EXHIBIT
10.40


CLINICAL SUPPLY AGREEMENT


THIS CLINICAL SUPPLY AGREEMENT
(the “Agreement”) is entered into as of the 1st day of June, 2006 (the “Effective Date”) by
and between SCHERING AKTIENGESELLSCHAFT, a German
corporation having a principal place of business at Müllerstraße 178, D-13342
Berlin, Germany (“Schering”) and SONUS PHARMACEUTICALS, INC., a Delaware corporation having a principal place of business at 22026
20th Avenue SE, Bothell, Washington 98021 (“Sonus”).  Schering and Sonus are referred to individually
as a “Party” and collectively as “Parties.”


WHEREAS,
Schering and Sonus have entered into a Collaboration and License Agreement
having an effective date of October 17, 2005 (the “License Agreement”) for the
development and commercialization of the Product in the Territory (each as
defined below);


WHEREAS,
pursuant to the License Agreement, Sonus has granted to Schering exclusive
rights to develop and commercialize the Product in the Territory, which rights
include, among other rights, the right to elect to make the Product and have
the Product made on its behalf;


 WHEREAS, Schering gave written notice of its
election to assume responsibility for manufacture and supply of Product on
March 2, 2006, but has not yet established internal or external manufacturing
capabilities for the Product, and the Parties desire that Sonus supply Schering
with clinical supplies of the  Product pursuant to the MSA (as defined
below) until Schering establishes such manufacturing capabilities; and


WHEREAS,
pursuant to Section 7.02 of the License Agreement, the Parties wish to provide
for each Party’s rights and responsibilities in connection with the clinical
supply of the Product to Schering by Sonus as set forth in the terms and
conditions of this Agreement.


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


1.             Definitions.


Capitalized terms used in
this Agreement (other than the headings of the Articles and Sections), whether
used in the singular or plural, shall have the meaning set forth below, or, if
not listed below, the meaning as designated in the text of this Agreement.


“Affiliate” means, with respect to any Person, any other
Person that directly or indirectly controls, is controlled by or is under
common control with such Person.  For the
purposes of this definition, a Person shall be deemed to control another Person
if such Person possesses the power to direct or cause the direction of the
management, business and policies of such Person, whether through ownership of
fifty percent (50%) or more of the voting securities of such Person, by
contract or otherwise.


“API”
or “Active Pharmaceutical Ingredient”
means any component of the Product that is intended to furnish pharmacological
activity or other direct effect in the diagnosis, cure, mitigation, treatment,
or prevention of disease, or to affect the structure or any function of the



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body of man or animals, but does not include
intermediates used in the synthesis of such ingredients.


“Certificate of Analysis”
means a certificate that accompanies each shipment of Product certifying that
the Product meets the Specifications.


“Certificate of Compliance”
means a certificate that accompanies each shipment of Product certifying that
the Product has been manufactured according to cGMP.


“cGMP” means current Good Manufacturing Practices regulations
promulgated by FDA, as they may be amended from time to time. cGMP also
includes published standards of FDA (or other standards of FDA that are
generally recognized within the United States pharmaceutical industry) that
relate to the testing, manufacturing, processing, packaging, holding or
distribution of drug substances and finished drugs.  cGMP also includes similar standards,
guidelines and regulations promulgated or otherwise required by the European
Commission, and published standards of the European Commission (and other
standards of the European Commission that are generally recognized within the
European pharmaceutical industry), including the Guide to Good Manufacturing
Practices for Medicinal Products as promulgated under European Directive
91/356/EEC, as amended from time to time, that relate to the testing,
manufacturing, processing, packaging, holding or distribution of drug substances
and finished drugs..


“Confidential Information”
means all information and materials regarded by the disclosing Party as
confidential (including, without limitation, information relating to the Sonus
Technology, as defined in the License Agreement) furnished by one Party to the
other pursuant to this Agreement and all information created or developed
during the course of the Parties’ collaboration hereunder, whether in oral,
written, graphic or electronic form. 
Confidential Information shall not include any information which the
receiving party can prove by competent evidence:


(a)           is now or hereafter
becomes, through no fault or failure to act on the part of the receiving Party,
generally known or available,


(b)           is known by the
receiving Party, without obligations of confidentiality, at the time of
receiving such information, as demonstrated by written evidence,


(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 without the aid, application or use of the
disclosing party’s Confidential Information, as demonstrated by written
evidence, or


(e)           is the subject of
written permission to disclose provided by the disclosing Party.


“Contract Manufacturing Agreement” means an agreement
between Sonus and a Third Party contract manufacturer regarding the manufacture
of all or part of the clinical supply of the



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Product.  For
the avoidance of doubt, the MSA and the Quality Agreement shall be considered
Contract Manufacturing Agreements.


“EU” means the countries of the European Union as constituted
from time to time.


