, or any part thereof,
involved in manufacturing the Drug Product from the Bulk Drug Substance.



     1.16 PERSON shall mean an individual, corporation, partnership, limited liability company, or
any other form of entity not specifically listed herein.



     1.17 SPECIFICATIONS shall mean those specifications set forth in Attachment I to the Manual.




     1.18 TERRITORY shall have the meaning set forth in Schedule III.



2. DEVELOPMENT AND MANUFACTURING




     2.1 Initiation: Upon request by CUMBERLAND and subject to the provisions hereof, BIONICHE,
directly or through an Affiliate thereof, shall Manufacture and package at the Facility all of
CUMBERLAND’s requirements for Drug Product in the Territory in the batch size set forth in
Schedule I in accordance with the terms hereof, including without limitation, Schedules I and II
hereof, the Specifications, and all applicable laws and regulations. Prior to distributing and
selling the Drug Product, CUMBERLAND shall prepare and file submissions to the FDA in order to
obtain and maintain during the term hereof regulatory approval of the Drug Product, BIONICHE shall
prepare and test the Drug Product in accordance with cGMP.



     2.2 Documentation: BIONICHE shall provide CUMBERLAND with required supporting documentation
for the manufacture of the Drug Product in a form suitable for CUMBERLAND’s submission to the FDA
or applicable governmental authorities for any country into which the Drug Product will be
distributed. BIONICHE shall provide draft Chemistry, Manufacturing, and Controls sections for
CUMBERLAND’s FDA submissions,



     2.3 Bulk Drug Substance Supply: BIONICHE shall be responsible for the supply of all Bulk Drug
Substance in accordance with Schedules I and II hereto; provided that the supply of Bulk Drug
Substance shall be exclusively from such suppliers and in such grades as have been approved in
writing by CUMBERLAND as reflected on an approved list to be attached hereto as Schedule IV, and
provided further that such suppliers and



 









 







grades may not be changed without CUMBERLAND’s prior written consent, which consent shall not
be unreasonably withheld or delayed. BIONICHE shall maintain, at its expense, secure storage areas
for the Bulk Drug Substance at the Facility.



     2.4 Supply of Components: BIONICHE shall be responsible for the supply of all Buffer Solution,
Excipients, and all other components of the finished Drug Product in accordance with Schedules I
and II hereto; provided that the supply of these components shall be exclusively from such
suppliers and in such grades as have been approved in writing by CUMBERLAND as reflected on an
approved list to be attached hereto as Schedule IV, and provided further that such suppliers and
grades may not be changed without CUMBERLAND’s prior written consent which consent shall not be
unreasonably withheld or delayed. BIONICHE shall maintain, at its expense, secure storage areas for
the Buffer Solution, Excipients, and all other components at the Facility.



     2.5 Delivery Terms: All deliveries of Drug Product under this Agreement shall be made by
BIONICHE to CUMBERLAND in the manner set forth in Schedule I. CUMBERLAND shall, within twenty (20)
working days after its receipt of any shipment, notify BIONICHE in writing, of any claim relating
to a Drug Product not conforming to GMP or to the Specifications, and, failing such notification,
notwithstanding Paragraph 5.1 of this Agreement, CUMBERLAND shall be deemed to have accepted the
Drug Product. If BIONICHE disputes CUMBERLAND’s claim that the Drug Product is non-conforming, then
such dispute shall be resolved by an independent testing organization of recognized repute within
the pharmaceutical industry mutually agreed upon by BIONICHE and CUMBERLAND, the appointment of
which shall not be unreasonably withheld or delayed by either party. In such event, CUMBERLAND
shall ship the testing organization representative samples of the Drug Product from the disputed
production lot, and the fees and costs of such testing organization and related shipping and supply
costs shall be borne by the party whose position is not sustained by the testing organization.
Should CUMBERLAND’s claim of non-conformity be sustained by the testing organization, BIONICHE
shall, at CUMBERLAND’S sole option, (a) credit towards future orders, or (b) refund within thirty
(30) days thereof; the payment for such non-conforming goods, plus the cost to CUMBERLAND of
Manufacturing and shipping the related Bulk Drug Substance and components.



     2.6 Forecasts: In order to permit BIONICHE to regularly supply CUMBERLAND with Drug Product
hereunder, at least [***] prior to its first requested delivery date, CUMBERLAND shall provide
BIONICHE a non-binding twelve (12) month rolling forecast (the “Forecast”) of CUMBERLAND’s
estimated requirements of Drug Product, itemized for use as commercial product or Regulatory
Samples (as defined below), for the term of this Agreement. The Forecast shall be reviewed and
updated by CUMBERLAND on a monthly basis, with copies delivered to BIONICHE. BIONICHE shall have an
opportunity to confirm its ability to deliver the quantities set out in the Forecast and each
update thereto, or to request amendments thereto to ensure its ability to supply. Once accepted by
BIONICHE, the first three (3) months of each Forecast shall constitue a firm order for Drug
Product. Each such Forecast shall reflect a good faith attempt by CUMBERLAND to estimate quantity
requirements of Drug Product, based on anticipated demand therefore.



     2.7 Periodic Orders: A purchase order (the “Purchase Order”) shall be provided by CUMBERLAND
to BIONICHE with respect to Drug Product to be supplied at least [***] prior to the scheduled
delivery date of such Drug Product. Such Purchase Order shall specify the quantities ordered by
CUMBERLAND for delivery by BIONICHE hereunder and the requested delivery date therefore, and, once
delivered to BIONICHE, and shall be firm and binding on the parties (the “Delivery Date”). Each
such Purchase Order shall become firm and binding on the parties and, except as specifically
provided for herein, may not be increased or decreased by more than [***] from the quantities shown
in the Forecast accepted by BIONICHE pursuant to Section 2.6 without the prior written approval of
the parties. If CUMBERLAND requires quantities of Drug Product exceeding those mentioned in the
Forecast, as updated, BIONICHE shall deliver the amount indicated in the Forecast on the scheduled
Delivery Date and shall use reasonable efforts to supply the additional amount exceeding such
Forecast on the scheduled Delivery Date, but shall have no liability for failure to deliver the
additional amount. Each Purchase Order shall constitute a separate agreement to purchase Drug
Product but where in conflict with the terms and conditions of this Agreement, this Agreement, and
not the standard terms and conditions set forth in the purchase orders, shall govern the
Manufacturing, purchase and sale of the Drug



 









 





     Product under this Agreement. Any Purchase Order for Drug Product shall be placed in the minimum
amounts listed below or in integral multiples thereof.


For the 10mL form of Drug Product                    [***]

For the 30mL form of Drug Product                    [***]




     2.8 Failure to Supply: Subject to the provisions of Article 7, BIONICHE shall supply all of
the Drug Product ordered by CUMBERLAND within [***] of receipt of a written order from CUMBERLAND.
If BIONICHE is unable to meet its supply obligations with respect to any Purchase Order,
CUMBERLAND shall be free to procure from third parties part or all of the quantities of the Drug
Product covered by the relevant Purchase Order. In the event that BIONICHE is unable to supply the
Drug Product to CUMBERLAND for any reason other than for Force Majeure or failure of CUMBERLAND to
fulfill its obligations hereunder, BIONICHE will reimburse CUMBERLAND for any increase in the
price of obtaining the Drug Product from an alternate supplier; provided that such replacement
Drug Product was purchased on reasonable commercial terms, and provided further that such failure
to supply was in respect of Drug Product that was the subject of a Purchase Order provided by
CUMBERLAND and accepted by BIONICHE under Paragraph 2.7. Should BIONICHE reimburse CUMBERLAND as
set out in this paragraph, BIONICHE shall have no further liability to CUMBERLAND for said failure
to supply.



     2.9 Payment for the Drug Product: At the time of each shipment, BIONICHE shall invoice
CUMBERLAND for BIONICHE’s manufacturing services at the prices set forth in Schedule I. Payment
shall be made in Canadian dollars within [***] of each such shipment of conforming Product in
accordance with the terms hereof.



2.10 Price Variations:




     (a) Prices are as set on Schedule I for the term hereof unless changed pursuant to Paragraph
2.10(b).



