EX-10.9 KRISTALOSE AGREEMENT



 





EXHIBIT 10.9




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

treatment which has been filed separately with the SEC.




KRISTALOSE AGREEMENT




Between




CUMBERLAND PHARMACEUTICALS INC.




And




INALCO BIOCHEMICALS, INC.




And




INALCO S.P.A.




APRIL 2006




 









 





TABLE OF CONTENTS




	 	 	 	 	 
	1. DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	2. REGULATORY APPROVAL, MARKETING AND DISTRIBUTION
	 	 	6	 
	 
	 	 	 	 
	3. TERM AND TERMINATION
	 	 	16	 
	 
	 	 	 	 
	4. PAYMENTS
	 	 	18	 
	 
	 	 	 	 
	5. CONFIDENTIALITY
	 	 	20	 
	 
	 	 	 	 
	6. PROTECTION AND OWNERSHIP OF INTELLECTUAL PROPERTY 
	 	 	22	 
	 
	 	 	 	 
	7. REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
	 	 	23	 
	 
	 	 	 	 
	8. GENERAL 
	 	 	27	 
	 
	 	 	 	 
	9. ARBITRATION 
	 	 	29	 
	 
	 	 	 	 
	EXHIBIT A — Minimum Purchases 
	 	 	 	 
	 
	 	 	 	 
	EXHIBIT B — Patents
	 	 	 	 
	 
	 	 	 	 
	EXHIBIT C — Transition Plan
	 	 	 	 
	 
	 	 	 	 
	EXHIBIT D — Specifications
	 	 	 	 
	 
	 	 	 	 
	EXHIBIT E — Adverse Event Reporting
	 	 	 	 






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THIS AGREEMENT, by and among CUMBERLAND PHARMACEUTICALS INC. (“CUMBERLAND”), a corporation
organized and existing under the laws of the State of Tennessee, U.S.A., with its principal place
of business located at 2525 West End Avenue, Suite 950, Nashville, Tennessee, U.S.A., 37203, and
INALCO BIOCHEMICALS, INC., a corporation organized and existing under the laws of California, with
its principal place of business located at 3440 Empresa Drive, Suite A, San Luis Obispo,
California 93401 (“INALCO U.S.”), and INALCO S.p.A., a corporation organized and existing under
the laws of Italy, with its principal place of business located at Via Calabiana 18, 20139 Milan,
Italy (“INALCO ITALY”) (INALCO U.S. and INALCO ITALY are hereinafter collectively referred to as
“INALCO”) is entered into as of the day of April, 2006 (the “Execution Date”).




RECITALS



WHEREAS, INALCO is negotiating the acquisition of the Kristalose Trademark from Mylan Laboratories
Inc. and this Agreement is conditional upon the successful acquisition of the Kristalose
Trademark;



WHEREAS, INALCO owns or has the right to use all Intellectual Property Rights related to the
Product (each as defined herein);



WHEREAS, CUMBERLAND is a pharmaceutical company with capabilities in the marketing, development,
registration and distribution of various pharmaceutical products in the Territory;



WHEREAS, INALCO has obtained and is willing to seek all necessary regulatory approvals for the
marketing and distribution of the Product in the Territory (as defined herein);



WHEREAS, CUMBERLAND wishes to acquire the exclusive distribution and marketing rights to the
Product in the Territory, in accordance with and subject to the terms and conditions set forth in
this Agreement;



WHEREAS, INALCO is willing to grant an exclusive license to CUMBERLAND to market and distribute
the Product in the Territory;



NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, it is
agreed by the parties 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.




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	1.2	 	Agreement shall mean this Agreement and all instruments supplemental hereto or in
amendment or confirmation hereof; “herein”, “hereof”, “hereto”, “hereunder” and similar
expressions mean and refer to this Agreement and not to any particular Article, Section,
Subsection or other subdivision; “Article”, “Section”, “Subsection” or other subdivision of
this Agreement means and refers to the specified Article, Section, Subsection or other
subdivision of this Agreement.
	 
	1.3	 	ANDA shall mean any Abbreviated New Drug Application covering the Product and filed
with the FDA pursuant to the U.S. Federal Food, Drug, and Cosmetic Act, as amended, or any
regulations thereunder.
	 
	1.4	 	Calendar Quarter shall mean each three (3) month period ending March 31, June 30,
September 30, and December 31.
	 
	1.5	 	Certificate of Analysis means a document which is signed and dated by a duly
authorized representative of INALCO certifying that the Product conforms with the Product
Specifications.
	 
	1.6	 	Competent Authority shall mean each and every Governmental Body from which approvals
are required for the manufacture, marketing, distribution or sale of the Product within the
Territory.
	 
	1.7	 	Confidential Information shall have the meaning set forth in Subsection 5.1(A) hereof.
	 
	1.8	 	Delivery Date is the date of delivery for Products agreed to by the parties.
	 
	1.9	 	Effective Date shall mean the date on which an authorized representative of INALCO
certifies in a writing delivered to CUMBERLAND that INALCO has met all requirements in order
to transfer exclusive marketing and distribution rights to the Product in accordance with this
Agreement, including without limitation, obtaining all rights to the Trademarks from Mylan
Pharmaceuticals, Inc.; provided that such certificate must be in a form reasonably
satisfactory to CUMBERLAND.
	 
	1.10	 	FDA shall mean the U.S. Food and Drug Administration.
	 
	1.11	 	Governmental Body shall mean (i) any domestic or foreign national, federal,
provincial, state, municipal or other government or body, (ii) any international or
multilateral body, (iii) any subdivision, ministry, department, secretariat, bureau, agency,
commission, board, instrumentality or authority of any of the foregoing governments or
bodies, (iv) any quasi-governmental or private body exercising any regulatory, expropriation
or taxing authority under or for the account of any of the foregoing governments or bodies,
or (v) any domestic, foreign, international, multilateral, or multinational judicial,
quasi-judicial, arbitration or administrative court, grand jury, tribunal, commission, board
or panel.
	 
	1.12	 	Independent Analyst is an analyst which is acceptable to the parties for the purposes
of
Sections 2.7(C) or 2.10.




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	1.13	 	Intellectual Property Rights shall mean whether or not reduced to writing, all
discoveries, inventions, all rights to inventions, patents, patent applications and issued
patents, data, including patient records, proprietary formulation, non-clinical and clinical
data, FDA registrations, market information and plans, designs, design applications and design
registrations, trade marks, trade mark applications, trade mark registration, trade names,
trade dresses, service marks, logos (whether registered or unregistered), copyright, copyright
applications and registrations, and all other rights and intellectual property relating to the
Product now or hereafter owned, held or used by INALCO or any of its Affiliates or
Subsidiaries; without limiting the generality of the foregoing, Intellectual Property Rights
shall include the Patent Rights, the Trademarks, the Know-How (each as defined herein) and all
other rights and intellectual property now or hereafter owned, held or used by INALCO or any
of its Affiliates or Subsidiaries.
	 
	1.14	 	Know-How shall mean all know-how, information, data, knowledge, discoveries, trade
secrets, works, data, analytical reference materials and confidential or proprietary processes
relating to the Product or to the manufacturing, distribution or sale of the Product in the
Territory, and other information relating to the Product, owned or developed by, in the
possession of, known to or used by INALCO or its Affiliates or Subsidiaries prior to the
Effective Date. Without limiting the generality of the foregoing, Know-How shall include all
techniques, technology, processes, and know-how related to production and purification of the
Product, including systems for fully processing and purifying the Product; types and
configuration of processing equipment; lists of suppliers, customers and prospective
customers; market research data and reports, customer segmentation reports, detail pieces and
any other marketing information relating to Product; development plans; methods of operation
and management; cost control methods of setting prices; reporting methods; quality assurance
programs; information systems; training manuals; databases; production solutions; financial
information; and all other trade secrets of INALCO.
	 
	1.15	 	Labels shall mean all labels and packaging and other written, printed, or graphic
matter approved by the Competent Authority upon or containing: (i) the Product or any
packaging, container or wrapper utilized with the Product, and (ii) any written material
accompanying the Product, including without limitation, package inserts, produced by INALCO
with CUMBERLAND’s prior written approval.
	 
	1.16	 	Laws shall mean:






	 	(i)	 	all constitutions, treaties, laws, statutes, codes, ordinances, orders,
decrees, rules, regulations, and municipal by-laws, whether domestic, foreign or
international;
	 
	 	(ii)	 	all judgments, orders, writs, injunctions, decisions, rulings, decrees, and
awards of any Governmental Body; and
	 
	 	(iii)	 	all policies, practices and guidelines of any Governmental Body;






	 	 	in each case binding on or affecting the party or Person referred to in the context in




3









 






	 	 	which such word is used; and “Law” shall mean any one of them.






	1.17	 	Listing means obtaining approval from the relevant pricing authority in the
Territory to qualify the Product for price reimbursement and/or (as appropriate) obtaining
formulary listing approval in the Territory.
	 
	1.18	 	Minimum Purchases shall mean the minimum number of
commercial pouches of the Product that CUMBERLAND must purchase, as set forth in Exhibit A.
	 
	1.19	 	Mylan shall have the meaning set forth in Section 2.5(A).
	 
	1.20	 	Net Sales shall mean the aggregate amount billed by CUMBERLAND for the sale of the
Product, less returns, buying group chargebacks, group purchasing organization administrative
fees, managed care organization rebates, sales/purchasing discounts, prompt payment
discounts, federally mandated discounts or rebates, state medical assistance program rebates
and discounts, adjustments for quantities shipped, and other discounts and fees, all as
determined on an accrual basis.
	 
	1.21	 	Order is defined in Section 2.6(C).
	 
	1.22	 	Patent Rights shall mean all issued patents and patent applications relating to the
Product in the Territory, whether owned by INALCO or its Affiliates or Subsidiaries and/or
made available in any other way to INALCO or its Affiliates or Subsidiaries, including those
listed in Exhibit B hereto, and every divisional, continuation, continuation-in-part,
substitution and confirmation application based thereon, and any reissue or extension based
on any of the foregoing.
	 
	1.23	 	Person shall mean an individual, corporation, company, co-operative, partnership,
organization or any similar entity.
	 
	1.24	 	Product shall mean INALCO’s pharmaceutical product lactulose crystals sold under the
Kristalose® trademark or any other trademark agreed by the parties, containing the
Label and packaged for sale in 10-gram and 20-gram pouches and all other strengths and dosage
forms.
	 
	1.25	 	Product Drug Master File shall mean all confidential reference files submitted to the
FDA or other applicable Competent Authorities in the Territory for use in the review of the
ANDA or in connection with obtaining or maintaining Regulatory Approval for the Product in the
Territory.
	 
	1.26	 	Product Payments shall have the meaning set forth in Section 4.3.
	 
	1.27	 	Product Specifications means the specifications contained in Exhibit D or any
later approved specification of the Products by the Competent Authority in the Territory which
may also include specifications for packaging material, labeling and product information.
	 
	1.28	 	Regulatory Approval(s) shall mean all approvals, licenses, registrations, or
authorizations




4









 






		 	of any Competent Authority necessary for the manufacturing, marketing, distribution and/or
sale of the Product in the Territory.
	 
	1.29	 	Royalty Payment shall have the meaning set forth in Section 4.2.
	 
	1.30	 	Subcontractor shall mean a Third Person to whom either party hereto has delegated
responsibilities under this Agreement.
	 
	1.31	 	Subsidiaries shall mean any and all existing and future subsidiaries of Inalco S.p.A.
and/or Inalco Biochemicals, Inc. and their Affiliates, or of Cumberland Pharmaceuticals Inc.
and its Affiliates.
	 
	1.32	 	Term shall mean the term of this Agreement, as set forth in Section 3.1.
	 
	1.33	 	Territory shall mean the U.S., subject to potential modifications pursuant to Section
4.2, Exhibit A, and the following understandings:






	 	(a)	 	As of the Effective Date of this Agreement, INALCO does not have Regulatory
Approval for the Product in Canada.
	 
	 	(b)	 	INALCO cannot guarantee that Regulatory Approval will be granted for the
Product in Canada.
	 
	 	(c)	 	CUMBERLAND and INALCO agree to cooperate reasonably to determine the
feasibility of and develop a strategy for registering and commercializing the Product
in Canada. Upon mutual agreement between INALCO and CUMBERLAND that commercialization
of the Product in Canada is justified, INALCO will act in good faith in order to obtain
the Regulatory Approvals required to register the Product in Canada, and at such time
as the Regulatory Approvals are obtained, the Territory shall be deemed to include
Canada.
	 
	 	(d)	 	In the event that Regulatory Approval in Canada is granted and CUMBERLAND is
not actively marketing and distributing the Product in Canada (as evidenced by its
distribution of the Product in such country or by entering into an agreement with a
Subcontractor to market and distribute the Product) within two (2) years of the date of
issuance of Regulatory Approval for the Product in Canada, then INALCO has the right to
remove Canada from the defined Territory upon ninety (90) days written notice to
CUMBERLAND.






	1.34	 	Third Person shall mean any Person other than one of the parties hereto or an
Affiliate or Subsidiary of one of the parties hereto.
	 
	1.35	 	Trademarks shall mean all trademarks, trademark applications and registrations, trade
names, trade dresses, service logos and other designations of origin owned by INALCO or its
Affiliates or Subsidiaries pursuant to Section 6 and used on or in connection with the
Product, whether registered or not, including without limitation,
Kristalose®.
	 
	1.36	 	U.S. shall mean the United States of America and each of its territories and
possessions.




5









 












	1.37	 	Valid Claim shall mean, with respect to the Patent Rights; (i) a claim of an issued
and unexpired patent that has not been revoked or held unenforceable or invalid by a decision
of a court or other Governmental Body of competent jurisdiction, unappealable or unappealed
within the time allowed for appeal, and which has not been disclaimed, denied or admitted to
be invalid or unenforceable through reissue, disclaimer or otherwise; or (ii) a claim included
in a pending patent application that is actively prosecuted and which has not been cancelled,
withdrawn, finally determined to be unallowable by the applicable Governmental Body pursuant
to an unappealable decision and/or abandoned in accordance with the terms hereof.
	 
	1.38	 	Year shall mean the twelve (12) month period commencing on the first date that INALCO
delivers an order of Product to CUMBERLAND pursuant to this Agreement, and each twelve month
period beginning on the anniversary thereof.





2. REGULATORY APPROVAL, MARKETING AND DISTRIBUTION





	2.1	 	Regulatory Approval. INALCO shall, at INALCO’s expense, secure with the least
possible delay, and maintain Regulatory Approval for the Product from all relevant Competent
Authorities in the Territory, and fulfill any reasonable additional requirements for approval
from the Competent Authorities in the Territory. All registrations and approvals obtained
shall be the sole and exclusive property of INALCO. INALCO agrees to provide additional
information in its possession or control to support CUMBERLAND in answering or attending to
any queries or requests of the Competent Authorities in relation to the Product.
	 
	2.2	 	Know-How. INALCO hereby grants to CUMBERLAND, and CUMBERLAND hereby accepts, an
exclusive license to use the Know-How to the extent reasonably required by CUMBERLAND in
order to market, distribute, advertise, promote and sell the Product in the Territory in
accordance with and subject to the terms and conditions set forth herein.
	 
	2.3	 	Trademarks. INALCO is negotiating the acquisition of the Kristalose Trademark from
Mylan Laboratories Inc. and this Agreement is conditional upon the successful acquisition of
the Kristalose Trademark. INALCO hereby grants to CUMBERLAND, and CUMBERLAND hereby accepts,
an exclusive license to use the Trademarks on the Product and in connection with the
marketing, advertisement, promotion, distribution and sale of the Product in the Territory
during the Term. In order to have authority to grant such license to CUMBERLAND, INALCO
agrees to obtain all rights to the Trademarks from Mylan Pharmaceuticals, Inc., prior to the
Effective Date hereof.
	 
	2.4	 	Patent Rights. INALCO hereby grants to CUMBERLAND, and CUMBERLAND hereby accepts, an
exclusive license to the Patent Rights for purposes of marketing, distribution, and sale of
the Product in the Territory during the Term.
	 
	2.5	 	Certain Responsibilities of INALCO.




6









 












	 	A.	 	Transition Plan. Prior to the Effective Date, INALCO will submit to
CUMBERLAND for consideration a transition plan for Mylan Pharmaceuticals Inc. (“Mylan”)
to transfer commercial responsibilities for the Product to CUMBERLAND, which plan will
include accurate and complete customer lists, customer data, customer contracts, and
market, financial and other information relating to the Product, as well as provisions
for transitioning Product inventory, Product returns and chargebacks processing,
government reporting, and regulatory reporting. The transition plan will also include
Mylan’s commitment to processing and payment of rebates, returns and chargebacks for
Product sold by Mylan. The transition plan shall also include Mylan’s commitment to
provide information necessary to comply with the CMS Medicaid Drug Rebate Program
Release Number 48, which requires that a termination date be supplied equal to the shelf
life of the last lot sold under the old NDC number, as well as pricing data extending
four (4) Calendar Quarters beyond the shelf life. The transition plan shall be finalized
after INALCO and CUMBERLAND agree to any amendments thereto, and in any event, the
parties hereto agree to finalize the transition plan on or before the thirtieth
(30th) day after the Effective Date. The transition plan shall be attached
hereto as Exhibit C when it is completed and shall be a part of this Agreement
effective as of the date thereof. INALCO shall complete all of its responsibilities
under the transition plan. At all times until such transition plan has been completed,
INALCO shall make best efforts to resolve any outstanding items in the transition plan
as promptly as possible.
	 