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


“FD&C Act” means the United States Federal Food, Drug and
Cosmetic Act, as amended.


“Field” means all uses of the
Product for the diagnosis, prevention, treatment, cure or mitigation of all
disease states, conditions, disorders and indications in humans or in animals


“Investigator Sponsored Study” or “ISS”
means any clinical study with respect to the Product in the Field where the
sponsor of the study is a physician or group of physicians acting as
sponsor-investigator(s) and neither of the Parties nor any of their Affiliates
or sublicensees accept the role of sponsor or co-sponsor of such a study.


“MSA” means the Manufacturing and Supply Agreement between
Sonus and Gensia Sicor Pharmaceutical Sales, Inc. (now known as Sicor
Pharmaceuticals, Inc.), effective as of June 26, 2002.


“NDA” means New Drug Application, as described in FDA
regulations, 21 C.F.R. 50, including all amendments and supplements to the
application.


“NDA Support Trial” means any clinical study with respect to
the Product in the Field that will be part of the initial NDA (as defined in
the License Agreement) submission, excluding the Pivotal Trial (as defined in
the License Agreement).


“Product” means
the product known as TOCOSOL® Paclitaxel, as more particularly described in the
License Agreement.


“Quality Agreement” means the Quality Agreement for the
Manufacturing and Supply of Tocosol® Paclitaxel Injectable Emulsion between
Sonus and Sicor Pharmaceuticals, Inc., effective as of February 1, 2005.  A complete copy of the Quality Agreement is attached
hereto as Exhibit A.


“ROW” means all countries, territories and geographical areas
of the world, excluding the United States of America and its territories,
commonwealths and possessions.


“ROW Registrational Trial” means any clinical study with
respect to the Product in the Field that will be part of an application for
approval by any regulatory authority in the ROW.



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“Schering Sponsored Study” or “CSS”
means any non-registrational clinical study with respect to the Product in the
Field where the sponsor of the study is Schering or its Affiliates.


“Specifications”
means the regulatory, manufacturing, quality control and quality assurance
procedures, processes, practices, standards, instructions and any other
attributes that the Parties agree upon, or that are otherwise required, in
connection with the manufacture of the Product, as may be amended by the
Parties from time to time.  A complete
copy of the Specifications, as agreed by the Parties, is attached hereto as
Exhibit B.


“Term” has the
meaning specified in Section 6.1 of this Agreement.


“Territory”
means the entire world.


“Third Party”
means any entity other than Schering, Sonus or any of their Affiliates.


2.             Supply of Product


2.1          Clinical Supply.  Pursuant to the terms hereof,  Sonus shall, during the term of this Agreement,
manufacture, either by itself of through a Third Party, and supply to
Schering  clinical supply of the Product
necessary to support ISS, CSS, NDA Support Trials, ROW Registrational Trials,
and any other investigational study sponsored or conducted by Schering.


2.2          Quality
of Product. All Product manufactured and supplied to Schering by
Sonus hereunder shall comply with the Quality Agreement.


2.3          Supply
Approval.  Batches of Product
will be manufactured consistent with the MSA and as approved by the Steering
Committee.  Each Party agrees to adhere
to their respective pharmaceutical responsibilities concerning supply of
Product as set forth in the Agreement on Responsibility Defined Regarding
Manufacture and Quality Control attached hereto as Exhibit C.


2.4          Delivery/Risk
of Loss.  Sonus shall deliver
all quantities of the clinical supply of the Product purchased hereunder F.O.B.
the Product manufacturing point.  The
Product shall be packaged, labeled, stored, and shipped in a manner that assures
that the Product meets the Specifications upon delivery.  Each shipment of Product shall be accompanied
by a Certificate of Analysis, a Certificate of Compliance, and copies of the
manufacturing and packaging batch records.


2.5          Testing,
Acceptance and Rejection. 
Upon Schering’s receipt of each batch of clinical supply of the Product,
Schering or its designee shall have thirty (30) days to inspect such batch to
determine its compliance with the Specifications.  If Schering does not notify Sonus of Schering’s
rejection of a batch of said Product within such thirty (30) day period, such
Product shall be deemed accepted subject to Product warranties under Section
7.1.  If Schering rejects any batch of
Product (“Defective Product”), Sonus shall promptly notify Schering in writing
if it either:  (a) agrees with the
rejection, in which event Sonus shall promptly replace such Defective Product
with Product complying with the Specifications to the extent it is able to do
so under the



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MSA and shall request in writing that Schering either
return or destroy the rejected batch of Product at no additional cost to
Schering; or (b) dispute Schering’s rejection.  If Sonus disputes Schering’s rejection, then
the Parties shall engage a mutually acceptable Third Party laboratory to make a
final and binding determination if the rejection was proper.  The fees and expenses of such laboratory
testing shall be borne entirely by the Party against whom such findings are
made.  If such laboratory determines that
such batch of Product has not been reasonably rejected, then such batch shall
automatically be deemed to have been accepted by Schering, and if it has not
already done so, Schering will pay the amount for the batch of Product
initially rejected by Schering.  If such
laboratory determines that such batch of Product has been reasonably rejected,
or if Sonus agrees with Schering’s rejection, then Sonus shall promptly replace
such Defective Product with Product complying with the Specifications.