     (b) Subject to Subparagraph 2.10(c), prices are subject to annual adjustment beginning two
(2) years after the date hereof. Price increases or decreases will be commensurate with documented
Manufacturing cost increases or decreases since the date that the then-current prices became
effective. For purposes hereof, “Manufacturing cost” shall mean, with respect to the Drug Product,
BIONICHE’s actual and documented cost of raw materials, direct labor, Manufacturing, packaging,
and overhead amounts directly applicable to such Manufacturing costs (including appropriately
amortized capital equipment costs and excluding non-manufacturing overhead and allocations and
excluding costs representing Manufacturing changes for which CUMBERLAND does not provide prior
written consent pursuant to Article 8), calculated in accordance with generally accepted
accounting principles consistently applied (the allocation of overhead to be consistent with
BIONICHE’s allocation of overhead as of the date of this Agreement). CUMBERLAND reserves the right
to audit the records of BIONICHE in order to determine that such increases and/or decreases are
appropriate. Any increase in price shall not exceed the twelve (12) month percent increase in the
Producer Price Index as published by the U.S. government and shall be further subject to a maximum
increase of five percent (5%) per year over the life of the Agreement.



     (c) Notwithstanding any of the contrary herein contained, should CUMBERLAND: (i) request a
change in Specifications, or (ii) unreasonably withhold the consent requested under Paragraphs 2.3
or 2.4, which request or refusal results in an increase in Manufacturing Costs, BIONICHE shall be
entitled to pass on such costs to CUMBERLAND immediately in the form of a Drug Product price
increase.



3. TERM AND TERMINATION




     3.1 Term: This Agreement shall commence on the date first above written and will continue
until the fifth anniversary of the date on which the FDA grants approval to market and sell the
Drug Product, unless sooner terminated pursuant to Paragraphs 3.2 or 3.3 hereof. Subject to
Paragraphs 3.2 and 3.3, the Agreement shall be automatically renewed for successive three-year
terms unless either party notifies the other party in writing at least twelve (12) months in
advance of the expiration of the then current term that the party is terminating the Agreement.



 









 





     3.2 Termination: This Agreement may be terminated at any time upon the occurrence of any of
the following events:



     (a) Default: Thirty (30) days following written notice, by either party to the other party, in
the event that the other party breaches any provision of this Agreement, and such party fails to
remedy the breach prior to the expiration of the thirty (30) day period; provided that, in the case
of nonpayment of sums due hereunder, the remedy period shall be decreased to ten (10) days.



     (b) Insolvency: Written notice by either party to the other upon insolvency or bankruptcy of
the other party, and the failure of any such insolvency or bankruptcy to be dismissed within sixty
(60) days.



     (c) Force majeure: If, as a result of causes described in Paragraph 7.1, either party is
unable to fully perform its obligations hereunder for a period of one hundred fifty (150)
consecutive days, the other party shall have the right to terminate this Agreement upon at least
thirty (30) days prior written notice; provided that if the required performance is met during that
thirty-day period, this Agreement shall continue in full force and effect as if the notice had not
been given.



     (d) Costs: Immediately upon written notice by BIONICHE to CUMBERLAND if the Manufacturing cost
per unit of Drug Product calculated in the manner set forth in Paragraph 2.10(a) hereof exceeds the
purchase price per unit of Drug Product set forth in Schedule I, as adjusted pursuant to Paragraphs
2.10(b) and/or (c) hereof.



     (e) No FDA Approval: Immediately upon written notice by BIONICHE to CUMBERLAND if the FDA does
not grant CUMBERLAND approval to market and sell the Drug Product on or before the second
anniversary of the date of this Agreement.



     (f) By mutual agreement of the parties hereto.



     Except as otherwise specifically set forth in this Paragraph 3.2, termination, expiration,
cancellation or abandonment of this Agreement, through any means and for any reason, shall not
relieve the parties of any obligation accruing prior thereto and shall be without prejudice to the
rights and remedies of either party with respect to any antecedent breach of any of the provisions
of this Agreement. Without limiting the generality of the foregoing, termination, expiration,
cancellation, or abandonment of this Agreement shall not relieve CUMBERLAND of its obligation to
pay the royalty provided for under Schedule I for Drug Product manufactured by BIONICHE hereunder.



     3.3 Minimum Quantities Purchased: If the parties fail to agree on minimum purchase quantities
as provided under Paragraph 5.7, or if following such agreement, CUMBERLAND should fail to meet the
agreed upon minimum purchase requirements, BIONICHE shall have the right (but not the obligation)
to terminate this Agreement in its entirety or with respect to any one or more format of the Drug
Product upon ninety (90) days notice; provided, however, that CUMBERLAND shall have the right (but
not the obligation) within such ninety (90) day period to pay BIONICHE any short-fall and avoid
such termination. Such shortfall shall be calculated by subtracting the purchase price of the
amount of each format of Drug Product actually ordered from the amount calculated by multiplying
the minimum quantity of such format under Schedule V by the purchase price thereof. It is
understood and agreed between the parties that BIONICHE shall not be required to supply Drug
Product for such payment. Should BIONICHE exercise its right to terminate under this Paragraph 3.3,
CUMBERLAND shall have no liability to BIONICHE for failing to purchase any minimum quantity of Drug
Product hereunder.



     3.4 Impact of Termination on Outstanding Purchase Orders: Upon termination of the Agreement
for any reason whatsoever (except for termination by either party pursuant to Paragraphs 3.2(a),
(b), or (c), or upon expiration of this Agreement), BIONICHE will, at CUMBERLAND’s written request
delivered after termination, continue to supply Drug Product to CUMBERLAND in satisfaction of
Purchase Orders already submitted to BIONICHE, subject to the same terms and conditions as applied
during the term of the Agreement, for a period of sixty (60) days from the date of termination or
expiration.



     3.5 Survival: Paragraphs 2.5, 2.8, 3.2, 3.3, and 3.5 and Articles 5, 6, 9, and 10 shall
survive the termination or cancellation of the Agreement for any reason.



 









 





4. CERTIFICATES OF ANALYSIS AND MANUFACTURING COMPLIANCE




     4.1 Certificates of Analysis: BIONICHE shall perform, or cause to be performed, certain tests
requested by CUMBERLAND in writing and as indicated in the Specifications on each batch of the Drug
Product manufactured pursuant to this Agreement before delivery to CUMBERLAND. A certificate of
analysis for each batch delivered shall be delivered with each batch and shall set forth the items
tested, specifications, and test results. BIONICHE shall also indicate on the certificate of
analysis that all batch production and control records have been reviewed and approved by the
appropriate quality control unit. Subject to Paragraph 2.5, CUMBERLAND shall test, or cause to be
tested, prior to final release, each batch of the Drug Product as meeting the Specifications. As
required by the FDA (see Paragraph 5.2 below), CUMBERLAND shall assume full responsibility for
final release of each lot of the Drug Product.



     4.2 Manufacturing Compliance: BIONICHE shall advise CUMBERLAND immediately if an authorized
agent of any regulatory body visits the Facility and makes an inquiry regarding BIONICHE’s method
of manufacture of the Drug Product for CUMBERLAND. Upon receipt of any Form 483 Notice of
Inspectional Observations issued by the FDA or notice of deficit from any other regulatory
inspection after a visit to the Facility, BIONICHE shall immediately send CUMBERLAND a copy
thereof; provided that it may redact any language that is subject to a written confidentiality
agreement between BIONICHE and a third party.



     4.3 Regulatory Agency Requirements: BIONICHE shall prepare and test the Drug Product in
conformity with GMP. Subject to the allocation of responsibility for regulatory compliance as set
forth in Paragraph 5.2, each party shall consult with the other party hereto before implementing
additional regulatory agency requirements concerning the control of Drug Product components,
manufacture of the Drug Product, or storage and handling of the Drug Product. The full text of
regulatory agency requests or comments will be provided by the party receiving such requests or
comments to the other party hereto. The parties will mutually agree on how to respond to such
requests and comments and on the allocation of the costs thereof; provided that BIONICHE shall be
entitled to reimbursement from CUMBERLAND for any out-of-pocket expenses or extraordinary costs
previously approved in writing by CUMBERLAND and required in connection with implementing such
regulatory requirements other than the ordinary costs of compliance with GMP.



     4.4 Regulatory Documents: Each party will advise the other party hereto of its intention to
change any Drug Product regulatory documents prior to submission of the document to any regulatory
body. If the change affects the rights and obligations of a party hereto under this Agreement, such
party may seek to review or alter any part of the document at any time within ten (10) business
days after receipt of notification thereof; provided that if no alterations are submitted to the
other party within such ten-day period, each party will be deemed to have consented to the
documents, as amended.



