As filed with the Securities and Exchange Commission on
July 11, 2007
Registration No. 333-142535
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Amendment No. 3
to
FORM S-1
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF
1933
Cumberland Pharmaceuticals
Inc.
(Exact name of registrant as
specified in its charter)
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Tennessee
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2834
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62-1765329
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(State or other jurisdiction
of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification No.)
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2525 West End Avenue,
Suite 950
Nashville, Tennessee
37203
(615) 255-0068
(Address, including zip code,
and telephone number, including
area code, of registrant’s
principal executive offices)
A.J. Kazimi
Chairman and CEO
2525 West End Avenue,
Suite 950
Nashville, Tennessee
37203
(615) 255-0068
(Name, address, including zip
code, and telephone number, including area code, of agent for
service)
Copies to:
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Martin S.
Brown, Esq.
Virginia Boulet, Esq.
Adams and Reese LLP
424 Church Street, Suite 2800
Nashville, Tennessee 37219
(615) 259-1450
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Donald J. Murray, Esq.
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019-6092
(212) 259-8000
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Approximate date of commencement of proposed offering to the
public:
As soon as practicable after this
registration statement becomes effective.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933 check the
following box:
o
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same
offering.
o
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering.
o
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering.
o
The registrant hereby amends this registration statement on
such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this registration statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
Part II
Information not
required in prospectus
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ITEM 13.
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OTHER EXPENSES OF
ISSUANCE AND DISTRIBUTION.
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The expenses relating to the registration of the shares of
common stock being offered hereby, other than underwriting
discounts and commissions, will be borne by us. Such expenses
are estimated to be as follows:
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Item
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Amount
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SEC registration fee
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$
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NASD filing fee
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$
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NASDAQ listing fee
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$
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Printing expenses
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$
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Legal fees and expenses
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$
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Accounting fees and expenses
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$
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Transfer agent and registrar
expenses
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$
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Total
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$
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ITEM 14.
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INDEMNIFICATION
OF DIRECTORS AND OFFICERS.
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Our charter and bylaws provide for indemnification of our
directors to the fullest extent permitted by the Tennessee
Business Corporation Act, as amended from time to time. Our
directors shall not be liable to the corporation or its
shareholders for monetary damages for breach of fiduciary duty
as a director. The Tennessee Business Corporation Act provides
that a Tennessee corporation may indemnify its directors and
officers against expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred by them in
connection with any proceeding, whether criminal or civil,
administrative or investigative if, in connection with the
matter in issue, the individual’s conduct was in good
faith, and the individual reasonably believed: in the case of
conduct in the individual’s official capacity with the
corporation, that the individual’s conduct was in its best
interest; and in all other cases, that the individual’s
behavior was at least not opposed to its best interest; and in
the case of a criminal proceeding, the individual had no reason
to believe the individual’s conduct was unlawful. In
addition, we have entered into indemnification agreements with
our directors. These provisions and agreements may have the
practical effect in certain cases of eliminating the ability of
our shareholders to collect monetary damages from directors. We
believe that these contractual agreements and the provisions in
our charter and bylaws are necessary to attract and retain
qualified persons as directors.
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ITEM 15.
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RECENT SALES OF
UNREGISTERED SECURITIES.
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In September 2003, we borrowed $500,000 from nine existing and
accredited shareholders pursuant to uncollateralized secured
notes payable with original maturity dates of 130 days.
These notes bore interest at 12% for the first 30 days and
15% thereafter. The holders of the notes had, at their option,
until the maturity date of the notes payable, the right to
convert all or a portion of the unpaid principal and interest
into shares of our common stock at a rate of $12.00 per share.
We also issued to these lenders options to purchase shares of
our common stock, at an exercise price of $12.00 per share,
and at the rate of 1,540 shares of common stock per $50,000
face value of the notes. If we had not prepaid all amounts due
and owing under the notes, we agreed to grant additional options
at the rate of 770 shares of common stock per $50,000 face
value on each of (i) the 30th day after the date of
the notes and (ii) on a continuing basis, each successive
30-day
period thereafter, or portion thereof, as the notes remained
outstanding. At December 31, 2003, the notes payable had
not been prepaid, so we granted options to acquire an additional
30,800 shares. We amended the notes agreements in
January 2004 to extend the maturity date 130 days. The
amendments granted an additional option to
II-1
Part II
purchase 1,540 shares per $50,000 face value upon extension
of the notes and contained similar provisions for granting
options in the event of nonpayment on the
agreed-upon
due dates. Based on the extension of the maturity date, rights
to purchase a total of 61,600 shares were earned by the
holders of the notes in 2004. We repaid these notes or settled
these notes in shares in May 2004. The issuance of these
securities was exempt from registration under the Securities Act
in reliance on Section 4(2) of the Securities Act.
In September 2003, we borrowed $1,000,000 from S.C.O.U.T.
Healthcare Fund, L.P., or S.C.O.U.T., in the form of a
convertible promissory note with a maturity date of September
2004. The President and majority shareholder of the general
partner of S.C.O.U.T., Dr. Lawrence W. Greer, serves on our
board of directors. Pursuant to the terms of the note, on its
maturity date, S.C.O.U.T. converted the principal value of the
note plus all interest accrued at a fixed rate of ten percent
per annum into 91,667 shares of our common stock at a price
of $12.00 per share.
On April 15, 2004, we issued 43,000 common shares at
$12.00 per share, for an aggregate consideration of
$516,000 and a five-year warrant to purchase 20,000 common
shares at $12.00 per share to S.C.O.U.T., which represented
to us that it was an accredited investor. This issuance was
exempt from registration under the Securities Act in reliance on
Section 4(2) of the Securities Act.
By an offering memorandum dated April 1, 2005, we offered
100,000 shares of our common stock at a purchase price of
$18.00 per share. Thirty investors subscribed for
100,000 shares in the aggregate, for an aggregate
consideration of $1,800,000. This issuance was exempt from
registration under the Securities Act in reliance on
Section 4(2) of the Securities Act.
By an offering memorandum dated May 5, 2005, we received
approximately $2,000,000 from approximately 41 investors in
exchange for uncollateralized convertible promissory notes with
a maturity date six months from the date of issuance. Upon
maturity, the principal and accrued interest payable on the
notes converted into 112,916 shares of common stock at a
rate of $18.00 per share. This issuance was exempt from
registration under the Securities Act in reliance on
Section 4(2) of the Securities Act.
In April 2006, we issued a ten-year warrant to purchase 1,979
common shares at $18.00 per share to Bank of America. The
issuance of this security was exempt from registration under the
Securities Act in reliance on Section 4(2) of the
Securities Act.
Since January 1, 2004, we have granted options to purchase
287,610 shares of our common stock under the
1999 Option Plan to our employees, directors and
consultants at exercise prices ranging from $12.00 to
$22.00 per share. Of these, an aggregate of 775 shares
of our common stock were issued upon the exercise of stock
options.
Since January 1, 2004, we also issued an aggregate of
75,645 shares of common stock as compensation for services
pursuant to contracts. Restricted-stock legends were affixed to
the securities issued in these transactions. Our board of
directors determined that the fair value of the services
received equaled the value of the stock granted with values
ranging from $12.00 to $22.00 per share. The issuances of
common stock in connection with awards of restricted stock were
exempt either pursuant to Rule 701 or pursuant to
Section 4(2) of the Securities Act as transactions by an
issuer not involving a public offering.
The issuances of securities described in the first six
paragraphs of Item 15 were exempt from registration under
the Securities Act of 1933, as amended, in reliance on
Section 4(2) of the Securities Act of 1933, as amended,
and/or Regulation D promulgated thereunder, as transactions
by an issuer not involving any public offering. The purchasers
of the securities in these transactions represented that they
were accredited investors and they were acquiring the securities
for investment only and not with a view
II-2
Part II
toward the public sale or distribution thereof. Such purchasers
received written disclosures that the securities had not been
registered under the Securities Act of 1933, as amended, and
that any resale must be made pursuant to a registration
statement or an available exemption from registration. All
purchasers either received adequate financial statement or
non-financial statement information about the registrant or had
adequate access, through their relationship with the registrant,
to financial statement or non-financial statement information
about the registrant. The sale of these securities was made
without general solicitation or advertising.
The issuances of securities described in the seventh and eighth
paragraphs of Item 15 were exempt from registration under
the Securities Act of 1933, as amended, in reliance on either
(1) Rule 701 of the Securities Act of 1933, as
amended, as offers and sales of securities pursuant to
compensatory benefit plans and contracts relating to
compensation in compliance with Rule 701 or
(2) Section 4(2) of the Securities Act as transactions
by an issuer not involving any public offering.
All certificates representing the securities issued in these
transactions described in this Item 15 included appropriate
legends setting forth that the securities had not been offered
or sold pursuant to a registration statement and describing the
applicable restrictions on transfer of the securities. There
were no underwriters employed in connection with any of the
transactions set forth in this Item 15.
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ITEM 16.
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EXHIBITS AND
FINANCIAL STATEMENT SCHEDULES.
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(a)
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No.
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Description
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1.1*
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Form of Underwriting Agreement.
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3.1**
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Second Amended and Restated
Charter of Cumberland Pharmaceuticals Inc.
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3.2**
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Amended and Restated Bylaws of
Cumberland Pharmaceuticals Inc.
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4.1*
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Specimen Common Stock Certificate
of Cumberland Pharmaceuticals Inc.
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4.2**
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Warrant to Purchase Common Stock
of Cumberland Pharmaceuticals Inc., issued to Bank of America,
N.A. on October 21, 2003.
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4.3**
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Stock Purchase Warrant, issued to
S.C.O.U.T. Healthcare Fund L.P. on April 15, 2004.
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4.4**
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Warrant to Purchase Common Stock
of Cumberland Pharmaceuticals Inc., issued to Bank of America,
N.A. on April 6, 2006.
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4.5#**
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Form of Option Agreement under
1999 Stock Option Plan of Cumberland Pharmaceuticals Inc.
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4.6.1#
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Form of Incentive Stock Option
Agreement under 2007 Long-Term Incentive Compensation Plan of
Cumberland Pharmaceuticals Inc.
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4.6.2#
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Form of Nonstatutory Stock Option
Agreement under 2007 Long-Term Incentive Compensation Plan of
Cumberland Pharmaceuticals Inc.
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4.7#
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Form of Nonstatutory Stock Option
Agreement under 2007 Directors’ Compensation Plan of
Cumberland Pharmaceuticals Inc.
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5.1*
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Opinion of Adams and Reese LLP.
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10.1†
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Manufacturing and Supply Agreement
for N-Acetylcysteine, dated January 15, 2002, by and
between Bioniche Life Sciences, Inc. and Cumberland
Pharmaceuticals Inc.
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10.2**
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Novation Agreement, dated
January 27, 2006, by and among Bioniche Life Sciences,
Inc., Bioniche Pharma Group Ltd., and Cumberland Pharmaceuticals
Inc.
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II-3
Part II
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No.
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Description
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10.3†
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First Amendment to Manufacturing
and Supply Agreement for N-Acetylcysteine, dated
November 16, 2006, by and between Bioniche Teoranta and
Cumberland Pharmaceuticals Inc.
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10.4†
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Cardinal Health Contract Sales and
Services for Cumberland Pharmaceuticals Inc. Dedicated Sales
Force Agreement, dated May 16, 2006, by and between
Cardinal Health PTS, LLC and Cumberland Pharmaceuticals Inc.
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10.5†
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First Amendment to Contract Sales
and Service Agreement, dated July 19, 2006, by and between
Cardinal Health PTS, LLC and Cumberland Pharmaceuticals Inc.
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10.6
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Second Amendment to Contract Sales
and Service Agreement, dated June 1, 2007, by and between
Cumberland Pharmaceuticals Inc. and Inventiv Commercial
Services, LLC, as successor in interest to Cardinal Health PTS,
LLC.
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10.7†
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Distribution Services Agreement,
dated August 3, 2000, by and between CORD Logistics, Inc.
and Cumberland Pharmaceuticals Inc.
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10.8†
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Strategic Alliance Agreement,
dated July 21, 2000, by and between F.H.
Faulding & Co. Limited and Cumberland Pharmaceuticals
Inc.
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10.9†
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Kristalose Agreement, dated
April 7, 2006, by and among Inalco Biochemicals, Inc.,
Inalco S.p.A., and Cumberland Pharmaceuticals Inc.
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10.10†
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License Agreement, dated
May 28, 1999, by and between Vanderbilt University and
Cumberland Pharmaceuticals Inc.
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10.11#**
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Employment Agreement effective as
of January 1, 2007 by and between A.J. Kazimi and
Cumberland Pharmaceuticals Inc.
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10.12#**
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Employment Agreement effective as
of January 1, 2007 by and between Jean W. Marstiller and
Cumberland Pharmaceuticals Inc.
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10.13#**
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Employment Agreement effective as
of January 1, 2007 by and between Leo Pavliv and Cumberland
Pharmaceuticals Inc.
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10.14#**
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Employment Agreement effective as
of January 1, 2007 by and between J. William Hix and
Cumberland Pharmaceuticals Inc.
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10.15#**
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Employment Agreement effective as
of January 1, 2007 by and between David L. Lowrance and
Cumberland Pharmaceuticals Inc.
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10.16.1†
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Second Amended and Restated Loan
Agreement by and between Cumberland Pharmaceuticals Inc. and
Bank of America, N.A., dated April 6, 2006.
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10.16.2
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First Amendment to Second Amended
and Restated Loan Agreement by and between Cumberland
Pharmaceuticals Inc. and Bank of America, N.A., dated
December 31, 2006.
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10.17#**
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1999 Stock Option Plan of
Cumberland Pharmaceuticals Inc.
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10.18#**
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2007 Long-Term Incentive
Compensation Plan of Cumberland Pharmaceuticals Inc.
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10.19#**
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2007 Directors’
Compensation Plan of Cumberland Pharmaceuticals Inc.
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10.20**
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Form of Indemnification Agreement
between Cumberland Pharmaceuticals Inc. and all members of its
Board of Directors.
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10.21†
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Lease Agreement, dated
September 10, 2005, by and between Nashville Hines
Development, LLC and Cumberland Pharmaceuticals Inc.
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10.22.1†
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Sublease Agreement, dated
December 14, 2006, by and between Robert W.
Baird & Co. Incorporated and Cumberland
Pharmaceuticals Inc.
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II-4
Part II
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No.
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Description
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10.22.2
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Addendum to Sublease Agreement,
dated May 5, 2007, by and between Robert W.
Baird & Co. Incorporated and Cumberland
Pharmaceuticals Inc. and consented to by Nashville Hines
Development, LLC.
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10.23†**
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Amended and Restated Lease
Agreement, dated November 11, 2004, by and between The
Gateway to Nashville LLC and Cumberland Emerging Technologies,
Inc.
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10.24**
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First Amendment to Amended and
Restated Lease Agreement, dated August 23, 2005, by and
between The Gateway to Nashville LLC and Cumberland Emerging
Technologies, Inc.
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21**
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Subsidiaries of Cumberland
Pharmaceuticals Inc.
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23.1**
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Consent of KPMG LLP.
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23.2*
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Consent of Adams and Reese, LLP
(contained in Exhibit 5).
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23.3**
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Consent of Morgan Joseph &
Co. Inc.
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24**
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Powers of Attorney (contained on
the signature page of Registration Statement on Form S-1
filed on May 1, 2007).
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*
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To be filed by amendment.
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#
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Indicates a management contract or compensatory plan.
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†
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Confidential treatment has been requested for portions of this
exhibit. These portions have been omitted from the Registration
Statement and submitted separately to the Securities and
Exchange Commission.
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(b)
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See Schedule II—Valuation and qualifying accounts
included in our audited financial statements included elsewhere
in this registration statement.
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All other schedules have been omitted because they are not
applicable.
The undersigned registrant hereby undertakes to provide to the
underwriters at the closing specified in the underwriting
agreement certificates in such denominations and registered in
such names as required by the underwriters to permit prompt
delivery to each purchaser.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers,
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer,
or controlling person of the registrant in the successful
defense of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933
and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
1) For purposes of determining any liability under
the Securities Act of 1933, the information omitted from the
form of prospectus filed as part of this Registration Statement
in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to
II-5
Part II
Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be part of this Registration Statement as
of the time it was declared effective.
2) For the purpose of determining any liability under
the Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial
bona fide
offering thereof.
II-6
Signatures
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Amendment No. 3 to the
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Nashville,
State of Tennessee, on the 11th day of July, 2007.
CUMBERLAND PHARMACEUTICALS INC.
A.J. Kazimi
Chairman and CEO
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 3 to the Registration Statement has been
signed by the following persons in the capacities and on the
dates indicated.
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Signature
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Title
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Date
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/s/
a.j.
kazimi
A.J.
Kazimi
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Chairman and CEO (Principal
Executive Officer)
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July 11, 2007
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/s/
david
l. lowrance
David
L. Lowrance
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Vice President and CFO (Principal
Financial and Accounting Officer)
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July 11, 2007
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*
Robert
G. Edwards
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Director
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July 11, 2007
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*
Thomas
R. Lawrence
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Director
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July 11, 2007
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*
Lawrence
W. Greer
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Director
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July 11, 2007
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*
Martin
E. Cearnal
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Director
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July 11, 2007
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*By:
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/s/
a.j.
kazimi
A.J.
Kazimi
Attorney-in-Fact
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S-1
Exhibit Index
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No.
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Description
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1.1*
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Form of Underwriting Agreement.
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3.1**
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Second Amended and Restated
Charter of Cumberland Pharmaceuticals Inc.
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3.2**
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Amended and Restated Bylaws of
Cumberland Pharmaceuticals Inc.
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4.1*
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Specimen Common Stock Certificate
of Cumberland Pharmaceuticals Inc.
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4.2**
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Warrant to Purchase Common Stock
of Cumberland Pharmaceuticals Inc., issued to Bank of America,
N.A. on October 21, 2003.
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4.3**
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Stock Purchase Warrant, issued to
S.C.O.U.T. Healthcare Fund L.P. on April 15, 2004.
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4.4**
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Warrant to Purchase Common Stock
of Cumberland Pharmaceuticals Inc., issued to Bank of America,
N.A. on April 6, 2006.
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4.5#**
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Form of Option Agreement under
1999 Stock Option Plan of Cumberland Pharmaceuticals Inc.
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4.6.1#
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Form of Incentive Stock Option
Agreement under 2007 Long-Term Incentive Compensation Plan of
Cumberland Pharmaceuticals Inc.
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4.6.2#
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Form of Nonstatutory Stock Option
Agreement under 2007 Long-Term Incentive Compensation Plan of
Cumberland Pharmaceuticals Inc.
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4.7#
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Form of Nonstatutory Stock Option
Agreement under 2007 Directors’ Compensation Plan of
Cumberland Pharmaceuticals Inc.
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5.1*
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Opinion of Adams and Reese LLP.
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|
10.1†
|
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Manufacturing and Supply Agreement
for N-Acetylcysteine, dated January 15, 2002, by and
between Bioniche Life Sciences, Inc. and Cumberland
Pharmaceuticals Inc.
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|
10.2**
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Novation Agreement, dated
January 27, 2006, by and among Bioniche Life Sciences,
Inc., Bioniche Pharma Group Ltd., and Cumberland Pharmaceuticals
Inc.
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10.3†
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First Amendment to Manufacturing
and Supply Agreement for N-Acetylcysteine, dated
November 16, 2006, by and between Bioniche Teoranta and
Cumberland Pharmaceuticals Inc.
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10.4†
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Cardinal Health Contract Sales and
Services for Cumberland Pharmaceuticals Inc. Dedicated Sales
Force Agreement, dated May 16, 2006, by and between
Cardinal Health PTS, LLC and Cumberland Pharmaceuticals Inc.
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10.5†
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First Amendment to Contract Sales
and Service Agreement, dated July 19, 2006, by and between
Cardinal Health PTS, LLC and Cumberland Pharmaceuticals Inc.
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10.6
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Second Amendment to Contract Sales
and Service Agreement, dated June 1, 2007, by and between
Cumberland Pharmaceuticals Inc. and Inventiv Commercial
Services, LLC, as successor in interest to Cardinal Health PTS,
LLC.
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10.7†
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Distribution Services Agreement,
dated August 3, 2000, by and between CORD Logistics, Inc.
and Cumberland Pharmaceuticals Inc.
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10.8†
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Strategic Alliance Agreement,
dated July 21, 2000, by and between F.H.
Faulding & Co. Limited and Cumberland Pharmaceuticals
Inc.
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10.9†
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Kristalose Agreement, dated
April 7, 2006, by and among Inalco Biochemicals, Inc.,
Inalco S.p.A., and Cumberland Pharmaceuticals Inc.
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10.10†
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|
License Agreement, dated
May 28, 1999, by and between Vanderbilt University and
Cumberland Pharmaceuticals Inc.
|
|
10.11#**
|
|
Employment Agreement effective as
of January 1, 2007 by and between A.J. Kazimi and
Cumberland Pharmaceuticals Inc.
|
|
|
|
|
|
No.
|
|
Description
|
|
|
|
|
|
10.12#**
|
|
Employment Agreement effective as
of January 1, 2007 by and between Jean W. Marstiller and
Cumberland Pharmaceuticals Inc.
|
|
10.13#**
|
|
Employment Agreement effective as
of January 1, 2007 by and between Leo Pavliv and Cumberland
Pharmaceuticals Inc.
|
|
10.14#**
|
|
Employment Agreement effective as
of January 1, 2007 by and between J. William Hix and
Cumberland Pharmaceuticals Inc.
|
|
10.15#**
|
|
Employment Agreement effective as
of January 1, 2007 by and between David L. Lowrance and
Cumberland Pharmaceuticals Inc.
|
|
10.16.1†
|
|
Second Amended and Restated Loan
Agreement by and between Cumberland Pharmaceuticals Inc. and
Bank of America, N.A., dated April 6, 2006.
|
|
10.16.2
|
|
First Amendment to Second Amended
and Restated Loan Agreement by and between Cumberland
Pharmaceuticals Inc. and Bank of America, N.A., dated
December 31, 2006.
|
|
10.17#**
|
|
1999 Stock Option Plan of
Cumberland Pharmaceuticals Inc.
|
|
10.18#**
|
|
2007 Long-Term Incentive
Compensation Plan of Cumberland Pharmaceuticals Inc.
|
|
10.19#**
|
|
2007 Directors’
Compensation Plan of Cumberland Pharmaceuticals Inc.
|
|
10.20**
|
|
Form of Indemnification Agreement
between Cumberland Pharmaceuticals Inc. and all members of its
Board of Directors.
|
|
10.21†
|
|
Lease Agreement, dated
September 10, 2005, by and between Nashville Hines
Development, LLC and Cumberland Pharmaceuticals Inc.
|
|
10.22.1†
|
|
Sublease Agreement, dated
December 14, 2006, by and between Robert W.
Baird & Co. Incorporated and Cumberland
Pharmaceuticals Inc.
|
|
10.22.2
|
|
Addendum to Sublease Agreement,
dated May 5, 2007, by and between Robert W.
Baird & Co. Incorporated and Cumberland
Pharmaceuticals Inc. and consented to by Nashville Hines
Development, LLC.
|
|
10.23†**
|
|
Amended and Restated Lease
Agreement, dated November 11, 2004, by and between The
Gateway to Nashville LLC and Cumberland Emerging Technologies,
Inc.
|
|
10.24**
|
|
First Amendment to Amended and
Restated Lease Agreement, dated August 23, 2005, by and
between The Gateway to Nashville LLC and Cumberland Emerging
Technologies, Inc.
|
|
21**
|
|
Subsidiaries of Cumberland
Pharmaceuticals Inc.
|
|
23.1**
|
|
Consent of KPMG LLP.
|
|
23.2*
|
|
Consent of Adams and Reese, LLP
(contained in Exhibit 5).
|
|
23.3**
|
|
Consent of Morgan Joseph &
Co. Inc.
|
|
24**
|
|
Powers of Attorney (contained on
the signature page of the Registration Statement on
Form S-1 filed on May 1, 2007).
|
|
|
|
|
*
|
To be filed by amendment.
|
|
|
|
|
#
|
Indicates a management contract or compensatory plan.
|
|
|
|
†
|
Confidential treatment has been requested for portions of this
exhibit. These portions have been omitted from the Registration
Statement and submitted separately to the Securities and
Exchange Commission.
|
EXHIBIT 10.1
*Certain portions of this exhibit have been omitted pursuant to a request for confidential
treatment which has been filed separately with the SEC.
MANUFACTURING AND SUPPLY AGREEMENT
for
N-ACETYLCYSTEINE
CUMBERLAND PHARMACEUTICALS INC.
and
BIONICHE LIFE SCIENCES, INC.
January 15, 2002
MANUFACTURING AND SUPPLY
AGREEMENT FOR N-ACETYLCYSTEINE
THIS AGREEMENT is made and entered into as of the 15th day of January, 2002.
BY AND BETWEEN:
CUMBERLAND PHARMACEUTICALS INC., a corporation organized and existing under the laws of Tennessee,
United States, with its principal offices located at 209 Tenth Avenue South, Suite 332, Nashville,
Tennessee, 37203 (hereinafter referred to as “
CUMBERLAND
”)
AND:
BIONICHE LIFE SCIENCES INC., a corporation organized and existing under the laws of Ontario,
Canada, with its principal place of business located at 231 Dundas Street, East Belleville,
Ontario, Canada K8N 1E2 (hereinafter referred to as “
BIONICHE
”);
WHEREAS
, CUMBERLAND is the owner of certain intellectual property rights with respect to a Drug
Product (as hereinafter defined);
WHEREAS
, BIONICHE has the expertise and the manufacturing facility suitable for the pharmaceutical
preparation and production of the Drug Product;
WHEREAS
, CUMBERLAND wishes to have BIONICHE manufacture the Drug Product on an exclusive basis for
sale in the Territory (as hereinafter defined) and BIONICHE wishes to supply the Drug Product on an
exclusive basis to CUMBERLAND on and subject to the terms and conditions set out herein;
NOW, THEREFORE
, in consideration of the premises and the undertakings, terms, conditions and
covenants set forth below, the parties hereto agree as follows:
1. DEFINITIONS
1.1 AFFILIATE
shall mean, with respect to any Person, any other Person that controls, is
controlled by or is under common control with, such Person. A Person shall be regarded as in
control of another Person if such Person owns, or directly or indirectly controls, more than fifty
percent (50%) of the voting securities (or comparable equity interests) or other ownership
interests of the other Person, or if such Person directly or indirectly possesses the power to
direct or cause the d
i
rection of the management or policies of the other Person, whether
through the ownership of voting securities, by contract or any other means whatsoever.
1.2 BUFFER SOLUTION
shall mean the buffer solution used for the manufacture of the Drug
Product.
1.3 BULK DRUG SUBSTANCE
shall mean the active ingredients in the Drug Product.
1.4 cGMP or GMP
shall have the meaning set forth in Schedule I.
1.5 CONFIDENTIAL INFORMATION
shall have the meaning set forth in Article 9.
1.6 DEVELOPMENT
shall mean all work necessary to develop a process to manufacture the Drug
Product in full accord with cGMP and to supply the Drug Product conforming to the Specifications.
Development activities shall include, but not be limited to, pilot batches, scale-up batches,
validation of the manufacturing process, and successful completion of the Drug Product manufacture
and delivery as defined in Schedule I attached hereto.
1.7 DRUG PRODUCT
shall mean the N-Acetylcysteine pharmaceutical product developed by
CUMBERLAND and marketed under the trade name ACETADOTE or any other trade name selected by
CUMBERLAND.
1.8 EXCIPIENT
shall mean any inert substance selected by CUMBERLAND and used to give the Drug
Product proper consistency.
1.9 FACILITY
shall mean the manufacturing facility and the real property underlying such
manufacturing facility operated by Bioniche Teoranta, an Affiliate of BIONICHE, located at
Inverin, Co. Galway, Republic of Ireland.
1.10 FDA
shall mean the United States Food and Drug Administration (FDA) or any successor
entity thereto.
1.11 IN-PROCESS SOLUTION
shall mean all Buffer Solutions and Excipients needed to produce
Drug Product in the finished dosage form set forth in Schedule I.
1.12 INVENTION
shall have the meaning set forth in Paragraph 9.4.
1.13 LABELING
shall mean all labels and other written, printed, or graphic matter upon: (i)
the Drug Product or any container or wrapper utilized with the Drug Product and (ii) any written
material accompanying the Drug Product, including without limitation, package inserts.
1.14 MANUAL
shall mean the Manufacturing Project Manual attached as Schedule II to this
Agreement and reviewed and accepted by CUMBERLAND and BIONICHE, the terms and provisions of which
are incorporated by reference as though fully set forth herein.
1.15 MANUFACTURE
shall mean the act of compounding, component preparations, filling,
packaging, testing and any other pharmaceutical manufacturing procedures, or any part thereof,
involved in manufacturing the Drug Product from the Bulk Drug Substance.
1.16 PERSON
shall mean an individual, corporation, partnership, limited liability company, or
any other form of entity not specifically listed herein.
1.17 SPECIFICATIONS
shall mean those specifications set forth in Attachment I to the Manual.
1.18 TERRITORY
shall have the meaning set forth in Schedule III.
2. DEVELOPMENT AND MANUFACTURING
2.1 Initiation:
Upon request by CUMBERLAND and subject to the provisions hereof, BIONICHE,
directly or through an Affiliate thereof, shall Manufacture and package at the Facility all of
CUMBERLAND’s requirements for Drug Product in the Territory in the batch size set forth in
Schedule I in accordance with the terms hereof, including without limitation, Schedules I and II
hereof, the Specifications, and all applicable laws and regulations. Prior to distributing and
selling the Drug Product, CUMBERLAND shall prepare and file submissions to the FDA in order to
obtain and maintain during the term hereof regulatory approval of the Drug Product, BIONICHE shall
prepare and test the Drug Product in accordance with cGMP.
2.2 Documentation:
BIONICHE shall provide CUMBERLAND with required supporting documentation
for the manufacture of the Drug Product in a form suitable for CUMBERLAND’s submission to the FDA
or applicable governmental authorities for any country into which the Drug Product will be
distributed. BIONICHE shall provide draft Chemistry, Manufacturing, and Controls sections for
CUMBERLAND’s FDA submissions,
2.3 Bulk Drug Substance Supply:
BIONICHE shall be responsible for the supply of all Bulk Drug
Substance in accordance with Schedules I and II hereto; provided that the supply of Bulk Drug
Substance shall be exclusively from such suppliers and in such grades as have been approved in
writing by CUMBERLAND as reflected on an approved list to be attached hereto as Schedule IV, and
provided further that such suppliers and
grades may not be changed without CUMBERLAND’s prior written consent, which consent shall not
be unreasonably withheld or delayed. BIONICHE shall maintain, at its expense, secure storage areas
for the Bulk Drug Substance at the Facility.
2.4 Supply of Components:
BIONICHE shall be responsible for the supply of all Buffer Solution,
Excipients, and all other components of the finished Drug Product in accordance with Schedules I
and II hereto; provided that the supply of these components shall be exclusively from such
suppliers and in such grades as have been approved in writing by CUMBERLAND as reflected on an
approved list to be attached hereto as Schedule IV, and provided further that such suppliers and
grades may not be changed without CUMBERLAND’s prior written consent which consent shall not be
unreasonably withheld or delayed. BIONICHE shall maintain, at its expense, secure storage areas for
the Buffer Solution, Excipients, and all other components at the Facility.
2.5 Delivery Terms:
All deliveries of Drug Product under this Agreement shall be made by
BIONICHE to CUMBERLAND in the manner set forth in Schedule I. CUMBERLAND shall, within twenty (20)
working days after its receipt of any shipment, notify BIONICHE in writing, of any claim relating
to a Drug Product not conforming to GMP or to the Specifications, and, failing such notification,
notwithstanding Paragraph 5.1 of this Agreement, CUMBERLAND shall be deemed to have accepted the
Drug Product. If BIONICHE disputes CUMBERLAND’s claim that the Drug Product is non-conforming, then
such dispute shall be resolved by an independent testing organization of recognized repute within
the pharmaceutical industry mutually agreed upon by BIONICHE and CUMBERLAND, the appointment of
which shall not be unreasonably withheld or delayed by either party. In such event, CUMBERLAND
shall ship the testing organization representative samples of the Drug Product from the disputed
production lot, and the fees and costs of such testing organization and related shipping and supply
costs shall be borne by the party whose position is not sustained by the testing organization.
Should CUMBERLAND’s claim of non-conformity be sustained by the testing organization, BIONICHE
shall, at CUMBERLAND’S sole option, (a) credit towards future orders, or (b) refund within thirty
(30) days thereof; the payment for such non-conforming goods, plus the cost to CUMBERLAND of
Manufacturing and shipping the related Bulk Drug Substance and components.
2.6 Forecasts:
In order to permit BIONICHE to regularly supply CUMBERLAND with Drug Product
hereunder, at least [***] prior to its first requested delivery date, CUMBERLAND shall provide
BIONICHE a non-binding twelve (12) month rolling forecast (the “Forecast”) of CUMBERLAND’s
estimated requirements of Drug Product, itemized for use as commercial product or Regulatory
Samples (as defined below), for the term of this Agreement. The Forecast shall be reviewed and
updated by CUMBERLAND on a monthly basis, with copies delivered to BIONICHE. BIONICHE shall have an
opportunity to confirm its ability to deliver the quantities set out in the Forecast and each
update thereto, or to request amendments thereto to ensure its ability to supply. Once accepted by
BIONICHE, the first three (3) months of each Forecast shall constitue a firm order for Drug
Product. Each such Forecast shall reflect a good faith attempt by CUMBERLAND to estimate quantity
requirements of Drug Product, based on anticipated demand therefore.
2.7 Periodic Orders:
A purchase order (the “Purchase Order”) shall be provided by CUMBERLAND
to BIONICHE with respect to Drug Product to be supplied at least [***] prior to the scheduled
delivery date of such Drug Product. Such Purchase Order shall specify the quantities ordered by
CUMBERLAND for delivery by BIONICHE hereunder and the requested delivery date therefore, and, once
delivered to BIONICHE, and shall be firm and binding on the parties (the “Delivery Date”). Each
such Purchase Order shall become firm and binding on the parties and, except as specifically
provided for herein, may not be increased or decreased by more than [***] from the quantities shown
in the Forecast accepted by BIONICHE pursuant to Section 2.6 without the prior written approval of
the parties. If CUMBERLAND requires quantities of Drug Product exceeding
those
mentioned in the
Forecast, as updated, BIONICHE shall deliver the amount indicated in the Forecast on the scheduled
Delivery Date and shall use reasonable efforts to supply the additional amount exceeding such
Forecast on the scheduled Delivery Date, but shall have no liability for failure to deliver the
additional amount. Each Purchase Order shall constitute a separate agreement to purchase Drug
Product but where in conflict with the terms and conditions of this Agreement, this Agreement, and
not the standard terms and conditions set forth in the purchase orders, shall govern the
Manufacturing, purchase and sale of the Drug
Product under this Agreement. Any Purchase Order for Drug Product shall be placed in the minimum
amounts listed below or in integral multiples thereof.
For the 10mL form of Drug Product [***]
For the 30mL form of Drug Product [***]
2.8 Failure to Supply:
Subject to the provisions of Article 7, BIONICHE shall supply all of
the Drug Product ordered by CUMBERLAND within [***] of receipt of a written order from CUMBERLAND.
If BIONICHE is unable to meet its supply obligations with respect to any Purchase Order,
CUMBERLAND shall be free to procure from third parties part or all of the quantities of the Drug
Product covered by the relevant Purchase Order. In the event that BIONICHE is unable to supply the
Drug Product to CUMBERLAND for any reason other than for Force Majeure or failure of CUMBERLAND to
fulfill its obligations hereunder, BIONICHE will reimburse CUMBERLAND for any increase in the
price of obtaining the Drug Product from an alternate supplier; provided that such replacement
Drug Product was purchased on reasonable commercial terms, and provided further that such failure
to supply was in respect of Drug Product that was the subject of a Purchase Order provided by
CUMBERLAND and accepted by BIONICHE under Paragraph 2.7. Should BIONICHE reimburse CUMBERLAND as
set out in this paragraph, BIONICHE shall have no further liability to CUMBERLAND for said failure
to supply.
2.9 Payment for the Drug Product:
At the time of each shipment, BIONICHE shall invoice
CUMBERLAND for BIONICHE’s manufacturing services at the prices set forth in Schedule I. Payment
shall be made in Canadian dollars within [***] of each such shipment of conforming Product in
accordance with the terms hereof.
2.10 Price Variations:
(a) Prices are as set on Schedule I for the term hereof unless changed pursuant to Paragraph
2.10(b).
(b) Subject to Subparagraph 2.10(c), prices are subject to annual adjustment beginning two
(2) years after the date hereof. Price increases or decreases will be commensurate with documented
Manufacturing cost increases or decreases since the date that the then-current prices became
effective. For purposes hereof, “Manufacturing cost” shall mean, with respect to the Drug Product,
BIONICHE’s actual and documented cost of raw materials, direct labor, Manufacturing, packaging,
and overhead amounts directly applicable to such Manufacturing costs (including appropriately
amortized capital equipment costs and excluding non-manufacturing overhead and allocations and
excluding costs representing Manufacturing changes for which CUMBERLAND does not provide prior
written consent pursuant to Article 8), calculated in accordance with generally accepted
accounting principles consistently applied (the allocation of overhead to be consistent with
BIONICHE’s allocation of overhead as of the date of this Agreement). CUMBERLAND reserves the right
to audit the records of BIONICHE in order to determine that such increases and/or decreases are
appropriate. Any increase in price shall not exceed the twelve (12) month percent increase in the
Producer Price Index as published by the U.S. government and shall be further subject to a maximum
increase of five percent (5%) per year over the life of the Agreement.
(c) Notwithstanding any of the contrary herein contained, should CUMBERLAND: (i) request a
change in Specifications, or (ii) unreasonably withhold the consent requested under Paragraphs 2.3
or 2.4, which request or refusal results in an increase in Manufacturing Costs, BIONICHE shall be
entitled to pass on such costs to CUMBERLAND immediately in the form of a Drug Product price
increase.
3. TERM AND TERMINATION
3.1 Term:
This Agreement shall commence on the date first above written and will continue
until the fifth anniversary of the date on which the FDA grants approval to market and sell the
Drug Product, unless sooner terminated pursuant to Paragraphs 3.2 or 3.3 hereof. Subject to
Paragraphs 3.2 and 3.3, the Agreement shall be automatically renewed for successive three-year
terms unless either party notifies the other party in writing at least twelve (12) months in
advance of the expiration of the then current term that the party is terminating the Agreement.
3.2 Termination:
This Agreement may be terminated at any time upon the occurrence of any of
the following events:
(a) Default: Thirty (30) days following written notice, by either party to the other party, in
the event that the other party breaches any provision of this Agreement, and such party fails to
remedy the breach prior to the expiration of the thirty (30) day period; provided that, in the case
of nonpayment of sums due hereunder, the remedy period shall be decreased to ten (10) days.
(b) Insolvency: Written notice by either party to the other upon insolvency or bankruptcy of
the other party, and the failure of any such insolvency or bankruptcy to be dismissed within sixty
(60) days.
(c) Force majeure: If, as a result of causes described in Paragraph 7.1, either party is
unable to fully perform its obligations hereunder for a period of one hundred fifty (150)
consecutive days, the other party shall have the right to terminate this Agreement upon at least
thirty (30) days prior written notice; provided that if the required performance is met during that
thirty-day period, this Agreement shall continue in full force and effect as if the notice had not
been given.
(d) Costs: Immediately upon written notice by BIONICHE to CUMBERLAND if the Manufacturing cost
per unit of Drug Product calculated in the manner set forth in Paragraph 2.10(a) hereof exceeds the
purchase price per unit of Drug Product set forth in Schedule I, as adjusted pursuant to Paragraphs
2.10(b) and/or (c) hereof.
(e) No FDA Approval: Immediately upon written notice by BIONICHE to CUMBERLAND if the FDA does
not grant CUMBERLAND approval to market and sell the Drug Product on or before the second
anniversary of the date of this Agreement.
(f) By mutual agreement of the parties hereto.
Except as otherwise specifically set forth in this Paragraph 3.2, termination, expiration,
cancellation or abandonment of this Agreement, through any means and for any reason, shall not
relieve the parties of any obligation accruing prior thereto and shall be without prejudice to the
rights and remedies of either party with respect to any antecedent breach of any of the provisions
of this Agreement. Without limiting the generality of the foregoing, termination, expiration,
cancellation, or abandonment of this Agreement shall not relieve CUMBERLAND of its obligation to
pay the royalty provided for under Schedule I for Drug Product manufactured by BIONICHE hereunder.
3.3 Minimum Quantities Purchased:
If the parties fail to agree on minimum purchase quantities
as provided under Paragraph 5.7, or if following such agreement, CUMBERLAND should fail to meet the
agreed upon minimum purchase requirements, BIONICHE shall have the right (but not the obligation)
to terminate this Agreement in its entirety or with respect to any one or more format of the Drug
Product upon ninety (90) days notice; provided, however, that CUMBERLAND shall have the right (but
not the obligation) within such ninety (90) day period to pay BIONICHE any short-fall and avoid
such termination. Such shortfall shall be calculated by subtracting the purchase price of the
amount of each format of Drug Product actually ordered from the amount calculated by multiplying
the minimum quantity of such format under Schedule V by the purchase price thereof. It is
understood and agreed between the parties that BIONICHE shall not be required to supply Drug
Product for such payment. Should BIONICHE exercise its right to terminate under this Paragraph 3.3,
CUMBERLAND shall have no liability to BIONICHE for failing to purchase any minimum quantity of Drug
Product hereunder.
3.4 Impact of Termination on Outstanding Purchase Orders:
Upon termination of the Agreement
for any reason whatsoever (except for termination by either party pursuant to Paragraphs 3.2(a),
(b), or (c), or upon expiration of this Agreement), BIONICHE will, at CUMBERLAND’s written request
delivered after termination, continue to supply Drug Product to CUMBERLAND in satisfaction of
Purchase Orders already submitted to BIONICHE, subject to the same terms and conditions as applied
during the term of the Agreement, for a period of sixty (60) days from the date of termination or
expiration.
3.5 Survival:
Paragraphs 2.5, 2.8, 3.2, 3.3, and 3.5 and Articles 5, 6, 9, and 10 shall
survive the termination or cancellation of the Agreement for any reason.
4. CERTIFICATES OF ANALYSIS AND MANUFACTURING COMPLIANCE
4.1 Certificates of Analysis:
BIONICHE shall perform, or cause to be performed, certain tests
requested by CUMBERLAND in writing and as indicated in the Specifications on each batch of the Drug
Product manufactured pursuant to this Agreement before delivery to CUMBERLAND. A certificate of
analysis for each batch delivered shall be delivered with each batch and shall set forth the items
tested, specifications, and test results. BIONICHE shall also indicate on the certificate of
analysis that all batch production and control records have been reviewed and approved by the
appropriate quality control unit. Subject to Paragraph 2.5, CUMBERLAND shall test, or cause to be
tested, prior to final release, each batch of the Drug Product as meeting the Specifications. As
required by the FDA (see Paragraph 5.2 below), CUMBERLAND shall assume full responsibility for
final release of each lot of the Drug Product.
4.2 Manufacturing Compliance:
BIONICHE shall advise CUMBERLAND immediately if an authorized
agent of any regulatory body visits the Facility and makes an inquiry regarding BIONICHE’s method
of manufacture of the Drug Product for CUMBERLAND. Upon receipt of any Form 483 Notice of
Inspectional Observations issued by the FDA or notice of deficit from any other regulatory
inspection after a visit to the Facility, BIONICHE shall immediately send CUMBERLAND a copy
thereof; provided that it may redact any language that is subject to a written confidentiality
agreement between BIONICHE and a third party.
4.3 Regulatory Agency Requirements:
BIONICHE shall prepare and test the Drug Product in
conformity with GMP. Subject to the allocation of responsibility for regulatory compliance as set
forth in Paragraph 5.2, each party shall consult with the other party hereto before implementing
additional regulatory agency requirements concerning the control of Drug Product components,
manufacture of the Drug Product, or storage and handling of the Drug Product. The full text of
regulatory agency requests or comments will be provided by the party receiving such requests or
comments to the other party hereto. The parties will mutually agree on how to respond to such
requests and comments and on the allocation of the costs thereof; provided that BIONICHE shall be
entitled to reimbursement from CUMBERLAND for any out-of-pocket expenses or extraordinary costs
previously approved in writing by CUMBERLAND and required in connection with implementing such
regulatory requirements other than the ordinary costs of compliance with GMP.
4.4 Regulatory Documents:
Each party will advise the other party hereto of its intention to
change any Drug Product regulatory documents prior to submission of the document to any regulatory
body. If the change affects the rights and obligations of a party hereto under this Agreement, such
party may seek to review or alter any part of the document at any time within ten (10) business
days after receipt of notification thereof; provided that if no alterations are submitted to the
other party within such ten-day period, each party will be deemed to have consented to the
documents, as amended.
5. REPRESENTATIONS AND WARRANTIES
5.1 Conformity with Specifications:
BIONICHE represents and warrants that, at the time of
Manufacture, the Drug Product is prepared and tested in accordance with cGMP and meets the
Specifications. In the event that any production lot of a Drug Product is not Manufactured in
accordance with the Specifications or other requirements hereunder, BIONICHE shall, at CUMBERLAND’s
request, perform new Manufacturing as necessary to fulfill any then outstanding purchase order of
CUMBERLAND. BIONICHE shall be fully responsible for the costs of any Bulk Drug Substance or
components required for such new Manufacturing. Because BIONICHE has no control of the conditions
under which the Drug Product is used, the diagnosis of the patient before or after treatment with
the Drug Product, the method of use or administration of the Drug Product, and handling of the Drug
Product after delivery to CUMBERLAND, BIONICHE does not warrant either a good effect, or against an
ill effect, following the use of the Drug Product. The foregoing warranty is exclusive and in lieu
of all other warranties either written, oral, or implied. No representative of BIONICHE may change
any of the foregoing warranties and CUMBERLAND accepts the Drug Product subject to all terms
hereof.
EXCEPT AS SPECIFICALLY PROVIDED FOR IN THIS ARTICLE 5 AND PARAGRAPH 11.4, BIOMCHE MAKES NO
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED (i) OF COMMERCIAL UTILITY; (ii) OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE; OR (iii) THAT THE USE OF THE DRUG PRODUCTS BY
CUMBERLAND OR ANY THIRD PARTY WILL NOT INFRINGE ANY PATENT, COPYRIGHT OR TRADEMARK OR OTHER
PROPRIETARY OR PROPERTY
RIGHTS OF OTHERS. EXCEPT AS PROVIDED FOR HEREIN, BIONICHE WILL NOT BE LIABLE TO CUMBERLAND,
CUMBERLAND’S SUCCESSORS OR ASSIGNS OR ANY THIRD PARTY WITH RESPECT TO ANY CLAIM ARISING FROM
CUMBERLAND’S OR ANY THIRD PARTY’S USE OF THE DRUG PRODUCTS.
CUMBERLAND ACCEPTS ALL RISK AND RESPONSIBILITY FOR DETERMINING THE MANNER IN WHICH CUMBERLAND
WILL USE THE DRUG PRODUCTS, AND BIONICHE MAKES NO REPRESENTATIONS OR WARRANTIES CONCERNING, AND
ASSUMES NO RESPONSIBILITY FOR, THE PERFORMANCE OF ANY OTHER PRODUCT(S) INTO WHICH THE DRUG
PRODUCTS MAY BE INCORPORATED.
5.2 Compliance:
CUMBERLAND represents and warrants that CUMBERLAND assumes responsibility for
coordinating all contact with the FDA and other regulatory bodies, pertaining specifically to the
Drug Product. During the term of this Agreement, BIONICHE authorizes CUMBERLAND’s representatives
to inspect the methods used in and facilities used for manufacturing, processing, packaging, and
handling of the Drug Product; provided that each such inspection shall be at CUMBERLAND’S own
cost, on reasonable prior notice, and subject to the prior execution of reasonable confidentiality
agreement by each inspector who is not an employee of CUMBERLAND but has been selected by
CUMBERLAND to represent it; and provided further that CUMBERLAND shall have no such obligation
under this Agreement. Except as otherwise required by applicable regulations, CUMBERLAND’s
inspections shall be conducted during normal business hours; provided that CUMBERLAND may inspect
such facilities immediately after any regulatory inspection thereof.
5.3 Debarring:
BIONICHE represents and warrants that it has not been debarred in the United
States within the meaning of 21 U.S.C. § 335a(a) and 335a(b), nor will it use, knowingly after due
inquiry, in any capacity the services of any person debarred pursuant to subsections 3.06(a) or
3.06(b) of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. Section 335(a) and (b).
5.4 FDA Submission:
BIONICHE represents and warrants that it has submitted to the FDA
information about the Facility and the operating procedures, and personnel at such site in the
form required by the FDA. BIONICHE shall keep and maintain the equipment necessary for the
Manufacture of any Drug Product in a manufacture-ready state and in good repair. During the term
hereof and until the fifth anniversary of termination or expiration, BIONICHE shall maintain
written documentation of all use, repair, service, and maintenance of such equipment and shall
provide CUMBERLAND copies of such documentation; provided that in the event that a Person acquires
substantially all of the assets and business of BIONICHE, BIONICHE may send all such documentation
to CUMBERLAND promptly after such acquisition.
5.5 Reimbursement:
BIONICHE shall not incur any costs for which it intends to seek
reimbursement from CUMBERLAND unless BIONICHE has the prior written consent of CUMBERLAND.
CUMBERLAND shall reimburse BIONICHE at a rate equal to one hundred fifty percent (150%) of all
such costs actually incurred and documented and directly related to the production of materials or
data for submissions to the FDA (“Pre-Approval Costs”) hereunder, provided that reimbursement of
such Pre-Approval Costs shall be paid by means of twelve (12) equal installments thereof to be
made on the first day of each of the twelve (12) months following the date on which the FDA issues
final approval to CUMBERLAND to market and sell the Drug Product commercially in the United States
(the “Approval Date”); and provided further that if the Approval Date has not occurred on or
before one year from the date of signing of the Agreement then CUMBERLAND shall immediately
reimburse BIONICHE at a rate equal to one hundred percent (100%) of all Pre-Approval Costs
incurred prior to such date in complete satisfaction of its obligations to reimburse such
Pre-Approval Costs.
5.6 Exclusivity:
(a) Neither BIONICHE nor any Affiliate thereof will sell, give away, or deliver to any other
person, firm, or corporation any form of the Drug Product in the Territory for indications
currently approved as of the date of signing this Agreement (“currently-approved indications”),
while this Agreement is effective and for two years after the termination of this Agreement;
provided that such restrictions shall not apply in the event of termination by BIONICHE pursuant to
Subparagraphs 3.2 (a), (b), (e), or Paragraph 3.3 and shall not apply to the sale by BIONICHE of a
product that contains the same active ingredients as the Drug Product for use as a chemoprotectant
(“Excluded Products”) or Other Products, as defined below, subject to the rights set out in
Subparagraph 5.6 (d).
(b) If, during the term hereof, BIONICHE wishes to market or distribute Excluded Products
in
the Territory in association with any third Person, BIONICHE shall give CUMBERLAND written notice
thereof, and CUMBERLAND shall have thirty (30) days to notify BIONICHE of its interest in entering
into an arrangement with BIONICHE, on terms to be negotiated by the parties in good faith during
the period of one hundred twenty (120) days immediately following the receipt by CUMBERLAND of
such notice (the “Option Period”). If the parties negotiate in good faith but do not conclude an
agreement within the Option Period, BIONICHE agrees not to enter into an agreement covering the
Excluded Products
in
the Territory with any third Person on terms that are more favorable than the
terms previously offered to CUMBERLAND without first offering to enter into an agreement with
CUMBERLAND, to be negotiated during an additional thirty day period, such offer to be made on
terms no less favorable than the terms being offered to the third Person. If CUMBERLAND does not
enter into negotiations with BIONICHE within thirty (30) days following receipt of such notice,
then BIONICHE shall be free to negotiate with third Persons with no further obligation to
CUMBERLAND.
(c) Notwithstanding the provisions of Subparagraph 5.6 (b) above, BIONICHE shall have no
obligation to make any offer to CUMBERLAND with respect to any development, marketing or sale of
Excluded Products in the Territory if it chooses to so develop, market or sell directly, rather
than in association with any third Person.
(d) With respect to any product that contains the same active ingredient as the Drug Product
for indications other than Excluded Products that BIONICHE may seek to develop (“Other Products”),
BIONICHE shall provide notice to CUMBERLAND as set out in Subparagraph 5.6 (b) above, and the same
procedures shall apply. Likewise, with respect to any indications other than currently-approved
indications for the Drug Product that CUMBERLAND seeks to develop, CUMBERLAND shall provide notice
to BIONICHE regarding the possibility of supply of said Drug Product to CUMBERLAND and the
procedures described in Subparagraph 5.6 (b) above shall apply.
(e) If CUMBERLAND does not acquire rights to Excluded Products or to Other Products as
described in Subparagraphs 5.6 (c) and (d) above, and CUMBERLAND establishes, through the dispute
resolution process set forth in Paragraph 11.7, that sales by BIONICHE of said products have
detrimentally impacted sales of the Drug Product then BIONICHE shall pay CUMBERLAND an amount
equal to the lost profits so established by CUMBERLAND. CUMBERLAND shall bear the burden of
establishing lost sales.
(f) Except in the event that BIONICHE fails to supply all Drug Product ordered within ninety
(90) days of receipt of a Purchase Order in accordance with Paragraph 2.7, or in the event of
Force Majeure, CUMBERLAND will order its entire requirement of the Drug Product for the Territory
from BIONICHE, If CUMBERLAND notifies BIONICHE that it intends. to distribute the Drug Product in
countries other than the United States and its territories, then the parties shall negotiate in
good faith, for a period not to exceed one hundred twenty (120) days after CUMBERLAND provides
such notice, to amend this agreement to expand the Territory hereunder; provided that if the
parties fail to agree upon the terms of supply for an expanded Territory within such 120-day
period, CUMBERLAND shall have no obligation to purchase requirements of Drug Products for such
other countries from BIONICHE, but its obligations hereunder with respect to the United States and
its territories shall remain in full force and effect.
(g) In the event of breach of this Paragraph 5.6, the parties shall have the right, in
addition to other rights hereunder, to seek injunctive relief, notwithstanding any other provision
of this Agreement.
5.7 Minimum Purchase Quantities:
CUMBERLAND shall have no minimum purchase requirements for
the first year following FDA approval of the Drug Product. The parties shall, no later than three
(3) months before the end of the first year following FDA approval, negotiate in good faith to set
on the minimum quantities applicable to the second to fifth years of commercial sale, which shall
be incorporated into Schedule V and shall form part of this Agreement. The parties shall negotiate
in good faith to set additional minimum purchase requirements for any extension of the Term of
this Agreement under Paragraph 3.1. CUMBERLAND shall use its best efforts to achieve the minimum
purchase requirements set forth in Schedule V of this Agreement for each format of Drug Product
being sold in the Territory by CUMBERLAND. In the event CUMBERLAND is required to procure Drug
Product from other sources in accordance with Paragraph 2.7, the minimum annual purchase
obligation set out in Schedule V shall be decreased by the quantity BIONICHE failed to deliver
hereunder.
6. DRUG PRODUCT RECALLS
6.1 Drug Product Recalls:
In the event: (a) any government authority issues a request,
directive or order that the Drug Product be recalled, or (b) a court of competent jurisdiction
orders such a recall, (c) CUMBERLAND determines that the Drug Product should be recalled, or (d)
BIONICHE recommends to CUMBERLAND that a recall be initiated, the parties shall take all
appropriate corrective actions; provided that a recall pursuant to Subparagraph 6.1 (c) shall be
without prejudice to the parties’ rights under Paragraph 2.5. In the event that BIONICHE
recommends a recall of Drug Product by CUMBERLAND, such recommendation must take the form of a
notice as per Paragraph 11.1, and CUMBERLAND shall respond promptly indicating to BIONICHE whether
the Drug Product will be recalled. In no event, however, shall BIONICHE have responsibility for
regulatory compliance in connection with any recall, except to the extent and under the
circumstances set forth in the Manual or any other written agreement between the parties hereto or
as required by law. All costs and expenses incurred in connection with such recall shall be the
responsibility of CUMBERLAND unless caused by the negligence of BIONICHE.
7. FORCE MAJEURE; FAILURE TO SUPPLY
7.1 Force Majeure Events:
Failure of either party to perform under this Agreement (except the
obligation to make payments) shall not subject such party to any liability to the other if such
failure is caused by acts such as, but not limited to, acts of God, fire, explosion, flood, war,
riot, sabotage, embargo, or by any cause beyond the reasonable control of the parties, provided
that written notice of such event is promptly given to the other party.
8. MANUFACTURING CHANGES
BIONICHE may implement commercially reasonable changes in the equipment used for
Manufacturing of the Drug Product in the Facility, or the Manufacturing methods, labeling, or
packaging of the Drug Product only as expressly provided in the Specifications unless BIONICHE has
the prior written consent of CUMBERLAND, which consent shall not be unreasonably withheld or
delayed.
9. CONFIDENTIALITY
9.1 Confidential Information:
“Confidential Information” means collectively Confidential
Information of CUMBERLAND (as defined herein) and Confidential Information of BIONICHE (as defined
herein).
9.2 Confidential Information of CUMBERLAND:
Except as expressly set forth herein,
“Confidential Information of CUMBERLAND” means all information obtained or developed by BIONICHE
which relates to CUMBERLAND’s business or the Drug Product, regardless of the form in which such
information is transmitted. The following shall not be considered Confidential Information of
CUMBERLAND for purposes hereof:
(a) Information that is already in the possession of BIONICHE at the time it is received from
CUMBERLAND or developed by BIONICHE on CUMBERLAND’s behalf, if BIONICHE notifies CUMBERLAND of its
belief that the information is excepted under the terms of this subsection;
(b) Information received by BIONICHE from a person
which
has the right to disclose the same,
when BIONICHE notifies CUMBERLAND of its belief that the information is excepted under the terms
of this subsection;
(c) Information that is or becomes published, or is or becomes otherwise publicly available
without the fault of BIONICHE;
(d) An Invention as defined in Paragraph 9.4; or
(e) Confidential Information of BIONICHE.
In the event of a dispute regarding the applicability of the above exceptions to the
definition of Confidential Information of CUMBERLAND, BIONICHE shall have the burden of producing
clear and convincing proof that the information should be excepted from the definition of
Confidential Information of CUMBERLAND. BIONICHE shall not use or permit the use of the
Confidential Information of CUMBERLAND other than for the limited purposes expressly permitted by
or consistent with this Agreement. Recipients of Confidential Information of CUMBERLAND shall be
granted access thereto strictly on a “need-to-know” basis. BIONICHE shall take all reasonable steps
to ensure that recipients comply with the terms of this Agreement, including all restrictions on
use, disclosure and dissemination of Confidential Information of CUMBERLAND. BIONICHE shall notify
CUMBERLAND immediately upon becoming aware of any breach hereof and shall take all reasonable steps
to prevent any further disclosure or unauthorized use.
Upon termination or expiration of this Agreement, BIONICHE shall deliver to CUMBERLAND all
Confidential Information of CUMBERLAND, all copies thereof, and all documents or data storage media
containing such Confidential Information of CUMBERLAND, except that one copy of such information
may be retained by BIONICHE as required by regulation or law for future reference. The Confidential
Information of CUMBERLAND shall remain confidential and not be disclosed by BIONICHE for a period
of ten (10) years following the date of expiration or termination of this Agreement except as
expressly set forth herein or in any other written agreement between the parties.
9.3 Confidential Information of BIONICHE:
Except as expressly set forth herein, “Confidential
Information of BIONICHE” means all information obtained or developed by CUMBERLAND which relates to
the manufacture, sale, and distribution of pharmaceutical products by BIONICHE, regardless of the
form in which such information is transmitted. The following shall not be considered Confidential
Information of BIONICHE for purposes hereof:
(a) Information that is already in the possession of CUMBERLAND at the time it is received
from BIONICHE or developed by CUMBERLAND on BIONICHE’s behalf, if CUMBERLAND notifies BIONICHE of
its belief that the information is excepted under the terms of this subsection;
(b) Information received by CUMBERLAND from a person which has the right to disclose the same,
when CUMBERLAND notifies BIONICHE of its belief that the information is excepted under the terms of
this subsection;
(c) Information that is or becomes published, or is or becomes otherwise publicly available
without the fault of CUMBERLAND; or
(d) Confidential Information of CUMBERLAND.
In the event of a dispute regarding the applicability of the above exceptions to the
definition of Confidential Information of BIONICHE, CUMBERLAND shall have the burden of producing
clear and convincing proof that the information should be excepted from the definition of
Confidential Information of BIONICHE. CUMBERLAND shall not use or permit the use of the
Confidential Information of BIONICHE other than for the limited purposes expressly permitted by or
consistent with this Agreement. Recipients of Confidential Information of BIONICHE shall be granted
access thereto strictly on a “need-to-know” basis. CUMBERLAND shall take all reasonable steps to
ensure that recipients comply with the terms of this Agreement, including all restrictions on use,
disclosure and dissemination of Confidential Information of BIONICHE. CUMBERLAND shall notify
BIONICHE immediately upon becoming aware of any breach hereof and shall take all reasonable steps
to prevent any further disclosure or unauthorized use.
Upon termination or expiration of this Agreement, CUMBERLAND shall deliver to BIONICHE all
Confidential Information of BIONICHE, all copies thereof, and all documents or data storage media
containing such Confidential Information of BIONICHE, except that one copy of such information may
be retained by CUMBERLAND as required by regulation or law for future reference. The Confidential
Information of BIONICHE shall remain confidential and not be disclosed by CUMBERLAND for a period
of ten (10) years following the date of expiration or termination of this Agreement except as
expressly set forth herein or in any other written agreement between the parties.
9.4 Invention:
As between the parties, CUMBERLAND owns all intellectual property rights in any
improvement to the Drug Product and, subject to Paragraph 5.6, any existing or further developments
or modifications of the Drug Product in the Territory (“Invention”). Subject to Article 10,
BIONICHE shall, at CUMBERLAND’s request and expense, take such actions and execute such documents
as necessary or desirable, in CUMBERLAND’s sole judgment, to create, maintain, enforce or defend
CUMBERLAND’s rights in any such Invention.
9.5 Press Release; Other Disclosure:
Except pursuant to a press release subject to the prior
written approval of both parties hereto, the parties agree that the contents of this Agreement
shall not be disclosed to any third party except (i) the controlling companies of the parties, (ii)
the companies controlled by the parties, (iii) individuals and entities providing paid services to
either of the parties who are bound by confidentiality obligations, and (iv) governmental
regulatory agencies, including, but not limited to, environmental protection authorities, without
prior written consent of the other party.
9.6 Production of Records:
BIONICHE shall prepare, maintain, and submit all documents or
reports required under applicable laws and regulations or as reasonably requested by CUMBERLAND
concerning the Manufacture of the Drug Products, including without limitation, batch production
records for each Drug Product. Notwithstanding the restrictions set forth in this Agreement,
BIONICHE shall retain production records for batches of Drug Product for a period of at least one
year after the respective expiration date for each batch. These records will be stored by
appropriate means, including without limitation, optical disk or microfilm in a secure manner in
compliance with current GMP with duplicate copies submitted to CUMBERLAND promptly after the
creation thereof and shall be made available on request of the FDA or any other authorized
regulatory body.
10. INDEMNIFICATION
10.1 Indemnification by CUMBERLAND:
Subject to Paragraph 5.1, CUMBERLAND shall indemnify and
hold BIONICHE (and any Affiliate and their officers, directors, shareholders, agents, and the
employees and insurers of any of them and/or their successors and assigns thereto), free and
harmless from any and all claims, demands, liability, actions or causes of actions, and any and all
expenses associated therewith (including, without limiting the generality of the foregoing, defense
costs and reasonable attorney’s fees), arising out of or in connection with, as a result of, or
otherwise related to any third party claims arising from: (i) any negligence or recklessness of
CUMBERLAND, its agents, or employees; (ii) the promotion, distribution, use, misuse or sale or
effects of the Drug Product except to the extent any alleged Drug Product defects were caused by
BIONICHE; (iii) CUMBERLAND’s non-compliance with any applicable FDA or other applicable
regulations; or, (iv) any failure of CUMBERLAND to perform, in whole or in part, any of its
obligations hereunder in each case, unless caused by the acts or omissions of BIONICHE. Beginning
prior to delivery of the first order of Drug Products pursuant to this Agreement and continuing
until the third anniversary of termination of this Agreement, CUMBERLAND shall maintain products
liability insurance with limits of liability of not less than Five Million U.S. Dollars
($5,000,000) and shall name BIONICHE as additional insured under said policy.