2.6          Schering Inspections and Information Rights.  Sonus agrees that Schering will
have access to Sonus’ facilities and any Third Party contract manufacturing
facilities (subject to any restrictions under any agreements between Sonus and
its Third Party contractors) at all reasonable times for purposes of inspecting
such facilities and monitoring activity relating to Sonus’ obligations under
this Agreement.


3.             Price and Payments.


3.1          Price.  The price for each batch of Product shall be
the cost of Product to Sonus for any Product manufactured by a Third Party and
shall include, but not be limited to, the purchase price paid to such Third
Party for Product, any actual costs incurred by Sonus under its Contract
Manufacturing Agreement with such Third Party, and costs incurred by Sonus for
API and excipients.


3.2          Payments.
 Sonus shall invoice Schering quarterly
in arrears for Product released by the manufacturer.  All payments due hereunder to Sonus shall be
paid in U.S. dollars not later than thirty (30) days following the receipt date
of the invoice.  Upon request, Sonus agrees
to promptly provide documentation that reasonably supports any amount invoiced
hereunder.  Schering will pay any and all
taxes (other than taxes based upon Sonus’ income), duties, assessments and
other charges and expenses imposed by any government authority in connection
with the delivery and sale of the Product to Schering.


3.3          Cost
Sharing.  Any cost sharing for
supply of Product provided for under Article V of the License Agreement
shall be reconciled quarterly as provided in the License Agreement.


4.             Regulatory


4.1          Regulatory
Inspections.  If a facility
that manufactures the Product is inspected by representatives of any
supra-national, national, federal, state or local regulatory agency in
connection with manufacture of the Product, Sonus shall notify Schering
promptly (by telephone and in writing) upon learning of such inspection, and
shall supply Schering with copies of any related correspondence or other
documentation, or portions thereof, in the possession of Sonus relating to the
Product.  Schering may send
representatives to such facilities and participate fully



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in any portion of such inspection, subject to
agreement by the Third Party manufacturer where such agreement by the Third
Party manufacturer is required.  Promptly
upon Sonus’ receipt thereof, Sonus shall provide Schering with a copy of any
regulatory letter or comments from any federal, state or local regulatory
agency in connection with the manufacture of the Product, including any Form
483 (Inspectional Observations) or warning letter.


4.2          Records.  Sonus shall keep complete,
accurate and authentic accounts, notes, data and records of the work performed
under this Agreement (including, without limitation, batch records for the
Product).  All such records relating to
the manufacture of the Product shall be maintained for such period of time as
may be required by applicable laws, rules or regulations and, in any event, for
a period of time not less than seven (7) years. 
Prior to the destruction of any record, Sonus shall give advance written
notice to Schering of Sonus’ intention to destroy any such record; Schering
shall then have the right to request, receive and retain such records with no
further compensation to Sonus.


5.             Confidentiality.  The Parties each agree that
the obligations of confidentiality, non-use and non-disclosure set forth in the
License Agreement are incorporated into this Agreement for purposes of
determining the Parties’ rights and obligations with respect to Confidential
Information disclosed by each Party under this Agreement.


6.             Term
And Termination


6.1          Term.  The term of this Agreement shall commence on
the Effective Date and shall continue until the earlier to occur of (i) Product
Launch (as defined in the License Agreement); or (ii) the effective date of termination
of the MSA.


6.2          Termination
for Cause.  Either Party may terminate this Agreement
(i) if the other Party is in material breach of this Agreement and such
breach is not cured within ninety (90) days following receipt by the breaching
Party of written notice from the other Party specifying the breach in
reasonable detail and demanding its cure; provided, however, that, if said
breach cannot be cured during such ninety (90) day period using diligent
efforts, the breaching Party shall be allowed an additional ninety (90) day
period to cure such breach provided  the breaching Party has commenced a cure promptly
after receipt of the aforementioned written notice from the other party and is
diligently pursuing completion of such cure; or (ii) if the other Party
experiences a Bankruptcy Event (as defined in the License Agreement).


6.3          Automatic
Termination.  This Agreement
shall automatically terminate effective on the effective date of any
termination of the License Agreement.