	 	B.	 	Exclusive Appointment. INALCO hereby appoints CUMBERLAND as exclusive
(even as to INALCO) distributor, marketer, advertiser, promoter, and seller of the
Product in the Territory during the Term. INALCO will not without
CUMBERLAND‘s prior written approval, itself promote, sell or distribute, nor
appoint nor allow any third party to promote, sell or distribute in the Territory any
presentation of the Product nor any product which competes with the Product; provided
that INALCO may make sales in the Territory of its liquid lactulose products in
existence as of the date hereof. INALCO will ensure that its Affiliates and licensees do
not supply the Products to any other party which it knows, or has reasonable grounds for
suspecting, will store, promote, sell or distribute the Products in or to the Territory.
	 
	 	C.	 	Maintenance of Patent Rights and Trademark. INALCO shall diligently
prosecute and maintain Patent Rights and the Trademarks at its own expense throughout
the Territory in accordance with Article 6.
	 
	 	D.	 	Supply of the Product. INALCO shall manufacture, package or have
packaged, and supply the Product to CUMBERLAND for resale during the Term. Except as
otherwise set forth in the transition plan pursuant to Section 2.5(A) for the first
one-hundred-twenty (120) days of the Term, INALCO shall manufacture, label, store, and
ship the Product with existing packaging from Mylan. At the end of one hundred twenty
(120) days or sooner pursuant to the written agreement of both parties hereto, INALCO
shall manufacture, label, store, and ship the Product with packaging designed by
CUMBERLAND. INALCO shall deliver the Product to CUMBERLAND in finished packages that
shall include the CUMBERLAND NDC number and logo.
	 
	 	E.	 	Provide Promotional Pouches. INALCO shall provide up to 1,000,000
promotional pouches of Product to CUMBERLAND per Year upon request at a price per pouch
as




7









 






	 	 	 	set forth in Section 4.3 for Promotional Unit Payments. In the event that CUMBERLAND
identifies the need for additional promotional pouches in any given Year, the parties
agree to negotiate in good faith regarding the price and delivery of such additional
pouches.
	 
	 	F.	 	Product Specifications. INALCO shall manufacture all Product in
compliance with (i) the Product DMF as submitted to the FDA, (ii) the FDA’s Good
Manufacturing Practices, as promulgated under the U.S. Food, Drug and Cosmetic Act, as
amended, (iii) the Abbreviated New Drug Application for the Product, (iv) the Patent
Rights, and (v) all other applicable Laws, requirements and regulations of the FDA or
other applicable Competent Authorities. In no event will INALCO implement any alteration
(that requires approval of the Competent Authority) to the materials or processes
described in the Drug Master File in relation to any of the Products supplied to
CUMBERLAND under this Agreement until INALCO has provided reasonable prior written
notice of such alteration to CUMBERLAND and the Competent Authority in the Territory has
approved all requisite amendments to the applicable Regulatory Approval. INALCO will not
change the Product Specifications during the Term without CUMBERLAND’s prior written
consent. INALCO shall provide for or arrange on-site inspections of each of the
facilities related to manufacturing or packaging the Product at least one time per year
by authorized representatives of CUMBERLAND at any time during regular business hours
and shall provide all reasonably requested information to confirm that the Product is
manufactured and packaged in accordance with the Specifications.
	 
	 	G.	 	Fulfillment of Regulatory Requirements. INALCO shall maintain all
Regulatory Approvals for the Product required to enable the Product to be sold in the
Territory at its own expense. INALCO shall maintain and fulfill all applicable
regulatory requirements with respect to the Product, including reporting and
pharmacovigilance in the Territory, and shall fully cooperate with CUMBERLAND to fulfill
and meet all requirements imposed by applicable law. INALCO shall inform CUMBERLAND of
any governmental submissions relating to the Product.
	 
	 	H.	 	Adverse Events. INALCO shall promptly notify CUMBERLAND of any event that
materially affects or could materially affect the marketing of the Product. With respect
to adverse events, the parties hereto shall report such events to Competent Authorities
per Exhibit E, Adverse Event Reporting.
	 
	 	I.	 	Additional Markets. At any time during the Term, CUMBERLAND may notify
INALCO of its interest in distributing the Product in a country outside of the Territory
for which INALCO does not, as of the date of such notice, already have a distribution
arrangement in effect or pending, as evidenced by a fully executed letter of intent. For
up to ninety (90) days after providing such notice, the parties hereto shall negotiate
in good faith toward developing an agreement for marketing and distribution rights for
the Product in the relevant country(ies).
	 
	 	J.	 	Delivery of Product. INALCO shall deliver Product to Cumberland in a
timely manner and in compliance with specifications for the Product and its packaging in
accordance with Section 2.11, et seq.




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	2.6	 	Certain Responsibilities of CUMBERLAND.






	 	A.	 	Marketing Plans. Within sixty (60) days after the Effective Date,
CUMBERLAND shall provide INALCO with a summary of marketing plans for the Product in
the Territory, including five (5) year sales forecasts. CUMBERLAND shall provide
updated marketing plans thereafter on an annual basis.
	 
	 	B.	 	Package Design. Except as otherwise set forth in Section 2.5(D),
CUMBERLAND, at its expense, shall design all labeling and exterior packaging to be
used on the Product. CUMBERLAND shall provide such package designs to INALCO within
thirty (30) days of the Effective Date. In the event of a change in the package design
for the Product, CUMBERLAND shall notify INALCO of the package design at least one
hundred fifty (150) days prior to its required use thereof. All labeling and packaging
designs for the Product must be in compliance with the rules and regulations of all
Competent Authorities. CUMBERLAND shall not implement any changes in labeling and
packaging for the Product unless CUMBERLAND has INALCO’s prior written consent, not to
be unreasonably withheld or delayed. INALCO and CUMBERLAND agree to work together to
minimize cost increases related to packaging design changes.
	 
	 	C.	 	Purchase Orders. CUMBERLAND shall submit to INALCO a purchase order
setting forth the quantity of Product ordered, Delivery Date, destination, and any
other delivery instructions at least ninety (90) days in advance of its requested
Delivery Date for such purchase order. INALCO will respond to CUMBERLAND promptly
after receipt of any purchase order, and each such response shall (i) accept the
Delivery Date or (ii) reject the Delivery Date and propose an alternative Delivery
Date. When such a purchase order for Product is accepted in writing or by facsimile,
it shall become binding upon INALCO and CUMBERLAND, and shall not be changed or
cancelled by CUMBERLAND without written approval of INALCO. Such approval shall not be
unreasonably withheld or delayed.
	 
	 	D.	 	Rolling Forecasts. Within thirty (30) days after the Effective Date,
and every thirty (30) days thereafter, CUMBERLAND shall complete and provide INALCO a
twelve (12) month rolling forecast of its projected monthly purchases of the Product
and shall adjust them thereafter on a monthly basis.
	 
	 	E.	 	Minimum Purchases. CUMBERLAND agrees to meet Minimum Purchases
annually in accordance with Exhibit A.
	 
	 	F.	 	Sales Reports. Within thirty (30) days after each month in which
CUMBERLAND sells any Product to a third party, CUMBERLAND shall prepare and provide
INALCO with a monthly sales report for the Product.
	 
	 	G.	 	Compliance. CUMBERLAND shall market, distribute, and sell the Product
in the Territory in accordance with applicable Laws.




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	 	H.	 	Adverse Drug Experiences. CUMBERLAND shall provide reasonable
cooperation and assistance to INALCO in the investigation of complaints and adverse
events with respect to the Product (see Exhibit E). Each party will bear its
own expenses associated with its duties set forth in Exhibit E.
	 
	 	I.	 	Interaction with DDMAC. CUMBERLAND shall be responsible for
interacting with the FDA Division of Drug Marketing, Advertising and Communication
regarding the Product.
	 
	 	J.	 	Formulary Listings. CUMBERLAND shall be responsible for filing and
maintaining Listings to obtain formulary listing approval from states or localities in
the Territory.
	 
	 	K.	 	Rebate and Managed Care Programs. CUMBERLAND shall have administrative
responsibility for the Product in any rebate and managed care programs through which
the Product is made available in the Territory.
	 
	 	L.	 	Product Returns. CUMBERLAND shall be responsible for administering
returns, discounts, and chargebacks involving third-party purchasers of the Product
during the Term in the Territory.
	 
	 	M.	 	Non-Compete Obligation. CUMBERLAND will not without INALCO’s prior
written approval, itself promote, sell or distribute in the Territory during the Term
hereof, any laxative product which competes with the Product.
	 
	 	N.	 	Inspections. CUMBERLAND shall provide for or arrange on-site
inspections of all facilities related to the storage and distribution of the Product
at least one time per year by authorized representatives of INALCO at any time during
regular business hours and shall provide all reasonably requested information to
confirm that the Product is stored, handled, and distributed in accordance with all
applicable rules and regulations of Competent Authorities.






	2.7	 	Certain Responsibilities of Both Parties.






	 	A.	 	Insurance. Beginning on the Effective Date, both CUMBERLAND and INALCO
shall have in place, and shall maintain during the Term and until the third
anniversary of the expiration or earlier termination of this Agreement, comprehensive
product liability insurance in amounts not less than $5,000,000 U.S. per incident and
$5,000,000 U.S. annual aggregate. The minimum amounts of insurance coverage required
shall not be construed to create or limit CUMBERLAND’s or INALCO’s liability with
respect to its indemnification under this Agreement. Both INALCO and CUMBERLAND shall
provide evidence of insurance to one another on or within thirty (30) days after the
Effective Date and each anniversary date thereof.
	 
	 	B.	 	Publicity. Either party may issue a press release or other public
announcement relating to the existence or terms of this Agreement, subject to the
prior review and written approval of the other party, which approval shall not be
unreasonably withheld or delayed; except where required by Law, in which event the
parties




10









 






	 	 	 	will use all reasonable efforts to consult with each other and cooperate with
respect to the wording of any such announcement. The parties shall cooperate in
issuing (an) initial public release(s) with respect to the signing of this
Agreement, either separately or as a joint release.
	 
	 	C.	 	Recalls:






	 	(i)	 	If either party determines that any quantity of the Product
should be recalled for any reason, that party will give to the other party
written notice of its intention to recall that quantity and specify its
reasons.
	 
	 	(ii)	 	If within three (3) days of the receipt of the notice the
parties are unable to agree upon the need to carry out the recall, the parties
agree to submit a sample of the Product to an Independent Analyst for a
report.
	 
	 	(iii)	 	The costs of the report of the Independent Analyst and of the
recall will be paid by the party against which the report is unfavourable.
	 
	 	(iv)	 	Notwithstanding paragraphs (i) to (iii), CUMBERLAND will
administer any such recall in the Territory.
	 
	 	(v)	 	Any Product recall initiated by a Competent Authority due to
the negligence or breach of warranty by a party hereto shall be the
responsibility of such party at its sole cost.
	 
	 	(vi)	 	Each of CUMBERLAND and INALCO agrees to comply with the
obligations set forth in Exhibit E with respect to any adverse drug
event (as defined therein) or any similar event described in Exhibit E
for the Product.
	 
	 	(vii)	 	If a recall results from a cause other than 2.7C (v), then
INALCO and CUMBERLAND will share equally all out-of-pocket costs to administer
the recall.






	2.8	 	Subcontractors. CUMBERLAND may make such arrangements with Subsidiaries, Affiliates
or Third Persons as it, in its reasonable judgment, believes is necessary to assure the
diligent and adequate registration, approval, release testing (if applicable), distribution
and sale of the Product in the Territory. Any such Third Persons or Affiliates or
Subsidiaries engaged by CUMBERLAND shall be referred to as “Subcontractors.”
	 
	2.9	 	Delivery:






	 	A.	 	Prior to shipping, INALCO will submit to CUMBERLAND appropriate shipment
notification documents for signature and approval to ship. These documents shall
include CUMBERLAND’s Approval to Ship form, packing slip, Certificate of Analysis, and
any required FDA shipment notification.




11









 






	 	B.	 	Following receipt of CUMBERLAND approval to ship, INALCO will deliver the
Products to CUMBERLAND F.O.B. the facility of INALCO’s packager, which facility shall
be located in the U.S. or Canada unless otherwise agreed in writing by INALCO and
CUMBERLAND, to such location in the Territory as is designated by CUMBERLAND in the
applicable purchase order.
	 
	 	C.	 	All risk of loss or of damage to, and title to the Product, will pass to
CUMBERLAND upon delivery of the Products to the, freight company specified by
CUMBERLAND in the purchase order in accordance with the terms of Article 2 of this
Agreement.
	 
	 	D.	 	CUMBERLAND shall be responsible for all costs of transportation from the
facility of INALCO’s packager to the location in the Territory as designated by
CUMBERLAND in the applicable purchase order, except that INALCO shall be responsible
for any costs associated with Customs Clearance at an international border (including
but not limited to brokers’ fees, import duties, taxes, permits, and licenses).






	2.10	 	Acceptance of the Products:






	 	A.	 	INALCO will supply a Certificate of Analysis with each delivery of the
Products.
	 
	 	B.	 	If CUMBERLAND does not notify INALCO in accordance with the following
paragraph, then CUMBERLAND will, for the purposes of this Section 2.10 only, be deemed
to have accepted the Products upon the expiration of the thirty (30) day period
referred to in that paragraph.
	 
	 	C.	 	If CUMBERLAND notifies INALCO within thirty (30) days of the receipt of any
shipment of the Product that CUMBERLAND believes any of the Product does not conform
to the warranty set out in Section 2.11 (“Defective Product”) the parties agree to
consult with each other in order to resolve the issue (during which time INALCO may
conduct its own retention sample testing). If such consultation does not resolve the
discrepancy within a further thirty (30) days from receipt of the notice, the parties
agree to nominate an Independent Analyst within the Territory, acceptable to both
parties, that will carry out tests on representative samples taken from such shipment,
and the results of such tests will be binding on the parties.
	 
	 	D.	 	If the Independent Analyst determines that the Defective Product does not
conform to the warranty set out in Section 2.11:






	 	(i)	 	INALCO will, at its expense, replace any such Defective Product
and reimburse CUMBERLAND for the costs of the Independent Analyst; and
	 
	 	(ii)	 	all quantities of Defective Product will, at INALCO’s election and
expense be either:






	 	a.	 	returned to INALCO, and packed and shipped
according to




12









 






	 	 	 	instructions provided by INALCO; or
	 
	 	b.	 	destroyed by CUMBERLAND under INALCO’s direction.






	 	E.	 	If the Independent Analyst determines that the Defective Product does conform
to the warranty set out in Section 2.11, CUMBERLAND will for the purposes of Section
2:10 only, be deemed to have accepted the Product and will reimburse INALCO for the
costs of the Independent Analyst.
	 
	 	F.	 	Replacement of Defective Product is in addition to any other obligations,
indemnities or warranties given by INALCO under this Agreement.






	2.11	 	Product Warranties:






	 	A.	 	INALCO represents and warrants that:






	 	(i)	 	any Product supplied under this Agreement will, upon delivery
to CUMBERLAND, have a shelf life of at least two (2) years nine (9) months;
	 
	 	(ii)	 	any Product supplied under this Agreement will upon delivery:






	 	a.	 	conform in all respects to the Product
Specifications and to any applicable Regulatory Approval in the
Territory;
	 
	 	b.	 	be manufactured, identically labelled and
identically packaged for the Territory and tested in accordance with
applicable laws and regulations in the Territory relating to the
manufacture, labelling, packaging and testing of the Product, subject
to any alterations required by law or applicable regulations; and
	 
	 	c.	 	will not be adulterated or misbranded in
contravention of applicable Law;






	 	(iii)	 	it will, at its expense, apply for, prosecute, maintain,
defend and enforce the Trademarks, the Patent Rights, and any Intellectual
Property Rights concerning the Product which are owned by or licensed to it to
the maximum extent commercially feasible and will also apply for any
appropriate extension of term for any patents covering the Product in
accordance with the laws and regulations in the Territory.






	 	B.	 	Product Defects:






	 	(i)	 	Any quantities of the Product that do not conform with Section
2.11(A) or that contravene applicable Law, regulations, or Regulatory approvals
will, for the purposes of this Agreement, be deemed to have a defect.
	 
	 	(ii)	 	If either party becomes aware of any defect in the Product, it
will immediately notify the other party and provide it with a full disclosure
of
that defect.




13









 






	 	(iii)	 	Where any defect in the Product arises either partially or
wholly as a result of a defect in raw material supplied to INALCO by a third
party, INALCO will make best efforts to ensure that the third party conforms to
any demands of the Competent Authority concerning the defect.
	 
	 	(iv)	 	Except as otherwise set forth in this Agreement,
INALCO‘s remedy for breach of warranty pertaining to the Product
provided hereunder shall be limited solely to replacement of such Product.






	 	C.	 	UNLESS OTHERWISE EXPRESSLY STATED IN THIS AGREEMENT, NEITHER PARTY SHALL BE
LIABLE FOR INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, IRRESPECTIVE OF WHETHER
ATTRIBUTABLE TO CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE.