10.2 Indemnification by BIONICHE:
Subject to Paragraph 5.1, BIONICHE will indemnify and hold
CUMBERLAND (and any Affiliate and their officers, directors, shareholders, agents, and the
employees and issuers of any of them and/or their successors and assigns thereto), free and
harmless from any and all claims, demands, liability, actions or causes of action, and any and all
expenses associated therewith (including, without limiting the generality of the foregoing, defense
costs and reasonable attorney’s fees), arising out of or in connection with, as a result of, or
otherwise related to any third party claims arising from: (i) any negligence or recklessness of
BIONICHE, its agents or employees; (ii) personal injury (including death) or property damage
arising out of or in connection with BIONICHE’s manufacture or handling of the Drug Product
otherwise than in accordance with the Specifications and CUMBERLAND’S written directions; (iii)
BIONICHE’s non-compliance with any applicable FDA or other applicable regulations; or (iv) any
failure of BIONICHE to perform any of its obligations hereunder, in each case, unless caused by the
acts or omissions of CUMBERLAND. Beginning prior to delivery of the first order for Drug Product
pursuant to this Agreement and continuing until the third anniversary of termination of this
Agreement, BIONICHE shall maintain products liability insurance with limits of liability of not
less than U.S. $5,000,000 and shall name CUMBERLAND as additional insured under said policy.
10.3 Conditions of Indemnification:
If either party seeks indemnification from the other
under Paragraphs 10.1 or 10.2, it shall promptly give written notice to the other party of any
such claim or suit threatened, made or filed against it, which forms the basis for such claim of
indemnification and shall cooperate fully with the other party in the defense of all such claims
or suits. No settlement or compromise shall be binding on a party hereto without its prior written
consent.
10.4 Limitation:
Except as expressly set forth herein, neither party will be liable to the
other for any claim for loss of profits, for loss or interruption of business or for indirect,
special or consequential damages of any kind under this Agreement.
11. GENERAL PROVISIONS
11.1 Notices:
Any notice permitted or required by this Agreement may be sent by facsimile with
the original document being sent by certified (or registered) mail, return receipt requested, or
overnight delivery and shall be effective when received (or refused) via facsimile or mail or
overnight if faxed and sent and addressed as follows (or to such other facsimile number or address
as may be designated by a party in writing):
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If to CUMBERLAND:
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CUMBERLAND PHARMACEUTICALS INC.
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209 Tenth Avenue South, Suite 332
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Nashville, Tennessee 37203
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Attn: Chief Executive Officer
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Telephone: 615-255-0068
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Facsimile: 615-255-0094
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If to BIONICHE:
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BIONICHE LIFE SCIENCES, INC.
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231 Dundas Street East,
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Belleville, Ontario, Canada K8N 1E2
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Attn: Chief Executive Officer
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Telephone: 800-265-5464
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Facsimile: 613-966-4177
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With a copy to:
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BIONICHE PHARMA (CANADA) LIMITED
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151 Dundas Street, Suite 507
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London, Ontario, Canada N6A 5R7
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Attn: President
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Telephone: 519-453-0641
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Facsimile: 519-453-6169
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And to:
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BIONICHE LIFE SCIENCES, INC.
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Attn: Vice President, Corporate Counsel
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Telephone: 800-265-5464
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Facsimile: 613-966-4177
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11.2 Master Agreement; Amendment:
This Agreement is being entered into pursuant to the
Strategic Alliance Agreement dated January 15, 2002, between CUMBERLAND and BIONICHE (the “Master
Agreement”), and this Agreement (including any and all exhibits hereto, whether entered into now or
hereafter) constitutes an Addendum (as defined in the Master Agreement). In the event of any
conflict or inconsistency between the terms of this Agreement and the Master Agreement, the terms
of this Agreement shall govern. No modification of any of the terms of this Agreement, or any
amendments thereto, shall be deemed to be valid unless in writing and signed by both parties
hereto. No course of dealing or usage of trade shall be used to modify the terms and conditions
herein.
Without limiting the generality of the foregoing, no provisions of any CUMBERLAND purchase order
that are inconsistent with the terms of this Agreement shall apply.
11.3 Waiver:
None of the provisions of the Agreement shall be considered waived by any party
hereto unless such waiver is agreed to, in writing, by both parties. The failure of a party to
insist upon strict conformance to any of the terms and conditions hereof, or failure or delay to
exercise any rights provided herein or by law shall not be deemed a waiver of any rights of any
party hereto.
11.4 Obligations to Third Parties:
Each party warrants and represents that this Agreement is
not inconsistent with any contractual obligations, expressed or implied, undertaken with any third
party.
11.5 Assignment:
This Agreement shall be binding upon and inure to the benefit of the
successors or permitted assigns of each of the parties and may not be assigned, transferred, or
subcontracted by either party without the prior written consent of’ the other, which consent will
not be unreasonably withheld or delayed, except that no consent shall be required in the case of a
transfer to an Affiliate of a party hereto or transaction involving the merger, consolidation or
sale of substantially all of’ the assets of the party seeking such assignment or transfer and such
transaction relates to the business covered by this Agreement and the resulting entity assumes all
the obligations of the assigning party under this Agreement.
11.6 Independent Contractor:
BIONICHE shall act as an independent contractor for CUMBERLAND
in providing the services required hereunder and shall not be considered an agent of or joint
venturer with CUMBERLAND. Unless otherwise provided herein to the contrary, BIONICHE shall furnish
all expertise, labor, supervision, machining and equipment necessary for performance hereunder and
shall obtain and maintain all building and other permits and licenses required by public
authorities.
11.7 Governing Law and Dispute Resolution:
This Agreement is subject to and shall be governed
by the laws of the State of New York. Any dispute, controversy, or claim arising out of or
relating to this Agreement, any purchase orders between the parties hereto, or the breach,
termination, or invalidity thereof shall be settled under the Rules of the American Arbitration
Association by one or more arbitrators appointed in accordance with said Rules. The place of
arbitration shall be within the State of New York. The parties agree that the award of the
arbitrator(s) shall be the sole and exclusive remedy between them regarding any claims,
counterclaims, issues or accountings presented or pled to the arbitrator(s); that it shall be made
and shall promptly be payable in U.S. dollars free of any tax, deduction, or offset; that any
costs and attorney fees incurred by the prevailing party as determined by the arbitrator(s)
incident to the arbitration, shall be included as part of the arbitration award; and that any
costs. fees, or taxes incident to enforcing the award shall, to the maximum extent permitted by
law, be charged against the party resisting such enforcement. The award shall include interest
from the date of any damages incurred for breach or other violation of the Agreement, and from the
date of the award until paid in full, at a rate to be fixed by the arbitrator(s), but in no event
less than the prime interest rate for Bank of America in Nashville, Tennessee, U.S.A.
11.8 Severability:
In the event that any term or provision of this Agreement shall violate
any applicable statute, ordinance, or rule of law in any jurisdiction in which it is used, or
otherwise be unenforceable, such provision shall be ineffective to the extent of such violation
without invalidating any other provision hereof.
11.9 Headings, Interpretation:
The headings used in this Agreement are for convenience only
and are not part of this Agreement.
11.10 Conflict:
In the event of conflict between the terms and provisions of this Agreement
and the terms and provisions of the Manual, the terms of this Agreement shall control.
11.11 Limitation:
The parties hereto acknowledge and agree that the International Sale of
Goods Act and the United Nations Convention on Contracts for the International Sale of Goods have
no application to this Agreement.
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be executed by their
duly authorized representatives effective as of the date first above written.
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CUMBERLAND PHARMACEUTICALS INC.
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BIONICHE LIFE SCIENCES, INC.
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/s/
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A. J. Kazimi
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/s/
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Albert Beraldo
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Authorized Signature
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Authorized Signature
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A.J. Kazimi
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Albert Beraldo
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Chief Executive Officer
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Vice President, Business Development
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SCHEDULE I
Shipping and Storage
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1.
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Finished Drug Product shall be stored by BIONICHE after
completion, at 20 degrees C
to 25 degrees C.
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2.
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Drug product will be delivered by BIONICHE to CUMBERLAND by air on the basis of FCA
(ex works) ex works BIONICHE’s plant in Galway, Ireland with the carrier to be selected
by CUMBERLAND.
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3.
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The terms “FCA” (“ex works”) and “DDP” and the Parties’ respective obligations
shall be determined in accordance with the INCOTERMS adopted by the International
Chamber of Commerce, effective July 1, 1990, unless otherwise specifically provided in
this Agreement.
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4.
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Additional details regarding packaging shall be incorporated herein upon adoption
thereof by written agreement of BIONICHE and CUMBERLAND.
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Pricing —
The prices to be paid by CUMBERLAND to BIONICHE for the Drug Products arc as follows:
N-acetylcysteine 30 mL
Canadian [***]
N-acetylcysteine 10 mL
Canadian [***]
Canadian currency conversions will be based upon the then current exchange rate listed in the Wall
Street Journal.
The minimum size of any order of the Drug Product shall be one production lot of [***] for the 30
mL Drug Product and [***] for the 10 mL Drug Product.
In
addition, CUMBERLAND shall pay to BIONICHE a royalty equal to [***]
percent ([***]%) of Net Sales
(as defined herein) during each calendar year; provided that CUMBERLAND shall pay BIONICHE such
royalty within [***] days after the last day of the applicable calendar year, For purposes
hereof, “Net Sales” shall mean the aggregate amount billed for sales of the Drug Product by
CUMBERLAND, less returns, hospital buying group chargebacks, hospital buying group/group
purchasing organization administration fees, managed care organization rebates, sales/purchasing
discounts, federally mandated discounts and rebates, and state medical assistance program rebates
and discounts, and determined on an accrual basis by CUMBERLAND.
Within sixty (60) days following the close of each calendar quarter following the first sale of a
Drug Product, CUMBERLAND shall furnish to BIONICHE a written report for the calendar quarter
showing the Net Sales for each format of the Drug Product during such calendar quarter and the
corresponding amount payable to BIONICHE under this Agreement for such calendar quarter.
Simultaneously with the submission of the written report, CUMBERLAND shall pay to BIONICHE a sum
equal to the aggregate royalty due for such calendar quarter calculated in accordance with this
Agreement.
Payments to be made by CUMBERLAND to BIONICHE under this Agreement shall be made by cheque made to
the order of BIONICHE or by bank wire transfer in immediately available funds to such bank account
designated in writing by BIONICHE from time to time.
For a period of at least five (5) years after the end of each calendar quarter following the first
sale of each Drug Product, CUMBERLAND shall keep complete and accurate records in sufficient
detail to enable the royalties payable hereunder to be determined. Upon the written request of
BIONICHE and not more than once in each calendar year and only with reasonable prior notice to
CUMBERLAND, CUMBERLAND shall permit an independent certified public accounting firm of nationally
recognized standing selected by BIONICHE and reasonably acceptable to CUMBERLAND to have access
during normal business hours to such of the records of CUMBERLAND as may be reasonably necessary
to verify the accuracy of the Royalty reports hereunder for any calendar year ending not more than
twenty-four (24) months prior to the date of such request.
If such accounting firm concludes in its review that additional royalties were owed during such
period, CUMBERLAND shall pay the additional amounts within forty-five (45) days of the date
BIONICHE delivers to CUMBERLAND such accounting firm’s written report so concluding. The fees
charged by such accounting firm shall be paid by BIONICHE, except CUMBERLAND shall pay such fees in
the event that the additional amounts owed by CUMBERLAND vary from amounts paid with respect to the
calendar year in question by five percent (5%) or greater.
SCHEDULE II
Technical
Agreement
Technical Agreement Rev 1 5
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April 2005
Bioniche/Cumberland
TECHNICAL AGREEMENT
This Agreement is entered into on this 5th day of April, 2005, by and between Cumberland
Pharmaceuticals Inc., a company organized and existing under the laws of the United States, with
offices located at 2525 West End Avenue, Suite 950 Nashville, Tennessee 37203 USA. (“Cumberland”)
and Bioniche Teoranta, a company organized and existing under the laws of the Republic of Ireland,
having a principal place of business, Inverin, Co. Galway, Republic of Ireland. (“Bioniche”).
Whereas, Cumberland requested Bioniche to manufacture and supply the Products (as defined in
section 1.1 hereof); and
Whereas the parties to this Agreement wish to establish in greater detail, the responsibilities of
Cumberland as the Contractor, and Bioniche as Suppliers, for the manufacture of the Products; and
Whereas, a detailed listing of responsibilities of the Contractor and Suppliers, is attached as
Exhibit I;
Now therefore, in consideration of the mutual covenants and promises contained herein, the parties
agree as follows:
This Technical Agreement is intended to serve as the Manufacturing Project Manual to be attached
as Schedule II to the Manufacturing and Supply Agreement, dated January 15, 2002, between
Cumberland and Bioniche Life Sciences, Inc. (the “Manufacturing Agreement”), and is not intended
to supersede any of the parties’ rights and obligations set forth therein. Only in the event that
this Technical Agreement expressly amends and restates specified subsections of the Manufacturing
Agreement shall this Technical Agreement serve as an amendment of the parties rights and
obligations set forth in the Manufacturing Agreement. Except as specifically amended hereby, the
Manufacturing Agreement shall remain in full force and effect, and any conflicting provision
hereof shall be null and void. The parties have entered into this Agreement to clearly define the
responsibilities of each party and to ensure that the Products are manufactured, packaged,
released, stored and shipped in accordance with current European and US GMP’s or other relevant
equivalent cGMP’s, agreed by Bioniche and Cumberland.
1.1
Product
Bioniche will supply Cumberland with Products, as follows:
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1.1.1
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Acetadote
®
— Acetylcysteine Injection
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200mg/mL Bioniche Code Number : 0164AI01
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1
Technical Agreement Rev 1 5
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Bioniche/Cumberland
All references to Bioniche or Cumberland shall include Affiliates of these companies.
“Affiliate” shall be defined as any entity (i) at least fifty percent (50%) of whose outstanding
securities or assets are owned or controlled, directly or indirectly, by said party, or (ii) which
owns or controls directly or indirectly fifty percent (50%) of the outstanding securities or assets
of said party, or (iii) is owned or controlled directly or indirectly, to the extent of fifty
percent (50%) or more of the outstanding securities or assets by any of the entities described in
(i) and (ii) above. The term “Manufacture” as used in this Agreement shall be understood to include
the specification and the purchase of all necessary components of the Product, the manufacturing
process, quality control and assurance. The term “Packaging” as used in this Agreement shall be
understood to include the specification and purchase of all necessary components of the Product,
the packaging and the final quality control and assurance.
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II.
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General Quality Issues
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2.1
Good Manufacturing Practices
Bioniche represents that it shall observe and adhere to the requirements of the current EU
Guide to Good Manufacturing Practice for Medicinal Products for Human Use, including
supplementary recommendations issued by the Commission of the European Communities (cGMPs)
and current US cGMPs. All terms defined in the cGMPs shall have the same meaning when used in
this document. Bioniche represents and warrants that all processes and equipment used in the
manufacture of the Product shall have been validated or are in the process of being validated
in accordance with the cGMPs and current US cGMPs. The reference to other regulatory
requirements will be agreed between the two parties.
2.2
Qualified Persons
The Qualified Person (“QP”), as defined in EU Directive 75/319/EEC, for Bioniche is named in
Exhibit II, and sample of the signature is affixed.
2.3
Supplier Quality Monitoring and Assessments
It is the responsibility of Bioniche to perform quality monitoring and assessment on suppliers
of all materials, involved in the manufacturing of the Product, in accordance with written
quality monitoring protocols.
2.4
Traceability
It is the responsibility of Bioniche to properly track each batch number of the Product, for
traceability, so as to be able to provide a full manufacturing history. Bioniche shall keep
manufacturing records, analytical records and reference samples for each batch of Product.
Copies of records and reference samples shall be made available to Cumberland promptly upon
request. Reference samples shall be kept for a period of one (1) year after the expiration
date for the batch. Manufacturing and quality control records shall be kept for a minimum
period of six (6) years from the date of manufacture or a minimum of one (1) year after the
expiration date, whichever is longer.
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Bioniche/Cumberland
2.5
Stability Studies
Bioniche has the responsibility for the performance of 36-month stability studies on the
Products in accordance with Bioniche stability SOP ST.001 Stability data are to be reported
to Cumberland on request but Cumberland will be alerted concerning any out-of-specification
results within 48 hours.
Attached hereto is a complete set of every Specification related to Products, which are
referenced in 1.1. Bioniche shall prepare the Master Manufacturing Formula and the
Manufacturing and Packaging Batch Instructions for the Product. The Batch Instruction will be
approved by Bioniche. Copies of completed Batch Instructions will be provided to Cumberland
following the completion of manufacture if requested.
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IV.
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Manufacture, Controls, Release and Shipment
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4.1
Purchases and Management of Materials.
It is the responsibility of Bioniche to source the Active Pharmaceutical Ingredients (APIs),
from Bioniche’s designated approved suppliers, for the manufacture of the Products. Bioniche
shall supply excipients and materials required for the manufacture of the Product, and/or
ancillary operating materials used in the manufacture. Bioniche is responsible for all
quality control testing and release of materials used in the manufacturing of the Product
4.2
Product Testing & Release
Bioniche shall test or cause to be tested by an approved, qualified entity each lot of the
Product pursuant to the Specifications before release to Cumberland. Each test shall set
forth the items tested, the specific release Specifications and test results in a certificate
of analysis for each lot delivered and be certified by Bioniche’s QP and sent separately to
Cumberland. Cumberland shall be entitled to rely on the certificate of analysis and is not
required to perform any further testing,
4.3
Non Conforming Activities
During the course of manufacture:
4.3.1 All deviations and events not affecting the agreed Technical Specifications will be
documented by Bioniche. These documents will be retained as part of the batch record. Bioniche
shall inform Cumberland of all deviations prior to release of the batch.
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Bioniche/Cumberland
4.4
Manufacturing Batch Records
4.4.1 Bioniche shall also provide as part of the Batch Certificate of Analysis, a
manufacturing compliance statement with each lot delivered to Cumberland. This certificate
will certify that the lot of Product was manufactured in accordance with the Specifications
and applicable cGMP laws or regulations.
4.4.2 The manufacturing lot records shall contain, at a minimum, the following information:
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The name and dosage form of the medicinal product.
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•
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The batch number or test number of the API and all other raw materials (excluding water).
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•
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The date of manufacture and the Product’s batch number.
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•
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Details of the amounts of Product manufactured during each operation and the quantity
of the Product in the various stages.
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•
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Both the expected and actual results of the in-process controls. If expected results
are expressed in a quantified manner, actual results shall also be quantified.
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•
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Confirmation that the critical steps of the operations proceeded in accordance with
the Manufacturing Instructions by the signature of the persons in charge of the various
stages.
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•
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Special observations made during manufacturing.
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•
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Certification that the process operating lines have been cleared, at the beginning of
the batch processing.
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•
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A list of deviations and their resolution.
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4.4.3 Labeling of the product for Clinical Trials will be the responsibility of Cumberland.
4.5
Shipment
Bioniche shall ship the Product in accordance with instructions agreed to by the parties.
Bioniche shall only place one lot number on any single pallet. Shipment of Product batches
under quarantine shall be made only when specifically authorized in writing by Cumberland, and
will be according to the Bioniche procedure.
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V.
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Changes in Site, Quality Standards, Formula and Manufacturing Procedures
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5.1
Changes Control
Bioniche shall inform Cumberland of any proposed intent to change the site of manufacture, the
specifications, labeling, the procedures for the manufacturing processes or record keeping of
Product.
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Bioniche/Cumberland
During normal working hours and upon reasonable notice, Cumberland shall be entitled to
inspect such areas of Bioniche’s plant where the Product is manufactured or otherwise
stored or handled. Such inspections will include, but not be limited to:
A review of Production facilities and utilities
The taking of physical inventory samples
Reviewing of Quality and Documentation Control systems
Reviewing batch records
A written report of observation shall be issued by Cumberland quality auditors, including a
listing of significant items, which must be corrected prior to the supply of further Product
to Cumberland.
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VII.
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Product Complaints/Recall
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Bioniche and Cumberland shall each notify the other of any claims related to damage,
defective or nonconforming Product. Bioniche shall supply Cumberland with all relevant
information for the investigation of complaints related to the Product.
Cumberland shall be responsible for the collection of adverse events reported on the
Finished Product. It shall be Cumberland’s responsibility to notify Bioniche of such
reports, if such reports relate to Bioniche’s manufacture of the Product, and to keep the
appropriate records and to promptly report such adverse reports to the appropriate
regulatory authorities. In the event any adverse events are reported to Bioniche, Bioniche
shall notify Cumberland in writing within 3 business days.
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VIII.
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Regulatory Communications
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8.1
Maintenance of Licenses
Cumberland is the current Authorization Holder (NDA) for the Finished Product to be
manufactured under this Technical Agreement and shall be responsible for the maintenance and
renewal of said Marketing Authorizations.
Bioniche shall be responsible for the maintenance and renewal of its manufacturing
license.
8.2
Notifications
Cumberland and Bioniche shall promptly inform each other of any material communications to or
from governmental authorities or agencies relating to the Product, including but not limited
to providing each other promptly with copies of any written communications, and “reports of
visits by a governmental authority or agency to any areas within the facilities where the
Product is manufactured that could impact upon the continued supply of Product. The parties
shall consult with each other regarding any issues raised in such communications and shall
attempt in good faith to agree upon any action to be taken or response to be made in
connection with such communications.
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Bioniche/Cumberland
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IX.
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Effective Date and Term, Interpretation
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This Technical Agreement shall become effective on the date first written above and shall
remain in force until the termination of the Agreement between the parties for the supply of
Products.
Any modifications or amendments to this Agreement must be in writing and signed by
both parties to be effective.
In Witness Whereof, the parties hereto have caused this Agreement to be executed by their
respective duly authorized officers, effective as of the first day above written.
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Bioniche Teoranta
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By:
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/s/ Andrew Hall
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Andrew Hall BSc(Hons) M.RS.C. M.I.Q.A
Director Of Quality and Qualified Person
Cumberland Pharmaceuticals Inc.
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By:
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/s/ Leo Pavliv
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Date:
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26 April 2005
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Leo Pavliv
Vice President Operations
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6
Technical Agreement Rev 1 5
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April 2005
Bioniche/Cumberland
Exhibit I
DETAILED RESPONSIBILITES
X = Responsible
A = Approval/Authority
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BIONICHE
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CUMBERLAND
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1
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SPECIFICATIONS/DOCUMENTATION
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1.1
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Specification of Active Bulk Ingredient
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X
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A
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1.2
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Master Manufacturing Formula
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X
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A
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1.3
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Product Lot Identification System
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X
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1.4
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Specification of Inactive Ingredients
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X
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A
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1.5
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Test Method for ID of Active Bulk
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X
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1.6
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Test Method for Inactive Ingredients
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X
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1.7
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Test Method for Release of Product
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X
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1.8
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Local Manufacturing and Packaging Instructions
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X
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1.9
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Specification for In-Process Control
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X
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1.10
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Change Control for Active Ingredient
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X
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A
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1.11
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Change Control for Manufacturing Formulas
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X
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A
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1.12
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Change Control for Inactive ingredients
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X
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A
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1.13
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Bulk product package specification, box & labels
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X
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1.14
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Finished Artwork
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A
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X
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1.15
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Change Control for Artwork/Finishing Materials
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X
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A
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2
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PRODUCTION
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2.1
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Procurement of Bulk Active ingredient
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X
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2.2
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Purchase Inactive Substances
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X
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2.3
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Store Active/Inactive Substances
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X
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2.4
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Sample/Test/Acceptance of Active & Inactive Substances
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X
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2.5
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Test Method Transfer
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N/A
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2.6
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On-Going Stability Testing of Product
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X
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2.7
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Retention of Certificate of Analysis for Active Substance
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X
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2.8
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Validation of Manufacturing Processes
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X
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2.9
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Bills of Material for Manufacturing Process
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X
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2.10
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In Process Control Instructions and Testing
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X
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2.11
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Batch Record Reconciliation
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X
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2.12
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Batch Record Retention
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X
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2.13
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Retention of Samples of Active Ingredient
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X
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2.14
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Retention of Samples of other Materials (Except water)
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X
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2.15
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Retention of Samples of Product
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X
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2.16
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Maintenance of Pharmaceutical Manufacturing Licenses
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X
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2.17
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Disposal of Waste
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X
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Technical Agreement Rev 1 5
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April2005
Bioniche/Cumberland
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BIONICHE
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CUMBERLAND
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3.0
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TESTING & RELEASE OF FINISHED PRODUCT
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3.1
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Analysis of Product
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X
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3.2
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Certificate of Analysis for the Product
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X
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3.3
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Internal QP certification of the Product as per approved production
and control documents
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X
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3.4
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Final QP Release of the product to Cumberland
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X
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3.5
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Complaint
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- Collection and Logging
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X
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X
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- Investigation and Report Issue
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X
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- Follow Up Corrective Action
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X
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- Response to Customer
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X
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3.6
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Product Recall
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- Decision to Initiate Recall
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X
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X
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- Approval of Notification Wording
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X
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X
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- Management of Recall
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X
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X
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- Reconciliation of Returned Product
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X
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X
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3.7
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Liaison with Regulatory Authorities for Approval, Maintenance and
Updating Marketing Authorisations/Product Authorisations (NDA)
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X
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3.8
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Final Release to Market
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X
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8
Technical Agreement Rev 1 5
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April 2005 Bioniche/Cumberland
Exhibit II
Qualified Person
(14
th
January 2004)
Qualified Persons of Bioniche Teoranta
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Mr. A. Hall
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Signature : /s/ Andrew Hall
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9
SCHEDULE III
Territory
The United States of America and all its possessions and territories
SCHEDULE IV
Approved Suppliers
[***]
Schedule V
Minimum Purchase Quantities
[Intentionally
omitted. Exhibit 10.3 to Form S-1 filed on May 1, 2007 (File No. 333-142535) incorporated by reference herein.]
EXHIBIT 10.4
* Certain portions of this exhibit have been omitted pursuant to a request for confidential
treatment which has been filed separately with the SEC.
Contract Sales and Services Agreement
Between
Cumberland Pharmaceuticals, Inc.
&
Cardinal Health Contract Sales & Services
For
Cumberland Pharmaceuticals Dedicated Sales Force
May 16, 2006
TABLE OF CONTENTS
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Article I
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Definitions and References to Cardinal Health
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Page 3
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Article II
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Appointment of Cardinal Health; General Scope of Activities
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Page 5
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Article III
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Compensation
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Page 8
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Article IV
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Representations, Warranties and Covenants
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Page 9
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Article V
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Status of Cardinal Health and the Representatives
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Page 10
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Article VI
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Training
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Page 11
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Article VII
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Samples
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Page 11
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Article VIII
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Trademarks and Intellectual Property Rights
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Page 12
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Article IX
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Communications; Monitoring the Program
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Page 12
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Article X
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Insurance
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Page 13
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Article XI
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Adverse Reaction Reporting and Regulatory Matters
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Page 14
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Article XII
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Return/Recall
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Page 15
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Article XIV
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Term and Termination
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Page 16
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Article XV
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Recordkeeping; Audit Rights
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Page 18
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Article XVI
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Indemnification
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Page 18
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Article XVII
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Notice
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Page 21
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Article XVIII
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Miscellaneous
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Page 21
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Schedule 1.1(k)
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List of Products
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Page 25
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Schedule 1.1(0)
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Definition of Territory
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Page 26
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Schedule 3.1
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Service Fees and Payment Schedule
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Page 27
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-2-
AGREEMENT
This AGREEMENT (“Agreement”) is dated as of May 16, 2006 by and between Cardinal Health PTS, LLC
(“Cardinal Health”) with a place of business at 7000 Cardinal Place, Dublin, Ohio, and Cumberland
Pharmaceuticals, Inc. (“Cumberland”), having a principal place of business at 2525 West End,
Suite 950, Nashville, Tennessee 37203.
Background Information
Cumberland is a Tennessee-based company which focuses on the acquisition, marketing, and
distribution of a portfolio of niche pharmaceutical products. Cardinal Health provides medical
representatives who Detail (as hereinafter defined) pharmaceutical products for third parties.
Cumberland desires Cardinal Health to provide representatives to Detail certain products as
determined and directed by Cumberland in the geographical territory hereinafter specified,
pursuant to the terms and conditions of this Agreement, and Cardinal Health desires to provide
the Representatives and perform such services pursuant to the terms and conditions set forth in
this Agreement.
The parties hereby agree as follows:
ARTICLE I
DEFINITIONS AND REFERENCES TO CARDINAL HEALTH
1.1.
Definitions.
The following terms when used in this Agreement shall, except
where the context otherwise requires, have the following meanings:
(a) “Act” means the Federal Food, Drug and Cosmetic Act, as amended, and the regulations
promulgated thereunder from time to time.
(b) “Affiliate” means any corporate or non-corporate business entity that controls, is
controlled by, or is under common control with a party to this Agreement. A corporation or
non-corporate business entity shall be regarded as in control of another corporation if it owns
or directly or indirectly controls at least forty percent (40%) of the voting stock of the other
corporation, or (i) in the absence of the ownership of at least forty percent (40%) of the voting
stock of a corporation or (ii) in the case of a non-corporate business entity, if it possesses
directly or indirectly, the power to direct or cause the direction of the management and policies
of such corporation or non-corporate business entity, as applicable.
(c) “Agency” means any governmental regulatory authority in the Territory responsible for
granting approvals for the sale or maintaining regulatory oversight of the Products, including,
without limitation, the FDA.
(d) “Cardinal Health” means Cardinal Health PTS, LLC and shall be deemed to include the
Representatives and Managers.
-3-
(e) “Detail” means an interactive, face-to-face visit by a Representative
with a Target Customer or his or her legally empowered designee in the Territory, during
which the FDA-approved indicated uses, safety, effectiveness, contraindications, side
effects, warnings and other relevant characteristics of one or more of the Products (as
defined herein) are described by the Representative in a fair and balanced manner consistent
with the requirements of the Act, and using, as necessary or desirable, the Product Labeling
(as defined herein) and the Product Promotional Materials (as defined herein). “Product
Detail” means Detail of a Product between Target Customer and Representative. When used as a
verb, “Detail” or “Detailing” shall mean to engage in a Detail as defined in this Section
1.1(f).
(f) “FDA” means the United States Food and Drug Administration and any successor agency
having substantially the same functions.
(g) “Manager” means an individual hired by and retained as an employee of Cardinal
Health to oversee activities of Representatives under this Agreement, including a project
manager.
(h) “PDMA” means the Prescription Drug Marketing Act of 1987, as amended, and the
regulations promulgated thereunder from time to time.
(i) “Product Labeling” means all labels and other written, printed, or graphic matter
provided by Cumberland including (i) any container or wrapper utilized with a Product, or
(ii) any written material accompanying a Product, including, without limitation, Product
package inserts.
(j) “Product Promotional Materials” means all written, printed or graphic material
provided by Cumberland, including Product Labeling, intended for use by Representatives
during a Detail, including visual aids, file cards, premium items, clinical studies,
reprints, drug information updates and any other promotional support items that Cumberland
deems necessary or appropriate to conduct the Program. Product Promotional Materials shall
include FDA approved indicated uses, safety, effectiveness, contraindications, side effects,
warnings and other relevant characteristics of each of the Products.
(k) “Products” means the pharmaceutical products to be detailed by Representatives and
marketed by Cumberland as set forth on attached Schedule 1.1(k) and such other products as
may be added by Cumberland from time to time to Schedule 1.1(k) attached hereto.
(l) “Program” means the program of Detailing to be conducted by the Representatives
pursuant to this Agreement beginning as of September 5, 2006 and continuing thorugh the
remainder of the Term, as defined in Section 14.1.
(m) “Representative” and “Representatives” mean an individual or individuals hired
by and retained as an employee of Cardinal Health to conduct Detailing of Cumberland
Products only in connection with the Program.
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(n) “Target” or “Target Customer” means a physician or other specialist identified by
Cumberland.
(o) “Territory” means the geographical area specified in the attached Schedule 1.1(o).
ARTICLE II
APPOINTMENT OF CARDINAL HEALTH; GENERAL SCOPE OF ACTIVITIES
2.1.
Detailing.
Cardinal Health shall provide twenty four (24) Representatives to
engage in Product Detail activities in the Territory. Cardinal Health shall assign
Representatives for such Target Customers, in such numbers, and in such Territories as
shall be designated by Cumberland during the term of this Agreement. Each Representative shall
make Product Details to his or her assigned Target Customers based on any reasonable
general direction given by Cumberland’s designated management team. The duties of such
Representatives shall be exclusively to Detail the Products and perform other related
activities reasonably agreed upon by Cardinal Health as deemed necessary for the establishment
and maintenance of new and existing customers of the Products in the Territories. Cumberland
shall at all times retain the right to promote the Products by whomever, wherever, and to
whomever it chooses.
2.2
Furnishing Managers
. Cardinal Health shall provide two Managers to oversee
the activities of Representatives and to perform this Agreement in such numbers and for such
Territories (when relevant) as mutually agreed upon by Cardinal Health and Cumberland.
2.3.
Scope of Activities.
The parties shall perform the following activities as
applicable to each in connection with the Program:
(a) Cardinal Health shall have sole and exclusive authority to discipline or terminate the
employment of Representatives. Cumberland may reasonably request that a Representative or
Manager be terminated or reassigned if such Representative’s or Manager’s activities or conduct
are not adequately achieving the performance goals of the Product, or if the Representative or
Manager fails to comply with all applicable laws, regulations, and Cumberland requirements for
Detailing the Product. Cardinal Health shall use its best efforts to comply with such request;
provided that such action complies with applicable laws and is in accordance with Cardinal
Health’s policies and procedures, as determined by Cardinal Health’s human resources manager. In
the event Cardinal Health determines that its policies and procedures or applicable laws
prohibit the termination or reassignment of any Representative so requested by Cumberland, it
shall notify Cumberland of such determination and submit a corrective action plan for
Cumberland’s approval.
(b) Cardinal Health shall cause each Representative to attend and successfully complete the
Training Program (as defined in Section 6.1) conducted by Cumberland for each of the Products
prior to participating in the Program. Any such Representative who shall not successfully
complete all such requirements shall be removed and replaced by another Representative who shall
comply with such requirements.
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(c) Cumberland shall provide the Representatives without cost with sufficient
quantities of the Product Promotional Materials and Product Labeling for the performance of
Detailing. Cumberland shall be solely responsible for the preparation, content, and method
of distribution of the Product Promotional Materials and the Product Labeling. In
connection with the Detailing of the Products, the Representatives shall use only the
Product Labeling and the Product Promotional Materials provided by Cumberland; and under no
circumstances shall Cardinal Health or the Representatives develop, create, or use any
other promotional material or literature for the Detailing of the Products. Cumberland
shall advise Cardinal Health immediately of any inaccuracy or incompleteness of the Product
Promotional Materials or the Product Labeling, and upon such notice Cardinal Health and the
Representatives shall immediately cease the use of any portion or all of the Product
Promotional Materials or Product Labeling so identified by Cumberland.
(d) Cardinal Health shall instruct the Representatives to limit their verbal
statements and claims regarding the Products, including efficacy and safety, to those that
are consistent with the Product Labeling and the Product Promotional Materials. The
Representatives shall not add, delete, or modify claims of efficacy or safety in the
Detailing of the Products, nor make any changes (including underlining or otherwise
highlighting any language or adding any notes thereto) in the Product Promotional
Materials. Representatives shall not make any disparaging, untrue, or misleading statements
about Cumberland or its Affiliates, employees, competitors, or competing products.
Representatives shall Detail the Products in strict adherence to all applicable laws,
regulations, and professional requirements, including, but not limited to, the Act, the
Medicare and Medicaid Anti-Kickback Statute, and the American Medical Association Gifts to
Physicians from Industry Guidelines.
(e) The Representatives shall remain under the direct authority and control of
Cardinal Health, but shall cooperate with the members of Cumberland and shall receive
advice and direction related to Detail activities on the Products from Cumberland and
Cardinal Health mutually. Cumberland shall make all decisions with respect to the overall
strategy in connection with the Detailing of the Products. Any Cumberland personnel
interacting with Cardinal Health Representatives shall not discipline the Representatives
or implement terms or conditions of employment or personnel policies and/or practices with
respect to the Representatives. Cumberland shall provide Cardinal Health with copies of all
reports, memoranda, audits and other data it develops pertaining to (i) the
Representatives, Detailing, and the Program within 30 days of the preparation of such
documents, and (ii) any negligent or wrongful acts or omissions of Representatives as
promptly as practicable.
(f) In the event Cardinal Health supplies Representatives and Managers with fleet
vehicles for their use in performing the Detailing as described in the Schedules of this
Agreement, Cumberland shall reimburse Cardinal Health for all of its out-of-pocket costs
related to using such vehicles for Detailing, including but not limited to costs related to
owning, leasing, maintaining, insuring, and/or operating such vehicles (including fuel
costs). Cumberland shall reimburse Cardinal Health for all reasonable out-of-pocket costs
and expenses (i.e., airline tickets and other travel expenses, hotel, rent-a-car,
business meals, travel meals) of
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Representatives and Managers in connection with performing services pursuant to this
Agreement. Cumberland and Cardinal Health shall establish a mutually acceptable budget for
the costs and expenses referenced in this subparagraph for each Territory.
(g) Cumberland shall provide Cardinal Health with a list of Target Customers in the
Territory and with data on prescriptions and sales in the Territory for Cardinal Health’s use
in performing this Agreement. Cumberland shall also provide Cardinal Health with other sales
and marketing information concerning the Products that Cumberland obtains or prepares during
the term of this Agreement and deems useful to Cardinal Health.
2.4.
Orders for Products
. Cumberland shall be solely responsible for
establishing the terms and conditions of the sale of the Products, including without
limitation, the price at which the Products will be sold, whether sales of the Products will
be subject to any discounts, the method of distribution of the Products, and whether any
credit will be granted or refused in connection with the sale or return of any Product.
Cumberland shall be exclusively responsible for accepting and filling all purchase orders for
the Products, billing and returns for the Products, and all other activities in connection
with the sale and delivery of the Products, other than Detailing. If Cardinal Health or the
Representatives receive an order for the Products, they shall immediately transmit such order
to Cumberland for further handling and communications with the submitter of the order,
including acceptance or rejection, which shall be in Cumberland’s sole discretion.
2.5.
Representatives’ Activity
(a) Subject to Cumberland’s obligations and representations and warranties in this
Agreement, any negligent or wrongful act or omission on the part of the Representatives (both
individually and as a group) that occur during the term of this Agreement and that arise
during the course and within the scope of their employment with Cardinal Health pursuant to
this Agreement shall be deemed to be negligent or wrongful acts or omissions of Cardinal
Health. Notwithstanding the foregoing, any acts or omissions of the Representatives pursuant
to the exclusive direction, control or supervision of Cumberland or its employees or agents
shall not be deemed to be negligent or wrongful acts or omissions of Cardinal Health.
(b) Each party shall notify the other in writing as promptly as practicable of any such
material alleged negligent or wrongful acts or omissions on the part of the Representatives
of which it becomes aware along with a plan to remedy such acts or omissions, and Cumberland
shall provide Cardinal Health with a reasonable opportunity to remedy such acts or omissions,
and if indicated, to replace the involved Representatives.
2.6
Vacancies/Turnover
. In the event of a Representative vacancy due to
resignation, reassignment or termination of a Representative, Cardinal Health shall fill any
such vacancy within a six (6) week period. Cumberland shall be responsible for paying the
Service Fees (as defined in Section 3.1 below) during such vacancy, unless such vacancy
exceeds the six (6) week period, in which event, the associated Service Fees for such vacancy
shall be suspended after the six (6) week period and shall resume once the vacancy is filled
by Cardinal Health. All recruiting and other related expenses for filling a vacancy shall
be borne by Cardinal Health;
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provided, however, that Cumberland shall be responsible for all recruiting and other
related expenses for filling any vacancy occurring pursuant to Cumberland’s request for
reassignment or termination other than a request pursuant to Section 2.5(b) or resulting from
the Representative’s failure to comply with any one or more of the provisions of Section 2.3.
In addition, if Cumberland desires to interview any candidates, Cumberland shall bear its own
cost of attending any final interview conducted by Cardinal Health or the costs of any
separate interview arranged for by Cumberland.
2.7
Management Reports
. Cardinal Health or its third party designee shall provide
Cumberland with monthly reports in the form agreed between Cumberland and Cardinal Health
within fifteen (15) days after the end of each month. At the request of Cumberland, Cardinal
Health shall furnish Cumberland at reasonable times such documentation as Cumberland
reasonably requests for purposes of verifying the accuracy of any monthly report.
2.8
Project Manager
. Cardinal Health shall appoint a Project Manager to serve
as a liaison between Cardinal Health, Representatives and Cumberland regarding the performance
by Cardinal Health and Cumberland of their respective obligations under this Agreement.
2.9
Non-compete
. During the term hereof and until the first anniversary of the
expiration thereof, the Representatives shall not, directly or indirectly, solicit or
influence or attempt to solicit or influence any Target Customer to acquire pharmaceutical
products manufactured by a competitor of Cumberland for a laxative product, an oral
rehydration solution or other Products added to Schedule 1.1(k) by Cumberland.
ARTICLE III
COMPENSATION
3.1.
Amount and Time of Payment
. For services hereunder, Cumberland shall pay
to Cardinal Health the fees set forth in Schedule 3.1 attached hereto and incorporated by
reference (the “Service Fees”), which shall be payable as set forth in the payment schedule
set forth therein.
3.2
Cumberland’s Hiring of Representatives.
Cumberland shall not solicit,
directly or indirectly, any Representative or other employee of Cardinal Health to terminate
their employment with Cardinal Health and/or hire any such Representative or employee during
the Term of this Agreement without the prior written consent of Cardinal Health, which consent
shall not be unreasonably withheld or delayed. At the expiration or termination of this
Agreement, Cumberland shall have the right to hire as its own employee or as an independent
contractor or agent any one or more of the Representatives or Managers (collectively, the
“Targeted Employees”). Cumberland shall have the right to negotiate with any Targeted
Employee concerning the terms on which Cumberland might hire that Targeted Employee prior to
the end of the Term only upon the prior written consent of Cardinal Health, which shall not be
unreasonably withheld or delayed. Cardinal agrees not to interfere with or restrict in any
manner Cumberland’s solicitation and hiring of the Targeted Employees and Cardinal Health will
assist Cumberland in the transition of Targeted Employees from Cardinal Health to Cumberland.
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3.3.
Reimbursement of Expenses
. All expenses of Cardinal Health for which
Cumberland is obligated to reimburse Cardinal Health as expressly provided in this
Agreement, including but not limited to travel expenses and vehicle expenses under Section
2.3(e), shall be paid by Cumberland within [***] days after Cardinal Health has submitted a
statement itemizing such expenses. Cardinal Health shall submit such expense statements to
Cumberland monthly.
3.4
Past Due Amounts
. All amounts owing by Cumberland to Cardinal Health
pursuant to this Agreement that are not timely paid by Cumberland will bear interest at the
rate of twelve (12%) per annum from the due date. An invoice will be considered late and
begin to accrue interest if unpaid 30 days past its due date.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
4.1.
By Cardinal Health.
Cardinal Health represents, warrants, and covenants to
Cumberland, as of execution of this Agreement and during the term of this Agreement, as
follows:
(a) that Cardinal Health and the Representatives shall perform the Detailing in a
professional and timely manner;
(b) that Cardinal Health and the Representatives shall comply with all laws, rules and
regulations that apply to the performance of services under this Agreement, including but
not limited to the PDMA, the Medicare and Medicaid Anti-Kickback Act (42 U.S.C. §
1320a-7b(a)), the Civil False Claims Act (31 U.S.C. § 3729(a)), Sections 1128A, 1128B, and
1877 of the Social Security Act (42 U.S.C. §§ 1320a-7a, -7b, and 1395nn), the Health Care
Fraud Act (18 U.S.C. § 1347), and the Criminal False Claims Act (18 U.S.C. § 287), as
amended from time to time, as well as similar applicable state laws; and
(c) that Cardinal Health is under no obligation to any third party that would prevent
the execution of this Agreement or interfere with its performance under this Agreement.
4.2.
By Cumberland
. Cumberland represents, warrants, and covenants to
Cardinal Health, as of execution of this Agreement and during the term of this Agreement,
as follows:
(a) that Cumberland is under no obligation to any third party that would prevent the
execution of this Agreement or interfere with its performance under this Agreement;
(b) that Cumberland shall comply with all laws, rules and regulations that apply to the
Products and their sale, the Program, and this Agreement, including but not limited to the
Act, the PDMA, the Medicare and Medicaid Anti-Kickback Act (42 U.S.C. § 1320a-7b(a)), the
Civil False Claims Act (31 U.S.C. § 3729(a)), Sections 1128A, 1128B, and 1877 of the Social
Security Act (42 U.S.C. §§ 1320a-7a, -7b, and 1395nn), the Health Care Fraud Act (18
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U.S.C. § 1347), and the Criminal False Claims Act (18 U.S.C. § 287), as amended from
time to time, as well as similar applicable state laws;
(c) that the Product Labeling and Product Promotional Materials are accurate,
complete, and in compliance with the Act and all applicable rules and regulations of the
FDA; and
(d) that to the best knowledge of Cumberland, the manufacture, sale, and distribution
of the products do not and will not during the term of this Agreement, infringe any patent
or other proprietary rights of third parties, and the Products have all necessary
governmental approvals and may be lawfully Detailed and sold by Cumberland and the
Representatives.
ARTICLE V
STATUS OF CARDINAL HEALTH AND THE REPRESENTATIVES
5.1.
Cardinal Health Independent Contractor.
Cardinal Health is being
retained and shall perform hereunder strictly as an independent contractor. Representatives
and Managers of Cardinal Health performing services hereunder shall not be, and shall not
be considered to be, employees of Cumberland for any purpose, and shall at all times remain
employees of Cardinal Health, subject to Section 3.3. Neither party shall have any
responsibility for the hiring, termination, compensation, benefits or other conditions of
employment of the other party’s employees, except as otherwise provided in this Agreement.
5.2.
No Cumberland Benefits.
While employees of Cardinal Health, the
Managers and Representatives are not eligible to participate in any benefits programs or
sales bonuses offered by Cumberland to its employees, or in any pension plans, profit
sharing plans, insurance plans or any other employee benefit plans offered from time to
time by Cumberland to its employees, provided that the Representatives shall be eligible to
participate in Cumberland sales contests and bonus plans if so requested by Cumberland and
approved by Cardinal Health. Cardinal Health acknowledges and agrees that Cumberland does
not, and will not, maintain or procure any worker’s compensation or unemployment
compensation insurance for or on behalf of the Managers or Representatives while they are
employees of Cardinal Health. Cardinal Health acknowledges and agrees that it shall be
solely responsible for paying all salaries, wages, benefits and other compensation which
its employees (including Representatives and Managers) may be entitled to receive in
connection with the performance of the services hereunder.
5.3
Sales, Use and Excise Taxes.
If any state or local government or other
taxing authority determines that sales, use or excise Taxes (“Taxes”) are applicable to
Cardinal Health’s services performed hereunder, Cardinal Health shall promptly accrue and
Cumberland shall pay such Taxes on behalf of Cardinal Health to the appropriate taxing
authorities. In addition, Cumberland shall be responsible for the payment of any applicable
Taxes related to Cumberland’s supply to Cardinal Health of Product Promotional Materials
and Product Samples.
5.4.
No Joint Venture.
Nothing contained in this Agreement shall be
construed as creating a joint venture or, except as otherwise provided herein, as granting
to either party the
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authority to bind or contract any obligations in the name of or on the account of the
other party or to make any guarantees or warranties on behalf of the other party.
ARTICLE VI
TRAINING
6.1.
Training Programs
.
(a) Cumberland shall conduct a training program for new Representatives and Managers
prior to participating in the Program, which shall include such medical and technical
information about the Products and such sales training as Cumberland, along with Cardinal
Health, deems necessary and appropriate (the “Training Program”). The Training Program
shall also include instruction on compliance with applicable laws, Company policies and
procedures, and computer training. Cardinal Health shall assist Cumberland with
the Training Program only to the extent requested by Cumberland.
(b) In order to qualify for assignment in a Territory, a Representative must
demonstrate thorough knowledge of the Products by passing Cumberland approved Product
tests at a level of proficiency agreed upon by Cumberland and Cardinal Health.
6.2.
Training Materials
. Cumberland shall prepare written training
materials for the Training Program and an up-to-date programmed learning unit for the
Products, to be sent to each Representative for “at home” study a minimum of five (5) days
prior to the commencement of the Training Program.
6.3.
Cumberland Assistance
. During the term of this Agreement,
Cumberland shall make available to Cardinal Health, free of charge, a reasonable number
of, and for a reasonable amount of time, at locations reasonably agreed by Cumberland and
Cardinal Health, Cumberland’s sales training and marketing personnel to assist Cardinal
Health’s Representatives and Managers with respect to the Training Program and additional
orientation and ongoing training for the Representatives.
ARTICLE VII
SAMPLES
7.1.
Provision of Samples.
Cumberland shall provide samples of the Products
to the Representatives at Cumberland’s option and at its expense. Cumberland shall
determine the quantity and types of samples to be provided to the Representatives and the
method of distribution of the samples. In the event Cumberland elects to have Cardinal
Health manage the storage and distribution of samples, Cardinal Health shall pass on to
Cumberland the actual invoice costs for storage, distribution and other related costs and
use prudent business sense in costs incurred. All samples shall be stored and handled by
Cumberland and Cardinal Health in compliance with the PDMA and applicable law.
7.2
Sample Accountability
. Cardinal Health shall prepare and provide to
Cumberland for approval a sample accountability program applicable to the samples
provided by
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Cumberland. After the parties agree in writing to adopt a sample accountability
program Cardinal Health shall comply with such program.
7.3.
Return of Samples.
Within 30 days following the termination or
expiration of this Agreement or within 30 days from the termination or removal from the
Program of a Representative (unless such Representative has been hired or retained by
Cumberland), Cardinal Health shall cause the Representatives to return to Cumberland all
unused Product samples provided to Cardinal Health or the Representatives by Cumberland.
Cumberland shall pay or reimburse Cardinal Health for all out-of-pocket costs and expenses
in connection with the storage and shipment of returned samples.
ARTICLE VIII
TRADEMARKS AND INTELLECTUAL PROPERTY RIGHTS
The Products shall be Detailed by Cardinal Health’s Representatives under trademarks
owned or licensed by Cumberland or an Affiliate of Cumberland. This Agreement does not
constitute a grant to Cardinal Health of any property right or interest in the Products or
any trademarks which Cumberland or an Affiliate of Cumberland uses with respect to the
Products or to the name or business style of Cumberland. Cardinal Health and the
Representatives shall use the Product Promotional Materials only for the purposes of this
Agreement, and all copyright and other intellectual property rights in the Product
Promotional Materials shall remain with Cumberland.
ARTICLE IX
COMMUNICATIONS; MONITORING THE PROGRAM
9.1.
Communications from Third Parties.
Cardinal Health and its
Representatives shall advise Cumberland promptly of all comments, statements, requests and
inquiries of the medical profession or any other third parties relating to the Products
that are not addressed by either Product Labeling or the Product Promotional Materials, of
which Cardinal Health becomes aware. All responses to such communications to the medical
profession or such other third parties shall be handled solely by Cumberland. Cardinal
Health shall provide reasonable assistance to Cumberland to the extent requested by
Cumberland, and at Cumberland’s cost and expense, to fully respond to such communications.
9.2.
Government Agencies.
All communications with government agencies,
including the FDA, concerning the Products shall be the sole responsibility of Cumberland.
Cardinal Health shall assist Cumberland with respect to such communications with
government agencies to the extent requested by Cumberland, and at Cumberland’s cost
and expense. Cardinal Health shall provide Cumberland with any documents or information
reasonably requested by Cumberland for purposes of responding to any communications with
government agencies within 72 hours of Cumberland’s request.
9.3.
Cumberland Communications.
In addition to Detailing, Cardinal Health shall assist
Cumberland with respect to customer communications (as reasonably requested by Cumberland and at
Cumberland’s cost and expense) within the Territory and shall regularly
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advise Cumberland of market, economic, regulatory and other developments of which Cardinal
Health may become aware which may affect the sale of the Products in the Territory.
9.4.
Review of Results.
The parties shall meet periodically, but at least once per
calendar quarter, to review and discuss the actual results compared to the marketing plans for
Detailing of the Products. Cumberland shall regularly and promptly share with Cardinal Health
all reports, audits and other data it develops relative to the Program.
ARTICLE X
INSURANCE
10.1
Cardinal Health Insurance
.
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(a)
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During the Term of this Agreement, Cardinal Health shall
obtain and maintain the following insurance with limits not less than those
specified below:
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i.
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Commercial General Liability Insurance with a
limit of One Million Dollars ($1,000,000) per occurrence.
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ii.
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Worker’s Compensation and Employers Liability
Insurance with statutory limits for Workers’ Compensation and
Employers’ Liability limits of One Million Dollars ($1,000,000) per
accident.
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iii.
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Automobile Liability Insurance with a combined
single limit of $1,000,000.
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iv.
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Products Liability Insurance with a limit of
Five Million Dollars ($5,000,000) per occurrence.
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(b) Cardinal Health may self-insure any or a portion of the required insurance.
In the event that any of the required policies of insurance are written on a claims
made basis, then such policies shall be maintained during the entire term of this
Agreement and for a period of not less than five (5) years following the
termination or expiration of this Agreement.
(c) Cardinal Health shall waive subrogation rights against Cumberland for
workers’ compensation benefits and shall obtain a waiver from any insurance
carriers with which Cardinal Health carries workers’ compensation insurance
releasing their subrogation rights against Cumberland.
(d) Each insurance policy which is required under this Section shall be
obtained from an insurance carrier with an A.M. Best rating of at least A- VII.
10.2
Cumberland Insurance
.
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(a)
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During the Term of this Agreement, Cumberland shall obtain and
maintain the following insurance with limits not less than those specified
below.
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i.
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Commercial General Liability Insurance with a limit of One
Million Dollars ($1,000,000) per occurrence.
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ii.
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Products Liability Insurance with a
limit of Five Million Dollars ($5,000,000) per occurrence.
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iii.
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Worker’s Compensation and Employers
Liability Insurance with statutory limits for Workers’
Compensation and Employers’ Liability limits of One Million
Dollars ($1,000,000) per accident.
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(b) Cumberland may self-insure any or a portion of the required insurance. In
the event that any of the required policies of insurance are written on a
claims made basis, then such policy(ies) shall be maintained during the
entire period of this Agreement and for a period of not less than five (5)
years following the termination or expiration of this Agreement.
(c) Cumberland shall waive subrogation rights against Cardinal Health for
workers’ compensation benefits and shall obtain a waiver from any insurance
carriers with which Cumberland carries workers’ compensation insurance
releasing their subrogation rights against Cardinal Health.
(d) Each insurance policy which is required under this Section shall be
obtained from an insurance carrier with an A.M. Best rating of at least A-
VII.
ARTICLE XI
ADVERSE REACTION REPORTING AND REGULATORY MATTERS
11.1.
Immediate Notification.
Cardinal Health and Cumberland agree to notify the
other party as soon as reasonably practicable of any information that each may obtain or
learn concerning any Product or package complaint or any serious unexpected side effect,
injury, toxicity, or sensitivity reaction or any unexpected incidence of severity thereof
associated with the clinical uses, studies, investigations, tests and marketing of the
Products, whether or not determined to be attributable to the Products. “Serious” as used in
this Section 11.1 refers to an experience which results in death, permanent or substantial
disability, in-patient hospitalization, prolongation of existing in-patient hospitalization,
a congenital anomaly or cancer, or a result of an overdose or life threatening condition.
“Unexpected” as used in this Section 11.1 refers to (i) conditions or developments not
previously submitted to governmental Agencies or encountered during clinical studies of the
Products and not reflected in the Product Promotional Materials or the Product Labeling, or
(ii) conditions or developments occurring with greater frequency, severity, or specificity
than shown by information previously submitted to governmental Agencies or encountered
during clinical studies of the Products and not reflected in the Product Promotional
Materials or the Product Labeling. Each party shall also notify the other in a timely manner
of any other adverse experience, i.e., any unfavorable and unintended change in the
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structure (signs), function (symptoms) or chemistry (laboratory data) of the body
temporally associated with the use of the Products, whether or not considered related
thereto.
11.2.
Threatened Agency Action.
Cardinal Health and Cumberland shall each
immediately notify the other party of any information that each may obtain or learn
regarding any threatened or pending action by an Agency which may affect the Products.
Cardinal Health shall, at the request of Cumberland and at the cost and expense of
Cumberland, cooperate with Cumberland in formulating a procedure for taking appropriate
action in response to such information. Unless compelled by law, Cardinal Health shall not
respond to an Agency without the prior written consent of Cumberland.
11.3.
Training
. Cardinal Health and Cumberland shall develop appropriate
instructions in the Training Program for Representatives as to handling of information
received or obtained subject to Sections 11.1 and 11.2.
ARTICLE XII
RETURN/RECALL
12.1.
Returned Products
.
(a) Cumberland shall be responsible for handling all returned Products, including
shipment and compensation or credit for the returned Products. Any Products inadvertently
returned to Cardinal Health shall be shipped to Cumberland or at its direction, in
compliance with Cumberland’s returned goods policy, and Cardinal Health shall advise the
customer who made the return that the Products have been returned to Cumberland. Cumberland
shall reimburse Cardinal Health’s out-of-pocket shipping costs arising from its handling of
such returned Products within 30 days of delivery to Cumberland of Cardinal Health’s
statement for such costs. Upon request Cardinal Health shall provide Cumberland with
documentation relating to such costs.
(b) At Cumberland’s request, Cardinal Health shall assist Cumberland in obtaining and
receiving any Products that have been recalled, and any costs incurred by Cardinal Health,
agreed upon in advance by Cumberland, with respect to participating in any such recall shall
be reimbursed by Cumberland within 30 days of delivery to Cumberland of Cardinal Health’s
statement for such costs.
ARTICLE XIII
CONFIDENTIAL INFORMATION
13.1
Mutual Obligation
. Cardinal Health and Cumberland agree that they will not
disclose the other party’s Confidential Information (defined below) to any third party
without the prior written consent of the other party except as required by law, regulation or
court or administrative order; provided, however, that prior to making any such legally
required disclosure, the party making such disclosure shall give the other party as much
prior notice of the requirement for and contents of such disclosure as is practicable under
the circumstances. Notwithstanding the foregoing, each party may disclose the other party’s
Confidential Information to any of its Affiliates that (A) need to know such
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Confidential Information for the purpose of performing under this Agreement, (B) are
advised of the contents of this Article, and (C) agree to be bound by the terms of this
Article.
13.2
Definition
. As used in this Agreement, the term
“Confidential Information”
includes all such information furnished by Cardinal Health or Cumberland, or any of their
respective representatives or Affiliates, to the other or its representatives or Affiliates,
whether furnished before, on or after the date of this Agreement and furnished in any form,
including but not limited to written, verbal, visual, electronic or in any other media or
manner. Confidential Information includes all proprietary technologies, know-how, trade
secrets, discoveries, inventions and any other Intellectual Property (whether or not
patented), analyses, compilations, business or technical information and other materials
prepared by either party, or any of their respective representatives, containing or based in
whole or in part on any such information furnished by the other party or its representatives.
Confidential Information also includes the existence of this Agreement and its terms.
13.3
Exclusions
. Notwithstanding Section 13.2, Confidential Information does not
include information that (A) is or becomes generally available to the public or within the
industry to which such information relates other than as a result of a breach of this
Agreement, or (B) is already known by the receiving party at the time of disclosure as
evidenced by the receiving party’s written records, or (C) becomes available to the
receiving party on a non-confidential basis from a source that is entitled to disclose it on
a non-confidential basis, or (D) was or is independently developed by or for the receiving
party without reference to the Confidential Information, as evidenced by the receiving
party’s written records.
13.4
No Implied License
. The receiving party will obtain no right of any kind or
license under any patent application or patent by reason of this Agreement. All Confidential
Information will remain the sole property of the party disclosing such information or data.
13.5
Return of Confidential Information
. Upon written request or termination of this
Agreement, the receiving party shall promptly return within thirty (30) days all such
information, including any copies thereof, and cease its use or, at the request of the
disclosing party, shall promptly destroy the same and certify such destruction to the
disclosing party; except for a single copy thereof, which may be retained for the sole
purpose of determining the scope of the obligations incurred under this Agreement.
13.6
Survival
. The obligations of this Article 13 will terminate five (5) years from
the expiration of this Agreement.
ARTICLE XIV
TERM AND TERMINATION
14.1.
Term
. This Agreement shall take effect as of September 5, 2006 and shall
continue in effect until August 30, 2008 (the “Initial Term”), unless terminated earlier
as set forth herein. Notwithstanding the foregoing, Cumberland may, at its option
upon written notice to Cardinal Health at least ninety (90) days prior to the expiration of
the Initial Term, and with the written consent of Cardinal Health, extend the Initial
Term for one additional year (the “Renewal Term”). If Cumberland desires to exercise the
Renewal Term, parties shall negotiate in good faith provisions of Section 3.1 regarding
Service Fees. References in this Agreement to the term of this Agreement include both the
Initial Term and the Renewal Term, if applicable.
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14.2.
Bankruptcy: Insolvency.
Either party may terminate this Agreement
upon notice to the other upon the occurrence of: (a) the entry of a decree or order for
relief by a court of proper jurisdiction in an involuntary case of the other party under the
Federal Bankruptcy Code, as now constituted or hereafter amended, or any other applicable
federal or state insolvency or other similar laws, and the continuance of any such decree or
order in effect for a period of sixty (60) consecutive days; or (b) the filing by the other
party of a petition for relief under the Federal Bankruptcy Code, as now constituted or
hereafter amended, or any other applicable federal or state insolvency or similar laws.
14.3
Termination For Breach
. Subject to Section 3.2 and other continuing
obligations, either party may terminate this Agreement (i) in the event of a material breach
of the other party’s obligations under this Agreement, provided that such breach has not
been cured within thirty (30) days after written notice thereof from the non-breaching party.
14.4
Termination Due To Regulatory And Other Problems
. If the Product is not
being marketed due to regulatory problems, court or administrative proceedings, product
liability claims, recalls, raw materials shortages, or similar factors beyond the control of
Cumberland, then, subject to Section 3.2, either party may terminate this Agreement upon
thirty (30) days written notice to the other.
14.5
Termination Due To Assignment or Change in Control
. In the event of a
Change of Control (defined herein), the party that has had a Change In Control (the
“Affected Party”) shall give written notice to the other party (the “Non-Affected Party”)
within thirty (30) days of the occurrence of such Change In Control. If the Change In
Control involves a material and direct competitor of the Non-Affected Party, the
Non-Affected Party may terminate this Agreement by written notice to the Affected Party
within 60 days after receipt of the Notice of a Change In Control . If the Change In Control
does not involve a material and direct competitor of the Non-Affected Party, this
Agreement may not be terminated by the Non-Affected Party. For purposes of this Section,
“Change In Control” includes a purchase, assignment or transfer of a controlling interest
in the Affected Party or substantially all of its business and assets and any merger or
consolidation involving the Affected Party or any Affiliate of the Affected Party that
requires a vote of the stockholders of the Ultimate Parent of the Affected Party. “Ultimate
Parent” for Cardinal Health is Cardinal Health, Inc. and the Ultimate Parent for Cumberland
is its stockholders.
14.6.
Termination: Phase Out.
In the event that this Agreement is terminated
pursuant to Sections 14.2 through 14.5, and at Cumberland’s request, the parties shall
discuss in good faith an appropriate phase-out of Cardinal Health’s Detailing activities.
14.7
Termination: Written Notice
. Cumberland may terminate the Agreement, with
or without cause, upon 60 days prior written notice.
14.8.
Termination: Continuing Rights.
The termination or expiration of this Agreement
shall not affect Cumberland’s obligation to reimburse or pay Cardinal Health any amount then
due and owing under this Agreement. Further, the termination or expiration of this
Agreement
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shall not affect any rights or obligations of any party under this Agreement which are
intended by the parties to survive such termination. The Service Fee paid by Cumberland
for the month in which this Agreement is terminated shall be prorated based on the number of
days in that month, and Cardinal Health shall refund any overpayment to Cumberland.
14.9
Termination: Return of Materials.
Within sixty (60) days following the
termination or expiration of this Agreement, Cardinal Health shall return to Cumberland all
Confidential Information, Product Promotional Materials, marketing plans, forms, territory
lists, reports and any and all other tangible items provided to Cardinal Health by Cumberland.
ARTICLE XV
RECORDKEEPING; AUDIT RIGHTS
15.1.
Cardinal Health Record Keeping: Inspection by Cumberland.
Cardinal Health
shall keep accurate records in sufficient detail as to costs and expenses for which Cumberland must reimburse Cardinal Health under this Agreement. Upon Cumberland’s reasonable
request made during or within one (1) year after the term of this Agreement, and at
Cumberland’s expense, Cardinal Health shall permit Cumberland’s designated employees or
agents to have access during ordinary business hours to records of such costs and expenses in
order to verify the accuracy of amounts reimbursed by Cumberland to Cardinal Health. Cumberland
and its designated employees or agents shall maintain in confidence all such cost and expense
records of Cardinal Health.
ARTICLE XVI
INDEMNIFICATION
16.1
Definitions
. As used in this Article 16 and this Agreement, “Damages” shall
mean all liabilities, damages, assessments, levies, losses, fines, penalties, costs,
and expenses, including, without limitation, reasonable attorneys’, accountants’,
investigators’, and experts’ fees and expenses, sustained or incurred as a result of any
claims, suits, liabilities, or actions by any third party.
16.2.
Indemnification by Cardinal Health.