6.4          Effect
of Early Termination By Schering. 
In the event of a Bankruptcy Event or a material breach of this
Agreement by Sonus under Section 6.2 (which breach is not cured as provided
therein), Schering may elect to either (a) terminate this Agreement in its
entirety, or (b) continue to exercise its rights under this Agreement, in
which case Sonus shall:  (i) at
Schering’s request, assign and transfer to Schering Sonus’ rights and
obligations under any Contract Manufacturing Agreement(s) and take whatever
actions are reasonably required under such agreement(s) to effectuate such
assignment and transfer; (ii) provide Schering with access to



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Sonus’ facilities and personnel as reasonably required
by Schering to transition all manufacturing activity for the Product to
Schering, its Third Party contract manufacturers or any other designee; and
(iii) use diligent efforts to cooperate with Schering, its Third Party
contract manufacturers and any other designee to effect a prompt and orderly
transition to Schering of any activities being conducted by or on behalf of
Sonus.  Schering shall be entitled to set
off any reasonable expenses Schering incurs as a result of the early transition
of manufacturing responsibilities hereunder first, against any milestone
payments owed to Sonus under the License Agreement and, second, against any
royalties owed to Sonus under the License Agreement.


6.5          Surviving Obligations.  Termination or expiration of this Agreement
shall not affect any rights or obligations of either Party that may have
accrued up to the date of such termination or expiration.  In addition to any other remedies provided in
this Agreement, each Party may institute any other legal action or pursue any
other remedy against the other Party permitted by applicable law.  The rights and obligations set forth in this
Agreement shall extend beyond the expiration or termination of this Agreement
to the extent that the survival of such rights or obligations is necessary to
permit their complete fulfillment or discharge. 
Without limiting in any way the generality of the foregoing, the
following provisions of this Agreement, strictly and only in accordance with
their express terms, shall survive termination or expiration of this
Agreement:  Sections 1, 4.2, 5, 6.4, 6.5,
7.4, 7.5, 8, and 9.


7.             Representations, Warranties and Covenants.


7.1          Product
Warranty.  Sonus represents
and warrants that all Product supplied by it pursuant to this Agreement:  (a) shall be manufactured and packaged
in compliance with cGMP and other applicable laws, rules and regulations;
(b) shall conform to the Specifications in effect at the time of delivery;
(c) shall not be adulterated or misbranded within the meaning of the
FD&C Act, and (d) at the time of delivery, shall be free and clear of
any lien or encumbrance.


7.2          Qualified
Personnel.  Sonus shall engage
and employ only professionally qualified personnel to perform the services
contemplated hereunder.  Sonus represents
and warrants that it shall not use the services of any person in connection
with activities under this Agreement who has either been (a) debarred or
suspended under the FD&C Act, or (b) charged with a violation of any laws
or regulations relating to the regulation of any drug product under the
FD&C Act or any similar law or regulation in force in any country of the
Territory.


7.3          Compliance
with Laws.  Sonus represents
and warrants that it shall comply, and shall contractually require that it’s
Affiliates and Third Party contract manufacturers comply, with all applicable
laws, guidelines, regulations, rules and other requirements of any government
or any regulatory authority in performing its obligations hereunder.


7.4          Disclaimer of Warranties.  EXCEPT
FOR THE WARRANTIES SET FORTH IN SECTIONS 7.1, 7.2, AND 7.3 ABOVE, NEITHER PARTY
GRANTS, AND EACH PARTY HEREBY EXPRESSLY DISCLAIMS, ALL WARRANTIES OF ANY KIND,
EXPRESS, STATUTORY OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF
DESIGN, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE AND
NON-INFRINGEMENT OF THIRD PARTY RIGHTS.



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7.5          Limitation
of Liability.  Except for
liability for breach of Section 5, neither Party shall be entitled to recover
from the other Party any special, incidental, consequential or punitive damages
in connection with this Agreement or a Parties’ performance of its obligations
hereunder; provided, however, that this Section 7.5 shall not be construed
to limit either Party’s indemnification rights or obligations under Section 8.


8.             Indemnification.


8.1          Indemnification
by Sonus.  Sonus shall
indemnify, defend and hold Schering, its Affiliates and their officers,
directors, employees, and agents (the “Schering Indemnitees”) harmless from and
against any and all Third Party claims, suits, proceedings, damages, expenses
(including court costs and reasonable attorneys’ fees and expenses) and recoveries
(collectively, “Claims”) to the extent that such Claims arise out of, are based
on, or result from:  (a) allegations
by Third Parties that the use of the Product manufactured by or on behalf of
Sonus caused personal injury or death; (b) Sonus’ breach of its
obligations, representations or warranties under this Agreement; or
(c) the willful misconduct or negligent acts of Sonus or its directors,
officers, agents, and employees.  The
foregoing indemnity obligation shall not apply to the extent that any Claim
arises from, is based on, or results from: 
(i) the willful misconduct or negligent acts of any of the Schering
Indemnitees; or (ii) a breach by Schering of its obligations,
representations or warranties under the Agreement.