3. TERM AND TERMINATION





	3.1	 	Term.






	 	A.	 	Condition for Commencement of Term. Notwithstanding any other provision
hereof, the commencement of the Term is subject to the satisfaction as of the Effective
Date of the following conditions: (i) the termination of any letter agreements
currently in effect between Mylan Bertek Pharmaceuticals Inc. (f/k/a Bertek
Pharmaceuticals Inc.) (“Mylan Bertek”) and CUMBERLAND (the “Letter Agreements”), and
(ii) the full and final mutual release of Mylan Bertek and Mylan by CUMBERLAND and of
CUMBERLAND by Mylan Bertek and Mylan for any and all obligations and/or liabilities in
connection with the Co-Promotion Agreement between CUMBERLAND and Mylan Bertek dated
January 4, 2002, as amended (the “Co-Promotion Agreement”), and the Letter Agreements;
provided that the sections listed as surviving provisions in Section 11.6 of the
Co-Promotion Agreement survive the termination and release set forth hereinabove.
	 
	 	B.	 	Duration. This Agreement shall commence on the Effective Date and will
continue until the fifteenth (15‘h) anniversary thereof. Thereafter, subject
to Section 3.2 hereof, the Agreement will automatically renew for successive terms of
three (3) years unless either party gives written notice of its intention not to renew
this Agreement to the other party at least twelve (12) months prior to the expiration
of the period.






	3.2	 	Termination. This Agreement may be terminated prior to expiration of the Term under
the following circumstances:






	 	A.	 	Material Breach. In the event that one party commits a material breach
of this Agreement, the non-breaching party may, at its option, terminate this Agreement
by giving the breaching party written notice pursuant to Section 8.2 of its election




14









 






	 	 	 	to terminate as of a stated date, but not less than forty-five (45) days from the
date of the notice. Such notice shall state the nature of the breach claimed by the
non-breaching party. The breaching party, during said forty-five (45) day period or
such longer period as may be indicated by the other, may correct any breach stated
in said notice and if such breach is corrected, this Agreement shall continue in
full force and effect as if such notice had not been given. If the breaching party
does not cure the breach to the reasonable satisfaction of the notifying party
within said forty-five (45) day period, or such longer period indicated by the
non-breaching party, then the notifying party may terminate this Agreement. For
purposes hereof, “material breach” shall mean failure by CUMBERLAND to comply with
any of its obligations under Sections 2.6(G), 2.6(M), 4.1, 4.2, or 4.3 hereunder or
failure by INALCO to comply with any of its obligations under Section 2.5(B),(C),
(D), (F), and (G).
	 
	 	B.	 	Anniversary. If CUMBERLAND gives INALCO written notice at least ninety
(90) days prior to the fourth anniversary of the Effective Date or any subsequent such
anniversary during the Term, CUMBERLAND may terminate the Agreement on the day
immediately preceding such anniversary date without any further liability except as
expressly set forth herein. Notwithstanding the foregoing, in no event shall
termination under this Section 3.2.B. terminate or modify CUMBERLAND’s obligations to
make the payments set forth in Section 4.1.






	3.3	 	Effect of Expiration or Termination. Upon expiration or termination of this
Agreement,






	 	A.	 	CUMBERLAND shall cease the sale of all Product for the Territory; provided,
however, that CUMBERLAND may continue to store, promote, sell and distribute its stock
on hand and fill all orders accepted by it prior to the expiration or termination of
the Agreement. INALCO will fill all orders accepted by INALCO hereunder prior to
expiration or termination of the Agreement. All applicable provisions of this
Agreement shall survive termination for such purpose; and
	 
	 	B.	 	all rights, title and interest in and to the Product and the Intellectual
Property Rights in the Product and the Know-How and the Patent Rights and the
Trademarks that INALCO owned prior to this Agreement shall revert to INALCO.






	3.4	 	Remedies Not Limited. Except as otherwise provided herein, the termination of this
Agreement by either party shall not limit remedies that may be otherwise available, including
without limitation, injunctive relief.
	 
	3.5	 	Survival. Expiration or termination of this Agreement for any reason shall not
relieve either party of its obligations that have accrued prior to the expiration or
termination of this Agreement. Without limiting the generality of the foregoing, Sections
2.11, 5.1, 5.2, and 5.3 and Article 3 of this Agreement shall survive expiration or
termination of this Agreement.




15









 






	3.6	 	Expectation of Profits. Except as otherwise provided herein, both parties
acknowledge and agree that they have no expectations and have received no assurances that any
investment by them in the development, marketing or distribution of the Product will be
recovered or recouped, or that they shall obtain any anticipated amount of profit by virtue
of this Agreement.
	 
	3.7	 	Option Regarding Transfer. CUMBERLAND shall have the first opportunity to negotiate
to acquire all rights to the Product in the Territory. Each party hereto shall negotiate in
good faith if the parties undertake discussions regarding such option. INALCO agrees not to
transfer any rights to the Product in the Territory unless INALCO first notifies CUMBERLAND
of the opportunity hereunder and unless INALCO negotiates in good faith with CUMBERLAND for
sixty (60) days after providing such notice in an attempt to enter into a written agreement
with respect to the rights that are being negotiated.





4. PAYMENTS





	4.1	 	Payments. Subject to the terms and conditions contained in this Agreement, in
consideration for rights granted to CUMBERLAND hereunder, CUMBERLAND shall pay Eleven Million
Dollars to INALCO in the following installments:






	 	A.	 	First Installment. Six Million Five Hundred Thousand
U.S. Dollars ($6,500,000 U.S.), payable upon the Effective Date of this
Agreement;
	 
	 	B.	 	Second Installment. One Million Five Hundred Thousand
U.S. Dollars ($1,500,000 U.S.), payable upon the first anniversary of the
Effective Date of this Agreement; and
	 
	 	C.	 	Third Installment. Three Million U.S. Dollars
($3,000,000 U.S.), payable upon the third anniversary of the
Effective Date of this Agreement.






	4.2	 	Royalty Payment. In further consideration of the rights granted to CUMBERLAND
hereunder, CUMBERLAND shall pay INALCO an amount equal to the following percentage of Net
Sales during the preceding [***] (each such payment shall hereinafter be referred to as a
“Royalty Payment”), within [***] of the end of each [***]:






	 	A.	 	[***] during first Year of the Term;
	 
	 	B.	 	[***] during each of the second, third, and fourth Years of the Term; and
	 
	 	C.	 	[***] for each Year thereafter during the Term;






	 	 	provided that the accrual of any obligation to make Royalty Payments shall cease immediately
with respect to Net Sales in a country within the Territory if a generic equivalent to the
Product receives Regulatory Approval, and is commercially available in such country.
	 
	4.3	 	Payment for Product. Subject to Section 2.10, CUMBERLAND shall pay INALCO,




16









 






	 	 	within [***] of receipt of Product under Section 2.5(D) during the first year of the Term,
and within [***] of receipt of Product thereafter, (a) an amount equal to [***] 10-gram
pouch and [***] per 20-gram pouch for each unit of Product supplied pursuant to purchase
orders submitted in accordance with Section 2.6(C) (“Product Payments”), and (b) an amount
equal to [***] per pouch for each 10-gram pouch and [***] per pouch for each 20-gram pouch
of Product pursuant to requests for promotional units submitted in accordance with Section
2.5(E) (“Promotional Unit Payments”).
	 
	 	 	[***]
	 
	 	 	Promotional Unit Prices are based upon a packaging configuration and cost that is
equivalent to the existing 30-count Commercial and/or 7-count Sample. If a new Sample
package configuration is required, then INALCO has the right to adjust the “per pouch”
price to reflect any increased direct costs incurred with such reconfiguration. Promotional
Units will be ordered under a unique Purchase Order Number, and such orders are subject to
the terms of Paragraph 2.6C.
	 
	4.4	 	Payment Currency. All payments under Article 4
hereof shall be made in U.S. dollars.
	 
	4.5	 	Records. CUMBERLAND shall maintain complete and accurate records sufficient to
enable accurate calculation of Royalty Payments due to INALCO under this Agreement.
CUMBERLAND shall, at INALCO’s request and expense, provide certified statements from
CUMBERLAND’s auditors, concerning Royalty Payments due pursuant to this Agreement. Once a
calendar year, INALCO shall have the right to request that a certified public accountant, the
selection of whom shall be subject to CUMBERLAND’s prior written consent, not to be
unreasonably withheld or delayed, inspect, on reasonable notice and during regular business
hours, the records of CUMBERLAND to verify INALCO’s statements and payments of Royalty
Payments due pursuant to this Agreement. The entire cost for such inspection shall be borne
by INALCO, unless there is a discrepancy of greater than 5% in INALCO’s favor, in which case
CUMBERLAND shall bear the entire cost of the inspection. Records shall be preserved by
CUMBERLAND for three (3) years after preparation thereof for inspection by INALCO.
	 
	4.6	 	Acquisition. In the event that INALCO or CUMBERLAND is acquired by a Third Person or
in any other way transfers all of its assets, including this Agreement to a Third Person, all
obligations of this Agreement, including the foregoing Royalty Payment terms, shall be binding
upon the party acquiring this Agreement.
	 
	4.7	 	Manner of Payment. All payments hereunder shall be made by bank wire transfer of
immediately available funds to the account of INALCO or such other reasonable method as INALCO
may request. Each party hereto shall be responsible for and pay all fees and other charges
imposed by its own bank in connection with any such bank wire transfer. Where required to do
so by Law, CUMBERLAND shall withhold taxes required to be paid to a taxing authority on
account of such income to INALCO, and CUMBERLAND shall furnish INALCO with satisfactory
evidence of such withholding and payment in order to permit INALCO to obtain a tax credit or
other relief as may be available under the Law.




17









 











5. CONFIDENTIALITY





	5.1	 	Protection of Confidential Information. The parties recognize that during the Term,
it may be necessary that one party and/or its Affiliates or Subsidiaries hereto be given
access to certain Confidential Information (as defined herein) of the other party and/or its
Affiliates or Subsidiaries hereto. Each party must ensure that the following Subsections shall
be applicable to such Confidential Information and the words “Recipient” and “Disclosing
Party” shall be interchangeable as between each of the parties and/or their Affiliates or
Subsidiaries hereto as appropriate under the circumstances:






	 	A.	 	Title to Confidential Information and Related Documents. Recipient
hereby acknowledges that the Confidential Information and all, including without
limitation, related documents, drawings, designs, products, or samples disclosed or
furnished hereunder by or on behalf of the Recipient are the sole and exclusive
property of Disclosing Party. Recipient hereby agrees to return all such documents,
drawings, designs, products, or samples furnished to it hereunder, together with all
reproductions and copies thereof and shall delete all references thereto stored
electronically promptly under the request of Disclosing Party or upon termination or
expiration of this Agreement, except that the Recipient’s legal representative may
retain one copy of such of the Confidential Information as required solely for the
purpose of determining the scope of its obligations under this Agreement.
	 
	 	B.	 	Nondisclosure or Use of Confidential Information. Recipient hereby
agrees that it shall hold all Confidential Information disclosed to it in strict
confidence and in a secure place, that it will use the same only for the purpose of
performing this Agreement and for no other purpose whatsoever, and that it will not
disclose the same to any Third Persons (except to its employees or consultants,
strictly on a “need-to-know basis,” to the extent such disclosure is permitted by or
consistent with this Agreement and the Third Persons are subject to written obligations
of confidentiality no less onerous than are contained in this Agreement) except to the
extent Disclosing Party agrees to it in writing.
	 
	 	C.	 	Definition of Confidential Information. “Confidential Information” as
used herein shall include without limitation any and all oral, written, or tangible
proprietary or confidential ideas, inventions, information, data, plans, materials,
trade secrets and know-how and the like owned, controlled or developed by or on behalf
of one party hereto and disclosed to the other party for the purposes of this
Agreement; provided however, that Confidential Information shall not include any
information, discovery, invention, improvement, or innovation which:






	 	(i)	 	was in the public domain at the time of disclosure to the
Recipient, or which becomes generally available to the public after its
disclosure through no fault of the Recipient or breach of this Agreement;




18









 






	 	(ii)	 	is already known to, or in the possession of, the Recipient
prior to disclosure by the Disclosing Party as can be demonstrated by
documentary evidence;
	 
	 	(iii)	 	is lawfully disclosed on a non-confidential basis from a
Third Person having the right to make such a disclosure; or
	 
	 	(iv)	 	is independently developed by the Recipient or its
Subsidiaries as can be demonstrated by documentary evidence.






	5.2	 	Unauthorized Use. In case either party becomes aware or has knowledge of any
unauthorized use or disclosure of Confidential Information, it shall promptly notify the
other party of such unauthorized use or disclosure and, thereafter, shall take all reasonable
steps to assist the other party in attempting to minimize any potential or actual damages or
losses resulting from such unauthorized use or disclosure.
	 
	5.3	 	Permitted Disclosure. Each party may disclose Confidential Information of the other
party to the Competent Authorities or Listing authorities in the Territory where such
disclosure is reasonably necessary in the application, grant, variation, renewal or
maintenance of a Regulatory Approval or Listing. Each party may also disclose Confidential
Information where it is required to do so under any laws or regulations in the Territory,
provided that it gives the other party such notice as is reasonably practicable in the
circumstances and allows the other party, at the other party’s cost, a reasonable opportunity
to resist such requirements.
	 
	5.4	 	Term. The provisions of this Article 5 shall survive the expiration or termination
of the Agreement until all of the Confidential Information has fallen within one of the
exceptions set forth in Sections 5.I(C) (i) through (iv), inclusive.





6. PROTECTION AND OWNERSHIP OF INTELLECTUAL PROPERTY





	6.1	 	Registration of Trademarks. INALCO shall be responsible, at its expense, for the
preparation, filing, prosecution and maintenance of the Trademarks in the Territory and for
conducting any interferences, re-examinations, reissues, oppositions, or requests for
extension relating thereto. INALCO shall take all steps necessary to maintain the Trademarks
in the Territory in good standing. INALCO shall not use any alternative trademark in the
Territory on or in connection with the Product. Subject to Section 3.3(A), upon the
termination or expiration of this Agreement or CUMBERLAND’s right to use the Trademarks,
CUMBERLAND shall cease using the Trademarks.
	 
	6.2	 	Patent Filings: Maintenance; Prosecution. INALCO shall be responsible, at its
expense, for the preparation, filing, prosecution and maintenance of the Patent Rights in the
Territory and for conducting any interferences, re-examinations, reissues, oppositions, or
requests for extension relating thereto. INALCO shall take all steps necessary to maintain
the Patent Rights in the Territory in good standing. CUMBERLAND agrees to cooperate
reasonably with INALCO, at INALCO’s expense, when requested, on matters relating to the
preparation, filing, prosecution and maintenance of the Patent Rights.




19









 






	6.3	 	Infringement by Third Persons.






	 	A.	 	In the event that either party determines that a Third Person is making,
using, or selling a product that may infringe the Patent Rights or Trademark, it will
promptly notify the other party in writing. INALCO will, at its own cost and to the
extent commercially feasible, take all legal action it deems necessary or advisable to
eliminate or minimize the consequences of the infringement, but will not without
CUMBERLAND’s prior written consent enter into any settlement in relation to such
matters nor take any step in relation to the potential or alleged infringement which
will affect CUMBERLAND’s storage, promotion, sale and distribution of the Product in
the Territory or other rights under this Agreement. CUMBERLAND shall take all
reasonable steps to assist INALCO at INALCO’s expense.
	 
	 	B.	 	Upon receiving any written request from CUMBERLAND to do so, INALCO will
forthwith disclose to CUMBERLAND all necessary information about the Products, their
formulation, use or process of manufacture, to enable CUMBERLAND to:






	 	(i)	 	ascertain whether the storage, promotion, sale or other
distribution of the Products in the Territory will infringe any existing
patent or other third party intellectual property rights; and
	 
	 	(ii)	 	determine its conduct in relation to any proceedings alleging
infringement of a patent or other third party intellectual property rights in
the Territory.






	 	C.	 	INALCO represents and warrants that any information disclosed to CUMBERLAND
under paragraph (B) above will be a full and accurate disclosure and that INALCO will
not withhold any information in its possession which might have a material adverse
impact on CUMBERLAND.
	 
	 	D.	 	If INALCO does not take any action to eliminate or minimize the consequences
of any such infringement within ninety (90) days of becoming aware of that
infringement, CUMBERLAND may take any reasonable action to prosecute such
infringement; provided that CUMBERLAND shall not retain legal counsel to prosecute any
such infringement without INALCO’s prior written consent, not to be unreasonably
withheld or delayed. In the event that legal counsel is so retained, INALCO shall
reimburse CUMBERLAND for such counsel’s reasonable fees and expenses directly related
to the prosecution of such infringement.
	 
	 	E.	 	Each party will cooperate fully and promptly with, and provide all reasonable
assistance to, the other party in respect of any action brought by the other party
under this Agreement in relation to alleged infringement of intellectual property
rights in connection with this Agreement and will be entitled to be promptly
reimbursed for all costs and expenses incurred in connection with such co-
operation and assistance.