5. REPRESENTATIONS AND WARRANTIES




     5.1 Conformity with Specifications: BIONICHE represents and warrants that, at the time of
Manufacture, the Drug Product is prepared and tested in accordance with cGMP and meets the
Specifications. In the event that any production lot of a Drug Product is not Manufactured in
accordance with the Specifications or other requirements hereunder, BIONICHE shall, at CUMBERLAND’s
request, perform new Manufacturing as necessary to fulfill any then outstanding purchase order of
CUMBERLAND. BIONICHE shall be fully responsible for the costs of any Bulk Drug Substance or
components required for such new Manufacturing. Because BIONICHE has no control of the conditions
under which the Drug Product is used, the diagnosis of the patient before or after treatment with
the Drug Product, the method of use or administration of the Drug Product, and handling of the Drug
Product after delivery to CUMBERLAND, BIONICHE does not warrant either a good effect, or against an
ill effect, following the use of the Drug Product. The foregoing warranty is exclusive and in lieu
of all other warranties either written, oral, or implied. No representative of BIONICHE may change
any of the foregoing warranties and CUMBERLAND accepts the Drug Product subject to all terms
hereof.



     EXCEPT AS SPECIFICALLY PROVIDED FOR IN THIS ARTICLE 5 AND PARAGRAPH 11.4, BIOMCHE MAKES NO
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED (i) OF COMMERCIAL UTILITY; (ii) OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE; OR (iii) THAT THE USE OF THE DRUG PRODUCTS BY
CUMBERLAND OR ANY THIRD PARTY WILL NOT INFRINGE ANY PATENT, COPYRIGHT OR TRADEMARK OR OTHER
PROPRIETARY OR PROPERTY



 









 







RIGHTS OF OTHERS. EXCEPT AS PROVIDED FOR HEREIN, BIONICHE WILL NOT BE LIABLE TO CUMBERLAND,
CUMBERLAND’S SUCCESSORS OR ASSIGNS OR ANY THIRD PARTY WITH RESPECT TO ANY CLAIM ARISING FROM
CUMBERLAND’S OR ANY THIRD PARTY’S USE OF THE DRUG PRODUCTS.



     CUMBERLAND ACCEPTS ALL RISK AND RESPONSIBILITY FOR DETERMINING THE MANNER IN WHICH CUMBERLAND
WILL USE THE DRUG PRODUCTS, AND BIONICHE MAKES NO REPRESENTATIONS OR WARRANTIES CONCERNING, AND
ASSUMES NO RESPONSIBILITY FOR, THE PERFORMANCE OF ANY OTHER PRODUCT(S) INTO WHICH THE DRUG
PRODUCTS MAY BE INCORPORATED.



     5.2 Compliance: CUMBERLAND represents and warrants that CUMBERLAND assumes responsibility for
coordinating all contact with the FDA and other regulatory bodies, pertaining specifically to the
Drug Product. During the term of this Agreement, BIONICHE authorizes CUMBERLAND’s representatives
to inspect the methods used in and facilities used for manufacturing, processing, packaging, and
handling of the Drug Product; provided that each such inspection shall be at CUMBERLAND’S own
cost, on reasonable prior notice, and subject to the prior execution of reasonable confidentiality
agreement by each inspector who is not an employee of CUMBERLAND but has been selected by
CUMBERLAND to represent it; and provided further that CUMBERLAND shall have no such obligation
under this Agreement. Except as otherwise required by applicable regulations, CUMBERLAND’s
inspections shall be conducted during normal business hours; provided that CUMBERLAND may inspect
such facilities immediately after any regulatory inspection thereof.



     5.3 Debarring: BIONICHE represents and warrants that it has not been debarred in the United
States within the meaning of 21 U.S.C. § 335a(a) and 335a(b), nor will it use, knowingly after due
inquiry, in any capacity the services of any person debarred pursuant to subsections 3.06(a) or
3.06(b) of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. Section 335(a) and (b).



     5.4 FDA Submission: BIONICHE represents and warrants that it has submitted to the FDA
information about the Facility and the operating procedures, and personnel at such site in the
form required by the FDA. BIONICHE shall keep and maintain the equipment necessary for the
Manufacture of any Drug Product in a manufacture-ready state and in good repair. During the term
hereof and until the fifth anniversary of termination or expiration, BIONICHE shall maintain
written documentation of all use, repair, service, and maintenance of such equipment and shall
provide CUMBERLAND copies of such documentation; provided that in the event that a Person acquires
substantially all of the assets and business of BIONICHE, BIONICHE may send all such documentation
to CUMBERLAND promptly after such acquisition.



     5.5 Reimbursement: BIONICHE shall not incur any costs for which it intends to seek
reimbursement from CUMBERLAND unless BIONICHE has the prior written consent of CUMBERLAND.
CUMBERLAND shall reimburse BIONICHE at a rate equal to one hundred fifty percent (150%) of all
such costs actually incurred and documented and directly related to the production of materials or
data for submissions to the FDA (“Pre-Approval Costs”) hereunder, provided that reimbursement of
such Pre-Approval Costs shall be paid by means of twelve (12) equal installments thereof to be
made on the first day of each of the twelve (12) months following the date on which the FDA issues
final approval to CUMBERLAND to market and sell the Drug Product commercially in the United States
(the “Approval Date”); and provided further that if the Approval Date has not occurred on or
before one year from the date of signing of the Agreement then CUMBERLAND shall immediately
reimburse BIONICHE at a rate equal to one hundred percent (100%) of all Pre-Approval Costs
incurred prior to such date in complete satisfaction of its obligations to reimburse such
Pre-Approval Costs.



     5.6 Exclusivity:



     (a) Neither BIONICHE nor any Affiliate thereof will sell, give away, or deliver to any other
person, firm, or corporation any form of the Drug Product in the Territory for indications
currently approved as of the date of signing this Agreement (“currently-approved indications”),
while this Agreement is effective and for two years after the termination of this Agreement;
provided that such restrictions shall not apply in the event of termination by BIONICHE pursuant to
Subparagraphs 3.2 (a), (b), (e), or Paragraph 3.3 and shall not apply to the sale by BIONICHE of a
product that contains the same active ingredients as the Drug Product for use as a chemoprotectant
(“Excluded Products”) or Other Products, as defined below, subject to the rights set out in
Subparagraph 5.6 (d).



 









 





     (b) If, during the term hereof, BIONICHE wishes to market or distribute Excluded Products in
the Territory in association with any third Person, BIONICHE shall give CUMBERLAND written notice
thereof, and CUMBERLAND shall have thirty (30) days to notify BIONICHE of its interest in entering
into an arrangement with BIONICHE, on terms to be negotiated by the parties in good faith during
the period of one hundred twenty (120) days immediately following the receipt by CUMBERLAND of
such notice (the “Option Period”). If the parties negotiate in good faith but do not conclude an
agreement within the Option Period, BIONICHE agrees not to enter into an agreement covering the
Excluded Products in the Territory with any third Person on terms that are more favorable than the
terms previously offered to CUMBERLAND without first offering to enter into an agreement with
CUMBERLAND, to be negotiated during an additional thirty day period, such offer to be made on
terms no less favorable than the terms being offered to the third Person. If CUMBERLAND does not
enter into negotiations with BIONICHE within thirty (30) days following receipt of such notice,
then BIONICHE shall be free to negotiate with third Persons with no further obligation to
CUMBERLAND.



     (c) Notwithstanding the provisions of Subparagraph 5.6 (b) above, BIONICHE shall have no
obligation to make any offer to CUMBERLAND with respect to any development, marketing or sale of
Excluded Products in the Territory if it chooses to so develop, market or sell directly, rather
than in association with any third Person.



     (d) With respect to any product that contains the same active ingredient as the Drug Product
for indications other than Excluded Products that BIONICHE may seek to develop (“Other Products”),
BIONICHE shall provide notice to CUMBERLAND as set out in Subparagraph 5.6 (b) above, and the same
procedures shall apply. Likewise, with respect to any indications other than currently-approved
indications for the Drug Product that CUMBERLAND seeks to develop, CUMBERLAND shall provide notice
to BIONICHE regarding the possibility of supply of said Drug Product to CUMBERLAND and the
procedures described in Subparagraph 5.6 (b) above shall apply.