8.2          Indemnification by Schering.  Schering
shall indemnify, defend and hold Sonus and Sonus’ officers, directors,
employees, and agents (the “Sonus Indemnitees”) harmless from and against any
and all Claims to the extent that such Claims arise out of, are based on, or
result from: (a) Schering’s breach of its obligations, representations or
warranties under the Agreement; or (b) the willful misconduct or negligent
acts of any of the Schering Indemnitees. 
The foregoing indemnity obligation shall not apply to the extent that
any Claim arises from, is based on, or results from: (i) allegations by Third
Parties that the use of the Product manufactured by or on behalf of Sonus
caused personal injury or death; (ii) the willful misconduct or negligent
acts or omissions of any of the Sonus Indemnitees; or (iii) a breach by
Sonus of its obligations, representations or warranties under the Agreement.


8.3          Indemnification
Procedures.  A person or entity that intends to claim
indemnification under this Section 8 (the “Indemnitee”) shall promptly notify
the other Party (the “Indemnitor”) of any Claim in respect of which the
Indemnitee intends to claim such indemnification, and the Indemnitor shall
assume the defense thereof, with counsel reasonably satisfactory to the
Indemnitee, whether or not such Claim is rightfully brought; provided, however,
that an Indemnitee shall have the right to retain its own counsel, at its own
expense.  The indemnity agreement in this
Section 8 shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the consent of the Indemnitor, which consent
shall not be withheld or delayed unreasonably. 
The failure to deliver notice to the Indemnitor within a reasonable time
after the commencement of any such Claim, only to the extent prejudicial to its
ability to defend such action, shall relieve such Indemnitor of liability to
the Indemnitee under this Section 8, but the omission so to deliver notice to
the Indemnitor will not relieve it of any liability that it may have to any
Indemnitee otherwise than under this Section 8. 
The Indemnitee under this Section 8, its employees and agents, shall
reasonably cooperate with the Indemnitor



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and its legal representatives in the
investigations of any Claim covered by this indemnification.  Any actions taken or payments made by an
Indemnitor hereunder shall be without prejudice to the Indemnitor’s right to
contest the Indemnitee’s right to indemnification and subject to refund if the
Indemnitor is ultimately held not to be obligated to indemnify the Indemnitee.


9.             Miscellaneous.


9.1          Assignment.  Schering may assign any of its
rights or obligations under this Agreement in any country to any of its
Affiliates, provided that such assignment does not relieve Schering of its
obligations hereunder or otherwise result in a novation.  Except as expressly provided hereunder,
neither this Agreement nor any rights or obligations hereunder may be assigned
or otherwise transferred by either Party without the prior written consent of
the other Party, which consent shall not be unreasonably withheld.  Notwithstanding the foregoing, either Party
can sell, transfer or assign its rights under the Agreement to any Third Party
as part of a sale of all or substantially all of the assets of such Party or in
connection with a merger or consolidation; provided that such Third Party
expressly agrees in writing to assume and perform all of the duties and
obligations of such Party under this Agreement. The rights and obligations of
the Parties under this Agreement shall be binding upon and inure to the benefit
of the successors and permitted assigns of the Parties.  Any assignment not in accordance with this
Agreement shall be null and void, and of no legal effect.


9.2          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 (other than non-payment)
when such failure or delay is caused by or results from causes beyond the
reasonable control of the affected Party, including, but not limited to, fire,
floods, embargoes, war, acts of war (whether war be declared or not),
insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances, failures of Third Parties to supply materials or Products, acts
of God or acts, omissions or delays in acting by the other Party.


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


9.4          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.


9.5          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.


9.6          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



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personally, by overnight delivery
service addressed as follows:


	
   

  	
  If to Sonus:

  	
  Sonus Pharmaceuticals, Inc.

  
	
   

  	
   

  	
  22026 20th Avenue, S.E.

  
	
   

  	
   

  	
  Bothell, Washington 98021

  
	
   

  	
   

  	
  Attention: President

  
	
   

  	
   

  	
   

  
	
   

  	
  Copy to:

  	
  K. C. Schaaf, Esq.

  
	
   

  	
   

  	
  Stradling Yocca Carlson & Rauth

  
	
   

  	
   

  	
  660 Newport Center Drive, Suite 1600

  
	
   

  	
   

  	
  Newport Beach, CA 92660

  
	
   

  	
   

  	
  Telephone: (949) 725-4000

  
	
   

  	
   

  	
  Facsimile: (949) 725-4100

  
	
   

  	
   

  	
   

  
	
   

  	
  If to Schering:

  	
  Schering Aktiengesellschaft

  
	
   

  	
   

  	
  Müllerstraße 178

  
	
   

  	
   

  	
  13342 Berlin

  
	
   

  	
   

  	
  Germany

  
	
   

  	
   

  	
  Attn: Head of Legal department

  
	
   

  	
   

  	
   

  
	
   

  	
  Copy to:

  	
  Berlex Pharmaceuticals, an
  Operating Unit of Berlex, Inc.