Except to the extent that any of the
following Damages arises from the negligence or willful misconduct of Cumberland or breach
of this Agreement by Cumberland, Cardinal Health shall indemnify and hold Cumberland, its
Affiliates, directors, officers, employees and agents harmless from and against any and all
Damages arising directly or indirectly from:
(a) Cardinal Health’s breach of or failure to comply with any of its obligations
under this Agreement;
(b) any inaccuracy in or breach or failure of any representation, warranty, or
covenant made by Cardinal Health in this Agreement;
(c) any negligent or wrongful act or omission on the part of Cardinal Health or
its employees or agents;
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(d) Cardinal Health’s violation of or failure to comply with all applicable laws
relating to the promotion, distribution and sale of the Products, including but not limited
to the Act, the PDMA, the Medicare and Medicaid Anti-Kickback Act (42 U.S.C. §
1320a-7b(a)), the Civil False Claims Act (31 U.S.C. § 3729(a)), Sections 1128A,
1128B, and 1877 of the Social Security Act (42 U.S.C. §§ 1320a-7a, -7b, and 1395nn),
the Health Care Fraud Act (18 U.S.C. § 1347), and the Criminal False Claims Act
(18 U.S.C. § 287), as amended from time to time, as well as similar applicable
state laws;
(e) Detailing of the Products, except to the extent such Damages arise from a negligent or
wrongful act or omission of Cumberland;
(f) any federal or state claim or assessment for nonpayment or late payment by
Cardinal Health of any tax or contribution based on the status of any Representatives
as employees of Cardinal Health:; or
(g) except as limited by Section 2.3(a) or by Cumberland’s indemnification obligations, any
employment actions and/or employment related claims alleging violation of any state or federal
employment laws arising out of any action taken or omission made independently by Cardinal
Health.
16.3.
Indemnification by Cumberland.
Except to the extent that any of the following
Damages arise from the negligence or willful misconduct of Cardinal Health or breach of this
Agreement by Cardinal Health, Cumberland shall indemnify and hold Cardinal Health and its
Affiliates, directors, officers, employees and agents harmless from and against any and all
Damages arising directly or indirectly from:
(a) Cumberland’s breach of or failure to comply with any of its obligations under this
Agreement;
(b) any inaccuracy in or breach or failure of any representation, warranty, or covenant made
by Cumberland in this Agreement;
(c) any negligent or wrongful act or omission on the part of Cumberland or its employees or
agents;
(d) Cumberland’s violation of or failure to comply with all applicable laws relating to the
manufacture, sale, distribution, possession and use of the Product, the Program and this
Agreement, including but not limited to the Act, the PDMA, the Medicare and Medicaid
Anti-Kickback Act (42 U.S.C. § 1320a-7b(a)), the Civil.False Claims Act (31 U.S.C. § 3729(a)),
Sections 1128A, 1128B, and 1877 of the Social Security Act (42 U.S.C. §§ 1320a-7a, -7b, and
1395nn), the Health Care Fraud Act (18 U.S.C. § 1347), and the Criminal False Claims Act (18
U.S.C. § 287), as amended from time to time, as well as similar applicable state laws;
-19-
(e) Detailing of the Products, except to the extent such Damages arise from a
negligent or wrongful act or omission of Cardinal Health;
(f) the accuracy or completeness of the Product Labels, Product Promotional
Materials, or the Training Program;
(g) any claims or liabilities for injury to or death of persons, regardless of
when such claim or liability is asserted or incurred, resulting from or arising out
of the manufacture, use, sale, distribution, possession of the Products, or a
manufacturing design or defect of the Products, or any failure to warn or inadequacy
of warning regarding the Products;
(h) Cumberland’s failure to pay when due or to reimburse Cardinal Health for
any Taxes (as defined in Section 5.3);
(i) any negligent or wrongful acts or omissions on the part of Cumberland with
respect to Cardinal Health’s employees or Representatives or those individuals who
have made application to be Representatives of Cardinal Health;
(j) any federal or state claim or assessment for nonpayment or late payment by
Cumberland of any tax or contribution based on the status of any former
Representatives as employees or agents of Cumberland; or
(k) the use by Cardinal Health, in the performance of its duties hereunder and
as specified or directed by Cumberland, of any trademark, trade name, copyright,
patent or other rights which use actually or allegedly infringes on the rights of
any third party.
16.4.
Indemnification Procedures.
A party (the “Indemnitee”) which intends to
claim indemnification under this Article 16 shall promptly notify the other party (the
“lndemnitor”) in writing of any action, claim or liability in respect of which the
lndemnitee or any of its employees or agents are entitled to indemnification. The
Indemnitee shall permit, and shall cause its employees and agents to permit, the Indemnitor
at its discretion, to settle any such action, claim or liability and agrees to the complete
control of such defense or settlement by the Indemnitor; provided, however, that such
settlement or defense does not adversely affect the lndemnitee’s rights hereunder or impose
any obligations on the Indemnitee in addition to those set forth in this Agreement. The
Indemnitee, its employees, and agents, shall cooperate fully with the Indemnitor and its
legal representatives in the investigation and defense of any action, claim or liability
subject to indemnification. The Indemnitee shall have the right, but not the obligation, to
be represented by counsel of its own selection and at its own expense: in connection with
any indemnified claim.
16.5.
Limitation on Cardinal Health Liability.
In no event shall Cardinal
Health’s total liability under this Agreement exceed an amount equal to the total fees paid
to Cardinal Health under this Agreement.
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16.6
No Consequential Damages
. Notwithstanding any provision of this
Agreement to the contrary, and except with regard to claims by third parties, neither party
shall be liable to the other for any special, indirect, incidental or consequential damages
(other than liability for personal injury as provided in this Article 16), including lost
profits.
ARTICLE 17
NOTICE
All notices and other communications hereunder shall be in writing and shall be deemed
given: (A) when delivered personally; (B) when delivered by facsimile transmission (receipt
verified); (C) when received or refused, if mailed by registered or certified mail (return
receipt requested), postage prepaid; or (D) when delivered if sent by express courier
service,
to the parties at the following addresses (or at such other address for a party as shall be
specified by like notice; provided, that notices of a change of address shall be effective only upon receipt thereof):
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To Cumberland:
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A.J. Kazimi, CEO
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Cumberland Pharmaceuticals Inc.
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2525 West End Avenue, Suite 950
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Nashville, Tennessee 37203
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Facsimile (615) 255-0094
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With a copy to:
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Adams and Reese / Stokes Bartholomew LLP
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424 Church Street, Suite 2800
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Nashville, Tennessee 37219
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Attn. Martin S. Brown, Jr.
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Facsimile (615) 259-1470
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To Cardinal Health:
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Cardinal Health PTS, LLC
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7000 Cardinal Place
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Dublin, Ohio 43017
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Attn: Thomas Dimke, SVP/GM
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Cardinal Health Contract Sales and Services
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Facsimile: (614) 757-6117
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With a copy to:
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Cardinal Health, Inc.
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7000 Cardinal Place
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Dublin, Ohio 43017
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Attn: Associate General Counsel,
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Pharmaceutical Technologies and Services
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Facsimile: (614) 757-5051
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ARTICLE 18
MISCELLANEOUS
18.1
Entire Agreement; Amendments
. This Agreement, the attachments, and any
amendments thereto constitute the entire understanding between the parties and supersede
any
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contracts, agreements or understanding (oral or written) of the parties with respect
to the subject matter hereof. No term of this Agreement may be amended except upon written
agreement of both parties, unless otherwise provided in this Agreement.
18.2
Captions
. The captions in this Agreement are for convenience only and
are not to be interpreted or construed as a substantive part of this Agreement.
18.3
Further Assurances
. The parties agree to execute, acknowledge and
deliver such further instruments and to take all such other incidental acts as may be
reasonably necessary or appropriate to carry out the purpose and intent of this Agreement.
18.4
No Waiver
. Failure by either party to insist upon strict compliance
with any term of this Agreement in any one or more instances will not be deemed to be a
waiver of its rights to insist upon such strict compliance with respect to any subsequent
failure.
18.5
Severability
. If any term of this Agreement is declared invalid or
unenforceable by a court or other body of competent jurisdiction, the remaining terms of
this Agreement will continue in full force and effect.
18.6
Independent Contractors
. The relationship of the parties is that of
independent contractors, and neither party will incur any debts or make any commitments for
the other party except to the extent expressly provided in this Agreement. Nothing in this
Agreement is intended to create or will be construed as creating between the parties the
relationship of joint ventures, co-partners, employer/employee or principal and agent.
18.7
Successors and Assigns
. This Agreement will be binding upon and inure
to the benefit of the parties, their successors and permitted assigns. Neither party may
assign this Agreement, in whole or in part, without the prior written consent of the other
party, except that either party may, without the other party’s consent, assign this
Agreement to an Affiliate or to a successor to substantially all of the business or assets
of the assigning company.
18.8
Governing Law
. This Agreement shall be governed by and construed under
the laws of the State of Tennessee, excluding its conflicts of law provisions. The United
Nations Convention on Contracts for the International Sale of Goods shall not apply to this
Agreement.
18.9
Alternative Dispute Resolution
. If any Dispute arises between the
parties, such Dispute shall be presented to the respective presidents or senior executives
of Cardinal Health and Cumberland for their consideration and resolution. If such parties
cannot reach a resolution of the Dispute, then such Dispute shall be resolved by binding
alternative dispute resolution in accordance with the then existing commercial arbitration
rules of CPR Institute for Dispute Resolution, 366 Madison Avenue, New York, NY 10017.
Arbitration shall be conducted in the jurisdiction of the defendant party.
18.10
Prevailing Party
. In any dispute resolution proceeding between the
parties in connection with this Agreement, the prevailing party will be entitled to its
reasonable attorney’s fees and costs in such proceeding.
18.11
Counterparts
. This Agreement may be executed in one or more counterparts, each
of which will be deemed an original but all of which together will constitute one and the
same
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instrument. Any photocopy, facsimile or electronic reproduction of the executed Agreement
shall constitute an original.
18.12
Publicity
. Neither party will make any press release or other public
disclosure regarding this Agreement or the transactions contemplated hereby without the
other party’s express prior written consent, except as required under applicable law or by
any governmental agency, in which case the party required to make the press release or
public disclosure shall use commercially reasonable efforts to obtain the approval of the
other party as to the form, nature and extent of the press release or public disclosure
prior to issuing the press release or making the public disclosure.
18.13
Setoff
. Without limiting Cardinal Health’s rights under law or in
equity, Cardinal Health and its Affiliates, parent or related entities, collectively or
individually, may exercise a right of set-off against any and all amounts due to Cardinal
Health from Cumberland. For purposes of this Article, Cardinal Health, its Affiliates,
parent or related entities shall be deemed to be a single creditor.
18.14
Survival
. The rights and obligations of the parties shall continue
under Articles 6 (Confidentiality), 7 (Intellectual Property), 9 (Indemnification), 10
(Limitations of Liability), 11 (Insurance), to the extent expressly stated therein, 13
(Notice), 14 (Miscellaneous) and Section 12.3 (Effect of Termination), notwithstanding
expiration or termination of this Agreement.
18.15
Force Majeure
. Except as to payments required under this Agreement,
neither party shall be liable in damages for, nor shall this Agreement be terminable or
cancelable by reason of, any delay or default in such party’s performance hereunder if such
default or delay is caused by events beyond such party’s reasonable control including, but
not limited to, acts of God, regulation or law or other action or failure to act of any
government or agency thereof, war or insurrection, civil commotion, destruction of
production facilities or materials by earthquake, fire, flood or storm, labor disturbances,
epidemic, or failure of suppliers, public utilities or common carriers; provided however,
that the party seeking relief hereunder shall immediately notify the other party of such
cause(s) beyond such party’s reasonable control. The party that may invoke this section
shall use all reasonable endeavors to reinstate its ongoing obligations to the other. If the
cause(s) shall continue unabated for one hundred eighty (180) days, then both parties shall
meet to discuss and negotiate in good faith what modifications to this Agreement should
result from this force majeure.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly
authorized officers.
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CARDINAL HEALTH PTS, LLC
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CUMBERLAND PHARMACEUTICALS INC.
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By:
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/s/ Thomas G. Dimke
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By:
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/s/ AJ Kazimi
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Name:
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Thomas G. Dimke
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Name:
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AJ Kazimi
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Title:
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SVP/GM HCSS
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Title:
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C.E.O.
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Date:
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5-18-06
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Date:
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5-17-06
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Schedule 1.1(k)
List of Products
CeraLyte
®
Kristalose
®
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Schedule 1.1(o)
Definition of Territory
The mutually agreed upon headquarter locations for the twenty four representatives are
as follows:
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Atlanta, GA
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Birmingham, AL
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Boston, MA
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Charlotte, NC
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Chicago, IL
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Dallas, TX
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Dayton, OH
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Detroit, MI
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Hartford, CT
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Houston, TX
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Knoxville, TN
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Lafayette, LA
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Long Island, NY
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Manhattan, NY
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Miami, FL
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Mobile, AL
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Newark, NJ
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Philadelphia N, PA
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Philadelphia S, PA
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Cleveland, OH
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San Antonio, TX
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Tampa, FL
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Washington, DC
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Yonkers, NY
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Each Territory shall include the Target Customers identified by Cumberland and Cardinal
Health.
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Schedule 3.1
Service Fees and Payment Schedule
With respect to the Program defined herein, the following fees shall apply:
A. As compensation for the satisfactory performance by Cardinal Health of its obligations
under the Agreement, Cumberland agrees to pay Cardinal Health Service
Fees at the annual rate of three million one hundred one thousand
seven hundred eighty four dollars ($3,101,784.00). The Service Fees shall be billed in monthly installments on the last day of each month
during the term hereof. Each such installment shall be in the amount
of two hundred fifty-eight thousand four hundred eighty-two dollars
($258,482.00) or pro rata portion
thereof in the event of early termination. The payment schedule for the term is as follows:
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Invoice Date
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Payment
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September 30, 2006
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$258,482.00
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October 31, 2006
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$258,482.00
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November 30, 2006
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$258,482.00
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December 31, 2006
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$258,482.00
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January 31, 2006
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$258,482.00
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February 28, 2006
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$258,482.00
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March 31, 2006
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$258,482.00
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April 30, 2007
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$258,482.00
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May 31, 2007
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$258,482.00
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June 30, 2007
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$258,482.00
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July 31, 2007
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$258,482.00
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August 31, 2007
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$258,482.00
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September 30, 2007
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$258,482.00
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October 31, 2007
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$258,482.00
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November 30, 2007
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$258,482.00
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December 31, 2007
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$258,482.00
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January 31, 2008
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$258,482.00
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February 28, 2008
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$258,482.00
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March 31, 2008
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$258,482.00
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April 30, 2008
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$258,482.00
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May 31, 2008
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$258,482.00
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June 30, 2008
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$258,482.00
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July 31, 2008
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$258,482.00
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August 31, 2008
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$258,482.00
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B. In addition to the Service Fees, Cardinal Health will invoice Cumberland for
the following pass through costs:
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(i)
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bonuses to Representatives in amounts as agreed in writing by Cardinal
Health and Cumberland before payment and based upon well-defined
performance criteria (typically [***] of salaries); and
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(ii)
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actual expenses associated with regular territory
business travel for Detailing, training meetings, and plan of action
meetings including airfare, hotels, meals, meeting rooms, A/V
equipment, materials, parking and tolls, each of which is subject to
the Territory Budget as set forth in the Agreement
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C. The expiration or termination of this Agreement shall not release Cumberland from
any obligation to pay Cardinal Health any amounts accrued under this Agreement in
connection with activities completed, expenses accrued prior to the effective date of
such expiration or termination; provided that the Service Fee paid by Cumberland for the
month in which this Agreement is terminated shall be prorated based on the number of days
in that month, and Cardinal Health shall refund any overpayment to Cumberland.
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D.
Performance Incentive.
Cardinal Health shall be eligible to receive a
Performance Incentive based upon Cardinal Health’s performance resulting in Kristalose sales
during the term hereof in excess of a mutually agreed upon threshold which is based on sales
to targeted physicians, over which Cardinal Health will be paid a maximum of [***] in
Performance Incentives according to the scale below:
[***]
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EXHIBIT 10.7
* Certain portions of this exhibit have been omitted pursuant to a request for confidential
treatment which has been filed separately with the SEC.
DISTRIBUTION SERVICES AGREEMENT
This agreement is made as of August 3, 2000, between Cumberland Pharmaceuticals Inc., a
Tennessee corporation (“Cumberland”), and CORD Logistics, Inc., an Ohio corporation
(“CORD”).
Background Information
A. Cumberland is a Tennessee-based company formed primarily to acquire and market a
portfolio of niche pharmaceutical products to specific physician segments in the United
States, the District of Columbia and Puerto Rico (the “Territory”).
B. CORD is in the business of distributing pharmaceutical products to wholesalers,
specialty distributors, physicians, clinics, hospitals, retail pharmacies, and other health
care providers in the Territory, and of providing Information Systems and other services
that support its customers’ use of its distribution capabilities (collectively, the
“Services”).
C. Cumberland desires to engage CORD as its exclusive distribution agent (described
below) for the pharmaceutical products described on the exhibits attached hereto (each, a
“Product”) and, with respect to each Product, to perform certain other services described in
this agreement, all upon the terms and conditions set forth in this agreement. This
agreement is being entered into pursuant to a letter of intent from CORD dated April 5,
2000, which was accepted and executed by Cumberland as of April 10, 2000.
Statement of Agreement
Cumberland and CORD (the “Parties”) hereby acknowledge the accuracy of the above
Background Information and agree as follows:
§1.
Appointment.
Upon the terms and conditions described in this agreement,
Cumberland hereby appoints CORD as its exclusive distribution agent in and for the Territory
for distribution of each Product (including samples) to Cumberland’s direct customers
(“Customers”).
The Services for each Product or group of Products identified on the same
Product-specific exhibit to this agreement shall be implemented pursuant to the
Implementation Schedule included in such exhibit (each, an “Implementation Schedule”), with
distribution of each Product to begin on the date specified in the Implementation Schedule
for such Product (the “Commencement Date”). In performing the Services, CORD will provide,
at its discretion, the services of either the Vice President and General Manager, Director
of Sales or other such representative as mutually agreed to by Cumberland and CORD. CORD’s
designated representative will be the primary liaison with Cumberland, unless otherwise
agreed to by the parties.
§2.
Product Supply. Warehousing and Storage.
Cumberland shall ship each Product
to CORD at CORD’s distribution facility currently located at 15 Ingram Boulevard, Suite 100,
La Vergne, TN 37086 or to such other distribution facility as may be designated by CORD
(individually or collectively, the “CORD Facility”) and agreed by Cumberland, in sufficient
quantities to meet Cumberland’s anticipated Customer orders. CORD shall visually inspect
each shipment of each Product for external damage or loss in transit and, in the event of
any such damage or loss, shall, within a commercially reasonable period of time following
discovery of such damage or loss by CORD, notify Cumberland that such damage or loss has
occurred.
With respect to each Product or group of Products identified on the same Product-specific
exhibit to this agreement: (a) Cumberland shall, during the Product Term set forth on such exhibit,
provide CORD with applicable regulatory storage and handling requirements and projections of such
Product’s volume requirements not less often than quarterly, at least 30 days in advance of the
quarter and written instructions setting forth the storage and handling requirements applicable to
such Product; and (b) CORD shall store such Product in the CORD Facility and comply with applicable
regulatory storage and handling requirements and the storage and handling requirements applicable
to such Product, as such requirements may be supplemented or amended from time to time in writing
by Cumberland with reasonable prior notice to CORD and its prior approval, which approval shall not
be unreasonably withheld or delayed. If CORD notifies Cumberland in good faith that any such
supplement or amendment will require any material modification to the CORD Facility or CORD’s
procedures or requirements which are unique and specific to the Product or the Services resulting
in a material increase to CORD’s anticipated costs and expenses, then Cumberland and CORD shall
consult regarding such reasonable costs and expenses (hereinafter, simply “unique costs”) and
Cumberland shall pay such unique costs resulting from that modification.
Cumberland shall pay all costs and expenses of delivering each Product to the CORD Facility.
CORD will never take title to any Product, even when such Product is located at the CORD Facility.
§3.
Standard Product Distribution.
With respect to each Product or group of Products
identified on the same Product-specific exhibit to this agreement, and during the Product Term set
forth on such exhibit, all Customer orders shall be taken by CORD as described in the Operating
Guidelines (defined in §6, below). CORD shall confirm the receipt of and process each order and, so
long as the ordered Product is then in stock at the CORD Facility and the orders are received no
later than 2:00 p.m. local time at the CORD Facility, routinely have that order available for
shipment within 24 hours of CORD’s receipt of the order (exclusive of holidays and weekends) or
such longer period as may be designated or permitted by Cumberland.
Customer orders will be delivered by a courier mutually chosen by Cumberland and CORD. CORD
will invoice Cumberland for such handling services and freight cost on a monthly basis. CORD will
use best efforts to manage any claims by Cumberland against the courier, provided, however, that
Cumberland shall be responsible for all lost or damaged shipments.
In addition, Cumberland shall reimburse CORD for all documented costs and expenses of
packaging material used for shipping the Product and all business forms unique to Cumberland (e.g.,
packing slips, invoices, etc.); provided that the use of such packaging material and business forms
is authorized in advance by Cumberland.
Each Product shall be shipped on a “first expiration date, first out” basis or as otherwise
directed by Cumberland. In addition, CORD shall establish (and Cumberland shall approve) procedures
for the processing and shipment of emergency orders on weekends and holidays, provided that
Cumberland shall separately pay all increased costs resulting from such orders.
§4.
Product Prices.
With respect to each Product or group of Products identified in
the same Product-specific exhibit to this agreement, Cumberland shall, upon execution of such
exhibit, deliver to CORD a price list for Customers who purchase such Product or Products (the
“Customer Price List”). Cumberland shall notify CORD of any change in the Customer Price List not
less than 10 business days prior to the effective date of any such change. The Parties hereby
acknowledge that Cumberland, and not CORD, is the seller of each Product to Customers.
Page 2 of 14
§5.
Financial Support Services.
(a) Subject to Section 5(b), during each Product Term set forth on the Product-specific
exhibits to this agreement, CORD shall perform the customer credit research, billing, cash
application, collections, and reporting services described in the Operating Guidelines in
accordance with the policies and procedures set forth in such Operating Guidelines, as such
policies and procedures may be supplemented or amended from time to time by Cumberland with
reasonable prior notice to CORD and with its prior approval (the “Financial Support Services”);
provided that if CORD notifies Cumberland in good faith that any such supplement or amendment will
require any material modification to CORD’s procedures or requirements for providing the Services,
then Cumberland shall pay all unique costs resulting from that modification.
(b) CORD shall have no obligation to pay for any Product or to reimburse Cumberland for any
losses incurred in connection with the failure of any Customer to pay Cumberland any amount due.
(c) Customers shall be directed to make payments for the Products in accordance with the
Operating Guidelines.
§6.
Operating Guidelines.
As soon as practicable after the date of this agreement,
CORD and Cumberland shall develop operating guidelines relating to the Products and the Services,
which guidelines (the “Operating Guidelines”) will be in writing, in a form satisfactory to CORD
and Cumberland, and will define and document the responsibilities of CORD and Cumberland in
support of the relationship described in this agreement. All Operating Guidelines shall be
developed and implemented in good faith and in a commercially reasonable manner, subject to the
qualifications set forth therein; provided that in the event of any inconsistency between the
Operating Guidelines and the other provisions of this agreement (including each Product-specific
exhibit to this agreement), the other provisions of this agreement shall control. The Operating
Guidelines may be amended from time to time upon the mutual agreement of CORD and Cumberland.
§7.
Returns and Recalls.
Pursuant to this agreement and any applicable Operating
Guidelines, CORD shall assist in the processing of Product returns (excluding recall returns,
which will be dealt with as described below) in coordination with the third party returns company
chosen by Cumberland to facilitate return of Product. No such assistance will involve handling by
CORD of the Product being returned. The fees to be paid to CORD for these return services are
described in Section 8.
CORD shall process Customer Product return authorizations and credits as set forth in the
Operating Guidelines. The fee for such Services by CORD will be included as a part of the Customer
Service Fees described in Section 8.
If Cumberland is required to recall, or on its own initiative recalls, any Product, CORD will
assist Cumberland with that recall as reasonably requested by Cumberland; provided that Cumberland
shall pay to CORD an amount equal to all costs incurred by CORD in connection with any such
recall.
§8.
Fees.
As compensation for services being provided by CORD in connection with the
development and implementation of the infrastructure for the relationship contemplated by this
agreement, including CORD’s information system development (separate from the Information System
Access Fees described below) and implementation for Cumberland’s use, Cumberland shall pay CORD a
one-time implementation fee of [***] (the “Implementation Fee”), one-half of which shall be
payable on the first anniversary of the date of this agreement and one-half of which shall be
payable on the second anniversary of the date of this agreement. Cumberland’s obligation to pay
the Implementation
Page 3 of 14
Fee is not contingent upon the acquisition by Cumberland of any Product marketing and distribution
rights and shall survive the termination of this agreement. However, the Implementation Fee shall
not be due and payable if this Agreement is terminated early for any reason other than breach by
Cumberland.
In addition, with respect to each Product or group of Products identified on the same
Product-specific exhibit to this agreement, Cumberland shall pay CORD, as compensation for the
Services related to such Product or Products, the fees described in such exhibit (the “Fees”). CORD
will use commercially reasonable efforts to keep total fees in line with industry standards. The
Fees shall include:
(a)
Storage/Distribution Fees.
The Storage and Distribution Fees shall be in the
amounts set forth in each applicable Product Exhibit. This component of the Fees shall cover
storage of Product and distribution services, which fees (the “Storage and Distribution Fees”),
with respect to each Product or group of Products identified on the same Product-specific exhibit
to this agreement, shall be in the amount specified in such exhibit.
The Storage Fees shall be based upon the average weekly number of pallets in storage. The
Distribution Fees, for each calendar month during the Term of this Agreement, shall be based upon
the aggregate number of units (or cases) shipped by CORD from the warehouse. Cumberland shall be
charged an initial price per unit or case (collectively referred to as “pick”) on the first pick of
each order placed by Cumberland each month, and then a recurring amount per pick for each
incremental pick shipped from the same order thereafter. For example, for the distribution of
Reglan and Donnatal, on a monthly basis, Cumberland shall be charged the sum of [***] per pick of
each order of product shipped that month and the sum of [***] per pick for each incremental pick
from the same order.
(b)
Information System Access Fees.
This component of the Fees shall cover
Cumberland’s access to CORD’s or an affiliate of CORD’s standard Information Systems, consisting of
the computer hardware and software and other components described in the attached Schedule 8(c)-1
(the “System”), and other services relating to Cumberland’s access to the System as described in
Schedule 8(c)-1, which fees (the “System Access Fees”), with respect to each Product or group of
Products identified on the same Product-specific exhibit to this agreement, shall be in the amount
specified in such exhibit. Access to the System shall be provided pursuant to a System Access
Agreement in the form of the attached Schedule 8(c)-2, which agreement (the “System Access
Agreement”) shall be executed by the Parties concurrently with this agreement. Access to the System
shall be made available to Cumberland’s facility for each Product at the prices set forth in the
exhibit for such Product, so long as Cumberland first has in place a local area network sufficient
to support all Cumberland terminals and personal computers which will have access to the System and
a centralized server sufficient for data storage related to Cumberland’s access to the System. All
costs and expenses associated with establishing initial hook-up of all communication and electronic
information lines necessary for interface of the System with Cumberland’s information systems
located at Cumberland’s address set forth at the end of this agreement are included in the
Implementation Fee and are separate from the services and costs and expenses covered by the System
Access Fees. Cumberland shall have sole responsibility for payment of all costs and expenses of
maintaining all such communication and electronic information lines. CORD and Cumberland shall each
assign knowledgeable and qualified employees to facilitate the access to the System as contemplated
by this agreement.
(c)
Financial Support Services Fees.
This component of the Fees shall be payment for cash
application, collections and chargeback processing services (including chargeback system access)
described in the Operating Guidelines, which fees (the “Financial Support Services Fees”), with
respect to each Product or group of Products identified on the same Product-specific exhibit to this
agreement, shall be in the amount specified in such exhibit.
Page 4 of 14
(d)
Customer Service Fees.
This component of the Fees shall be payment for the
customer services performed by CORD pursuant to the Operating Guidelines, which fees (the
“Customer Support Fees”), with respect to each Product or group of Products identified in the same
Product-specific exhibit to this agreement, shall be in the amount specified in such exhibit.
(e)
EDI Set-up, Maintenance, Access Fees.
This component of the Fees shall be
payment for services related to the set-up and maintenance of Electronic Data Interchange (“EDI”)
transaction capabilities between Cumberland and its Customers and access and use of a mutually
agreed upon EDI provider. These fees are included in the System Access Fees described in §8(b)
above.
With respect to each Product or group of Products identified on the same Product-specific
exhibit to this agreement, following the end of each calendar month with respect to Product Term
set forth on such exhibit, CORD shall issue an invoice to Cumberland for the Fees payable with
respect to CORD’s performance of the Services for the prior month. The Fees or other amounts owed
to CORD by Cumberland under this agreement shall be payable within 30 days of the date of CORD’s
invoice for such Fees or other amounts.
The Fees shall be held firm for the first contract year. Thereafter, CORD shall adjust the
price not more often than once per contract year by not more than the increase in the Producer
Price Index — All Commodities published by the United States Department of Labor, Bureau of
Statistics, as amended from time to time.
Notwithstanding the above Price Increase, if CORD can demonstrate that the costs for
providing the Services have materially increased, or are likely to materially increase in the
coming year due to the adoption of any applicable law or regulation, or any material change in the
interpretation or administration thereof, then upon notice from CORD, the Parties agree to meet in
good faith and negotiate a mutually acceptable adjustment to the Fees, which compensates CORD for
the change.
§9.
Term and Termination.
(a) The initial term of this agreement shall begin upon the day Cumberland signs a letter of
intent to acquire its first Product and shall continue for a period of three (3) years (the
“Initial Term”), unless terminated earlier pursuant to this agreement. Thereafter, this agreement
shall automatically renew for additional terms of one (1) year each, unless written notice of
termination is given by either Party at least 90 days prior to the end of the Initial Term, or
such other term, in which case this agreement shall terminate at the end of the relevant term. Any
reference in this agreement to the “term of this agreement” shall include the Initial Term and any
such renewal terms. Upon termination of this agreement or upon the written request of Client, all
Product shall be expeditiously returned to the Client or a designee of the Client.
(b) Either Party shall have the right to terminate this agreement or any Product-specific exhibit
to this agreement upon the breach by the other Party of a material provision of this agreement or
such exhibit and that Party’s failure to cure such breach within 60 days following written notice
thereof from the non-breaching Party or, in the event such failure is not capable of being cured
within such 60-day period, the non-breaching Party’s failure to continue to diligently prosecute
such cure thereafter; provided, that, with respect to any failure to make any payment when due under this agreement
or any Product-specific exhibit to this agreement, such period in which to cure shall be reduced
to 30 days.
Page 5 of 14
(c) Either Party shall have the right to terminate this agreement or any Product-specific
exhibit to this agreement immediately upon notice to the other Party following the commencement of
any bankruptcy or insolvency proceeding (whether voluntary or involuntary) with respect to such
other Party or its assets, the general assignment for the benefit of creditors by such other
Party, or the appointment of a receiver, trustee or liquidator by or for such other Party.
(d) Sections 8 and Sections 14 through 17, inclusive, of this agreement shall survive the
termination or expiration of this agreement and each Product-specific exhibit to this agreement,
and except as set forth herein, no termination of this agreement or any Product-specific exhibit
to this agreement shall affect any liabilities arising, or based upon acts or omissions occurring,
prior to the date of such termination.
§ 10.
Audits.
In connection with any services being provided pursuant to this
Agreement, CORD agrees to maintain written records and data during and after the term of this
Agreement in compliance with all applicable legal and regulatory requirements, including without
limitation applicable requirements of the United States Food and Drug Administration. Further,
CORD shall furnish Cumberland within thirty (30) days following each March 31, June 30, September
30, and December 31 of each calendar year a complete and accurate statement for the immediately
preceding calendar quarterly period of (a) the number of units of Products sold; (b) information
as to returns actually credited; (c) current inventory levels for Products; and (d) such other
information as Cumberland may reasonably request. In order to verify compliance, CORD shall
provide Cumberland with such records and agrees to permit representatives of Cumberland to visit
facilities of CORD at which Services are being performed during normal business hours (i.e., 8:00
a.m. to 5:00 p.m. local time), upon 15 business days prior notice, to: (a) review and audit CORD’s
records relating directly to Product received at and shipped from the CORD Facility; and (b)
conduct, together with representatives of CORD, an inventory of the Product at the CORD Facility.
§11.
Compliance With Laws.
Each Party shall conduct its activities in connection with
this agreement in substantial compliance with all applicable laws, rules, regulations, and orders
of governmental entities.
§ 12.
Representations and Warranties.
(a)
Mutual Representations and Warranties.
Each Party represents and warrants to
the other that: (i) it has full power and authority to enter into this agreement and perform and
observe all obligations and conditions to be performed or observed by it under this agreement
without any restriction by any other agreement or otherwise; (ii) the execution, delivery and
performance of this agreement have been duly authorized by all necessary corporate action of that
Party; and (iii) this agreement constitutes the legal, valid and binding obligation of that Party.
(b)
Cumberland Representations and Warranties.
Cumberland further represents and
warrants to CORD that (i) each Product is and shall be manufactured in conformity with the Food,
Drug, and Cosmetic Act, as amended, and all other applicable laws, rules, regulations and orders
of governmental entities, and (ii) as of the effective date of any Product-specific exhibit
hereto, Cumberland will have (and will have provided CORD with written documentation in form
reasonably satisfactory to CORD that Cumberland has, as of such effective date) title to such
Product or Products and the right to market and distribute such Product or Products as
contemplated hereby.
Page 6 of 14
(c)
CORD Representations and Warranties.
CORD hereby represents and warrants that it
has the experience, capability and resources, including without limitation, sufficient personnel
and supervisors, to perform the Services offered hereunder in a commercially reasonable manner in
conformity with applicable regulations of any governmental authority, including the United States
Food and Drug Administration. CORD further represent that it will at all times devote the necessary
personnel and supervisors to perform the Services in such a manner.
CORD shall not make any representations, warranties, or guarantees to Customers with respect
to the Products that are inconsistent with information provided by Cumberland to CORD, including
without limitation, representations, warranties, and guarantees concerning specifications,
features, efficacy, prices, or availability of the Products.
§13.
Taxes.
Cumberland shall pay when due all sales, use, gross receipts, excise,
personal property taxes associated with each Product (excluding any personal property tax
associated with CORD’s equipment used in connection with the Services), and other taxes or similar
charges now or hereafter imposed as a result of the transactions contemplated by this agreement,
none of which have been included in the fees payable to CORD under this agreement; provided that
the amounts payable by Cumberland under this section shall not include taxes based on the net
income of CORD.
§ 14.
Trademarks and Proprietary Rights.
14.1 Neither party hereto shall have the right to use the trademarks, service marks, logos, or
other similar marks of the party hereto, or any of its affiliates, in any manner except with the
prior written approval of the party that has rights to such intellectual property.
14.2 All materials, documents, information, inventions, improvements, data, programs and
suggestions of every kind and description, whether or not patentable, and all copyrightable works
supplied to CORD by Cumberland pursuant to this Agreement shall be the property of Cumberland
solely and exclusively (the “Cumberland Property”); provided that any and all information,
processes, documents, computer software or other proprietary information used, owned, licensed or
developed by CORD shall be the property of CORD.
§15.
Master Agreement.
This agreement is being entered into pursuant to the Strategic
Alliance Agreement dated June 6, 2000, between Cardinal Health (as defined below) and Cumberland
(the “Master Agreement”), and this agreement (including any and all exhibits hereto, whether
entered into now or hereafter) constitutes an Addendum, as defined in the Master Agreement. In the
event of any conflict or inconsistency between the terms of this agreement (including any and all
exhibits hereto) and the terms of the Master Agreement, the terms of this agreement shall govern.
For purposes of this agreement, “Cardinal Health” means the following affiliated operating
companies: Cardinal MarketForce, a division of RedKey, Inc., an Ohio corporation (Dublin, OH); CORD
Logistics, Inc., an Ohio corporation (Dublin, OH); and any other subsidiary of Cardinal Health,
Inc., an Ohio corporation (“CHI”), as may be designated by CHI and agreed by client in writing.
§ 16.
Indemnification.
Each Party shall indemnify and hold harmless the other and its
parent and affiliates, and each of their respective directors, officers, employees, agents, and
representatives from and against all claims, liabilities, losses, damages, costs, and expenses
(including without limitation reasonable attorneys’ fees) arising directly or indirectly out of any
failure of that Party to perform and observe fully all obligations and conditions to be performed
or observed by that Party pursuant to this agreement or any breach of any warranty made by that
Party in this agreement. Cumberland further agrees to indemnify and hold harmless CORD and its parent and affiliates and each of their
respective directors, officers, employees, agents and representatives from and against all claims,
liability, losses, damages, costs, and expenses (including without limitation reasonable attorney’s
fees) arising directly or
Page 7 of 14
indirectly out of injury or death to person or property alleged to have
been caused by any defect in any
Product.
NOTWITHSTANDING THE FOREGOING, OR ANY OTHER PROVISION OF THIS AGREEMENT TO THE
CONTRARY, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY CONSEQUENTIAL, INCIDENTAL,
INDIRECT, SPECIAL, OR OTHER SIMILAR DAMAGES ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT,
AND IN NO EVENT SHALL CORD’S LIABILITY HEREUNDER EXCEED CORD’S INSURANCE LIMITS SET FORTH BELOW IN
SECTION
17(b)(i)
.
§17.
Insurance.
(a) Promptly after Cumberland acquires rights to distribute its first Product and for as long
thereafter as necessary to cover claims resulting from this agreement, Cumberland shall obtain and
maintain: (i) product liability and commercial general liability insurance having a limit of not
less than $10 million; and (ii) property damage insurance at replacement value for each Product
located at the CORD Facility or in transit to or from the CORD Facility, pursuant to one or more
insurance policies with reputable insurance carriers. Cardinal Health, Inc. and its subsidiaries
shall be designated as “additional insureds” under the product liability and commercial general
liability insurance policy(ies), and as “loss payees” under the property damage insurance
policy(ies). Prior to CORD’s receipt of Product, Cumberland shall deliver to CORD certificates
evidencing such insurance. Cumberland shall not cause or permit such insurance to be canceled or
modified to materially reduce its scope or limits of coverage during the term of this agreement or
thereafter as provided above. Except for any losses resulting from the negligence or intentional
misconduct of CORD, Cumberland shall bear all risk of loss or damage with respect to each Product,
whether located at the CORD Facility or otherwise.
(b) Promptly after Cumberland acquires rights to distribute its first Product and for as long
thereafter as necessary to cover claims resulting from this agreement, CORD shall obtain and
maintain: (i) product liability and commercial general liability insurance having a limit of not
less than $1 million; and (ii) property damage insurance at replacement value for each Product
located at the CORD Facility or in transit to or from the CORD Facility, pursuant to one or more
insurance policies with reputable insurance carriers. Cumberland shall be designated as “additional
insureds” under the product liability and commercial general liability insurance policy(ies), and
as “loss payees” under the property damage insurance policy(ies). Prior to CORD’S receipt of
Product, CORD shall deliver to Cumberland certificates evidencing such insurance. CORD shall not
cause or permit such insurance to be canceled or modified to materially reduce its scope or limits
of coverage during the term of this agreement or thereafter as provided above.
§18.
Relationship of the Parties.
The relationship among the Parties is and shall be
that of independent contractors. This agreement does not establish or create a partnership or joint
venture among the Parties.
§19.
Notices.
Any notice or other communication required or desired to be given to any
Party under this agreement shall be delivered in writing to the address or facsimile number set
forth beneath the authorized signatures on this agreement and shall be deemed given: (a) three
business days after such notice is deposited in the United States mail, first-class postage
prepaid, and addressed to that Party at the address for such Party set forth at the end of this
agreement; (b) one business day after delivered to Federal Express, Airborne, or any other similar
express delivery service for delivery to that Party at that address; or (c) when sent by facsimile
transmission, with electronic confirmation, to that Party at its
facsimile number set forth at the end of this agreement. Any notice delivered by facsimile
transmission will be deemed delivered upon electronic confirmation provided the notice is also
deposited in the U.S. mail, first-class postage prepaid. Any Party may change its address or
facsimile number for notices under this agreement by giving the other Parties notice of such
change.
Page 8 of 14
§20.
Alternative Dispute Resolution.
The Parties agree to use good faith efforts to resolve all disputes within ninety (60) days of
written notice that such a dispute exists. If dispute under this Agreement cannot be resolved by
the Parties within such sixty (60) day period, the Parties agree to refer the matter to one
executive from each Party not directly involved in the dispute for review and resolution. A copy
of the terms of this Agreement, agreed upon facts and areas of disagreement, and a concise summary
of the basis for each side’s contentions will be provided to both executives who shall review the
same, confer, and attempt to reach a mutual resolution of the issue within forty-five (45) days
after receipt of the materials referenced above. If the matter has not been resolved within such
forty-five (45) day period, either or both Parties may pursue resolution of the matter through
litigation or other process available under law or equity.
§21.
Remedies.
Each Party acknowledges that in the event of any violation by that
Party of any of the provisions of Section 14 of this agreement or Article III., Sections D or E of
the Master Agreement, the other Party would suffer irreparable harm and its remedies at law would
be inadequate. Accordingly, in the event of any violation or attempted violation of any such
provisions by either Party, the other Party shall be entitled to a temporary restraining order,
temporary and permanent injunctions, specific performance, and other equitable relief, without any
showing of irreparable harm or damage or the posting of any bond. The rights and remedies of each
Party under this agreement shall be cumulative and in addition to any other rights or remedies
available to such Party, whether under any other agreement, at law, or in equity.
§22.
Governing Law.
All questions concerning the validity or meaning of this
agreement or relating to the rights and obligations of the Parties with respect to performance
under this agreement shall be construed and resolved under the laws of the State of Tennessee ,
without regard to principles of conflicts of laws. The parties agree that any claims asserted in
any legal proceeding by one party against the other shall be commenced and maintained in any state
or federal court in Nashville, Tennessee or Columbus, Ohio and the parties submit to the
jurisdiction of these courts.
§23.
Severability.
The intention of the Parties is to comply fully with all laws and
public policies, and this agreement shall be construed consistently with all laws and public
policies to the extent possible. If and to the extent that any court of competent jurisdiction
determines that it is impossible to construe any provision of this agreement consistently with any
law or public policy and consequently holds that provision to be invalid, such holding shall in no
way affect the validity of the other provisions of this agreement, which shall remain in full
force and effect.
§24.
Non-waiver.
No failure by either Party to insist upon strict compliance with any
term of this agreement, to exercise any option, to enforce any right, or to seek any remedy upon
any default of the other Party shall affect, or constitute a waiver of, the first Party’s right to
insist upon strict compliance, to exercise that option, to enforce that right, or to seek that
remedy with respect to that default or any prior, contemporaneous, or subsequent default. No
custom or practice of the Parties at variance with any provision of this agreement shall affect,
or constitute a waiver of, that Party’s right to demand strict compliance with all provisions of
this agreement.
§25.
Force Majeure.
If the performance of any part of this agreement by either Party shall
be affected for any length of time by fire or other casualty, government restrictions, war, riots,
strikes or labor disputes, lock out, transportation delays, acts of God, or any other causes which
are beyond the control of the Parties, such Party shall not be responsible for delay or failure of
performance of this agreement for such length of time, provided, however, that the obligation of
one Party to pay amounts due to any other Party shall not be subject to the provisions of this
section
Page 9 of 14
§26.
Genders and Numbers.
Where permitted by the context, each pronoun in this
agreement includes the same pronoun in the other genders or numbers and each noun used in this
agreement includes the same noun in other genders.
§27.
Complete Agreement.
This agreement (together with the Master Agreement, the
Product-specific exhibits hereto, and the other documents referred to herein, all of which are
hereby incorporated herein by reference) contains the entire agreement between the Parties and
supersedes all prior or contemporaneous discussions, negotiations, representations, warranties, or
agreements relating to the subject matter of this agreement. CORD and Cumberland agree to comply
with the obligations of confidentiality set forth in Article III, Section E of the Master
Agreement. No changes to this agreement shall be made or be binding on either Party unless made in
writing and signed by both Parties.
§28.
Successors.
This Agreement may not be assigned or transferred by a party without
the prior written consent of the other party hereto, provided, however, that either party may
assign this Agreement to any subsidiary, affiliate or an entity which acquires substantially all of
it’s assets and business that is not in direct competition with CORD. Any such assignment shall not
materially or adversely affect the rights or obligations of either party to this Agreement.
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CUMBERLAND PHARMACEUTICALS, INC.
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CORD LOGISTICS, INC.
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/s/ A.J. Kazimi
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/s/ Frank C. Wegerson
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A.J. Kazimi
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Frank C. Wegerson
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Chief Executive Officer
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Vice President and General Manager
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Initials:
/s/ AJK
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Initials:
/s/ FCW
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209 10
th
Avenue South
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15 Ingram Blvd, #100
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Nashville, TN 37203
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LaVergne, TN 37086
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Facsimile No. (615) 255-0094
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Facsimile No. (615) 793-4783
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Page 10 of 14
Schedule 8 (c) -1
OPERATING SYSTEM BASE PACKAGE
A.
System Access
Includes access to CORD’s processor and operating system Monday through Friday, excluding
holidays, 12 hours per day (5:30 am to 5:30 p.m., Pacific local time).
B.
Software Access and Maintenance
Includes access to CORD’s or an affiliate of CORD’s standard software. CORD or an affiliate of CORD
shall perform at it’s own expense any necessary modification to bring the systems in compliance
with the standard functionality described below.
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•
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Reports necessary to perform Medicaid rebate calculations
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•
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Billing (Customization of invoicing/packing slips)
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•
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Inventory tracking and reporting
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•
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Ability to download system data to Cumberland’s processors for reporting writing
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•
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Contracts/Pricing maintenance and chargeback processing
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Systems Development/Additional Services:
Cumberland bears financial responsibility for customization beyond the standard systems
functionality described above. Such customization performed by CORD or its representatives
(exclusive of the base package) in connection with this agreement shall be billed to Cumberland
as follows:
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•
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Systems and software development—$120 per hour per person, plus travel.
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•
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On-site training—$120 per hour per person, plus travel.
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•
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Supplies, equipment and other, to be agreed upon by both parties.
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Page 11 of 14
Schedule 8 (c) -2
SYSTEM ACCESS AGREEMENT
This agreement is made as of July ___, 2000, between CORD Logistics, Inc., an Ohio corporation
(“Licensor”), and Cumberland Pharmaceuticals Inc., a Tennessee corporation (“Licensee”), who hereby
agree as follows:
1.
System Access; Maintenance Obligations
. On the terms and subject to the conditions
described in this agreement and the Distribution Services Agreement having the same date as this
agreement between Licensor and Licensee (the “Distribution Agreement”), Licensor hereby grants to
Licensee a nonexclusive license (the “License”) to utilize Licensor’s Order Entry System,
consisting of the computer hardware, software and other components described in Schedule 8(c)-1 to
the Distribution Agreement (collectively, the “System”), for the information processing needs of
Licensee in connection with the Services to be provided by Licensor under the Distribution
Agreement. Licensee shall maintain during the term of this agreement the network and local area
network (including without limitation centralized server) requirements for the System described in
the Distribution Agreement.
During the term of this agreement, Licensee shall employ reasonable security measures and
policies designed to safeguard the integrity, accessibility, and confidentiality of all of
Licensee’s data resident on the System and establish reasonable disaster and emergency recovery
plans designed to minimize disruption from System operation interruptions. Licensee shall have the
right to review the operation of the System from time to time upon reasonable prior notice from
Licensee to Licensor; provided that such reviews shall be conducted in a manner to avoid disruption
of Licensor’s business operations to the extent possible.
2.
Proprietary Rights.
Licensee shall have the right to use the System during the term
of this agreement as expressly provided in paragraph 1 of this agreement, but not otherwise.
Licensee shall not assign or otherwise transfer, disclose, copy, modify, or decompile the System or
any part thereof without prior written consent of the Licensor. The System and all parts thereof,
in all of their tangible and intangible manifestations, all existing or new enhancements,
developments, derivative works, and other adaptations or modifications to the System (or any part
thereof), and all related proprietary rights, are and shall remain the exclusive property of
Licensor. Except for the License, Licensee shall have no right, title, or interest in or to the
System or any part thereof. Upon termination of this agreement, Licensee shall promptly return to
Licensor all portions of the System then in Licensee’s possession or under its control.
3.
Warranties.
Licensee acknowledges that it has had adequate opportunity to review
the System and its features and operation and Licensee accepts the System “AS IS” for its use as
contemplated in the Distribution Agreement.
EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN THE
DISTRIBUTION AGREEMENT, LICENSOR MAKES NO REPRESENTATIONS OR WARRANTIES, AND HEREBY EXPRESSLY
DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED RELATING DIRECTLY OR INDIRECTLY TO
THE SYSTEM OR ANY PART THEREOF, INCLUDING WITHOUT LIMITATION ANY WARRANTIES OF QUALITY,
PERFORMANCE, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE.
4.
Limitation On Liability.
LICENSOR SHALL NOT BE LIABLE FOR ANY CONSEQUENTIAL,
INDIRECT, SPECIAL, OR OTHER SIMILAR DAMAGES ARISING DIRECTLY OR INDIRECTLY OUT OF THE USE OR
INABILITY TO USE THE SYSTEM OR ANY PART THEREOF, EVEN IF INFORMED OF THE POSSIBILITY OF SUCH
DAMAGES, WHETHER CLAIMED UNDER CONTRACT, TORT, OR ANY OTHER LEGAL THEORY.
IF ANY OF THE LIMITATIONS ON THE LIABILITY OF LICENSOR CONTAINED IN THIS AGREEMENT ARE FOUND
TO BE INVALID OR UNENFORCEABLE FOR ANY REASON THEN LICENSOR AND LICENSEE EXPRESSLY AGREE THAT THE
MAXIMUM AGGREGATE LIABILITY OF LICENSOR FOR ALL CLAIMS RELATING TO THE SYSTEM SHALL NOT EXCEED 100%
OF THE AGGREGATE BASE PACKAGE FEES PAID BY LICENSEE TO LICENSOR FOR LICENSEE’S USE OF THE SYSTEM
UNDER THE DISTRIBUTION AGREEMENT.
5.
Taxes.
Licensee shall pay when due all sales, use, gross receipts, excise,
property, and other taxes or similar charges (other than taxes based upon Licensor’s net income)
now or hereafter imposed as a result of the transactions contemplated by this agreement.
6.
Term.
The term of this agreement shall begin upon Licensee’s initial use of the
System as evidenced by the first entry of inventory into the System (which may be a date earlier
than the Commencement Date specified for the Distribution Agreement) and shall end: (a)
automatically upon the termination of the Distribution Agreement (for any reason), or (b) on any
earlier date specified by Licensee in notice to Licensor given not less than 180 days prior to
Page 12 of 14
the specified termination date; provided that: (i) paragraph 2 through 5 inclusive, and
paragraph 8
of this agreement shall survive the termination of this agreement, and (ii)
no termination of this agreement shall affect any liabilities arising, or based upon acts or
omissions occurring, prior to such termination.
Licensee shall continue to have access to the System for a reasonable period of time (not be
exceed 60 days) following termination of this agreement solely for purposes of retrieving and
transferring to a separate system Licensee’s data relating to its pre-termination operations, and
Licensor shall reasonably cooperate with Licensee to preserve the integrity and accessibility of
Licensee’s data during such period; provided that, during such period, Licensee shall continue to
pay the full Base Package and other fees payable by Licensee under the Distribution Agreement and
comply with all other requirements imposed upon Licensee under this agreement.
7.
Notices.
Any notice or other communication required or desired to be given to
either party under this agreement shall be in writing and shall be deemed given: (a) three days
after mailing, if deposited in the United States mail, first-class postage prepaid,
and
-
addressed to that party at its address set forth at the end of this agreement; (b)
when received if delivered to Federal Express or any other similar overnight
,
delivery
service for delivery to that party at that address; or (c) when sent by facsimile transmission,
with electronic confirmation, to that party at its facsimile number set forth at the end of this
agreement. Either party may change its address or facsimile number for notices under this agreement
by giving the other party notice of such change.
8.
Remedies.
Licensee shall indemnify Licensor and its affiliates, directors,
officers, employees, agents, and representatives against all claims, liabilities, losses, damages,
costs and expenses (including without limitation reasonable attorneys’ fees) arising directly or
indirectly out of any failure of Licensee to perform and observe fully all obligations and
conditions to be performed or observed by Licensee pursuant to this agreement. Licensee
acknowledges that in the event of any violation by it of any of the provisions of paragraph 2 of
this agreement, Licensor would suffer irreparable harm and its remedies at law would be inadequate.
Accordingly, in the event of any violation or attempted violation of any such provisions by
Licensee, Licensor shall be entitled to a temporary restraining order, temporary and permanent
injunctions, specific performance, and other equitable relief, without any showing of irreparable
harm or damage or the posting of any bond, in addition to any other rights or remedies which may be
available to Licensor.
9.
Force Majeure.
Notwithstanding any other provisions of this agreement or the
Distribution Agreement to the contrary, each party’s obligations under this agreement (exclusive of
payment obligations) shall be excused if and to the extent that any delay or failure to perform
such obligations is due to fire or other casualty, material shortages, strikes or labor disputes,
acts of God, or other causes beyond the reasonable control of that party.
10.
Successors.
Licensee shall not assign or otherwise transfer this agreement or any
of its rights or obligations under this agreement without the prior written consent of Licensor,
which consent shall not be unreasonably withheld. Subject to the preceding sentence, this agreement
shall be binding upon, inure to the benefit of, and be enforceable by and against the respective
successors and assigns of each party.
11.
Interpretation.
This agreement shall be governed by and construed in accordance
with the laws of the State of Tennessee. If and to the extent that any court of competent
jurisdiction determines that it is impossible to construe any provision of this agreement
consistently with any law or public policy and consequently holds that provision to be invalid,
such holding shall in no way affect the validity or the other provisions of this agreement, which
shall remain in full force and effect.
12.
Complete Agreement.
This agreement (together with the Distribution Agreement,
which is hereby incorporated herein by reference) constitutes the entire agreement between the
parties with respect to the subject matter of this agreement and supersedes all prior or
contemporaneous discussions, negotiations, representations, warranties, or agreements relating to
the subject matter of this agreement. This agreement may not be amended or otherwise modified
except by a written instrument signed by each party.
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CUMBERLAND PHARMACEUTICALS, INC.
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CORD LOGISTICS, INC.
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By:
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/s/ A.J. Kazimi
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By:
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/s/ Frank C. Wegerson
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A.J. Kazimi
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Frank C. Wegerson
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Chief Executive Officer
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Vice President and General Manager
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Initials:
/s/ AJK
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Initials:
/s/ FCW
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209 10
th
Avenue South, Suite 332
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15 Ingram Blvd., #100
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Nashville, TN 37203
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LaVergne, TN 37086
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Facsimile No. (615) 255-0094
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Facsimile No. (615) 793-4783
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Page 13 of 14
Exhibit A
CUMBERLAND PHARMACEUTICALS
PROPOSED FEE SCHEDULE
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Program Implementation
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One Time Start-up Fee
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$
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*
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**
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Distribution Services
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Monthly per pallet ambient storage
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$
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*
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**
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Per bottle ambient product pick/pack/stage — first bottle (1)
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$
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*
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**
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Per bottle ambient product pick/pack/stage — each add’l bottle (1)
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$
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*
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**
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Per
case
ambient product pick/pack/stage —
first case (1)
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$
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*
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**
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Per
case
ambient product pick/pack/stage — each add’l case (1)
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$
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*
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**
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Per unit return
goods
processing
|
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$
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*
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**
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|
Monthly distribution
system access
and use
(2)
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$
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*
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**
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Monthly account management fee
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$
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*
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**
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Packing/Shipping Supplies
|
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Cost plus ***% handling fee
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(includes ordering, receiving, storage)
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Shipping Charges
(3)
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List minus ***%
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Customer Service
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Monthly fixed fee
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$
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*
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**
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Per order fee
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$
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*
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**
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Preprinted Forms
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Cost plus ***% handling fee
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Financial Services
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Monthly fixed fee Accounts Receivable Management
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$
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*
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**
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Per order fee Accounts Receivable Management
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$
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*
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**
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Monthly fixed fee Chargeback Management
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$
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*
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**
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Per submission Chargeback Processing & Government Reporting
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$
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*
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**
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Preprinted Forms
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Cost plus ***% handling fee
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Note (1):
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This proposal is based on the distribution of Reglan and Donnatal only, any
additional products requiring distribution services will be quoted separately. The pricing
will be based on the buying patterns of the wholesalers.
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Note (2):
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System access fee includes licenses for two concurrent users. Any additional
licenses required by Cumberland Pharmaceuticals will Increase the monthly fee by $*** per
concurrent user.
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Note (3):
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List minus ***% is incorporated to UPS and FedEx rates only, all other freight
carriers will be billed back at cost plus ***%.
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Note (4):
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The implementation fee will be paid in two equal installments at the beginning of
contract year two and three. The monthly fixed fees will be assessed at a ***% discount
in year one and a ***% increase in year three.
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Page 14 of 14
EXHIBIT 10.8
*Certain portions of this exhibit have been omitted pursuant to a request for confidential
treatment which has been filed separately with the SEC.
STRATEGIC ALLIANCE AGREEMENT
THIS AGREEMENT is made and entered into as of the 21st day of July, 2000.
BY AND BETWEEN:
CUMBERLAND PHARMACEUTICALS INC., a corporation organized and existing under the laws of Tennessee,
with its principal offices located at 209 Tenth Avenue South, Suite 332, Nashville, Tennessee,
37203 (hereinafter referred to as “
CUMBERLAND
”)
AND:
F.H. FAULDING & CO. LIMITED (ABN 88 007 870 984), a corporation organized under the laws of South
Australia, with its principal place of business located at 115 Sheriff Street, Underdale, South
Australia 5032 (hereinafter referred to as “
FAULDING
”);
WHEREAS
, CUMBERLAND is the owner of intellectual property rights, formulations and know- how
related to intravenous formulations of a certain pharmaceutical product set forth in Schedule I;
WHEREAS
, FAULDING has the expertise and the manufacturing facility suitable for the pharmaceutical
preparation and production of the Drug Product;
WHEREAS
, CUMBERLAND wishes to have FAULDING manufacture the Drug Product and FAULDING wishes to
supply the Drug Product to CUMBERLAND;
WHEREAS
, CUMBERLAND will appoint FAULDING as its preferred manufacturer for CUMBERLAND’s products;
WHEREAS
, FAULDING and CUMBERLAND will explore opportunities to collaborate on the manufacture and
distribution of other pharmaceutical products of CUMBERLAND;
NOW, THEREFORE
, in consideration of the premises and the undertakings, terms, conditions and
covenants set forth below, the parties hereto agree as follows:
1. DEFINITIONS
1.1 BUFFER SOLUTION
shall mean the buffer solution selected by CUMBERLAND for the manufacture
of the Drug Product.
1.2 BULK DRUG SUBSTANCE
shall mean the active ingredients in the Drug Product.
1.3 cGMP
or
GMP
shall have the meaning set forth in Schedule I.
1.4 CONFIDENTIAL INFORMATION
shall have the meaning set forth in Paragraph 9.
1.5 DEVELOPMENT
shall mean all work necessary to develop a process to manufacture the Drug
Product in full accord with cGMP and to supply the Drug Product conforming to the Specifications.
Development activities shall include, but not be limited to, pilot batches, scale- up batches,
validation of the manufacturing process, and successful completion of the Drug Product manufacture
and delivery as defined in Schedule I attached hereto.
1.6 DRUG PRODUCT
shall mean the Ibuprofen for injection pharmaceutical product developed by
Cumberland and marketed under the trade name AMELIOR™.
1.7 EXCIPIENT
shall mean any inert substance selected by CUMBERLAND and used to give the Drug
Product proper consistency.
1.8 FDA
shall mean the United States Food and Drug Administration (FDA).
1.9 IN-PROCESS SOLUTION
shall mean all Buffer Solutions and Excipients needed to produce Drug
Product in the finished dosage form set forth in Schedule I.
1.10 INVENTION
shall have the meaning set forth in Paragraph 9.4.
1.11 LABELING
shall mean all labels and other written, printed, or graphic matter upon: (i)
the Drug Product or any container or wrapper utilized with the Drug Product or (ii) any written
material accompanying the Drug Product, including without limitation, package inserts.
1.12 MANUAL
shall mean the Manufacturing Project Manual attached as Schedule II to this
Agreement and reviewed and accepted by CUMBERLAND and FAULDING, the terms and provisions of which
are incorporated by reference as though fully set forth herein.
1.13 SPECIFICATIONS
shall mean those specifications set forth in Attachment I to the Manual.
2. DEVELOPMENT AND MANUFACTURING
2.1 Initiation:
Upon request by CUMBERLAND, FAULDING shall proceed with the schedule for
completing Development of the Drug Product. Upon request by CUMBERLAND, FAULDING shall manufacture
the Drug Product in the batch size set forth in Schedule I in accordance with the terms hereof, the
Specifications, and all applicable laws and
regulations. Prior to distributing and selling the Drug Product, CUMBERLAND shall prepare and
file submissions to the FDA in order to obtain and maintain during the term hereof regulatory
approval of the Drug Product. FAULDING shall prepare and test the Drug Product in accordance with
cGMP.
2
2.2 Processing and Manufacturing:
FAULDING shall manufacture and package the Drug Product in
accordance with Schedules I and II hereto.
2.3 Documentation:
Subject to CUMBERLAND’s prior consent pursuant to Paragraph 5.5 hereof to
reimburse FAULDING for all out-of-pocket expenses and reasonable internal costs, FAULDING shall
provide CUMBERLAND with required supporting documentation for the Development of the Drug Product
in a form suitable for CUMBERLAND’s submission to the FDA or applicable governmental authorities
for any country into which the Drug Product will be distributed with the prior written consent of
FAULDING, which consent shall not be unreasonably withheld or delayed.
2.4 Bulk Drug Substance Supply:
FAULDING shall be responsible for the supply of all Bulk Drug
Substance in accordance with Schedules I and II hereto; provided that the supply of Bulk Drug
Substance shall be exclusively from such suppliers and in such grades as have been approved in
writing by CUMBERLAND as reflected on an approved list to be attached hereto as Schedule III, and
provided further that such suppliers and grades may not be changed without CUMBERLAND’s prior
written consent.
2.5 Supply of Components:
FAULDING shall be responsible for the supply of all components in
accordance with Schedules I and II hereto; provided that the supply of components shall be
exclusively from such suppliers and in such grades as have been approved in writing by CUMBERLAND
as reflected on an approved list to be attached hereto as Schedule III, and provided further that
such suppliers and grades may not be changed without CUMBERLAND’s prior written consent.
2.6 Delivery Terms:
All deliveries of Drug Product under this Agreement shall be made by
FAULDING to CUMBERLAND in the manner set forth in Schedule I. CUMBERLAND shall, within twenty (20)
working days after its receipt of any shipment, notify FAULDING in writing, of any claim relating
to a Drug Product not conforming to the Specifications, and, failing such notification,
notwithstanding Paragraph 5.1 of this Agreement, CUMBERLAND shall be deemed to have accepted the
Drug Product. If FAULDING disputes CUMBERLAND’s claim that the Drug Product is non-conforming, then
such dispute shall be resolved by an independent testing organization of recognized repute within
the pharmaceutical industry mutually agreed upon by FAULDING and CUMBERLAND, the appointment of
which shall not be unreasonably withheld by either party. In such event, CUMBERLAND shall ship the
testing organization representative samples of the Drug Product from the disputed production lot,
and the fees and costs of such testing organization and related shipping and supply costs shall be
borne by the party whose position is not sustained by the testing organization. CUMBERLAND’s sole
remedy for non-conforming product (other than indemnification under Paragraph 10.2) is to be
provided with replacement Drug Product free of charge, including compensation for all CUMBERLAND
inputs and all freight charges.
2.7 Payment for the Drug Product:
At the time of each shipment, FAULDING shall invoice
CUMBERLAND for FAULDING’s manufacturing services at the cost per batch as set forth in Schedule I.
Payment shall be made in Australian dollars of the latter of the invoice date or
3
CUMBERLAND’s acceptance of
shipment of conforming Product at its designated receiving facility.
2.8
Price Variations:
(i) Prices are as set on Schedule I for the term hereof unless changed pursuant to Paragraph
2.8(ii).
(ii) A party may request not less than two months prior to the second anniversary of the
effective date of this Agreement and each anniversary thereof thereafter to renegotiate the price
per batch having regard to varying costs of manufacture. The requesting party shall provide the
other party with evidence of varying costs of manufacture if an increase or decrease in price is
sought. Any increase in price shall not exceed the twelve (12) month percent increase in the
Consumer Price Index as published by the Australian government and shall be further subject to a
maximum of [***] percent ([***]%) unless (a) CUMBERLAND consents in writing to an increase in excess
of such Consumer Price Index and (b) FAULDING provides CUMBERLAND with evidence that the proposed
increase in price per batch is equivalent to FAULDING’s increased cost of manufacturing per batch
(excluding non-manufacturing overhead) as calculated in accordance with generally accepted
accounting principles consistently applied. If CUMBERLAND does not consent in writing to an
increase in excess of such Consumer Price Index within thirty (30) days of written notification
thereof, then FAULDING may withdraw the proposed amount of the increase in excess of the Consumer
Price Index or may terminate this Agreement upon at least ninety (90) days prior written notice.