     (e) If CUMBERLAND does not acquire rights to Excluded Products or to Other Products as
described in Subparagraphs 5.6 (c) and (d) above, and CUMBERLAND establishes, through the dispute
resolution process set forth in Paragraph 11.7, that sales by BIONICHE of said products have
detrimentally impacted sales of the Drug Product then BIONICHE shall pay CUMBERLAND an amount
equal to the lost profits so established by CUMBERLAND. CUMBERLAND shall bear the burden of
establishing lost sales.



     (f) Except in the event that BIONICHE fails to supply all Drug Product ordered within ninety
(90) days of receipt of a Purchase Order in accordance with Paragraph 2.7, or in the event of
Force Majeure, CUMBERLAND will order its entire requirement of the Drug Product for the Territory
from BIONICHE, If CUMBERLAND notifies BIONICHE that it intends. to distribute the Drug Product in
countries other than the United States and its territories, then the parties shall negotiate in
good faith, for a period not to exceed one hundred twenty (120) days after CUMBERLAND provides
such notice, to amend this agreement to expand the Territory hereunder; provided that if the
parties fail to agree upon the terms of supply for an expanded Territory within such 120-day
period, CUMBERLAND shall have no obligation to purchase requirements of Drug Products for such
other countries from BIONICHE, but its obligations hereunder with respect to the United States and
its territories shall remain in full force and effect.



     (g) In the event of breach of this Paragraph 5.6, the parties shall have the right, in
addition to other rights hereunder, to seek injunctive relief, notwithstanding any other provision
of this Agreement.



     5.7 Minimum Purchase Quantities: CUMBERLAND shall have no minimum purchase requirements for
the first year following FDA approval of the Drug Product. The parties shall, no later than three
(3) months before the end of the first year following FDA approval, negotiate in good faith to set
on the minimum quantities applicable to the second to fifth years of commercial sale, which shall
be incorporated into Schedule V and shall form part of this Agreement. The parties shall negotiate
in good faith to set additional minimum purchase requirements for any extension of the Term of
this Agreement under Paragraph 3.1. CUMBERLAND shall use its best efforts to achieve the minimum
purchase requirements set forth in Schedule V of this Agreement for each format of Drug Product
being sold in the Territory by CUMBERLAND. In the event CUMBERLAND is required to procure Drug
Product from other sources in accordance with Paragraph 2.7, the minimum annual purchase
obligation set out in Schedule V shall be decreased by the quantity BIONICHE failed to deliver
hereunder.



 









 





6. DRUG PRODUCT RECALLS




     6.1 Drug Product Recalls: In the event: (a) any government authority issues a request,
directive or order that the Drug Product be recalled, or (b) a court of competent jurisdiction
orders such a recall, (c) CUMBERLAND determines that the Drug Product should be recalled, or (d)
BIONICHE recommends to CUMBERLAND that a recall be initiated, the parties shall take all
appropriate corrective actions; provided that a recall pursuant to Subparagraph 6.1 (c) shall be
without prejudice to the parties’ rights under Paragraph 2.5. In the event that BIONICHE
recommends a recall of Drug Product by CUMBERLAND, such recommendation must take the form of a
notice as per Paragraph 11.1, and CUMBERLAND shall respond promptly indicating to BIONICHE whether
the Drug Product will be recalled. In no event, however, shall BIONICHE have responsibility for
regulatory compliance in connection with any recall, except to the extent and under the
circumstances set forth in the Manual or any other written agreement between the parties hereto or
as required by law. All costs and expenses incurred in connection with such recall shall be the
responsibility of CUMBERLAND unless caused by the negligence of BIONICHE.



7. FORCE MAJEURE; FAILURE TO SUPPLY




     7.1 Force Majeure Events: Failure of either party to perform under this Agreement (except the
obligation to make payments) shall not subject such party to any liability to the other if such
failure is caused by acts such as, but not limited to, acts of God, fire, explosion, flood, war,
riot, sabotage, embargo, or by any cause beyond the reasonable control of the parties, provided
that written notice of such event is promptly given to the other party.



8. MANUFACTURING CHANGES




     BIONICHE may implement commercially reasonable changes in the equipment used for
Manufacturing of the Drug Product in the Facility, or the Manufacturing methods, labeling, or
packaging of the Drug Product only as expressly provided in the Specifications unless BIONICHE has
the prior written consent of CUMBERLAND, which consent shall not be unreasonably withheld or
delayed.



9. CONFIDENTIALITY




     9.1 Confidential Information: “Confidential Information” means collectively Confidential
Information of CUMBERLAND (as defined herein) and Confidential Information of BIONICHE (as defined
herein).



     9.2 Confidential Information of CUMBERLAND: Except as expressly set forth herein,
“Confidential Information of CUMBERLAND” means all information obtained or developed by BIONICHE
which relates to CUMBERLAND’s business or the Drug Product, regardless of the form in which such
information is transmitted. The following shall not be considered Confidential Information of
CUMBERLAND for purposes hereof:



     (a) Information that is already in the possession of BIONICHE at the time it is received from
CUMBERLAND or developed by BIONICHE on CUMBERLAND’s behalf, if BIONICHE notifies CUMBERLAND of its
belief that the information is excepted under the terms of this subsection;



     (b) Information received by BIONICHE from a person which has the right to disclose the same,
when BIONICHE notifies CUMBERLAND of its belief that the information is excepted under the terms
of this subsection;



     (c) Information that is or becomes published, or is or becomes otherwise publicly available
without the fault of BIONICHE;



 









 





     (d) An Invention as defined in Paragraph 9.4; or



     (e) Confidential Information of BIONICHE.



     In the event of a dispute regarding the applicability of the above exceptions to the
definition of Confidential Information of CUMBERLAND, BIONICHE shall have the burden of producing
clear and convincing proof that the information should be excepted from the definition of
Confidential Information of CUMBERLAND. BIONICHE shall not use or permit the use of the
Confidential Information of CUMBERLAND other than for the limited purposes expressly permitted by
or consistent with this Agreement. Recipients of Confidential Information of CUMBERLAND shall be
granted access thereto strictly on a “need-to-know” basis. BIONICHE shall take all reasonable steps
to ensure that recipients comply with the terms of this Agreement, including all restrictions on
use, disclosure and dissemination of Confidential Information of CUMBERLAND. BIONICHE shall notify
CUMBERLAND immediately upon becoming aware of any breach hereof and shall take all reasonable steps
to prevent any further disclosure or unauthorized use.



     Upon termination or expiration of this Agreement, BIONICHE shall deliver to CUMBERLAND all
Confidential Information of CUMBERLAND, all copies thereof, and all documents or data storage media
containing such Confidential Information of CUMBERLAND, except that one copy of such information
may be retained by BIONICHE as required by regulation or law for future reference. The Confidential
Information of CUMBERLAND shall remain confidential and not be disclosed by BIONICHE for a period
of ten (10) years following the date of expiration or termination of this Agreement except as
expressly set forth herein or in any other written agreement between the parties.



     9.3 Confidential Information of BIONICHE: Except as expressly set forth herein, “Confidential
Information of BIONICHE” means all information obtained or developed by CUMBERLAND which relates to
the manufacture, sale, and distribution of pharmaceutical products by BIONICHE, regardless of the
form in which such information is transmitted. The following shall not be considered Confidential
Information of BIONICHE for purposes hereof:



     (a) Information that is already in the possession of CUMBERLAND at the time it is received
from BIONICHE or developed by CUMBERLAND on BIONICHE’s behalf, if CUMBERLAND notifies BIONICHE of
its belief that the information is excepted under the terms of this subsection;



     (b) Information received by CUMBERLAND from a person which has the right to disclose the same,
when CUMBERLAND notifies BIONICHE of its belief that the information is excepted under the terms of
this subsection;



     (c) Information that is or becomes published, or is or becomes otherwise publicly available
without the fault of CUMBERLAND; or



     (d) Confidential Information of CUMBERLAND.



     In the event of a dispute regarding the applicability of the above exceptions to the
definition of Confidential Information of BIONICHE, CUMBERLAND shall have the burden of producing
clear and convincing proof that the information should be excepted from the definition of
Confidential Information of BIONICHE. CUMBERLAND shall not use or permit the use of the
Confidential Information of BIONICHE other than for the limited purposes expressly permitted by or
consistent with this Agreement. Recipients of Confidential Information of BIONICHE shall be granted
access thereto strictly on a “need-to-know” basis. CUMBERLAND shall take all reasonable steps to
ensure that recipients comply with the terms of this Agreement, including all restrictions on use,
disclosure and dissemination of Confidential Information of BIONICHE. CUMBERLAND shall notify
BIONICHE immediately upon becoming aware of any breach hereof and shall take all reasonable steps
to prevent any further disclosure or unauthorized use.