20









 











7. REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION





	7.1	 	Representations and Warranties of CUMBERLAND. CUMBERLAND represents and warrants
that:






	 	A.	 	it is a corporation duly organized and validly existing under the laws of
Tennessee;
	 
	 	B.	 	the execution and delivery by CUMBERLAND of this Agreement, the performance by
CUMBERLAND of all the terms and conditions thereof to be performed by it and the
consummation of the transactions contemplated hereby have been duly authorized by all
necessary action, and no other act or approval of any person or entity is required to
authorize such execution, delivery, and performance;
	 
	 	C.	 	the Agreement constitutes a valid and binding obligation of CUMBERLAND,
enforceable in accordance with its terms; and
	 
	 	D.	 	this Agreement and the execution and delivery thereof by CUMBERLAND, does not,
and the fulfillment and compliance with the terms and conditions hereof and the
consummation of the transactions contemplated hereby will not:






	 	(i)	 	conflict with any of, or require the consent of any person or
entity under, the terms, conditions, or provisions of the organizational
documents of CUMBERLAND;
	 
	 	(ii)	 	violate any provision of, or require any consent,
authorization, or approval under, any Law applicable to CUMBERLAND; or
	 
	 	(iii)	 	conflict with, result in a breach of, or constitute a default
under, any material agreement or obligation to which CUMBERLAND is a party.






	7.2	 	Representations and Warranties of INALCO. INALCO ITALY and INALCO U.S. jointly and
severally represent and warrant that:






	 	A.	 	INALCO U.S. is a corporation duly organized and validly existing under the
laws of California and INALCO ITALY is a corporation duly organized and validly
existing under the laws of Italy and;
	 
	 	B.	 	the execution and delivery by INALCO of this Agreement, the performance by
INALCO of all the terms and conditions thereof to be performed by it and the
consummation of the transactions contemplated hereby have been duly authorized by all
necessary action, and no other act or approval of any person or entity is required to
authorize such execution, delivery, and performance;




21









 






	 	C.	 	the Agreement constitutes a valid and binding obligation by each of INALCO
ITALY and INALCO U.S., enforceable in accordance with its terms; and
	 
	 	D.	 	this Agreement and the execution and delivery thereof by INALCO, does not, and
the fulfillment and compliance with the terms and conditions hereof and the
consummation of the transactions contemplated hereby will not:






	 	(i)	 	conflict with any of, or require the consent of any person or
entity under, the terms, conditions, or provisions of the organizational
documents of INALCO;
	 
	 	(ii)	 	violate any provision of, or require any consent,
authorization, or approval under, any Law applicable to INALCO; or
	 
	 	(iii)	 	conflict with, result in a breach of, or constitute a default
under, any material agreement or obligation to which INALCO is a party.






	 	E.	 	the manufacture, storage, promotion, sale or other distribution of the Product
in the Territory will not infringe any patent (whether in relation to the Products,
their formulation, use or process of manufacture) or infringe upon any other rights of
a Third Person;
	 
	 	F.	 	as of the Effective Date, INALCO has not received any notice of opposition,
interference, or refusal to register in connection with the Patent Rights in the
Territory or elsewhere;
	 
	 	G.	 	as of the Effective Date, INALCO holds, and shall continue to hold for the
duration of the Term, valid rights to the Patent Rights and all other Intellectual
Property Rights relating to the Product and has the full right, power and authority to
grant the rights granted to CUMBERLAND hereunder, free and clear of any mortgage, lien,
encumbrance or other Third Person interest of any kind;
	 
	 	H.	 	INALCO has licensed to CUMBERLAND all Intellectual Property Rights necessary
for CUMBERLAND to perform its obligations under this Agreement;
	 
	 	I.	 	INALCO has not granted to any other Person in the Territory the rights it is
granting to CUMBERLAND hereunder in respect of the Product;
	 
	 	J.	 	INALCO has informed CUMBERLAND about all information in its possession or
control concerning the safety and efficacy of the Product, and any side effects,
injury, toxicity or sensitivity reactions and incidents associated with all uses,
studies, investigations or tests involving the Product (animal or human) throughout the
world;
	 
	 	K.	 	as of the Effective Date of this Agreement, INALCO is not aware of any facts
that would reasonably lead it to conclude that the Product will be unable to maintain
Regulatory Approval in the Territory or that would indicate that future




22









 






	 	 	 	marketing and sales of the Product in the Territory may be adversely affected in any
material respect; and
	 
	 	L.	 	no representations, warranties or covenants made by INALCO in this Agreement or
in any document, certificate, exhibit, or schedule furnished or to be furnished in
connection with the transactions contemplated hereby, contain or will contain, to the
best of INALCO’s knowledge, any untrue statement of fact or omit or will omit to state
any material fact necessary to make the statement of facts contained therein not
misleading to the best of INALCO’s knowledge.






	7.3	 	Indemnification by CUMBERLAND. Without affecting any other remedies and recourses
available under this Agreement, under law and in equity, CUMBERLAND shall indemnify INALCO
and its Affiliates and Subsidiaries, and their respective directors, officers, and employees,
from and against claims, suits or demands for liability, damages, costs and expenses
(including reasonable attorney fees) arising from or relating to (i) the negligence or
willful misconduct of CUMBERLAND or its Affiliates or its Subsidiaries, or their respective
directors, shareholders, officers or employees in connection with this Agreement, or (ii) any
breach by CUMBERLAND of any of its representations and warranties provided for in Section
7.1; except to the extent that such claims, suits or demands are the result of the fault,
negligence or willful misconduct of INALCO and/or its Affiliates and/or its Subsidiaries, or
their respective directors, shareholders, officers or employees.
	 
	7.4	 	Indemnification by INALCO. Without affecting any other remedies and recourses
available under this Agreement, under law and in equity, INALCO shall indemnify CUMBERLAND
and its Affiliates and Subsidiaries, and their respective directors, officers, and employees
from and against claims, suits or demands for liability, damages, costs and expenses
(including reasonable attorney fees) arising from or relating to (i) the negligence or
willful misconduct of INALCO or its Affiliates or Subsidiaries, or their respective
directors, shareholders, officers or employees in connection with this Agreement; or (ii) any
breach by INALCO of any of its representations and warranties provided for in Sections
2.5(F), 2.11 and 7.2 hereof ; (iii) the export, storage, promotion, sale or other
distribution of the Product in the Territory (including the packaging of the Product and
associated promotional and like material provided by or on behalf of INALCO, if any) will not
infringe any patent (whether in relation to the Products, their formulation, use or process
of manufacture) or infringe upon any other rights of a Third Person; except to the extent
that such claims, suits or demands are the result of the fault, negligence or willful
misconduct of CUMBERLAND or its directors, shareholders, officers or employees.
	 
	7.5	 	Indemnification Procedures. A party (the “Indemnitee”) which intends to claim
indemnification under this Article 7 shall promptly notify the other party (the “Indemnitor”)
in writing of the claim, suit or demand for liability with respect to which the claim of
indemnification relates. If the Indemnitor wishes to assume the defense it must notify the
Indemnitee within sixty (60) days of receipt of such notice. Legal counsel of the Indemnitor
must be reasonably satisfactory to the Indemnitee. The Indemnitee shall permit, and shall
cause its employees and agents to permit the Indemnitor, at its discretion, to settle any
such claim, suit or demand for liability, the




23









 






	 	 	defense and settlement of which shall be under the complete control of the Indemnitor;
provided, however, that such settlement shall not adversely affect the Indemnitee’s rights
hereunder or impose any obligations on the Indemnitee in addition to those set forth herein
in order for it to exercise those rights. No such claim, suit or demand for liability shall
be settled without the prior written consent of the Indemnitee and the Indemnitee shall not
be responsible for any legal fees or other costs incurred other than as provided herein.
The Indemnitee, its employees and agents shall co-operate fully with the Indemnitor and its
legal representatives in the investigation and defense of any claim, suit or demand for
liability covered by this indemnification. The Indemnitee shall have the right, but not the
obligation, to be represented by counsel of its own selection and expense.





8. GENERAL





	8.1	 	Provisions Contrary to Law. In performing this Agreement, the parties shall comply
with all applicable Laws. In particular, it is understood and acknowledged that the transfer
of certain commodities and technical data is subject to U.S. Laws controlling the export of
such commodities and technical data, including all Export Administration Regulations of the
United States Department of Commerce. These Laws among other things prohibit or require a
license for the export of certain types of technical data to certain specified countries.
CUMBERLAND hereby agrees to do all things reasonably requested of it by INALCO to comply with
all U.S. Laws controlling the export of commodities and technical data.
	 
	 	 	Nothing in this Agreement shall be construed so as to require the violation of any Law, and
wherever there is any conflict between any provision of this Agreement and any Law, the Law
shall prevail, but in such event the affected provision of this Agreement shall be affected
only to the extent necessary to bring it within the applicable Law.
	 
	8.2	 	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:

	 	If to INALCO U.S.:
	 
	 	 
	Cumberland Pharmaceuticals Inc.

	 	Inalco Biochemicals, Inc.
	2525 West End Ave., Suite 950

	 	3440 Empresa Drive, Suite A
	Nashville, Tennessee 37203

	 	San Luis Obispo, CA 93401
	Fax: 615-255-0094

	 	Fax: 805-782-0719
	Attn: Chief Executive Officer

	 	Attn: Eric A. Lowe





With a copy to:




24









 








Adams and Reese/Stokes Bartholomew LLP

424 Church Street, 28th Floor

Nashville, Tennessee 37219

Fax: 615-259-1470

Attn: Martin S. Brown, Esq.




If to INALCO ITALY:




Inalco S.p.A.

Via Calabiana, 18

20139 Milan

ITALY

Fax: 011-39-02-55213277

Attn: Giovanni Cipolletti



Such notice shall be effective upon the earlier of (i) actual receipt by the party to whom notice
is sent, (ii) seven (7) days after deposit into the mail, or (iii) receipt of fax-back confirmation
if notice is sent via facsimile.





	8.3	 	Force Majeure. Neither party to this Agreement shall be liable for delay or failure
in the performance of any of its obligations hereunder if such delay or failure is due to
causes beyond its reasonable control, including, without limitation, acts of God, fires,
earthquakes, strikes and labor disputes, acts of war, civil unrest, or intervention of any
governmental authority, but any such delay or failure shall be notified to the other party,
and remedied by such party, as soon as is reasonably possible.
	 
	8.4	 	Assignments. Except as otherwise set forth herein or in connection with the sale of
all or substantially all of the assets or business of either party or as expressly set forth
in this Agreement, rights and obligations under this Agreement may not be assigned by either
party hereto without the prior written consent of the other party hereto, which consent shall
not be unreasonably withheld or delayed; provided, however, that nothing in this Agreement
shall limit CUMBERLAND’s right to assign its rights or delegate its obligations under this
Agreement to a lender to CUMBERLAND in the event of a default in its agreement with such
lender.
	 
	8.5	 	Independent Contractors. The parties hereto agree that each is acting as an
independent contractor and not as an agent of the other or as joint venturers.
	 
	8.6	 	Waivers and Modifications. The failure of any party to insist on the performance of
any obligation hereunder shall not act as a waiver of such obligation. No waiver,
modification, release, or amendment of any obligation under this Agreement shall be valid or
effective unless in writing and signed by both parties hereto.
	 
	8.7	 	Successors in Interest. This Agreement shall inure to the benefit of and be binding
on the parties’ permitted assigns or successors in interest.
	 
	8.8	 	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




25









 






		 	otherwise be unenforceable, such provision shall be ineffective to the extent of such
violation without invalidating any other provision hereof.
	 
	8.9	 	Exhibits; Headings. All exhibits attached to and incorporated in this Agreement by
reference are deemed to be a part hereof. The headings used in this Agreement are for
convenience only and are not part of this Agreement.
	 
	8.10	 	Choice of Law. This Agreement is subject to and shall be construed and enforced in
accordance with the laws of the State of Delaware, United States of America. The Parties
hereby submit to the jurisdiction of the courts of the State of Delaware in respect to all
disputes arising out of or in connection with this Agreement and waive any and all objections
to such venue.
	 
	8.11	 	Entire Agreement. This Agreement, constitutes the entire agreement between the
parties as to the subject matter hereof, and all prior negotiations, representations,
agreements and understandings are merged into, extinguished by and completely expressed by
this Agreement.





9. ARBITRATION




     Any matter or disagreement arising under this Agreement shall be submitted for decision to a
panel of three neutral arbitrators with expertise in the subject matter to be arbitrated. One
arbitrator shall be selected by each party and the two arbitrators so selected shall select the
third arbitrator. The arbitration shall be conducted in accordance with the Rules of the American
Arbitration Association. The decision and award rendered by the arbitrators shall be final and
binding. Judgment upon the award may be entered in any court having jurisdiction thereof. Any
arbitration shall be held in Wilmington, Delaware, or such other place as may be mutually agreed
upon in writing by the parties.



26









 




IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized
officers on the date first written above.






	 	 	 	 	 	 	 	 	 	 	 
	CUMBERLAND PHARMACEUTICALS INC.


	 	 	 	INALCO BIOCHEMICALS, INC.

	 	 
	 
	By:

	 	/s/ A.J. Kazimi
	 	 	 	By:
	 	/s/ Eric A. Lowe
	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	A.J. Kazimi
	 	 	 	 	 	Eric A. Lowe	 	 
	 

	 	Title: Chief Executive Officer
	 	 	 	 	 	Title: President	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	INALCO S.p.A.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ Giovanni Cipolletti	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Giovanni Cipolletti	 	 
	 

	 	 	 	 	 	 	 	Title: President	 	 






27









 






EXHIBIT A




Minimum Purchases







Year 1:       6,000,000 commercial pouches of Product




Year 2:       7,000,000 commercial pouches of Product




Year 3:       8,000,000 commercial pouches of Product




Year 4:       9,000,000 commercial pouches of Product




Year 5:       10,000,000 commercial pouches of Product



Minimum purchases for subsequent Years shall not be less than 65% of the average purchases in each
of the three immediately preceding annual periods.



Provided, however, that none of the minimums set forth in this Exhibit A shall be
applicable if a generic equivalent to the Product is introduced for sale in the United States, or
if INALCO fails to provide promotional units of Product to CUMBERLAND in accordance with the terms
of this Agreement.



If CUMBERLAND fails to meet the minimum in any given Year, CUMBERLAND shall pay INALCO within sixty
(60) days after the termination of such Year the profit on the Product Payments that INALCO would
have received on the shortfall (i.e., the difference between applicable purchases of the Product
and the applicable minimum).



Notwithstanding the foregoing, if INALCO is unable to supply Product for a period of more than
sixty (60) days in any Year during the Term, the minimum purchases for the applicable Year shall be
reduced twenty-five percent (25%) and an additional ten percent (10%) for each month thereafter
when INALCO is unable to supply; provided that the minimum purchases for the applicable Year shall
be waived altogether if INALCO fails to supply Product for a period of more than one hundred eighty
(180) consecutive days.

















 








EXHIBIT B




Patents















 





United States Patent

Bimbi




	 	 	 
	 

	 	US005480491A
	Patent Number:

	 	 5,480,491
	Date of Patent:

	 	 Jan. 2, 1996





PROCESS FOR THE PREPARATION OF
CRYSTALLINE LACTULOS FROMCOMMERCIAL SYRUPS




	 	 	 
	Inventor:

	 	Giuseppe Bimbi, Pontedera, Italy
	 
	 	 
	Assignee:

	 	Inalco S.p.A., Milan, Italy
	 
	 	 
	Appl. No.:

	 	 229,559
	 
	 	 
	Filed:

	 	April 18, 1994






Foreign Application Priority Data




	 	 	 	 	 
	Apr. 28, 1993 [IT] Italy
	 	 	MI93A0833	 
	Int. Cl6
	 	 	C13F 1/00; C13F 1/02	 
	U.S. Cl.
	 	 	127/61;127/46.2;127/55;	 
	 
	 	 	127/56; 127/58	 
	Field of Search
	 	 	127/61; 58, 56,	 
	 
	 	 	127/55, 46.2	 






References Cited




U.S. PATENT DOCUMENTS




	 	 	 	 	 
	4,555,271 11/1985 Carobbi et al 
	 	 	127/46.2	 
	4,978,397 12/1990 Carobbi et al 
	 	 	127/46.2	 
	5,034,064 7/1991 Deya et al 
	 	 	127/46.2	 
	5,304,251 4/1994 Tomita et al 
	 	 	127/42	 






FOREIGN PATENT DOCUMENTS




	 	 	 	 	 	 	 
	0132509

	 	2/1985
	 	European Pat. Off
	 	C13K 13/00
	0159521

	 	10/1985
	 	European Pat. Off
	 	CO8F 8/42
	0158148

	 	6/1988
	 	European Pat. Off
	 	C13K 13/00
	0284959

	 	1/1992
	 	European Pat. Off
	 	CO8F 8/42
	0284960

	 	6/1992
	 	European Pat. Off
	 	C08F 8/42






OTHER PUBLICATIONS



J. Agric. Chem. 1984, 32, 288-292 Jul./Dec. 1983.




Primary
Examiner—Paul Lieberman Assistant

Examiner—Patricia Halley

Attorney, Agent, or Firm—Hedman, Gibson & Costigan




ABSTRACT



The following description sets forth a new process for the preparation of .gtoreq.98.5% pure
crystalline lactulose from commercially available aqueous syrups having the following composition:
50-70% by weight of lactulose, 3-9% by weight of lactose, 3-14% by weight of galactose, 4-7% by
weight of other carbohydrates, the total content of carbohydrates different from lactulose being of
from 10% to 30%.