3. TERM AND TERMINATION
3.1 Term:
This Agreement shall commence on the date first above written and will continue
until the fifth anniversary of the date on which the FDA grants approval to market and sell the
Drug Product, unless sooner terminated pursuant to Paragraph 3.2 herein. The Agreement shall be
automatically renewed for successive three-year terms unless either party notifies the other party
in writing at least twelve (12) months in advance of the expiration of the then current term that
the party is terminating the Agreement.
3.2 Termination:
This Agreement may be terminated at any time upon the occurrence of any of
the following events:
(a) Default: Forty-five (45) days following written notice, by either party to the other
party, in the event that the other party breaches any provision of this Agreement, and such party
fails to remedy the breach prior to the expiration of the forty-five (45) day period.
(b) Insolvency: Written notice by either party to the other upon insolvency or bankruptcy of
the other party, and the failure of any such insolvency or bankruptcy to be dismissed within sixty
(60) days.
(c) If, as a result of causes described in Paragraph 7.1, either party is unable to fully
perform its obligations hereunder for a period of one hundred eighty (180) consecutive days, the
other party shall have the right to terminate this Agreement upon at least thirty (30) days prior
written notice; provided that if the required performance is met during that thirty-day period,
this Agreement shall continue in full force and effect as if the notice had not been given.
Termination, expiration, cancellation or abandonment of this Agreement, through any means and
for any reason, shall not relieve the parties of any obligation accruing prior thereto and shall be
without the prejudice to the rights and remedies of either party with respect to any antecedent
breach of any of the provisions of this Agreement or CUMBERLAND’s purchase order issued hereunder.
3.3 Survival:
Paragraphs 5, 6, 9, and 10 shall survive the termination or cancellation of the
Agreement for any reason.
4. CERTIFICATES OF ANALYSIS AND MANUFACTURING COMPLIANCE
4.1 Certificates of Analysis:
FAULDING shall perform, or cause to be performed, certain tests
requested by CUMBERLAND as indicated in the Specifications on each batch of the Drug Product
manufactured pursuant to this Agreement before delivery to CUMBERLAND.
4
A certificate of analysis
for each batch delivered shall be delivered with each batch and shall set forth the items tested,
specifications, and test results. FAULDING shall also indicate on the certificate of analysis that
all batch production and control records have been reviewed and approved by the appropriate quality
control unit. FAULDING shall send, or cause to be sent, such certificates to CUMBERLAND prior to
the shipment of the Drug Product. CUMBERLAND shall test, or cause to be tested, prior to final
release, each batch of the Drug Product as meeting the Specifications. As required by the FDA (see
Paragraph 5.2 below), CUMBERLAND shall assume full responsibility for final release of each lot of
the Drug Product.
4.2 Manufacturing Compliance:
FAULDING shall advise CUMBERLAND immediately if an authorized
agent of any regulatory body visits FAULDING’s manufacturing facility and makes an inquiry
regarding FAULDING’s method of manufacture of the Drug Product for CUMBERLAND. Upon receipt of any
Form 483 Notice of Inspectional Observations issued by the FDA or notice of deficit from any other
regulatory inspection after a visit to FAULDING’s manufacturing facility, FAULDING shall
immediately send CUMBERLAND a copy thereof; provided that it may redact any language that is
subject to a legally enforceable confidentiality agreement between FAULDING and a third party.
4.3 Regulatory Agency Requirements:
FAULDING shall prepare and test the Drug Product in
conformity with GMP. Subject to the allocation of responsibility for regulatory compliance as set
forth in Paragraph 5.2, each party shall consult with the other party hereto before implementing
additional regulatory agency requirements concerning the control of Drug Product components,
manufacture of the Drug Product, or storage and handling of the Drug Product. The full text of
regulatory agency requests or comments will be provided by the party receiving such requests or
comments to the other party hereto. The parties will mutually agree on how to respond to such
requests and comments and on the allocation of the costs thereof; provided that FAULDING shall be
liable only for its reasonable internal costs and not for any out-of-pocket expenses or
extraordinary costs required in connection with implementing such regulatory requirements other
than the ordinary costs of compliance with GMP.
4.4 Regulatory Documents:
Each party will advise the other party hereto of its intention to
change any Drug Product regulatory documents prior to submission of the document to any regulatory
body. If the change affects the rights and obligations of a party hereto under this Agreement, such
party may seek to review or alter any part of the document at any time within ten (10) business
days after receipt of notification thereof; provided that if no alterations are submitted to the
other party within such ten-day period, each party will be deemed to have consented to the
alteration. CUMBERLAND shall reimburse FAULDING for all out-of-pocket expenses and reasonable
internal costs of changes to Drug Product regulatory documents, subject to CUMBERLAND’s prior
consent pursuant to Paragraph 5.5.
5. REPRESENTATIONS AND WARRANTIES
5.1 Conformity with Specifications:
FAULDING warrants that, at the time of manufacture, the
Drug Product is prepared and tested in accordance with cGMP and meets the Specifications. Because
FAULDING has no control of the conditions under which the Drug Product is used, the diagnosis of
the patient before or after treatment with the Drug Product, the
5
method of use or administration of
the Drug Product, and handling of the Drug Product after delivery to CUMBERLAND, FAULDING does not
warrant either a good effect, or against an ill effect, following the use of the Drug Product. The
foregoing warranty is exclusive and in lieu of all other warranties either written, oral, or
implied. THERE ARE NO WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. No
representative of FAULDING may change any of the foregoing warranties and CUMBERLAND accepts the
Drug Product subject to all terms hereof.
5.2 Compliance:
CUMBERLAND assumes responsibility for coordinating all contact with the FDA
and other regulatory bodies, pertaining specifically to Drug Product. FAULDING authorizes
CUMBERLAND’s representatives to supervise and inspect the methods used in and facilities used for
manufacturing, processing, packaging, and handling of the Drug Product, but CUMBERLAND shall have
no such obligation under this Agreement. Except as otherwise required by applicable regulations,
CUMBERLAND’s inspections shall be limited to two per year, each to occur upon seven days notice and
to be conducted during normal business hours; provided that CUMBERLAND may also inspect such
facilities promptly after any regulatory inspection thereof.
5.3 Debarring:
FAULDING represents and warrants that it has not been debarred in the United
States within the meaning of 21 U.S.C. § 335a(a) and 335a(b), nor will it use in any capacity the
services of any person debarred pursuant to subsections 3.06(a) or 3.06(b) of the Federal Food,
Drug, and Cosmetic Act, 21 U.S.C. Section 335(a) and (b).
5.4 FDA Submission:
FAULDING represents and warrants that it has submitted to the FDA
information about the manufacturing site to be used for the Drug Product and the facilities,
operating procedures, and personnel at such site.
5.5 Reimbursement:
FAULDING shall not incur any development costs for which it intends to seek
reimbursement from CUMBERLAND for the manufacturing facility, equipment, or manufacturing method
unless FAULDING has the prior written consent of CUMBERLAND.
5.6 Exclusivity:
FAULDING will not sell, give away, or deliver to any other person, firm, or
corporation any Drug Product without CUMBERLAND’s prior written consent while this Agreement is
effective and for two years after the termination of this Agreement. In the event of breach,
CUMBERLAND shall have the right, in addition to other rights, to seek injunctive relief.
6. DRUG PRODUCT RECALLS
6.1 Drug Product Recalls:
In the event: (a) any government authority issues a request,
directive or order that the Drug Product be recalled, or (b) a court of competent jurisdiction
orders such a recall, (c) CUMBERLAND determines that the Drug Product should be recalled because
the Drug Product does not conform to Specifications, or (d) FAULDING
recommends to CUMBERLAND that a recall be initiated, the parties shall take all appropriate
corrective actions. In the event that FAULDING recommends a recall of Drug Product by CUMBERLAND,
such recommendation must take the form of a notice as per Paragraph 14.1, and CUMBERLAND shall
respond promptly indicating to FAULDING whether the Drug
6
Product will be recalled. In no event,
however, shall FAULDING have responsibility for regulatory compliance in connection with any
recall, except to the extent and under the circumstances set forth in the Manual or any other
written agreement between the parties hereto or as required by law. All costs and expenses incurred
in connection with such recall shall be the responsibility of CUMBERLAND unless caused by the
negligence of FAULDING.
7. FORCE MAJEURE; FAILURE TO SUPPLY
7.1 Force Majeure Events:
Failure of either party to perform under this Agreement (except the
obligation to make payments) shall not subject such party to any liability to the other if such
failure is caused by acts such as, but not limited to, acts of God, fire, explosion, flood,
drought, war, riot, sabotage, embargo, strikes or other labor trouble, compliance with any order or
regulation of any government entity, or by any cause beyond the reasonable control of the parties,
provided that written notice of such event is promptly given to the other party.
7.2 Failure to Supply; Delivery Dates; Forecasts:
FAULDING shall supply all of the Drug
Product ordered by CUMBERLAND within sixty (60) days of receipt of a written order from CUMBERLAND.
On the date that CUMBERLAND makes its first order, CUMBERLAND will supply FAULDING with a
non-binding forecast of its future orders of Drug Product for each of the eleven calendar months
following the month in which the initial order is made. CUMBERLAND will update the forecasts on the
first day of the calendar month and on a monthly basis thereafter throughout the term of this
Agreement. The quantity of any Drug Product ordered pursuant to this Agreement shall not be less
than seventy percent (70%) nor more than one hundred thirty percent (130%) of the quantity
indicated in the most recent monthly forecast provided hereunder for the month in which the order
is placed. If CUMBERLAND fails to provide orders, or forecasts by agreed dates, FAULDING shall not
be required to deliver the quantity ordered by CUMBERLAND within sixty (60) days. The provisions of
this Paragraph 7.2 shall be without prejudice to CUMBERLAND’s rights under Paragraph 3.2 and
remedies provided for thereunder.
8. IMPROVEMENTS
8.1 Changes by CUMBERLAND:
When CUMBERLAND seeks to change the Drug Product Specifications, such change shall be
incorporated within the Specifications only with the prior written consent of FAULDING, such
consent not to be unreasonably withheld or delayed. The price of the Drug Product may be adjusted
for such change, and CUMBERLAND shall pay FAULDING the agreed costs associated with such change,
including any development work, if necessary, based upon FAULDING’s then-prevailing development
rates. Such prices and costs shall be set forth in a written amendment to this Agreement. It is the
responsibility of CUMBERLAND to ensure that proper regulatory agencies approve the suggested
changes. CUMBERLAND will notify
FAULDING if it intends to change the process or test specifications related to the preparation
of the Bulk Drug Substance.
8.2 Changes by FAULDING:
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FAULDING shall inform CUMBERLAND in writing of all proposed changes in the manufacturing
facility, equipment, or manufacturing methods and labeling of the Drug Product, each as approved by
applicable regulatory authorities, including the FDA, in advance of the time such changes are
intended to be made to allow CUMBERLAND sufficient time to provide any notice required by FDA
regulations. FAULDING shall not implement any such changes without prior written authorization by
the FDA or other applicable regulatory authorities and the prior written consent of CUMBERLAND,
which consent shall not be unreasonably withheld or delayed. FAULDING shall be liable only for its
reasonable internal costs and not for extraordinary costs in connection with such manufacturing
changes.
9. CONFIDENTIALITY
9.1 Confidential Information:
“Confidential Information” means collectively Confidential
Information of CUMBERLAND (as defined herein) and Confidential Information of FAULDING (as defined
herein).
9.2 Confidential Information of CUMBERLAND:
“Confidential Information of CUMBERLAND” means all
information obtained or developed by FAULDING or any third party which related to CUMBERLAND’s
business or the Drug Product, regardless of the form in which such information is transmitted. The
following shall not be considered Confidential Information of CUMBERLAND for purposes hereof:
(a) Information that is already in the possession of FAULDING at the time it is received from
CUMBERLAND or developed on CUMBERLAND’s behalf, if FAULDING notifies CUMBERLAND of its belief that
the information is excepted under the terms of this subsection;
(b) Information received by FAULDING from a person which has the right to disclose the same,
when FAULDING notifies CUMBERLAND of its belief that the information is excepted under the terms of
this subsection;
(c) Information that is or becomes published, or is or becomes otherwise publicly available
without the fault of FAULDING; or
(d) An Invention as defined in Paragraph 9.4.
In the event of a dispute regarding the applicability of the above exceptions to the
definition of Confidential Information of CUMBERLAND, FAULDING shall have the burden of producing
clear and convincing proof that the information should be excepted from the definition of
Confidential Information of CUMBERLAND. FAULDING shall not use or permit the use of the
Confidential Information of CUMBERLAND other than for the limited purposes
expressly permitted by or consistent with this Agreement. Recipients of Confidential
Information of CUMBERLAND shall be granted access thereto strictly on a “need-to-know” basis.
FAULDING shall take all reasonable steps to ensure that recipients comply with the terms of this
Agreement, including all restrictions on use, disclosure and dissemination of Confidential
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Information of CUMBERLAND. FAULDING shall notify CUMBERLAND immediately upon becoming aware of any
breach hereof and shall take all reasonable steps to prevent any further disclosure or unauthorized
use.
Upon termination or expiration of this Agreement, FAULDING shall deliver to CUMBERLAND all
Confidential Information of CUMBERLAND, all copies thereof, and all documents or data storage media
containing such Confidential Information of CUMBERLAND, except as expressly set forth herein or in
any other written agreement between the parties.
9.3 Confidential Information of FAULDING:
“Confidential Information of FAULDING” means all
information obtained by CUMBERLAND which relates to FAULDING’s business, regardless of the form in
which such information is transmitted. The following shall not be considered Confidential
Information of FAULDING for purposes hereof:
(a) Information that is already in the possession of CUMBERLAND at the time it is received
from FAULDING, if CUMBERLAND notifies FAULDING of its belief that the information is excepted under
the terms of this subsection; or
(b) Information received by CUMBERLAND from a person which has the right to disclose the same,
when CUMBERLAND notifies FAULDING of its belief that the information is excepted under the terms of
this subsection; or
(c) Information that is or becomes published, or is or becomes otherwise publicly available
without the fault of CUMBERLAND.
In the event of a dispute regarding the applicability of the above exceptions to the
definition of Confidential Information of FAULDING, CUMBERLAND shall have the burden of producing
clear and convincing proof that the information should be excepted from the definition of
Confidential Information of FAULDING. CUMBERLAND shall not use or permit the use of the
Confidential Information of FAULDING other than for the limited purposes expressly permitted by or
consistent with this Agreement. Recipients of Confidential Information of FAULDING shall be
granted access thereto strictly on a “need-to-know” basis. CUMBERLAND shall take all reasonable
steps to ensure that recipients comply with the terms of this Agreement, including all restrictions
on use, disclosure and dissemination of Confidential Information of FAULDING. CUMBERLAND shall
notify FAULDING immediately upon becoming aware of any breach hereof and shall take all reasonable
steps to prevent any further disclosure or unauthorized use.
Upon termination or expiration of this Agreement, CUMBERLAND shall deliver to FAULDING all
Confidential Information of FAULDING, all copies thereof, and all documents or data storage media
containing such Confidential Information of FAULDING, except as expressly set forth herein or in
any other written agreement between the parties.
9.4 Invention:
CUMBERLAND owns all intellectual property rights in any improvement to or
derived from the Drug Product and any existing or further developments or modifications of the Drug
Products (“Invention”), except to the extent that a manufacturing
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process used therewith is
developed exclusively by FAULDING, in which case the intellectual property rights for such process
shall be retained by FAULDING.
9.5 Disclosure:
The parties agree that the existence of this Agreement may be disclosed to
third parties but that the contents of this Agreement shall not be disclosed to any third party
except (i) the controlling companies of the parties, (ii) the companies controlled by the parties,
(iii) individuals and entities providing paid services to either of the parties, and (iv)
governmental regulatory agencies, including, but not limited to, environmental protection
authorities, without prior written consent of the other party.
9.6 Retention of Records:
Notwithstanding the restrictions set forth in this Agreement,
FAULDING shall retain production records (a) for batches of Drug Products manufactured prior to
establishment by CUMBERLAND of an expiry date (CTM and validation batches) for three (3) years
after (i) issuance of regulatory approval of the Drug Product necessary for distribution thereof or
(ii) withdrawal of the IND (Notice of Claimed Investigational Exemption for a New Drug) and (b) for
batches of Drug Product manufactured after establishment by CUMBERLAND of an expiry date for a
period of at least one year after the respective expiry date for each batch. These records will be
stored by appropriate means, including without limitation, optical disk or microfilm in a secure
manner in compliance with current GMP with duplicate copies submitted to CUMBERLAND promptly after
the creation thereof and shall be made available on request of the FDA or any other authorized
regulatory body.
9.7 Confidential Information Upon Termination:
Upon termination of this Agreement for whatever
reason, FAULDING shall return to CUMBERLAND originals, copies, and derivative forms of disclosed or
developed information relating to the purpose of this Agreement; except that one copy of such
information may be retained as required by regulation or law for future reference. The Confidential
Information shall remain confidential and not be disclosed by either party for a period of ten (10)
years following the date of expiration or termination of this Agreement.
10. INDEMNIFICATION
10.1 Indemnification by CUMBERLAND:
CUMBERLAND shall indemnify and hold FAULDING (and any
parent, subsidiary, or affiliate company or corporation, and their officers, directors,
shareholders, agents, and the employees and insurers of any of them and/or their successors and
assigns thereto), free and harmless from any and all claims, demands, liability, actions or causes
of actions, and any and all expenses associated therewith (including, without limiting the
generality of the foregoing, attorney’s fees), arising out of or in connection with, as a result
of, or otherwise related to any third party claims arising from: (i) any negligence or recklessness
of CUMBERLAND, its agents, or employees; (ii) the promotion, distribution, use, misuse or sale or
effects of the Drug Product except to the extent the alleged Drug Product
defects were caused by FAULDING; (iii) CUMBERLAND’s non-compliance with any applicable FDA or
other applicable regulations; or, (iv) any failure of CUMBERLAND to perform, in whole or in part,
any of its obligations hereunder in each case, unless caused by the acts or omissions of FAULDING.
Beginning prior to use of the Drug Product in humans and
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continuing until the third anniversary of
termination of this Agreement, CUMBERLAND shall maintain products liability insurance with limits
of liability of not less than [***] and shall name
FAULDING as additional insured under said policy.
10.2 Indemnification by FAULDING:
FAULDING will indemnify and hold CUMBERLAND (and any parent,
subsidiary, or affiliate company or corporation, and their officers, directors, shareholders,
agents, and the employees and issuers of any of them and/or their successors and assigns thereto),
free and harmless against any and all claims, demands, actions or causes of action, and any and all
expenses associated therewith (including, without limiting the generality of the foregoing, defense
costs and attorney’s fees), arising out of or in connection with, as a result of, or otherwise
related to any third party claims arising from (i) any negligence or recklessness of FAULDING, its
agents or employees; (ii) personal injury (including death) or property damage arising out of or in
connection with FAULDING’s manufacture or handling of the Drug Product otherwise than in accordance
with the Specifications and CUMBERLAND’S written directions; (iii) FAULDING’s non-compliance with
any applicable FDA or other applicable regulations; provided that CUMBERLAND perform its
obligations under Paragraph 2.1, or (iv) any failure of FAULDING to perform any of its obligations
hereunder, unless caused by the acts or omissions of CUMBERLAND. Beginning prior to delivery of the
first order for Drug Product pursuant to this Agreement and continuing until the third anniversary
of termination of this Agreement, FAULDING shall maintain products liability insurance with limits
of liability of not less than [***] and shall name CUMBERLAND as additional insured under
said policy.
10.3 Patent Indemnity:
Subject to Paragraph 5.1, CUMBERLAND further warrants that importation,
manufacture (excluding manufacturing not specific to the manufacture of the Drug Product to be
performed by FAULDING for CUMBERLAND), use, supply, and sale of the Drug Product and Bulk Drug
Substance will not infringe any patent rights or any other third-party intellectual property rights
and that CUMBERLAND will indemnify, defend, and hold FAULDING free and harmless from any damage,
judgment, liability, loss, cost or expense, including legal expenses, arising from claims that the
Drug Product and Bulk Drug Substance infringe patent rights of a third party or any third-party
intellectual property rights.
10.4 Conditions of Indemnification:
If either party seeks indemnification from the other under
Paragraphs 10.1, 10.2, or 10.3, it shall promptly give written notice to the other party of any
such claim or suit threatened, made or filed against it, which forms the basis for such claim of
indemnification and shall cooperate fully with the other party in the defense of all such claims or
suits. No settlement or compromise shall be binding on a party hereto without its prior written
consent.
10.5 Disclaimer of Warranties; Limited Liability:
Under no circumstances shall either party be
liable to the other on account of any claim (whether based upon principles of
contract, warranty, negligence, or other tort, breach of any statutory duty, principles of
indemnity, the failure of any expressly limited remedy to achieve its essential purpose) for any
special, consequential, incidental or exemplary damages, or including but not limited to lost
profits.
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11. APPOINTMENT AS PREFERRED MANUFACTURER
Until the expiration or earlier termination of this Agreement, CUMBERLAND agrees to provide
FAULDING with the first opportunity to negotiate to manufacture each CUMBERLAND pharmaceutical
product to be sold anywhere in the world in addition to the Drug Product; provided that the
foregoing shall not apply to pharmaceutical products in respect of which CUMBERLAND is unable to
enter into a manufacturing arrangement with FAULDING, due to contractual obligations applicable to
CUMBERLAND or where to enter into such an arrangement with FAULDING would adversely affect any
existing regulatory approval or application for regulatory approval for the product, in either case
as reasonably determined by CUMBERLAND having regard to documented evidence which CUMBERLAND shall
provide to FAULDING or FAULDING’s advisers for review at FAULDING’s request. Except as set forth to
the contrary in the preceding sentence, CUMBERLAND agrees not to manufacture, or to have
manufactured, such a product anywhere in the world unless CUMBERLAND first notifies FAULDING of the
opportunity hereunder and unless CUMBERLAND negotiates in good faith with FAULDING for sixty (60)
days after providing such notice in an attempt to enter into a written agreement on substantially
the same terms as this Agreement with respect to such additional product.
12. LICENSING AND DISTRIBUTION OF CUMBERLAND PRODUCTS
Until the expiration or earlier termination of this Agreement, CUMBERLAND agrees to provide
FAULDING with the first opportunity to negotiate to license and distribute each pharmaceutical
product of CUMBERLAND in Australia, New Zealand, Canada, and mutually agreed Southeast Asian and
Latin American countries; provided that the foregoing shall not apply to pharmaceutical products in
respect of which CUMBERLAND is unable to enter into a license and distribution arrangement with
FAULDING, due to contractual obligations applicable to CUMBERLAND as reasonably determined by
CUMBERLAND having regard to documented evidence which CUMBERLAND shall provide to FAULDING or
FAULDING’s advisers for review at FAULDING’s request, and further provided that CUMBERLAND shall
use good faith efforts to initiate such negotiations with FAULDING as soon as such a product is
reasonably available for license and distribution in such territory. Except as set forth to the
contrary in the preceding sentence, CUMBERLAND agrees not to license or distribute such a product
in such territory unless CUMBERLAND first notifies FAULDING of the opportunity hereunder and unless
CUMBERLAND negotiates in good faith with FAULDING for sixty (60) days after providing such notice
in an attempt to enter into a written agreement with respect to the services that are being
negotiated.
13. REGULATORY SUPPORT
If requested by CUMBERLAND, and at CUMBERLAND’S cost at reasonable fees to be agreed
by the parties, FAULDING shall provide CUMBERLAND with reasonable assistance in relation to the
Development of, and applications for regulatory approval for, pharmaceutical products other than
the Drug Product which are identified by CUMBERLAND, including but not limited to the preparation
of development reports, stability reports, manufacturing documentation and
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instructions for use
necessary to support applications for regulatory approval.
14. GENERAL PROVISIONS
14.1 Notices:
Any notice permitted or required by this Agreement may be sent by facsimile with
the original document being sent by certified (or registered) mail, return receipt requested, or
overnight delivery and shall be effective when received (or refused) via facsimile or mail or
overnight if faxed and sent and addressed as follows (or to such other facsimile number or address
as may be designated by a party in writing):
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If to CUMBERLAND:
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Cumberland Pharmaceuticals Inc.
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209 Tenth Avenue South, Suite 332
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Nashville, Tennessee 37203
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Attn: Chief Executive Officer
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Telephone:
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615-255-0068
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Facsimile:
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615-255-0094
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If to FAULDING:
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F.H. Faulding & Co. Limited
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115 Sherriff Street
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Underdale, South Australia 5032
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Attn: Company Secretary
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Telephone:
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61-8-8205-6500
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Facsimile:
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61-8-8234-8380
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14.2 Entire Agreement:
Amendment: The parties hereto acknowledge that this Agreement sets
forth the entire agreement and understanding of the parties and supersedes all prior written or
oral agreements or understandings with respect to the subject matter hereof; provided that the
Confidentiality Agreement dated August 1, 1999, between FAULDING and CUMBERLAND shall remain in
effect and that the terms thereof shall supersede any conflicting term of Paragraph 9 hereof. No
modification of any of the terms of this Agreement, or any amendments thereto, shall be deemed to
be valid unless in writing and signed by both parties hereto. No course of dealing or usage of
trade shall be used to modify the terms and conditions herein.
14.3 Waiver:
None of the provisions of the Agreement shall be considered waived by any party
hereto unless such waiver is agreed to, in writing, by both parties. The failure of a party to
insist upon strict conformance to any of the terms and conditions hereof, or failure or delay to
exercise any rights provided herein or by law shall not be deemed a waiver of any rights of any
party hereto.
14.4 Obligations to Third Parties:
Each party warrants and represents that this Agreement is
not inconsistent with any contractual obligations, expressed or implied, undertaken
with any third party.
14.5 Assignment:
This Agreement shall be binding upon and inure to the benefit of the
successors or permitted assigns of each of the parties and may not be assigned, transferred, or
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subcontracted by either party without the prior written consent of the other, which consent will
not be unreasonably withheld or delayed, except that no consent shall be required in the case of a
transfer to a wholly-owned subsidiary or transaction involving the merger, consolidation or sale of
substantially all of the assets of the party seeking such assignment or transfer and such
transaction relates to the business covered by this Agreement and the resulting entity assumes all
the obligations under this Agreement.
14.6 Independent Contractor:
FAULDING shall act as an independent contractor for CUMBERLAND in
providing the services required hereunder and shall not be considered an agent of or joint venturer
with CUMBERLAND. Unless otherwise provided herein to the contrary, FAULDING shall furnish all
expertise, labor, supervision, machining and equipment necessary for performance hereunder and
shall obtain and maintain all building and other permits and licenses required by public
authorities.
14.7 Governing Law:
This Agreement is subject to and shall be governed by the laws of the
State of Tennessee. The parties hereby submit to the jurisdiction of the courts of the State of
Tennessee in respect to all disputes arising out of or in connection with this Agreement and waive
any and all objections to such venue.
14.8 Severability:
In the event that any term or provision of this Agreement shall violate any
applicable statute, ordinance, or rule of law in any jurisdiction in which it is used, or otherwise
be unenforceable, such provision shall be ineffective to the extent of such violation without
invalidating any other provision hereof.
14.9 Headings, Interpretation:
The headings used in this Agreement are for convenience only
and are not part of this Agreement.
14.10 Conflict:
In the event of conflict between the terms and provisions of this Agreement
and the terms and provisions of the Manual, the terms of this Agreement shall control.
IN WITNESS WHEREOF
, the parties hereto have each caused this Agreement to be executed by their
duly authorized representatives effective as of the date first above written.
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CUMBERLAND PHARMACEUTICALS INC.
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F.H. FAULDING & CO. LIMITED
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/s/ A.J. Kazimi
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/s/ Alex Bell
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Authorized Signature
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Printed Name
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Printed Name
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A.J. Kazimi
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Alex Bell
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Printed Name
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Printed Name
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Title
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CEO
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V.P. Tech Ops.
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Title
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14
SCHEDULE I
DEVELOPMENT ACTIVITIES AND PRICING
Development
of the Drug Product for use in Clinical Studies and for sale will consist of the
following:
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Product -
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Amelior™. Ibuprofen for intravenous injection.
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Timing -
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CUMBERLAND shall provide FAULDING with non-binding
forecasts of its requirements in the manner set forth in
Paragraph 7.2 of this Agreement. FAULDING shall
manufacture the number of batches of Drug Product
corresponding to each purchase order therefor within 60
days of receipt of any such order.
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Special Issues -
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All product contact components must be dedicated or
disposed of after use. CUMBERLAND may be present for
manufacturing. The initial batches are for an FDA
submission, and may subsequently be used in clinical
studies or sold. FAULDING shall provide process
validation (scale-up and three validation batches) in
accordance with this Agreement and the Schedules thereto.
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cGMP or GMP -
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GMP or cGMP shall mean the current good manufacturing
practices as defined from time in regulations promulgated
under the Federal Food, Drug and Cosmetic Act of the
United States or any successor laws or regulations
governing the manufacture of the Drug Product.
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Storage -
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1.
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FAULDING shall store and handle Bulk Drug Substance and finished Drug Product at 20E to 25E
C.
|
Composition, Process & Container
[***]
15
|
|
|
|
|
Preparation
-
|
|
Additional details regarding preparation shall be
incorporated herein upon adoption thereof by written
agreement of FAULDING and
CUMBERLAND.
|
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|
|
[***]
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|
Disposal -
|
|
Method of disposal is incineration. Any disposal costs
incurred by FAULDING will be charged back to CUMBERLAND;
provided that CUMBERLAND shall not be required to reimburse
FAULDING for such costs if the Drug Product is disposed of
because of FAULDING’s negligence or breach of this
Agreement. FAULDING shall prepare and provide CUMBERLAND
with complete documentation of disposal throughout the chain
of custody.
|
Documentation by FAULDING –
|
1.
|
|
Master batch record for review and approval by FAULDING and CUMBERLAND.
|
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|
2.
|
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Product specific validation summaries.
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3.
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Executed batch records.
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4.
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Analytical records.
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5.
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Inventory records.
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6.
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Disposal records.
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Compensation -
|
|
The price to be paid by CUMBERLAND to FAULDING for the satisfactory performance of its obligations under this Agreement are as
follows:
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[***]
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Reimbursement of Development Costs -
|
|
CUMBERLAND shall reimburse FAULDING
for development costs incurred and
approved as agreed by the parties.
|
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Reimbursement of Regulatory Costs -
|
|
CUMBERLAND shall reimburse FAULDING
for regulatory costs incurred and
approved as agreed by the parties.
|
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|
Reimbursement of Inspection and Audit
Costs -
|
|
CUMBERLAND shall reimburse FAULDING
for inspection and audit costs
incurred and approved as agreed by
the parties.
|
16
SCHEDULE II
MANUFACTURING PROJECT MANUAL
(To be expanded by mutual written consent of F.H. Faulding & Co., Limited (“FHF”) and
Cumberland Pharmaceuticals, Inc. (“CPI”))
|
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Responsibility
|
|
Documentation/Activity
|
|
FHF
|
|
CPI
|
|
Comments
|
|
GMP certificate and other permits
|
|
/
|
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|
|
Active Pharmaceutical Ingredient
(“API”)
|
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Supply of API
|
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/
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CPI to identify source
|
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Provide specifications
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/
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Approval of API specifications
|
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/
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/
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Provide sampling and testing
methods
|
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/
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|
|
Approval of sampling and testing
methods
|
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/
|
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/
|
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|
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|
|
|
Sampling and testing
|
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/
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Release
|
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/
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Storage of samples
|
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/
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Storage of documents
|
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/
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/
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|
Starting Materials (except API)
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Supply of starting materials
|
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/
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|
CPI to identify arginine source
|
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Provide specifications of starting
materials
|
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/
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Approval of starting materials
specifications
|
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/
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/
|
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|
|
|
|
|
|
Providing sampling and testing
methods
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Approval of sampling and testing
materials
|
|
/
|
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/
|
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|
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|
|
|
Sampling and testing
|
|
/
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|
Release
|
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/
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|
Storage of samples
|
|
/
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|
Storage of documentation
|
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/
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/
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|
|
Manufacturing Formula
|
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|
Development of manufacturing
formula
|
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/
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/
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|
|
Approval of manufacturing formula
|
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/
|
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/
|
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|
|
Processing Instructions
|
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|
|
Development of processing
instructions
|
|
/
|
|
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|
|
|
Approval of processing instructions
|
|
/
|
|
/
|
|
|
17
|
|
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|
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|
|
|
|
|
|
FHF
|
|
CPI
|
|
Comments
|
|
Bulk Product
|
|
|
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|
|
Supply of Bulk Product
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provide specifications of Bulk Product
|
|
/
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
Approval of Bulk Product specifications
|
|
/
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
Providing sampling and testing methods
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Approval of sampling and testing methods
|
|
/
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
Sampling and testing
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Release
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Storage of samples
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepare stability data for Bulk Product
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Storage of documentation
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Packaging
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supply of packaging materials
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provide packaging materials specifications
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Approval of specifications
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Providing sampling and testing methods
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Approval of sampling and testing methods
|
|
/
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
Sampling and testing
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Release
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Storage of samples
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Storage of documentation
|
|
/
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
Batch Processing Records
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preparation of batch processing records
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Review of batch processing records
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Release of batch processing records
|
|
/
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
Storage of batch processing records
|
|
/
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Providing sampling and testing methods
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Approval of sampling and testing methods
|
|
/
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
Sampling and testing
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Release
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Storage of samples
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Storage of documentation
|
|
/
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
Prepare stability data for Product
|
|
/
|
|
|
|
|
18
Supply of Materials
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplier (check one):
|
|
Documentation/Activity
|
|
FHF
|
|
CPI
|
|
Comments
|
|
Starting Materials
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Active Pharmaceutical Ingredient
|
|
/
|
|
|
|
CPI will identify source
|
|
|
|
|
|
|
|
|
|
Other Starting Materials
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Auxiliaries, fluids, gases, etc.):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excipients
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WFI
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N2
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Packaging Materials
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vials
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stoppers
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Seals
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Boxes
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shippers
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Labeling
|
|
/
|
|
|
|
|
Quality Control
Distribution of responsibilities:
F.H. Faulding & Co. (FHF) shall ensure that all quality control measures follow the applicable cGMP
guidelines. The responsibilities shall be distributed between FAULDING and CPI as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplier (check one):
|
|
Documentation/Activity
|
|
FHF
|
|
CPI
|
|
Comments
|
|
Active Pharmaceutical Ingredient
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Providing sampling and testing methods
|
|
/
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
Approval of sampling and testing methods
|
|
/
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
Sampling and testing
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Release
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Storage of samples
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Storage of documentation
|
|
/
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
Starting Materials (except API)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Providing sampling and testing methods
|
|
/
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
Approval of sampling and testing methods
|
|
/
|
|
/
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplier (check one):
|
|
Documentation/Activity
|
|
FHF
|
|
CPI
|
|
Comments
|
|
Sampling and testing
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Release
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Storage of samples
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Storage of documentation
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bulk Product
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Providing sampling and testing methods
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Approval of sampling and testing methods
|
|
/
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
Sampling and testing
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Release
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Storage of samples
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Storage of documentation
|
|
/
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
Prepare stability data for Bulk Product
|
|
/
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
Packaging Materials
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Providing sampling and testing methods
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Approval of sampling and testing methods
|
|
/
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
Sampling and testing
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Release
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Storage of samples
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Storage of documentation
|
|
/
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FHF
|
|
CPI
|
|
Comments
|
|
Batch Documentation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assignment of batch numbers
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preparation of batch processing records
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Review of batch processing records
|
|
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
Release of batch processing records
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Storage of batch processing records
|
|
/
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Providing sampling and testing methods
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Approval of sampling and testing methods
|
|
/
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
Sampling and testing
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Release
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Storage of samples
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Storage of documentation
|
|
/
|
|
/
|
|
|
|
|
|
|
|
|
|
|
|
Prepare stability data for Product
|
|
/
|
|
|
|
|
20
ATTACHMENT I
BULK DRUG SUBSTANCE
AND DRUG PRODUCT SPECIFICATIONS
AND PROCEDURES
Bulk Drug Substance -
To be agreed.
Drug Product Specifications and Procedures -
To be decided.
21
SCHEDULE 3
Ibuprofen Injection 100mg/ml
[***]
22
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
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1. DEFINITIONS
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1
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2. REGULATORY APPROVAL, MARKETING AND DISTRIBUTION
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6
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3. TERM AND TERMINATION
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16
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4. PAYMENTS
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18
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5. CONFIDENTIALITY
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20
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6. PROTECTION AND OWNERSHIP OF INTELLECTUAL PROPERTY
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22
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7. REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
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23
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8. GENERAL
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27
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9. ARBITRATION
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29
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EXHIBIT A — Minimum Purchases
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EXHIBIT B — Patents
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EXHIBIT C — Transition Plan
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EXHIBIT D — Specifications
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EXHIBIT E — Adverse Event Reporting
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i
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
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1.1
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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
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1.2
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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.
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1.3
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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.
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1.4
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Calendar Quarter
shall mean each three (3) month period ending March 31, June 30,
September 30, and December 31.
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1.5
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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.
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1.6
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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.
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1.7
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Confidential Information
shall have the meaning set forth in Subsection 5.1(A) hereof.
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1.8
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Delivery Date
is the date of delivery for Products agreed to by the parties.
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1.9
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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.
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1.10
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FDA
shall mean the U.S. Food and Drug Administration.
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1.11
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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.
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1.12
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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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2
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1.13
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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.
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1.14
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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.
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1.15
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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.
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1.16
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Laws shall mean:
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(i)
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all constitutions, treaties, laws, statutes, codes, ordinances, orders,
decrees, rules, regulations, and municipal by-laws, whether domestic, foreign or
international;
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(ii)
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all judgments, orders, writs, injunctions, decisions, rulings, decrees, and
awards of any Governmental Body; and
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(iii)
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all policies, practices and guidelines of any Governmental Body;
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in each case binding on or affecting the party or Person referred to in the context in
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3
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which such word is used; and “Law” shall mean any one of them.
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1.17
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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.
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1.18
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Minimum Purchases
shall mean the minimum number of
commercial pouches of the Product that CUMBERLAND must purchase, as set forth in
Exhibit A
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1.19
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Mylan
shall have the meaning set forth in Section 2.5(A).
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1.20
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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.
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1.21
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Order
is defined in Section 2.6(C).
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1.22
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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.
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1.23
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Person
shall mean an individual, corporation, company, co-operative, partnership,
organization or any similar entity.
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1.24
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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.
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1.25
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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.
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1.26
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Product Payments
shall have the meaning set forth in Section 4.3.
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1.27
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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.
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1.28
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Regulatory Approval(s)
shall mean all approvals, licenses, registrations, or
authorizations
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4
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of any Competent Authority necessary for the manufacturing, marketing, distribution and/or
sale of the Product in the Territory.
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1.29
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Royalty Payment
shall have the meaning set forth in Section 4.2.
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1.30
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Subcontractor
shall mean a Third Person to whom either party hereto has delegated
responsibilities under this Agreement.
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1.31
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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.
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1.32
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Term
shall mean the term of this Agreement, as set forth in Section 3.1.
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1.33
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Territory
shall mean the U.S., subject to potential modifications pursuant to Section
4.2, Exhibit A, and the following understandings:
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(a)
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As of the Effective Date of this Agreement, INALCO does not have Regulatory
Approval for the Product in Canada.
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(b)
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INALCO cannot guarantee that Regulatory Approval will be granted for the
Product in Canada.
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(c)
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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.
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(d)
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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.
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1.34
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Third Person
shall mean any Person other than one of the parties hereto or an
Affiliate or Subsidiary of one of the parties hereto.
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1.35
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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
®
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1.36
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U.S.
shall mean the United States of America and each of its territories and
possessions.
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1.37
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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.
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1.38
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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.
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2. REGULATORY APPROVAL, MARKETING AND DISTRIBUTION
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2.1
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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.
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2.2
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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.
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2.3
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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.
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2.4
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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.
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2.5
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Certain Responsibilities of INALCO.
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A.
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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
(30
th
) 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.
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B.
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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.
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C.
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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.
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D.
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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.
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E.
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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
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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.
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F.
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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.
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G.
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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.
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H.
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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.
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I.
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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).
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J.
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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
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Certain Responsibilities of CUMBERLAND.
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A.
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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.
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B.
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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.
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C.
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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.
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D.
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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.
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E.
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Minimum Purchases.
CUMBERLAND agrees to meet Minimum Purchases
annually in accordance with
Exhibit A.
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F.
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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.
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G.
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Compliance.
CUMBERLAND shall market, distribute, and sell the Product
in the Territory in accordance with applicable Laws.
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9
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H.
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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.
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I.
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Interaction with DDMAC.
CUMBERLAND shall be responsible for
interacting with the FDA Division of Drug Marketing, Advertising and Communication
regarding the Product.
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J.
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Formulary Listings.
CUMBERLAND shall be responsible for filing and
maintaining Listings to obtain formulary listing approval from states or localities in
the Territory.
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K.
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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.
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L.
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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.
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M.
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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.
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N.
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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.
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2.7
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Certain Responsibilities of Both Parties.
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A.
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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.
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B.
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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
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10
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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.
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C.
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Recalls:
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(i)
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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.
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(ii)
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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.
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(iii)
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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.
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(iv)
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Notwithstanding paragraphs (i) to (iii), CUMBERLAND will
administer any such recall in the Territory.
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(v)
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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.
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(vi)
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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.
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(vii)
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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.
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2.8
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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.”
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2.9
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Delivery:
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A.
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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.
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11
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B.
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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.
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C.
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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.
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D.
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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).
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2.10
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Acceptance of the Products:
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A.
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INALCO will supply a Certificate of Analysis with each delivery of the
Products.
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B.
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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.
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C.
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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.
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D.
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If the Independent Analyst determines that the Defective Product does not
conform to the warranty set out in Section 2.11:
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(i)
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INALCO will, at its expense, replace any such Defective Product
and reimburse CUMBERLAND for the costs of the Independent Analyst; and
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(ii)
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all quantities of Defective Product will, at INALCO’s election and
expense be either:
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a.
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returned to INALCO, and packed and shipped
according to
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12
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instructions provided by INALCO; or
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b.
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destroyed by CUMBERLAND under INALCO’s direction.
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E.
|
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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.
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F.
|
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Replacement of Defective Product is in addition to any other obligations,
indemnities or warranties given by INALCO under this Agreement.
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A.
|
|
INALCO represents and warrants that:
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(i)
|
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any Product supplied under this Agreement will, upon delivery
to CUMBERLAND, have a shelf life of at least two (2) years nine (9) months;
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(ii)
|
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any Product supplied under this Agreement will upon delivery:
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a.
|
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conform in all respects to the Product
Specifications and to any applicable Regulatory Approval in the
Territory;
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b.
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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
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c.
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will not be adulterated or misbranded in
contravention of applicable Law;
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(iii)
|
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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.
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(i)
|
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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.
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(ii)
|
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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.
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13
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(iii)
|
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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.
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(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.
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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.
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3. TERM AND TERMINATION
|
|
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.
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B.
|
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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.
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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
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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).
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|
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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
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|
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
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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.
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|
|
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 [***]:
|
|
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A.
|
|
[***] during first Year of the Term;
|
|
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|
|
B.
|
|
[***] during each of the second, third, and fourth Years of the Term; and
|
|
|
|
|
C.
|
|
[***] for each Year thereafter during the Term;
|
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|
|
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.
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|
|
4.3
|
|
Payment for Product.
Subject to Section 2.10, CUMBERLAND shall pay INALCO,
|
16
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|
|
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”).
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|
|
|
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[***]
|
|
|
|
|
|
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.
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|
|
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.
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|
|
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.
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|
|
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:
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|
|
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.
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|
|
|
|
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.
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|
|
|
|
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)
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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;
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(iii)
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is lawfully disclosed on a non-confidential basis from a
Third Person having the right to make such a disclosure; or
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(iv)
|
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is independently developed by the Recipient or its
Subsidiaries as can be demonstrated by documentary evidence.
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5.2
|
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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.
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5.3
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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.
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5.4
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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
|
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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.
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6.2
|
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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.
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19
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6.3
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Infringement by Third Persons.
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A.
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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.
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B.
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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:
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(i)
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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
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(ii)
|
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determine its conduct in relation to any proceedings alleging
infringement of a patent or other third party intellectual property rights in
the Territory.
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C.
|
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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.
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D.
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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.
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E.
|
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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.
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20
7. REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
|
7.1
|
|
Representations and Warranties of CUMBERLAND.
CUMBERLAND represents and warrants
that:
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A.
|
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it is a corporation duly organized and validly existing under the laws of
Tennessee;
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B.
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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;
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C.
|
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the Agreement constitutes a valid and binding obligation of CUMBERLAND,
enforceable in accordance with its terms; and
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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:
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(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;
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(ii)
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violate any provision of, or require any consent,
authorization, or approval under, any Law applicable to CUMBERLAND; or
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(iii)
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conflict with, result in a breach of, or constitute a default
under, any material agreement or obligation to which CUMBERLAND is a party.
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7.2
|
|
Representations and Warranties of INALCO.
INALCO ITALY and INALCO U.S. jointly and
severally represent and warrant that:
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|
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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;
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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
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|
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
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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:
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|
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(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;
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|
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(ii)
|
|
violate any provision of, or require any consent,
authorization, or approval under, any Law applicable to INALCO; or
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(iii)
|
|
conflict with, result in a breach of, or constitute a default
under, any material agreement or obligation to which INALCO is a party.
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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;
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|
|
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;
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|
|
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;
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|
H.
|
|
INALCO has licensed to CUMBERLAND all Intellectual Property Rights necessary
for CUMBERLAND to perform its obligations under this Agreement;
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|
|
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;
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|
|
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;
|
|
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|
|
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
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|
|
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.
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|
|
|
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, 28
th
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.
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|
|
|
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.
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|
|
|
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.
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CUMBERLAND PHARMACEUTICALS INC.
|
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INALCO BIOCHEMICALS, INC.
|
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|
|
By:
|
|
/s/ A.J. Kazimi
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|
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By:
|
|
/s/ Eric A. Lowe
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|
|
A.J. Kazimi
|
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|
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Eric A. Lowe
|
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|
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Title: Chief Executive Officer
|
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|
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Title: President
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INALCO S.p.A.
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By:
|
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/s/ Giovanni Cipolletti
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Giovanni Cipolletti
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Title: President
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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.
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
|
|
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|
|
Assignee:
|
|
Inalco S.p.A., Milan, Italy
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|
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|
|
Appl. No.:
|
|
229,559
|
|
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|
|
Filed:
|
|
April 18, 1994
|
Foreign Application Priority Data
|
|
|
|
|
|
|
Apr. 28, 1993 [IT] Italy
|
|
|
MI93A0833
|
|
|
Int. Cl
6
|
|
|
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,
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|
|
|
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
|
|
|
|
|
|
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|
|
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
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0284959
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1/1992
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European Pat. Off
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CO8F 8/42
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0284960
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6/1992
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European Pat. Off
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C08F 8/42
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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 k
ps
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)
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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;
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b)
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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;
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c)
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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;
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d)
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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
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Item
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LTL
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LTS
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EPI
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GLT
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ND
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H
2
O
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I
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51.4
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4.4
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1.2
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3.6
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6.4
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34.0
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II
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50.6
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4.9
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2.0
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3.8
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5.0
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33.7
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III
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51.9
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3.1
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2.2
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7.9
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3.1
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31.8
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IV
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51.0
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8.2
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1.3
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3.5
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4.0
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32.0
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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
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total
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LTL
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Cone. syr.
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LTL as initiator
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LTL
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LTL recovered
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Ex.
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Syr
a
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Brix
b
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h
c
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% w
d
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Xg
e
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%
f
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Kg
g
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Kg
h
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Kg
i
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% tit
l
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% fil
m
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yield
n
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1
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I
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74
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72
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55.2
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931
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18.7
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111.6
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610
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309
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84.2
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99.0
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42.2
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2
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I
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74
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96
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55.3
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929
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7.5
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46.1
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553
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254
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83.8
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98.9
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38.5
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|
3
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I
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74
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72
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55.3
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929
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10.0
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61.1
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565
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260
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84.6
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99.2
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38.9
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4
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II
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78
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120
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57.0
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888
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5.0
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30.3
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531
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212
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83.9
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99.0
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33.5
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5
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II
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74
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72
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55.0
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920
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7.5
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45.2
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544
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253
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84.1
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99.4
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38.9
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6
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II
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75
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88
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55.6
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933
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7.5
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46.5
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558
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310
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83.4
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99.0
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46.3
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7
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II
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71
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88
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54.4
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954
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7.5
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46.7
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558
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255
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84.0
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98.8
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38.4
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8
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IV
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74
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56
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55.2
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924
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15.0
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69.8
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587
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|
238
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83.5
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99.1
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33.9
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|
9
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IV
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74
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72
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55.5
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919
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7.5
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45.8
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548
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248
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84.6
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98.8
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38.3
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10
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IV
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70
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72
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53.8
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948
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7.5
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45.9
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548
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213
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84.6
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98.8
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32.9
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a
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Commercial aqueous syrup used
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b
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Brix degrees after syrup concentration
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c
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Residence time in crystallizer at 8° C
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d
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By weight %, amount of LTL after syrup concentration
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e
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Amount of concentrated syrup (kg)
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f
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By weight % amount of trihydrated LTL used as a crystallization initiator
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g
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Weight of trihydrated LTL used as a crystallization initiator
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h
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LTL total weight (LTL of the syrup + LTL used as a crystallization initiator)
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i
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Weight of trihydrated LTL recovered
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l
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titre of anhydrous LTL in trihydrated crystal before drying
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m
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titre of anhydrous LTL after drying
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n
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yield calculated by:
(anhydrous) crystalline LTL recovered (kg)
(anhydrous) total LTL In the system (kg)
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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)
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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;
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(b)
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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;
|
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(c)
|
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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;
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(d)
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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;
|
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(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;
|
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(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).
* * * * *
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United States Patent
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|
Patent Number:
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5,003,061
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|
Carobbi et al.
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|
Date of Patent:
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|
Mar. 26, 1991
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METHOD FOR PREPARING HIGH-PURITY CRYSTALLINE LACTULOSE
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|
|
Inventors:
|
|
Renato Carobbi, Pistoia; Franco
Innocenti, Bagno a Ripoli, both of
Italy
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Assignee:
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SIRAC Srl, Milan, Italy
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|
Appl. No.:
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141,786
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Filed:
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Jan. 11, 1988
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Foreign Application Priority Data
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|
Dec. 1, 1987 [IT] Italy
|
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22848 A/87
|
|
Int. Cl.
5
|
|
C07H 1/06; C13F 1/02
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|
U.S. Cl
|
|
536/127; 536/1.1;
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|
536/4.1; 127/30; 127/46.1; 127/58
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|
Field of Search
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|
536/1.1, 4.1, 127;
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127/30, 46.1, 58
|
References Cited
U.S. PATENT DOCUMENTS
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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:
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lactulose
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50%by weight
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galactose
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5-8%by weight
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lactose
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3-3%by weight
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other carbohydrates
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5-10%by weight
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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:
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lactulose
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50%
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lactose
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0.7%
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galactose
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0.9%
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other sugars
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0.3%
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water
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to make up to 100%
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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:
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lactulose
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50
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%
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lactose
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0.7
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%
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galactose
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0.9
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%
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other sugars
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0.3
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%
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water to make up to
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100
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%
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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:
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(a)
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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.;
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(b)
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crystallizing said lactulose solution at a temperature between 5° and
40° C. and in a time between 10 and 60 hours; and
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(c)
|
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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
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PATENT NO.
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5,003,061
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DATED
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March 26, 1991
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INVENTORS) :
|
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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—
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Signed and Sealed this
Fifth Day of January, 1993
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Attest:
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DOUGLAS B. COMER
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Attesting Officer
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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:
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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):
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If to Recipient:
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If to Service Provider:
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Cumberland Pharmaceuticals Inc.
|
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Inalco Biochemicals, Inc.
|
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2525 West End Ave., Suite 950
|
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3440 Empresa Drive, Suite A
|
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Nashville, Tennessee 37203
|
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San Luis Obispo, CA 93401
|
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|
|
Fax: 615-255-0094
|
|
Fax: 805-782-0719
|
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|
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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.
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INALCO BIOCHEMICALS, INC.
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By:
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/s/ illegible
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Title: President
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CUMBERLAND PHARMACEUTICALS INC.
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By:
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/s/ A.J. Kazimi
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Title: C.E.O.
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-7-
EXHIBIT A to Transition Agreement
Books and Records
Data Room Index
|
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|
|
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Label
#
|
|
Description
|
|
1.
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Historical units, gross sales, & expenses
|
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2.
|
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2005 Market research presentation
|
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3.
|
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Sample inventory at 2/14/06
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4.
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Prices & purchase mix
|
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5.
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Promotional items & literature inventory at 2/14/06
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6.
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Medical information / inquiries
|
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7.
|
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Mylan accounting policies excerpt from 2005 10-k filing
|
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8.
|
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Gross sales forecast through 2011
|
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9.
|
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Activity reports: July 2002 — June 2005 details by specialty
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10.
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Aligned & call file prescribers by territory
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11.
|
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Call file: QI FY06 & call file development flow chart
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12.
|
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Called on/detailed prescribers: June 2004 — May 2005
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13.
|
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Reach & frequency analysis: FY 2005 & Q1 FY 06
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14.
|
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Sample history: June 2004 — May 2005
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15.
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Targets by market
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16.
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Targets by product
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17.
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Learning System
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18.
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Training Manual
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19.
|
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Field Directions & Training Presentation
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20.
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Market research study: stocking & positioning
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21.
|
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Sales & marketing presentations, FY 06 marketing plan, promotional plan, & sample distribution procedures
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22.
|
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Concept Testing report & samples of certain promotional materials
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23.
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Product supply & manufacturing data
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24.
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Medical information
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25.
|
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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:
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1.
|
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A list of customers to receive a notice letter from Mylan substantially in the form attached hereto.
|
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2.
|
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All purchase orders pending on the Effective Date, as well as all orders for Product received thereafter.
|
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3.
|
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All existing URLs related to the Product and information needed to continue use of such URLs.
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4.
|
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All Product inquiries received by Mylan following the Effective Date.
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5.
|
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Analysis of sales by customer.
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6.
|
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All inventory of Product related promotional materials.
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STANDARD SPECIFICATION
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Product
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Lactulose Bulk API
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Chemical name
|
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4-O-ß-Galactopyranosyl-D-Fructofuranose.
|
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|
|
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|
Empirical Formula
|
|
C
12
H
22
O
11
|
|
|
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Molecular weight
|
|
342.30
|
|
|
|
|
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Characters
|
|
White or nearly white, odorless powder
|
|
|
|
|
|
Solubility
|
|
Freely soluble in water
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|
|
|
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|
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Test
|
|
Limits
|
|
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|
|
|
|
|
Assay
|
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> [***]% anhydrous basis
|
|
|
|
|
|
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Related
substances
(the sum of galactose and lactose)
|
|
< [***]% anhydrous basis
|
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|
|
|
|
|
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Water
|
|
< [***]%
|
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|
|
|
|
|
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Specific Optical Rotation
|
|
- [***]º to - [***]º
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|
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Total bacterial count
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< [***] cfu/g
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|
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|
|
E.Coli
|
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absent
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|
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Salmonella Species
|
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absent
|
These specifications are current as of March 31, 2006
STANDARD SPECIFICATION
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Product
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Lactulose for oral solution,
10-gram unit dose
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Chemical name
|
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4-O-ß-Galactopyranosyl-D-Fructofuranose.
|
|
|
|
|
|
|
|
Empirical Formula
|
|
C
12
H
22
O
11
|
|
|
|
|
|
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
|
|
|
|
|
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Water
|
|
< [***]%
|
|
|
|
|
|
|
|
Specific Optical Rotation
|
|
- [***]º to - [***]º
|
|
|
|
|
|
|
|
Total bacterial count
|
|
< [***] cfu/g
|
|
|
|
|
|
E.Coli
|
|
absent
|
|
|
|
|
|
Salmonella Species
|
|
absent
|
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|
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Fill weight
|
|
Average net content of 10 sachets
³
10.0g
|
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|
|
|
Minimum Fill
|
|
Net content of any single sachet
³
9.0g
|
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|
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|
Maximum Full
|
|
Net content of any single sachet
£
11.0g
|
These specifications are current as of March 31, 2006
STANDARD SPECIFICATION
|
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|
|
|
Product
|
|
Lactulose for oral solution,
20-gram unit dose
|
|
|
|
|
|
|
|
Chemical name
|
|
4-O-ß-Galactopyranosyl-D-Fructofuranose.
|
|
|
|
|
|
|
|
Empirical Formula
|
|
C
12
H
22
O
11
|
|
|
|
|
|
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
|
|
C
12
H
22
O
11
|
|
|
|
|
|
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
|
|
C
12
H
22
O
11
|
|
|
|
|
|
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
|
|
C
12
H
22
O
11
|
|
|
|
|
|
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.
EXHIBIT 10.10
*Certain portions of this exhibit have been omitted pursuant to a request for confidential
treatment which has been filed separately with the SEC.
License Agreement
between
Vanderbilt University
and
Cumberland Pharmaceuticals Inc.
May 1999
LICENSE AGREEMENT
between
VANDERBILT UNIVERSITY
and
CUMBERLAND PHARMACEUTICALS INC.
THIS AGREEMENT, by and between VANDERBILT UNIVERSITY, a not-for-profit corporation, organized and
existing under the laws of the state of Tennessee (“VANDERBILT”), and Cumberland Pharmaceuticals
Inc., a Tennessee corporation, having a principal place of business at Nashville, Tennessee (the
“LICENSEE”) is effective as of the
28
TH
day of
May
, 1999 (the
“EFFECTIVE DATE”).
RECITALS
WHEREAS, VANDERBILT represents that it holds title, by assignment, to the data, including patient
records, created by Gordon R. Bernard, M.D., Professor of Medicine (“the Data”) relating to
intravenously administered ibuprofen for treatment of sepsis and that it has all rights to the Data
and VANDERBILT is willing to grant a license to the Data and any intellectual property rights
associated therewith; and
WHEREAS, LICENSEE desires to acquire, and VANDERBILT desires to grant to LICENSEE, an exclusive,
worldwide license to use the Data in connection with the development and production of the
“Product,” as hereinafter defined, for which LICENSEE intends to seek necessary approvals from
regulatory governmental agencies in order to market and sell such products upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, it is
agreed by the parties as follows:
1. DEFINITIONS
1.1
Product(s)
shall mean a pharmaceutical product, consisting, in whole or part, of
intravenously administered ibuprofen manufactured by or for LICENSEE based on the Data and approved
by a regulatory agency for sale or other distribution in the country in which the agency has
regulatory authority.
1.2
Net Sales
. The term “Net Sales” shall mean the receipts for Products sold by LICENSEE
or a sublicense during the term of this Agreement, computed quarter by quarter, less allowances
for:
(a) cash, trade, or quantity discounts and rebates,
(b) taxes, including sales taxes and duties,
(c) credits, returns and replacements, and
(d) shipping and insurance charges.
Products shall be deemed sold when paid for.
1
1.3
The Inventor
. The term “Inventor” shall mean Gordon R. Bernard, M.D., Professor of
Medicine.
1.4
Affiliate
means, when used with reference to LICENSEE, any entity directly or
indirectly controlling, controlled by or under common control with LICENSEE. For purposes of this
Agreement, “control” means the direct or indirect ownership of over fifty percent (50%) of the
outstanding voting securities of an entity, or the right to receive over fifty percent (50%) of the
profits or earnings of an entity, or the right to control the policy decisions of an entity.
2. GRANT
2.0
Exclusive License
. VANDERBILT hereby grants to LICENSEE and LICENSEE hereby accepts
from VANDERBILT, upon the terms and conditions herein specified, an exclusive, royalty bearing,
worldwide license, with the right to sublicense, to use Data for any purpose, including manufacture
and sale of the Product(s) as well as submission to regulatory governmental agencies for approval
to sell Product(s), except as otherwise expressly set forth herein. Upon execution of this
Agreement, VANDERBILT through Gordon Bernard will promptly deliver to LICENSEE all information and
data relating to intravenously administered ibuprofen to which VANDERBILT holds title.
2.1
Federal Government Rights Reserved
. Notwithstanding the exclusive license granted
herein, the Federal Government shall receive all the rights, if any, to the Data required by law or
regulation to be reserved to the government. All rights granted in this Agreement are expressly
granted subject to the rights of the Federal Government and such rights are specifically reserved
to the Government by this Agreement.
2.2
Reservation of Right
. VANDERBILT reserves the right to make, use and further develop
the Data for its own non-commercial, educational and research purposes.
2.3 Upon receipt of regulatory approval to sell the Product, LICENSEE shall use reasonable efforts
to effect introduction of the Products into the commercial market as soon as practicable,
consistent with sound and reasonable business practices and judgment; thereafter, until the
expiration of this Agreement, LICENSEE shall use commercially reasonable efforts to keep Products
reasonably available to the public.
2.4
Subsidiaries and Distributors
. License rights granted hereunder shall enable LICENSEE
to make, use, sell or otherwise distribute Product through any of its subsidiaries and to sell
Product through any of its normal channels including its subsidiaries, distributors, and agents.
2
3. TERMS AND TERMINATION
3.0
Term
. Unless previously terminated as herein provided, this Agreement shall become
effective as stated above and shall continue until LICENSEE ceases distribution of Product in all
countries in which it has obtained regulatory approval for manufacture and distribution of such
product based on use of the Data.
3.1
Termination
. This Agreement may be terminated by written notice to the other party:
(a) Other than as stated in Article 3.1(b), in the event that one party commits any
substantial breach of this Agreement, the non-breaching party at its option, may terminate this
Agreement by giving the breaching party written notice pursuant to Article 10.2 of its election to
terminate as of a stated date, not less than forty-five (45) days from the date of the notice.
Such notice shall state the nature of the defaults 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 default stated in said notice and if such default is corrected, this
Agreement shall continue in full force and effect as if such notice had not been given. Failure by
LICENSEE to pay earned royalties to VANDERBILT in a timely manner shall be deemed a substantial
breach of the Agreement.
(b) In the event LICENSEE shall file a petition for voluntary bankruptcy, has a petition for
involuntary bankruptcy filed against it (which petition is not withdrawn within sixty (60) days of
such filing), is adjudicated to be bankrupt, or shall make an assignment for the benefit of
creditors, or shall apply for or consent to the appointment of a receiver or trustee of a
substantial part of its property, to the extent permitted by law, this Agreement shall
automatically terminate effective as of a date ten (10) days prior to LICENSEE’s change of status
hereunder and shall be subject to Article 3.2.
(c) In the event a LICENSEE provides written notice to VANDERBILT and LICENSEE is terminating
pursuing regulatory approval for the Product.
3.2
Effect of Termination
. Upon termination of this Agreement, LICENSEE shall cease all
production and sale of Product except for the production and sale of Product on which production
had begun prior to notice of such termination. LICENSEE may continue to sell such Product for up
to one year after such notice upon payment of royalties accruing thereon, and shall render an
accounting to VANDERBILT of any royalties which may be due. Immediately upon termination all
rights of Licensee, except as expressly stated in this article, shall revert to VANDERBILT.
3.3 Sections 3.2, 3.4, 5.1, Article 6, Article 7, Article 8, Article 9, and Section 10.8 of the
agreement shall survive termination.
3
4. CONSULTING AGREEMENTS
4.0
Consulting Agreements
. In the event LICENSEE desires to have a Consulting Agreement
with Dr. Bernard, any such Consulting Agreement will be separate and apart from this Agreement, and
in accord with VANDERBILT policy and procedures.
5.
ROYALTIES AND MILESTONES
5.0
Initial Payment
. Upon execution of this Agreement, LICENSEE agrees to grant VANDERBILT
25,000 shares of common stock in Cumberland Pharmaceuticals, Inc. (the “Stock”) upon the same terms
and conditions contained in Section 2.2 of the subscription agreement attached to the LICENSEE’s
Confidential Private Placement Memorandum dated January 29, 1999. A certificate for such Stock will
be delivered to VANDERBILT within ten (10) days of the effective date of this Agreement as set
forth above.
5.1
Royalties
. Commencing on the effective date of this Agreement, LICENSEE agrees to pay
VANDERBILT at the rate of [***] percent of Net Sales of Products sold to third parties.
5.2
Schedule of Payment
. LICENSEE further agrees to pay royalties on a quarterly basis
based on LICENSEE’s fiscal quarter and payments shall be due within forty-five (45) days after the
completion of the fiscal quarter. Each such payment shall be accompanied by a statement for the
period covered by such royalties showing total number or volume of Products sold, and total
royalties due, and identified as Net Sales within U.S. or non-U.S. This statement is to be
certified as accurate by a responsible officer of LICENSEE.