     Upon termination or expiration of this Agreement, CUMBERLAND shall deliver to BIONICHE all
Confidential Information of BIONICHE, all copies thereof, and all documents or data storage media
containing such Confidential Information of BIONICHE, except that one copy of such information may
be retained by CUMBERLAND as required by regulation or law for future reference. The Confidential
Information of BIONICHE shall remain confidential and not be disclosed by CUMBERLAND for a period
of ten (10) years following the date of expiration or termination of this Agreement except as
expressly set forth herein or in any other written agreement between the parties.



 









 





     9.4 Invention: As between the parties, CUMBERLAND owns all intellectual property rights in any
improvement to the Drug Product and, subject to Paragraph 5.6, any existing or further developments
or modifications of the Drug Product in the Territory (“Invention”). Subject to Article 10,
BIONICHE shall, at CUMBERLAND’s request and expense, take such actions and execute such documents
as necessary or desirable, in CUMBERLAND’s sole judgment, to create, maintain, enforce or defend
CUMBERLAND’s rights in any such Invention.



     9.5 Press Release; Other Disclosure: Except pursuant to a press release subject to the prior
written approval of both parties hereto, the parties agree that the contents of this Agreement
shall not be disclosed to any third party except (i) the controlling companies of the parties, (ii)
the companies controlled by the parties, (iii) individuals and entities providing paid services to
either of the parties who are bound by confidentiality obligations, and (iv) governmental
regulatory agencies, including, but not limited to, environmental protection authorities, without
prior written consent of the other party.



     9.6 Production of Records: BIONICHE shall prepare, maintain, and submit all documents or
reports required under applicable laws and regulations or as reasonably requested by CUMBERLAND
concerning the Manufacture of the Drug Products, including without limitation, batch production
records for each Drug Product. Notwithstanding the restrictions set forth in this Agreement,
BIONICHE shall retain production records for batches of Drug Product for a period of at least one
year after the respective expiration date for each batch. These records will be stored by
appropriate means, including without limitation, optical disk or microfilm in a secure manner in
compliance with current GMP with duplicate copies submitted to CUMBERLAND promptly after the
creation thereof and shall be made available on request of the FDA or any other authorized
regulatory body.



10. INDEMNIFICATION




     10.1 Indemnification by CUMBERLAND: Subject to Paragraph 5.1, CUMBERLAND shall indemnify and
hold BIONICHE (and any Affiliate and their officers, directors, shareholders, agents, and the
employees and insurers of any of them and/or their successors and assigns thereto), free and
harmless from any and all claims, demands, liability, actions or causes of actions, and any and all
expenses associated therewith (including, without limiting the generality of the foregoing, defense
costs and reasonable attorney’s fees), arising out of or in connection with, as a result of, or
otherwise related to any third party claims arising from: (i) any negligence or recklessness of
CUMBERLAND, its agents, or employees; (ii) the promotion, distribution, use, misuse or sale or
effects of the Drug Product except to the extent any alleged Drug Product defects were caused by
BIONICHE; (iii) CUMBERLAND’s non-compliance with any applicable FDA or other applicable
regulations; or, (iv) any failure of CUMBERLAND to perform, in whole or in part, any of its
obligations hereunder in each case, unless caused by the acts or omissions of BIONICHE. Beginning
prior to delivery of the first order of Drug Products pursuant to this Agreement and continuing
until the third anniversary of termination of this Agreement, CUMBERLAND shall maintain products
liability insurance with limits of liability of not less than Five Million U.S. Dollars
($5,000,000) and shall name BIONICHE as additional insured under said policy.



     10.2 Indemnification by BIONICHE: Subject to Paragraph 5.1, BIONICHE will indemnify and hold
CUMBERLAND (and any Affiliate and their officers, directors, shareholders, agents, and the
employees and issuers of any of them and/or their successors and assigns thereto), free and
harmless from any and all claims, demands, liability, actions or causes of action, and any and all
expenses associated therewith (including, without limiting the generality of the foregoing, defense
costs and reasonable attorney’s fees), arising out of or in connection with, as a result of, or
otherwise related to any third party claims arising from: (i) any negligence or recklessness of
BIONICHE, its agents or employees; (ii) personal injury (including death) or property damage
arising out of or in connection with BIONICHE’s manufacture or handling of the Drug Product
otherwise than in accordance with the Specifications and CUMBERLAND’S written directions; (iii)
BIONICHE’s non-compliance with any applicable FDA or other applicable regulations; or (iv) any
failure of BIONICHE to perform any of its obligations hereunder, in each case, unless caused by the
acts or omissions of CUMBERLAND. Beginning prior to delivery of the first order for Drug Product
pursuant to this Agreement and continuing until the third anniversary of termination of this
Agreement, BIONICHE shall maintain products liability insurance with limits of liability of not
less than U.S. $5,000,000 and shall name CUMBERLAND as additional insured under said policy.



 









 





     10.3 Conditions of Indemnification: If either party seeks indemnification from the other
under Paragraphs 10.1 or 10.2, it shall promptly give written notice to the other party of any
such claim or suit threatened, made or filed against it, which forms the basis for such claim of
indemnification and shall cooperate fully with the other party in the defense of all such claims
or suits. No settlement or compromise shall be binding on a party hereto without its prior written
consent.



     10.4 Limitation: Except as expressly set forth herein, neither party will be liable to the
other for any claim for loss of profits, for loss or interruption of business or for indirect,
special or consequential damages of any kind under this Agreement.



11. GENERAL PROVISIONS




     11.1 Notices: Any notice permitted or required by this Agreement may be sent by facsimile with
the original document being sent by certified (or registered) mail, return receipt requested, or
overnight delivery and shall be effective when received (or refused) via facsimile or mail or
overnight if faxed and sent and addressed as follows (or to such other facsimile number or address
as may be designated by a party in writing):



	 	 	 	 	 	 	 
	 	 	If to CUMBERLAND:	 	CUMBERLAND PHARMACEUTICALS INC.
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	209 Tenth Avenue South, Suite 332
	 

	 	 	 	 	 	Nashville, Tennessee 37203
	 

	 	 	 	 	 	Attn: Chief Executive Officer
	 

	 	 	 	 	 	Telephone:          615-255-0068
	 

	 	 	 	 	 	Facsimile:            615-255-0094
	 
	 	 	 	 	 	 
	 	 	If to BIONICHE:	 	BIONICHE LIFE SCIENCES, INC.
	 

	 	 	 	 	 	231 Dundas Street East,
	 

	 	 	 	 	 	Belleville, Ontario, Canada K8N 1E2
	 

	 	 	 	 	 	Attn: Chief Executive Officer
	 

	 	 	 	 	 	Telephone:          800-265-5464
	 

	 	 	 	 	 	Facsimile:            613-966-4177
	 
	 	 	 	 	 	 
	 	 	With a copy to:	 	BIONICHE PHARMA (CANADA) LIMITED
	 

	 	 	 	 	 	151 Dundas Street, Suite 507
	 

	 	 	 	 	 	London, Ontario, Canada N6A 5R7
	 

	 	 	 	 	 	Attn: President
	 

	 	 	 	 	 	Telephone:          519-453-0641
	 

	 	 	 	 	 	Facsimile:            519-453-6169
	 
	 	 	 	 	 	 
	 	 	And to:	 	BIONICHE LIFE SCIENCES, INC.
	 

	 	 	 	 	 	Attn: Vice President, Corporate Counsel
	 

	 	 	 	 	 	Telephone:          800-265-5464
	 

	 	 	 	 	 	Facsimile:            613-966-4177






     11.2 Master Agreement; Amendment: This Agreement is being entered into pursuant to the
Strategic Alliance Agreement dated January 15, 2002, between CUMBERLAND and BIONICHE (the “Master
Agreement”), and this Agreement (including any and all exhibits hereto, whether entered into now or
hereafter) constitutes an Addendum (as defined in the Master Agreement). In the event of any
conflict or inconsistency between the terms of this Agreement and the Master Agreement, the terms
of this Agreement shall govern. No modification of any of the terms of this Agreement, or any
amendments thereto, shall be deemed to be valid unless in writing and signed by both parties
hereto. No course of dealing or usage of trade shall be used to modify the terms and conditions
herein.