8 Claims, No Drawings




 









 








PROCESS FOR THE PREPARATION OF

CRYSTALLINE LACTULOSE FROM

COMMERCIAL SYRUPS




FIELD OF THE INVENTION




     The present invention relates to a process for the preparation of high-purity crystalline
lactulose by crystallization of commercially available aqueous syrups.



PRIOR ART




     Lactulose,
or 4-0-b-D-galactopyranosyl-D-fructofuranose, is a semisynthetic disaccharide, used
in the form of syrup or of crystalline product on account of its laxative action, efficacy in the
treatment of hepatic dysfunctions, in particular of portal systemic encephalopathy, and as a
sweetener.



     Lactulose syrups that are now available on the market are generally not pure, but contain more
or less large amounts of other carbohydrates, in particular galactose and lactose, and typically
50% by weight of lactulose; from 5 to 8% by weight of galactose; from 3 to 5% by weight of lactose;
from 5 to 10% by weight of other carbohydrates.



     As may be seen, the per cent amount of carbohydrates different from lactulose contained in the
syrups of commerce is relatively high. The use of products containing other carbohydrates in
addition to lactulose for the therapy of disorders requiring administration of lactulose alone,
would be prejudicial and raise problems, e.g. in patients suffering from diabetes or requiring a
diet without galactose.



     Therefore, as lactulose becomes ever more important in pharmaceutical practice, there is a
need for an adequate purification of same from contaminating carbohydrates.



     As disclosed in U.S. Pat. No. 4,536,221, various processes known for lactulose purification
are based on the crystallization from alcoholic solvents, usually ethanol.



     However, the lactulose crystals obtained from alcohols always contain a given amount of
solvent, probably due to the formation of hydrogen bonds between the OH groups of sugar and the OH
groups of the solvent, while the solvent residue cannot be completely removed even by prolonged
dryings.



     The disadvantage of the crystallization from ethanol is not only that complex process are
required for solvent residue elimination, but also that high operating costs are generally
involved.



     Some process for the direct recovery of lactulose from aqueous solutions based on the
concentration of same by drying under vacuum, lyophilization, and spray-drying are also known.



     Some of them are mentioned below:



  the process disclosed in JP No. 61,104,800, which comprises concentrating an aqueous solution
containing at least 60% lactulose, adding the concentrate with crystal seeds at from 60° to
110° C., kneading and pulverizing, thus affording a powder containing lactulose crystals;



  the process disclosed in European patent application EP-A-333,295, for the preparation of solid
lactulose from an aqueous syrup by high-temperature evaporation to lower the water content to
10% max., followed by cooling, grinding, sieving or crumbling of the resulting solid, whose
purity is the same as that of the starting syrup;



  the process disclosed in European patent application EP-A-480,519, consisting of lactulose
solidification from aqueous solutions by evaporating the water contained therein and conversion of
the resulting product into a free-flowing powder. Lactulose solidification may be initiated by
addition of crystal seeds, preferably in amounts of from 1% to 5% by weight (on dry residue
basis);



  the process disclosed in patent application JP No. 2,200,693, (“Derwent” abstract) consisting of
lactulose crystallization from a condensed syrup, followed by condensate drying at a reduced
pressure and pulverization of the dried product.



     The aforementioned processes are essentially based on the evaporation and concentration of the
starting syrup and greatly differ from crystallizations in that they simply cause the solute
solidification without eliminating—as crystallizations do—the undesirable secondary components
present in mother liquors.



     Therefore, since the processes based on concentration give lactulose of the same purity as
that of the starting syrup, they cannot be utilized for the production of high-purity lactulose
from commercial syrups that, as already mentioned, contain high amounts of other carbohydrates.
Furthermore, the aforementioned processes can give crystalline lactulose only if combined with
crystallization from alcohols.



     The only known process which involves a real crystallization from water, with no need of
alcoholic solvents, is disclosed in EP-A-318,630 by the Applicant. It is also the only known
process that yields highly pure (3 98%) and non-hygroscopic crystalline lactulose. However, this
process cannot be exploited if the lactulose aqueous syrup to be crystallized contains
carbohydrates different from lactulose in amounts exceeding 14% by weight of lactulose.



     In case of lactulose syrups containing carbohydrates different from lactulose in amounts
exceeding said limit value, it was always deemed it necessary to lower the content of said
carbohydrates below said limit value and, to this purpose, before crystallization from water, the
aqueous syrup was always purified according to one of the other known methods.



     The ever growing importance of lactulose in pharmaceutical practice is a spur to the
development of new processes to be applied to the industrial production of high-purity crystalline
lactulose, without causing the inconveniences of the processes already known.



SUMMARY




     The Applicant has now found a new process for lactulose purification that may be exploited on
an industrial scale, yielding high-purity crystalline lactulose, in particular having a content of
carbohydrates different from lactulose lower than 1% and a purity higher than 98.5%. The present
process is based on the crystallization of a commercial lactulose aqueous syrup having a total
content of carbohydrates different from lactulose higher than 10% by weight.



     In particular, the process of the present invention can be applied to commercial lactulose
aqueous syrups having the following composition: from 50% to 70% by weight of lactulose; from 3% to
9% by weight of lactose; from 3% to 14% by weight of galactose; from 4% to 7% by weight of other
carbohydrates; the total content of carbohydrate different from lactulose ranging between 10% and
30% by weight.



     It has surprisingly been found—and this finding constitutes a fundamental feature of the
present invention—that by



 









 




adding a commercial lactulose aqueous syrup with trihydrated crystalline lactulose in
amounts ranging from 5% to 30% of the total lactulose present, a high-purity lactulose
crystallizes in good yields.




     As known, in crystallization processes, once the right solvent and the right crystallization
conditions in respect of concentration and temperature have been found, few seed crystals are
generally enough for initiating the progressive crystallization of the product in solution,
according to laws governed by:



product concentration in the concentrated matrix;

crystallization temperature;

residence time.




     As far as sugars are concerned, said conditions are generally reached in such long times that
a “random self-initiation” of the solutes having lower kps than the product to be
crystallized becomes highly probable: consequently, the crystalline cake recovered is still
contaminated by said solutes.



     It is, therefore, surprising that the addition to a lactulose aqueous syrup of a large amount
of trihydrated lactulose in the crystal state—and not of few seed crystals—can initiate a
preferential crystallization of lactulose in respect of the other carbohydrates present in the
syrup, yielding a high-purity crystalline lactulose.



     Compared with the process disclosed in European patent application EP-A-318630, the process of
the present invention has the advantage of giving very-high-purity crystalline lactulose starting
from any syrup of commerce.



DETAILED DESCRIPTION OF THE

INVENTION




     Lactulose crystallization according to the present invention is characterized by the following
process: the water content of the lactulose aqueous syrup is lowered to a sugar concentration of
from 70° to 80° Brix; the resulting syrup is added at from 5° C. to 20° C. with crystalline
trihydrated lactulose, acting as a crystallization initiator, in amounts ranging from 5% to 30% by
weight of the lactulose present in the starting syrup, which temperature is maintained for a period
of from 20 to 120 hrs. The crystalline solid obtained consisted of trihydrated lactulose having a
content of carbohydrates different from lactulose below 1% by weight and a lactulose content of at
least 98.5% (on anhydrous basis).



     In particular, the process for the preparation of crystalline lactulose according to the
present invention comprises the following steps:




	a)	 	commercial lactulose aqueous syrup is evaporated under continuous stirring at a temperature
of from 50° to 60° C. and at a pressure of 2660 to 6650 Pa, up to a sugar concentration of
70°-80° Brix;






	b)	 	the resulting concentrated syrup is cooled to 5° to 20° C. and added with crystalline
trihydrated lactulose in an amount of from 5 to 30 parts by weight of the lactulose present in
the syrup;






	c)	 	the suspension obtained is stirred at said temperature for a period of from 20 to 120 hours
and the lactulose present in the syrup is crystallizes in the form of trihydrated lactulose;






	d)	 	the crystallized trihydrated lactulose obtained is separated by centrifuging or filtering
from mother liquors, washed with cold water, and dried at a pressure of from 6650 to 13300 Pa,
at a temperature of from 30° to 60° C., to yield crystalline lactulose having a water content
below 0.5%.





     The process of the invention gives highly pure (98.5% minimum) crystalline lactulose in yields
per cycle greater than 40% of the lactulose present in the starting syrup.



     The mother liquors resulting from the separation of crystalline trihydrated lactulose are
passed once or several times through columns containing anionic or cationic exchange resins, either
individually or in sequence, as illustrated in European patent applications EP-A-132,509,
EP-A-158,148, EP-A-159,521, EP-A-284,959, and EP-A-294,960 by the Applicant, so to lower the
content of carbohydrates different from lactulose below the aforesaid limits and, therefore, to
allow the mixing of same with the commercial starting syrup to be subjected to the process of the
present invention.



     This operation allows the recycling of the mother liquors and the almost complete recovery of
the lactulose present in the syrups of commerce.



     In a preferred embodiment of the present invention, the concentrated syrup of step b) has a
content of 55% to 62% by weight of lactulose and the crystalline trihydrated lactulose is added in
an amount ranging between 5% and 15% by weight of the lactulose present in the commercial syrup
(the amount of trihydrated lactulose used as a crystallization initiator is expressed as % by
weight of anhydrous lactulose).



     A single washing of the crystalline trihydrated lactulose obtained in d) with cold water
(3°-5° C.) is generally enough for a satisfactory removal of the residual mother liquors and for
obtaining a product of the desired purity.



     The following examples illustrate some embodiments of the claimed process.



EXAMPLES




Crystallization of Lactulose Starting

From Commercially Available Syrups




     Several crystallizations of commercially available lactulose syrups were carried out according
to the standard procedure described below.



     Syrups characteristics are shown in Table 1 and the results obtained in Table 2.



STANDARD PROCEDURE




     A syrup (1000 kg) of composition as shown in Table 1 was concentrated under vacuum at a
pressure of from 2660 to 6650 Pa, under continuous stirring, at a temperature of from 50° to 60°
C., to a sugar concentration of 70°-80° Brix.



     The resulting solution was fed to a crystallizer and cooled to 8° C. under continuous
stirring. Once said conditions have been reached, crystalline trihydrated lactulose was fed in the
amounts shown in Table 2.



     The obtained suspension was slowly stirred at 8° C. for the period indicated in Table 2, then
the mother liquors were removed by centrifuging, the crystal cake was squeezed to remove most
mother liquors, washed with cold water, and squeezed again.



     The resulting product was dried in an air oven at a temperature not exceeding 60° C. and at a
pressure of from 6650 to 13300 Pa, until obtaining anhydrous lactulose crystals (i.e. having a
maximum water content of 0.5%) of >98.8% purity (on dry basis) (Table 2).



     The purity of lactulose crystals was determined on the dried product by HPLC analysis (J.
Agric. Food Chem., 32, 288-292, 1984), by means of comparison with standard lactulose produced and
sold by MERCK.



 









 






TABLE 1




Composition (%) of the aqueous solutions used




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Item	 	LTL	 	LTS	 	EPI	 	GLT	 	ND	 	H2O
	 
	I
	 	 	51.4	 	 	 	4.4	 	 	 	1.2	 	 	 	3.6	 	 	 	6.4	 	 	 	34.0	 
	II
	 	 	50.6	 	 	 	4.9	 	 	 	2.0	 	 	 	3.8	 	 	 	5.0	 	 	 	33.7	 
	III
	 	 	51.9	 	 	 	3.1	 	 	 	2.2	 	 	 	7.9	 	 	 	3.1	 	 	 	31.8	 
	IV
	 	 	51.0	 	 	 	8.2	 	 	 	1.3	 	 	 	3.5	 	 	 	4.0	 	 	 	32.0	 





Remarks: all quantities are by weight percentages of the solution total weight.




Abbreviations

LTL lactulose;

LTS lactose;

EPI epilactose;

GLT galactose;

ND carbohydrates different from LTL, LTS, EPI, and GLT.




TABLE 2




Experimental results




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	total	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	LTL	 	Cone. syr.	 	LTL as initiator	 	LTL	 	LTL recovered
	Ex.	 	Syr a	 	Brixb	 	hc	 	% wd	 	Xge	 	%f	 	Kgg	 	Kgh	 	Kgi	 	% titl	 	% film	 	yieldn
	 
	1
	 	 	I	 	 	 	74	 	 	 	72	 	 	 	55.2	 	 	 	931	 	 	 	18.7	 	 	 	111.6	 	 	 	610	 	 	 	309	 	 	 	84.2	 	 	 	99.0	 	 	 	42.2	 
	2
	 	 	I	 	 	 	74	 	 	 	96	 	 	 	55.3	 	 	 	929	 	 	 	7.5	 	 	 	46.1	 	 	 	553	 	 	 	254	 	 	 	83.8	 	 	 	98.9	 	 	 	38.5	 
	3
	 	 	I	 	 	 	74	 	 	 	72	 	 	 	55.3	 	 	 	929	 	 	 	10.0	 	 	 	61.1	 	 	 	565	 	 	 	260	 	 	 	84.6	 	 	 	99.2	 	 	 	38.9	 
	4
	 	II	 	 	78	 	 	 	120	 	 	 	57.0	 	 	 	888	 	 	 	5.0	 	 	 	30.3	 	 	 	531	 	 	 	212	 	 	 	83.9	 	 	 	99.0	 	 	 	33.5	 
	5
	 	II	 	 	74	 	 	 	72	 	 	 	55.0	 	 	 	920	 	 	 	7.5	 	 	 	45.2	 	 	 	544	 	 	 	253	 	 	 	84.1	 	 	 	99.4	 	 	 	38.9	 
	6
	 	II	 	 	75	 	 	 	88	 	 	 	55.6	 	 	 	933	 	 	 	7.5	 	 	 	46.5	 	 	 	558	 	 	 	310	 	 	 	83.4	 	 	 	99.0	 	 	 	46.3	 
	7
	 	II	 	 	71	 	 	 	88	 	 	 	54.4	 	 	 	954	 	 	 	7.5	 	 	 	46.7	 	 	 	558	 	 	 	255	 	 	 	84.0	 	 	 	98.8	 	 	 	38.4	 
	8
	 	IV	 	 	74	 	 	 	56	 	 	 	55.2	 	 	 	924	 	 	 	15.0	 	 	 	69.8	 	 	 	587	 	 	 	238	 	 	 	83.5	 	 	 	99.1	 	 	 	33.9	 
	9
	 	IV	 	 	74	 	 	 	72	 	 	 	55.5	 	 	 	919	 	 	 	7.5	 	 	 	45.8	 	 	 	548	 	 	 	248	 	 	 	84.6	 	 	 	98.8	 	 	 	38.3	 
	10
	 	IV	 	 	70	 	 	 	72	 	 	 	53.8	 	 	 	948	 	 	 	7.5	 	 	 	45.9	 	 	 	548	 	 	 	213	 	 	 	84.6	 	 	 	98.8	 	 	 	32.9	 








 




			
	a	 	Commercial aqueous syrup used
	 
	b	 	Brix degrees after syrup concentration
	 
	c	 	Residence time in crystallizer at 8° C
	 
	d	 	By weight %, amount of LTL after syrup concentration
	 
	e	 	Amount of concentrated syrup (kg)
	 
	f	 	By weight % amount of trihydrated LTL used as a crystallization initiator
	 
	g	 	Weight of trihydrated LTL used as a crystallization initiator
	 
	h	 	LTL total weight (LTL of the syrup + LTL used as a crystallization initiator)
	 
	i	 	Weight of trihydrated LTL recovered
	 
	l	 	titre of anhydrous LTL in trihydrated crystal before drying
	 
	m	 	titre of anhydrous LTL after drying
	 
	n	 	yield calculated by:

(anhydrous) crystalline LTL recovered (kg)

(anhydrous) total LTL In the system (kg)





I claim:



1. A process for the preparation of crystalline lactulose having a content of carbohydrates
which are different from lactulose that is lower than 1% and a lactulose content of more than
98.5%, said process comprising the following steps:





	(a)	 	evaporating a part of the water from an aqueous lactulose syrup under continuous stirring
at a temperature of from 50° to 60° C. and at a pressure of from 2660 to 6650 Pa to obtain
a concentrated lactulose syrup with a sugar concentration of 70°-80° Brix, said aqueous
lactulose syrup having a lactulose content of from 50% to about 62% by weight and a content
of carbohydrates which are different from lactulose and include lactose, galactose and
other carbohydrates, the lactose content being from 3% to 9% by weight; the galactose
content being from 3% to 14 % and the other carbohydrate content being from 4% to 7% by
weight;






	(b)	 	cooling the concentrated syrup obtained in step (a) to a temperature of from 5° to 20° C.
prior to adding from 5% to 30% by weight of crystalline trihydrated lactulose based on the total weight of lactulose which is present in said aqueous lactulose syrup;






	(c)	 	stirring the product of step (c) for a period of from 20 to 120 hours to crystallize the
lactulose which is present as trihydrated lactulose;






	(d)	 	separating the crystallized trihydrated lactulose by centrifugation or filtration of the
product of Step (c) to obtain a mother liquor and separated crystallized trihydrated
lactulose; and thereafter washing said separated crystallized trihydrate of lactulose with
cold water prior to drying the separated crystallized trihydrate of lactulose at a temperature
of from 30° to 60° C., to obtain crystalline lactulose having a water content of less that
0.5%.