  
	
   

  	
   

  	
  340 Changebridge Road

  
	
   

  	
   

  	
  Montville, New Jersey 07045

  
	
   

  	
   

  	
  Attn: Head of Oncology Global Business Unit

  
	
   

  	
   

  	
   

  
	
   

  	
  Copy to:

  	
  Berlex Pharmaceuticals, an
  Operating Unit of Berlex, Inc.

  
	
   

  	
   

  	
  340 Changebridge Road

  
	
   

  	
   

  	
  Montville, New Jersey 07045

  
	
   

  	
   

  	
  Attn: General Counsel

  



 


Either Party may by like notice specify or change an address
to which notices and communications shall thereafter be sent.  Notices sent by mail or overnight delivery
service shall be effective upon receipt, and notices given personally shall be
effective when delivered.


9.7          Independent Contractors.  It is expressly
agreed that Sonus and Schering shall be independent contractors and that the
relationship between the two Parties shall not constitute a partnership or
agency of any kind.  Neither Sonus nor
Schering 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.


9.8          Affiliates;
Subcontractors.  Each Party
may use Affiliates to perform such Party’s obligations under this Agreement;
provided, however, that such Party contractually binds such Affiliate to the
terms and conditions of this Agreement and the original Party guarantees the



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performance of its Affiliate.  Each Party shall have the right to engage Third
Party subcontractors or consultants to perform certain of its obligations under
this Agreement; provided, however, that such subcontractors or consultants are
contractually bound to the terms and conditions of this Agreement and the
original Party guarantees the performance of such subcontractor or consultants.


9.9          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.


9.10        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.  This Agreement supersedes and
terminates all prior agreements and understandings between the Parties with
respect to the subject matter hereof. 
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.


9.11        Headings.  The captions contained in this
Agreement are not a part of this Agreement, but are merely guides or labels to
assist in locating and reading the several articles hereof.


9.12        Publicity.  Schering and Sonus shall consult
with each other before issuing any press release with respect to this Agreement
or the transactions contemplated hereby and neither shall issue any such press
release or make any such public statement without the prior consent of the
other, which consent shall not be unreasonably withheld; provided, however, (i)
that a Party may, without the prior consent of the other Party, issue such
press release or make such public statement as may upon the advice of counsel
be required by law or the rules and regulations of the Nasdaq or any stock
exchange, or under applicable securities laws, if it has used reasonable
efforts to consult with the other Party prior thereto, and (ii) such consent
shall be deemed to have been given if the recipient of the press release or
public statement fails to respond to the other Party within forty-eight (48)
hours after the recipient’s receipt of such press release or public statement
delivered in accordance with the terms of Section 9.6.  No such consent of the other Party shall be
required to release information which has previously been made public.


9.13        Counterparts.  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.


9.14        Further Assurances.  Each Party
agrees to execute, acknowledge and deliver such further instructions, and to do
all such other acts, as may be necessary or appropriate in order to carry out
the purposes and intent of this Agreement.



 11
 









IN WITNESS WHEREOF,
the Parties hereto have caused this Agreement to be executed by their duly
authorized representatives on the day and year first above written.


 


	
  SCHERING AKTIENGESELLSCHAFT

  	
   

  	
  SONUS
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Joachim Schmidt 

  	
   

  	
  By:

  	
  /s/ Michael A. Martino

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Joachim Schmidt 

  	
   

  	
  Name: Michael A. Martino 

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Head R&D Quality and Operations

  	
   

  	
  Title: President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Dr. Michael Hildebrand  

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Dr. Michael Hildebrand  

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Head Global Pharmaceutical Development

  	
   

  	
   

  
							



 


 



 12















EXHIBIT A


QUALITY AGREEMENT FOR THE MANUFACTURING AND SUPPLY


OF TOCOSOL® PACLITAXEL INJECTABLE EMULSION


Between


Sonus
Pharmaceuticals, Inc.


And


Sicor
Pharmaceuticals, Inc.