5.3
Milestone Payments
. LICENSEE agrees to use its commercially reasonable best efforts and
diligence to proceed with the development, manufacture, use and sale of Products. Within thirty
(30) days following notification of marketing approval granted by the U.S. Food and Drug
Administration for distribution of the Product (“FDA Notification”), LICENSEE agrees to grant
VANDERBILT Stock with a value of $150,000, as measured by the offering price per share of Stock
offered by the Company to outside investors (i) at the time that such grant is due, or in the event
that no such offering is ongoing at the time such grant is required, (ii) at such earlier date when
LICENSEE last sold Stock to such investors prior to FDA Notification. A certificate for such Stock
will be delivered to VANDERBILT within thirty (30) days following FDA Notification.
5.4
Reports
. LICENSEE shall provide written annual reports within [***] after December 31
of each calendar year which shall include but not be limited to: reports of progress on research
and development, regulatory approvals, manufacturing, marketing and sales during the preceding
twelve (12) months as well as plans for the coming year. LICENSEE shall promptly notify VANDERBILT
if any changes in the marketplace or in LICENSEE’s financial condition or business aims suggest
commercialization will not occur within three (3) years from the date hereof.
5.5
Records
. LICENSEE shall maintain complete and accurate records sufficient to enable
accurate calculation of royalties due VANDERBILT under this Agreement. LICENSEE shall, at
VANDERBILT’s request and expense, provide certified statements from LICENSEE’s auditors, concerning
royalties due pursuant to this Agreement. Once a calendar year, VANDERBILT shall have the right to
select a certified public accountant to inspect, on reasonable notice and during regular business
hours, the records of LICENSEE to verify LICENSEE’s statements and royalty payments pursuant to
this Agreement. The entire cost for such inspection shall be borne by VANDERBILT, unless there is
a discrepancy greater than 5% in VANDERBILT’s favor, in which case LICENSEE shall bear the entire
cost of the inspection. Records shall be preserved by LICENSEE for three (3) years for inspection
by VANDERBILT.
5.6 If this Agreement is not terminated in accordance with other provisions hereof, LICENSEE’s
obligation to pay royalties hereunder shall continue as long as Product is being distributed by
LICENSEE.
4
5.7 The royalty on sales in currencies other than U.S. Dollars shall be calculated using the
appropriate exchange rate for such transactions quoted by CITICORP BANK (NEW YORK) foreign exchange
desk on the last banking day of each calendar quarter. Royalty payments to VANDERBILT shall be in
U.S. Dollars.
5.8 In the event that LICENSEE is acquired by a third party or enters into a joint venture with a
third party, or in any other way transfers all of its assets, including this License to a third
party, all obligations of this License, including the foregoing royalty terms, shall be binding
upon the party acquiring this License.
6. CONFIDENTIALITY
6.0 It may be necessary for one party to disclose to the other party certain confidential or
proprietary information, including business plans and marketing strategies. In such event, the
receiving party agrees to preserve such identified information as confidential. The obligation of
confidentiality shall not apply to information which:
(a) is now in the public domain or which becomes generally available to the public through no
fault of the receiving party; or
(b) is already known to, or in the possession of, the receiving party prior to disclosure by
the disclosing party as can be demonstrated by documentary evidence; or
(c) is disclosed on a non-confidential basis from a third party having the right to make such
a disclosure; or
(d) is independently developed by the receiving party as can be demonstrated by documentary
evidence.
6.1
Term
. The confidentiality obligations of this Article shall continue for a period of
five (5) years beyond the termination of this Agreement.
5
7. INFRINGEMENT
7.0
Products Infringing Third Parties
. Each party shall promptly notify the other if any
legal proceedings are commenced or threatened against either party or any purchaser of a Product
sold by LICENSEE on the ground that the manufacture, use, sale or possession of the Product is an
infringement of a third party’s patent or other intellectual property rights. LICENSEE shall, at
its own expense, conduct all suits brought against it as a result of the exercise of the rights
granted hereunder, and VANDERBILT shall, at the request and expense of LICENSEE, give LICENSEE all
reasonable assistance in any such proceedings. Payment of any amounts which may be recovered by
such third party by way of judgment, award, decree, or settlement that resulted from infringement
of third party patent rights or other rights by a Product, including attorneys’ fees and other
costs shall be the sole responsibility of LICENSEE. LICENSEE agrees not to settle or compromise any
action, suit or proceeding without the consent of VANDERBILT.
8. WARRANTIES AND INDEMNITIES
8.0 Nothing in this Agreement shall be constructed as:
(a) a warranty or representation by VANDERBILT that anything made, used, sold, or otherwise
disposed of through the license granted herein is or will be free from infringement of patents
rights of third parties;
(b) an obligation by VANDERBILT to bring or prosecute actions or suits against third parties
for infringement;
(c) Granting by implication, estoppel, or otherwise any licenses under patents of VANDERBILT.
8.1 To the best of its knowledge and belief, VANDERBILT hereby represents and warrants that it is
the sole owner of the Data and has the right to grant the license to the Data provided herein and
that to the best of its knowledge and belief after due inquiry, no rights of patients or other
persons are or will be infringed by the license granted to LICENSEE. VANDERBILT further represents
and warrants that the Data is both accurate and complete and includes all information and data
relating to intravenously administered ibuprofen to which VANDERBILT holds title. VANDERBILT also
represents and warrants that it has full right, title, and authority to enter into this Agreement
and that VANDERBILT is not under any obligation resulting from any contract or arrangement, to any
person, firm, or corporation, which is inconsistent or in conflict with this Agreement.
8.2 (a) LICENSEE shall indemnify, defend and hold harmless VANDERBILT and its trustees, officers,
faculty, staff, employees, students, agents and representatives, and their respective successors,
heirs and assigns (the “Indemnities”), against any liability, damage, loss or expenses (including
reasonable attorneys’ fees and expense of litigation) incurred by or imposed upon the Indemnities
or any one of them in connection with any claims, suits, actions, demands, or judgments arising out
of any theory of law (including, but not limited
6
to, actions in the form of tort, warranty, or strict liability) arising from LICENSEE’s use of the
Data pursuant to any right or license granted under this Agreement. Such indemnity obligation
shall include claims and expenses related to infringement of a third party’s rights by the Product.
(b) LICENSEE agrees, at its own expense, to provide attorneys reasonably acceptable to
VANDERBILT to defend against any actions brought or filed against any party indemnified hereunder
with respect to the subject of indemnity contained herein, whether or not such actions are
rightfully brought.
(c) VANDERBILT shall indemnify, defend and hold harmless LICENSEE and its officers, directors,
employees, agents, and shareholders, notwithstanding termination of this Agreement, against any
liability, damage, loss, or expenses (including reasonable attorney’s fees) incurred by or imposed
in connection with any claims, suits, actions, demands or judgments arising out of any theory of
law (including, but not limited to, actions in the form of tort, warranty, or strict liability)
arising from default under any provision of this Agreement by VANDERBILT.
8.3 VANDERBILT MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND EXPRESS OR IMPLIED,
OTHER THAN AS EXPRESSLY STATED HEREIN. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR THAT USE OF A PRODUCT WILL NOT INFRINGE ANY
PATENT, COPYRIGHT, TRADEMARK, OR OTHER INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.
8.4 Regarding the indemnity and hold harmless provisions, under Paragraph 8.2, VANDERBILT shall
give prompt written notice to LICENSEE of the commencement of any action, suit, or proceeding for
which indemnification may be sought, and LICENSEE, through counsel reasonably satisfactory to
VANDERBILT shall assume the defense thereof; provided, however, that VANDERBILT shall be entitled
to participate in any such action, suit, or proceeding with counsel of its own choice, but at its
own expense. If LICENSEE fails to assume the defense within ninety (90) days of receipt of written
notice of the action, suit, or proceeding, VANDERBILT may assume such defense and the reasonable
fees and expenses of its attorneys will be covered by the indemnity provided for in Paragraph 8.2.
No such action, suit, or proceeding shall be compromised or settled in any manner which might
adversely affect the interests of VANDERBILT without the prior written consent of VANDERBILT.
Notwithstanding anything in this Paragraph to the contrary, LICENSEE shall not, without the written
consent of VANDERBILT, which consent shall not be unreasonably withheld:
(a) Settle or compromise any action, suit, or proceeding or consent to the entry of any
judgment which does not include as an unconditional term thereof the delivery by the claimant or
plaintiff to VANDERBILT of a written release from all liability in respect of such action, suit, or
proceeding; or
(b) Settle or compromise any action, suit, or proceeding in any manner which may adversely
affect VANDERBILT.
7
8.5
Insurance
. (a) Beginning at the time as any Product is being commercially distributed
or sold by LICENSEE or agent of LICENSEE, LICENSEE or such other, shall make commercially
reasonable efforts to procure and maintain comprehensive general product liability and tort
liability insurance in amounts not less than $5,000,000 per incident and $5,000,000 annual
aggregate and name the Indemnities as additional insureds. Such comprehensive general liability
insurance shall provide (i) product liability coverage and (ii) broad form contractual liability
coverage for LICENSEE’s indemnification under this Agreement. If LICENSEE elects to self-insure or
otherwise finds it necessary to self-insure all or part of the limits described above, such
self-insurance program must be reasonably acceptable to VANDERBILT. LICENSEE agrees that no amount
greater than the sum of $250,000 shall be deductible under LICENSEE’s primary coverage for
VANDERBILT and LICENSEE against any claims or suits arising from alleged defects in Products. The
minimum amounts of insurance coverage required shall not be construed to create or limit LICENSEE’s
liability with respect to its indemnification under this Agreement.
(b) LICENSEE represents and warrants that it will make commercially reasonable efforts to
acquire its product liability and general tort liability is of the occurrence-based rather than
claims-made type. Within thirty (30) day after the date of the first commercial sale of a Product
hereunder, LICENSEE shall provide VANDERBILT with a certificate or certificates of insurance
evidencing that VANDERBILT has been named as an additional insured party and evidencing the
insurer(s) is required to notify VANDERBILT in writing at least thirty (30) days in advance of any
termination of the policy or certificate, or any modification that would cause LICENSEE no longer
to be in compliance with the provisions of this Article, or would cause the representation and
warranties set forth above in this Article no longer to be true, such written notification to
specify the reason for such termination, the nature of the proposed modification, as the case may
be. It is expressly agreed by the parties that the provisions of this Article regarding insurance
shall in no way limit LICENSEE’s indemnity obligations, except to the extent that LICENSEE’s
insurer(s) actually pays VANDERBILT amounts for which VANDERBILT is entitled to be indemnified
under this Agreement, nor shall VANDERBILT have any obligation to pursue any insurer as a
precondition to its rights to be indemnified by LICENSEE. As used in this Article, the term
“VANDERBILT” shall include VANDERBILT, and its officers, directors, agents and employees. If
LICENSEE does not make commercially reasonable efforts to obtain replacement insurance within such
thirty (30) day period specified above, VANDERBILT shall have the right to terminate this Agreement
effective at the end of such thirty (30) day period without notice or any additional waiting
periods.
(c) LICENSEE shall maintain such comprehensive general product liability and tort liability
insurance or self-insurance beyond the expiration or termination of this Agreement during (i) the
period that any product relating to, or developed pursuant to, this Agreement is being commercially
distributed or sold by LICENSEE or agent of LICENSEE and (ii) a period not less than the statute of
limitations for product liability claims in the state in which the product is being used.
8
9. USE OF VANDERBILT’S NAME
9.0 LICENSEE agrees not to identify VANDERBILT or to use the name of VANDERBILT, its faculty,
employees, or students, or any trademark, service mark, trade name, or symbol of VANDERBILT, or
that is associated with any of them, in promotional advertising or other similar materials without
VANDERBILT’s written consent, except as required by governmental authority. LICENSEE may, without
prior consent, refer to VANDERBILT as LICENSOR of the Data submitted in support of marketing
approval for Product in a business plan, fund raising material or the like. All other uses of
VANDERBILT’s name shall be made only after prior approval.
9.1 VANDERBILT agrees not to identify LICENSEE or to use the name of LICENSEE’s officers,
employees, or any trademark, service mark, trade name or symbol of LICENSEE without the written
consent of LICENSEE, except as may be required by governmental authority or as necessary in the
normal course of VANDERBILT’S business operations.
10. TERMS AND CONDITIONS
10.
Manner of Payment
. All payments hereunder shall be made by check to VANDERBILT. Where
required to do so by applicable law or treaty, LICENSEE shall withhold taxes required to be paid
to a taxing authority on account of such income to VANDERBILT, and LICENSEE shall furnish
VANDERBILT with satisfactory evidence of such withholding and payment in order to permit
VANDERBILT to obtain a tax credit or other relief as may be available under the applicable law or
treaty.
10.1
Provisions Contrary to Law
. In performing this Agreement, the parties shall comply
with all applicable laws and regulations. In particular, it is understood and acknowledged that
the transfer of certain commodities and technical data is subject to United States laws and
regulations controlling the export of such commodities and technical data, including all Export
Administration Regulations of the United States Department of Commerce. These laws and regulations
among other things, prohibit or require a license for the export of certain types of technical
data to certain specified countries. LICENSEE hereby agrees and gives written assurance that it
will comply with all United States laws and regulations controlling the export of commodities and
technical data, that it will be solely responsible for any violation of such by LICENSEE or its
Affiliates, and that it will defend and hold VANDERBILT harmless in the event of any legal action
of any nature occasioned by such violation.
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.
10.2
Notices
. Any notice may be initially given by facsimile with confirmation required or
permitted to be given by this License by postpaid, first class, registered or certified mail
addressed as set forth below unless changed by notice so given:
9
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For LICENSEE:
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For VANDERBILT:
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Cumberland Pharmaceuticals Inc.
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Office of Technology Transfer
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209 10
th
Ave. South, Suite 332
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VANDERBILT University
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Nashville, Tennessee 37203
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1207 17
th
Avenue, S., Suite 210
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Fax: 615-259-9085
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Nashville, TN 37212
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Fax: 615-343-4419
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With a copy to:
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Stokes & Bartholomew, P.A.
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424 Church Street, 28
th
Floor
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Nashville, Tennessee 37214
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Attn: Martin S. Brown, Esq.
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Fax: 615-259-1470
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Such notice shall be effective upon receipt by the party to whom notice is sent.
10.3
Dispute Resolution
. The parties acknowledge and agree that they have entered into this
agreement with the expectation of a long-term, mutually beneficial relationship. However, should
disagreement arise regarding obligations imposed on the parties be this Agreement, it is agreed
that the parties will, in good faith, promptly attempt to reach an amicable resolution of such
disagreement.
10.4
Force Majeure
. Neither party to this License 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 was, civil unrest, or intervention of any
governmental authority, but any such delay or failure shall be remedied by such party as soon as is
reasonably possible. Failure to make timely royalty payments shall not be excused by Force
Majeure.
10.5
Assignments
. Except in connection with the sale of all or substantially all of the
assets of either party, this Agreement may not be assigned by either party without the prior
written consent of the other party, which consent shall not be unreasonably withheld. The parties
hereto agree that each is acting as an independent contractor and not as an agent of the other or
as joint ventures.
10.6
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.
10.7
Successors in Interest
. This Agreement shall inure to the benefit of and be binding on
the parties’ permitted assigns, successors in interest, and subsidiaries.
10
10.8
Choice of Law and Jurisdiction
. This Agreement is subject to and shall be construed
and enforced in accordance with the laws of the U.S.A., and Tennessee. Any action on any dispute
arising out of this Agreement shall be tried in Davidson County, and the parties consent to the
jurisdiction of the state and federal courts there.
10.9
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.
11
IN WITNESS WHEREOF, the parties have duly executed this Agreement on the date(s) written below.
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LICENSEE
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VANDERBILT UNIVERSITY
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By:
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/s/ A.J. Kazimi
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By:
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/s/ Larry R. Steranka
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A.J. Kazimi
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Larry R. Steranka, Ph.D.
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Title:
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President
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Title:
|
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Director, Office of Technology Transfer
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Date:
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May 28, 1999
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Date:
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June 4, 1999
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ACKNOWLEDGED AND AGREED
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By:
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/s/ Gordon R. Bernard, M.D.
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A.J. Kazimi
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Title:
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Professor of Medicine
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Date:
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6/2/99
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12
EXHIBIT 10.16.1
*Certain portions of this exhibit have been omitted pursuant to a request for confidential
treatment which has been filed separately with the SEC.
SECOND AMENDED AND RESTATED
LOAN AGREEMENT
April 6, 2006
by and between
CUMBERLAND PHARMACEUTICALS, INC.,
as the Borrower
and
BANK OF AMERICA, N.A.,
as the Bank
$ 9,500,000
TABLE OF CONTENTS
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1.
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FACILITY NO. 1: LINE OF CREDIT AMOUNT AND TERMS
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1
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1.1
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Line of Credit Amount
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1
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1.2
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Availability Period
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1
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1.3
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Borrowing Base
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1
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1.4
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Interest Rate
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3
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1.5
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Repayment Terms
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4
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2.
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FACILITY NO. 2: FIXED RATE TERM LOAN AMOUNT AND TERMS
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4
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2.1
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Loan Amount
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4
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2.2
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Availability Period
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4
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2.3
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Interest Rate
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4
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2.4
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Repayment Terms
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4
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2.5
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Prepayments
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5
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3.
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FEES AND EXPENSES
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5
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3.1
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Fees
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5
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3.2
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Expenses
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5
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3.3
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Reimbursement Costs
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5
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4.
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COLLATERAL
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5
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4.1
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Personal Property
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5
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5.
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DISBURSEMENTS, PAYMENTS AND COSTS
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6
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5.1
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Disbursements and Payments
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6
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5.2
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Telephone and Telefax Authorization
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6
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5.3
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Direct Debit (Pre-Billing)
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6
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5.4
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Banking Days
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7
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5.5
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Interest Calculation
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7
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5.6
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Default Rate
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7
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6.
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CONDITIONS
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7
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6.1
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Authorizations and Incumbency
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8
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6.2
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Governing Documents
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8
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6.3
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CET Intercompany Debt
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8
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6.4
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Security Agreements
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8
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6.5
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Perfection and Evidence of Priority
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8
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6.6
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Payment of Fees
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8
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6.7
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Good Standing
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8
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6.8
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Legal Opinion
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8
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6.9
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Warrant
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8
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6.10
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Financial Statements
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9
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6.11
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Insurance
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9
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6.12
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Product Agreements
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9
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6.13
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Consents, Licenses, Permits, Assignments
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9
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6.14
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Availability
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9
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6.15
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Representations, Warranties and No Default
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9
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6.16
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Other Required Documentation
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9
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7.
|
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REPRESENTATIONS AND WARRANTIES
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10
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7.1
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Formation
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10
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7.2
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Authorization
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10
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7.3
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Enforceable Agreement
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10
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7.4
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Good Standing
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10
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i
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7.5
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No Conflicts
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10
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7.6
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Financial Information
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10
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7.7
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Lawsuits
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10
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7.8
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Collateral
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10
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7.9
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Permits, Franchises
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11
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7.10
|
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Other Obligations
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11
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7.11
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Tax Matters
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11
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7.12
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No Event of Default
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11
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7.13
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Insurance
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11
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7.14
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Location of Borrower
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11
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7.15
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Capitalization
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11
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7.16
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Material Adverse Change
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11
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8.
|
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COVENANTS
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11
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8.1
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Use of Proceeds
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12
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8.2
|
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Financial Information and Appraisal
|
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12
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8.3
|
|
Funded Debt to EBITDA Ratio
|
|
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13
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8.4
|
|
Minimum Fixed Charge Coverage Ratio
|
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13
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8.5
|
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Minimum Net Worth
|
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14
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8.6
|
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Minimum EBITDA
|
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14
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8.7
|
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Capital Expenditures
|
|
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14
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8.8
|
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Lease Expenditures
|
|
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14
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|
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8.9
|
|
Dividends and Distributions
|
|
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14
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8.10
|
|
Bank as Principal Depository
|
|
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14
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8.11
|
|
Other Debts
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|
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14
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8.12
|
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Other Liens
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|
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15
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8.13
|
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Maintenance of Assets
|
|
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15
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8.14
|
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Investments
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15
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8.15
|
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Loans
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15
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8.16
|
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Change of Management
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16
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8.17
|
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Change of Ownership or Control
|
|
|
16
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|
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8.18
|
|
Additional Negative Covenants
|
|
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16
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8.19
|
|
Notices to Bank
|
|
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16
|
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|
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8.20
|
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Insurance
|
|
|
17
|
|
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|
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8.21
|
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Compliance with Laws
|
|
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17
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8.22
|
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ERISA Plans
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17
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8.23
|
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Books and Records
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|
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17
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8.24
|
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Audits
|
|
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18
|
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8.25
|
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Perfection of Liens
|
|
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18
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|
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8.26
|
|
Cooperation
|
|
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18
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8.27
|
|
Collateral Account Notification and Acknowledgement
|
|
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18
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9.
|
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HAZARDOUS SUBSTANCES
|
|
|
18
|
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|
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9.1
|
|
Indemnity Regarding Hazardous Substances
|
|
|
18
|
|
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|
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9.2
|
|
Compliance Regarding Hazardous Substances
|
|
|
18
|
|
|
|
|
9.3
|
|
Notices Regarding Hazardous Substances
|
|
|
18
|
|
|
|
|
9.4
|
|
Site Visits, Observations and Testing
|
|
|
18
|
|
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|
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9.5
|
|
Definition of Hazardous Substances
|
|
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19
|
|
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|
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9.6
|
|
Continuing Obligation
|
|
|
19
|
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|
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|
|
10.
|
|
DEFAULT AND REMEDIES
|
|
|
19
|
|
|
|
|
10.1
|
|
Failure to Pay
|
|
|
19
|
|
|
|
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10.2
|
|
Other Bank Agreements
|
|
|
19
|
|
|
|
|
10.3
|
|
Cross-Default
|
|
|
20
|
|
|
|
|
10.4
|
|
False Information
|
|
|
20
|
|
|
|
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10.5
|
|
Bankruptcy
|
|
|
20
|
|
ii
|
|
|
|
|
|
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|
|
|
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|
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10.6
|
|
Receivers
|
|
|
20
|
|
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10.7
|
|
Lien Priority
|
|
|
20
|
|
|
|
|
10.8
|
|
Lawsuits
|
|
|
20
|
|
|
|
|
10.9
|
|
Judgments
|
|
|
20
|
|
|
|
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10.10
|
|
Death
|
|
|
20
|
|
|
|
|
10.11
|
|
Material Adverse Change
|
|
|
20
|
|
|
|
|
10.12
|
|
Government Action
|
|
|
21
|
|
|
|
|
10.13
|
|
Default Under Related Documents
|
|
|
21
|
|
|
|
|
10.14
|
|
Other Breach Under Agreement
|
|
|
21
|
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|
|
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|
|
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|
|
|
|
11.
|
|
ENFORCING THIS AGREEMENT; MISCELLANEOUS
|
|
|
21
|
|
|
|
|
11.1
|
|
GAAP
|
|
|
21
|
|
|
|
|
11.2
|
|
Foreign Eligible Accounts Receivable
|
|
|
21
|
|
|
|
|
11.3
|
|
Tennessee Law
|
|
|
21
|
|
|
|
|
11.4
|
|
Successors and Assigns
|
|
|
21
|
|
|
|
|
11.5
|
|
Interest and Loan Charges Not to Exceed Maximum Amounts Allowed by Law
|
|
|
21
|
|
|
|
|
11.6
|
|
Arbitration and Waiver of Jury Trial
|
|
|
22
|
|
|
|
|
11.7
|
|
Severability; Waivers
|
|
|
23
|
|
|
|
|
11.8
|
|
Costs and Attorneys' Fees
|
|
|
23
|
|
|
|
|
11.9
|
|
Individual Liability
|
|
|
23
|
|
|
|
|
11.10
|
|
One Agreement
|
|
|
23
|
|
|
|
|
11.11
|
|
Indemnification
|
|
|
24
|
|
|
|
|
11.12
|
|
Notices
|
|
|
24
|
|
|
|
|
11.13
|
|
Headings
|
|
|
24
|
|
|
|
|
11.14
|
|
Counterparts
|
|
|
24
|
|
|
|
|
11.15
|
|
Prior Agreement Superseded
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24
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iii
SECOND AMENDED AND RESTATED LOAN AGREEMENT
THIS SECOND AMENDED AND RESTATED LOAN AGREEMENT
(the “
Agreement
”) dated as of April 6,
2006, is between BANK OF AMERICA, N.A., a national banking association (the “
Bank
”) and
CUMBERLAND PHARMACEUTICALS, INC., a Tennessee corporation (the “
Borrower
”).
WHEREAS
, the Borrower and the Bank are parties to a certain Amended and Restated Loan
Agreement dated as of October 21, 2003 (the “
Existing Loan Agreement
”) and certain loan
documents listed on
Schedule 1
hereto (the “
Existing Loan Documents
”);
WHEREAS
, at the Borrower’s request and in reliance upon the representations and inducements of
the Borrower set forth herein, the Bank has agreed to modify the terms and conditions of the
Existing Loan Agreement and to amend and restate the Existing Loan Agreement in its entirety as
more particularly hereinafter set forth; and
WHEREAS
, the Borrower and the Bank have agreed to amend or to amend and restate the Existing
Loan Documents pursuant to the Loan Documents (as hereinafter defined);
NOW, THEREFORE
, in consideration of the Facility No. 1 Commitment and the Facility No. 2
Commitment described below, the mutual covenants and agreements contained herein, and intending to
be legally bound hereby, the Bank and the Borrower agree as follows:
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1.
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FACILITY NO. 1: LINE OF CREDIT AMOUNT AND TERMS
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1.1
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Line of Credit Amount
.
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(a)
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Subject to
Section 1.2
below, the Bank will provide a line of credit to the Borrower.
The amount of the line of credit (the “
Facility No. 1 Commitment
”) is Four Million
Dollars ($4,000,000).
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(b)
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This is a revolving line of credit. During the availability period, the Borrower may repay
principal amounts and reborrow them, provided, however, on the date of this Agreement,
Borrower shall borrow no more than $2,000,000 in the aggregate pursuant to the Facility No. 1
Commitment.
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(c)
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The Borrower agrees not to permit the principal balance outstanding to exceed the amount of
the Facility No. 1 Commitment. If the Borrower exceeds this limit, the Borrower will
immediately pay the excess to the Bank upon the Bank’s demand.
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1.2
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Availability Period
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The maximum availability under the Facility No. 1 Commitment shall be $1,500,000 from and after the
date of this Agreement until the earlier of (a) receipt by the Bank of a full appraisal by an
independent party, in form and substance acceptable to the Bank in its sole discretion,
establishing a valuation of the Acetadote product of at least $9,000,000 or (b) receipt by the Bank
of evidence satisfactory to the Bank that the Borrower is in compliance with the Funded Debt to
EBITDA ratio requirement calculated as of September 30, 2006 pursuant to
Section 8.3
.
Thereafter, the maximum availability under the Facility No. 1 Commitment shall be $4,000,000 until
the second (2nd) anniversary of the date of this Agreement, or such earlier date as the
availability may terminate as provided in this Agreement (the “
Facility No. 1 Expiration
Date
”).
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1.3
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Borrowing Base
.
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(a)
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The aggregate principal amount of all amounts from time to time advanced hereunder in respect
of the Facility No. 1 Commitment shall not exceed the Maximum Amount. “
Maximum Amount
”
shall mean the lesser of the amount of the Facility No. 1 Commitment or the Borrowing Base.
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The “
Borrowing Base
” at any time shall be equal to 80% of Eligible Accounts
Receivable plus 50% of the value of Eligible Inventory.
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(b)
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As used herein, the following terms shall have the following meanings
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(i)
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“
Eligible Accounts Receivable
” shall mean all Accounts Receivable of
the Borrower that have been created in the ordinary course of the Borrower’s business
and upon which the Borrower’s right to receive payment is absolute and not contingent
upon the fulfillment of any condition whatsoever. The term “
Eligible Accounts
Receivable
” shall not include:
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(A)
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any account that is unpaid more than 90 days from the invoice
date thereof;
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(B)
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any account from any Customer who has had an account past due
more than 90 days from the invoice date thereof on two or more occasions
(except with respect to any account for which the Borrower has provided
extended payment terms);
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(C)
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any account for which there exists a right of setoff or,
defense;
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(D)
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any account with respect to which the Customer is either (i)
the United States of America or any department, agency or instrumentality
thereof (excluding accounts with respect to which the Borrower has complied, to
the satisfaction of the Bank, with the Assignment of Claims Act, 31 U.S.C. §
3727), or (ii) any state within the United States of America (excluding
accounts owed by a state that does not have a counterpart to the Assignment of
Claims Act);
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(E)
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any account that arises out of a contract or order that, by its
terms, forbids or makes void or unenforceable any assignment by the Borrower to
the Bank of the account receivable arising with respect thereto;
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(F)
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any account arising from a “sale on approval,” “sale or
return,” “consignment,” or subject to any other repurchase or return agreement;
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(G)
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any account that represents an obligation of a Customer that is
not a resident of the United States or Canada, unless such account is supported
by a letter of credit or other security in form and substance acceptable to the
Bank;
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(H)
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any account that arises from the sale or lease to or
performance of services for, or represents an obligation of, an employee,
affiliate, partner, parent or subsidiary of the Borrower (excluding accounts
with the State of Tennessee, Vanderbilt University, Cardinal, Ranbaxy, Mylan,
Johnson & Johnson, Bioniche, Mayne/Faulding, Amerisource Bergen and McKesson);
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(I)
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any accounts arising from sales of goods or services in which
the performance of the Borrower has been bonded;
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(J)
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any account on which the Bank is not or does not continue to
be, in the Bank’s sole discretion, satisfied with the credit standing of the
customer of the Borrower in relation to the amount of credit extended;
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(K)
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any returns, allowances, rebates, credits and contra items; or
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(L)
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any account of a Customer if 25% or more of the accounts of
such Customer are not eligible pursuant to the criteria set forth in
subsections (A)-(K) above;
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2
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(ii)
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“
Eligible Inventory
” shall mean all of the Borrower’s inventory of
CeraLyte, Acetadote and Kristalose
®
other than (A) work in process and supplies; (B)
all inventory in which the Bank does not have a first priority perfected security
interest; (C) inventory on consignment; (D) repossessed inventory; (E) obsolete
inventory; (F) inventory that is not in good condition or that fails to meet government
standards; and (G) inventory that the Bank in its sole discretion determines to be
ineligible. Inventory will be valued based on book value. As used herein, the term
“book value” shall mean the costs incurred by the Borrower in purchasing and/or
manufacturing its inventory of CeraLyte, Acetadote and Kristalose
®
.
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(iii)
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“
Customers
” shall mean the account debtors obligated on the Borrower’s
Accounts Receivable.
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(iv)
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“
Accounts Receivable
” shall mean all of the Borrower’s accounts,
instruments, contract rights, chattel paper, documents and general intangibles arising
from the sale of goods and/or the rendition of services by the Borrower in the ordinary
course of business, and the proceeds thereof and all security and guaranties therefor,
whether now existing or hereafter created, and all returned, reclaimed or repossessed
goods, and all books and records pertaining to the foregoing. For purposes of
calculating the Borrowing Base hereunder, the actual amounts due from Customers shall
be used regardless of whether the Borrower has granted any Customer a discounted price
with respect to any Account Receivable.
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(c)
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The amounts of advances under the Facility No. 1 Commitment shall be determined in the sole
discretion of the Bank consistent with the value of the Eligible Accounts Receivable and the
Eligible Inventory, taking into account all fluctuations of the value thereof in light of the
Bank’s experience and sound business principles. The Bank shall be under no obligation to make
any advance to the Borrower under the Facility No. 1 Commitment in excess of the limitations
stated above.
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(d)
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The Bank and the Borrower shall establish and maintain one or more special lock box or
blocked accounts for the collection of the Accounts Receivable. Each such special account
shall be with the Bank and shall be subject to the Bank’s standard form agreement. Any checks
or other remittances against Accounts Receivables that are received by the Borrower shall be
held in trust for the Bank and turned over by the Borrower to the Bank or to a person
designated by the Bank in the identical form received (except for any necessary endorsement)
as speedily as possible.
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1.4
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Interest Rate
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(a)
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The interest rate is a rate per year equal to the BBA LIBOR
Daily Floating Rate plus 2.50 percentage point(s); provided, however, that in no event shall the
interest payable in respect of amounts advanced pursuant to the Facility No. 1 Commitment
exceed the maximum amounts collectible under applicable law from time to time.
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(b)
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The BBA LIBOR Daily Floating Rate is a fluctuating rate of
interest equal to the rate per annum equal to the rate per annum
equal to the British Bankers Association LIBOR Rate (“
BBA
LIBOR
”),
as published by Reuters (or other commercially available source
providing quotations of BBA LIBOR as selected by the Bank from time to time) as determined for each banking day at approximately
11:00 a.m. London time two (2) London Banking Days prior to the date in question, for U.S.
Dollar deposits (for delivery on the first day of such interest period) with a one month term,
as adjusted from time to time in the Bank’s sole discretion for reserve requirements, deposit
insurance assessment rates and other regulatory costs. If such rate is not available at such
time for any reason, then the rate for that interest period will be determined by such
alternate method as reasonably selected by the Bank. A “
London Banking Day
” is a day
on which banks in London are open for business and dealing in offshore dollars.
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3
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1.5
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Repayment Terms
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(a)
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The Borrower will pay interest on July 1, 2006 and on the first day of each October, January,
April and July thereafter until payment in full of any principal outstanding under this
facility.
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(b)
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The Borrower will repay in full any principal, interest or other charges outstanding under
this facility no later than the Facility No. 1 Expiration Date.
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(c)
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The Borrower may prepay this loan in full or in part at any time. The prepayment will be
applied to the most remote payment of principal due under this Agreement in respect of the
Facility No. 1 Commitment.
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(d)
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In the event the aggregate principal outstanding balance of advances under the Facility No. 1
Commitment exceed the Maximum Amount at any time, the Borrower shall immediately and without
notice or demand of any kind make such payments as shall be necessary to reduce the principal
balance of the Facility No. 1 Commitment below the Maximum Amount.
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2.
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FACILITY NO. 2: FIXED RATE TERM LOAN AMOUNT AND TERMS
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2.1
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Loan Amount
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The Bank agrees to provide a term loan to the Borrower in the amount of Five Million Five Hundred
Thousand Dollars ($5,500,000.00) (the “
Facility No. 2 Commitment
”).
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2.2
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Availability Period
.
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The loan is available in one disbursement from the Bank on the date of this Agreement.
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2.3
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Interest Rate
.
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(a)
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The interest rate is a rate per year equal to the BBA LIBOR
Daily Floating Rate plus 2.50 percentage point(s); provided, however, that in no event
shall the interest payable in respect of amounts advanced pursuant to the Facility No. 2
Commitment exceed the maximum amounts collectible under applicable law from time to time.
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(b)
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The BBA LIBOR Daily Floating Rate is a fluctuating rate of
interest equal to the rate per annum equal to the rate per annum
equal to the British Bankers Association LIBOR Rate (“
BBA
LIBOR
”),
as published by Reuters (or other commercially available source
providing quotations of BBA LIBOR as selected by the Bank from time to time) as determined for each banking day at approximately
11:00 a.m. London time two (2) London Banking Days prior to the date in question, for U.S.
Dollar deposits (for delivery on the first day of such interest period) with a one month term,
as adjusted from time to time in the Bank’s sole discretion for reserve requirements, deposit
insurance assessment rates and other regulatory costs. If such rate is not available at such
time for any reason, then the rate for that interest period will be determined by such
alternate method as reasonably selected by the Bank. A “
London Banking Day
” is a day
on which banks in London are open for business and dealing in offshore dollars.
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2.4
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Repayment Terms
.
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(a)
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The Borrower will pay interest on July 1, 2006 and on the first day of each October, January,
April and July thereafter until payment in full of any principal outstanding under this
facility.
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(b)
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The Borrower will repay principal in equal installments of Four Hundred Fifty-Eight Thousand
Three Hundred Thirty-Four and No/00ths Dollars ($458,334.00) beginning on July 1, 2006 and
continuing on the first day of each October, January, April and July thereafter until the
third (3rd) anniversary of the date of this Agreement (the “
Repayment Period
”). In any
event, on the last day of the Repayment Period, the Borrower will repay the entire remaining
principal balance plus any interest or other charges outstanding under this facility.
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4
The Borrower may prepay this loan in full or in part at any time. The Borrower will give the Bank
irrevocable written notice of the Borrower’s intention to make the prepayment, specifying the date
and amount of the prepayment. The notice must be received by the Bank at least five (5) banking
days in advance of the prepayment. The prepayment will be applied to the most remote payment of
principal due under this Agreement in respect of the Facility No. 2 Commitment.
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3.
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FEES AND EXPENSES
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3.1
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Fees
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(a)
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Loan Fee
. The Borrower agrees to pay a loan fee in the amount of [***]. This fee is
due on the date of this Agreement.
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(b)
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Warrant
. The Borrower agrees to issue to the Bank, a warrant (or an amendment to the
Bank’s existing warrant) to purchase 1,979 shares of common stock of the Borrower to be valued
on the date of this Agreement at [***] (the “
Warrant
”). This Warrant is to be issued
on the date this Agreement.
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(c)
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Unused Commitment Fee
. The Borrower agrees to pay a fee on any difference between the
availability of the Facility No. 1 Commitment (as determined in accordance with
Section
1.2
hereof) and the amount of credit it actually uses, determined by the average of the
daily amount of credit outstanding during the specified period. The
fee will be calculated at 0.50% per year. The fee is due on July 1, 2006 and on the first day of each October, January,
April and July thereafter until the expiration of the availability period.
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3.2
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Expenses
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The Borrower agrees to immediately repay the Bank for expenses that include, but are not limited
to, filing, recording and search fees, appraisal fees, title report fees and documentation fees.
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3.3
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Reimbursement Costs
.
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(a)
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The Borrower agrees to reimburse the Bank for any expenses it incurs in the preparation of
this Agreement and any agreement or instrument required by this Agreement. Expenses include,
but are not limited to, reasonable attorneys’ fees, including any allocated costs of the
Bank’s in-house counsel to the extent permitted by applicable law.
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(b)
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The Borrower agrees to reimburse the Bank for the cost of periodic field examinations of the
Borrower’s books, records and collateral, and appraisals of the collateral, at such intervals
as the Bank may reasonably require, but no less frequently than annually. The actions
described in this paragraph may be performed by employees of the Bank or by independent
appraisers.
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4.
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COLLATERAL
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4.1
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Personal Property
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The personal property listed below now owned or owned in the future by the parties listed below
will secure the Borrower’s obligations to the Bank under this Agreement as indicated in the
security agreement. The collateral is further defined in security agreement(s) executed by the
owners of the collateral. In addition, all personal property collateral owned by the Borrower
securing this Agreement shall also secure all other present and future obligations of the Borrower
to the Bank (excluding any consumer credit covered by the federal Truth in Lending law, unless the
Borrower has otherwise agreed in writing or received written notice thereof). All personal property
collateral securing any other present or future obligations of the Borrower to the Bank shall also
secure this Agreement.
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(a)
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Equipment and fixtures owned by the Borrower.
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5
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(b)
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Inventory owned by the Borrower.
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(c)
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Receivables owned by the Borrower.
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(d)
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Securities or other investment property owned by the Borrower as described in one or more
pledge agreements required by the Bank.
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(e)
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Regulation U of the Board of Governors of the Federal Reserve System places certain
restrictions on loans secured by margin stock (as defined in the Regulation). The Bank and the
Borrower shall comply with Regulation U. If any of the collateral is margin stock, the
Borrower shall provide to the Bank a Form U-1 Purpose Statement.
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(f)
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Deposit accounts with the Bank and owned by the Borrower.
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(g)
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Patents, trademarks and other general intangibles owned by the Borrower.
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(h)
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The CET Pledged Note and the CET Security Agreement (as hereinafter defined).
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5.
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DISBURSEMENTS, PAYMENTS AND COSTS
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5.1
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Disbursements and Payments
.
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(a)
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Each payment by the Borrower will be made in U.S. Dollars and immediately available funds by
direct debit to a deposit account as specified below or, for payments not required to be made
by direct debit, by mail to the address shown on the Borrower’s statement or at one of the
Bank’s banking centers in the United States.
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(b)
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Each disbursement by the Bank and each payment by the Borrower will be evidenced by records
kept by the Bank. In addition, the Bank may, at its discretion, require the Borrower to sign
one or more promissory notes.
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5.2
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Telephone and Telefax Authorization
.
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(a)
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The Bank may honor telephone or telefax instructions for advances or repayments given, or
purported to be given, by any one of the individuals authorized to sign loan agreements on
behalf of the Borrower or any other individual designated by any one of such authorized
signers.
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(b)
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Advances will be deposited in and repayments will be withdrawn from account number 3782867788
owned by the Borrower, or such other of the Borrower’s accounts with the Bank as designated in
writing by the Borrower.
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(c)
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The Borrower will indemnify and hold the Bank harmless from all liability, loss, and costs in
connection with any act resulting from telephone or telefax instructions the Bank reasonably
believes are made by any individual authorized by the Borrower to give such instructions. This
paragraph will survive this Agreement’s termination, and will benefit the Bank and its
officers, employees, and agents.
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5.3
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Direct Debit (Pre-Billing)
.
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(a)
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The Borrower agrees that the Bank will debit account number 3782867788 owned by the Borrower,
or such other of the Borrower’s accounts with the Bank as designated in writing by the
Borrower (the “
Designated Account
”) on the date each payment of principal and interest
and any fees from the Borrower becomes due (the “
Due Date
”).
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(b)
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Prior to each Due Date, the Bank will mail to the Borrower a statement of the amounts that
will be due on that Due Date (the “
Billed Amount
”). The bill will be mailed a specified number of
calendar days prior to
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6
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the Due Date, which number of days will be mutually agreed from time
to time by the Bank and the Borrower. The calculations in the bill will be made on the
assumption that no new extensions of credit or payments will be made between the date of the
billing statement and the Due Date, and that there will be no changes in the applicable
interest rate.
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(c)
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The Bank will debit the Designated Account for the Billed Amount, regardless of the actual
amount due on that date (the “
Accrued Amount
”). If the Billed Amount debited to the
Designated Account differs from the Accrued Amount, the discrepancy will be treated as
follows:
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(i)
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If the Billed Amount is less than the Accrued Amount, the Billed Amount for the
following Due Date will be increased by the amount of the discrepancy. The Borrower
will not be in default by reason of any such discrepancy.
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(ii)
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If the Billed Amount is more than the Accrued Amount, the Billed Amount for the
following Due Date will be decreased by the amount of the discrepancy.
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Regardless of any such discrepancy, interest will continue to accrue based on the actual
amount of principal outstanding without compounding. The Bank will not pay the Borrower
interest on any overpayment.
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(d)
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The Borrower will maintain sufficient funds in the Designated Account to cover each debit. If
there are insufficient funds in the Designated Account on the date the Bank enters any debit
authorized by this Agreement, the Bank may reverse the debit.
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5.4
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Banking Days
.
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Unless otherwise provided in this Agreement, a banking day is a day other than a Saturday, Sunday
or other day on which commercial banks are authorized to close, or are in fact closed, in the state
where the Bank’s lending office is located, and, if such day relates to amounts bearing interest at
an offshore rate (if any), means any such day on which dealings in dollar deposits are conducted
among banks in the offshore dollar interbank market. All payments and disbursements that would be
due on a day that is not a banking day will be due on the next banking day. All payments received
on a day that is not a banking day will be applied to the credit on the next banking day.
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5.5
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Interest Calculation
.
|
Except as otherwise stated in this Agreement, all interest and fees, if any, will be computed on
the basis of a 360-day year and the actual number of days elapsed. This results in more interest or
a higher fee than if a 365-day year is used. Installments of principal that are not paid when due
under this Agreement shall continue to bear interest until paid.
Upon the occurrence of any default or after maturity or after judgment has been rendered on any
obligation under this Agreement, all amounts outstanding under this Agreement, including any
interest, fees, or costs that are not paid when due, will at the option of the Bank bear interest
at a rate that is four percentage points (4.00%) higher than the rate of interest otherwise
provided under this Agreement. This may result in compounding of interest. This will not constitute
a waiver of any default.
Before the Bank is required to extend any credit to the Borrower under this Agreement, it must
receive any documents and other items it may reasonably require, in form and content acceptable to
the Bank, including any items specifically listed below.
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6.1
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Authorizations and Incumbency
.
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If the Borrower is anything other than a natural person, evidence that the execution, delivery and
performance by the Borrower of this Agreement and any instrument or agreement required under this
Agreement have been duly authorized. A certificate of the secretary of the Borrower as to the
incumbency and signature of all officers of such Borrower authorized to execute or attest to any
instrument or agreement required under this Agreement.
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6.2
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Governing Documents
.
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If required by the Bank, a copy of the Borrower’s organizational documents.
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6.3
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CET Intercompany Debt
.
|
Signed original Promissory Note executed by Cumberland Emerging Technologies, Inc. (“
CET
”)
and payable to the order of the Borrower, in the maximum principal amount of $856,000 evidencing
the now existing and hereafter arising indebtedness of CET to the Borrower and endorsed in blank by
the Borrower (together with any and all modifications, extensions and renewals thereof, the
“
CET Pledged Note
”). A signed security agreement by and between CET and Borrower, wherein
CET granted Borrower a first priority security interest in CET’s property described therein, such
security agreement to be in form and substance satisfactory to the Bank (as the same may be
amended, restated, supplemented, extended, modified, restructured, renewed or replaced from time to
time, the “
CET Security Agreement
”). An assignment to the Bank to be of, and grant to the
Bank of a security interest in, all of the Borrower’s right, title an interest in and to the CET
Pledged Note and the CET Security Agreement, such assignment to be in form and substance
satisfactory to the Bank.
|
6.4
|
|
Security Agreements
.
|
Signed original security agreements, including intellectual property security agreements, covering
the personal property collateral that the Bank requires. Such security agreements, together with
this Agreement, any notes, any warrants and all other instruments, documents and agreements for
time to time evidencing, securing or otherwise relating to the Facility No. 1 Commitment and the
Facility No. 2 Commitment are hereinafter referred to as the “Loan Documents”.
|
6.5
|
|
Perfection and Evidence of Priority
.
|
Evidence that the security interests and liens in favor of the Bank are valid, enforceable,
properly perfected in a manner acceptable to the Bank and prior to all others’ rights and
interests, except those the Bank consents to in writing.
Payment of all fees and other amounts due and owing to the Bank, including without limitation
payment of all accrued and unpaid expenses incurred by the Bank as required by the paragraph
entitled “
Reimbursement Costs
.”
Certificates of good standing for the Borrower and CET from its state of formation and from any
other state in which the Borrower and CET is required to qualify to conduct its business.
A written opinion from the Borrower’s and CET’s legal counsel, covering such matters as the Bank
may require. The legal counsel and the terms of the opinion must be acceptable to the Bank.
Signed original Warrant, duly and validly executed by the Borrower for the benefit of the Bank.
8
|
6.10
|
|
Financial Statements
.
|
|
|
|
(a)
|
|
Detailed consolidated projections (including balance sheet, profit and loss statement and
statement of cash flow) by product line (i) on a quarterly basis for fiscal year 2006 and (ii)
on an annual basis for fiscal years 2007 and 2008.
|
|
|
|
(b)
|
|
Marketing analysis for Kristalose
®
, including sales and marketing expense, in form and
substance acceptable to the Bank in its sole discretion.
|
|
|
|
6.11
|
|
Insurance
.
|
Evidence of insurance coverage, as required in the “Covenants” section of this Agreement.
|
6.12
|
|
Product Agreements
.
|
|
|
|
(a)
|
|
Receipt and approval by the Bank of the term sheet, the distribution agreement, and other
agreements relating to the Borrower’s purchase of exclusive rights to distribute Kristalose
®
in North America, each of which shall be in form and substance acceptable to the Bank in its
sole discretion.
|
|
|
|
(b)
|
|
Receipt by the Bank of all CeraLyte agreements, each of which shall be in form and substance
acceptable to the Bank in its sole discretion.
|
|
|
|
(c)
|
|
Receipt by the Bank of all Procto-Kit agreements, each of which shall be in form and
substance acceptable to the Bank in its sole discretion.
|
|
|
|
6.13
|
|
Consents, Licenses, Permits, Assignments
.
|
|
|
|
(a)
|
|
Evidence satisfactory to the Bank that the Borrower has obtained all requisite consents and
approvals required to be obtained from any person to permit the transactions contemplated by
this Agreement and the other Loan Documents executed in connection herewith to be consummated
in accordance with their respective terms and conditions.
|
|
|
|
(b)
|
|
Evidence satisfactory to the Bank that Borrower and the collateral securing this Agreement
are in compliance with all applicable governmental requirements and that all permits, and any
necessary licenses and approvals have been obtained.
|
|
|
|
(c)
|
|
Evidence satisfactory to the Bank that Leo Pavliv has assigned to the Borrower the patent
rights to the pharmaceutical composition of 2-(4-isobutylphenyl) propionic acid.
|
|
|
|
6.14
|
|
Availability
.
|
Evidence satisfactory to the Bank that the Borrower has a minimum liquidity of $2,000,000 in either
cash or available credit under this Agreement.
|
6.15
|
|
Representations, Warranties and No Default
.
|
Receipt by the Bank of a certificate of a properly authorized officer of the Borrower, stating that
(a) each of the representations and warranties contained herein is true and correct at and as of
the date hereof with the same force and effect as if made on such date and (b) no default hereunder
or under any of the other Loan Documents executed in connection therewith has occurred and is
continuing.
|
6.16
|
|
Other Required Documentation
.
|
All other documents, instruments, agreements, opinions, certificates, insurance policies, consents
and evidences of other legal matters, in form and substance satisfactory to the Bank and its
counsel, that are required by the terms of
9
any term sheet or commitment of the Bank relating to the
credit that is the subject of this Agreement or that the Bank otherwise may reasonable request.
|
7.
|
|
REPRESENTATIONS AND WARRANTIES
|
When the Borrower signs this Agreement, and until the Bank is repaid in full, the Borrower makes
the following representations and warranties. Each request for an extension of credit constitutes a
renewal of these representations and warranties as of the date of the request:
If the Borrower is anything other than a natural person, it is duly formed and existing under the
laws of the state or other jurisdiction where organized.
This Agreement, and any instrument or agreement required hereunder, are within the Borrower’s
powers, have been duly authorized, and do not conflict with any of its organizational papers.
|
7.3
|
|
Enforceable Agreement
.
|
This Agreement is a legal, valid and binding agreement of the Borrower, enforceable against the
Borrower in accordance with its terms, and any instrument or agreement required hereunder, when
executed and delivered, will be similarly legal, valid, binding, and enforceable.
In each state in which the Borrower does business, it is properly licensed, in good standing, and,
where required, in compliance with fictitious name statutes.
This Agreement does not conflict with any law, agreement, or obligation by which the Borrower is
bound.
|
7.6
|
|
Financial Information.
|
All financial and other information that has been or will be supplied to the Bank is sufficiently
complete to give the Bank accurate knowledge of the Borrower’s (and CET’s) financial condition,
including all material contingent liabilities. Since the date of the most recent financial
statement provided to the Bank, there has been no material adverse change in the business condition
(financial or otherwise), operations, properties or prospects of the Borrower or CET. If the
Borrower is comprised of the trustees of a trust, the foregoing representations shall also pertain
to the trustor(s) of the trust.
There is no lawsuit, tax claim or other dispute pending or threatened against the Borrower that, if
lost, would impair the Borrower’s financial condition or ability to repay the loan, except as have
been disclosed in writing to the Bank.
All collateral required in this Agreement is owned by the grantor of the security interest free of
any title defects or any liens or interests of others, except (a) those that have been approved by
the Bank in writing and (b) liens securing purchase money debt or indebtedness arising under
capitalized lease obligations permitted by this Agreement; provided, however, that in each case any such liens shall attach only to the specific
item(s) of property or asset(s) financed with such purchase money debt or capitalized lease.
10
|
7.9
|
|
Permits, Franchises
.
|
The Borrower possesses all permits, memberships, franchises, contracts, licenses required and all
trademark rights, trade name rights, patent rights, copyrights, and fictitious name rights
necessary to enable it to conduct the business in which it is now engaged.
The Borrower is not in default on any obligation for borrowed money, any purchase money obligation
or any other material lease, commitment, contract, instrument or obligation, except as have been
disclosed in writing to the Bank.
The Borrower has no knowledge of any pending assessments or adjustments of its income tax for any
year and all taxes due have been paid, except as have been disclosed in writing to the Bank.
|
7.12
|
|
No Event of Default
.
|
There is no event that is, or with notice or lapse of time or both would be, a default under this
Agreement.
The Borrower has obtained, and maintained in effect, the insurance coverage required in the
“Covenants” section of this Agreement.
|
7.14
|
|
Location of Borrower
.
|
The place of business of the Borrower (or, if the Borrower has more than one place of business, its
chief executive office) is located as follows:
Cumberland Pharmaceuticals, Inc.
2525 West End Avenue, Suite 950
Nashville, Tennessee 37203
As of December 31, 2005, the authorized capital stock of the Borrower consists of (1) 10,000,000
shares of common stock, no par value per share (“
Common Shares
”), of which 4,890,149 shares
(the “
Outstanding Common Shares
”) are issued and outstanding, and (2) 3,000,000 shares of
preferred stock, no par value per share, of which 855,495 shares (the “
Outstanding Preferred
Shares
”) are issued and outstanding, and (3) under the Borrower’s amended 1999 Stock Option
Plan, 3,950,000 options convertible into Common Shares (“
Options
”) are authorized for
issuance, with 3,910,867 Options issued and outstanding, of which 3,724,011 Options are fully
vested and exercisable. All of the Outstanding Common Shares are duly authorized, validly issued
and outstanding and fully paid and nonassessable and free of preemptive rights. All of the
Outstanding Preferred Shares are duly authorized, validly issued and outstanding and fully paid and
nonassessable and are convertible into Common Shares.
|
7.16
|
|
Material Adverse Change
.
|
Since December 31, 2004, no material adverse change has occurred on or in (a) the properties,
business, prospects, operations, management or financial condition of the Borrower, or (b) the
ability of the Borrower to perform any of its obligations under this Agreement or the other Loan
Documents to which it is a party.
The Borrower agrees, so long as credit is available under this Agreement and until the Bank is
repaid in full:
11
|
8.1
|
|
Use of Proceeds
.
|
|
|
|
(a)
|
|
To use the proceeds of the Facility No. 1 Commitment only for (i) the purchase of the
exclusive rights to distribute the Kristalose
®
product in North America and for general
operating and working capital expenses and (ii) extensions of credit to CET permitted by this
Agreement.
|
|
|
|
(b)
|
|
To use the proceeds of the Facility No. 2 Commitment only for the purchase of the exclusive
rights to distribute the Kristalose
®
product in North America and for general operating and
working capital expenses.
|
|
|
|
(c)
|
|
The proceeds of the credit extended under this Loan Agreement may not be used directly or
indirectly to purchase or carry any “margin stock” as that term is defined in Regulation U of
the Board of Governors of the Federal Reserve System, or extend credit to or invest in other
parties for the purpose of purchasing or carrying any such “margin stock,” or to reduce or
retire any indebtedness incurred for such purpose.
|
|
|
|
8.2
|
|
Financial Information and Appraisal
.
|
To provide the following financial information and statements in form and content acceptable to the
Bank, and such additional information as requested by the Bank from time to time:
|
(a)
|
|
Within 150 days of the fiscal year end, the annual financial statements of the Borrower,
which shall include a balance sheet, profit and loss statement and statement of cash flow,
certified and dated by an authorized financial officer. These financial statements must be
audited (with an opinion satisfactory to the Bank) by a certified public accountant acceptable
to the Bank. The statements shall be prepared on a consolidated basis and include unaudited
statements on a consolidating basis.
|
|
|
|
(b)
|
|
Within 60 days of the beginning of each fiscal year of the Borrower, a copy of the Borrower’s
operating and capital expenditure budget for such fiscal year, certified and dated by an
authorized financial officer.
|
|
|
|
(c)
|
|
Within 45 days of the period’s end (including the last period in each fiscal year), quarterly
financial statements of the Borrower, which shall include a balance sheet, profit and loss
statement and statement of cash flow. The profit and loss statement and the statement of cash
flow to be submitted under this subsection shall be presented on a quarterly and a
year-to-date basis, and the balance sheet to be submitted under this subsection shall include
comparisons with the same period for the prior year. These financial statements may be
company-prepared. The statements shall be prepared on a consolidated and consolidating basis.
Such financial statements shall be certified and dated by an authorized financial officer and
set forth (i) the information and computations (in sufficient detail) to establish that the
Borrower is in compliance with all financial covenants at the end of the period covered by the
financial statements then being furnished and (ii) whether there existed as of the date of
such financial statements and whether there exists as of the date of the certificate, any
default under this Agreement and, if any such default exists, specifying the nature thereof
and the action the Borrower is taking and proposes to take with respect thereto. The
compliance certificate shall be substantially in the form attached hereto as
Exhibit
A
.
|
|
|
|
(d)
|
|
Within 30 days of the period’s end (including the last period in each fiscal year), monthly
financial statements of the Borrower, which shall include a balance sheet, profit and loss
statement and statement of cash flow. The profit and loss statement and the statement of cash
flow to be submitted under this subsection shall be presented on a monthly and a year-to-date
basis, and the balance sheet to be submitted under this subsection shall include comparisons
with the same period for the prior year. These financial statements may be company-prepared.
Such financial statements shall be certified and dated by an authorized financial officer and
set forth (i) the information and computations (in sufficient detail) to establish that the
Borrower is in compliance with all financial covenants at the end of the period covered by the
financial statements then being furnished and (ii) whether there existed as of the date of
such financial statements and whether there exists as of the date of the certificate, any
default under this Agreement and, if any such default exists, specifying the nature thereof and the action the Borrower is
taking and proposes to take with respect thereto. The compliance certificate shall be
substantially in the form attached hereto as
Exhibit A
.
|
12
|
(e)
|
|
Within 10 days of the period’s end (including the last period in each fiscal year), a monthly
listing of accounts receivable aged from the date of invoice attached to a monthly Borrowing
Base Certificate for (and executed by an authorized financial officer) the Borrower in the
form attached hereto as
Exhibit B
.
|
|
|
|
(f)
|
|
Within 10 days of receipt or dispatch by the Borrower, copies of any management letters and
correspondence relating to management letters, sent or received by the Borrower to or from the
Borrower’s auditor. If no management letter is prepared, the Bank may, in its discretion,
request a letter from such auditor stating that no deficiencies were noted that would
otherwise be addressed in a management letter.
|
|
|
|
(g)
|
|
Such additional financial information regarding the Borrower, CET, pledgor, accommodation
party or other obligor with respect to the loan as the Bank shall request.
|
|
|
|
(h)
|
|
On or before May 31, 2006, full appraisal of the Acetadote product, in form and substance
acceptable to the Bank in its sole discretion.
|
|
|
|
8.3
|
|
Funded Debt to EBITDA Ratio
.
|
To maintain on a consolidated basis a ratio of Funded Debt to EBITDA not exceeding the ratios
indicated for each period specified below:
|
|
|
|
|
Period
|
|
Ratios
|
|
|
|
|
|
From September 30, 2006
through December 31, 2006
|
|
4.25:1.0
|
|
|
|
|
|
From January 1, 2007
through March 31, 2007
|
|
2.50:1.0
|
|
|
|
|
|
From April 1, 2007 and thereafter
|
|
2.25:1.0
|
“
Funded Debt
” means all outstanding liabilities for borrowed money and other
interest-bearing liabilities, including current and long term debt, promissory notes, seller notes,
letters of credit, if any, and any obligations guaranteed by the Borrower, less the non-current
portion of Subordinated Liabilities.
“
EBITDA
” means net income after extraordinary losses and before extraordinary gains, less
income or plus loss from discontinued operations plus interest expense, income taxes, depreciation
and amortization expense. EBITDA will be calculated for the twelve-month period ending with the end
of each reporting period.
“
Subordinated Liabilities
” means liabilities subordinated to the Borrower’s obligations to
the Bank in a manner acceptable to the Bank in its sole discretion.
This ratio will be calculated at the end of each quarter-annual reporting period for which the Bank
requires financial statements, using the results of the twelve-month period ending with that
reporting period.
|
8.4
|
|
Minimum Fixed Charge Coverage Ratio
.
|
To
maintain on a consolidated basis a Minimum Fixed Charge Coverage
Ratio of at least 1.50:1.0 from
and after June 30, 2006.
13
“
Minimum Fixed Charge Coverage Ratio
” means the ratio of (a) the sum of EBITDA plus lease
expense and rent expense, minus maintenance capital expenditures $50,000 per annum, minus income
taxes, minus dividends, withdrawals and other distributions, to (b) the sum of interest expense,
lease expense, rent expense, scheduled principal payments on term debt and the current portion of
capitalized lease obligations.
This ratio will be calculated at the end of each quarter-annual reporting period for which the Bank
requires financial statements, using the results of the twelve-month period ending with that
reporting period.
To have a
net worth as of the date hereof equal to at least $4,750,000,
provided, however
, that the
aforesaid net worth requirement shall be reduced by the amount, if any, that Borrower’s 2005 fiscal
year-end net worth is reduced by year-end audit adjustments (but in no event shall such reduction
be in excess of $250,000).
“
Net Worth
” means the value of total assets (including leaseholds and leasehold
improvements and reserves against assets but excluding goodwill, patents, trademarks, trade names,
organization expense, unamortized debt discount and expense, capitalized or deferred research and
development costs, deferred marketing expenses, and other like intangibles, and monies due from
affiliates, officers, directors, employees, shareholders, members or managers) less total
liabilities, including but not limited to accrued and deferred income taxes.
To
maintain EBITDA of not less than $400,000 from June 30, 2006 until such time as the Bank receives a
full appraisal by an independent party, in form and substance acceptable to the Bank in its sole
discretion, establishing a valuation of the Acetadote product of at
least $9,000,000.
EBITDA will be calculated at the end of each quarter-annual reporting period for which the Bank
requires financial statements, using the results of the twelve-month period ending with that
reporting period.
|
8.7
|
|
Capital Expenditures
.
|
Not to make or incur capital expenditures (including capital lease obligations) in an aggregate
amount in excess of $500,000 during any fiscal year.
Not to incur obligations for the leasing of real or personal property requiring payments in an
aggregate amount in excess of $350,000 during any fiscal year.
|
8.9
|
|
Dividends and Distributions
.
|
Not to declare, make or pay any dividends (except dividends paid in capital stock), redemptions of
stock or membership interests, distributions and withdrawals (as applicable) to its owners.
|
8.10
|
|
Bank as Principal Depository
.
|
To maintain the Bank as its principal depository bank, including for the maintenance of business,
cash management, operating and administrative deposit accounts.
Not to have outstanding or incur any direct or contingent liabilities or lease obligations (other
than those to the Bank), or become liable for the liabilities of others, without the Bank’s written
consent. This does not prohibit:
|
(a)
|
|
Acquiring services, goods, supplies, or merchandise on normal trade credit.
|
14
|
(b)
|
|
Endorsing negotiable instruments received in the usual course of business.
|
|
|
|
(c)
|
|
Obtaining surety bonds in the usual course of business.
|
|
|
|
(d)
|
|
Liabilities, lines of credit and leases in existence on the date of this Agreement disclosed
in writing to the Bank in the Borrower’s most recent financial statement.
|
|
|
|
(e)
|
|
Purchase money debt and capitalized lease obligations financed by the Borrower through
specific research grants to the Borrower for the development of pharmaceutical products in
connection with such obligations, and other purchase money debt and capitalized lease
obligations in an aggregate principal amount not exceeding $250,000 outstanding at any one
time.
|
|
|
|
8.12
|
|
Other Liens
.
|
Not to create, assume, or allow any security interest or lien (including judicial liens) on
property the Borrower now or later owns, except:
|
(a)
|
|
Liens and security interests in favor of the Bank.
|
|
|
|
(b)
|
|
Liens for taxes not yet due.
|
|
|
|
(c)
|
|
Liens outstanding on the date of this Agreement disclosed in writing to and approved by the
Bank.
|
|
|
|
(d)
|
|
Liens securing purchase money debt or indebtedness arising under capitalized lease
obligations permitted by this Agreement; provided, however, that in each case any such liens
shall attach only to the specific item(s) of property or asset(s) financed with such purchase
money debt or capitalized lease.
|
|
|
|
8.13
|
|
Maintenance of Assets
.
|
Not to sell, assign, lease, transfer or otherwise dispose of any part of the Borrower’s business or
the Borrower’s assets except in the ordinary course of the Borrower’s business.