     2. The process according to claim 1, wherein the crystalline trihydrated lactulose is
added in an amount of between 5% and 15% by weight of the lactulose present in said aqueous
lactulose syrup.



     3. The process according to claim 1, wherein the mother liquors obtained in step (d) are
passed one or more times through columns containing ion exchange resins to reduce the content of
carbohydrates which are other than lactulose.



     4. The process according to claim 3, wherein the mother liquors which are recovered after the
passage through the ion exchange columns are mixed with the aqueous lactulose syrup of step (a).



     5. A process for the preparation of crystalline lactulose having a content of carbohydrates
which are different from lactulose that is lower than 1% and a lactulose content of more than
98.5%, said process consisting essentially of the following steps:


(a) evaporating a part of the water from an aqueous lactulose syrup under continuous stirring at a
temperature of from 50° to 60° C. and at a pressure of from 2660 to 6650 Pa to obtain a
concentrated lactulose




 









 









	 	 	syrup with a sugar concentration of 70°–80° Brix, said aqueous lactulose syrup having a
lactulose content of from 50% to about 62% by weight and a content of carbohydrates which are
different from lactulose and include lactose, galactose and other carbohydrates, the lactose
content being from 3% to 9% by weight; the galactose content being from 3% to 14 % and the other
carbohydrate content being from 4% to 7% by weight;






	(b)	 	cooling the concentrated syrup obtained in step (a) to a temperature of from 5° to 20° C.
prior to adding from 5% to 30% by weight of crystalline trihydrated lactulose based on the
total weight of lactulose which is present in said aqueous lactulose syrup;






	(c)	 	stirring the product of step (c) for a period of from 20 to 120 hours to crystallize the
lactulose which is present as trihydrated lactulose;






	(d)	 	separating the crystallized trihydrated lactulose by centrifugation or filtration of the
product of step (c) to obtain a mother liquor and separated crystallized tri-
hydrated lactulose; and thereafter washing said separated crystallized trihydrate of
lactulose with cold water prior to drying the separated crystallized trihydrate of lactulose at
a temperature of from 30° to 60° C., to obtain crystalline lactulose having a water content of
less that 0.5%.





     6. The process according to claim 5, wherein the crystal-line trihydrated lactulose is added
in an amount of between 5% and 15% by weight of the lactulose present in said aqueous lactulose
syrup.



     7. The process according to claim 5, wherein the mother liquors obtained in step (d) are
passed one or more times through columns containing ion exchange resins to reduce the content of
carbohydrates which are other than lactulose.



     8. The process according to claim 7, wherein the mother liquors which are recovered after the
passage through the ion exchange columns are mixed with the aqueous lactulose syrup of step (a).



* * * * *




 









 








	 	 	 	 	 	 	 
	United States Patent

	 	Patent Number:
	 	 	5,003,061	 
	Carobbi et al.

	 	Date of Patent:
	 	Mar. 26, 1991






METHOD FOR PREPARING HIGH-PURITY CRYSTALLINE LACTULOSE




	 	 	 
	Inventors:

	 	Renato Carobbi, Pistoia; Franco
Innocenti, Bagno a Ripoli, both of
Italy
	 
	 	 
	Assignee:

	 	SIRAC Srl, Milan, Italy
	 
	 	 
	Appl. No.:

	 	 141,786
	 
	 	 
	Filed:

	 	Jan. 11, 1988






Foreign Application Priority Data




	 	 	 
	Dec. 1, 1987 [IT] Italy

	 	22848 A/87
	Int. Cl.5

	 	C07H 1/06; C13F 1/02
	U.S. Cl

	 	536/127; 536/1.1;
	 

	 	536/4.1; 127/30; 127/46.1; 127/58
	Field of Search

	 	536/1.1, 4.1, 127;
	 

	 	127/30, 46.1, 58






References Cited

U.S. PATENT DOCUMENTS




	 	 	 	 	 	 	 	 	 
	 	3,110,600	 	 	11/1963
	 	Bok

	 	536/1.1
	 	3,546,206	 	 	12/1970
	 	Guth et al.

	 	127/30
	 	3,562,012	 	 	2/1971
	 	Reinicke et al.

	 	536/1.1
	 	3,816,174	 	 	6/1974
	 	Nagasawa et al.

	 	127/30
	 	3,816,394	 	 	6/1974
	 	Nagasawa et al.

	 	536/124
	 	4,142,916	 	 	3/1979
	 	Ogasa et al.

	 	127/63
	 	4,264,763	 	 	4/1981
	 	Gasparotti

	 	536/1.1
	 	4,273,922	 	 	6/1981
	 	Hicks

	 	127/46.1
	 	4.536,221	 	 	8/1985
	 	Carobbi et al.

	 	536/127
	 	4,555,271	 	 	11/1985
	 	Carobbi et al.
	 	127/46.2
	 	4,605,646	 	 	8/1986
	 	Bernardi
	 	514/53
	 	4,812,444 	 	 	3/1989
	 	Mitsuhashi et al.
	 	514/53







FOREIGN PATENT DOCUMENTS




57-102200 6/1982 Japan.

61-104800 5/1986 Japan.

1232554 5/1971 United Kingdom.
2031430 4/1980
United Kingdom.



OTHER PUBLICATIONS




Montgomery et al; J.A.C.S. 52:2101-2106, May 1930.

Oosten; Chemical Abstracts 67:73799k (1967).

Nitsch et al; Chemical Abstracts 84:150910v (1976).

Krol et al; Chemical Abstracts 90:40510f (1979).

Takahashi; Chemical Abstracts 105:135841g (1986).




Primary Examiner—Ronald W. Griffin

Assistant Examiner—Nancy S. Carson

Attorney, Agent, or Firm—Parkhurst, Wendel & Rossi




ABSTRACT



A method for preparing high-purity crystalline lactulose and the product obtained by the method,
which comprises crystallization from aqueous solutions at a temperature of 5’-40’ C., the starting
aqueous solution having a lactulose concentration of 50-80% w/w, a lactose concentration of less
than 5% of the lactulose concentration by weight, a galactose concentration of less than 5% of the
lactulose concentration by weight, and a concentration of other sugars of less than 4% of the
lactulose concentration by weight.




4 Claims, No Drawings




 









 









METHOD FOR PREPARING HIGH-PURITY

CRYSTALLINE LACTULOSE




FIELD OF THE INVENTION




     This invention relates to a new method for preparing high-purity crystalline lactulose by
crystallizing aqueous solutions which contain it and eliminating the secondary components during
the crystallization stage, and to the crystalline lactulose obtained in this manner.



PRIOR ART




     Lactulose, or 4-O-b-D-galactopyranosyl-D-fructofuranose, is a semisynthetic disaccharide used
in the form of a syrup or crystalline product for its laxative effects, for its effectiveness in
hepatic disfunctions and particularly in portosystemic encephalopathy, or as a sweetener.



     Commercially available lactulose syrup is generally impure, containing variable quantities of
other carbohydrates, particularly lactose and galactose.



     A typical composition of currently available syrup is the following:



			
	lactulose
	 	50%by weight
	galactose
	 	5-8%by weight
	lactose
	 	3-3%by weight
	other carbohydrates
	 	5-10%by weight





in which relatively large percentages of carbohydrates other than lactulose are present. These
carbohydrates are also present, generally in lesser quantity, in currently commercially available
crystalline lactulose.




     Carbohydrates other than lactulose are undesirable in therapeutic applications for which
lactulose is intended, and in particular for patients requiring a galactose-free diet and diabetic
patients.



     There is therefore a requirement for crystalline lactulose of higher purity, in particular
with the greatest possible reduction in carbohydrates other than lactulose and with the absence of
undesirable residual alcoholic solvent concentrations, which are present when lactulose is
crystallized from alcoholic solutions.



     The main currently known lactulose purification methods involve the use of alcoholic solvents,
generally ethanol, together with complex procedures based on the extreme solubility of lactulose in
an aqueous environment, or on various concentration processes by drying.



     Crystalline lactulose obtained from alcoholic solvents is known to always contain a
considerable percentage of solvent retained by the crystal, probably by the formation of hydrogen
bonds between the sugar OH groups and the solvent OH groups, and it is never possible to eliminate
the solvent residue even by prolonged drying.



     One example of a process of purification by crystallization from ethanol is described in
Italian patent No. 1,155,429.



     The yield of such processes when calculated with respect to the lactulose contained in the
starting syrup is particularly low.



     In the present text the term “yield” indicates the amount of crystalline product obtained in a
single step, as a weight percentage of the starting lactulose.



     Thus, processes for obtaining crystalline lactulose from alcoholic solutions have the
drawbacks of greater complication, lower yields and consequent higher cost,
and a product from which the undesirable alcoholic solvent traces cannot be eliminated.



     Again, processes involving concentration by direct drying of aqueous lactulose solutions, even
if of high purity and whatever drying method is used (vacuum, lyophilization, spray drying), are
known to lead to a very hygroscopic solid amorphous product or, as described in JP No. 61104800, to
a solid containing crystalline lactulose which has to undergo further mixing and grinding before it
can be used.



     Thus none of the previously used methods has provided crystalline lactulose free both of
impurities in the form of other undesirable carbohydrates and of residual concentrations of
alcoholic solvent retained by the lactulose crystal.



     Up to the present time it has been impossible in practice to directly obtain from aqueous
solutions high-purity crystalline lactulose having the characteristics of the lactulose claimed in
the present patent.



SUMMARY OF THE INVENTION




     In accordance with the present invention we have now discovered a new industrially applicable
lactulose purification process which obviates all these drawbacks and enables crystalline lactulose
to be obtained in a particularly simple and economical manner with a degree of purity exceeding 98%
by weight and practically free of carbohydrates other than lactulose, in particular lactose and
galactose, from aqueous solutions which contain it in an impure state due to the presence of
carbohydrates other than lactulose, and/or alcohols. If the process of the present invention is
applied to lactulose crystallized from alcoholic solutions and then redissolved in water, the
crystalline lactulose finally obtained is practically free of any trace of the alcoholic solvent
used and thus has a degree of purity considerably higher than that obtainable by any process
previously used.



     The final yield of the process according to the invention varies according to the
crystallization temperature, the crystallization time, the lactulose purity and the solution
purity, and lies between 10 and 70%.



     In its preferred embodiments, the yield varies from 55 to 70% as indicated hereinafter, and is
therefore considerably greater than in all previously used methods, so making this process usable
more economically on an industrial scale than previous processes.



     The method of the present invention enables crystalline lactulose to be obtained from aqueous
solutions which are impure because of the presence of carbohydrates other than lactulose and/or
alcohols, and in particular from aqueous solutions having the following characteristics:



     (a) lactulose concentration of 50-80% w/w and preferably 65-70% w/w in the aqueous solution;



     (b) lactose concentration of less than 5% of the lactulose concentration by weight;
(c) galactose concentration of less than 5% of the lactulose concentration by weight;



     (d) concentration of other carbohydrates of less than 4% of the lactulose concentration by
weight;



     (e) total concentration of carbohydrates other than lactulose not exceeding 6% of the
lactulose concentration by weight.



     The method according to the present invention is characterised by maintaining the
crystallization conditions within precise critical values, and more specifi-



 









 




cally by simultaneously maintaining all the indicated parameters within the following
defined critical values:




     a. Crystallization temperature between 5° and 40° C., and preferably
between 10° and 15° C.



     b. Crystallization time between 10 and 60 hours, and preferably between 24 and 36 hours.



     Outside these values an extremely low final process yield is obtained such that the process
cannot be used industrially, it being sufficient for only one of these parameters to lie outside
the range of values defined by the present invention for the final yield to be such as to make the
process unusable industrially.



     This process, which is described in detail in the examples, therefore not only enables
crystalline lactulose to be obtained directly from sufficiently pure aqueous solutions, but also
enables the residual solvent to be completely eliminated from crystalline lactulose obtained by
conventional crystallization from alcoholic solvents such as methanol, ethanol and propanol.



     The following examples are given as non-limiting illustration of the process according to the
invention for purifying and crystallizing lactulose from aqueous solutions.



EXAMPLE 1




     1000 kg of a lactulose solution having the following composition:



			
	lactulose
	 	50%
	lactose
	 	0.7%
	galactose
	 	0.9%
	other sugars
	 	0.3%
	water
	 	to make up to 100%






     are concentrated under vacuum to a lactulose concentration of 70%.



     The concentrated solution is then cooled to 13° C. and 1 kg of crystalline lactulose
is added.



     The mixture is left under agitation for 24 hours maintaining the temperature at 13°
C., after which the solid obtained, consisting of crystalline lactulose, is filtered off.



     The solid is dried in an air oven at a temperature not exceeding 35° -40°
C. to obtain 273 kg of crystalline lactulose with a purity exceeding 98% and a yield of 54.5%.



EXAMPLE 2




     1000 kg of a lactulose solution having the following composition:



	 	 	 	 	 
	lactulose
	 	 	50	%
	lactose
	 	 	0.7	%
	galactose
	 	 	0.9	%
	other sugars
	 	 	0.3	%
	water to make up to
	 	 	100	%





are concentrated under vacuum to a lactulose concentration of 68%.




     The concentrated solution is cooled to 35° C. after which 1 kg of crystalline
lactulose is added.



     Over a period of 20 hours the temperature is cooled to 15° C. while maintaining slow
agitation, this temperature then being maintained for a further 16 hours.



     By centrifuging, 373 kg of wet product (KF 17%) are obtained, equivalent to 309.5 kg of dry
product, with a yield of 61.7% and a purity of 98.3%.



EXAMPLE 3




     500 kg of crystalline lactulose (purity 98.7%) obtained by crystallization from ethanol, with
a residual ethanol concentration of 5000 ppm, are dissolved in 2000 l of water.



     The solution obtained is concentrated under vacuum to 68% of lactulose and its temperature
allowed to reach 30° -35° C. spontaneously.



     Crystallization is triggered by adding 800g of crystalline lactulose.



     The solution is then cooled to about 15° C. and kept at this temperature for 30
hours.



     By centrifuging, 430 kg of wet product (KF 18%) are obtained, equivalent to 342.5 kg of dry
product, with a yield of 68.5% and a purity exceeding 99%.



     The residual ethanol content is reduced to less than 5 ppm.



     We claim:



     1. A method for preparing crystalline lactulose having less than 2% of carbohydrate other than
lactulose and a purity exceeding 98% comprising:




	 	(a)	 	adding a crystalline lactulose seed to an aqueous solution of lactulose having a
lactulose concentration of from 50% to 80% w/w, a lactose concentration of less than 5% of
the lactulose concentration by wt., a galactose concentration of less than 5% of the
lactulose concentration by wt. and concentration of other carbohydrates of less than 4% of
the lactulose concentration by wt.;
	 
	 	(b)	 	crystallizing said lactulose solution at a temperature between 5° and
40° C. and in a time between 10 and 60 hours; and
	 
	 	(c)	 	drying the obtained crystalline lactulose.





     2. A method as claimed in claim 1, wherein the lactulose concentration in the aqueous solution
is 65-70% w/w and the total concentration of carbohydrates other than lactulose does not exceed 6%
of the lactulose concentration by weight.



     3. The method of claim 1 wherein said lactulose solution crystallizing temperature is between
10° C. and 15° C. and said time is between 24 and 36 hours.



     4. The method of claim 1 wherein the aqueous solution of lactulose is obtained by dissolving
lactulose, which was previously crystallized from alcoholic solutions, in water.



* * * * *




 









 





UNITED STATES PATENT AND TRADEMARK OFFICE

CERTIFICATE OF CORRECTION




	 	 	 
	PATENT NO.

	 	 5,003,061
	 
	 	 
	DATED

	 	March 26, 1991
	 
	 	 
	INVENTORS) :

	 	Renato CAROBBI et al.






     It is certified that error appears in the above-identified parent and that said Letters Patent is
hereby corrected as shown below:



Title Page:

[73] Assignee: Please change “SIRAC Srl, Milan, Italy” to



—INALCO S.p.A., Milano, Italy—




					
	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	Signed and Sealed this


Fifth Day of January, 1993
	 	 	 	 	 
	 
	 	Attest:	 	 
	 	 	 	 	 
	 
	 	 	 	DOUGLAS B. COMER
	 	 	 	 	 
	 
	 	Attesting Officer
	 	Acting Commissioner
of Patents and Trademarks






 









 






REEXAMINATION CERTIFICATE

ISSUED UNDER 35 U.S.C. 307




THE PATENT IS HEREBY AMENDED AS

INDICATED BELOW.




     Matter enclosed in heavy brackets [ ] appeared in the patent, but has been deleted and is no
longer a part of the patent; matter printed in italics indicates additions made to the patent.


AS A RESULT OP REEXAMINATION, IT HAS BEEN DETERMINED THAT:





	 	 	Claim 1 is determined to be patentable as amended.





     Claims 2, 3 and 4, dependent on an amended claim, are determined to be patentable.



     1. A method for preparing crystalline lactulose having less than 2% of carbohydrate
other than lactulose and a purity exceeding 98% comprising;



     (a) adding a crystalline lactulose seed to an aqueous solution of lactulose having a
lactulose concentration of from 50% to 80% w/w, a lactose concentration of less than 5% of the
lactulose concentration by wt., a galactose concentration of less than 5% of the lactulose
concentration by wt. and concentration of other carbohydrates of less than 4% of the lactulose
concentration by wt., said aqueous solution containing water as the only solvent;



     (b) crystallizing said lactulose solution at a temperature between 5° and 40° C. and in a
time between 10 and 60 hours; and



     (c) drying the obtained crystalline lactulose.