(Effective as of
February 1, 2005)



 13
 









EXHIBIT B


FINISHED
PRODUCT SPECIFICATION


TOCOSOL®
PACLITAXEL INJECTABLE EMULSION, 10 mg/mL


 


	
  Test

  	
   

  	
  Description

  	
   

  	
  Specification

  
	
  Color and Appearance

  	
   

  	
  Visual

  	
   

  	
  White /off-white to pale yellow milky, opalescent
  liquid



  
	
  Paclitaxel ID Assay

  	
   

  	
  HPLC

  	
   

  	
  RT matches reference 

  9.0 — 11.0 mg/mL (90% to 110% of label claim)

  
	
  Paclitaxel Purity

  	
   

  	
  HPLC

  	
   

  	
  

  Degradation Products,% 

  NMT 0.8%                                                                                      Baccatin
  III 

  NMT 0.8%                                                                                      10-Deacetylpaclitaxel
  

  NMT 0.5%                                                                                      10-Deacetyl-7epipaclitaxel
  

  NMT 0.6%                                                                                      7-Epipaclitaxel
  

  For Information Only                                PEG
  Ester Side Chain 

   

  Impurities,% 

  For Information Only                                Cephalamannine
  

  For Information Only                                Paclitaxel
  C 

  For Information Only                                7
  Epi-Cephalomannine 

  For Information Only                                N
  Methyl Taxol C 

   

  NMT 0.1%                                                                                      Any
  Other 

  NMT 3.0%                                                                                      Total
  Degradants + Impurities + Any 

  Other

  
	
  Vitamin E ID Assay (Target)

  	
   

  	
  HPLC

  	
   

  	
  RT matches ref. 

  Report value 

  (70 — 90 mg/mL)

  
	
  TPGS ID Assay (Target)

  	
   

  	
  HPLC

  	
   

  	
  RT matches ref. 

  Report value 

  (40 — 60 mg/mL)

  
	
  Mean Particle Diameter

  	
   

  	
  Polarization
  Intensity

  Differential Scattering

  	
   

  	
  NMT 150 nm

  
	
  Distribution Limits 

  Particle% volume

  	
   

  	
  Diffraction

  	
   

  	
  1.261μm to 4.655μm, NMT 5% 

  > 4.655μm, None Detected

  
	
  pH

  	
   

  	
  H+ Electrode

  	
   

  	
  4.0 — 7.0

  
	
  Particulate Matter

  	
   

  	
  Microscopic
  Count

  	
   

  	
  NMT 3,000 > 10 μm (particles per
  container), and NMT 

  300 > 25 μm (particles per container)

  
	
  Volume in Container

  	
   

  	
  Volumetric

  	
   

  	
  Volume not less than labeled volume

  
	
  Sterility

  	
   

  	
  USP

  	
   

  	
  No microbial growth

  
	
  Endotoxin

  	
   

  	
  LAL

  	
   

  	
  < 0.4 EU/mg

  



 



 14
 









 


EXHIBIT C


Agreement on Responsibility
Defined


Regarding
Manufacture and Quality Control


Attachment C to
the Clinical Supply Agreement


between


SCHERING
AKTIENGESELLSCHAFT


(“SCHERING”)


and


SONUS
Pharmaceuticals Inc.


covering the
clinical supply of


TOCOSOL®
Paclitaxel



 15
 









    


	
   

  	
   

  	
  SONUS

  	
   

  	
  Schering

  
	
  I.  MATERIALS

  	
   

  	
   

  	
   

  	
   

  
	
  1.  STARTING MATERIALS  (without active ingredients)

  	
   

  	
   

  	
   

  	
   

  
	
  ·  Quality Specifications,
  Testing Standards

  	
   

  	
  x

  	
   

  	
   

  
	
  ·  Purchase

  	
   

  	
  x

  	
   

  	
   

  
	
  ·  Testing and release of starting
  materials supplied by third parties

  	
   

  	
  x

  	
   

  	
   

  
	
  ·  Retention of reserve samples

  	
   

  	
  x

  	
   

  	
   

  
	
  ·  Shipment responsibility

  	
   

  	
  x

  	
   

  	
   

  
	
  2. ACTIVE PHARMACEUTICAL INGREDIENTS

  	
   

  	
   

  	
   

  	
   

  
	
  ·  Quality Specifications,
  Testing Standards

  	
   

  	
  x

  	
   

  	
   

  
	
  ·  Purchase

  	
   

  	
  x

  	
   

  	
   

  
	
  ·  Testing and release of active pharmaceutical
  ingredient(s) supplied by third parties

  	
   

  	
  x

  	
   

  	
   

  
	
  ·  Retention of batch
  documentation

  	
   

  	
  x

  	
   

  	
   

  
	
  ·  Retention of reserve samples

  	
   

  	
  x

  	
   

  	
   

  
	
  ·  Shipment responsibility

  	
   

  	
  x

  	
   

  	
   

  
	
  3. PACKAGING MATERIALS

  	
   

  	
   

  	
   

  	
   

  
	
  A. Primary
  Packaging

  	
   

  	
   

  	
   

  	
   

  
	
  ·  Quality Specifications,
  Testing Standards

  	
   

  	
  x

  	
   

  	
   

  
	