Not to have any existing, or make any new, investments in any individual or entity, or make any
capital contributions or other transfers of assets to any individual or entity, except for:
|
(a)
|
|
Existing investments in CET (other than advances to CET described in
Subsection
8.15(c)
) disclosed to the Bank in writing.
|
|
|
|
(b)
|
|
Investments permitted by
Section 8.15
.
|
|
|
|
(c)
|
|
Investments in any of the following:
|
|
|
(i)
|
|
certificates of deposit;
|
|
|
|
|
(ii)
|
|
U.S. treasury bills and other obligations of the federal government;
|
|
|
|
|
(iii)
|
|
readily marketable securities (including commercial paper, but excluding
restricted stock and stock subject to the provisions of Rule 144 of the Securities and
Exchange Commission).
|
Not to make any loans, advances or other extensions of credit to any individual or entity, except
for:
15
|
(a)
|
|
Existing extensions of credit disclosed to the Bank in writing prior to the date of this
Agreement.
|
|
|
|
(b)
|
|
Extensions of credit in the nature of accounts receivable or notes receivable arising from
the sale or lease of goods or services in the ordinary course of business to non-affiliated
entities.
|
|
|
|
(c)
|
|
Extensions of credit to CET in an aggregate amount not exceeding Eight Hundred Fifty-Six
Thousand Dollars ($856,000) outstanding at any one time, provided, (i) extensions of credit by
the Borrower to CET from the Facility No. 1 Commitment shall not exceed Three Hundred Fifty
Thousand Dollars ($350,000) outstanding at any one time and (ii) such loans are evidenced by
the CET Pledged Note and secured by the CET Security Agreement.
|
|
|
|
(d)
|
|
Advances to employees for business travel and other expenses incurred in the ordinary course
of business in an aggregate amount not exceeding $100,000 outstanding at any one time.
|
|
|
|
8.16
|
|
Change of Management
.
|
Not to make any substantial change in the present executive or management personnel of the
Borrower. A “substantial change”, as used in this subsection shall include, but not be limited to,
the removal or resignation of A.J. Kazimi as Chief Executive Officer and President of the Borrower,
and/or the removal or resignation of David Lowrance as the Director of Finance and Accounting for
the Borrower.
|
8.17
|
|
Change of Ownership or Control
.
|
Not to cause, permit, or suffer any change in the direct or indirect capital ownership or control
of the Borrower such that any individual, entity or group (as defined in Section 13(d) of the
Securities Exchange Act of 1934) except A.J. Kazimi shall become the owner, directly or indirectly,
beneficially or of record, of shares representing more than 30% of the aggregate ordinary voting
power represented by the issued and outstanding capital stock of the Borrower.
|
8.18
|
|
Additional Negative Covenants
.
|
Not to, without the Bank’s written consent:
|
(a)
|
|
Enter into any consolidation, merger, or other combination, or become a partner in a
partnership, a member of a joint venture, or a member of a limited liability company other
than CET.
|
|
|
|
(b)
|
|
Acquire or purchase a business or its assets.
|
|
|
|
(c)
|
|
Change the general character of the business of the Borrower as conducted on the date of this
Agreement or engage in any business activities substantially different from the Borrower’s
present business.
|
|
|
|
(d)
|
|
Liquidate or dissolve the Borrower’s business.
|
|
|
|
8.19
|
|
Notices to Bank
|
To promptly notify the Bank in writing of:
|
(a)
|
|
Any lawsuit against the Borrower or CET.
|
|
|
|
(b)
|
|
Any substantial dispute between any governmental authority and the Borrower or CET.
|
|
|
|
(c)
|
|
Any event of default under this Agreement, or any event that, with notice or lapse of time or
both would constitute an event of default.
|
16
|
(d)
|
|
Any material adverse change in the Borrower’s or CET’s business condition (financial or
otherwise), operations, properties or prospects, or ability to repay the credit.
|
|
|
|
(e)
|
|
Any change in the Borrower’s name, legal structure, place of business, or chief executive
office if the Borrower has more than one place of business.
|
|
|
|
(f)
|
|
Any uninsured or partially uninsured loss through fire, theft, liability or property damage
in excess of $25,000.
|
|
|
|
8.20
|
|
Insurance
|
|
|
|
(a)
|
|
General Business Insurance
. To maintain insurance satisfactory to the Bank as to
amount, nature and carrier covering property damage (including loss of use and occupancy) to
any of the Borrower’s properties, business interruption insurance, public liability insurance
including coverage for contractual liability, product liability and workers’ compensation, and
any other insurance that is usual for the Borrower’s business. Each policy shall provide for
at least thirty (30) days’ prior notice to the Bank of any cancellation thereof.
|
|
|
|
(b)
|
|
Insurance Covering Collateral
. To maintain all-risk property damage insurance
policies covering the tangible property comprising the collateral. Each insurance policy must
be in an amount acceptable to the Bank. The insurance must be issued by an insurance company
acceptable to the Bank and must include a lender’s loss payable endorsement in favor of the
Bank in a form acceptable to the Bank.
|
|
|
|
(c)
|
|
Evidence of Insurance
. Upon the request of the Bank, to deliver to the Bank a copy of
each insurance policy, or, if permitted by the Bank, a certificate of insurance listing all
insurance in force.
|
|
|
|
(d)
|
|
Insurance Certificates
. On or before May 6, 2006, to deliver to the Bank a copy of
the certificate of property insurance including a lender’s loss payable endorsement in favor
of the Bank in form and substance acceptable to the Bank in its sole discretion.
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8.21
|
|
Compliance with Laws
.
|
To comply with the laws (including any fictitious or trade name statute), regulations, and orders
of any government body with authority over the Borrower’s business. The Bank shall have no
obligation to make any advance to the Borrower except in compliance with all applicable laws and
regulations and the Borrower shall fully cooperate with the Bank in complying with all such
applicable laws and regulations.
Promptly during each year, to pay and cause any subsidiaries to pay contributions adequate to meet
at least the minimum funding standards under ERISA with respect to each and every Plan; file each
annual report required to be filed pursuant to ERISA in connection with each Plan for each year;
and notify the Bank within ten (10) days of the occurrence of any Reportable Event that might
constitute grounds for termination of any capital Plan by the Pension Benefit Guaranty Corporation
or for the appointment by the appropriate United States District Court of a trustee to administer
any Plan. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time
to time. Capitalized terms in this paragraph shall have the meanings defined within ERISA.
To maintain adequate books and records.
17
To allow the Bank and its agents to inspect the Borrower’s properties and examine, audit and make
copies of books and records at any reasonable time. If any of the Borrower’s properties, books or
records are in the possession of a third party, the Borrower authorizes that third party to permit
the Bank or its agents to have access to perform inspections or audits and to respond to the Bank’s
requests for information concerning such properties, books and records.
|
8.25
|
|
Perfection of Liens
.
|
To help the Bank perfect and protect its security interests and liens, and reimburse it for related
costs it incurs to protect its security interests and liens.
To take any action reasonably requested by the Bank to carry out the intent of this Agreement.
|
8.27
|
|
Collateral Account Notification and Acknowledgement
.
|
To deliver to the Bank a signed original Collateral Account Notification and Acknowledgement
Agreement covering the personal property collateral in the account(s) described therein, on or
before May 6, 2006 and in form and substance acceptable to the Bank in its sole discretion.
|
9.
|
|
HAZARDOUS SUBSTANCES
|
|
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9.1
|
|
Indemnity Regarding Hazardous Substances
.
|
The Borrower will indemnify and hold harmless the Bank from any loss or liability the Bank incurs
in connection with or as a result of this Agreement, that directly or indirectly arises out of the
use, generation, manufacture, production, storage, release, threatened release, discharge, disposal
or presence of a hazardous substance. This indemnity will apply whether the hazardous substance is
on, under or about the Borrower’s property or operations or property leased to the Borrower. The
indemnity includes but is not limited to attorneys’ fees (including the reasonable estimate of the
allocated cost of in-house counsel and staff). The indemnity extends to the Bank, its parent,
subsidiaries and all of their directors, officers, employees, agents, successors, attorneys and
assigns.
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9.2
|
|
Compliance Regarding Hazardous Substances
.
|
The Borrower represents and warrants that the Borrower has complied with all current and future
laws, regulations and ordinances or other requirements of any governmental authority relating to or
imposing liability or standards of conduct concerning protection of health or the environment or
hazardous substances.
|
9.3
|
|
Notices Regarding Hazardous Substances
.
|
Until full repayment of the loans made pursuant to this Agreement, the Borrower will promptly
notify the Bank in writing of any threatened or pending investigation of the Borrower or its
operations by any governmental agency under any current or future law, regulation or ordinance
pertaining to any hazardous substance.
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9.4
|
|
Site Visits, Observations and Testing
.
|
The Bank and its agents and representatives will have the right at any reasonable time, after
giving reasonable notice to the Borrower, to enter and visit any locations where the collateral
securing this Agreement (the “
Collateral
”) is located for the purposes of observing the
Collateral, taking and removing environmental samples, and conducting tests. The Borrower shall
reimburse the Bank on demand for the costs of any such environmental investigation and testing. The
Bank will make reasonable efforts during any site visit, observation or testing conducted pursuant this
18
paragraph to avoid interfering with the Borrower’s use of the Collateral. The Bank is under no
duty to observe the Collateral or to conduct tests, and any such acts by the Bank will be solely
for the purposes of protecting the Bank’s security and preserving the Bank’s rights under this
Agreement. No site visit, observation or testing or any report or findings made as a result thereof
(“
Environmental Report
”) (i) will result in a waiver of any default of the Borrower; (ii)
impose any liability on the Bank; or (iii) be a representation or warranty of any kind regarding
the Collateral (including its condition or value or compliance with any laws) or the Environmental
Report (including its accuracy or completeness). In the event the Bank has a duty or obligation
under applicable laws, regulations or other requirements to disclose an Environmental Report to the
Borrower or any other party, the Borrower authorizes the Bank to make such a disclosure. The Bank
may also disclose an Environmental Report to any regulatory authority, and to any other parties as
necessary or appropriate in the Bank’s judgment. The Borrower further understands and agrees that
any Environmental Report or other information regarding a site visit, observation or testing that
is disclosed to the Borrower by the Bank or its agents and representatives is to be evaluated
(including any reporting or other disclosure obligations of the Borrower) by the Borrower without
advice or assistance from the Bank.
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9.5
|
|
Definition of Hazardous Substances
.
|
“
Hazardous substances
” means any substance, material or waste that is or becomes designated
or regulated as “toxic,” “hazardous,” “pollutant,” or “contaminant” or a similar designation or
regulation under any current or future federal, state or local law (whether under common law,
statute, regulation or otherwise) or judicial or administrative interpretation of such, including
without limitation petroleum or natural gas.
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9.6
|
|
Continuing Obligation
.
|
The Borrower’s obligations to the Bank under this Article, except the obligation to give notices to
the Bank, shall survive termination of this Agreement and repayment of the Borrower’s obligations
to the Bank under this Agreement.
If any of the following events of default occurs, the Bank may do one or more of the following:
declare the Borrower in default, terminate the Facility No. 1 Commitment and the Facility No. 2
Commitment, stop making any additional credit available to the Borrower, and require the Borrower
to repay its entire debt immediately and without prior notice. If an event that, with notice or the
passage of time, will constitute an event of default has occurred and is continuing, the Bank has
no obligation to make advances or extend additional credit under this Agreement. In addition, if
any event of default occurs, the Bank shall have all rights, powers and remedies available under
any instruments and agreements required by or executed in connection with this Agreement, as well
as all rights and remedies available at law or in equity. If an event of default occurs under the
paragraph entitled “Bankruptcy,” below, with respect to the Borrower, then the entire debt
outstanding under this Agreement will automatically be due immediately.
The Borrower fails to make a payment under this Agreement when due.
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10.2
|
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Other Bank Agreements
.
|
Any default occurs under any other agreement the Borrower (or any Obligor) or any of the Borrower’s
related entities or affiliates (including CET) has with the Bank or any affiliate of the Bank. For
purposes of this Agreement, “Obligor” shall mean any party pledging collateral to the Bank, or, if the Borrower is comprised of
the trustees of a trust, any trustor.
19
Any default occurs under any agreement in connection with any credit the Borrower (or any Obligor)
or any of the Borrower’s related entities or affiliates has obtained from anyone else or that the
Borrower (or any Obligor) or any of the Borrower’s related entities or affiliates has guaranteed.
The Borrower or any Obligor has given the Bank materially false or misleading information or
representations.
The Borrower, any Obligor or any general partner of the Borrower or of any Obligor files a
bankruptcy petition, a bankruptcy petition is filed against any of the foregoing parties, or the
Borrower, any Obligor or any general partner of the Borrower or of any Obligor makes a general
assignment for the benefit of creditors.
A receiver or similar official is appointed for a substantial portion of the Borrower’s or any
Obligor’s business, or the business is terminated, or, if any Obligor is anything other than a
natural person, such Obligor is liquidated or dissolved.
The Bank fails to have an enforceable first lien (except for any prior liens to which the Bank has
consented in writing) on or security interest in any property given as security for this Agreement.
Any lawsuit or lawsuits are filed on behalf of one or more trade creditors against the Borrower or
any Obligor in excess of any insurance coverage.
Any judgments or arbitration awards are entered against the Borrower or any Obligor, or the
Borrower or any Obligor enters into any settlement agreements with respect to any litigation or
arbitration, in excess of any insurance coverage.
If the Borrower or any Obligor is a natural person, the Borrower or such Obligor dies or becomes
legally incompetent; if the Borrower or any Obligor is a trust, a trustor dies or becomes legally
incompetent; if the Borrower or any Obligor is a partnership, any general partner dies or becomes
legally incompetent.
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10.11
|
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Material Adverse Change
.
|
A material adverse change occurs, or is reasonably likely to occur, in the Borrower’s (or any
Obligor’s) business condition (financial or otherwise), operations, properties or prospects, or
ability to repay the credit; or the Bank determines that it is insecure for any other reason.
20
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10.12
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Government Action
.
|
Any government authority takes action that the Bank believes materially adversely affects the
Borrower’s or any Obligor’s financial condition or ability to repay.
|
10.13
|
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Default Under Related Documents
.
|
Any default occurs under any subordination agreement, security agreement, deed of trust, mortgage,
the CET Pledged Note, the CET Security Agreement or any other document required by or delivered in
connection with this Agreement or any such document is no longer in effect.
|
10.14
|
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Other Breach Under Agreement
.
|
A default occurs under any other term or condition of this Agreement not specifically referred to
in this Article. This includes any failure by the Borrower (or any other party named in the
Covenants section) to comply with any financial covenants set forth in this Agreement, whether such
failure is evidenced by financial statements delivered to the Bank or is otherwise known to the
Borrower or the Bank.
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11.
|
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ENFORCING THIS AGREEMENT; MISCELLANEOUS
|
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11.1
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GAAP
.
|
Except as otherwise stated in this Agreement, all financial information provided to the Bank and
all financial covenants will be made under generally accepted accounting principles, consistently
applied.
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11.2
|
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Foreign Eligible Accounts Receivable
.
|
In the event the Accounts Receivable of Borrower with respect to Mayne Pharma PTY, Ltd. (a) are in
an amount not less than $100,000 and (b) but for the exclusion in clause (G) of the definition of
“Eligible Accounts Receivable” in
Subsection 1.3(b)(i)
above, such Accounts Receivable
would otherwise be Eligible Accounts Receivable, then the Borrower and the Bank agree to enter into
negotiations, in good faith, regarding an amendment of the definition of “Eligible Accounts
Receivable” to take into account all or a portion of such Mayne Pharma PTY, Ltd. receivables in a
mutually acceptable manner. Unless and until such an amendment has been approved, executed and
delivered by the Borrower and the Bank, all Eligible Accounts Receivable shall be determined in
accordance with the terms in this Agreement without reference to this
Section 11.2
or any
similar understandings between the parties.
This Agreement is governed by Tennessee law.
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11.4
|
|
Successors and Assigns
.
|
This Agreement is binding on the Borrower’s and the Bank’s successors and assignees. The Borrower
agrees that it may not assign this Agreement without the Bank’s prior consent. The Bank may sell
participations in or assign this loan, and may exchange information about the Borrower (including,
without limitation, any information regarding any hazardous substances) with actual or potential
participants or assignees. If a participation is sold or the loan is assigned, the purchaser will
have the right of set-off against the Borrower.
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11.5
|
|
Interest and Loan Charges Not to Exceed Maximum Amounts Allowed by Law
.
|
Anything in this Agreement or any of the other Loan Documents to the contrary notwithstanding, in
no event whatsoever, whether by reason of advancement of proceeds of the loans hereunder,
acceleration of the maturity of the unpaid balance of such loans or otherwise, shall the interest
and loan charges agreed to be paid to the Bank for the use of the money advanced or to be advanced
hereunder exceed the maximum amounts collectible under
applicable laws in effect from time to time. It is understood and agreed by the parties that, if
for any reason whatsoever the interest or loan charges paid or contracted to be paid by the
Borrower in respect of the loans made
21
hereunder shall exceed the maximum amounts collectible under
applicable laws in effect from time to time, then
ipso
facto
, the obligation to pay
such interest and/or loan charges shall be reduced to the maximum amounts collectible under
applicable laws in effect from time to time, and any amounts collected by the Bank that exceed such
maximum amounts shall be applied to the reduction of the principal balance of the loans and/or
refunded to the Borrower so that at no time shall the interest or loan charges paid or payable in
respect of the loans hereunder exceed the maximum amounts permitted from time to time by applicable
law.
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11.6
|
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Arbitration and Waiver of Jury Trial
.
|
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(a)
|
|
This paragraph concerns the resolution of any controversies or claims between the parties,
whether arising in contract, tort or by statute, including but not limited to controversies or
claims that arise out of or relate to: (i) this agreement (including any renewals, extensions
or modifications); or (ii) any document related to this agreement (collectively a “Claim”).
For the purposes of this arbitration provision only, the term “parties” shall include any
parent corporation, subsidiary or affiliate of the Bank involved in the servicing, management
or administration of any obligation described or evidenced by this agreement.
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(b)
|
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At the request of any party to this agreement, any Claim shall be resolved by binding
arbitration in accordance with the Federal Arbitration Act (Title 9, U.S. Code) (the “Act”).
The Act will apply even though this agreement provides that it is governed by the law of a
specified state. The arbitration will take place on an individual basis without resort to any
form of class action.
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(c)
|
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Arbitration proceedings will be determined in accordance with the Act, the then-current rules
and procedures for the arbitration of financial services disputes of the American Arbitration
Association or any successor thereof (“AAA”), and the terms of this paragraph. In the event of
any inconsistency, the terms of this paragraph shall control. If AAA is unwilling or unable to
(i) serve as the provider of arbitration or (ii) enforce any provision of this arbitration
clause, the Bank may designate another arbitration organization with similar procedures to
serve as the provider of arbitration.
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(d)
|
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The arbitration shall be administered by AAA and conducted, unless otherwise required by law,
in any U.S. state where real or tangible personal property collateral for this credit is
located or if there is no such collateral, in the state specified in the governing law section
of this agreement. All Claims shall be determined by one arbitrator; however, if Claims exceed
Five Million Dollars ($5,000,000), upon the request of any party, the Claims shall be decided
by three arbitrators. All arbitration hearings shall commence within ninety (90) days of the
demand for arbitration and close within ninety (90) days of commencement and the award of the
arbitrator(s) shall be issued within thirty (30) days of the close of the hearing. However,
the arbitrator(s), upon a showing of good cause, may extend the commencement of the hearing
for up to an additional sixty (60) days. The arbitrator(s) shall provide a concise written
statement of reasons for the award. The arbitration award may be submitted to any court having
jurisdiction to be confirmed, judgment entered and enforced.
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(e)
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The arbitrator(s) will give effect to statutes of limitation in determining any Claim and may
dismiss the arbitration on the basis that the Claim is barred. For purposes of the application
of the statute of limitations, the service on AAA under applicable AAA rules of a notice of
Claim is the equivalent of the filing of a lawsuit. Any dispute concerning this arbitration
provision or whether a Claim is arbitrable shall be determined by the arbitrator(s). The
arbitrator(s) shall have the power to award legal fees pursuant to the terms of this
agreement.
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(f)
|
|
This paragraph does not limit the right of any party to: (i) exercise self-help remedies,
such as but not limited to, setoff; (ii) initiate judicial or non-judicial foreclosure against
any real or personal property collateral; (iii) exercise any judicial or power of sale rights,
or (iv) act in a court of law to obtain an interim remedy, such as but not limited to,
injunctive relief, writ of possession or appointment of a receiver, or additional or
supplementary remedies.
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22
|
(g)
|
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The filing of a court action is not intended to constitute a waiver of the right of any
party, including the suing party, thereafter to require submittal of the Claim to arbitration.
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(h)
|
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By agreeing to binding arbitration, the parties irrevocably and voluntarily waive any right
they may have to a trial by jury in respect of any Claim. Furthermore, without intending in
any way to limit this agreement to arbitrate, to the extent any Claim is not arbitrated, the
parties irrevocably and voluntarily waive any right they may have to a trial by jury in
respect of such Claim. This provision is a material inducement for the parties entering into
this agreement.
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11.7
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Severability; Waivers
.
|
If any part of this Agreement is not enforceable, the rest of this Agreement may be enforced. The
Bank retains all rights, even if it makes a loan after default. If the Bank waives a default, it
may enforce a later default. Any consent or waiver under this Agreement must be in writing.
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11.8
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Costs and Attorneys’ Fees
.
|
The Borrower shall reimburse the Bank for any reasonable costs and attorneys’ fees incurred by the
Bank in connection with the enforcement or preservation of any rights or remedies under this
Agreement and any other documents executed in connection with this Agreement, and in connection
with any amendment, waiver, “workout” or restructuring under this Agreement. In the event of a
lawsuit or arbitration proceeding, the prevailing party is entitled to recover costs and reasonable
attorneys’ fees incurred in connection with the lawsuit or arbitration proceeding, as determined by
the court or arbitrator. In the event that any case is commenced by or against the Borrower under
the Bankruptcy Code (Title 11, United States Code) or any similar or successor statute, the Bank is
entitled to recover costs and reasonable attorneys’ fees incurred by the Bank related to the
preservation, protection, or enforcement of any rights of the Bank in such a case. As used in this
paragraph, “attorneys’ fees” includes the allocated costs of the Bank’s in-house counsel.
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11.9
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Individual Liability
.
|
If the Borrower is a natural person, the Bank may proceed against the Borrower’s business and
non-business property in enforcing this and other agreements relating to this loan. If the Borrower
is a partnership, the Bank may proceed against the business and non-business property of each
general partner of the Borrower in enforcing this and other agreements relating to this loan.
This Agreement, the Loan Documents and any related security or other agreements required by this
Agreement, collectively:
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(a)
|
|
represent the sum of the understandings and agreements between the Bank and the Borrower
concerning this credit;
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(b)
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|
replace any prior oral or written agreements between the Bank and the Borrower concerning
this credit; and
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(c)
|
|
are intended by the Bank and the Borrower as the final, complete and exclusive statement of
the terms agreed to by them.
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In the event of any conflict between this Agreement and any other agreements required by this
Agreement, this Agreement will prevail. Any reference in any related document to a “promissory
note” or a “note” executed by the Borrower and dated as of the date of this Agreement shall be
deemed to refer to this Agreement and any promissory note(s) that may be executed as additional
evidence of the debt hereunder, all as now in effect or as hereafter amended, modified, extended,
renewed or restated.
23
The Borrower will indemnify and hold the Bank harmless from any loss, liability, damages,
judgments, and costs of any kind relating to or arising directly or indirectly out of (a) this
Agreement or any document required hereunder, (b) any credit extended or committed by the Bank to
the Borrower hereunder, and (c) any litigation or proceeding related to or arising out of this
Agreement, any such document, or any such credit. This indemnity includes but is not limited to
attorneys’ fees (including the allocated cost of in-house counsel). This indemnity extends to the
Bank, its parent, subsidiaries and all of their directors, officers, employees, agents, successors,
attorneys, and assigns. This indemnity will survive repayment of the Borrower’s obligations to the
Bank. All sums due to the Bank hereunder shall be obligations of the Borrower, due and payable
immediately without demand.
Unless otherwise provided in this Agreement or in another agreement between the Bank and the
Borrower, all notices required under this Agreement shall be personally delivered or sent by first
class mail, postage prepaid, or by overnight courier, to the addresses on the signature page of
this Agreement, or sent by facsimile to the fax numbers listed on the signature page, or to such
other addresses as the Bank and the Borrower may specify from time to time in writing. Notices and
other communications shall be effective (i) if mailed, upon the earlier of receipt or five (5) days
after deposit in the U.S. mail, first class, postage prepaid, (ii) if telecopied, when transmitted,
or (iii) if hand-delivered, by courier or otherwise (including telegram, lettergram or mailgram),
when delivered.
Article and paragraph headings are for reference only and shall not affect the interpretation or
meaning of any provisions of this Agreement.
This Agreement may be executed in as many counterparts as necessary or convenient, and by the
different parties on separate counterparts each of which, when so executed, shall be deemed an
original but all such counterparts shall constitute but one and the same agreement.
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11.15
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Prior Agreement Superseded
.
|
This Agreement supersedes the Existing Loan Agreement, and any credit outstanding thereunder shall
be deemed to be outstanding under this Agreement.
[This space left blank intentionally; signature page follows]
24
This Agreement is executed as of the date stated at the top of the first page.
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BANK OF AMERICA, N.A.
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CUMBERLAND PHARMACEUTICALS, INC.
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By:
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/s/ Elizabeth L. Knox
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By:
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Typed Name:
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Typed Name:
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Title:
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SVP
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Title:
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Address where notices to the Bank are to be sent:
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Address where notices to the Borrower are to be sent:
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Bank of America, N.A.
Bank of America Plaza
414 Union Street
Nashville, TN 37219-1697
Attn: Healthcare Banking Group (TN1-100-04-17)
Facsimile: (615) 749-4951
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Cumberland Pharmaceuticals, Inc.
2525 West End Avenue, Suite 950
Nashville, Tennessee 37203
Attn: A.J. Kazimi, Chief Executive Officer
Facsimile No. (615) __-____
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ACKNOWLEDGED:
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CUMBERLAND EMERGING TECHNOLOGIES, INC.
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By:
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Typed Name:
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Title:
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25
This Agreement is executed as of the date stated at the top of the first page.
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BANK OF AMERICA, N.A.
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CUMBERLAND PHARMACEUTICALS, INC.
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By:
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By:
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/s/ A.J. Kazimi
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Typed Name:
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Typed Name:
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A.J. Kazimi
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Title:
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Title:
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C.E.O.
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Address where notices to the Bank are to be sent:
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Address where notices to the Borrower are to be sent:
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Bank of America, N.A.
Bank of America Plaza
414 Union Street
Nashville, TN 37219-1697
Attn: Healthcare Banking Group (TN1-100-04-17)
Facsimile: (615) 749-4951
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Cumberland Pharmaceuticals, Inc.
2525 West End Avenue, Suite 950
Nashville, Tennessee 37203
Attn: A.J. Kazimi, Chief Executive Officer
Facsimile No. (615)
255-0068
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ACKNOWLEDGED:
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CUMBERLAND EMERGING TECHNOLOGIES, INC.
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By:
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/s/ A.J. Kazimi
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Typed Name:
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A.J. Kazimi
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Title:
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C.E.O.
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26
SCHEDULE 1
Existing Loan Documents
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1.
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Third Amended and Restated Promissory Note dated March 1, 2005, in the principal amount not
exceeding $3,500,000.00, made and executed by Borrower and payable to the order of Bank.
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2.
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Trademark and Patent Security Agreement dated April 19, 2002, between Borrower and Bank, as
amended by that certain First Amendment to Trademark and Patent Security Agreement dated
August 1, 2002.
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3.
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Security Agreement dated April 19, 2002, between Borrower and Bank, as amended by that
certain First Amendment to Security Agreement dated August 1, 2002.
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27
EXHIBIT A
COMPLIANCE CERTIFICATE
This Compliance Certificate is delivered pursuant to Section 8.2 of that certain Loan
Agreement dated as of April 6, 2006 (together with all amendments and modifications, if any, from
time to time made thereto, the “
Loan Agreement
”), between Cumberland Pharmaceuticals, Inc.,
a Tennessee corporation (the “
Borrower
”) and Bank of America, N.A. (the “
Bank
”).
Unless otherwise defined, terms used herein (including the attachments hereto) have the meanings
provided in the Loan Agreement.
The undersigned, being the duly elected, qualified and acting
of the Borrower, on
behalf of the Borrower and solely in his or her capacity as an officer of the Borrower, hereby
certifies and warrants that:
1. He or she is the
of the Borrower and that, as such, he or she is
authorized to execute this certificate on behalf of the Borrower.
2. As of
, 200
:
(a) The Borrower was not in default of any of the provisions of the Loan
Agreement during the period as to which this Compliance Certificate relates; and
(b) The financial statements being submitted to the Bank by the Borrower with
this Certificate are true and correct as of the date hereof.
IN WITNESS WHEREOF, the undersigned has executed and delivered this certificate, this
day of
, 200___.
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CUMBERLAND PHARMACEUTICALS, INC.
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By:
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Typed Name:
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Title:
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28
EXHIBIT B
BORROWING BASE CERTIFICATE
This Borrowing Base Certificate is delivered pursuant to pursuant to Section 8.2 of that
certain Loan Agreement dated as of April 6, 2006 (together with all other amendments and
modifications, if any, from time to time made thereto, the “
Loan Agreement
”), between
Cumberland Pharmaceuticals, Inc., a Tennessee corporation (the “
Borrower
”) and Bank of
America, N.A (the “
Bank
”). Unless otherwise defined, terms used herein (including the
attachments hereto) have the meanings provided in the Loan Agreement.
The undersigned, being the duly elected, qualified and acting
of the Borrower,
on behalf of the Borrower and solely in his or her capacity as an officer of the Borrower, hereby
certifies and warrants that:
1. He or she is the
of the Borrower and that, as such, he or she is
authorized to execute this certificate on behalf of the Borrower.
2. Attached hereto is a true and accurate listing of accounts receivable aged from date
of invoice up through
, 200
.
3. Attached hereto is a true and accurate listing of the inventory of the Borrower.
4. The Borrowing Base as of
, 200
, as such term is defined under
the Loan Agreement, is $
.
IN WITNESS WHEREOF, the undersigned has executed and delivered this certificate, this
day of
, 200
.
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CUMBERLAND PHARMACEUTICALS, INC.
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By:
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Typed Name:
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Title:
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29
EXHIBIT 10.21
*Certain portions of this exhibit have been omitted pursuant to a request for confidential
treatment which has been filed separately with the SEC.
2525 WEST END
OFFICE LEASE AGREEMENT
BY AND BETWEEN
NASHVILLE HINES DEVELOPMENT, LLC
AS LANDLORD
AND
CUMBERLAND PHARMACEUTICALS INC.,
AS TENANT
BASIC LEASE INFORMATION
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Lease Date:
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Sept 10, 2005
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Tenant:
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Cumberland Pharmaceuticals Inc.
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Address of Tenant:
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2525 West End Avenue, Suite 950
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Nashville, Tennessee 37203
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Primary Contact:
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Jean W. Marstiller
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Landlord:
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Nashville Hines Development, LLC
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Address of Landlord:
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Five Greenway Plaza
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Houston, Texas 77046
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Attention: F. Russ Nicholson
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Leased Premises:
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Approximately 6,341 square feet of RSF
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Located on Floor 9
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Commencement Date:
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January 1, 2006
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Lease Term:
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Five (5) years
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Base Rental:
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Per
Exhibit G
. Initial monthly Base Rental is [***].
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Initial Allowance:
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[***] per square foot of RSF
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The foregoing Basic Lease Information is hereby incorporated into and made a part of the Lease
identified above. In the event of any conflict between any Basic Lease Information and the Lease,
the Lease shall control.
TABLE OF CONTENTS
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PAGE
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ARTICLE I
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1
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1.1. Leased Premises
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1
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1.2. Term
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3
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1.3. Use
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3
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1.4. Landlord’s Relocation Right
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4
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1.5. Surrender of Premises
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5
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1.6. Survival
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5
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ARTICLE II
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6
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2.1. Rental Payments
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6
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2.2. Base Rental
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6
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2.3. Additional Rental
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7
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2.4. Operating Expenses
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8
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2.5. Security Deposit
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11
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2.6. Landlord’s Lien
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11
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ARTICLE III
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11
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3.1. Services
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11
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3.2. Keys and Locks
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13
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3.3. Graphics, Building Directory and Name
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13
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3.4. Parking
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14
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ARTICLE IV
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15
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4.1. Care of Leased Premises
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15
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4.2. Entry for Repairs and Inspection
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15
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4.3. Nuisance
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15
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4.4. Laws and Regulations; Encumbrances; Rules of Building
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15
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4.5. Legal Use and Violations of Insurance Coverage
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15
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4.6. Hazardous Substances
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16
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4.7. Tenant Taxes
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16
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ARTICLE V
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16
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5.1. Initial Allowance; Leasehold Improvements
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16
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5.2. Repairs by Landlord
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17
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5.3. Repairs by Tenant
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17
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ARTICLE VI
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18
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6.1. Condemnation
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18
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6.2. Damages from Certain Causes
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19
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6.3. Casualty Clause
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19
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6.4. Casualty Insurance
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20
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6.5. Liability Insurance
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21
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6.6. Hold Harmless
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21
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6.7. Waiver of Subrogation Rights
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21
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PAGE
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ARTICLE VII
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22
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7.1. Default and Remedies
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22
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7.2. Insolvency or Bankruptcy
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26
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7.3. Late Payments
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26
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7.4. Attorney’s Fees
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26
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7.5. Waiver of Homestead
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26
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7.6. No Waiver of Rights
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27
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7.7. Holding Over
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27
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7.8. Subordination
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27
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7.9. Estoppel Certificate
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29
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ARTICLE VIII
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30
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8.1. Sublease or Assignment by Tenant
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30
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8.2. Assignment by Landlord
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32
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8.3. Peaceful Enjoyment
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32
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8.4. Limitation of Landlord’s Personal Liability
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32
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8.5. Force Majeure
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33
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ARTICLE IX
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33
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9.1. Notices
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33
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9.2. Miscellaneous
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34
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9.3. Option to Renew
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36
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EXHIBIT A
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SITE PLAN AND LOCATION OF THE BUILDING
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EXHIBIT A-1
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DESCRIPTION OF LAND
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EXHIBIT B
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FLOOR PLAN OF LEASED PREMISES
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EXHIBIT C
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AIR CONDITIONING AND HEATING SERVICES
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EXHIBIT D
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BUILDING RULES AND REGULATIONS
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EXHIBIT F
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[INTENTIONALLY DELETED]
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EXHIBIT G
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BASE RENTAL
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EXHIBIT H
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JANITORIAL SPECIFICATIONS
|
ii
2525 WEST END
OFFICE LEASE AGREEMENT
THIS LEASE AGREEMENT
(
“Lease”
) is
made and entered into on this
10
th
day
of
Sept
, 2005 (the
“Date of Lease”
),
by and between NASHVILLE HINES DEVELOPMENT, LLC, a
limited partnership organized under the laws of the State of Delaware, whose address for purposes
hereof is Five Greenway Plaza, Houston, Texas 77046 Attention: F. Russ Nicholson (hereinafter
called
“Landlord”
),
and CUMBERLAND PHARMACEUTICALS INC., a Tennessee corporation, whose address for
purposes hereof is 2525 West End Avenue, Suite 950, Nashville, TN 37203, Attention: Jean W.
Marstiller, (the address of the Leased Premises within the Building) (hereinafter called
“Tenant”
)
.
ARTICLE I.
1.1.
Leased Premises.
Landlord has constructed or intends to construct certain improvements on a certain tract or
parcel of land located on West End Avenue in Nashville, Davidson County, Tennessee, and more
particularly described in
Exhibit A-1,
attached hereto and incorporated herein by this
reference (the
“
Land
”).
The certain improvements including an office building with a retail area
included within it currently known as 2525 West End Avenue (the
“Building”
)
and the Parking
Facility (as defined herein). The Building, the Parking Facility, and the Land together with all
common areas not specifically made a part of the Building or the Parking Facility, and all other
improvements from time to time located thereon or related thereto are hereinafter collectively
referred to as the
“
Project
.”
Subject to and upon the terms hereinafter set forth, and in
consideration of the sum of Ten Dollars ($10.00), the premises, and the mutual covenants set
forth herein, the receipt and sufficiency of which are hereby acknowledged, Landlord does hereby
lease and demise to Tenant and Tenant does hereby lease and take from Landlord (subject to all
matters of record in Davidson County, Tennessee, that affect the Project) those certain premises
(hereinafter sometimes called the
“Leased Premises”
) located in the Building as shown on
Exhibit A,
attached hereto and incorporated herein, such Leased Premises being more
particularly described as follows:
Approximately 6,341 RSF on the ninth (9
th
) Floor of the Building and as
generally described or depicted on
Exhibit B,
attached hereto and
incorporated herein.
Tenant accepts the Leased Premises “AS-IS.” Landlord has not undertaken to perform any alteration
or improvement to the Lease Premises.
The terms
“Rentable Square Feet”
and
“RSF”,
as used herein, shall refer to (i) in the case
of a floor leased to a single tenant, the total square footage of all floor area measured from
the inside surface of the exterior glass line of the Building to the inside surface of the
opposite exterior glass line, excluding only Service Areas (defined below) and General Common
Areas (defined below), plus an allocation of the square footage of the General Common Areas, and
(ii) in the case of a floor leased to more than one tenant, the total square footage of all floor
areas within the inside surface of the exterior glass line of the Building enclosing the Leased
Premises and measured to the mid-point of demising walls (i.e., walls separating the Leased
Premises from areas leased to or held for lease to other tenants, from On-Floor Common Areas
(defined
1
below), and from General Common Areas), excluding only Service Areas, plus an allocation of
the square footage of the General Common Areas and an allocation of the square footage of the
On-Floor Common Areas. No deductions from Rentable Square Feet shall be made for columns or
projections.
“
Service Areas
”
shall mean the areas within (and measured from the exterior surface of the
interior walls enclosing, or from the inside surface of the exterior glass or wall enclosing, as
the case may be) Building stairs, elevator shafts, flues, vents, stacks, pipe shafts and vertical
ducts. Areas for the specific use of Tenant or other tenants of the Building or installed at the
request of Tenant such as special stairs or elevators are not included within the definition of
Service Areas.
“General Common Areas”
shall mean those areas within (and measured from the midpoint of the
walls or from the inside surface of the exterior glass enclosing) the Building’s elevator machine
rooms, main mechanical rooms, electrical rooms, and public lobbies, engineering and cleaning
staging areas, and other areas not leased or held for lease within the Building but which are
reasonably necessary for the proper utilization of the Building or to provide customary services
to the Building, plus an allocation of any On-Floor Common Areas to the General Common Areas on
the floor for floors that contain General Common Areas. The allocation of the square footage of
the General Common Areas shall be equal to the total square footage of the General Common Areas
multiplied by a fraction, the numerator of which is the Rentable Square Feet of the Leased
Premises (excluding the total square footage of the General Common Areas) and the denominator of
which is the total of all Rentable Square Feet contained in the Building (excluding the allocation
of the General Common Areas).
“On-Floor Common Areas”
shall mean the total square footage of all areas within (and measured
from the midpoint of the walls enclosing) public corridors, elevator foyers, rest rooms,
mechanical rooms, janitor closets, telephone and equipment rooms, and other similar facilities for
the use of all tenants on the floor on which the Leased Premises are located. The allocation of
the square footage of the On-Floor Common Areas shall be equal to the total On-Floor Common Areas
on said floor multiplied by a fraction, the numerator of which is the Rentable Square Feet of the
portion of the Leased Premises (excluding the allocations of General Common Areas and On-Floor
Common Areas) located on said floor and the denominator of which is the total of all Rentable
Square Feet on said floor (excluding the allocations of General Common Areas and On-Floor Common
Areas on the floor).
“
Parking Facility
”
shall mean the parking structure that is constructed or intended to be
constructed and located adjacent to the Building (the
“
Adjacent Parking Facility”),
the surface
parking area adjacent to the Building (the
“Surface Parking Area”),
and the existing garage
located across Kensington Place (the
“Kensington Parking Facility”)
as
shown and labeled on
Exhibit A
(which shall only be used by Tenant as parking for Tenant’s employees and the
employees of other office tenants, not customer parking), together with any connecting walkways,
covered walkways, or other means of access to said building or buildings, the grounds related
thereto and any additional improvements at any time related thereto. The Parking Facility may be
operated by a parking contractor designated from time to time by Landlord.
(a) This Lease does not grant Tenant any rights to light, air or view over or about the Land
or any other real property. Landlord specifically excepts and reserves to itself all
2
rights to and the use of any roofs, the exterior portions of the Leased Premises, the Land,
improvements and air and other rights below the improved floor level of the Leased Premises, the
improvements and air and other rights above the improved ceiling of Leased Premises, the
improvements and air and other rights located outside the demising walls of the Leased Premises and
such areas within the Leased Premises as are required for installation of utility lines and other
installations required to serve the Building or any occupants of the Building, and Landlord
specifically reserves to itself the right to use, maintain and repair same, and no rights with
respect thereto are conferred upon Tenant, unless otherwise specifically provided herein.
(b) Tenant has been in possession of the Leased Premises prior to the Commencement Date
pursuant to a sublease agreement, is aware of the condition of the Leased Premises and represents
and acknowledges that the Leased Premises is, as of the Commencement Date, in good order and
satisfactory condition. Tenant acknowledges that no promise by or on behalf of Landlord, any of
Landlord’s beneficiaries, the managing agent of the Building, the leasing agent of the Building or
any of their respective agents, partners or employees to alter, remodel, improve, repair, decorate
or clean the Leased Premises has been made to or relied upon by Tenant, and that no representation
respecting the condition of the Leased Premises or the Building by or on behalf of Landlord, any of
Landlord’s beneficiaries, the managing agent of the Building, the leasing agent of the Building or
any of their respective agents, partners or employees has been made to or relied upon by Tenant,
except to the extent expressly set forth in this Lease.
1.2.
Term.
(a) Subject to and upon the terms and conditions set forth herein, or in any exhibit hereto,
the term of this Lease shall commence on the Commencement Date (defined below) and shall expire at
6:00 P.M on December 31, 2010.
(b) As used herein,
“Commencement Date”
means January 1, 2006.
1.3.
Use
. The Leased Premises are to be used and occupied by Tenant (and its permitted
assignees and subtenants) solely for the purpose of office space and for no other purpose. The
Leased Premises shall not be used for any purpose which would create unreasonable elevator loads or
otherwise unreasonably interfere with Building operations, and Tenant shall not engage in any
activity which is not in keeping with the first class standards of the Building. In no event shall
the Leased Premises be used for the purpose of installing, marketing, operating, or providing
electronic telecommunications, information or data processing, storage or transmissions, or other
electronic office services or equipment for tenants or other occupants of the Building on a
shared-usage basis through a central switch or a local area network.
1.4.
Landlord’s Relocation Right.
Upon ninety (90) days’ written notice to Tenant
(“
Landlord’s Relocation Notice
”),
Landlord may substitute for the Leased Premises other premises
in the Building (the
“
New Premises
”),
in which event the New Premises shall be deemed to be the
Leased Premises for all purposes hereunder, provided:
(a) The New Premises shall be comparable to the Leased Premises in size, configuration and
market value;
3
(b) Landlord and Tenant shall cooperate in good faith in making any changes to the Tenant
Program, Space Plan, Preliminary Working Drawings, and/or Working Drawings (as defined herein and
as may be applicable depending upon which, if any, of the foregoing has then been prepared at the
time of Landlord’s election to relocate the Leased Premises) so as to conform the leasehold
improvements in the New Premises as closely as practicable to those planned for the Leased
Premises;
(c) To the extent Tenant shall have incurred any expense in the preparation of the Tenant
Program, Space Plan, Preliminary Working Drawings, Working Drawings and/or leasehold improvements
(as defined herein and as may be applicable depending upon which, if any, of the foregoing has
then been prepared, purchased or installed at the time of Landlord’s election to relocate the
Leased Premises), Landlord shall, at Landlord’s expense, cause each of such applicable items to be
reproduced for the New Premises so that Tenant shall not incur expenses in connection therewith by
reason of the exercise by Landlord of the relocation right contained herein. In addition, Landlord
shall reimburse Tenant within thirty (30) days after receipt of genuine, third-party invoices
marked “paid” for Tenant’s moving costs and all costs of reprinting stationery, cards and other
printed material bearing tenant’s address at the Lease Premises if such address changes due to the
relocation (but only the reasonable quantities existing immediately prior to the relocation); and
(d) Upon substitution of the New Premises for the Leased Premises, the Rentable Square Feet
of the New Premises shall control for purposes of this Lease, and Tenant Percentage Share
(hereinafter defined) and the Base Rental shall be recalculated and adjusted based on the Rentable
Square Feet of the New Premises.
Tenant shall not be entitled to any compensation for any inconvenience or interference with
Tenant’s business, nor to any abatement or reduction in rent or other sums payable by Tenant
hereunder, nor shall Tenant’s obligations under this Lease be otherwise affected, as a result of
the substitution of the New Premises, except as otherwise expressly provided in this Section.
Tenant agrees to cooperate with Landlord so as to facilitate the prompt completion by Landlord of
its obligations under this
Section.
Without limiting the generality of the preceding sentence,
Tenant agrees to promptly provide to Landlord such approvals, instructions, plans, specifications
and other information as may be reasonably requested by Landlord in connection with such
obligations. At Landlord’s request, Tenant shall execute a supplement to this Lease confirming the
substitution of the New Premises for the Leased Premises. Within twenty (20) days after receipt of
Landlord’s Relocation Notice, Tenant shall either accept such relocation or deliver written notice
to Landlord terminating this Lease effective no later than the ninetieth (90
th
) day
after Landlord’s relocation Notice. Tenant’s failure to deliver such termination notice within
such twenty (20) day period shall be deemed conclusively Tenant’s election to relocate to the New
Premises.
1.5.
Surrender of Premises.
(a) Upon the termination of this Lease by lapse of time or otherwise or upon the earlier
termination of Tenant’s right of possession, Tenant shall quit and surrender possession of the
Leased Premises to Landlord, broom clean, in the same condition as upon delivery of possession to
Tenant hereunder, normal wear and tear excepted. Before surrendering possession of the Leased
Premises, Tenant shall, without expense to Landlord, remove all signs, furnishings, equipment
(including all communication and other cables),
4
trade fixtures, merchandise and other personal property installed or placed in the Leased
Premises and all debris and rubbish, and Tenant shall repair all damage to the Leased Premises
resulting from such removal; provided if Tenant is then in default under this Lease, Tenant shall
not remove any such item unless Tenant receives written directions from Landlord authorizing or
directing the removal thereof. If Tenant fails to remove any of the signs, furnishings, equipment,
trade fixtures, merchandise and other personal property installed or placed in the Leased Premises
by the expiration or termination of this Lease, then Landlord may, at its sole option, (i) treat
Tenant as a holdover, in which event the provisions of this Lease regarding holding over shall
apply, (ii) deem any or all of such items abandoned and the sole property of Landlord, or (iii)
remove any and all such items and dispose of same in any manner. Tenant shall pay Landlord on
demand any and all expenses incurred by Landlord in the removal of such items, including, without
limitation, the cost of repairing any damage to the Leased Premises or the Building caused by such
removal and storage charges (if Landlord elects to store such property).
(b) All installations, additions, partitions, hardware, cables, wires, fixtures and
improvements, temporary or permanent (including, but not limited to, Tenant’s Extra Work), except
for Tenant’s signs, furnishings, equipment, communication cables, telephone switches, trade
fixtures, merchandise and other personal property, in or upon the Leased Premises, whether placed
there by Tenant or Landlord, shall, upon the termination of this lease by lapse of time or
otherwise or upon the earlier termination of Tenant’s right of possession, become Landlord’s
property and shall remain upon the Leased Premises, all without compensation, allowance or credit
to Tenant; provided, however, that if at the time Landlord consents to Tenant’s installation of
any installations, additions, partitions, hardware, cables, wires, fixtures and improvements or at
any time prior to termination of this Lease, Landlord requires removal of the same upon
termination, then Tenant, at Tenant’s sole cost and expense, upon termination of this Lease by
lapse of time or otherwise or upon the earlier termination of Tenant’s right of possession, shall
promptly remove such designated items placed in or upon the Leased Premises by or on behalf of
Tenant and, repair any damage to the Leased Premises or the Building caused by such removal,
failing which Landlord may remove the same and repair the Leased Premises or the Building, as the
case may be, and Tenant shall pay the cost thereof to Landlord on written demand.
1.6.
Survival.
Any claim, cause of action, liability or obligation arising under the
term of this Lease and under the provisions hereof in favor of a party hereto against or
obligating the other party hereto and all of Tenant’s indemnification obligations hereunder shall
survive the expiration or any earlier termination of this Lease.
ARTICLE II.
2.1.
Rental Payments.
(a) Commencing on the Commencement Date and continuing thereafter throughout the full term of
this Lease, Tenant hereby agrees to pay the Base Rental (defined below), and Tenant’s Forecast
Additional Rental (defined below) and Tenant’s Additional Rental Adjustment (defined below) in
accordance with this Article. The Base Rental and Tenant’s Forecast Additional Rental shall be due
and payable in equal monthly installments on the first
5
day of each calendar month during the initial term of this Lease and any extensions or
renewals hereof, and Tenant hereby agrees to so pay such rent to Landlord at Landlord’s address as
provided herein (or such other address as may be designated by Landlord from time to time) monthly
in advance.
(b) If the Commencement Date is other than the first day of a calendar month, then the
installments of Base Rental and Tenant’s Forecast Additional Rental for such month shall be
prorated and the installment or installments so prorated shall be paid in advance. Said
installments for such prorated month shall be calculated by multiplying the equal monthly
installment by a fraction, the numerator of which shall be the number of days of the Lease term
occurring during said commencement or expiration month, as the case may be, and the denominator of
which shall be thirty (30). If the term of this Lease commences or expires on other than the first
day of a calendar year, Tenant’s Forecast Additional Rental and Tenant’s Additional Rental shall be
prorated for such commencement or expiration year, as the case may be, by multiplying Tenant’s
Forecast Additional Rental and Tenant’s Additional Rental by a fraction, the numerator of which
shall be the number of whole and partial months of the Lease term during the commencement or
expiration year, as the case may be, and the denominator of which shall be twelve (12). In such
event the Tenant’s Additional Rental Adjustment shall be made as soon as reasonably possible after
the termination of this Lease.
(c) For purposes hereof, the term
“Rental”
shall mean and collectively refer to the Base
Rental, Tenant’s Forecast Additional Rental, Tenant’s Additional Rental Adjustment and other sums
payable by Tenant hereunder. Tenant agrees to pay all Rental at the times and in the manner
provided in this Lease, without abatement, demand, notice, set-off, deduction or counterclaim, and
all sums payable under this Lease by Tenant shall be deemed to be rent due and owing hereunder. All
Rental shall bear interest from the tenth (10
th
) day after the date due thereof until
paid at the lesser of (i) a per annum rate equal to the “prime rate” announced by Chase Manhattan
Bank, New York, New York, or its successor, (or if the “prime rate” is discontinued, the rate
announced as that being charged to the most credit-worthy commercial borrowers) plus two percent
(2%) or (ii) the maximum interest rate per annum allowed by law.
2.2.
Base Rental.
Throughout the full term of this Lease, Tenant hereby agrees to pay
a base annual rental (the
“Base Rental”)
in accordance with the schedule attached hereto as
Exhibit G,
as such dollar amount may be adjusted from lease year to lease year pursuant to
the terms of this Lease.
2.3.
Additional Rental.
(a) Commencing with the calendar year in which the Commencement Date occurs and continuing
thereafter for each calendar year during the full term of this Lease, Landlord shall present to
Tenant prior to the beginning of said calendar year (or for the calendar year in which the Lease
term commences, on the Commencement Date) a statement of Tenant’s Forecast Additional Rental.
Landlord’s failure to deliver such a statement of Tenant’s Forecast Additional Rental shall not
operate to excuse Tenant from the payment of the monthly installment of Tenant’s Forecast
Additional Rental due under
Section 2.
1(a)
.
Rather, Tenant shall continue to pay the monthly
installment of Tenant’s Forecast Additional Rental based on Landlord’s most recent calculation
thereof until such a statement is delivered to Tenant, with such statement being applied
retroactively to the beginning of the calendar year and Tenant
6
making up any under payments immediately upon its receipt of such statement. Landlord may,
from time to time, recalculate Tenant’s Forecast Additional Rental in order to more accurately
reflect Landlord’s good faith estimate of Tenant’s Additional Rental, and Tenant shall commence
paying the recalculated Tenant’s Forecast Additional Rental, in accordance with Section 2.1(a)
hereof, immediately after receiving notice thereof.
(b) As used herein,
“
Tenant’s Forecast Additional Rental”
shall mean Landlord’s reasonable
estimate of Tenant’s Additional Rental (defined below) for the coming calendar year (or, in the
calendar year in which the lease term commences, for such calendar year).
(c) Landlord shall absorb and be responsible for paying Operating Expenses (defined below)
during any calendar year to the extent such Operating Expenses are less than Nine and 17/100
Dollars ($9.17) per square foot of space in the Building leased to rent paying tenants (the
“Expense Stop”
).
As part of Tenant’s Additional Rental, Tenant shall be responsible for paying its
pro rata share of the Operating Expenses for any calendar year in excess of the Expense Stop. For
purposes hereof,
“Tenant’s Additional Rental”
for any calendar year shall mean Tenant’s Percentage
Share (defined below) of the Operating Expenses for such calendar year in excess of the Expense
Stop. As used herein,
“Tenant’s Percentage Share”
shall mean a fraction, the numerator of which is
the total number of square feet of Rentable Square Feet within the Leased Premises and the
denominator of which is the greater of (i) ninety-five percent (95%) of the total square footage of
all Rentable Square Feet in the Building (exclusive of any retail space) held for lease, or (ii)
the total square footage of all Rentable Square Feet in the Building (exclusive of any retail
space) actually leased to rent paying tenants.
(d) Landlord shall use reasonable efforts to provide Tenant, within one hundred twenty (120)
days after the end of the calendar year in which the Commencement Date occurs and of each calendar
year thereafter during the term of this Lease, with a statement detailing the Operating Expenses
for each such calendar year (the
“Annual Operating Expense Statement”
)
and a statement prepared by
Landlord comparing Tenant’s Forecast Additional Rental with Tenant’s Additional Rental. In the
event that Tenant’s Forecast Additional Rental exceeds Tenant’s Additional Rental for said calendar
year, Landlord shall pay Tenant (in the form of a credit against rentals next due or, upon
expiration of this Lease, in the form of Landlord’s check) an amount equal to such excess. In the
event that the Tenant’s Additional Rental exceeds Tenant’s Forecast Additional Rental for said
calendar year, Tenant hereby agrees to pay Landlord, within thirty (30) days of receipt of the
statement, an amount equal to such difference
(
“Tenant’s Additional Rental Adjustment”
).
(e) Tenant, at Tenant’s sole cost and expense, shall have the right, to be exercised by
written notice given to Landlord within sixty (60) days after receipt of the Annual Operating
Expense Statement for any calendar year, to audit Landlord’s books and records pertaining only to
the Operating Expenses for such calendar year, provided such audit must commence within thirty (30)
days after Tenant’s notice to Landlord and thereafter proceed regularly and continuously to
conclusion and, provided, further, that such audit must be conducted by a nationally recognized
independent public accounting firm in a manner that does not unreasonably interfere with the
conduct of Landlord’s business. Notwithstanding the foregoing, Tenant shall not have the right to
audit Landlord’s books
7
and records regarding the Operating Expenses for any calendar year if (i) the Annual Operating
Expense Statement for such calendar year was prepared by a nationally recognized independent public
accounting firm, or (ii) Tenant is in default under the terms of this Lease or any circumstance
exists which with the giving of notice, the passage of time, or both, would constituted such a
default. Landlord agrees to cooperate in good faith with Tenant in the conduct of any such audit.
Tenant (and its agents, employees and accountants) shall hold the results of such audits in strict
confidence and not disclose the same to any third party, except as is necessary during any dispute
between Landlord and Tenant related thereto or as required by law. A copy of the results of any
such audit shall be promptly provided to Landlord, and Landlord may conduct an independent review
of the same. If there is any disagreement regarding the results of any such audit, the parties
shall select a third party auditor to resolve the dispute. Tenant shall not employ any person or
entity to audit Landlord’s books and records whose compensation is based, in whole or in part, on a
contingency fee or the results of the audit.
2.4.
Operating Expenses.
(a)
“Operating Expenses”,
for each calendar year, shall consist of (i) all Operating Costs
(defined below) for the Building, plus (ii) an amount equal to the sum of the total ownership,
management, maintenance, repair, replacement and operating costs accruing during each such calendar
year for portions of the Project not within the Building that are designated or maintained from
time to time as common areas, including, but not limited to, fifty (50%) percent of the cost of
maintaining the Kensington Place roadway adjoining the Project and those areas which are for the
benefit of the occupants of the Project whether or not so designated or maintained as common areas
(net of any contribution received from time to time from the owners of the other portions of the
Project for such expenses).
(b) For the purposes of this Lease,
“
Operating Costs
”
shall mean all expenses, costs and
accruals (excluding therefrom, however, specific costs billed to or otherwise incurred for the
particular benefit of specific tenants of the Building) of every kind and nature, computed on an
accrual basis, incurred or accrued in connection with, or relating to, the ownership, operation,
management, maintenance, repair and replacement of the Building during each calendar year,
including, but not limited to, the following:
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(i)
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wages and salaries, including taxes, insurance
and benefits, of all on and off-site employees engaged in operations,
management, maintenance, repair, replacement or access control, as
reasonably allocated by Landlord and rent for the Building’s management
office exclusive of that portion of such office used for leasing;
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(ii)
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cost of all supplies, tools, equipment and
materials to the extent used in operations, management, maintenance,
repairs or replacements, as reasonably allocated by Landlord;
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(iii)
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cost of all utilities, including, but not
limited to, the cost of electricity, the cost of water and the cost of
power for heating, lighting, air conditioning and ventilating;
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8
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(iv)
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the cost of trash and garbage removal, cleaning,
vermin extermination, snow, ice and debris removal, and other services;
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(v)
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cost related to and fees payable under all
maintenance, management and service agreements, including, but not
limited to, a management fee contribution equal to three percent (3%)
of the gross revenues;
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(vi)
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costs related to those agreements related to
access control services, garage operations, window cleaning, elevator
maintenance, janitorial service, pest control and landscaping
maintenance;
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(vii)
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cost of inspections, repairs, maintenance and
replacements (except to the extent covered by proceeds of insurance);
provided the cost of capital repairs and replacements shall be
amortized over such reasonable period of time as Landlord shall
determine and only the portion of such costs allocable to any calendar
year (plus interest on the unpaid balance of such costs) may be
included in the Operating Costs for such calendar year;
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(viii)
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the cost of legal and accounting services incurred by Landlord
relating to management and maintenance of the Building but not
including any such expenses related to leasing of space in the
Building;
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(ix)
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amortization of the cost (plus interest on the
unpaid balance of such costs) of any system, apparatus, device, or
equipment which is installed for the principal purpose of (i) reducing
Operating Expenses, (ii) promoting safety or (iii) complying with
governmental requirements;
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(x)
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the cost of all insurance, including, but not
limited to, the cost of casualty, rental loss and liability insurance,
and insurance on Landlord’s personal property, plus the cost of all
deductible and co-insurance payments made by Landlord in connection
therewith;
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(xi)
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amounts due under easements, operating agreements,
parking operating agreements, declarations, covenants or instruments
encumbering the Land;
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(xii)
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reasonable replacement reserves;
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(xiii)
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cost of maintaining, striping, repairing, replacing, repaving and
lighting grounds, streets, parking areas, sidewalks, curbs, walkways,
landscaping, drainage and lighting facilities; and
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(xiv)
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all taxes, assessments and governmental charges,
whether or not directly paid by Landlord, whether federal, state, county
or municipal
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9
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and whether they be by taxing districts or authorities presently
taxing the Building and said common areas or by others subsequently
created or otherwise, and any other taxes, assessments and
governmental charges attributable to the Building and that portion of
the common areas or their operation, excluding, however, taxes and
assessments attributable to the personal property of other tenants,
federal and state taxes on income, death taxes, franchise taxes, and
any taxes imposed or measured on or by the income of Landlord from the
operation of the Building or imposed in connection with any change of
ownership of the Building; provided, however, that if at any time
during the term of this Lease, the present method of taxation or
assessment shall be so changed that the whole or any part of the
taxes, assessments, levies, impositions or charges now levied,
assessed or imposed on real estate and the improvements thereon shall
be discontinued and as a substitute therefor, or in lieu of or in
addition thereto, taxes, assessments, levies, impositions or charges
shall be levied, assessed or imposed, wholly or partially, as a
capital levy or otherwise, on the rents received from the Building or
the rents reserved herein or any part thereof, then such substitute or
additional taxes, assessments, levies, impositions or charges, to the
extent so levied, assessed or imposed with respect to the Building,
shall be deemed to be included within the Operating Costs.
Consultation, legal fees and costs resulting from any challenge of tax
assessments as reasonably allocated by Landlord shall also be included
in Operating Costs. It is agreed that Tenant will be responsible for
ad valorem taxes on its personal property and on the value of the
leasehold improvements in the Leased Premises to the extent that the
same exceed the Tenant Improvement Allowance (and if the taxing
authorities do not separately assess Tenant’s leasehold improvements,
Landlord may make a reasonable allocation of the ad valorem taxes
allocated to the Building to give effect to this sentence). In the
case of special taxes and assessments which may be payable in
installments, only the amount of each installment accruing during a
calendar year shall be included in the Operating Costs for such year.
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(c) Notwithstanding any language contained herein to the contrary, Tenant hereby agrees that,
during any calendar year in which the entire Building is not provided with Building Standard
Services or is not completely occupied, Landlord shall compute all Variable Operating Costs
(defined below) for such calendar year as though the entire Building were provided with Building
Standard Services and were completely occupied. For purposes of this Lease the term
“Variable
Operating Costs”
shall mean any operating cost that is variable with the level of occupancy of the
Building (e.g. utilities and cleaning services). In the event that Landlord excludes from
“Operating Costs”
any specific costs billed to or otherwise incurred for the particular benefit of
specific tenants of the Building or to other buildings or projects on the Land, Landlord shall have
the right to increase
“Operating Costs”
by an amount equal to the cost of providing standard
services similar to the services for which such excluded specific costs were billed or incurred. In
no event shall Landlord receive from all tenants of the Building more than one hundred percent
(100%) of any Operating Costs.
10
2.5.
Security Deposit.
[Intentionally deleted.]
2.6.
Landlord’s Lien.
[Intentionally
deleted.]
ARTICLE III.
3.1.
Services.
Landlord shall furnish the following services to Tenant during the term
of this Lease (
“Building Standard Services”
):
(a) Hot and cold domestic water to common use rest rooms and toilets, in such amounts as are
reasonably determined by Landlord
(b) Subject to curtailment as required by governmental laws, rules or mandatory regulations,
central heat and air conditioning in season, at such temperatures and in such amounts as are
reasonably determined by Landlord and on such dates and at such times as are more particularly
described on
Exhibit C
attached hereto and incorporated herein.
(c) Electric lighting service for all public areas and special service areas of the Building
in such amounts and locations as are reasonably determined by Landlord.
(d) Janitor service in accordance with the Janitorial Specifications attached hereto and
incorporated herein as
Exhibit H;
however, if Tenant’s floor coverings or other
improvements are other than building standard commercial grade, Tenant shall pay one hundred and
fifteen percent (115%) of the actual additional cleaning cost, if any, attributable thereto, and if
supplying such additional cleaning service requires active managerial oversight by Landlord,
Landlord shall be entitled to collect an administrative fee equal to fifteen percent (15%) of the
cost of such service.
(e) Access control for the Building shall be provided to the extent and in the manner
reasonably determined by Landlord; provided, however, Landlord shall have no responsibility to
prevent, and shall not be liable to Tenant for, any liability or loss to Tenant, its agents,
employees and visitors arising out of losses due to theft, burglary, or damage or injury to persons
or property caused by persons gaining access to the Leased Premises, and Tenant hereby releases
Landlord from all liability for such losses, damages or injury.
(f) Electrical service to floors with plug-in type bus risers sized to provide 8.0 watts per
useable square foot of electrical connected load capacity for tenant use above and beyond the base
building electrical requirements. Of that, 6.0 watts per useable square foot of electrical
connected load capacity will be available in 480/277V panels for tenant use leaving 2.0 watts per
useable square foot available in the bus riser for future tenant electrical loads. Of the 6.0 watts
per useable square foot, 3.0 watts per useable square foot of electrical connected load capacity
will be available in 208/120V panels for tenant use leaving 3.0 watts per useable square foot of
capacity in the 480/277V panels for future tenant electrical loads. This capacity is part of the
6.0 watts per useable square foot of power for tenant’s use noted above.
Should Tenant’s total rated electrical design load exceed the Building Standard rated
electrical design load for either low or high voltage electrical consumption, or if Tenant’s
electrical design requires low voltage or high voltage circuits in excess of Tenant’s share of the
Base Building Shell Condition circuits, Landlord will (at Tenant’s expense) install one (1)
11
additional high voltage panel and/or one (1) additional low voltage panel with associated
transformer, space for which has been provided in the base building electrical closets based on a
maximum of two (2) such additional panels per floor for all tenants on the floor (which additional
panels and transformers shall be hereinafter referred to as the
“additional electrical equipment”
).
If the additional electrical equipment is installed because Tenant’s low or high voltage rated
electrical design load exceeds the applicable Building Standard rated electrical design load, then
a meter shall also be added (at Tenant’s expense) to measure the electricity used through the
additional electrical equipment.
The design and installation of any additional electrical equipment (or any related meter)
required by Tenant shall be subject to the prior approval of Landlord (which approval shall not be
unreasonably withheld). All expenses incurred by Landlord in connection with the review and
approval of any additional electrical equipment shall also be reimbursed to Landlord by Tenant.