* * * * *





 









 





EXHIBIT C




Transition Plan





 









 








TRANSITION PERIOD SERVICES AGREEMENT





     THIS AGREEMENT is made and entered into as of April 7 , 2006, by and between
INALCO BIOCHEMICALS, INC., a California corporation with principal offices at 3440 Empresa Drive,
Suite A, San Luis Obispo, California 93401 (“Service Provider”) and CUMBERLAND PHARMACEUTICALS
INC., a Tennessee corporation with principal offices located at 2525 West End Avenue, Suite 950,
Nashville, Tennessee 37203 ("Recipient"). Service Provider and Recipient are
referred to herein collectively as "Parties" and separately as a “Party.”



     WHEREAS, this Agreement is intended to govern certain tasks to be accomplished in order to
effect the orderly transfer from Service Provider to Recipient of the certain supply chain
activities; and



     WHEREAS, Recipient wishes Service Provider provide for certain transitional services related
to the Product (as defined herein) by Recipient, and Service Provider is willing to provide for
such transitional services to Recipient, on the terms and conditions set forth herein.



     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:



ARTICLE 1

SERVICES




     1.1 Services Overview. During the Term (as defined in Article 7 hereof) and subject
to the terms and conditions of this Agreement, Service Provider shall have provided to Recipient
the supply chain activity services set forth in Section 1.2 (collectively, the “Services”).



     1.2 Supply Chain Activity Services.



     (a) Description. Service Provider shall have performed the following supply chain
activity services relating to the Product: (i) customer service; (ii) maintaining inventory levels
of Product (as defined herein) based upon Recipient’s forecasts and reporting inventory levels
monthly to Recipient; (iii) order taking, processing and fulfillment of orders including billing
and invoicing; (iv) processing and recording of sales, credits and price concessions; (v)
warehousing and distribution; (vi) management of suppliers for transfer to Recipient; (vii)
calculation and filing of government reports; (viii) reconciling aged accounts receivable
balances; (ix) processing and destroying returned Product; (x) coordinating logistics and
obtaining and maintaining all necessary permits and all other documentation for transporting
Product; and (xi) processing of government rebates for Product identified by Mylan’s NDC Code
throughout the Term. For purposes hereof, “Product” shall mean the pharmaceutical product
lactulose crystals sold under the Kristalosee trademark in all strengths and dosage forms. For
purposes hereof, “NDC Code” shall mean the National Drug Code number assigned as a listing number
to each drug or class of drugs as described in Section 510(e) of the Federal Food, Drug, and
Cosmetic Act. Notwithstanding anything herein to the contrary, commencing on the Effective Date
(as defined herein), Recipient shall have sole responsibility for production forecasts and all
Product pricing decisions and any state and other governmental entity licenses for Product
commercial distribution. For purposes hereof, “Effective Date” shall mean the Effective Date as
defined in the Kristalose Agreement dated April 7 , 2006, among Recipient, Inalco
Biochemicals, Inc., and Inalco S.p.A (the "Master Kristalose Agreement").
With respect to the Product, the Transition Team (as defined in Section 3.1(b)) will work together
in good faith to determine how the Recipient and Service Provider will cooperate to comply with
all government price reporting obligations, including, but not limited to, average
manufacturer‘s price, average sales price, best price, and non-federal average
manufacturing price. All Services are required to be provided in a competent manner in conformity
with applicable requirements of any governmental authority, including the United States Food and
Drug Administration.



 









 





     (b) Service Period. Except for the Services set forth in Section 1.2 (a)(xi) which
Service Provider shall have performed throughout the Term, Service Provider shall have performed
the Services set forth in this Section 1.2 for the period commencing on the Effective Date and
ending on the first to occur of (i) early termination of this Agreement pursuant to Article 7
hereof; or (ii) the date upon which Recipient has begun using its own NDC Code and all inventories
of Product containing Mylan’s NDC Code have been sold. Immediately upon expiration of such period,
Recipient shall be fully responsible for such Services and shall immediately cease using Mylan’s
NDC Code, and Service Provider shall have no further responsibility whatsoever for the Services.



     (c) NDC Code. Recipient shall use all reasonable efforts to establish as soon as
possible following the Effective Date its own NDC Code. Once the Recipient has received its own
number, the Transition Team will work together to transition to use of that code on the Product as
soon as possible. Within ten (10) business days of the receipt by Recipient of its own NDC Code,
the Parties, acting through their designees on the Transition Team, will agree in writing on the
date for the transition of the Services (except for Services provided pursuant to Section
1.2(a)(xi)) from Service Provider to Recipient.



     (d) Sales Data. Service Provider shall supply Recipient on a monthly basis with a
written report containing information on the channels of distribution of the Product, sales
results, and remaining inventory of the Product for the period since the ending date of the prior
such report. Each report shall be delivered to Recipient no later than five (5) days after the end
of the month in question. Within thirty (30) days after the end of the month in question, Service
Provider will also provide a more detailed sales report that sets forth the information contained
in Section 2.2(a)(i),(ii), and (iii) and such other information as is reasonably requested by
Recipient.



     1.3 Limitation on Service Provider’s Obligations. Service Provider will not be
obligated to (i) hire additional or different personnel or acquire additional resources or (ii)
retain personnel currently employed by it, but, in each case to devote such personnel as may be
reasonably necessary to provide the Services to Recipient pursuant to and in accordance with the
terms of this Agreement.



     1.4 Performance of Services; Remedy. Service Provider agrees to have performed the
Services with the same skill, diligence, and expertise as have historically been applied by Service
Provider and others in the performance of Services prior to the Effective Date. Service Provider
shall have the Services performed at existing facilities of Mylan Laboratories or at such other
place as agreed in writing by Recipient in advance of performance. Each Party agrees and
acknowledges that except as otherwise set forth herein, Recipient’s sole and exclusive remedy and
Service Provider’s sole and exclusive liability for any defect or error in the Services will be
correction or re-performance of the Services.



     1.5 License. Service Provider hereby represents and warrants that it has the right to
sublicense, and hereby does sublicense, to Recipient its non-exclusive license to use the names and
marks “Mylan” and “Bertek” in connection with the use, sale, marketing and distribution of the
Product. All such use shall be consistent with the use of such names in connection with the Product
prior to the Effective Date. Such sublicense shall terminate upon the earliest to occur of the
following events: (i) Recipient‘s commencing commercial use of revised labels, printed
materials and Product samples to sell, market and distribute the Product under Recipient’s own name
and NDC Code; (ii) termination of the Services set forth in Section 2.1 of this Agreement; (iii)
Service Provider’s receipt of written notice from Recipient that Recipient no longer requires the
sublicense; or (iv) thirty (30) days after Recipient’s receipt of notice from Service Provider that
Recipient is in material breach of this Section 1.5 if Recipient has not, within such thirty (30)
day period, cured such material breach. Recipient shall make commercially reasonable efforts to
obtain such revised labels, printed materials and Product samples as soon as possible.





-2-









 





ARTICLE 2

FEES



     2.1 Fees. If Recipient fails to begin performing the Services (except for Section
1.2(a)0d)) on the date agreed to by the Transition Team pursuant to Section 1.2(c), Recipient shall
begin on such date paying Service Provider the sum of [***] Dollars (US
$[***]) per month for the Services. In addition, Recipient shall reimburse Service Provider for
all documented and reasonable out-of-pocket expenses incurred during the Term and necessary for the
performance of all of Service Provider’s obligations under this Agreement.



     2.2 Payments. (a) During the period that the Service Provider shall have the Services
set forth in Section 1.2(a) performed, Service Provider will immediately remit to Recipient
payments received from Mylan, which are to be made the first business day of each calendar month,
an amount equal to the revenues received by Mylan during the prior calendar month from the sale of
Product (after the deduction of any quantity and / or normal and customary cash discounts actually
allowed for the sale of those Products) less (i) Recipient’s supply price of $[***] per 10-gram
pouch sold and $[***] per 20-gram pouch sold, as applicable, (ii) the cost of any credits, rebates,
administrative fees, reimbursements, chargebacks, rejections, returns or similar charges allocated
to the Recipient as determined by Section 2.3 below in such calendar month, and (iii) any and all
fees due from Recipient to Service Provider for such calendar month as set forth in Section 2.1. If
the costs under subsections (i), (ii) and (iii) in this Section exceed the revenues received by the
Service Provider from the sale of Product for the calendar month then the Recipient will remit the
balance to Service Provider. Thereafter, Recipient shall make payments to Service Provider monthly
within [***] ([***]) days of Recipient’s receipt of invoice for amounts due under Section 2.2(a)(ii)
above. Service Provider may charge the Recipient a late fee of one and one-half percent (1.5%) per
month on any undisputed payment which the Recipient does not pay within thirty (30) days of
becoming due. Taxes arising as payable by the Recipient by virtue of the delivery of Services
hereunder shall be in addition to the foregoing amounts and shall be paid by Recipient.



     (b) Any withholding taxes, levies, or other duties paid or required to be withheld under the
appropriate local tax laws by Service Provider as a direct result of monies being paid to Recipient
hereunder may be deducted from the amount of monies otherwise payable to Recipient provided that
Service Provider promptly provides Recipient with a certificate evidencing payment of such taxes,
levies or dates and the amounts actually paid. The Parties shall cooperate reasonably with each
other to ensure that any amounts required to be withheld are reduced in amount or not paid to the
fullest extent permitted by law. No deduction shall be made, or a reduced amount shall be deducted,
if Recipient furnishes a document from the appropriate tax authorities to Service Provider
certifying that the payments are exempt from withholding or subject to reduced withholding,
according to the applicable convention for the avoidance of double taxation.



     2.3 Accounts Arrangements. For all credits, price concessions, rebates, administrative
fees, reimbursements, chargebacks, rejections, returns (including the cost of destroying any
return) and similar costs (“Costs”) paid or issued subsequent to the Effective Date that pertain:



     (a) to the sale of Product prior to the Effective Date, Service Provider shall be responsible
for those Costs; and



     (b) to the sale of the Product subsequent to the Effective Date, Recipient shall be
responsible for those Costs.


Recipient shall reimburse Service Provider, and Service Provider shall reimburse Recipient, for any
payments made by it for which the other is responsible pursuant to this Section 2.3, in each case
against invoice. Determination of liability for any particular Cost shall be made using the
methodology that most accurately and reasonably allocates Costs as outlined above, such as lot
number of the Product sold, or where it is not possible to determine the lot number of Product
sold, by the timing between incurring the Cost and the time of actual payment (such time lag to be
reasonable to both Parties) or such other method as the Parties may agree. If the


-3-









 





Parties cannot agree on allocation of any Cost, the calculation will be submitted for determination
to an international, independent public accounting firm mutually selected by the Parties, and such
determination will be binding on the Parties. For ease of administration, the Parties agree to
accept the following assumptions:





(i) for Medicaid rebates, rebates that are claimed within 180 days of the Effective
Date will be deemed to pertain to Mylan’s sales and rebates claimed thereafter (or
any with Recipient ‘s label) will be deemed to pertain to Recipient’s sales;



(ii) with respect to returns, each Party is responsible for all returns relating to
entire lots of Product sold by it. Where each Party has sold part of a lot of
Product, unless otherwise agreed, returns will be destroyed and the responsibility
for the Costs of such returns will be allocated between Recipient and Service
Provider in proportion to volume of sales of Product made by it from that lot. The
Parties believe the above calculation would be the most reasonable basis for
allocating returns, however, if after reviewing the actual return activity, a Party
believes an alternate basis is more accurate it may propose such alternate basis.
If the Parties cannot agree on the suggested alternate allocation of returns, the
calculation will be submitted for determination to an international, independent
public accounting firm mutually selected by the Parties, and such determination
will be binding on the Parties.



ARTICLE 3

DELIVERY




     3.1 Delivery.



     (a) Books and Records. Service Provider shall commence delivery of the books and
records set forth on Exhibit A hereto (the “Books and Records”) to Recipient within seven
(7) business days of the Effective Date, and Service Provider shall complete the delivery of the
Books and Records to Recipient within thirty (30) days of the Effective Date. Notwithstanding
anything herein to the contrary, the Parties acknowledge that Service Provider may indefinitely
retain a copy of the Books and Records for regulatory, liability and/or archival purposes.



     (b) The Parties shall appoint a transition team comprising one project manager from
Recipient, one project manager from Service Provider and one project manager from Mylan
("Transition Team”). Each project manager shall involve additional representatives of
his/her respective Party with the requisite experience, knowledge and expertise necessary to
accomplish the objectives of the Transition Team. Service Provider shall have Mylan’s
representative on the Transition Team provide for access to employees and/or contractors who have
direct and up-to-date experience of managing the Product. The Transition Team shall be appointed
within ten (10) days of the Effective Date for the Term and shall be responsible for agreeing and
implementing the detailed arrangements for the transfer of each of the Services from Service
Provider to Recipient.



ARTICLE 4

RESPONSIBILITY




     Nothing in this Agreement shall be construed as: (a) an assumption by either Party hereto of
any financial obligation of the other Party hereto; (b) an assumption by either Party hereto of
responsibility for the operations of the other Party hereto; or (c) the creation of any
relationship of employment between either Party hereto and employees or consultants of the other
Party hereto, or its affiliates.



-4-









 





ARTICLE 5

DISCLAIMERS; INDEMNIFICATION




     5.1 Disclaimer of Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER
PARTY MAKES ANY REPRESENTATION OR WARRANTY TO THE OTHER PARTY OF ANY KIND, EXPRESS OR IMPLIED,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE.



     5.2 Exclusion of Liability. IN NO EVENT SHALL EITHER PARTY, ITS DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS OR AFFILIATES BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL,
EXEMPLARY OR CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO LOST PROFITS ARISING FROM OR
RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF THE POSSIBILITY OF SUCH
DAMAGES.



     5.3 Limitation of Liability. EXCEPT AS OTHERWISE SET FORTH HEREIN, SERVICE PROVIDER’S
AGGREGATE LIABILITY ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT SHALL BE LIMITED TO
CORRECTION OR RE-PERFORMANCE OF THE SERVICES BY SERVICE PROVIDER AT SERVICE PROVIDER’S EXPENSE.



     5.4
Indemnification. Each Party (the “Indemnifying Party”) shall
indemnify and hold the other Party (the “Indemnified Party”) harmless from and against all claims,
causes of action, settlement costs, including reasonable attorneys’ fees, losses or liabilities of
any kind asserted by third persons which arise out of or are attributable to any negligent act or
omission on the part of the Indemnifying Party in the performance of its obligations under this
Agreement.



ARTICLE 6

FORCE MAJEURE




     Service Provider shall not be held responsible for the failure or delay in performance
hereunder to the extent such failure or delay is due to a cause reasonably beyond the control of
Service Provider, and which could not be avoided or prevented by reasonable foresight and planning
(“Force Majeure Event”). This may (but may not necessarily) include without limitation, an
act of God, war, fire, flood, explosion, sabotage, terrorism, epidemic, strikes and labor
interruption, shortage, accident, unusually severe weather or other similar causes. In any such
event, Service Provider shall promptly give notice to Recipient of the occurrence or circumstance
upon which it intends to rely to excuse its performance. Duties and obligations of both Parties to
the extent so affected shall be suspended for the duration of the Force Majeure Event and the fee
payable under Section 2.1 shall be reasonably adjusted to reflect the level and scope of Services
received by Recipient; provided, however, during such Force Majeure Event, Service Provider shall
use reasonable efforts in providing Services hereunder not to disfavor Recipient as compared to
itself when providing such similar services for its own operations.



ARTICLE 7

TERM AND TERMINATION




     7.1 Term and Termination.



     (a) Unless this Agreement is earlier terminated in accordance with paragraphs (b) or (c) of
this Section 7.1, or unless otherwise agreed to in writing by the Parties hereto, this Agreement
shall terminate on the date which is eighteen (18) months following the Effective Date (the
“Term”). In addition to the provisions of paragraphs (b) and (c) of this Section 7.1, this
Agreement may be terminated by Recipient upon thirty (30) days’ advance written notice to Service
Provider at any time.



-5-









 





     (b) If Service Provider, on the one hand, or Recipient, on the other hand, shall fail to
perform or shall default in the performance of any material provision of this Agreement, and if
such failure or default shall continue for thirty (30) days (or where the default is a failure to
pay monies due, for ten (10) days) after receipt by such defaulting Party of written notice of
such failure or default, and such failure or default is not cured within such thirty (30) day (or
ten (10) day) period (as appropriate), then the non-defaulting Party may terminate this Agreement
in its entirety only. A termination of this Agreement shall become effective upon the expiration
of such thirty (30) day (or ten (10) day) period (as appropriate), without the requirement of any
additional notice, in the absence of a cure of the default and notice by the defaulting Party to
the non-defaulting Party that the default has been cured. Termination pursuant to this Section
7.1(b) shall be without prejudice to any right or remedy a Party may have in respect of the breach
giving rise to the termination.



     (c) Upon expiration of the Term or earlier termination hereof for any reason, Service
Provider shall have Mylan immediately cease all marketing, sale, promotion and distribution of the
Product and shall promptly send all relevant records, materials, or confidential information
relating to the Product and any remaining inventory thereof in its possession to Recipient.