 









 




Without limiting the generality of the foregoing, no provisions of any CUMBERLAND purchase order
that are inconsistent with the terms of this Agreement shall apply.




     11.3 Waiver: None of the provisions of the Agreement shall be considered waived by any party
hereto unless such waiver is agreed to, in writing, by both parties. The failure of a party to
insist upon strict conformance to any of the terms and conditions hereof, or failure or delay to
exercise any rights provided herein or by law shall not be deemed a waiver of any rights of any
party hereto.



     11.4 Obligations to Third Parties: Each party warrants and represents that this Agreement is
not inconsistent with any contractual obligations, expressed or implied, undertaken with any third
party.



     11.5 Assignment: This Agreement shall be binding upon and inure to the benefit of the
successors or permitted assigns of each of the parties and may not be assigned, transferred, or
subcontracted by either party without the prior written consent of’ the other, which consent will
not be unreasonably withheld or delayed, except that no consent shall be required in the case of a
transfer to an Affiliate of a party hereto or transaction involving the merger, consolidation or
sale of substantially all of’ the assets of the party seeking such assignment or transfer and such
transaction relates to the business covered by this Agreement and the resulting entity assumes all
the obligations of the assigning party under this Agreement.



     11.6 Independent Contractor: BIONICHE shall act as an independent contractor for CUMBERLAND
in providing the services required hereunder and shall not be considered an agent of or joint
venturer with CUMBERLAND. Unless otherwise provided herein to the contrary, BIONICHE shall furnish
all expertise, labor, supervision, machining and equipment necessary for performance hereunder and
shall obtain and maintain all building and other permits and licenses required by public
authorities.



     11.7 Governing Law and Dispute Resolution: This Agreement is subject to and shall be governed
by the laws of the State of New York. Any dispute, controversy, or claim arising out of or
relating to this Agreement, any purchase orders between the parties hereto, or the breach,
termination, or invalidity thereof shall be settled under the Rules of the American Arbitration
Association by one or more arbitrators appointed in accordance with said Rules. The place of
arbitration shall be within the State of New York. The parties agree that the award of the
arbitrator(s) shall be the sole and exclusive remedy between them regarding any claims,
counterclaims, issues or accountings presented or pled to the arbitrator(s); that it shall be made
and shall promptly be payable in U.S. dollars free of any tax, deduction, or offset; that any
costs and attorney fees incurred by the prevailing party as determined by the arbitrator(s)
incident to the arbitration, shall be included as part of the arbitration award; and that any
costs. fees, or taxes incident to enforcing the award shall, to the maximum extent permitted by
law, be charged against the party resisting such enforcement. The award shall include interest
from the date of any damages incurred for breach or other violation of the Agreement, and from the
date of the award until paid in full, at a rate to be fixed by the arbitrator(s), but in no event
less than the prime interest rate for Bank of America in Nashville, Tennessee, U.S.A.



     11.8 Severability: In the event that any term or provision of this Agreement shall violate
any applicable statute, ordinance, or rule of law in any jurisdiction in which it is used, or
otherwise be unenforceable, such provision shall be ineffective to the extent of such violation
without invalidating any other provision hereof.



     11.9 Headings, Interpretation: The headings used in this Agreement are for convenience only
and are not part of this Agreement.



     11.10 Conflict: In the event of conflict between the terms and provisions of this Agreement
and the terms and provisions of the Manual, the terms of this Agreement shall control.



     11.11 Limitation: The parties hereto acknowledge and agree that the International Sale of
Goods Act and the United Nations Convention on Contracts for the International Sale of Goods have
no application to this Agreement.



 









 





     IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be executed by their
duly authorized representatives effective as of the date first above written.



	 	 	 	 	 	 	 	 	 	 	 
	CUMBERLAND PHARMACEUTICALS INC.	 	 	 	BIONICHE LIFE SCIENCES, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	/s/

	 	A. J. Kazimi	 	 	 	/s/	 	Albert Beraldo	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Authorized Signature			 	Authorized Signature	 	 
	 
	A.J. Kazimi	 	 	 	Albert Beraldo	 	 
	Chief Executive Officer	 	 	 	Vice President, Business Development	 	 






 









 





SCHEDULE I





Shipping and Storage





	 	1.	 	Finished Drug Product shall be stored by BIONICHE after
completion, at 20 degrees C
to 25 degrees C.
	 
	 	2.	 	Drug product will be delivered by BIONICHE to CUMBERLAND by air on the basis of FCA
(ex works) ex works BIONICHE’s plant in Galway, Ireland with the carrier to be selected
by CUMBERLAND.
	 
	 	3.	 	The terms “FCA” (“ex works”) and “DDP” and the Parties’ respective obligations
shall be determined in accordance with the INCOTERMS adopted by the International
Chamber of Commerce, effective July 1, 1990, unless otherwise specifically provided in
this Agreement.
	 
	 	4.	 	Additional details regarding packaging shall be incorporated herein upon adoption
thereof by written agreement of BIONICHE and CUMBERLAND.





Pricing —



The prices to be paid by CUMBERLAND to BIONICHE for the Drug Products arc as follows:



N-acetylcysteine 30 mL                         
Canadian      [***]

N-acetylcysteine 10 mL                         
Canadian      [***]



Canadian currency conversions will be based upon the then current exchange rate listed in the Wall
Street Journal.



The minimum size of any order of the Drug Product shall be one production lot of [***] for the 30
mL Drug Product and [***] for the 10 mL Drug Product.





In
addition, CUMBERLAND shall pay to BIONICHE a royalty equal to [***]
percent ([***]%) of Net Sales
(as defined herein) during each calendar year; provided that CUMBERLAND shall pay BIONICHE such
royalty within [***] days after the last day of the applicable calendar year, For purposes
hereof, “Net Sales” shall mean the aggregate amount billed for sales of the Drug Product by
CUMBERLAND, less returns, hospital buying group chargebacks, hospital buying group/group
purchasing organization administration fees, managed care organization rebates, sales/purchasing
discounts, federally mandated discounts and rebates, and state medical assistance program rebates
and discounts, and determined on an accrual basis by CUMBERLAND.




Within sixty (60) days following the close of each calendar quarter following the first sale of a
Drug Product, CUMBERLAND shall furnish to BIONICHE a written report for the calendar quarter
showing the Net Sales for each format of the Drug Product during such calendar quarter and the
corresponding amount payable to BIONICHE under this Agreement for such calendar quarter.
Simultaneously with the submission of the written report, CUMBERLAND shall pay to BIONICHE a sum
equal to the aggregate royalty due for such calendar quarter calculated in accordance with this
Agreement.




Payments to be made by CUMBERLAND to BIONICHE under this Agreement shall be made by cheque made to
the order of BIONICHE or by bank wire transfer in immediately available funds to such bank account
designated in writing by BIONICHE from time to time.




For a period of at least five (5) years after the end of each calendar quarter following the first
sale of each Drug Product, CUMBERLAND shall keep complete and accurate records in sufficient
detail to enable the royalties payable hereunder to be determined. Upon the written request of
BIONICHE and not more than once in each calendar year and only with reasonable prior notice to
CUMBERLAND, CUMBERLAND shall permit an independent certified public accounting firm of nationally
recognized standing selected by BIONICHE and reasonably acceptable to CUMBERLAND to have access
during normal business hours to such of the records of CUMBERLAND as may be reasonably necessary
to verify the accuracy of the Royalty reports hereunder for any calendar year ending not more than
twenty-four (24) months prior to the date of such request.




If such accounting firm concludes in its review that additional royalties were owed during such
period, CUMBERLAND shall pay the additional amounts within forty-five (45) days of the date
BIONICHE delivers to CUMBERLAND such accounting firm’s written report so concluding. The fees
charged by such accounting firm shall be paid by BIONICHE, except CUMBERLAND shall pay such fees in
the event that the additional amounts owed by CUMBERLAND vary from amounts paid with respect to the
calendar year in question by five percent (5%) or greater.








 









 








SCHEDULE II




Technical
Agreement




 









 







Technical Agreement Rev 1            5th April 2005

Bioniche/Cumberland




TECHNICAL AGREEMENT



This Agreement is entered into on this 5th day of April, 2005, by and between Cumberland
Pharmaceuticals Inc., a company organized and existing under the laws of the United States, with
offices located at 2525 West End Avenue, Suite 950 Nashville, Tennessee 37203 USA. (“Cumberland”)
and Bioniche Teoranta, a company organized and existing under the laws of the Republic of Ireland,
having a principal place of business, Inverin, Co. Galway, Republic of Ireland. (“Bioniche”).