Tenant shall also pay on demand the actual metered cost of electricity consumed through the
additional electrical equipment (if applicable), plus any actual accounting expenses incurred by
Landlord in connection with the metering thereof.
If any of Tenant’s electrical equipment requires conditioned air in excess of Base Building
Shell Condition air conditioning, the same shall be installed by Landlord (on Tenant’s behalf), and
Tenant shall pay all design, installation, metering and operating costs relating thereto.
If Tenant requires that certain areas within Tenant’s demised premises must operate in excess
of the normal Building Operating Hours (as defined in
Exhibit C
attached hereto), the
electrical service to such areas shall be separately circuited and metered such that Tenant shall
be billed the costs associated with electricity consumed during hours other than Building Operating
Hours.
(g) All Building Standard fluorescent bulb replacement in all areas and all incandescent bulb
replacement in General Common Areas, Service Areas and On-Floor Common Areas.
(h) Non-exclusive multiple cab passenger service to the Leased Premises during Building
Operating Hours and at least one (1) cab passenger service to the Leased Premises twenty-four (24)
hours per day and non-exclusive freight elevator service during Building Operating Hours (all
subject to temporary cessation for ordinary repair and maintenance and during times when life
safety systems override normal building operating systems) with such freight elevator service
available at other times upon reasonable prior notice and the payment by Tenant to Landlord of any
additional expense actually incurred by Landlord in connection therewith.
To the extent the services described in subsection (a), (b), (c), (f) and (h) above require
electricity and water supplied by public utilities, Landlord’s covenants thereunder shall only
impose on Landlord the obligation to use its good faith, reasonable efforts to cause the applicable
public utilities to furnish the same. Failure by Landlord to furnish the services described in this
Section, or any cessation thereof, shall not render Landlord liable for damages to either person or
property, nor be construed as an eviction of Tenant, nor work an abatement of rent, nor relieve
Tenant from fulfillment of any covenant or agreement
12
hereof. In addition to the foregoing, should any of the equipment or machinery, for any cause,
fail to operate, or function properly, Tenant shall have no claim for rebate of rent or damages on
account of an interruption in service occasioned thereby or resulting therefrom; provided, however,
Landlord agrees to use reasonable efforts to repair said equipment or machinery promptly and to
restore said services.
3.2.
Keys and Locks.
Landlord shall install a card reader on the elevator servicing
the Leased Premises that restricts after hours access to the Leased Premises. Landlord shall also
supply Tenant with two (2) keys for each Building Standard lockset on code required doors entering
the Leased Premises from public areas. Additional keys will be furnished by Landlord upon an order
signed by Tenant and at Tenant’s expense. All such keys shall remain the property of Landlord. No
additional locks shall be allowed on any door of the Leased Premises without Landlord’s permission,
and Tenant shall not make or permit to be made any duplicate keys. Upon termination of this Lease,
Tenant shall surrender to Landlord all keys to any locks on doors entering or within the Leased
Premises, and give to Landlord the explanation of the combination of all locks for safes, safe
cabinets and vault doors, if any, in the Leased Premises.
3.3.
Graphics, Building Directory and Name.
Landlord shall provide and install all
graphics, letters, and numerals at the entrance to the Leased Premises on multi-tenant floors, if
any (it being understood that Tenant shall be responsible for all graphics on full floors occupied
by Tenant. Landlord shall maintain an electronic directory in such main lobby which shall include
such information relating to Tenant. All such letters and numerals shall be in the Building
standard graphics (font size to be approved by Landlord). Tenant agrees that Landlord shall not be
liable for any inconvenience or damage occurring as a result of any error or omission in any
directory or graphics. No signs, numerals, letters or other graphics shall be used or permitted on
the exterior of, or may be visible from outside, the Leased Premises, unless approved in writing by
Landlord. All on-floor graphics for full-floor tenants shall be removed by Tenant upon lease
expiration.
3.4.
Parking.
(a) Subject to the other provisions hereof, Landlord hereby agrees to make available, or to
cause the lessee or operator of the Parking Facility (the
“Garage Operator”
)
,
to make available to
Tenant (so long as Tenant shall continue to lease at least 6,341 RSF) up to twenty-five (25)
permits to park in the Kensington Parking Facility upon the terms and conditions set forth below
(the
“Parking Permits”
).
Landlord shall also provide (or cause the Garage Operator to provide)
visitor parking in a portion of the Parking Facility on a “first come-first served” pay basis at
such rates and upon such conditions as Landlord or the Garage Operator, as applicable, shall
establish from time to time.
(b) Tenant shall notify Landlord within thirty (30) days following the execution of this Lease
of the number of Parking Permits that it intends to utilize. Neither Landlord nor the Garage
Operator shall be obligated to hold any Parking Permits that Tenant does not elect to utilize.
(c) Tenant shall pay as rental for the Parking Permits at the rate charged from time to time
by Landlord (or the Garage Operator), in its sole and absolute discretion,
13
plus any applicable taxes thereon; provided the rate charged for the Parking Permits shall be
prorated for any partial months during the term of this Lease. The current charge to Tenant for
each Parking Permit is $40.00 per month, plus any applicable taxes thereon. In the event the rate
charged for the Parking Permits is increased, Tenant may elect to relinquish all or a portion of
the Parking Permits by giving written notice to Landlord (or its designee) within thirty (30) days
after receiving notice of such increase, in which event Tenant shall have no further right to or
interest in such Parking Permit and neither Landlord nor the Garage Operator shall have any
obligation to provide replacement parking for Tenant. If the rate charged for the Parking Permits
is increased and Tenant fails to notify Landlord, in writing, of its election to relinquish all or
a portion of the Parking Permits within thirty (30) days after receiving notice of such increase,
then Tenant shall be deemed to have agreed to such increase and shall have no further right to
relinquish its Parking Permits on account thereof. Unless Landlord directs otherwise, Tenant shall
pay the monthly charges established from time to time in accordance with this Lease by the Garage
Operator for parking in the Kensington Parking Facility to Landlord and Landlord shall collect such
payments, on behalf of the Garage Operator, monthly in advance, at the same time and place as
Tenant makes payments of Base Rent under the terms of this Lease.
(d) In the event the parking spaces covered by the Parking Permits are not available to Tenant
due to causes beyond the control of Landlord or the Garage Operator and Landlord is unable to
provide replacement parking to Tenant, neither Landlord nor Garage Operator shall be liable for any
damages that Tenant suffers on account thereof, nor shall such fact be construed as a constructive
eviction of Tenant, entitle Tenant to an abatement of any Rental or an abatement of the charges for
the Parking Permits, or relieve Tenant from fulfillment of any covenant or agreement hereof.
(e) Landlord or the Garage Operator may make, modify and enforce reasonable rules and
regulations relating to the parking of vehicles in the Parking Facility, and Tenant agrees to abide
by such rules and regulations. Except as expressly provided herein, this Lease does not grant
Tenant (or its agents, employees, contractors and visitors) the right to use the Parking Facilities
or any other parking areas located on the Land or serving the Building. So long as Landlord ensures
that there is sufficient parking available in the Parking Facilities to accommodate the holders of
the Parking Permits, Landlord or the Garage Operator may, from time to time, designate specific
portions of the Parking Facilities as reserved areas and Tenant shall have no right to park in such
reserved areas, except Tenant may park in reserved areas made available to tenants of the Building
to the extent Tenant has purchased Parking Permits specifically entitling Tenant to use the same.
Landlord agrees to make (or cause the Garage Operator to make) parking for Tenant’s guests and
visitors available on a non-exclusive basis in the Parking Facility. Landlord or the Garage
Operator may restrict Tenant’s right to utilize the Parking Permits on weekends and after 6:00 p.m.
in the evening when athletic events are scheduled in the nearby athletic facilities.
ARTICLE IV.
4.1.
Care of Leased Premises.
Tenant shall not commit or allow to be committed by
Tenant’s employees, agents or contractors, any waste or damage to any portion of the Leased
Premises or the Building. Upon the expiration or any earlier termination of this
14
Lease, Landlord shall have the right to re-enter and resume possession of the Leased Premises
immediately.
4.2.
Entry for Repairs and Inspection.
Tenant shall permit Landlord and its
contractors, agents or representatives to enter into and upon any part of the Leased Premises
during reasonable hours to inspect or clean the same, make repairs, alterations or additions
thereto, and, upon reasonable prior notice to Tenant, for the purpose of ‘showing the same to
prospective tenants or purchasers and Tenant shall not be entitled to any abatement or reduction of
rent by reason thereof. Landlord shall use its reasonable efforts not to interfere materially with
the operation of Tenant’s business during any such entry.
4.3.
Nuisance.
Tenant shall conduct its business and control its agents, employees,
invitees, contractors and visitors in such a manner as not to create any nuisance, or interfere
with, annoy or disturb any other tenant or Landlord in its operation of the Building.
4.4.
Laws and Regulations; Encumbrances; Rules of Building.
Tenant shall comply with,
and Tenant shall cause its employees, contractors and agents to comply with, and shall use its best
efforts to cause its visitors and invitees to comply with, (i) all laws, ordinances, orders, rules
and regulations of all state, federal, municipal and other governmental or judicial agencies or
bodies relating to the use, condition or occupancy of the Leased Premises, (ii) all recorded
easements, operating agreements, parking agreements, declarations, covenants and instruments
encumbering the Leased Premises, and (iii) the rules of the Building reasonably adopted and altered
by Landlord from time to time for the safety, care and cleanliness of the Leased Premises and
Building and for the preservation of good order therein. The initial rules of the Building are
attached hereto and incorporated herein as
Exhibit D.
4.5.
Legal Use and Violations of Insurance Coverage.
Tenant shall not occupy or use
the Leased Premises, or permit any portion of the Leased Premises to be occupied or used, for any
business or purpose which is unlawful, disreputable or deemed to be hazardous in any manner, or
permit anything to be done which would in any way increase the rate of fire, liability, or any
other insurance coverage on the Building or its contents.
4.6.
Hazardous Substances.
Tenant shall comply, at its sole expense, with all laws,
ordinances, orders, rules and regulations of all state, federal, municipal and other governmental
or judicial agencies or bodies relating to the protection of public health, safety, welfare or the
environment (collectively,
“Environmental Laws”)
in the use, occupancy and operation of the Leased
Premises. Tenant agrees that no Hazardous Substances (as hereinafter defined) shall be used,
located, stored or processed on the Leased Premises or be brought onto any other portion of the
Building by Tenant or any of its agents, employees, contractors, assigns, subtenants, guests or
invitees, and no Hazardous Substances will be released or discharged from the Leased Premises
(including, but not limited to, ground water contamination). The term
“Hazardous Substances”
shall
mean and include all hazardous and toxic substances, waste or materials, any pollutant or
contaminant, including, without limitation, PCB’s, asbestos and raw materials that include
hazardous constituents or any other similar substances or materials that are now or hereafter
included under or regulated by any Environmental Laws or that would pose a health, safety or
environmental hazard. Tenant hereby agrees to indemnify, defend and hold harmless Landlord from and
against any and all losses, liabilities (including, but not limited to, strict
15
liability), damages, injuries, expenses (including, but not limited to, court costs,
litigation expenses, reasonable attorneys’ fees and costs of settlement or judgment), suits and
claims of any and every kind whatsoever paid, incurred or suffered by, or asserted against,
Landlord by any person, entity or governmental agency for, with respect to, or as a direct or
indirect result of, the presence in or the escape, leakage, spillage, discharge, emission or
release from the Leased Premises of any Hazardous Substances or the presence of any Hazardous
Substances placed on or discharged from the Building by Tenant or any of its agents, employees,
contractors, assigns, subtenants, guests or invitees, including, without limitation, any losses,
liabilities (including, but not limited to, strict liability), damages, injuries, expenses
(including, but not limited to, court costs, litigation expenses, reasonable attorneys’ fees and
costs of settlement or judgment), suits and claims asserted or arising under the Comprehensive
Environmental Response, Compensation and Liability Act
(“
CERCLA
”),
any so-called federal, state or
local “Superfund” or “Superlien” laws or any other Environmental Law.
4.7.
Tenant Taxes.
Tenant shall pay promptly when due all taxes directly or indirectly
imposed or assessed upon Tenant’s gross sales, business operations, machinery, equipment, trade
fixtures and other personal property or assets, whether such taxes are assessed against Tenant,
Landlord or the Building. In the event that such taxes are imposed or assessed against Landlord or
the Building, Landlord shall furnish Tenant with all applicable tax bills, public charges and other
assessments or impositions and Tenant shall forthwith pay the same either directly to the taxing
authority or, at Landlord’s option, to Landlord.
ARTICLE V.
5.1.
Initial Allowance; Leasehold Improvements.
(a) Within ten (10) days of the Commencement Date, Landlord shall contribute [***] per RSF in
the Leased Premises (the
“
Initial Allowance
”)
for Tenant’s use during the initial Lease Term, all
or any portion of which Tenant may apply as a credit towards Base Rental next due and payable.
(b) Tenant shall not make or allow to be made any alterations or physical additions in or to
the Leased Premises, or place safes, vaults or other heavy furniture or equipment within the
Leased Premises, without first obtaining the written consent of Landlord which consent shall not
be unreasonably withheld so long as said alterations do not impact on Building systems or
structure and are not visible from outside the Leased Premises. Tenant shall deliver to Landlord a
copy of the “as-built” plans and specifications for all alterations or physical additions so made
in or to the Leased Premises. Tenant further specifically agrees that no food, soft drink or other
vending machine will be installed within the Leased Premises without the written consent of
Landlord. Any such machine(s) shall be for the use of Tenant and its employees and invitees only.
(c) Tenant shall indemnify and hold Landlord harmless from and against all costs (including
reasonable attorneys’ fees and costs of suit), losses, liabilities, or causes of action arising
out of or relating to any alterations, additions or improvements made by Tenant to the Leased
Premises, including, but not limited to, any mechanics’ or materialmen’s liens asserted in
connection therewith. No portion of Landlord’s interest in the Building shall be
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subject to attachment on account of any work performed by or on account of Tenant, and Tenant
shall provide written notice of same to all of its contractors.
(d) Should any mechanic’s or other liens be filed against any portion of the Building by
reason of Tenant’s acts or omissions or because of a claim against Tenant, Tenant shall cause the
same to be canceled or discharged of record by bond or otherwise within thirty (30) days after
notice by Landlord. If Tenant shall fail to cancel or discharge said lien or liens, within said
thirty (30) day period, Landlord may, at its sole option, cancel or discharge the same and upon
Landlord’s demand, Tenant shall promptly reimburse Landlord for all reasonable costs incurred in
canceling or discharging such liens, and if canceling or discharging such liens requires active
managerial oversight by Landlord, Landlord shall be entitled to collect an administrative fee
equal to fifteen percent (15%) of the cost thereof.
5.2.
Repairs by Landlord.
All repairs, alterations or additions that affect the
Building’s structural components or the Building’s mechanical, electrical and plumbing systems
shall be made solely by Landlord or its contractor. In the event of any damage to such components
or systems or any other portion of the Building caused by Tenant or Tenant’s agents, contractors,
employees, visitors or invitees, the cost of repair or restoration of such damage shall be paid
for solely by Tenant in an amount equal to Landlord’s costs plus fifteen percent (15%) for
administrative cost recovery. Landlord shall make such repairs to Base Building Shell Condition
improvements as may be deemed necessary by Landlord for normal maintenance operations and Landlord
shall not otherwise be obligated to make improvements to, or repairs of, the Leased Premises.
5.3.
Repairs by Tenant.
Subject to Section 5.2, Tenant shall at its own cost and
expense, keep the Leased Premises and all leasehold improvements in a condition similar to the
condition as of the Commencement Date, normal wear and tear excepted, and Tenant shall perform all
maintenance, repairs and replacements necessary to accomplish the same. In addition, Tenant shall
perform all maintenance, repairs, replacements and improvements required by any governmental law,
ordination, rule or regulation. If Tenant fails to commence any maintenance, repairs, replacements
or improvements which it is required to perform hereunder within ten (10) days after written
notice from Landlord to Tenant and thereafter diligently proceed with such work until completion,
Landlord may, at its option, perform any such maintenance, repairs, replacements or improvements
deemed necessary by Landlord, and Tenant shall pay to Landlord on demand Landlord’s cost thereof
plus a charge of fifteen percent (15%) for administrative cost recovery.
ARTICLE VI.
6.1.
Condemnation.
If all or substantially all of the Leased Premises, or such
portion of the Leased Premises or the Building as would render, in Landlord’s reasonable judgment,
the continuance of Tenant’s business from the Leased Premises impracticable, shall be permanently
taken or condemned for any public purpose, then this Lease, at the option of Tenant or Landlord
upon the giving of written notice to the other party within ten (10) days from the date of such
condemnation or taking, shall forthwith cease and terminate. If less than all or substantially all
of the Leased Premises or any portion of the Building shall be permanently taken or condemned for
any public purpose, then Landlord shall have the option of terminating this Lease by written
notice to Tenant within ten (10) days from the date of such condemnation or taking. If this Lease
is terminated as provided above, this Lease shall cease and expire as if
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the date of transfer of possession of the Leased Premises, the Building, or any portion
thereof, was the expiration date of this Lease. In the event that this Lease is not terminated by
either Landlord or Tenant as aforesaid, Tenant shall pay the Rental up to the date of transfer of
possession of such portion of the Leased Premises so taken or condemned and this Lease shall
thereupon cease and terminate with respect to such portion of the Leased Premises so taken or
condemned as if the date of transfer of possession of the Leased Premises was the expiration date
of the term of this Lease relating to such portion of the Leased Premises. Thereafter the Base
Rental, Tenant’s Forecast Additional Rental and Tenant’s Additional Rental shall be adjusted on a
pro rata, net rentable square foot basis. In the event of any such condemnation or taking and this
Lease is not so terminated, Landlord shall promptly repair the Leased Premises or the Building, as
the case may be, to Base Building Shell Condition so that the remaining portion of the Leased
Premises or Building, as the case may be, shall constitute an architectural unit, fit for Tenant’s
occupancy and business; provided, however, that Landlord’s obligation to repair hereunder shall be
limited to the extent of the net proceeds made available to Landlord for such repair from any such
condemnation or taking. In the event of any temporary taking or condemnation for any public
purpose of the Leased Premises or any portion thereof, then this Lease shall continue in full
force and effect except that Base Rental, Tenant’s Forecast Additional Rental, and Tenant’s
Additional Rental shall be adjusted on a pro rata net rentable square foot basis for the period of
time that the Leased Premises are so taken as of the date of transfer of possession of the Leased
Premises and Landlord shall be under no obligation to make any repairs or alterations. In the
event of any condemnation or taking of the Leased Premises, Tenant hereby assigns to Landlord the
value of all or any portion of the unexpired term of the Lease and all leasehold improvements and
Tenant may not assert a claim for a condemnation award therefor; provided, however, Tenant may
pursue a separate attempt to recover an award or compensation against or from the condemning
authority for (i) the value of any fixtures, furniture, furnishings, Tenant’s Extra Work and other
personal property which were condemned but which under the terms of this Lease, Tenant is
permitted to remove at the end of the term of this Lease, (ii) relocation and moving expenses, and
(iii) compensation for loss to Tenant’s business.
6.2.
Damages from Certain Causes.
Landlord shall not be liable or responsible to
Tenant for any loss or damage to any property or person occasioned by theft, fire, act of God,
public enemy, riot, strike, insurrection, war, act or omission of any tenant or occupant of the
Building, any nuisance or interference caused or created by any tenant or occupant of the Building,
requisition or order of governmental body or authority, court order or injunction, or any cause
beyond Landlord’s control or, except in the case of the gross negligence or intentional misconduct
of Landlord, for any damage or inconvenience which may arise through repair or alteration of any
part of the Building. Tenant shall notify Landlord of any damage to the Leased Premises, regardless
of the cause of such damage.
6.3.
Casualty Clause.
(a) In the event any portion of the Leased Premises or any portion of the General Common Areas
is damaged by fire or other casualty, earthquake or flood or by any other cause of any kind or
nature (hereinafter collectively referred to as the
“damaged property”
)
and the damaged property
can, in the opinion of the Landlord’s architect, be repaired within ninety (90) calendar days from
the date of notice of Landlord’s architect’s
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opinion, then Landlord shall proceed to rebuild or restore the damaged property to Base
Building Shell Condition, subject to subsection (e) hereof.
(b) In the event the damaged property can not, in the opinion of Landlord’s architect, be
repaired within ninety (90) days from the date of notice of Landlord’s architect’s opinion, but can
be repaired within one hundred eighty (180) days from the date of notice of Landlord’s architect’s
opinion, Landlord, at Landlord’s sole option, shall have the right (i) to terminate this Lease by
notifying Tenant of such termination within twenty (20) days of receipt of Landlord’s architect’s
opinion, or (ii) to restore or rebuild the damaged property to Base Building Shell Condition,
subject to subsection (e) hereof.
(c) If, in the opinion of Landlord’s architect, damage to the damaged property cannot be
repaired within one hundred eighty (180) days from the date of notice of Landlord’s architect’s
opinion, then both Landlord and Tenant shall have the right to terminate this Lease by notifying
the other party in writing of such termination within twenty (20) days of receipt of Landlord’s
architect’s opinion.
(d) Notwithstanding any language herein to the contrary, if at the time of any such damage,
less than one (1) year remains in the term of this Lease, exclusive of any renewal options, then
Landlord, at Landlord’s sole option, shall have the right to terminate this Lease.
(e) If at anytime during the term of this Lease the Building is damaged and the cost of
repairing and restoring the same exceeds twenty-five percent (25%) of the replacement cost of the
improvements comprising the Building, then Landlord, at Landlord’s sole option, shall have the
right to terminate this Lease.
(f) Notwithstanding any language contained herein to the contrary, in the event this Lease is
not terminated as provided hereunder (i) Landlord shall be obligated to rebuild or restore the
damaged property only to the extent of the net insurance proceeds available to Landlord for the
purpose of rebuilding and restoration, (ii) if the damaged property is all or any portion of the
Leased Premises Landlord shall be obligated to rebuild or restore the damaged property only to Base
Building Shell Condition, except that Tenant shall have the right to require Landlord to rebuild or
restore the damaged property substantially to the condition which existed immediately prior to such
damage, provided that Tenant shall bear all costs and expenses, including without limitation,
rentals that are lost due to extended construction time, in excess of the lesser of (A) any net
insurance proceeds available to Landlord for the purpose of rebuilding or restoration, or (B) the
cost to Landlord of rebuilding and restoring the damaged property to Building Standard condition
(with Building Standard tenant allowances); and (iii) to the extent Landlord has rental loss
insurance proceeds available, Tenant shall be entitled to a pro rata abatement of Base Rental,
Tenant’s Forecast Additional Rental, and Tenant’s Additional Rental during the period of time the
Leased Premises, or any portion thereof, are untenantable due to such damage. Landlord’s
architect’s opinion shall be delivered to both Landlord and Tenant within thirty (30) days from the
date of any such damage. In the event of any termination of this Lease under this
Section,
this
Lease shall cease and terminate as if the date of such damage was the expiration date of the term
of this Lease. Notwithstanding any contrary language in this
Section,
if the Leased Premises, the
Building, or any portion thereof shall be damaged through the negligence or willful misconduct of
Tenant and the cost of repairing the same is not covered by Landlord’s insurance, such damage shall
be repaired by Landlord at the sole expense of Tenant and rent shall continue hereunder unabated.
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(g) If any portion of Tenant’s leasehold improvements (including, but not limited to, Tenant’s
Extra Work), alterations, additions, improvements, fixtures, furnishing, equipment or trade
fixtures are damaged by fire or other casualty, earthquake or flood or by any other cause of any
kind or nature, Tenant shall immediately restore the same to the condition existing immediately
prior to such damage, unless such damage is so extensive as to permit termination of this Lease as
provided herein and the Lease is terminated in accordance with such provisions.
6.4.
Casualty Insurance.
Landlord shall maintain all-risk property insurance on the
Building and on all Base Building Shell Condition improvements. Said insurance shall be maintained
with an insurance company authorized to do business in Tennessee, at full replacement cost and
payments for losses thereunder shall be made solely to Landlord. Tenant shall maintain at its
expense business interruption insurance and all-risk property insurance on the full replacement
cost of all its personal property, including removable trade fixtures, located in the Leased
Premises and on Tenant’s Extra Work and all other additions and improvements (including fixtures)
made by Tenant and not required to be insured by Landlord above, regardless of whether such
improvements were made at Landlord’s or Tenant’s expense. If the annual premiums to be paid by
Landlord shall exceed the standard rates because of Tenant’s operations within, or contents of, the
Leased Premises or because the improvements to the Leased Premises are in excess of improvements
contemplated by the Tenant Improvement Allowance, Tenant shall promptly pay the excess amount of
the premium upon request by Landlord (and if necessary, Landlord may allocate the insurance costs
of the Building to give effect to this sentence). Upon the request of Landlord, a duly executed
certificate of insurance, reflecting Tenant’s maintenance of the insurance required under this
Section 6.4
and
Section 6.5
, shall be delivered to Landlord.
6.5.
Liability Insurance.
Landlord and Tenant shall each maintain a policy or
policies of commercial general liability insurance with the premiums thereon fully paid on or
before the due dates, issued by and binding upon a solvent insurance company authorized to
transact business in Tennessee. Such insurance shall be written on an occurrence basis and shall
afford minimum protection (which may be affected by primary and/or excess coverage) of not less
than $1,000,000.00 per occurrence for bodily injury and property damage with umbrella liability in
excess of $1,000,000 of no less than $2,000,000 per occurrence and in the aggregate provided,
however, Tenant shall carry such greater limits of coverage as Landlord may reasonably request
from time to time so long as Landlord maintains similar limits of coverage.
6.6.
Hold Harmless.
Landlord shall not be liable to Tenant, its agents, servants,
employees, contractors, customers or invitees for any damage to person or property caused by any
act, omission or neglect of Tenant. Without limiting or being limited by any other indemnity in
this Lease, but rather in confirmation and furtherance thereof, Tenant agrees to indemnify, defend
by counsel reasonably acceptable to Landlord and hold Landlord, Landlord’s beneficiaries (if
Landlord is a land trust), the managing agent of the Building, the leasing agent of the Building
and their respective agents, partners, shareholders, officers, directors and employees of the
Building harmless of, from and against any and all losses, damages, liabilities, claims, liens,
costs and expenses (including, but not limited to, court costs, reasonable attorneys’ fees and
litigation expenses) in connection with injury to or death of any person or damage to or theft,
loss or loss of the use of any property occurring in or about the Leased Premises or the Building
arising from Tenant’s occupancy of the Leased Premises, or the
20
conduct of its business or from any activity, work, or thing done, permitted or suffered by
Tenant in or about the Leased Premises or the Building, or from any breach or default on the part
of Tenant in the performance of any covenant or agreement on the part of Tenant to be performed
pursuant to the terms of this Lease, or due to any other act or omission or willful misconduct of
Tenant or any of its agents, employees, contractors, assigns, subtenants, guest or invitees.
6.7.
Waiver of Subrogation Rights.
Anything in this Lease to the contrary
notwithstanding, Landlord and Tenant each hereby waives any and all rights of recovery, claim,
action or cause of action, against the other, its agents, servants, partners, shareholders,
officers or employees, for personal injury, loss or damage to business, and loss or damage that
may occur to the Leased Premises, the Building or any improvements thereto or thereon or any
personal property of such party therein or thereon by reason of fire, the elements, or any other
cause to the extent such loss or damage is covered by terms of the all-risk property insurance
policies referred to in
Section 6.4
hereof or any other insurance policy maintained by Landlord or
Tenant, as applicable, regardless of cause or origin, including negligence of the other party
hereto, its agents, officers, partners, shareholders, servants or employees, and covenants that no
insurer shall hold any right of subrogation against such other party. The foregoing waiver shall
apply regardless of the cause or origin of such claim, including but not limited to the negligence
of a party, or such party’s agents, officers, employees or contractors, but shall not apply if it
would have the effect, but only to the extent of such effect, of invalidating any insurance
coverage of Landlord or Tenant. Each party shall obtain any special endorsements, if any, required
by their respective insurers to evidence compliance with the aforementioned waiver.
ARTICLE VII.
7.1.
Default and Remedies.
(a) The occurrence of any of the following shall constitute a default under and breach of this
Lease by Tenant (an
“Event of Default”
):
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(i)
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Failure by Tenant to pay any Rental within ten
(10) days after the same becomes due hereunder;
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(ii)
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The Leased Premises are deserted, vacated, or not
used for a period exceeding thirty (30) consecutive days, even though
the Tenant continues to pay the stipulated monthly rent;
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(iii)
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Failure by Tenant to observe or perform any of
the covenants in respect of assignment and subletting set forth in
Article VIII;
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(iv)
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Failure by Tenant to cure forthwith, immediately
after receipt of notice from Landlord, any hazardous condition which
Tenant has created or permitted in violation of law or of this Lease;
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(v)
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Failure by Tenant to complete, execute and
deliver any instrument or document required to be completed, executed
and delivered by Tenant pursuant to
Section 7.8
or
Section 7.9
of
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this Lease, within ten (10) days after the initial written demand
therefor to Tenant;
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(vi)
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Failure by Tenant to observe or perform any other
covenant, agreement, condition or provision of this Lease, if such
failure shall continue for thirty (30) days after written notice thereof
from Landlord to Tenant; provided that such thirty (30) day period shall
be extended for the time reasonably required to complete such cure, if
such failure cannot reasonably be cured within said thirty (30) day
period and Tenant commences to cure such failure within said thirty (30)
day period and thereafter diligently and continuously proceeds to cure
such failure;
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(vii)
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The levy upon execution or the attachment by
legal process of the leasehold interest of Tenant, or the filing or
creation of a lien in respect of such leasehold interest, which lien
shall not be released or discharged within ten (10) days from the date
of such filing;
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(viii)
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Any default under or breach by any guarantor of Tenant’s obligations
under this Lease of such guarantor’s obligations under any agreements
with Landlord;
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(ix)
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Tenant or any guarantor of Tenant’s obligations
under this Lease becomes insolvent or bankrupt or admits in writing its
inability to pay its debts as they mature, or makes an assignment for
the benefit of creditors, or applies for or consents to the appointment
of a trustee or receiver for all or a major part of its property;
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(x)
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A trustee or receiver is appointed for Tenant,
any guarantor of Tenant’s obligations under this Lease or for a major
part of either party’s property and is not discharged within sixty (60)
days after such appointment;
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(xi)
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Any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding, or other proceeding for relief
under any bankruptcy law or similar law for the relief of debtors, is
instituted (A) by Tenant or any guarantor of Tenant’s obligations under
this Lease, or (B) against Tenant or any guarantor of Tenant’s
obligations under this Lease and is allowed against it or is consented
to by it or is not dismissed within sixty (60) days after such
institution;
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(xii)
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Tenant’s repeated or continued failure to
timely pay any Rental due Landlord hereunder where such failure shall
continue or be repeated for two (2) consecutive months, or for a total
of four (4) months in any period of twelve (12) consecutive months; or
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(xiii)
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Tenant’s repeated failure to observe or perform any of the other
covenants, terms or conditions hereof more than six (6) times, in the
aggregate, in any period of twelve (12) consecutive months.
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(b) Upon the occurrence of an Event of Default, Landlord shall have the option to do and
perform any one or more of the following in addition to, and not in limitation of, any other
remedy or right permitted it by law or in equity or by this Lease:
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(i)
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Landlord, with or without terminating this
Lease, may immediately or at any time thereafter re-enter the Leased
Premises and correct or repair any condition which shall constitute a
failure on Tenant’s part to keep, observe, perform, satisfy, or abide
by any term, condition, covenant, agreement, or obligation of this
Lease or of the Rules and Regulations now in effect or hereafter
adopted or of any notice given Tenant by Landlord pursuant to the terms
of this Lease, and Tenant shall fully reimburse and compensate Landlord
on demand.
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(ii)
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Landlord, with or without terminating this
Lease, may immediately or at any time thereafter demand in writing that
Tenant vacate the Leased Premises and thereupon Tenant shall vacate the
Leased Premises and remove therefrom all property thereon belonging to
or placed on the Leased Premises by, at the direction of, or with
consent of Tenant within ten (10) days of receipt by Tenant of such
notice from Landlord, whereupon Landlord shall have the right to
re-enter and take possession of the Leased Premises. Any such demand,
re-entry and taking possession of the Leased Premises by Landlord shall
not of itself constitute an acceptance by Landlord of a surrender of
this Lease or of the Leased Premises by Tenant and shall not of itself
constitute a termination of this Lease by Landlord.
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(iii)
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Landlord, with or without terminating this Lease,
may immediately or at any time thereafter, re-enter the Leased Premises
and remove therefrom Tenant and all property belonging to or placed on
the Leased Premises by, at the direction of, or with consent of Tenant.
Any such re-entry and removal by Landlord shall not of itself constitute
an acceptance by Landlord of a surrender of this Lease or of the Leased
Premises by Tenant and shall not of itself constitute a termination of
this Lease by Landlord.
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(iv)
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Landlord, with or without terminating this Lease,
may immediately or at any time thereafter relet the Leased Premises or
any part thereof for such time or times, at such rental or rentals and
upon such other terms and conditions as Landlord in its sole discretion
may deem advisable, and Landlord may make any alterations or repairs to
the Leased Premises which it may deem necessary or
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proper to facilitate such reletting; and Tenant shall pay all costs
of such reletting including but not limited to the cost of any such
alterations and repairs to the Leased Premises, attorneys’ fees,
leasing inducements, and brokerage commissions; and if this Lease
shall not have been terminated, Tenant shall continue to pay all rent
and all other charges due under this lease up to and including the
date of beginning of payment of rent by any subsequent tenant of part
or all of the Leased Premises, and thereafter Tenant shall pay
monthly during the remainder of the term of this Lease the
difference, if any, between the rent and other charges collected from
any such subsequent tenant or tenants and the rent and other charges
reserved in this Lease, but Tenant shall not be entitled to receive
any excess of any such rents collected over the rents reserved
herein.
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(v)
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Landlord may immediately or at any time thereafter
terminate this Lease, and this Lease shall be deemed to have been
terminated upon receipt by Tenant of written notice of such termination;
upon such termination Landlord shall recover from Tenant all damages
Landlord may suffer by reason of such termination including, without
limitation, unamortized sums expended by Landlord for leasing commissions
and construction of tenant improvements, all arrearages in rentals,
costs, charges, additional rentals, and reimbursements, the cost
(including court costs and attorneys’ fees) of recovering possession of
the Leased Premises, the cost of any alteration of or repair to the
Leased Premises which is necessary or proper to prepare the same for
reletting and, in addition thereto, Landlord at its election shall have
and recover from Tenant either (A) an amount equal to the excess, if any,
of the total amount of all rents and other charges to be paid by Tenant
for the remainder of the term of this Lease over the then reasonable
rental value of the Leased Premises for the remainder of the term of this
Lease, or (B) the rents and other charges which Landlord would be
entitled to receive from Tenant pursuant to the provisions of
Section
7.
1(b)(iv)
if the Lease were not terminated. Such election shall be made
by Landlord by serving written notice upon Tenant of its choice of one of
the two said alternatives within thirty (30) days of the notice of
termination. All future amounts due in accordance with this
Section
7.
1(b)(v)
shall be discounted to present value at the per annum interest
rate publicly announced by a federally insured bank selected by Landlord
in the state in which the Building is located as such bank’s prime or
base rate.
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(c) If Landlord re-enters the Leased Premises or terminates this Lease pursuant to any of the
provisions of this Lease, Tenant hereby waives all claims for damages which may be caused by such
re-entry or termination by Landlord. Tenant shall and does hereby indemnify and hold Landlord
harmless from any loss, cost (including court costs and
24
attorneys’ fees), or damages suffered by Landlord by reason of such re-entry or termination.
No such re-entry or termination shall be considered or construed to be a forcible entry.
(d) The exercise by Landlord of any one or more of the rights and remedies provided in this
Lease shall not prevent the subsequent exercise by Landlord of any one or more of the other rights
and remedies herein provided. All remedies provided for in this Lease are cumulative and may, at
the election of Landlord, be exercised alternatively, successively, or in any other manner and are
in addition to any other rights provided for or allowed by law or in equity.
(e) No act by Landlord with respect to the Leased Premises shall terminate this Lease,
including, but not limited to, acceptance of the keys, institution of an action for detainer or
other dispossessory proceedings, it being understood that this Lease may only be terminated by
express written notice from Landlord to Tenant, and any reletting of the Leased Premises shall be
presumed to be for and on behalf of Tenant, and not Landlord, unless Landlord expressly provides
otherwise in writing to Tenant.
(f) Upon termination of Tenant’s right to possess the Leased Premises, Landlord shall, only to
the extent required by applicable law, use objectively reasonable efforts to mitigate damages by
reletting the Leased Premises. Landlord shall not be deemed to have failed to do so if Landlord
refuses to lease the Leased Premises to a prospective tenant that Landlord deems, in the exercise
of Landlord’s business judgment, unacceptable for or incompatible with the other tenants of the
Building, or who (1) is an Affiliate (as defined below), parent or subsidiary of Tenant; (2) is not
acceptable to any Mortgagee of Landlord; (3) requires improvements to the Leased Premises to be
made at Landlord’s expense; or (4) is unwilling to accept lease terms then proposed by Landlord,
including: (a) leasing for a shorter or longer term than remains under this Lease; (b)
re-configuring or combining the Leased Premises with other space, (c) taking all or only a part of
the Leased Premises; and/or (d) changing the use of the Leased Premises. Notwithstanding Landlord’s
duty to mitigate its damages as provided herein, Landlord shall not be obligated (i) to give any
priority to reletting Tenant’s space in connection with its leasing of space in the Building or any
complex of which the Building is or becomes a part, or (ii) to accept below market rental rates for
the Leased Premises or any rate that would negatively impact the market rates for the Building. To
the extent that Landlord is required by applicable law to mitigate damages, Tenant must plead and
prove by clear and convincing evidence that Landlord failed to so mitigate in accordance with the
provisions of this Section 7.1(f), and that such failure resulted in an avoidable and quantifiable
detriment to Tenant.
7.2.
Insolvency or Bankruptcy.
The appointment of a receiver to take possession of all
or substantially all of the assets of Tenant or any guarantor of Tenant’s obligations under this
Lease, or any general assignment by Tenant or any guarantor of Tenant’s obligations under this
Lease for the benefit of creditors, or any action taken or suffered by Tenant or any guarantor of
Tenant’s obligations under this Lease under any insolvency, bankruptcy, or reorganization act,
shall, at Landlord’s option, constitute a breach of this Lease by Tenant. Upon the happening of any
such event or at any time thereafter, this Lease shall terminate five (5) days after written notice
of termination from Landlord to Tenant. In no event shall this Lease be assigned or assignable by
operation of law or by voluntary or involuntary bankruptcy proceedings or otherwise and in no event
shall this Lease or any
25
rights or privileges hereunder be an asset of Tenant under any bankruptcy, insolvency, or
reorganization proceedings.
7.3.
Late Payments.
Tenant shall pay, as a one (1) time late charge on each
installment of any Rental owed by Tenant hereunder that is not paid when due, the greater of
$100.00 or an amount equal to five percent (5%) of the amount due for each and every thirty (30)
day period that said amount remains unpaid (but in no event shall the amount of such late charge
exceed an amount based upon the highest legally permissible rate chargeable at any time by Landlord
under the circumstances). Should Tenant make a partial payment of past due amounts, the amount of
such partial payment shall be applied first to reduce all accrued and unpaid late charges, in
inverse order of their maturity, and then to reduce all other past due amounts, in inverse order of
their maturity.
7.4.
Attorney’s Fees.
In any action to enforce a party’s rights under this Lease or
the terms hereof, the prevailing party shall be entitled to collect from the other party all court
costs, reasonable attorneys fees and litigation expenses, including, but not limited to, costs of
depositions and expert witnesses, actually incurred by the prevailing party in connection with such
action.
7.5.
Waiver of Homestead.
Tenant hereby waives and renounces all homestead or
exemption rights which Tenant may have under or by virtue of the Constitutions and Laws of the
United States, the State of Tennessee, and any other State as against any debt or sum Tenant may
owe Landlord under this Lease and hereby transfers, conveys, and assigns to Landlord all homestead
or exemption rights which may be allowed or set apart to Tenant, including such as may be set apart
in any bankruptcy proceeding, to pay any debt or sum owing by Tenant to Landlord hereunder.
7.6.
No Waiver of Rights.
No failure or delay of Landlord to exercise any right or
power given it herein or to insist upon strict compliance by Tenant of any obligation imposed on
it herein and no custom or practice of either party hereto at variance with any term hereof shall
constitute a waiver or a modification of the terms hereof by Landlord or any right it has herein
to demand strict compliance with the terms hereof by Tenant. No waiver of any right of Landlord or
any default by Tenant on one occasion shall operate as a waiver of any of Landlord’s other rights
or of any subsequent default by Tenant. No express waiver shall affect any condition, covenant,
rule, or regulation other than the one specified in such waiver and then only for the time and in
the manner specified in such waiver. No person has or shall have any authority to waive any
provision of this Lease unless such waiver is expressly made in writing and signed by an
authorized officer of Landlord.
7.7.
Holding Over.
In the event of holding over by Tenant after expiration or
termination of this Lease without the written consent of Landlord, Tenant shall pay as liquidated
damages, solely for such holding over, double the Rental that would have been payable if this
Lease had not so terminated or expired) for the entire holdover period. No holding over by Tenant
after the term of this Lease shall be construed to extend this Lease, and Tenant shall be deemed a
tenant at will, terminable on five (5) days notice from Landlord. In the event of any unauthorized
holding over, Tenant shall indemnify Landlord against all claims for damages by any other tenant
to whom Landlord shall have leased all or any part of the Leased Premises effective upon the
termination of this Lease. Any holding over with the
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express written consent of Landlord shall thereafter constitute this Lease to be a lease from
month to month (terminable by either party on thirty (30) days notice) at a Base Rental, Tenant’s
Forecast Additional Rental, and all other sums required to be paid by Tenant prior to the
expiration or termination of this Lease as may be determined by Landlord.
7.8.
Subordination.
(a) Landlord may have heretofore or may hereafter encumber with a mortgage, deed of trust,
deed to secure debt, financing statement or other security interests
(collectively, a
“Mortgage”)
the Land, the Project or any part thereof or any interest therein, may sell and lease back the
Land, the Project or any part thereof, and may encumber the leasehold estate under such a sale and
leaseback arrangement with a Mortgage. (The holder of any Mortgage is herein called a
“Mortgagee.”
A lease creating Landlord’s interest in the Land, the Project or part thereof is herein called a
“Ground Lease”
and the lessor under any such Ground Lease is herein called a
“Ground Lessor.”
)
This Lease and the rights of Tenant hereunder shall be and are hereby expressly made subject to
and subordinate at all times to any Mortgage and to any Ground Lease now or hereafter existing,
and to all amendments, modifications, renewals, extensions, consolidations and replacements
thereof, and to all advances made or hereafter to be made upon the security thereof; provided,
however, that the Mortgagee or Ground Lessor shall not, so long as Tenant shall not be in default
under this Lease, disturb Tenant in its possession of the Leased Premises or terminate Tenant’s
rights hereunder. Tenant agrees to execute and deliver to Landlord such further instruments
consenting to or confirming the subordination of this Lease to any Mortgage and to any Ground
Lease and containing such other provisions which may be requested in writing by Landlord within
ten (10) days after Tenant’s receipt of such written request.
(b) Tenant agrees that if Landlord defaults in the performance or observance of any covenant
or condition of this Lease required to be performed or observed by Landlord hereunder, Tenant will
give written notice specifying such default by certified or registered mail, postage prepaid, to
any Mortgagee or Ground Lessor of which Tenant has been notified in writing, and before Tenant
exercises any right or remedy which it may have on account of any such default of Landlord, such
Mortgagee or Ground Lessor shall have a reasonable amount of time to cure such default of Landlord,
if such default can be cured without such Mortgagee or Ground Lessor taking possession of the
mortgaged or leased estate, or to obtain possession of the mortgaged or leased estate and then to
cure such default of Landlord, if such default cannot be cured without such Mortgagee or Ground
Lessor taking possession of the mortgaged or leased estate.
(c) If any Mortgage is foreclosed, or Landlord’s interest under this Lease is conveyed or
transferred in lieu of foreclosure, or if any Ground Lease is terminated:
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(i)
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No person or entity which as the result of any
of the foregoing has succeeded to the interest of Landlord in this
Lease (any such person or entity being hereafter called a
“
Successor
”)
shall be liable for any default by Landlord or any other matter which
occurred prior to the date such Successor succeeded to Landlord’s
interest in this Lease, nor shall such Successor be bound by or
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subject to any offsets or defenses which Tenant may have against
Landlord or any other predecessor in interest to such Successor.
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(ii)
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Upon request of any Successor, Tenant will
attorn to such Successor, as Landlord under this Lease, subject to the
provisions of this
Section 7.
8(c)
and
Section 7.
8(e)
,
and will execute
and deliver such instruments as may be necessary or appropriate to
evidence such attornment within ten (10) days after receipt of a
written request to do so.
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(iii)
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No Successor shall be bound to recognize any
prepayment by more than thirty (30) days of any Rental payable by
Tenant hereunder.
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(d) Notwithstanding anything to the contrary contained herein, any Mortgagee may subordinate,
in whole or in part, its Mortgage to this Lease by sending Tenant notice in writing subordinating
all or any part of such Mortgage to this Lease, and Tenant agrees to execute and deliver to such
Mortgagee such further instruments consenting to or confirming the subordination of all or any
portion of its Mortgage to this Lease and containing such other provisions which may be requested
in writing by such Mortgagee within ten (10) days after Tenant’s receipt of such written request.
(e) Whether or not any Mortgage is foreclosed or any Ground Lease is terminated, or any
Mortgagee or Ground Lessor succeeds to any interest of Landlord under this Lease, no Mortgagee or
Ground Lessor shall have any liability to Tenant for any security deposit paid to Landlord by
Tenant hereunder, unless such security deposit has actually been received by such Mortgagee or
Ground Lessor.
(f) Should any prospective Mortgagee or Ground Lessor require a modification or modifications
of this Lease, which modification or modifications will not cause an increased cost or expense to
Tenant or in any other way materially and adversely change the rights and obligations of Tenant
hereunder, in the reasonable judgment of Tenant, then and in such event, Tenant agrees that this
Lease may be so modified and agrees to execute whatever documents are required therefor and deliver
the same to Landlord within ten (10) days following written request therefor. Should any
prospective Mortgagee or Ground Lessor require execution of a short form of this Lease for
recording (containing, among other customary provisions, the names of the parties, a description of
the Leased Premises and the term of this Lease), Tenant agrees to execute such short form of lease
and deliver the same to Landlord within ten (10) days following the request therefor.
(g) If Tenant fails within ten (10) days after initial written demand therefor to execute and
deliver any instruments as may be necessary or proper to effectuate any of the covenants of Tenant
set forth above in this
Section,
Tenant hereby makes, constitutes and irrevocably appoints any one
of Landlord or any of Landlord’s beneficiaries or partners in such beneficiaries as
attorney-in-fact for Tenant (such power of attorney being coupled with an interest) with full power
and authority to execute and deliver any such instruments for and in the name of Tenant.
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(h) No Mortgagee or Ground Lessor of which Tenant has been notified, in writing, shall be
bound any amendment or modification of this Lease made without the written consent of such
Mortgagee or Ground Lessor.
7.9.
Estoppel Certificate.
Tenant agrees that, from time to time upon not less than
ten (10) days’ prior request by Landlord, or any existing or prospective Mortgagee or Ground
Lessor, Tenant will, and Tenant will cause any subtenant, licensee, concessionaire or other
occupant of the Leased Premises claiming by, through or under Tenant, to complete, execute and
deliver to Landlord or Landlord’s designee or to any existing or prospective mortgagee or ground
lessor, a written estoppel certificate certifying (i) that this Lease is unmodified and is in full
force and effect (or if there have been modifications, that this Lease, as modified, is in full
force and effect and setting forth the modifications); (ii) the amounts of the monthly installments
of Base Rental, Tenant’s Forecast Additional Rental, Tenant’s Additional Rental Adjustment and
other sums then required to be paid under this Lease by Tenant; (iii) the date to which the Base
Rental, Tenant’s Forecast Additional Rental, Tenant’s Additional Rental Adjustment and other sums
required to be paid under this Lease by Tenant have been paid; (iv) that Landlord is not in default
under any of the provisions of this Lease, or if in default, the nature thereof in detail and what
is required to cure same; and (v) such other information concerning the status of this Lease or the
parties’ performance hereunder reasonably requested by Landlord or the party to whom such estoppel
certificate is to be addressed.
ARTICLE VIII.
8.1.
Sublease or Assignment by Tenant.
(a) The Tenant shall not, without the Landlord’s prior written consent, (i) assign, convey,
mortgage, pledge, encumber, or otherwise transfer (whether voluntarily, by operation of law, or
otherwise) this Lease or any interest hereunder; (ii) allow any lien to be placed upon Tenant’s
interest hereunder; (iii) sublet the Leased Premises or any part thereof; or (iv) permit the use or
occupancy of the Leased Premises or any part thereof by any one other than Tenant. Any attempt to
consummate any of the foregoing without Landlord’s consent shall be void and of no force or effect.
For purposes hereof, the transfer of the ownership or voting rights in a controlling interest of
the voting stock of Tenant (if Tenant is a corporation) or the transfer of a general partnership
interest or a majority of the limited partnership interest in Tenant (if Tenant is a partnership),
at any time throughout the term of this Lease, shall be deemed to be an assignment of this Lease.
(b) Notwithstanding anything herein to the contrary, if at any time or from time to time
during the term of this Lease, Tenant desires to sublet all or any portion of the Leased Premises
or assign all or any portion of Tenant’s interest in this Lease, Tenant shall notify Landlord in
writing (hereinafter referred to in this
Section
as the
“
Notice
”)
of the terms of the proposed
subletting or assignment, the identity of the proposed sublessee or assignee, the area proposed to
be sublet or covered by the assignment (hereinafter referred to as
“Sublet Space”),
and such other
information as Landlord may request to evaluate Tenant’s request to sublet or assign. Landlord
shall then have the option (i) to sublet the Sublet Space from Tenant as provided in subsection (c)
hereof at the same Base Rental and Tenant’s Additional Rental as Tenant is required to pay to
Landlord under this Lease for the Sublet Space, (ii) to terminate this Lease as to the Sublet Space
as provided in subsection (d)
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hereof, or (iii) to allow the proposed sublease or assignment subject only to the final review
for approval as provided in subsection (e) hereof. Landlord s option to sublet, to terminate, or to
allow the proposed sublease or assignment subject to final review, as the case may be, shall be
exercisable by Landlord in writing within a period of thirty (30) calendar days after receipt of
the Notice and any failure by Landlord to exercise any of such options within said thirty (30) day
period shall be deemed to constitute the election of option (iii) above.
(c) In the event Landlord exercises the option to sublet the Sublet Space pursuant to
Landlord’s options set forth above, the term of the subletting from the Tenant to Landlord shall be
the term set forth in the Notice (which shall not be longer than the then current term of this
Lease unless Landlord expressly agrees in writing that any extension or renewal option contained in
this Lease will apply to such Sublet Space) and shall be on such terms and conditions as are
contained in this Lease to the extent applicable, except that the Landlord shall have the right to
further sublet the Sublet Space freely and without any consent or approval from Tenant and upon
such terms and for such rent as Landlord shall agree upon in its sole and absolute discretion.
(d) If Landlord elects to terminate this Lease pursuant to Landlord’s options set forth above,
then this Lease shall terminate as to the Sublet Space on the date set forth in Landlord’s notice
to Tenant, which date shall be no less than thirty (30) days and no more than ninety (90) days
after the date of such notice. If the Sublet Space does not constitute the entire Leased Premises
and Landlord exercises its option to terminate this Lease with respect to the Sublet Space, as to
that portion of the Leased Premises which is not part of the Sublet Space, this Lease shall remain
in full force and effect except that Base Rental, Tenant’s Forecast Additional Rental, and Tenant’s
Additional Rental shall be calculated on the difference between the Rentable Square Feet prior to
such termination and the Rentable Square Feet of the Sublet Space.
(e) If Landlord elects or is deemed to have elected to allow the proposed sublease or
assignment subject to final review, Tenant shall submit to Landlord, within twenty (20) calendar
days after receipt of Landlord’s notice of election (or the expiration of said thirty (30)-day
period if no such election is made), a copy of the proposed sublease or assignment, which sublease
or assignment must provide for the assumption of all of Tenant’s obligations under this Lease, and
such additional information concerning the business, reputation and credit-worthiness of the
proposed sublessee or assignee as shall be sufficient to allow Landlord to form a commercially
reasonable judgment with respect thereto. Landlord agrees not to unreasonably withhold its
approval of any proposed sublease or assignment and, in the event Landlord fails to approve or
disapprove any such sublease or assignment within thirty (30) days after Landlord’s receipt of
such submission from Tenant, such sublease or assignment shall be deemed to be approved; provided,
however, that if Landlord approves any proposed sublease or assignment, Landlord shall receive
from Tenant as additional rent hereunder seventy-five percent (75%) of any rents or other sums
received by Tenant pursuant to said sublease or assignment in excess of the rentals payable to
Landlord by Tenant under this Lease with respect to the Sublet Space (after deducting all of
Tenant’s reasonable costs associated therewith, including reasonable brokerage fees and the
reasonable cost of remodeling or otherwise improving the Leased Premises for said sublessee or
assignee), as such rents or other sums are received by Tenant from the approved sublessee or
assignee. Landlord may require that any rent or other sums paid by a sublessee or assignee be paid
directly to Landlord. If Landlord approves in writing the proposed sublessee or assignee and the
terms of the proposed sublease
30
or assignment, but a fully executed counterpart of such sublease or assignment is not
delivered to Landlord within sixty (60) calendar days after the date of Landlord’s written
approval, then Landlord’s approval of the proposed sublease or assignment shall be deemed null and
void and Tenant shall again comply with all the conditions of this
Section
as if the Notice and
options hereinabove referred to had not been given, received or exercised. If Landlord fails to
approve the form of sublease or assignment or the sublessee or assignee, Tenant shall have the
right to submit amended forms or other sublessees or assignees to Landlord to review for approval.
(f) Notwithstanding the giving by Landlord of its consent to any sublease or assignment with
respect to the Leased Premises, no sublessee or assignee may exercise any expansion option, right
of first refusal option, or renewal option under this Lease except in accordance with a separate
written agreement entered into directly between such sublessee or assignee and Landlord, and
Tenant may not exercise any such right with respect to any space that Tenant has sublet or
assigned.
(g) Notwithstanding the giving by Landlord of its consent to any subletting, assignment or
occupancy as provided hereunder or any language contained in such lease, sublease or assignment to
the contrary, unless this Lease is expressly terminated by Landlord, Tenant shall not be relieved
of any of Tenant’s obligations or covenants under this Lease and Tenant shall remain fully liable
hereunder.
(h) If, with the consent of the Landlord, the Leased Premises or any part thereof is sublet or
occupied by other than Tenant or this Lease is assigned, Landlord may, after default by Tenant,
collect rent from the subtenant, assignee or occupant, and apply the net amount collected to the
Rental herein reserved. No such subletting, assignment, occupancy, or collection shall be deemed
(i) a waiver of any of Tenant’s covenants contained in this Lease, (ii) a release of Tenant from
further performance by Tenant of its covenants under this Lease, or (iii) a waiver of any of
Landlord’s other rights hereunder.
(i) In no event shall Tenant assign this Lease or enter into any sublease, license, concession
or other agreement for use, occupancy or utilization of any part of the Leased Premises which
provides for a rental or other payment for such use, occupancy or utilization based in whole or in
part on the income or profits derived by any person from the Leased Premises leased, used, occupied
or utilized (other than an amount based on a fixed percentage or percentages of gross receipts of
sales), and Tenant agrees that all assignments, subleases, licenses, concessions or other
agreements for use, occupancy or utilization of any part of the Leased Premises shall provide that
the person having an interest in the possession, use, occupancy or utilization of the Leased
Premises shall not enter into any lease, sublease, license, concession or other agreement for use,
occupancy or utilization of space in the Leased Premises which provides for a rental or other
payment for such use, occupancy or utilization based in whole or in part on the income or profits
derived by any person from the Leased Premises leased, used, occupied or utilized (other than an
amount based on a fixed percentage or percentages of gross receipts of sales) and any such
purported assignment, sublease, license, concession or other agreement shall be absolutely void and
ineffective as a conveyance of any right or interest in the possession, use, occupancy or
utilization of any part of the Leased Premises.
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8.2.
Assignment by Landlord.
Landlord shall have the right to transfer and assign, in
whole or in part, all its rights and obligations hereunder, in the Building, the Land and all other
property referred to herein, and in such event and upon such transfer (any such transferee to have
the benefit of, and be subject to, the provisions of Sections 8.03 and 8.04 hereof) no further
liability or obligation shall thereafter accrue against Landlord hereunder.
8.3.
Peaceful Enjoyment.
Landlord covenants that Tenant shall and may peacefully have,
hold and enjoy the Leased Premises free from hindrance by Landlord or any person claiming by,
through or under Landlord but subject to the other terms hereof, provided that Tenant pays the
rental and other sums herein recited to be paid by Tenant and performs all of Tenant’s covenants
and agreements herein contained. It is understood and agreed that this covenant and any and all
other covenants of Landlord contained in this Lease shall be binding upon Landlord and its
successors only with respect to breaches occurring during the ownership of the Landlord’s interest
hereunder.
8.4.
Limitation of Landlord’s Personal Liability.
Tenant specifically agrees to look
solely to Landlord’s equity interest in the Building for the recovery of any monetary judgment
against Landlord, it being agreed that Landlord (and its partners and shareholders) shall never be
personally liable for any such judgment. The provision contained in the foregoing sentence is not
intended to, and shall not, limit any right that Tenant might otherwise have to obtain injunctive
relief against Landlord or Landlord’s successors in interest or any suit or action in connection
with enforcement or collection of amounts which may become owing or payable under or on account of
insurance maintained by Landlord.
8.5.
Force Majeure.
Landlord and Tenant (except with respect to the payment of Rental
or any other monetary obligation under this Lease shall be excused for the period of any delay and
shall not be deemed in default with respect to the performance of any of the terms, covenants and
conditions of this Lease when prevented from so doing by a cause or causes beyond the Landlord’s or
Tenant’s (as the case may be) control (excluding financial inability to perform), which shall
include, without limitation, all labor disputes, governmental regulations or controls, fire or
other casualty, inability to obtain any material or services, acts of God, or any other cause not
within the reasonable control of Landlord or Tenant (as the case may be).
ARTICLE IX.
9.1.
Notices.
Any notice or other communications required or permitted to be given
under this Lease must be in writing and shall be effectively given or delivered if (i) hand
delivered to the addresses for Landlord and Tenant stated below, (ii) sent by certified or
registered United States Mail, return receipt requested, to said addresses, or (iii) sent by
nationally recognized overnight courier (such as Federal Express, UPS Next Day Air or Airborne
Express), with all delivery charges paid by the sender and signature required for delivery, to said
address. Any notice mailed shall be deemed to have been given upon receipt or refusal thereof.
Notice effected by hand delivery shall be deemed to have been given at the time of actual delivery.
Either party shall have the right to change its address to which notices shall thereafter be sent
and the party to whose attention such notice shall be directed by giving the other party notice
thereof in accordance with the provisions of this
Section 9.1.
The initial addresses of the parties
for purposes of this Lease are:
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To:
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Lionstone Cash Flow Office One, LP
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Five Greenway Plaza
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Houston, Texas 77046
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Attn: Daniel R. Dubrowski
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Telecopy: (713) 285-2911
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With copy to:
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Property Tennessee One Corporation
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c/o Lionstone Cash Flow Office One, LP
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Five Greenway Plaza
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Houston, Texas 77046
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Attn: F. Russ Nicholson
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Telecopy: (713) 285-2911
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With copy to:
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Nashville Hines Development, LLC
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Property Management Office
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2525 West End Avenue
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Nashville, TN 37203
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Attn: Project Manager
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Tenant:
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Cumberland Pharmaceuticals Inc.
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2525 West End Avenue, Suite 950
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Nashville, TN 37203
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Attn: Jean W. Marstiller
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Telecopy: (615) 255-0094
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With a copy to:
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Adams and Reese / Stokes Bartholomew LLP
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424 Church Street, Suite 2800
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Nashville, TN 37219-2386
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Attn: Martin S. Brown
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Telecopy: (615) 259-1470
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Tenant shall also send a copy of each such notice to each Mortgagee that notifies Tenant in writing
of its interest and the address to which notices are to be sent.
9.2.
Miscellaneous.
(a) This Lease shall be binding upon and inure to the benefit of the successors and assigns of
Landlord, and shall be binding upon and inure to the benefit of Tenant, its successors, and, to the
extent assignment may be approved by Landlord hereunder, Tenant’s assigns. Where appropriate the
pronouns of any gender shall include the other gender, and either the singular or the plural shall
include the other.
(b) All rights and remedies of Landlord and Tenant under this Lease shall be cumulative and
none shall exclude any other rights or remedies allowed by law. This Lease is declared to be a
Tennessee contract, and all of the terms hereof shall be construed according to the laws of the
State of Tennessee.
(c) This Lease may not be altered, changed or amended, except by an instrument in writing
executed by all parties hereto. Further, the terms and provisions of this
33
Lease shall not be construed against or in favor of a party hereto merely because such party
is the
“Landlord”
or the
“Tenant”
hereunder or such party or its counsel is the draftsman of this
Lease.
(d) If Tenant is a corporation, partnership or other entity, Tenant warrants that all consents
or approvals required of third parties (including but not limited to its Board of Directors or
partners) for the execution, delivery and performance of this Lease have been obtained and that
Tenant has the right and authority to enter into and perform its covenants contained in this Lease.
Likewise, if Landlord is a corporation, partnership or other entity, Landlord warrants that all
consent or approvals required of third parties (including but not limited to its Board of Directors
or partners) for the execution, delivery and performance of this Lease have been obtained and that
Landlord has the right and authority to enter into and perform its covenants contained in this
Lease.
(e) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO SHALL AND THEY HEREBY DO
WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES
HERETO AGAINST THE OTHER ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS
LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT’S USE OR OCCUPANCY OF THE DEMISED PREMISES
AND/OR ANY CLAIM OF INJURY OR DAMAGE. IN THE EVENT LANDLORD COMMENCES ANY PROCEEDINGS FOR
NONPAYMENT OF RENT OR ANY OTHER AMOUNTS PAYABLE HEREUNDER, TENANT SHALL NOT INTERPOSE ANY
COUNTERCLAIM OF WHATEVER NATURE OR DESCRIPTION IN ANY SUCH PROCEEDING, UNLESS THE FAILURE TO RAISE
THE SAME WOULD CONSTITUTE A WAIVER THEREOF. THIS SHALL NOT, HOWEVER, BE CONSTRUED AS A WAIVER OF
TENANT’S RIGHT TO ASSERT SUCH CLAIMS IN ANY SEPARATE ACTION BROUGHT BY TENANT.
(f) Wherever in this Lease there is imposed upon Landlord the obligation to use best or
reasonable efforts or due diligence, Landlord shall be required to do so only to the extent the
same is economically feasible and otherwise will not impose upon Landlord extreme financial or
other burdens.
(g) If any term or provision of this Lease, or the application thereof to any person or
circumstance, shall to any extent be invalid or unenforceable, the remainder of this Lease, or the
application of such provision to persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each provision of this Lease shall be
valid and shall be enforceable to the extent permitted by law.
(h) Time is of the essence in this Lease.
(i) This Lease agreement shall not convey any leasehold estate from Landlord to Tenant.
Landlord and Tenant hereby agree that this Lease creates only the interest of a usufruct in Tenant
which may not be levied upon or assigned without Landlord’s permission.
34
(j) Tenant represents and warrants to Landlord that Tenant did not deal with any broker in
connection with this Lease. Tenant shall indemnify, defend and hold Landlord, Landlord’s
beneficiaries, the managing agent of the Building, the leasing agent of the Building and their
respective agents, partners and employees and the Building harmless of, from and against any and
all losses, damages, liabilities, claims, liens, costs and expenses (including, without
limitation, court costs, reasonable attorneys’ fees and litigation expenses) arising from any
claims or demands of any broker or brokers or finders for any commission alleged to be due such
other broker or brokers or finders claiming to have dealt with Tenant in connection with this
Lease or with whom Tenant hereafter deals or whom Tenant employs. The provisions of this
subsection shall survive the expiration or earlier termination of this Lease.
(k) If Tenant comprises more than one person, corporation, partnership, limited liability
company or other entity, the liability hereunder of all such persons, corporations, partnerships
or other entities shall be joint and several.
(1) Landlord’s receipt of any Rental payable by Tenant hereunder with knowledge of the breach
of a covenant or agreement contained in this Lease shall not be deemed a waiver of the breach. No
acceptance by Landlord of a lesser amount than the installment of Rental which is due shall be
considered, nor shall any endorsement or statement on any check or any letter accompanying any
check or payment be deemed, an accord and satisfaction. Landlord may accept a check or payment
without prejudice to Landlord’s right to recover the balance due or to pursue any other remedy
provided in this Lease.