  ·  Purchase

  	
   

  	
  x

  	
   

  	
   

  
	
  ·  Approval of master for printed packaging  materials

  	
   

  	
  x

  	
   

  	
  x

  
	
  ·  Testing and release of packaging
  materials

  	
   

  	
  x

  	
   

  	
   

  
	
  ·  Retention of batch
  documentation

  	
   

  	
  x

  	
   

  	
   

  
	
  ·  Retention of reserve samples

  	
   

  	
  x

  	
   

  	
   

  
	
  B. Secondary Packaging

  	
   

  	
   

  	
   

  	
   

  
	
  ·  Quality Specifications,
  Testing Standards

  	
   

  	
   

  	
   

  	
  x

  
	
  ·  Purchase

  	
   

  	
   

  	
   

  	
  x

  
	
  ·  Testing and release of packaging
  materials

  	
   

  	
   

  	
   

  	
  x

  
	
  ·  Retention of batch
  documentation

  	
   

  	
   

  	
   

  	
  x

  
	
  ·  Retention of reserve samples

  	
   

  	
   

  	
   

  	
  x

  



 



 16
 









 


	
  4. BULK  PRODUCT

  	
   

  	
   

  	
   

  	
   

  
	
  ·  Quality Specifications,
  Testing Standard

  	
   

  	
  x

  	
   

  	
   

  
	
  ·  Retention of reserve samples

  	
   

  	
  x

  	
   

  	
   

  
	
  ·  Shipment responsibility

  	
   

  	
  x

  	
   

  	
   

  
	
  5. FINISHED PRODUCT

  	
   

  	
   

  	
   

  	
   

  
	
  ·  Bill of materials

  	
   

  	
  x

  	
   

  	
   

  
	
  ·  Quality Specifications,
  Testing Standard

  	
   

  	
   

  	
   

  	
  x

  
	
  ·  Identity testing and release of Bulk product supplied by SONUS

  	
   

  	
   

  	
   

  	
  x

  
	
  ·  Retention of reserve samples

  	
   

  	
   

  	
   

  	
  x

  
	
  ·  Follow-up-Stability

  	
   

  	
  x

  	
   

  	
   

  
	
  ·  Certificate of Analysis

  	
   

  	
  x

  	
   

  	
   

  
	
  ·  Certificate of Compliance

  	
   

  	
  x

  	
   

  	
   

  
	
  II. PROCESSES, PROCEDURES

  	
   

  	
   

  	
   

  	
   

  
	
  6. BULK PRODUCTION

  	
   

  	
   

  	
   

  	
   

  
	
  ·  Processing Instructions

  	
   

  	
  x

  	
   

  	
   

  
	
  ·  In-process controls

  	
   

  	
  x

  	
   

  	
   

  
	
  ·  Testing and release of Bulk
  product

  	
   

  	
  x

  	
   

  	
   

  
	
  ·  Retention of original batch
  documentation

  	
   

  	
  x

  	
   

  	
   

  
	
  ·  Copy of batch
  documentation

  	
   

  	
   

  	
   

  	
  x

  
	
  7. PACKAGING

  	
   

  	
   

  	
   

  	
   

  
	
  ·  Packaging instructions

  	
   

  	
  x

  	
   

  	
   

  
	
  ·  Filling in primary packaging
  materials including IPC

  	
   

  	
  x

  	
   

  	
   

  
	
  ·  Labeling of primary packaging
  materials including IPC

  	
   

  	
  x

  	
   

  	
  x

  
	
  ·  Packaging in secondary packaging
  material including IPC

  	
   

  	
   

  	
   

  	
  x

  
	
  ·  Labeling of secondary packaging
  material including IPC

  	
   

  	
   

  	
   

  	
  x

  
	
  ·  Packaging of
  Product for distribution

  	
   

  	
   

  	
   

  	
  x

  
	
  ·  Testing and final release for clinical
  trials

  	
   

  	
   

  	
   

  	
  x

  
	
  ·  Distribution to clinical trial sites

  	
   

  	
   

  	
   

  	
  x

  



 



 17
 









 


	
  8. COMPLAINTS

  	
   

  	
   

  	
   

  	
   

  
	
  ·  Registration of complaints

  	
   

  	
   

  	
   

  	
  x

  
	
  ·  Investigation of complaints

  	
   

  	
  x

  	
   

  	
  x

  
	
  ·  Corrective actions

  	
   

  	
  x

  	
   

  	
  x

  
	
  ·  Answer to complainant

  	
   

  	
   

  	
   

  	
  x

  
	
  ·  Documentation

  	
   

  	
  x

  	
   

  	
  x

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9. OTHERS

  	
   

  	
   

  	
   

  	
   

  
	
  ·  Shipment instructions

  	
   

  	
   

  	
   

  	
  x

  



 


 



 18