Whereas, Cumberland requested Bioniche to manufacture and supply the Products (as defined in
section 1.1 hereof); and



Whereas the parties to this Agreement wish to establish in greater detail, the responsibilities of
Cumberland as the Contractor, and Bioniche as Suppliers, for the manufacture of the Products; and



Whereas, a detailed listing of responsibilities of the Contractor and Suppliers, is attached as
Exhibit I;



Now therefore, in consideration of the mutual covenants and promises contained herein, the parties
agree as follows:





	I.	 	Purpose.




This Technical Agreement is intended to serve as the Manufacturing Project Manual to be attached
as Schedule II to the Manufacturing and Supply Agreement, dated January 15, 2002, between
Cumberland and Bioniche Life Sciences, Inc. (the “Manufacturing Agreement”), and is not intended
to supersede any of the parties’ rights and obligations set forth therein. Only in the event that
this Technical Agreement expressly amends and restates specified subsections of the Manufacturing
Agreement shall this Technical Agreement serve as an amendment of the parties rights and
obligations set forth in the Manufacturing Agreement. Except as specifically amended hereby, the
Manufacturing Agreement shall remain in full force and effect, and any conflicting provision
hereof shall be null and void. The parties have entered into this Agreement to clearly define the
responsibilities of each party and to ensure that the Products are manufactured, packaged,
released, stored and shipped in accordance with current European and US GMP’s or other relevant
equivalent cGMP’s, agreed by Bioniche and Cumberland.




1.1 Product




     Bioniche will supply Cumberland with Products, as follows:



	 	 	 	 	 
	 	1.1.1	 	 	Acetadote® — Acetylcysteine Injection

	 	 	 	 	200mg/mL Bioniche Code Number : 0164AI01







1





 









 








Technical Agreement Rev 1            5th April 2005

Bioniche/Cumberland



All references to Bioniche or Cumberland shall include Affiliates of these companies.
“Affiliate” shall be defined as any entity (i) at least fifty percent (50%) of whose outstanding
securities or assets are owned or controlled, directly or indirectly, by said party, or (ii) which
owns or controls directly or indirectly fifty percent (50%) of the outstanding securities or assets
of said party, or (iii) is owned or controlled directly or indirectly, to the extent of fifty
percent (50%) or more of the outstanding securities or assets by any of the entities described in
(i) and (ii) above. The term “Manufacture” as used in this Agreement shall be understood to include
the specification and the purchase of all necessary components of the Product, the manufacturing
process, quality control and assurance. The term “Packaging” as used in this Agreement shall be
understood to include the specification and purchase of all necessary components of the Product,
the packaging and the final quality control and assurance.





	II.	 	General Quality Issues





2.1 Good Manufacturing Practices



Bioniche represents that it shall observe and adhere to the requirements of the current EU
Guide to Good Manufacturing Practice for Medicinal Products for Human Use, including
supplementary recommendations issued by the Commission of the European Communities (cGMPs)
and current US cGMPs. All terms defined in the cGMPs shall have the same meaning when used in
this document. Bioniche represents and warrants that all processes and equipment used in the
manufacture of the Product shall have been validated or are in the process of being validated
in accordance with the cGMPs and current US cGMPs. The reference to other regulatory
requirements will be agreed between the two parties.



2.2 Qualified Persons



The Qualified Person (“QP”), as defined in EU Directive 75/319/EEC, for Bioniche is named in
Exhibit II, and sample of the signature is affixed.



2.3 Supplier Quality Monitoring and Assessments



It is the responsibility of Bioniche to perform quality monitoring and assessment on suppliers
of all materials, involved in the manufacturing of the Product, in accordance with written
quality monitoring protocols.



2.4 Traceability



It is the responsibility of Bioniche to properly track each batch number of the Product, for
traceability, so as to be able to provide a full manufacturing history. Bioniche shall keep
manufacturing records, analytical records and reference samples for each batch of Product.
Copies of records and reference samples shall be made available to Cumberland promptly upon
request. Reference samples shall be kept for a period of one (1) year after the expiration
date for the batch. Manufacturing and quality control records shall be kept for a minimum
period of six (6) years from the date of manufacture or a minimum of one (1) year after the
expiration date, whichever is longer.



2





 









 








Technical Agreement Rev 1             5th April 2005

Bioniche/Cumberland




2.5 Stability Studies



Bioniche has the responsibility for the performance of 36-month stability studies on the
Products in accordance with Bioniche stability SOP ST.001 Stability data are to be reported
to Cumberland on request but Cumberland will be alerted concerning any out-of-specification
results within 48 hours.




	III.	 	Specifications.





Attached hereto is a complete set of every Specification related to Products, which are
referenced in 1.1. Bioniche shall prepare the Master Manufacturing Formula and the
Manufacturing and Packaging Batch Instructions for the Product. The Batch Instruction will be
approved by Bioniche. Copies of completed Batch Instructions will be provided to Cumberland
following the completion of manufacture if requested.




	IV.	 	Manufacture, Controls, Release and Shipment





4.1 Purchases and Management of Materials.



It is the responsibility of Bioniche to source the Active Pharmaceutical Ingredients (APIs),
from Bioniche’s designated approved suppliers, for the manufacture of the Products. Bioniche
shall supply excipients and materials required for the manufacture of the Product, and/or
ancillary operating materials used in the manufacture. Bioniche is responsible for all
quality control testing and release of materials used in the manufacturing of the Product



4.2 Product Testing & Release



Bioniche shall test or cause to be tested by an approved, qualified entity each lot of the
Product pursuant to the Specifications before release to Cumberland. Each test shall set
forth the items tested, the specific release Specifications and test results in a certificate
of analysis for each lot delivered and be certified by Bioniche’s QP and sent separately to
Cumberland. Cumberland shall be entitled to rely on the certificate of analysis and is not
required to perform any further testing,



4.3 Non Conforming Activities



During the course of manufacture:



4.3.1 All deviations and events not affecting the agreed Technical Specifications will be
documented by Bioniche. These documents will be retained as part of the batch record. Bioniche
shall inform Cumberland of all deviations prior to release of the batch.



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4.4 Manufacturing Batch Records



4.4.1 Bioniche shall also provide as part of the Batch Certificate of Analysis, a
manufacturing compliance statement with each lot delivered to Cumberland. This certificate
will certify that the lot of Product was manufactured in accordance with the Specifications
and applicable cGMP laws or regulations.



4.4.2 The manufacturing lot records shall contain, at a minimum, the following information:




	 	•	 	The name and dosage form of the medicinal product.
	 
	 	•	 	The batch number or test number of the API and all other raw materials (excluding water).
	 
	 	•	 	The date of manufacture and the Product’s batch number.
	 
	 	•	 	Details of the amounts of Product manufactured during each operation and the quantity
of the Product in the various stages.
	 
	 	•	 	Both the expected and actual results of the in-process controls. If expected results
are expressed in a quantified manner, actual results shall also be quantified.
	 
	 	•	 	Confirmation that the critical steps of the operations proceeded in accordance with
the Manufacturing Instructions by the signature of the persons in charge of the various
stages.
	 
	 	•	 	Special observations made during manufacturing.
	 
	 	•	 	Certification that the process operating lines have been cleared, at the beginning of
the batch processing.
	 
	 	•	 	A list of deviations and their resolution.





4.4.3 Labeling of the product for Clinical Trials will be the responsibility of Cumberland.



4.5 Shipment



Bioniche shall ship the Product in accordance with instructions agreed to by the parties.
Bioniche shall only place one lot number on any single pallet. Shipment of Product batches
under quarantine shall be made only when specifically authorized in writing by Cumberland, and
will be according to the Bioniche procedure.




	V.	 	Changes in Site, Quality Standards, Formula and Manufacturing Procedures





5.1 Changes Control



Bioniche shall inform Cumberland of any proposed intent to change the site of manufacture, the
specifications, labeling, the procedures for the manufacturing processes or record keeping of
Product.