ARTICLE 8

MISCELLANEOUS




     8.1 Compliance with Applicable Law. In performing this Agreement, the Parties shall
comply with all applicable laws.



     8.2 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 Recipient:

	 	If to Service Provider:
	 
	 	 
	 
	 	 
	Cumberland Pharmaceuticals Inc.

	 	Inalco Biochemicals, Inc.
	2525 West End Ave., Suite 950

	 	3440 Empresa Drive, Suite A
	Nashville, Tennessee 37203

	 	San Luis Obispo, CA 93401
	                                                       
	Fax: 615-255-0094

	 	Fax: 805-782-0719
	                                                        
	Attn: Chief Executive Officer

	 	Attn: Eric A. Lowe







Such notice shall be effective upon the earlier of (i) receipt by the Party to whom notice
is sent, (ii) seven (7) days after deposit into the mail, or (iii) receipt of fax-back
confirmation if notice is sent via facsimile.



     8.3 Assignment. This Agreement shall not be assigned by either Party without the
prior written consent of the other Party, and the performance of its duties hereunder shall not be
delegated; provided, however, that either Party may assign this Agreement to any person or entity
which acquires substantially all of its assets and business.



     8.4 Independent Contractors. The Parties hereto agree that each is acting as an
independent contractor and not as an agent of the other or as joint venturers.



     8.5 Waivers and Modifications. The failure of any Party to insist on the performance
of any obligation hereunder shall not act as a waiver of such obligation. No waiver, modification,
release, or amendment of any obligation under this Agreement shall be valid or effective unless in
writing and signed by both Parties.



-6-









 





     8.6 Successors in Interest. This Agreement shall inure to the benefit of and be
binding on the Parties’ permitted assigns or successors in interest.



     8.7 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.



     8.8 Exhibits; Headings. All Exhibits annexed to and incorporated in this Agreement by
reference are deemed to be a part hereof. The headings used in this Agreement are for convenience
only and are not part of this Agreement.



     8.9 Choice of Law. This Agreement is subject to and shall be construed and enforced in
accordance with the laws of the State of Delaware. The Parties hereby submit to the jurisdiction of
federal and state courts in the State of Delaware in respect to all disputes arising out of or in
connection with this Agreement and waive any and all objections to such venue.



     8.10 Entire Agreement. This Agreement is being entered into pursuant to the Master
Kristalose Agreement, and this Agreement (including exhibits hereto) constitutes an exhibit to the
Master Kristalose Agreement. In the event of any conflict or inconsistency between the terms of
this Agreement and the Master Kristalose Agreement, the terms of the Master Kristalose Agreement
shall govern.



     8.11 Performance. Time is of the essence in each Party’s performance of its
obligations hereunder.



     8.12 Enforcement. Each Party acknowledges that in the event of breach of its covenants
under this Agreement, actual damages may be impossible to calculate, that remedies at law may be
inadequate, and the other Party may suffer irreparable harm. Therefore, the Parties agree that any
such covenant may be specifically enforced through injunctive relief, but such right to injunctive
relief shall not preclude either Party from other remedies which may be available to it.



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



	 	 	 	 	 	 	 
	 	 	INALCO BIOCHEMICALS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ illegible
	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Title: President	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	CUMBERLAND PHARMACEUTICALS INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ A.J. Kazimi	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Title: C.E.O.	 	 






-7-









 





EXHIBIT A to Transition Agreement




Books and Records




Data Room Index




	 	 	 
	Label #	 	Description
	1.

	 	Historical units, gross sales, & expenses
	2.

	 	2005 Market research presentation
	3.

	 	Sample inventory at 2/14/06
	4.

	 	Prices & purchase mix
	5.

	 	Promotional items & literature inventory at 2/14/06
	6.

	 	Medical information / inquiries
	7.

	 	Mylan accounting policies excerpt from 2005 10-k filing
	8.

	 	Gross sales forecast through 2011
	9.

	 	Activity reports: July 2002 — June 2005 details by specialty
	10.

	 	Aligned & call file prescribers by territory
	11.

	 	Call file: QI FY06 & call file development flow chart
	12.

	 	Called on/detailed prescribers: June 2004 — May 2005
	13.

	 	Reach & frequency analysis: FY 2005 & Q1 FY 06
	14.

	 	Sample history: June 2004 — May 2005
	15.

	 	Targets by market
	16.

	 	Targets by product
	17.

	 	Learning System
	18.

	 	Training Manual
	19.

	 	Field Directions & Training Presentation
	20.

	 	Market research study: stocking & positioning
	21.

	 	Sales & marketing presentations, FY 06 marketing plan, promotional plan, & sample distribution procedures
	22.

	 	Concept Testing report & samples of certain promotional materials
	23.

	 	Product supply & manufacturing data
	24.

	 	Medical information
	25.

	 	Trademark documentation





Service Provider also will supply Recipient the following additional items within the time
period specified in Section 3.1(a) of the Agreement:




	 	 	 
	1.

	 	A list of customers to receive a notice letter from Mylan substantially in the form attached hereto.
	2.

	 	All purchase orders pending on the Effective Date, as well as all orders for Product received thereafter.
	3.

	 	All existing URLs related to the Product and information needed to continue use of such URLs.
	4.

	 	All Product inquiries received by Mylan following the Effective Date.
	5.

	 	Analysis of sales by customer.
	6.

	 	All inventory of Product related promotional materials.






 









 





EXHIBIT D




Specifications




 









 







STANDARD SPECIFICATION




	 	 	 
	Product

	 	Lactulose Bulk API
	 
	 	 
	                                                       
	Chemical name

	 	4-O-ß-Galactopyranosyl-D-Fructofuranose. 
	                                                        
	 
	 	 
	Empirical Formula

	 	C12H22O11 
	 
	 	 
	Molecular weight

	 	342.30 
	 
	 	 
	Characters

	 	White or nearly white, odorless powder
	 
	 	 
	Solubility

	 	Freely soluble in water






	 	 	 
	                                                       
	Test	 	Limits
	                                                        
	 
	 	 
	Assay

	 	> [***]% anhydrous basis
	 
	 	 
	                                                       
	Related
substances

(the sum of galactose and lactose)

	 	< [***]% anhydrous basis
	                                                        
	 
	 	 
	Water

	 	< [***]%
	 
	 	 
	                                                       
	Specific Optical Rotation

	 	- [***]o to - [***]o
	                                                        
	 
	 	 
	Total bacterial count

	 	< [***] cfu/g
	 
	 	 
	E.Coli

	 	absent
	 
	 	 
	Salmonella Species

	 	absent






These specifications are current as of March 31, 2006




 









 





STANDARD SPECIFICATION




	 	 	 
	Product

	 	Lactulose for oral solution,

10-gram unit dose
	 
	 	 
	                                                       
	Chemical name

	 	4-O-ß-Galactopyranosyl-D-Fructofuranose.
	                                                        
	 
	 	 
	Empirical Formula

	 	C12H22O11
	 
	 	 
	Molecular weight

	 	342.30 
	 
	 	 
	Characters

	 	White or nearly white, odorless powder
	 
	 	 
	Solubility

	 	Freely soluble in water






	 	 	 
	Test	 	Limits
	 
	 	 
	Assay

	 	> [***]% anhydrous basis
	 
	 	 
	Related substances
(the sum of galactose and lactose)

	 	< [***]% anhydrous basis
	 
	 	 
	Water

	 	< [***]%
	 
	 	 
	                                                       
	Specific Optical Rotation

	 	- [***]o to - [***]o 
	                                                        
	 
	 	 
	Total bacterial count

	 	< [***] cfu/g
	 
	 	 
	E.Coli

	 	absent
	 
	 	 
	Salmonella Species

	 	absent
	 
	 	 
	Fill weight

	 	Average net content of 10 sachets 3 10.0g
	 
	 	 
	Minimum Fill

	 	Net content of any single sachet 3 9.0g
	 
	 	 
	Maximum Full

	 	Net content of any single sachet £ 11.0g






These specifications are current as of March 31, 2006




 









 





STANDARD SPECIFICATION




	 	 	 
	Product

	 	Lactulose for oral solution,

20-gram unit dose
	 
	 	 
	                                                       
	Chemical name

	 	4-O-ß-Galactopyranosyl-D-Fructofuranose.
	                                                        
	 
	 	 
	Empirical Formula

	 	C12H22O11
	 
	 	 
	Molecular weight

	 	342.30 
	 
	 	 
	Characters

	 	White or nearly white, odorless powder
	 
	 	 
	Solubility

	 	Freely soluble in water






	 	 	 
	Test	 	Limits
	 
	 	 
	Assay

	 	> [***]% anhydrous basis
	 
	 	 
	                                                       
	Related
substances

(the sum of galactose and lactose)

	 	< [***]% anhydrous basis
	                                                        
	 
	 	 
	Water

	 	< [***]%
	 
	 	 
	Specific Optical Rotation

	 	- [***]o to - [***]o 
	 
	 	 
	Total bacterial count

	 	< [***] cfu/g
	 
	 	 
	E.Coli

	 	absent
	 
	 	 
	Salmonella Species

	 	absent
	 
	 	 
	Fill weight

	 	Average net content of 10 sachets 3 20.0g
	 
	 	 
	Minimum Fill

	 	Net content of any single sachet 3 18.0g
	 
	 	 
	Maximum Full

	 	Net content of any single sachet £ 22.0g






These specifications are current as of March 31, 2006




 









 





STANDARD SPECIFICATION




	 	 	 
	Product

	 	Lactulose Bulk API
	 
	 	 
	                                                       
	Chemical name

	 	4-O-ß-Galactopyranosyl-D-Fructofuranose.
	                                                        
	 
	 	 
	Empirical Formula

	 	C12H22O11
	 
	 	 
	Molecular weight

	 	342.30 
	 
	 	 
	Characters

	 	White or nearly white, odorless powder
	 
	 	 
	Solubility

	 	Freely soluble in water






	 	 	 
	Test	 	Limits
	 
	 	 
	Identification

	 	Conforms with tests B,C,D and E
of the European Pharmacopoeia
	 
	 	 
	pH of solution

	 	[***] to [***]
	 
	 	 
	Color of solution

	 	£ reference solution BY5
of the European Pharmacopoeia
	 
	 	 
	Clarity of solution

	 	clear
	 
	 	 
	Assay

	 	3 [***]% anhydrous basis
	 
	 	 
	                                                       
	Related
substances

(the sum of galactose, lactose, epilactose,
tagatose and fructose)

	 	£ [***]%
	                                                        
	 
	 	 
	Water

	 	£ [***]%
	 
	 	 
	Specific Optical Rotation

	 	- [***]o to - [***]o
	 
	 	 
	*Boron

	 	£ [***] ppm
	 
	 	 
	*Methanol

	 	£ [***]ppm
	 
	 	 
	*Lead

	 	£ [***]ppm
	 
	 	 
	*Sulphated Ash

	 	£ [***]%
	 
	 	 
	                                                       
	Particle size

	 	[***] > 800μ

[***]% < 100μ
	                                                        
	 
	 	 
	Bulk density

	 	> [***]g/ml
	 
	 	 
	Flowability

	 	< [***] seconds
	 
	 	 
	Total viable aerobic count

	 	< [***] cfu/g
	 
	 	 
	E.Coli

	 	absent/1 g
	 
	 	 
	Salmonella Species

	 	not detectable








 




			
	*	 	These tests are periodically performed in accordance to the Certification of Suitability
of Monographs of the Eur. Ph. and internal validation. It would comply if tested.





These specifications will be effective upon approval by a Competent Authority.




 









 





STANDARD SPECIFICATION




	 	 	 
	Product

	 	Lactulose for oral solution,

10-gram unit dose
	 
	 	 
	                                                       
	Chemical name

	 	4-O-ß-Galactopyranosyl-D-Fructofuranose.
	                                                        
	 
	 	 
	Empirical Formula

	 	C12H22O11
	 
	 	 
	Molecular weight

	 	342.30 
	 
	 	 
	Characters

	 	White or nearly white, odorless powder
	 
	 	 
	Solubility

	 	Freely soluble in water






	 	 	 
	Test	 	Limits
	 
	 	 
	Description

	 	Cardboard box containing patient information
leaflet and 30 single dose sachets, each
containing nominally 10g of white or nearly
white, odorless powder
	 
	 	 
	Identification

	 	Principal peak in test solution chromatogram
is similar in position and size to the principal
peak in the reference solution chromatogram
	 
	 	 
	 

	 	Complies with the test for specific optical

rotation
	 
	 	 
	                                                       
	Fill weight

	 	Average net content of 10 sachets ≥ 10.0g
	                                                        
	 
	 	 
	                                                       
	Minimum Fill

	 	Net content of any single sachet ≥ 9.0g
	                                                        
	 
	 	 
	                                                       
	Maximum Fill

	 	Net content of any single sachet ≥ 11.0g
	                                                        
	 
	 	 
	pH of solution

	 	[***] to [***]
	 
	 	 
	Assay

	 	3 [***]% anhydrous basis
	 
	 	 
	                                                       
	Related
substances

(the sum of galactose,
lactose, epilactose,
tagatose and fructose)

	 	£ [***]%
	                                                        
	 
	 	 
	Water

	 	£ [***]%
	 
	 	 
	Specific Optical Rotation

	 	- [***]o to - [***]o
	 
	 	 
	Total viable aerobic count

	 	< [***] cfu/g
	 
	 	 
	E.Coli

	 	absent/1 g
	 
	 	 
	Salmonella Species

	 	not detectable






These specifications will be effective upon approval by a Competent Authority




 









 





STANDARD SPECIFICATION




	 	 	 
	Product

	 	Lactulose for oral solution,

20-gram unit dose
	 
	 	 
	                                                       
	Chemical name

	 	4-O-ß-Galactopyranosyl-D-Fructofuranose.
	                                                        
	 
	 	 
	Empirical Formula

	 	C12H22O11
	 
	 	 
	Molecular weight

	 	342.30 
	 
	 	 
	Characters

	 	White or nearly white, odorless powder
	 
	 	 
	Solubility

	 	Freely soluble in water






	 	 	 
	Test	 	Limits
	 
	 	 
	Description

	 	Cardboard box containing patient information
leaflet and 30 single dose sachets, each
containing nominally 20g of white or nearly
white, odorless powder
	 
	 	 
	Identification

	 	Principal peak in test solution chromatogram
is similar in position and size to the principal
peak in the reference solution chromatogram
	 
	 	 
	 

	 	Complies with the test for specific optical

rotation
	 
	 	 
	                                                       
	Fill weight

	 	Average net content of 10 sachets ≥ 20.0g
	 
	 	 
	                                                        
	                                                       
	Minimum Fill

	 	Net content of any single sachet ≥ 18.0g
	 
	 	 
	                                                        
	                                                       
	Maximum Fill

	 	Net content of any single sachet ≥ 22.0g
	                                                        
	 
	 	 
	pH of solution

	 	[***] to [***]
	 
	 	 
	Assay

	 	3 [***]% anhydrous basis
	 
	 	 
	                                                       
	Related
substances

(the sum of galactose,
lactose, epilactose,
tagatose and fructose)

	 	£ [***]%
	                                                        
	 
	 	 
	Water

	 	£ [***]%
	 
	 	 
	Specific Optical Rotation

	 	- [***]o to - [***]o
	 
	 	 
	Total viable aerobic count

	 	< [***] cfu/g
	 
	 	 
	E.Coli

	 	absent/1 g
	 
	 	 
	Salmonella Species

	 	not detectable






These specifications will be effective upon approval by a Competent Authority




 









 





EXHIBIT E




Adverse Event Reporting



CUMBERLAND’s role in assisting INALCO in the management of adverse events and product complaints
for the INALCO-manufactured, Kristalose® (Lactulose for Oral Solution) shall be as
follows:



In the event that CUMBERLAND receives an adverse event report or product complaint, CUMBERLAND will
perform all communication with the initial reporter (i.e. documentation of the initial report,
fellow-up correspondence, closeout letter etc.) This information will be faxed or sent via e-mail
to INALCO (fax #805-782-0719). Also note that all adverse event reports and product complaints will
be assigned a tracking number by CUMBERLAND (ex. KRIS2000-XXXINL). This number should be used on
any correspondence regarding the reports between INALCO and CUMBERLAND. INALCO assumes all other
responsibilities for the management of adverse events and product complaints for these products,
which can be detailed as follows:





	 	•	 	Completion of product investigation.
	 
	 	•	 	Preparation and submission of FDA 3500A forms for adverse event complaints.
	 
	 	•	 	Preparation and submission of periodic reports for adverse experiences.
	 
	 	•	 	Preparation and submission of alert reports for adverse experiences.
	 
	 	•	 	Maintenance of completed files for all AE and product quality complaints.
(CUMBERLAND will send INALCO a copy of the file once the investigation is
complete.)




Any product that is returned to CUMBERLAND will be forwarded on to INALCO, a QA investigation form
will also be sent to INALCO to be completed and returned to CUMBERLAND. CUMBERLAND will
periodically send a report to INALCO providing a listing of the adverse events and quality
complaints received by CUMBERLAND for Kristalose during that period.



In summary, INALCO will manage all manufacturing-related investigations and maintain all
communication with the Food and Drug Administration regarding these products. All medical
information requests will be answered by CUMBERLAND.