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	VI.	 	Quality Audit





During normal working hours and upon reasonable notice, Cumberland shall be entitled to
inspect such areas of Bioniche’s plant where the Product is manufactured or otherwise
stored or handled. Such inspections will include, but not be limited to:


A review of Production facilities and utilities

The taking of physical inventory samples

Reviewing of Quality and Documentation Control systems

Reviewing batch records




A written report of observation shall be issued by Cumberland quality auditors, including a
listing of significant items, which must be corrected prior to the supply of further Product
to Cumberland.




	VII.	 	Product Complaints/Recall





Bioniche and Cumberland shall each notify the other of any claims related to damage,
defective or nonconforming Product. Bioniche shall supply Cumberland with all relevant
information for the investigation of complaints related to the Product.



Cumberland shall be responsible for the collection of adverse events reported on the
Finished Product. It shall be Cumberland’s responsibility to notify Bioniche of such
reports, if such reports relate to Bioniche’s manufacture of the Product, and to keep the
appropriate records and to promptly report such adverse reports to the appropriate
regulatory authorities. In the event any adverse events are reported to Bioniche, Bioniche
shall notify Cumberland in writing within 3 business days.




	VIII.	 	Regulatory Communications





8.1 Maintenance of Licenses



Cumberland is the current Authorization Holder (NDA) for the Finished Product to be
manufactured under this Technical Agreement and shall be responsible for the maintenance and
renewal of said Marketing Authorizations.



Bioniche shall be responsible for the maintenance and renewal of its manufacturing
license.



8.2 Notifications



Cumberland and Bioniche shall promptly inform each other of any material communications to or
from governmental authorities or agencies relating to the Product, including but not limited
to providing each other promptly with copies of any written communications, and “reports of
visits by a governmental authority or agency to any areas within the facilities where the
Product is manufactured that could impact upon the continued supply of Product. The parties
shall consult with each other regarding any issues raised in such communications and shall
attempt in good faith to agree upon any action to be taken or response to be made in
connection with such communications.



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Technical Agreement Rev 1             5th April 2005

Bioniche/Cumberland





	IX.	 	Effective Date and Term, Interpretation





This Technical Agreement shall become effective on the date first written above and shall
remain in force until the termination of the Agreement between the parties for the supply of
Products.




	X.	 	Modifications





Any modifications or amendments to this Agreement must be in writing and signed by
both parties to be effective.


In Witness Whereof, the parties hereto have caused this Agreement to be executed by their
respective duly authorized officers, effective as of the first day above written.




	 	 	 	 	 
	 	Bioniche Teoranta

 	 
	 	By:  	/s/ Andrew Hall
 	 



	 	 	 	 	 
	 	 	 
	 	Date:  	5th April 2005	 
	 	 	 	 
	 	 	 	 
	 



	 	 	 	 	 
	 	Andrew Hall BSc(Hons) M.RS.C. M.I.Q.A

Director Of Quality and Qualified Person





Cumberland Pharmaceuticals Inc.

 	 
	 	By:  	/s/ Leo Pavliv
 	 



	 	 	 	 	 
	 	 	 
	 	Date:  	26 April 2005	 
	 	 	 	 
	 	 	Leo Pavliv

Vice President Operations 	 
	 



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Technical Agreement Rev 1             5th April 2005

Bioniche/Cumberland




Exhibit I




DETAILED RESPONSIBILITES



X = Responsible

A = Approval/Authority




	 	 	 	 	 	 	 
	 	 	 	 	BIONICHE	 	CUMBERLAND
	     1

	 	SPECIFICATIONS/DOCUMENTATION	 	 	 	 
	  1.1

	 	Specification of Active Bulk Ingredient
	 	X
	 	A
	  1.2

	 	Master Manufacturing Formula
	 	X
	 	A
	  1.3

	 	Product Lot Identification System
	 	X	 	 
	  1.4

	 	Specification of Inactive Ingredients
	 	X
	 	A
	  1.5

	 	Test Method for ID of Active Bulk
	 	X	 	 
	  1.6

	 	Test Method for Inactive Ingredients
	 	X	 	 
	  1.7

	 	Test Method for Release of Product
	 	X	 	 
	  1.8

	 	Local Manufacturing and Packaging Instructions
	 	X	 	 
	  1.9

	 	Specification for In-Process Control
	 	X	 	 
	1.10

	 	Change Control for Active Ingredient
	 	X
	 	A
	1.11

	 	Change Control for Manufacturing Formulas
	 	X
	 	A
	1.12

	 	Change Control for Inactive ingredients
	 	X
	 	A
	1.13

	 	Bulk product package specification, box & labels
	 	X	 	 
	1.14

	 	Finished Artwork
	 	A
	 	X
	1.15

	 	Change Control for Artwork/Finishing Materials
	 	X
	 	A
	 
	 	 	 	 	 	 
	     2

	 	PRODUCTION	 	 	 	 
	  2.1

	 	Procurement of Bulk Active ingredient
	 	X	 	 
	  2.2

	 	Purchase Inactive Substances
	 	X	 	 
	  2.3

	 	Store Active/Inactive Substances
	 	X	 	 
	  2.4

	 	Sample/Test/Acceptance of Active & Inactive Substances
	 	X	 	 
	  2.5

	 	Test Method Transfer
	 	N/A	 	 
	  2.6

	 	On-Going Stability Testing of Product
	 	X	 	 
	  2.7

	 	Retention of Certificate of Analysis for Active Substance
	 	X	 	 
	  2.8

	 	Validation of Manufacturing Processes
	 	X	 	 
	  2.9

	 	Bills of Material for Manufacturing Process
	 	X	 	 
	2.10

	 	In Process Control Instructions and Testing
	 	X	 	 
	2.11

	 	Batch Record Reconciliation
	 	X	 	 
	2.12

	 	Batch Record Retention
	 	X	 	 
	2.13

	 	Retention of Samples of Active Ingredient
	 	X	 	 
	2.14

	 	Retention of Samples of other Materials (Except water)
	 	X	 	 
	2.15

	 	Retention of Samples of Product
	 	X	 	 
	2.16

	 	Maintenance of Pharmaceutical Manufacturing Licenses
	 	X	 	 
	2.17

	 	Disposal of Waste
	 	X	 	 






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Technical Agreement Rev 1             5th April2005

Bioniche/Cumberland




	 	 	 	 	 	 	 
	 	 	 	 	BIONICHE	 	CUMBERLAND
	3.0

	 	TESTING & RELEASE OF FINISHED PRODUCT	 	 	 	 
	3.1

	 	Analysis of Product
	 	X	 	 
	3.2

	 	Certificate of Analysis for the Product
	 	X	 	 
	3.3

	 	Internal QP certification of the Product as per approved production
and control documents
	 	X	 	 
	3.4

	 	Final QP Release of the product to Cumberland
	 	X	 	 
	3.5

	 	Complaint	 	 	 	 
	 

	 	- Collection and Logging
	 	X
	 	X
	 

	 	- Investigation and Report Issue
	 	X	 	 
	 

	 	- Follow Up Corrective Action
	 	X	 	 
	 

	 	- Response to Customer
	 	 	 	X
	3.6

	 	Product Recall	 	 	 	 
	 

	 	- Decision to Initiate Recall
	 	X
	 	X
	 

	 	- Approval of Notification Wording
	 	X
	 	X
	 

	 	- Management of Recall
	 	X
	 	X
	 

	 	- Reconciliation of Returned Product
	 	X
	 	X
	3.7

	 	Liaison with Regulatory Authorities for Approval, Maintenance and
Updating Marketing Authorisations/Product Authorisations (NDA)
	 	 	 	X
	 
	 	 	 	 	 	 
	3.8

	 	Final Release to Market
	 	 	 	X






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     Technical Agreement Rev 1             5th April 2005 Bioniche/Cumberland



Exhibit II




Qualified Person

(14th January 2004)



Qualified Persons of Bioniche Teoranta




	 	 	 	 	 
	Mr. A. Hall       	 	 
	 	Signature :  /s/ Andrew Hall
 	 
	 	 	 
	 	 	 
	 



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SCHEDULE III




Territory 




The United States of America and all its possessions and territories




 









 





SCHEDULE IV




Approved Suppliers




[***]





 









 





Schedule V




Minimum Purchase Quantities




[Intentionally
omitted; Section 9 of the First Amendment to Manufacturing and Supply
Agreement for N-Acetylcysteine as set forth in Exhibit 10.3 to Form S-1 filed on May 1, 2007 (File No. 333-142535) incorporated by reference herein.]