(m) Wherever Landlord’s consent or approval is required pursuant to the terms of this Lease,
Landlord may grant or withhold the same in Landlord’s sole and absolute discretion, except as
otherwise expressly provided herein.
(n) Tenant covenants and agrees to keep strictly confidential all of the financial terms of
this Lease and not to disseminate any such information to any third parties without the prior
written consent of Landlord. Tenant further covenants and agrees that, at all times after the date
of this Lease and prior to the Commencement Date, unless consented to in writing by Landlord, no
press release or other public disclosure concerning this Lease shall be made by Tenant.
(o) Submission of this instrument for examination shall not constitute a reservation of or
option to lease the Leased Premises or in any manner bind Landlord, and no lease or obligation on
Landlord shall arise until this instrument is signed and delivered by Landlord and Tenant;
provided, however, the execution and delivery by Tenant of this Lease to Landlord, or the managing
agent of the Building or the leasing agent of the Building shall constitute an irrevocable offer by
Tenant to lease the Leased Premises on the terms and conditions herein contained, which offer may
not be revoked for thirty (30) days after such delivery.
(p)
Financial Statements.
Tenant shall deliver to Landlord, within fifteen (15) days
after Landlord’s request, Tenant’s annual financial statement for the immediately previous fiscal
year and Tenant’s quarterly financial statements, if any, prepared since such annual financial
statement, including balance sheets, income statements and cash flow statements,
35
prepared in accordance with generally accepted accounting principles consistently applied.
Such financial statements shall be certified by the chief financial officer of Tenant as being
true, accurate and complete in all material respects. If Tenant’s annual financial statement will
not be prepared or complete within such fifteen (15) day period, then Tenant’s time to deliver its
annual financial statement shall be extended to the day that such statement is completed in the
normal course of Tenant’s business and in keeping with reasonable business practices. However, if
Tenant’s time to respond would be extended by more than thirty (30) days, Tenant shall so notify
Landlord in writing upon Tenant’s receipt of Landlord’s request for Tenant’s financial statement,
and shall offer to Landlord (in the interim) a copy of Tenant’s prior year’s financial statement
with Tenant’s chief financial officer’s estimate of any material differences in Tenant’s financial
condition since that statement was prepared. Landlord shall only make request for such financial
statements when Landlord determines, in the exercise of Landlord’s reasonable judgment, that such
information is of immediate value.
9.3.
Option to Renew.
Subject to the provisions hereinafter set forth and the
expansion and renewal rights of other tenants on the floor containing the Leased Premises, Landlord
hereby grants to Tenant an option to extend the Lease Term for not less than the entire initial
Leased Premises (the
“Option to Renew”
)
on the same terms, conditions and provisions as contained
in this Lease, as modified in this
Section 9.3
, for one period of five (5) years (the
“Renewal
Period”
)
commencing on January 1, 2011 (the
“Renewal Period Commencement Date”
)
and ending at 6:00
p.m. on December 31, 2015.
(a) The Option to Renew shall be exercisable by written notice from Tenant to Landlord of
Tenant’s election to exercise said option
(“Tenant’s Renewal Notice”)
given not earlier than
twenty-four (24) months nor later than nine (9) months prior to the Renewal Period Commencement
Date, time being of the essence. If the Option to Renew is not so exercised, said option shall
thereupon expire.
(b) Tenant may only exercise the Option to Renew, and an exercise thereof shall only be
effective, if at the time of Tenant’s exercise of said option and on the Renewal Period
Commencement Date this Lease is in full force and effect and there is no Event of Default under
this Lease. No sublessee shall be entitled to exercise the renewal option under this
Section 9.3.
(c) Rent per Rentable Square Foot payable during the Renewal Period with respect to all space
included in the Leased Premises as of the Renewal Period Commencement Date shall be equal to
Landlord’s then-quoted Building rental rate for the Leased Premises, which may be a stepped rate,
taking into account other pecuniary concessions such as any rent abatement, tenant improvement
allowances, commissions, lese term, lease rate escalations, operating expenses, and taxes. Landlord
shall give Tenant written notice of the proposed Market Rental Rate within twenty (20) days
following written request by Tenant made not earlier than fourteen (14) months prior to the Renewal
Period Commencement Date; provided, however, Landlord shall not be required to provide its notice
of the proposed Market Rental Rate until Landlord has received Tenant’s Renewal Notice.
(d) If Tenant has validly exercised the Option to Renew, within thirty (30) days after request
by either party hereto, Landlord and Tenant shall enter into a written
36
amendment to this Lease confirming the terms, conditions and provisions applicable to the
Renewal Period as determined in accordance herewith, with such revisions to the rental provisions
of this Lease as may be necessary to conform such provisions to the Market Rental Rate.
[signatures appear on following page]
37
IN WITNESS WHEREOF, the parties hereto have executed and sealed this Lease as of the date
aforesaid.
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LANDLORD:
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NASHVILLE HINES DEVELOPMENT, LLC,
a Delaware limited liability company
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By:
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Cash Flow Asset Management, L.P.,
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a Texas limited partnership, its sole manager
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By:
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CFAM GP, L.L.C.,
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a Texas limited liability company, its sole partner
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By:
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/s/ F. Russ Nicholson
F. Russ Nicholson
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Vice President
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TENANT:
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CUMBERLAND PHARMACEUTICALS INC.
,
a Tennessee corporation
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By:
Name:
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/s/ A.J. Kazimi
A. J. Kazimi
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Title:
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Chief Executive Officer
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38
EXHIBIT A
SITE PLAN AND LOCATION OF THE
BUILDING
Exhibit A — Page 1
EXHIBIT A-1
DESCRIPTION OF LAND
Tract 1 / 3.01 Acres
Being a parcel of land in Nashville, First Civil District, Eighteenth Councilmanic District,
Davidson County, Tennessee, generally located on the southerly side of West End Avenue between
Twenty-Fifth Avenue South and Natchez Trace, being part of Lot 1, Vanderbilt University
Consolidation Plat of record in Plat Book 9700, page 522, R.O.D.C. and being more particularly
described as follows:
Beginning at a mag nail (new) in the westerly right-of-way line of Twenty-Fifth Avenue South
(50-foot right-of-way) at the southerly terminus of a curve return to the southerly right-of-way
line of West End Avenue (right-of-way varies);
THENCE,
along said westerly right-of-way line of Twenty-Fifth Avenue South, S
36° 59' 53" E,
179.61 to an iron pipe (old) at the northeast corner of property conveyed to Vanderbilt University
by deed of record in Book 5157, page 991, R.O.D.C.;
THENCE,
along the northerly line of said property, S 53° 09' 57" W, 150.00 feet to an “x” in conc.
wall;
THENCE,
along the westerly line of said property, S 36° 59' 53" E, 179.81 feet to an iron pin
(set) in the northerly line of a fifty foot wide ingress and egress easement;
THENCE, along the northerly line of said ingress and egress easement the following
calls;
S 53°
08' 25" W, 90.85 feet to an iron pin (set) at the beginning of a curve to the
left;
Along said curve to the left, 136.18 feet to a railroad spike (new), said curve having a central
angle of
17° 56' 44", a radius of 434.80 feet, a tangent of
68.65 feet and a chord of S 44° 10' 03" W,
135.63 feet;
S 35°
11' 41" W, 8.07 feet to a mag nail (new);
THENCE, leaving the northerly line of said ingress and egress easement and along a severance line
the following calls:
N 36° 59' 13" W, 103.37 feet to a mag nail
(new);
S 53° 00' 47" W, 43.57 feet to a mag nail (new);
N 36° 59' 13" W, 3.57 feet to a mag nail (new);
S 53° 00' 47" W, 12.00 feet to a mag nail (new);
N 36° 59' 13" W, 285.90 feet to a mag nail (new) in the southerly right-of-way line of West End
Avenue;
THENCE, along said right-of-way the following calls;
N 54° 13' 39" E, 33.07 feet to a mag nail (new);
Exhibit A-1 — Page 1
N 53°
00' 47" E, 394.99 feet to an “x” in conc. (new) at the westerly terminus of a curve return to
the right to the westerly right-of-way line of Twenty-Fifth Avenue South; Along said curve to the
right 15.71 feet to the point of beginning, said curve having a
central angle of 89° 59' 19", a
radius of 10.00 feet, a tangent of 10.00 feet and a chord of S
81° 59' 33" E, 14.14 feet;
Containing 3.01 acres, more or less.
Exhibit A-1 — Page 2
EXHIBIT B
FLOOR PLAN OF LEASED PREMISES
[to be attached]
Exhibit B — Page 1
EXHIBIT
C
AIR CONDITIONING AND HEATING SERVICES
Subject to the provisions of
Section 3.1(b),
Landlord will furnish Building Standard air
conditioning and heating between 8 a.m. and 6 p.m. on weekdays (from Monday through Friday,
inclusive) and between 8 a.m. and 1:00 p.m. on Saturdays, all exclusive of Holidays as defined
below (the
“Building Operating Hours”
).
Upon request of Tenant made in accordance with the rules
and regulations for the Building, Landlord will furnish air conditioning and heating at other
times (that is, at times other than the times specified above), in which event Tenant shall
reimburse Landlord for Landlord’s actual cost of furnishing such services, plus an amount equal to
fifteen percent (15%) of such costs to cover Landlord’s administrative costs.
The Building Standard heating, ventilation and air conditioning system shall meet the
following design conditions, at the stated outside design conditions, based on one person per 100
square feet:
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1.
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Summer — Outdoor conditions 92 degrees Fahrenheit dry bulb, 75 degrees
Fahrenheit wet bulb; indoor conditions 75 degrees Fahrenheit dry bulb, 50% relative
humidity at design condition.
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2.
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Winter — Outdoor conditions minus 16 degrees Fahrenheit dry bulb; indoor
conditions 72 degrees Fahrenheit dry bulb.
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The following dates shall constitute
“Holidays”
as said term is used in this Lease:
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(a)
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New Year’s Day
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(b)
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Memorial Day
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(c)
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Independence Day
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(d)
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Labor Day
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(e)
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Thanksgiving Day
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(f)
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Friday following Thanksgiving Day
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(g)
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Christmas
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(h)
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Any other holiday generally recognized as such by landlords of
office space in the metropolitan Nashville, Tennessee office market, as
determined by Landlord in good faith.
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If in the case of any holiday described in (a) through (g) above, a different day shall be
observed than the respective day above-described, then that day which constitutes the day observed
by national banks in Nashville, Tennessee on account of such holiday shall constitute the holiday
under this Lease.
Exhibit C — Page 1
EXHIBIT D
BUILDING RULES AND REGULATIONS
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1.
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Sidewalks, doorways, vestibules, halls, stairways, and other similar areas shall not be used
for the disposal of trash, be obstructed by tenants, or be used by tenants for any purpose
other than entrance to and exit from the Leased Premises and for going from one part of the
Building to another part of the Building.
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2.
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Plumbing fixtures shall be used only for the purposes for which they are designed, and no
sweepings, rubbish, rags or other unsuitable materials shall be disposed into them. Damage
resulting to any such fixtures from misuse by a tenant shall be the liability of said tenant.
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3.
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Signs, advertisements, or notices visible in or from public corridors or from outside the
Building shall be subject to Landlord’s prior written approval.
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4.
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Movement in or out of the Building of furniture, office equipment, or any other bulky or
heavy materials shall be restricted to such hours as Landlord shall reasonably designate.
Landlord will determine the method and routing of said items so as to ensure the safety of all
persons and property concerned. Advance written notice of intent to move such items must be
made to the Building management office.
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5.
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All routine deliveries to a tenant’s Leased Premises during 8:00 a.m. to 5:00 p.m. weekdays
shall be made through the freight elevators. Passenger elevators are to be used only for the
movement of persons, unless an exception is approved by the Building management office.
Delivery vehicles shall be permitted only in such areas as are designated by Landlord, from
time to time, for deliveries to the Building.
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6.
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Building management shall have the authority to prescribe the manner that heavy furniture and
equipment are positioned.
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7.
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Corridor doors, when not in use, shall be kept closed.
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8.
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Tenant space that is visible from public areas must be kept neat and clean.
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9.
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All freight elevator lobbies are to be kept neat and clean. The disposal of trash or storage
of materials in these areas is prohibited.
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10.
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No animals shall be brought into or kept in, on or about the Building, except for seeing-eye
dogs.
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11.
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Tenant shall not tamper with or attempt to adjust temperature control thermostats in the
Leased Premises. Landlord shall adjust thermostats as required to maintain the Building
standard temperature. Landlord requests that all window blinds remain down and tilted at a 45
degree angle toward the street to help maintain comfortable room temperatures and conserve
energy.
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Exhibit D — Page 1
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12.
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Tenant will comply with all security procedures during business hours and after hours
and on weekends.
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13.
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Tenants are requested to lock all office doors leading to corridors and to turn out all
lights at the close of their working day.
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14.
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All requests for overtime air conditioning or heating must be submitted in writing to the
Building management office by 2:00 p.m. on the day desired for weekday requests, by 2:00 p.m.
Friday for weekend requests and by 2:00 p.m. on the preceding business day for holiday
requests.
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15.
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No flammable or explosive fluids or materials shall be kept or used within the Building
except in areas approved by Landlord, and Tenant shall comply with all applicable building
and fire codes relating thereto.
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16.
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Tenant may not place any items on the balconies of the Building that alter the exterior
appearance of the Building without obtaining Landlord’s prior written consent.
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17.
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Any motor vehicle exceeding the height restrictions of the Parking Facility shall not be
parked at any location on the Land or Parking Area.
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18.
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Tenant may not make any modifications, additions or repairs to the Leased Premises and may
not install any furniture, fixtures or equipment in the Leased Premises which is in violation
of any applicable building and/or fire code governing the Leased Premises or the Building.
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19.
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Except in those areas designated by Landlord. if any, smoking is prohibited in the Building
(including, but not limited to, the Leased Premises, the main building lobby, public
corridors, elevator lobbies, service elevator vestibules, stairwells, restrooms and other
common areas within the Building).
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20.
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All Tenant contractors shall abide by the contractor’s rules and regulations promulgated by
Landlord from time to time.
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Landlord reserves the right to rescind any of these rules and regulations and to make such other
and further rules and regulations as in its reasonable judgment shall, from time to time, be
required for the safety, protection, care and cleanliness of the Building, the operation thereof,
the preservation of good order therein and the protection and comfort of the tenants and their
agents, employees and invitees. Such rules and regulations, when made and written notice thereof
is given to a tenant, shall be binding upon it in like manner as if originally herein prescribed.
Exhibit D — Page 2
EXHIBIT F
[INTENTIONALLY DELETED]
Exhibit F — Page 1
EXHIBIT G
BASE RENTAL
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ANNUAL BASE
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RENTABLE SQUARE
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MONTHLY
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PERIOD
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RENTAL RATE
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FOOTAGE
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BASE RENTAL
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1/1/06-12/31/06
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[***]
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6,341
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[***]
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1/1/07-12/31/07
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[***]
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6,341
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[***]
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|
1/1/08-12/31/09
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[***]
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6,341
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|
[***]
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|
1/1/09-12/31/09
|
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|
[***]
|
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6,341
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[***]
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1/1/10-12/31/10
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|
[***]
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6,341
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[***]
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Exhibit G — Page 1
JANITORIAL SPECIFICATIONS
EXHIBIT H
OFFICE AREAS
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1.
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Empty, clean and damp dust all waste receptacles and remove waste paper and rubbish from the
premises nightly; wash receptacles as necessary.
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2.
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|
Empty and clean all ashtrays, screen all sand urns nightly and supply and replace sand as
necessary.
|
|
|
|
3.
|
|
Vacuum all rugs and carpeted areas in offices, lobbies and corridors nightly.
|
|
4.
|
|
Hand dust and wipe clean with damp or treated cloth all office furniture, files, fixtures,
paneling, window sills and all other horizontal surfaces nightly; wash window sills when
necessary.
|
|
|
|
5.
|
|
Damp wipe and polish all glass furniture tops nightly.
|
|
6.
|
|
Remove all finger marks and smudges from vertical surfaces, including doors, door frames,
around light switches, private entrance glass and partitions nightly.
|
|
|
|
7.
|
|
Wash clean all water coolers nightly.
|
|
|
|
8.
|
|
Sweep all stairways nightly,
|
|
|
|
9.
|
|
Police all stairwells throughout the Building daily and keep in clean condition.
|
|
|
|
10.
|
|
Damp mop spillage in office and public areas as required.
|
|
|
|
11.
|
|
Damp dust all telephones weekly.
|
WASH ROOMS
|
1.
|
|
Mop, rinse and dry floor nightly.
|
|
|
|
2.
|
|
Scrub floors as necessary.
|
|
|
|
3.
|
|
Clean all mirrors, bright work and enameled surfaces nightly.
|
|
4.
|
|
Wash and disinfect all basins, urinals and bowls nightly, using non-abrasive cleaners to
remove stains and clean undersides of rim of urinals and bowls.
|
|
|
|
5.
|
|
Wash both sides of all toilet seats with soap and water and disinfect nightly.
|
|
6.
|
|
Damp wipe nightly, wash with disinfectant when necessary, all partitions, tile walls and
outside surface of all dispensers and receptacles.
|
|
7.
|
|
Empty and sanitize all receptacles and sanitary disposals nightly; thoroughly clean and wash
at least once per week.
|
|
8.
|
|
Fill toilet tissue, soap, towel and sanitary napkin dispensers nightly.
|
|
|
|
9.
|
|
Clean flushometers, piping, toilet seat hinges and other metal work nightly.
|
|
|
|
10.
|
|
Wash and polish all walls, partitions, and enamel surfaces from trim to floor monthly.
|
|
|
|
11.
|
|
Vacuum all louvers, ventilating grills, and dust light fixtures monthly.
|
FLOORS
|
1.
|
|
Ceramic tile, marble and terrazzo floors to be swept and buffed nightly and washed or
scrubbed as necessary.
|
|
2.
|
|
Vinyl asbestos, asphalt, vinyl, rubber, or other composition floors and bases to be swept
nightly; such floors in public areas on multiple tenancy floors to be waxed and buffed as
needed.
|
|
|
|
3.
|
|
Tile floors in office areas will be waxed and buffed monthly.
|
|
|
|
4.
|
|
All floors stripped and rewaxed at tenant’s request and billed to tenant.
|
|
|
|
5.
|
|
All carpeted areas and rugs to be vacuumed clean nightly and spot cleaned as needed.
|
|
|
|
6.
|
|
Carpet shampooing will be performed at tenant’s request and billed to tenant.
|
GLASS
|
1.
|
|
Clean glass entrance doors, the adjacent glass panels and the doorframe around the doors
nightly.
|
|
|
|
2.
|
|
Clean inside surface of exterior widows at least once per year.
|
|
3.
|
|
Clean outside surface of exterior windows at least twice per year; provided, however, in the
event landlord cleans more frequently than twice per year the exterior windows of floors of
the Building located above the leased premises in such a manner so as to dirty the windows of
the leased premises, the landlord shall clean the windows of the leased premises as frequently
as those located above same.
|
HIGH DUSTING (Quarterly)
|
1.
|
|
Dust and wipe clean all closet shelving when empty and carpet sweep or dry mop all floors in
closets if such are empty.
|
|
|
|
2.
|
|
Dust all picture frames, charts, graphs and similar wall hangings.
|
|
3.
|
|
Dust clean all vertical surfaces such as walls, partitions, doors, door bucks and other
surfaces above shoulder height.
|
|
4.
|
|
Damp dust all ceiling air conditioning diffusers, wall grilles, registers and other
ventilating louvers.
|
|
5.
|
|
Dust the exterior surfaces of lighting fixtures, including glass and plastic enclosures.
|
COMPUTER ROOM AND HIGH-SECURITY AREAS
|
1.
|
|
If areas are secured, tenant must be present and provide access for cleaning staff to clean
any secured areas.
|
|
|
|
2.
|
|
Special cleaning requirements for equipment shall be at extra cost to tenant.
|
GENERAL
|
1.
|
|
Wipe all interior metal window frames/mullions and other unpainted interior metal surfaces of
the perimeter walls of the building each time the interior of the windows are washed.
|
|
|
|
2.
|
|
Keep slopsink rooms in a clean, neat and orderly condition at all times.
|
|
|
|
3.
|
|
Wipe clean and polish all metal hardware fixtures and other bright work nightly.
|
|
|
|
4.
|
|
Dust and/or wash all directory boards as needed. Remove fingerprints and smudges nightly.
|
|
|
|
5.
|
|
Maintain building lobby, corridors and other public areas in a clean condition.
|
|
|
|
6.
|
|
Maintain all landscaped areas.
|
|
|
|
7.
|
|
Maintain and clean all parking garages.
|
EXHIBIT
10.22.1
*Certain portions of this exhibit have been omitted pursuant to a request for confidential
treatment which has been filed separately with the SEC.
SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT
is made and entered into this ___
14th
___day of December, 2006
(“Effective Date”), by and between
ROBERT W. BAIRD & CO. INCORPORATED
, a Wisconsin corporation
(“Sublessor”) and
CUMBERLAND PHARMACEUTICALS INC.
, a Tennessee corporation (“Sublessee”).
RECITALS
|
A.
|
|
Sublessor is the current tenant under a certain “Office Lease Agreement” by and between
Nashville Hines Development, LLC (“Landlord”) and Sublessor, dated as of July 24, 2000 (“Prime
Lease”) for space consisting of approximately 40,000 rentable square feet on the
9
th
and 10
th
Floor in the building commonly known as 2525 West End
Avenue (the “Building”) located in Nashville, Tennessee, as more fully described in the Prime
Lease (the “Leased Premises”). A copy of the Prime Lease is attached hereto as
EXHIBIT A
.
|
|
|
|
B.
|
|
With the consent of Landlord, Sublessor has the right to sublease a part of the Leased
Premises pursuant to the terms and conditions of the Prime Lease.
|
|
|
|
C.
|
|
Sublessor desires to sublet to Sublessee, and Sublessee desires to sublease from Sublessor, a
portion of the Leased Premises consisting of approximately 8,606 rentable square feet of space
on the 9
th
Floor of the Building (the “Subleased Premises”). The Subleased
Premises are more fully described and are as situated on the floor plan attached hereto as
EXHIBIT B
.
|
|
|
|
D.
|
|
The obligations of Sublessor and Sublessee to perform this Sublease are conditioned upon
first obtaining the written consent of Landlord to this Sublease as required under Section
8.01 of the Prime Lease and to such other conditions precedent as are herein set forth.
|
IN CONSIDERATION
of the above recitals and the mutual covenants contained in this Sublease,
the parties agree as follows:
|
|
1.1
|
|
Sublessor sublets to Sublessee and Sublessee subleases from Sublessor,
the Subleased Premises. Sublessor warrants and represents that the copy of the
Prime Lease attached hereto as
EXHIBIT A
is a true, correct and complete copy
thereof and that such Prime Lease represents the entire understanding and
agreement between Landlord and Sublessor with respect to the Subleased
Premises. Except as otherwise provided in this Sublease, Sublessee
acknowledges and agrees that Sublessor has made and makes no warranties or
representations of any nature whatsoever with respect to any aspect of the
condition or otherwise relative to the Subleased Premises and that Sublessee is
taking the Subleased Premises strictly in its “
AS IS
” condition. Sublessor
agrees to provide Sublessee with a Tenant Improvement Allowance of [***]. Such
allowance shall be paid to Sublessee as a Rent credit over the six (6) month
period of the sublease term from July 1, 2007 through December 31, 2007. As
such, Sublessee shall have the right to deduct up to one sixth
(1/6
th
) of the Tenant Improvement Allowance or [***] from its
monthly Rent during the six (6) month period of July 1, 2007 through December
31, 2007 of the Sublease.
|
|
|
|
|
1.2
|
|
As of the Effective Date, Sublessor warrants and represents to
Sublessee that: (a) Sublessor is not now, and as of the Commencement Date (as
defined below) will not be, in default or breach of any of the terms or
provisions of the Prime Lease, (b) Sublessor has no notice or knowledge of any
claim by Landlord that Sublessor is or would, with the passage of time or the
giving of notice or otherwise, be in default or breach of any of the terms or
provisions of the Prime Lease, (c) to the knowledge of Sublessor, Landlord is
|
1
|
|
|
|
not in default or breach of any of the terms or provisions of the Prime Lease,
(d) to the knowledge of Sublessor, the Subleased Premises are in full
compliance with all applicable laws, statutes, ordinances, rules, regulations,
directives, orders and other requirements of any federal, state and municipal
entities, or otherwise, including without limitation the Americans with
Disabilities Act and all applicable environmental laws, rules and regulations.
|
|
|
|
|
1.3
|
|
Sublessor shall indemnify and hold Sublessee harmless from claims
arising from Sublessor’s breach of its representations and warranties contained
in this Sublease. This Section 1.3 shall survive the termination or expiration
of this Lease.
|
|
|
2.
|
|
Sublease Subject to the Prime Lease
.
|
|
|
2.1
|
|
Except as otherwise provided herein, the terms, conditions and
Exhibits of the Prime Lease shall be incorporated into this Sublease. This
Sublease is subject and subordinate in all respects to the terms and conditions
of the Prime Lease and Sublessee shall comply therewith with respect to the
Subleased Premises. Sublessee agrees to be bound by and to perform all
obligations and responsibilities of Sublessor as tenant under the Prime Lease
as such obligations and responsibilities may apply to the Subleased Premises.
Except as provided herein, Sublessee shall be entitled to all rights and
benefits of Sublessor pertaining to the Subleased Premises under the Prime
Lease and be subject to the same obligations, liabilities and limitations of
Sublessor pertaining to the Subleased Premises under the Prime Lease.
Sublessee shall neither do nor permit anything to be done that would cause the
Prime Lease to be terminated or forfeited by reason of any right of termination
or forfeiture reserved or vested in Landlord under the Prime Lease.
Notwithstanding anything contained herein or otherwise to the contrary,
sections 9.03, 9.04 and 9.05 of the Prime Lease shall not be part of this
Sublease and Sublessee shall have no rights of first refusal or options to
extend with respect to the Subleased Premises, whether pursuant to the terms of
the Prime Lease or otherwise.
|
|
|
|
|
2.2
|
|
Sublessee acknowledges that Sublessor does not, pursuant to this
Sublease, covenant or agree to do or perform any obligations undertaken or
assumed by Landlord under the Prime Lease. Sublessor will, upon Sublessee’s
request, use its reasonable efforts to obtain performance by Landlord under the
Prime Lease provided such efforts shall be at no cost to Sublessor. In strict
compliance with the Prime Lease, Sublessor shall reasonably cooperate, at no
expense to Sublessor, with Sublessee to enable Sublessee to enforce any
obligations or covenants of Landlord under the Prime Lease. Sublessee shall be
entitled to receive the pro-rata portion attributable to the Subleased Premises
of any rent abatements or credits received by Sublessor from Landlord as result
of any interruption in, or failure by Landlord to provide, any of the services
and utilities required under the Prime Lease or any failure by Landlord to
maintain and repair the Leased Premises or the Building under the Prime Lease
or for any other reason under the Prime Lease.
|
|
|
|
|
2.3
|
|
Sublessor agrees to perform, according to the terms of the
Prime Lease, the obligations of Sublessor under the Prime Lease that have not
been assumed by Sublessee hereunder with respect to the Subleased Premises.
Sublessor further agrees that Sublessor shall not enter into any agreement with
Landlord to modify or terminate the Prime Lease which would affect the
Subleased Premises or to exercise any right to terminate the Prime Lease
without obtaining Sublessee’s prior written consent in each instance.
Sublessor agrees to promptly provide Sublessee with copies of all notices
received from Landlord with respect to the Subleased Premises and all
notices of default received from Landlord under the Prime Lease at the
location specified in Section 12.1 hereof.
|
|
|
|
|
2.4
|
|
Sublessor agrees, at no cost to Sublessor, to use reasonable
efforts to cooperate with Sublessee in obtaining for Sublessee (i) any
additional services requested by Sublessee
|
2
|
|
|
|
under the Prime Lease, (ii) any
benefit to Sublessor relating to the Subleased Premises under the Prime Lease
that would directly benefit Sublessee including, without limitation any dispute
rights regarding Operating Expenses and other payments as set forth in the
Prime Lease, and (iii) Landlord’s consent to any action for which the Prime
Lease requires Landlord’s consent. Sublessor agrees to promptly forward any
request made by Sublessee to Landlord for services or consent or approval and
to provide Landlord with any information reasonably requested by Landlord in
connection therewith. If Landlord grants any consent required under the Prime
Lease, Sublessor agrees that it shall not unreasonably withhold, condition or
delay its consent with respect thereto.
|
3.
Term
.
The term of this Sublease shall commence on June 1, 2007
(“Commencement Date”) and end on October 31, 2010 (the “Term”). Prior to the Commencement Date,
Sublessee may inspect, at reasonable times agreed upon by Sublessor, the Subleased Premises. In
the event Sublessee discovers conclusive evidence that a health and/or safety hazard (“Hazard”) is
present on the Subleased Premises, Sublessee shall deliver to Sublessor a copy of the written
inspection report disclosing the Hazard and a written notice identifying the Hazard. If Sublessor
fails to cure the Hazard within ten (10) days after receipt of the written notice from Sublessee,
or such longer period as is reasonably required for Sublessor to cure the Hazard, Sublessee may
terminate this Sublease prior to the Commencement Date, upon written notice to Sublessor as
Sublessee’s sole remedy. Sublessee shall be responsible for all costs of inspection of the
Subleased Premises and shall promptly restore the Subleased Premises to the same condition existing
immediately prior to such inspection by Sublessee (except for any such Hazard). Sublessor shall
deliver possession of the Subleased Premises to Sublessee on the Commencement Date for the purpose
of installing the Sublessee Improvements in the Subleased Premises.
|
|
4.
|
|
Rent; Security Deposit
.
|
4.1 Commencing on the Commencement Date, and continuing thereafter on or
before the first day of each month during the Term of this Sublease, and subject to
the Rent credit to Sublessee described in Section 1.1 herein, Sublessee shall pay to
Sublessor at the address specified for notices in this Sublease, monthly rent in
advance, as follows:
|
|
|
|
|
Period
|
|
Monthly Rent
|
|
06/01/07 – 06/30/07
|
|
$0.00
|
|
07/01/07 – 12/31/07
|
|
[***]
|
|
01/01/08 – 12/31/08
|
|
[***]
|
|
01/01/09 – 12/31/09
|
|
[***]
|
|
01/01/10 – 10/31/10
|
|
[***]
|
|
|
4.2
|
|
Pursuant to the Prime Lease, Landlord is responsible for paying
Operating Expenses (as defined in the Prime Lease) during any calendar year to
the extent such Operating Expenses are less than or equal to [***] per square
foot of space in the Building leased to rent paying tenants (the “Expense
Stop”) and Sublessor is responsible for paying its pro-rata share of the
Operating Expenses for any calendar year in excess of the Expense Stop.
Sublessee shall pay directly to Landlord or such other provider (i.e.,
utilities), as appropriate, or to reimburse Sublessor (for amounts actually
paid by Sublessor) for Sublessee’s proportionate share (based upon the square
footage, from time to time, of the Subleased Premises), under the Prime Lease,
of Operating Expenses for any calendar year in excess of the Operating Expenses
for 2006. Sublessor shall provide to Subtenant
copies of all statements and other documentation of such Operating Expenses
provided by Landlord under the Prime Lease and a statement prepared by
Sublessor indicating the pro-rata portion thereof payable by Sublessee
hereunder.
|
|
|
|
|
4.3
|
|
Security Deposit
.
Intentionally Deleted.
|
3
5.
Alterations to Subleased Premises
.
Sublessee shall not perform any
alterations to the Subleased Premises without the prior written consent of Sublessor and Landlord,
which consent by Sublessor shall not be unreasonably withheld. Sublessee shall surrender the
Subleased Premises to Sublessor upon termination or expiration of this Sublease in the condition as
upon delivery of possession to Sublessee hereunder, normal wear and tear and fire and casualty
excepted, and shall remove any of its trade fixtures and equipment from the Subleased Premises.
Notwithstanding the foregoing, Sublessee shall not be obligated to remove the Sublessee
Improvements from the Subleased Premises upon the termination or expiration of this Sublease.
6.
Parking
. Sublessee shall be entitled to no more than 30 Parking Permits
(as defined in the Prime Lease) to park in the Kensington Parking Facility, on a nonreserved,
unassigned basis and upon the same terms and conditions governing Sublessor’s use of Parking
Permits under the Prime Lease.
|
|
7.1
|
|
Sublessee shall have the right to use the Subleased Premises for the
purposes authorized under the Prime Lease and for no other purpose.
|
|
|
|
|
7.2
|
|
Sublessee shall obtain, at its expense, all licenses and permits
necessary for its use and occupancy of the Subleased Premises.
|
|
|
|
|
7.3
|
|
Sublessee’s use and occupancy of the Subleased Premises shall, during
the term of this Sublease, be in compliance with all Applicable Laws (as
defined in the Prime Lease) provided Sublessee shall not be required to make
any repairs or alterations to the Building to comply with such Applicable Laws,
except as may be required in connection with any alteration to the Subleased
Premises made by Sublessee. Sublessee shall, during the term of this Sublease,
keep and maintain the Subleased Premises in the condition required of Sublessor
(as tenant under the Prime Lease).
|
8.
Default
.
In addition to such other rights or remedies as may be
available to Sublessor at law or in equity, in the event Sublessee shall default in the performance
of any of the terms, covenants and conditions on its part to be performed under this Sublease
(after notice and expiration of any applicable cure period), then Sublessor shall have the same
rights and remedies with respect to the default as are given to Landlord with respect to defaults
by Sublessor as tenant under the Prime Lease. In the event of a breach of this Sublease by
Sublessor or Sublessee, the prevailing party shall be entitled to its costs and reasonable
attorneys fees in enforcing or seeking to enforce the terms and provision hereof. Sublessee
further agrees that Sublessor shall have no liability of any nature whatsoever to Sublessee as a
consequence of Landlord’s acts or omissions or its default under or breach of any of its duties or
obligations in connection with the Prime Lease. Any conflicts between the terms, covenants and
conditions of this Sublease and the Prime Lease shall be resolved in favor of this Sublease.
|
|
9.1
|
|
Sublessee shall, at all times during the term of this Sublease,
maintain in full force and effect the insurance required of Sublessor as tenant
under the Prime Lease for comprehensive general public liability insurance. All
such insurance shall be written by responsible companies licensed to do
business in Tennessee and shall name Sublessor and Landlord as additional
insureds. Sublessee shall furnish Sublessor with a certificate of insurance
evidencing the required coverage prior to the Commencement Date, in form
satisfactory to Sublessor and Landlord. All such policies shall require at
least 30 days’ written notice to Sublessor and Landlord of any cancellation,
nonrenewal or any change
affecting Sublessor’s coverage or the Landlord’s coverage thereunder. All
insurance required to be maintained by Sublessee hereunder shall be primary
and noncontributing with any other insurance. If Sublessee fails to obtain,
maintain and/or provide evidence of insurance required hereunder (after
notice and expiration of any applicable cure period), Sublessor may obtain
the same and Sublessee shall, immediately upon demand, reimburse Sublessor
for the reasonable cost thereof. No such action by Sublessor or
|
4
|
|
|
|
reimbursement from Sublessee shall be a waiver of any default or other
remedies. In no event shall the limits of any such policies of insurance be
considered as limiting the liability of Sublessee under this Sublease.
|
|
|
|
|
9.2
|
|
Sublessor and Sublessee each release and relieve the other and their
respective agents, partners, officers, directors, shareholders or employees,
and waive their entire rights of recovery for, loss or damage to property
located within or constituting a part of or all of the Subleased Premises, or
to any improvements thereto to the extent that the loss or damages are covered
by (a) the injured party’s insurance, or (b) the insurance the injured party is
required to carry under this Section 9, whichever is greater. This waiver
applies whether or not the loss or damage is due to the negligent acts or
omissions of Sublessor or Sublessee, or their respective agents, partners,
officers, directors, shareholders or employees, it being understood that such
parties will look solely to their insurers for reimbursement, and each such
party covenants to cause its insurers to waive such rights of subrogation
against the other party or parties.
|
|
|
|
|
9.3
|
|
All of Sublessee’s personal property, fixtures, trade fixtures and
equipment of any kind or description whatsoever in or about the Subleased
Premises (including without limitation the Furniture) shall be at Sublessee’s
sole risk. Sublessor and Landlord shall not be liable for any damage done to
or loss of such personal property, fixtures, trade fixtures or equipment or
damage or loss suffered by the business or occupation of Sublessee arising from
any acts or neglect of any other occupants of the building of which the
Subleased Premises are a part or of any other persons or from bursting,
overflowing or leaking of water, sewer or steampipes, or from the heating or
plumbing or sprinkler fixtures, or from electrical current or wires, or from
gas, or odors, or caused in any other manner whatsoever unless and then only to
the extent such loss or damage is caused by the intentional misconduct of
Sublessor or its agents, employees, servants, customers, clients, contractors
or invitees, or the breach of Sublessor’s obligations under this Sublease.
|
|
|
10.1
|
|
Except as provided in Section 9.2 above, Sublessee shall
defend, indemnify and hold Sublessor and Landlord harmless from and against any
and all claims, demands, actions, causes of action, liabilities, suits and
expenses, including without limitation reasonable attorney’s fees, for or in
connection with any injury (included without limitation death), loss or damage
in, on or about the Subleased Premises or arising out of or in connection with
(a) the use or occupancy of the Subleased Premises; or (b) negligence or
intentional act of Sublessee or Sublessee’s agents, employees, servants,
customers, clients, contractors or invitees. This indemnification and hold
harmless shall survive the termination or expiration of this Sublease but shall
not apply to any claims, demands or actions to the extent caused by the
negligence or intentional wrongdoing of Sublessor or its agents, employees,
servants, customers, clients, contractors or invitees.
|
|
|
|
|
10.2
|
|
Except as provided in Section 9.2 above, Sublessor shall
defend, indemnify and hold Sublessee harmless from and against any and all
claims, demands, actions, causes of action, liabilities, suits and expenses,
including without limitation reasonable attorney’s fees, for or in connection
with any injury (included without limitation death), loss or damage in, on or
about the Subleased Premises to the extent arising out of or in connection with
any negligence or intentional act of Sublessor or Sublessor’s agents,
employees, servants, customers, clients, contractors or invitees. This
indemnification and
hold harmless shall survive the termination or expiration of this Sublease
but shall not apply to any claims, demands or actions to the extent caused
by the negligence or intentional wrongdoing of Sublessee or its agents,
employees, servants, customers, clients, contractors or invitees.
|
5
11.
Brokerage
. Sublessor and Sublessee each warrant and represent that it
has dealt with no real estate brokers in connection with this transaction. Sublessor and Sublessee
each indemnifies and holds the other harmless from any loss, cost, damage or expense (including
attorneys’ fees and expenses) resulting from any breach of the foregoing representation and
warranty.
|
|
12.1
|
|
All notices hereunder to the respective parties shall be in writing
and shall be served by personal delivery or by prepaid express mail via
reputable national delivery service, or by prepaid, registered or certified
mail, addressed to the respective parties at their addresses set forth below.
Any such notice will be deemed to be given and effective if (a) personally
delivered, then on the date of such deliver; (b) sent via express mail or
overnight courier, then 24 hours after the date such notice is sent; or (c)
sent via registered or certified mail, then three days following the day on
which such notice is deposited in the United States mail addressed as stated
below. Copies of all notices or other communications shall be delivered to the
parties as follows:
|
|
|
|
|
|
To Sublessor:
|
|
Robert W. Baird & Co. Incorporated
|
|
|
|
777 East Wisconsin Avenue
|
|
|
|
Milwaukee, Wisconsin 53202
|
|
|
|
Attn: D. Michael Schaefer and Legal Department
|
|
|
|
Phone: (414) 298-2627
|
|
|
|
Fax: (414) 298-2405
|
|
|
|
|
|
To Sublessee:
|
|
Cumberland Pharmaceuticals Inc.
|
|
|
|
2525 West End Avenue, Suite 950
|
|
|
|
Nashville, Tennessee 37203
|
|
|
|
Attn: Jean W. Marstiller, VP Admin Services
|
|
|
|
Phone: (615) 255-0068
|
|
|
|
Fax: (615) 255-0094
|
|
|
|
|
Either party may, upon prior written notice to the other, specify a
different address for the giving of notices.
|
|
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|
|
12.2
|
|
This Sublease and the exhibits, if any, attached to it, set forth all
the covenants, promises, agreements, conditions and understandings between
Sublessor and Sublessee concerning the Subleased Premises and there are no
covenants, promises, agreements, conditions or understandings, either oral or
written, between them other than are herein set forth. No alteration,
amendment, change or addition to this Sublease shall be binding upon Sublessor
or Sublessee unless reduced to writing and signed by each party.
|
|
|
|
|
12.3
|
|
Sublessee may not assign this Sublease nor further sublet the
Subleased Premises in whole or in part without the prior written consent of
Sublessor and Landlord, which consent by Sublessor shall not be unreasonably
withheld. Notwithstanding anything contained in this Sublease to the contrary,
Sublessee shall have the right, without Sublessor’s prior written consent, at
any time during the Term of this Sublease, to assign or otherwise transfer this
Sublease and its rights hereunder, or sublet the Subleased Premises, in whole
or in part, to any corporation or other entity controlling, controlled by, or
under common control with, Sublessee, or to any corporation or other entity
into or with which Sublessee may be merged or consolidated, or to any
corporation or other
entity which shall be a successor of Sublessee or to any corporation or
other entity which has acquired, or is concurrently therewith acquiring,
ownership or control of all or substantially all of the business and assets
of Sublessee and has a comparable net worth of Sublessee as of the date of
this Sublease. Any assignment or subletting by Sublessee
|
6
|
|
|
|
pursuant to this
Section shall not release Sublessee from its obligations under this
Sublease.
|
|
|
|
|
12.4
|
|
The covenants, conditions and agreements contained in this Sublease
shall be binding upon and inure to the benefit of the parties and their
respective heirs, personal representatives, successors and assigns, but in the
case of assigns, only to the extent that assignment is permitted.
|
|
|
|
|
12.5
|
|
This Sublease may be executed in one or more counterparts, each and
all of which is deemed an original and all of which together constitutes but
one and the same instrument.
|
|
|
|
|
12.6
|
|
The obligations of the parties under this Sublease are expressly
subject to and conditioned upon Landlord’s prior written consent to the terms
and conditions of this Sublease, as evidenced by its execution of the “Consent
to Sublease” set forth below.
|
IN WITNESS WHEREOF
, the parties, by their duly authorized representatives, have executed this
Agreement effective as of the day and year first set forth above.
|
|
|
|
|
|
|
|
|
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|
|
SUBLESSOR:
|
|
SUBLESSEE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ROBERT W. BAIRD & CO. INCORPORATED
|
|
CUMBERLAND PHARMACEUTICALS INC.
|
|
a Wisconsin corporation
|
|
a Tennessee corporation
|
|
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|
By:
|
|
/s/ Russell P. Schwei
|
|
|
|
By:
|
|
/s/ Jean M. Marstiller
|
|
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|
Name:
|
|
Russell P. Schwei
|
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|
Name:
|
|
Jean W. Marstiller
|
|
|
|
Its:
|
|
Managing Director
|
|
|
|
Its:
|
|
Vice President, Administrative Services
|
|
|
7
CONSENT TO SUBLEASE
THIS CONSENT TO SUBLEASE (this
"
Consent”)
is
entered into to be effective as of the
Effective Date by and among Lessor, Lessee and Sublessee.
1.
General Terms
.
|
|
|
|
|
|
|
(a)
|
|
Effective Date:
|
|
December 15, 2006
|
|
|
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|
|
(b)
|
|
Lessor:
|
|
Nashville Hines Development, LLC, a Delaware limited liability company
|
|
|
|
|
|
|
|
(c)
|
|
Lessee:
|
|
Robert W. Baird & Co. Incorporated, a Wisconsin corporation
|
|
|
|
|
|
|
|
(d)
|
|
Sublessee:
|
|
Cumberland Pharmaceuticals Inc., a Tennessee corporation
|
|
|
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|
|
|
|
(e)
|
|
Building:
|
|
2525 West End, Nashville, Tennessee
|
|
|
|
|
|
|
|
(f)
|
|
Primary Lease:
|
|
Office Lease Agreement dated as of July 24, 2000. Any
capitalized term used but not defined in this Consent shall have the same meaning given
to such term in the Primary Lease.
|
|
|
|
|
|
|
|
(g)
|
|
Primary Premises:
|
|
Approximately forty thousand (40,000) square feet of RSF
located on the ninth (9
th
) and tenth (l0
th
) floors of the
Building.
|
|
|
|
|
|
|
|
(h)
|
|
Sublease:
|
|
Sublease dated as of December 14, 2006.
|
|
|
|
|
|
|
|
(i)
|
|
Subleased Premises:
|
|
Approximately eight thousand, six hundred and six (8,606)
square feet of RSF on the ninth (9
th
) floor of the Building.
|
2.
Recitals
.
(a) Lessee is the lessee under the Primary Lease, under which Lessor leased to Lessee the
Primary Premises located in the Building.
(b) Lessee desires to sublease the Subleased Premises to Sublessee.
(c) The Primary Lease requires Lessor’s consent to any sublease.
3.
Lessor’s Consent
.
(a)
Consent and Sublessee Acknowledgement
. As of the Effective Date, Lessor consents
to the sublease of the Subleased Premises from Lessee to Sublessee pursuant to the Sublease, a copy
of which is attached to this Consent as
Exhibit “A”,
subject to the terms and conditions of this
Consent. Sublessee acknowledges that it has examined and is familiar with all of the terms and
provisions of the Primary Lease.
(b)
Prohibition Against Further Transfers
. Lessee and Sublessee shall not, without
Lessor’s prior written consent in each instance, (i) convey, assign or encumber the Primary Lease
or the Sublease or any interest in either, directly or indirectly, voluntarily or by operation of
law, including the merger or conversion of Lessee or Sublessee with or into another entity, (ii)
sublet all or any portion of the Primary Premises or Subleased Premises, (iii) permit the use or
occupancy of any part of the Primary Premises or Subleased Premises by anyone other than Lessee or
Sublessee, as applicable (any of the foregoing actions shall be a
“Prohibited Transfer"
),
or (iv)
amend the Sublease. If Lessee or Sublessee is other than an individual, any change in Control
(defined in the following sentence) of Lessee or Sublessee shall constitute a Prohibited Transfer.
“Control”
means the direct or indirect power to direct or cause direction of the management and
policies of an entity, whether through ownership of voting securities, by contract or otherwise.
Conversely, Lessee and Sublessee shall not sublease space from, or assume the lease obligations
of, another lessee in the Building without Lessor’s prior written consent, which shall not be
unreasonably withheld or delayed. Following any Prohibited Transfer, Lessee or Sublessee, as
applicable (and any guarantors) shall remain fully liable under the Primary Lease and this
Consent, as either maybe amended with or without notice to or consent of Lessee or Sublessee (or
any guarantors), and Lessor may proceed directly under the Primary Lease or this Consent against
Lessee or Sublessee (or any guarantors) without first proceeding against any other party.
Notwithstanding the foregoing, Lessor’s consent shall not be unreasonably withheld or delayed in
the event (i) an assignee under a Prohibited Transfer shall have a net worth equal to or greater
than Lessee as evidenced by its then available most recent financial statements, and (ii) such
assignee’s use of the Primary Premises and Subleased Premises is permitted under the terms of the
Primary Lease and does not conflict with any exclusive usage rights granted to any other tenant in
the Building.
4.
Sublease Subordination
.
The Sublease shall be subject and subordinate at all times
to all of the covenants, agreements, terms, provisions and conditions of the Primary Lease and of
this Consent. Neither Lessee nor Sublessee shall do or permit anything to be done in connection
with the Sublease or Sublessee’s occupancy of the Subleased Premises that will violate the Primary
Lease or this Consent. As between Lessor and Sublessee, the Sublease shall automatically terminate
upon termination of the Primary Lease for any reason whatsoever, notwithstanding any other
provision of the Sublease to the contrary.
5.
Alterations
.
Sublessee agrees that no alterations, additions or physical changes
will be made in or to any part of the Subleased Premises without Lessor’s prior written consent in
each instance, which shall not be unreasonably withheld or delayed, except as may be permitted
under the Primary Lease.
6.
No Release
.
Lessor’s consent shall not be deemed in any way or manner to be a waiver
or release of Lessee or any guarantor(s) of Lessee’s obligations under the Primary Lease from the
responsibility and liability for the payment of rent under the Primary Lease and for compliance
with any and all obligations to be performed by Lessee as the Lessee under the Primary Lease.
Without limiting the scope of the preceding sentence, it is specifically understood that Lessee
shall remain fully liable for the obligation to pay Lessor for any special services provided to
Sublessee in the course of Sublessee’s use and occupancy of the Subleased Premises, whether or not
specifically provided for in the Primary Lease (including, without limitation, after-hours heating
and air conditioning of the Subleased Premises), and Lessee hereby covenants and agrees that
2
unless and until Lessor receives a written notice to the contrary from Lessee, Lessor may honor
Sublessee’s request for any such special services without the specific consent of Lessee. After an
event of default by Lessee under the Primary Lease, Lessor may, in addition to any other remedies
under the Primary Lease or at law, collect directly from Sublessee all rents due and owing from
Sublessee and apply any such rent against sums due to Lessor by Lessee as Lessee under the Primary
Lease. Further, Lessee authorizes and directs Sublessee to make such payments of rent directly to
Lessor upon its receipt of written notice of default from Lessor. The collection of any such rents
shall not be deemed a waiver of any rights and remedies of Lessor against Lessee as the Lessee
under the Primary Lease or constitute a novation or release of Lessee as Lessee from the further
performance of its obligations under the Primary Lease. Lessee acknowledges that the receipt by
Lessor from Sublessee of any such rents shall be a full and complete release, discharge and
acquittance of any claims by Lessee for rent against such Sublessee to the extent of any such
amount of rent so paid to Lessor. In addition, Lessee agrees that it forfeits its rights to any
excess consideration to which it may otherwise be entitled during any period when Lessee is in
default under the Primary Lease, and any such excess consideration shall be payable to Lessor.
7.
Lessor’s Obligations
.
Notwithstanding anything to the contrary contained in the
Sublease, neither the Sublease nor this Consent shall (i) enlarge or increase Lessor’s obligations
or liability, or (ii) reduce or decrease Lessor’s rights, under the Primary Lease or otherwise.
Lessor is not a party to the Sublease and, therefore, is not bound by the Sublease or any of its
terms. Lessor shall have no responsibility or obligation to Sublessee for the performance by
Lessee of its obligations under the Sublease. Similarly, Lessor shall have no responsibility or
obligation to Sublessee for the performance of any obligations Lessor may owe to Lessee under the
Primary Lease.
8.
Excess Rents
.
In the event that the rental and other consideration payable to
Lessee by Sublessee under the Sublease exceed the rental payable under the Primary Lease with
respect to the Subleased Premises, then Lessee shall be bound and obligated to pay Lessor fifty
percent (50%) of such excess rental within thirty (30) days of Lessee’s receipt of the same from
Sublessee. Lessee’s failure to pay to Lessor such amounts when due shall be an event of default
under the Primary Lease.
9.
Options
.
Sublessee acknowledges and agrees that Sublessee shall not have the right
to exercise any renewal, expansion, right of first refusal or other similar options or rights
afforded to Lessee under the Primary Lease.
10.
Brokerage
.
Lessee and Sublessee each agree to indemnify, defend and hold Lessor
and its designated property management, construction and marketing firms harmless from and against
any and all damage, loss, cost or expense, including, without limitation, all attorneys’ fees and
disbursements, incurred by reason of any claim of or liability to any broker or other person for
commissions or other compensation or charges with respect to the negotiation, execution and
delivery of the Sublease. The obligations of Lessee and Sublessee under this Paragraph shall
survive the expiration or earlier termination of the Sublease.
3
11.
Miscellaneous
.
(a)
Attorneys’ Fees
. In the event of any action to enforce this Consent, the
prevailing party shall be entitled to receive from the other party(ies) all costs and expenses,
including all attorneys’ fees and costs of court (or other venue of dispute resolution), incurred
in connection with such action.
(b)
Other Agreements
. Other than the Sublease, the Primary Lease and this Consent,
there are no other agreements or understandings, whether written or oral, between Lessee and
Sublessee with respect to Sublessee’s use and occupancy of the Subleased Premises or any property
of Lessee located in the Building. No compensation or consideration is payable or will become due
and payable to Lessee or any affiliate of Lessee in connection with the Sublease other than the
rentals expressly set forth in the Sublease. This Consent shall not be amended orally, but only by
an agreement in writing signed by all parties to this Consent.
(c)
Successors and Assigns
. This Consent shall be binding upon and inure to the
benefit of Lessor, Lessee and Sublessee and their respective successors and permitted assigns.
(d)
Recording
. Neither this Consent nor the Sublease may be recorded without Lessor’s
prior written consent.
(e)
Conflicts
. In the event of any conflicts among the provisions of the Primary
Lease, the Sublease and this Consent, the provisions of this Consent and the Primary Lease shall
control; and in the event of any conflicts between the provisions of the Primary Lease and this
Consent, the provisions of this Consent shall control.
(f)
Counterparts
. This Consent may be executed in any number of counterparts, each of
which shall be an original and all of which taken together shall be one instrument.
[Remainder of Page Intentionally Left Blank]
4
IN WITNESS WHEREOF, this Consent to Sublease has been executed by the parties to be effective
as of the Effective Date.
Lessor:
Nashville Hines Development, LLC, a Delaware
limited liability company
|
|
|
|
|
By:
|
|
Cash Flow Asset Management, L.P., a Texas limited
partnership, its General Partner
|
|
|
|
|
|
By:
|
|
CFAM GP, L.L.C., a Texas limited
liability company, its sole general
partner
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Joanne M. Johnson
|
|
|
|
|
Joanne M. Johnson,
|
|
|
|
|
Vice President
|
|
|
|
Lessee:
Robert W. Baird & Co. Incorporated, a Wisconsin
corporation
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Russell P. Schwei
|
|
|
|
|
Russell P. Schwei, Managing Director
|
|
|
|
|
|
|
|
|
Sublessee:
Cumberland Pharmaceuticals, Inc, a Tennessee
corporation
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Jean W. Marstiller
|
|
|
|
|
Jean W. Marstiller, Vice President,
|
|
|
|
|
Administrative Services
|
|
5
Exhibit “A”
(Sublease Agreement)
[Intentionally
omitted. See Sublease Agreement immediately preceding Consent to
Sublease.]
6
EXHIBIT
A TO SUBLEASE
PRIME LEASE
Exhibit “A”
2525 WEST END
OFFICE LEASE AGREEMENT
BY AND BETWEEN
NASHVILLE HINES DEVELOPMENT, LLC
AS LANDLORD
AND
ROBERT W. BAIRD & CO. INCORPORATED
AS TENANT
BASIC LEASE INFORMATION
|
|
|
|
|
Lease Date:
|
|
July
24
, 2000
|
|
|
|
|
|
Tenant:
|
|
Robert W. Baird & Co. Incorporated
|
|
|
|
|
|
Address of Tenant:
|
|
777 East Wisconsin Avenue
|
|
|
|
Milwaukee, Wisconsin 53202
|
|
|
|
|
|
Primary Contact:
|
|
D. Michael Schaefer
|
|
|
|
First Vice President
|
|
|
|
Manager of Real Estate and Facilities
|
|
|
|
|
|
Landlord:
|
|
Nashville Hines Development, LLC
|
|
|
|
|
|
Address of Landlord:
|
|
2800 Post Oak Boulevard
|
|
|
|
Houston, Texas 77056-6190
|
|
|
|
Attention: Profit Center Office/Central Division
|
|
|
|
|
|
Leased Premises:
|
|
Approximately 40,000 square feet of RSF located on all of Floor 10 and a portion of Floor 9.
|
|
|
|
|
|
Estimated Commencement Date:
|
|
November 1, 2000
|
|
|
|
|
|
Lease Term:
|
|
Ten (10) years
|
|
|
|
|
|
Base Rental:
|
|
$23.90 per RSF, increasing by 3% annually beginning on the first year anniversary
|
|
|
|
|
|
Floor Ready Date:
|
|
July 1, 2000
|
|
|
|
|
|
Construction Allowance:
|
|
$31.00 per square foot of RSF subject. to adjustment as provided herein
|
The foregoing Basic Lease Information is hereby incorporated into and made a part of the Lease
identified above. In the event of any conflict between any Basic Lease Information and the Lease,
the Lease shall control.
TABLE OF CONTENTS
|
|
|
|
|
|
|
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|
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|
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|
|
|
|
|
PAGE
|
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE I.
|
|
|
|
|
|
|
|
1.01.
|
|
Leased Premises
|
|
|
1
|
|
|
|
|
1.02.
|
|
Term
|
|
|
4
|
|
|
|
|
1.03.
|
|
Use
|
|
|
4
|
|
|
|
|
1.04.
|
|
Intentionally Deleted
|
|
|
4
|
|
|
|
|
1.05.
|
|
Surrender of Premises
|
|
|
4
|
|
|
|
|
1.06.
|
|
Survival
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE II.
|
|
|
|
|
|
|
|
2.01.
|
|
Rental Payments
|
|
|
6
|
|
|
|
|
2.02.
|
|
Base Rental
|
|
|
6
|
|
|
|
|
2.03.
|
|
Additional Rental
|
|
|
7
|
|
|
|
|
2.04.
|
|
Operating Expenses
|
|
|
8
|
|
|
|
|
2.05.
|
|
Intentionally Deleted
|
|
|
13
|
|
|
|
|
2.06.
|
|
Intentionally Deleted
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE III.
|
|
|
|
|
|
|
|
3.01.
|
|
Services
|
|
|
14
|
|
|
|
|
3.02.
|
|
Keys and Locks
|
|
|
16
|
|
|
|
|
3.03.
|
|
Graphics, Building Directory and Name
|
|
|
16
|
|
|
|
|
3.04.
|
|
Parking
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE IV.
|
|
|
|
|
|
|
|
4.01.
|
|
Care of Leased Premises
|
|
|
18
|
|
|
|
|
4.02.
|
|
Entry for Repairs and Inspection
|
|
|
18
|
|
|
|
|
4.03
|
|
Nuisance
|
|
|
18
|
|
|
|
|
4.04.
|
|
Laws and Regulations; Encumbrances; Rules of Building.
|
|
|
18
|
|
|
|
|
4.05.
|
|
Legal Use and Violations of Insurance Coverage
|
|
|
18
|
|
|
|
|
4.06.
|
|
Hazardous Substances
|
|
|
19
|
|
|
|
|
4.07.
|
|
Tenant Taxes
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE V.
|
|
|
|
|
|
|
|
5.01.
|
|
Leasehold Improvements
|
|
|
20
|
|
|
|
|
5.02.
|
|
Repairs by Landlord
|
|
|
21
|
|
|
|
|
5.03.
|
|
Repairs by Tenant
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE VI.
|
|
|
|
|
|
|
|
6.01.
|
|
Condemnation
|
|
|
22
|
|
|
|
|
6.02.
|
|
Damages from Certain Causes
|
|
|
22
|
|
|
|
|
6.03.
|
|
Casualty Clause
|
|
|
23
|
|
-i-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PAGE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.04.
|
|
Casualty Insurance
|
|
|
24
|
|
|
|
|
6.05.
|
|
Liability Insurance
|
|
|
24
|
|
|
|
|
6.06.
|
|
Hold Harmless
|
|
|
25
|
|
|
|
|
6.07.
|
|
Waiver of Subrogation Rights
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE VII.
|
|
|
|
|
|
|
|
7.01.
|
|
Default and Remedies
|
|
|
26
|
|
|
|
|
7.02.
|
|
Insolvency or Bankruptcy
|
|
|
29
|
|
|
|
|
7.03.
|
|
Late Payments
|
|
|
30
|
|
|
|
|
7.04.
|
|
Attorney's Fees
|
|
|
30
|
|
|
|
|
7.05.
|
|
Waiver of Homestead
|
|
|
30
|
|
|
|
|
7.06.
|
|
No Waiver of Rights
|
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30
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7.07.
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Holding Over
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30
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7.08.
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Subordination
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31
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7.09.
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Estoppel Certificate
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33
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ARTICLE VIII.
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8.01.
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Sublease or Assignment by Tenant
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33
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8.02.
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Assignment by Landlord
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36
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8.03.
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Peaceful Enjoyment
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36
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8.04.
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Limitation of Landlord's Personal Liability.
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36
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8.05.
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Force Majeure
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36
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ARTICLE IX.
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9.01.
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Notices
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37
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9.02.
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Miscellaneous
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38
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9.03.
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Tenant's Right of First Offer
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40
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9.04.
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Renewal Option
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42
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9.05.
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Satellite Dish
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42
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EXHIBIT A — SITE PLAN AND LOCATION OF THE BUILDING
EXHIBIT A-1 — DESCRIPTION OF LAND
EXHIBIT B — FLOOR PLAN OF LEASED PREMISES
EXHIBIT C — BASE BUILDING SHELL CONDITION
EXHIBIT E — AIR CONDITIONING AND HEATING SERVICES
EXHIBIT F — BUILDING RULES AND REGULATIONS
EXHIBIT G — RENTABLE SQUARE FEET AND COMMENCEMENT DATE
EXHIBIT H — BASE RENTAL
EXHIBIT I — RULES APPLICABLE TO SATELLITE DISHES
EXHIBIT J — VISITOR PARKING AREA
-ii-
2525 WEST END
OFFICE LEASE AGREEMENT
THIS LEASE AGREEMENT (“Lease”) is made and entered into on this
24
th
day of
July, 2000, by and between NASHVILLE HINES DEVELOPMENT, LLC, a limited partnership organized under
the laws of the State of Delaware, whose address for purposes hereof is 2800 Post Oak Boulevard,
Houston, Texas 77056-6190 Attention: Profit Center Office/Central Division (hereinafter called
“Landlord”), and ROBERT W. BAIRD & CO. INCORPORATED, a corporation organized under the laws of the
State of Wisconsin, whose address for purposes hereof is 777 East Wisconsin Avenue, Milwaukee,
Wisconsin 53202, Attention: D. Michael Shaefer, First Vice President and Manager of Real Estate and
Facilities, prior to the commencement of the term of this Lease, and thereafter shall be 2525 West
End Avenue, Suite 1000, Nashville, Tennessee 37203 (the address of the leased premises within the
Building) (hereinafter called “Tenant”).
ARTICLE I.
1.01.
Leased Premises.
(a) Landlord has constructed or intends to construct certain improvements on a certain tract
or parcel of land located on West End Avenue: in Nashville, Davidson County, Tennessee, and more
particularly described in
Exhibit A-1,
attached hereto and incorporated herein by this
reference (the “Land”). The improvements contemplated shall include an office building with a
retail area included within it known as 2525 West End Avenue or such other name as Landlord may
determine (the `Building’.”) and the Parking Facility (as defined herein). The Building, the
Parking Facility, and the Land together with all common areas not specifically made a part of the
Building or the Parking Facility, and all other improvements from time to time located thereon or
related thereto are hereinafter collectively referred to as the “Project.” Subject to and upon the
terms hereinafter set forth, and in consideration of the sum of Ten Dollars ($10.00), the premises,
and the mutual covenants set forth herein, the receipt and sufficiency of which are hereby
acknowledged, Landlord does. hereby lease and demise to Tenant and Tenant does hereby lease and
take from Landlord (subject to all matters of record in Davidson County, Tennessee, that affect the
Project) those certain premises (hereinafter sometimes called the “Leased Premises”) located in the
Building as shown on
Exhibit A,
attached hereto and incorporated herein, such Leased
Premises being more particularly described as follows:
Approximately 40,000 square feet of contiguous rentable square feet on the 10th and a portion
of the 9th Floor of the Building and as generally described or depicted on
Exhibit B,
attached hereto and incorporated herein (“Leased Premises”).
(b) The terms “Rentable Square Feet” and “RSF”, as used herein, shall be based on BOMA
standards and refer to (i) in the case of a floor leased to a single tenant, the total square
1
footage of all floor area measured from the inside surface of the exterior glass line of the
Building to the inside surface of the opposite exterior glass line, excluding only Service Areas
(defined below) and General Common Areas (defined below), plus an allocation of the square footage
of the General Common Areas, and (ii) in the case of a floor leased to more than one tenant, the
total square footage of all floor areas within the inside surface of the exterior glass line of the
Building enclosing the Leased Premises and measured to the mid-point of demising walls (i.e., walls
separating the Leased Premises from areas leased to or held for lease to other tenants, from
On-Floor Common Areas (defined below), and from General Common Areas), excluding only Service
Areas, plus an allocation of the square footage of the General Common Areas and an allocation of
the square footage of the On-Floor Common Areas. No deductions from Rentable Square Feet shall be
made for columns or projections.
“Service Areas” shall mean the areas within (and measured from the exterior surface of the
interior walls enclosing, or from the inside surface of the-exterior glass or wall enclosing, as
the case may be) Building stairs, elevator shafts, flues, vents, stacks, pipe shafts and vertical
ducts. Areas for the specific use of Tenant or other tenants of the Building or installed at the
request of Tenant such as special stairs or elevators are not included within the definition of
Service Areas.
“General Common Areas” shall mean those areas ‘within (and measured from the midpoint of the
walls or from the inside surface of the exterior glass enclosing). the Building’s elevator machine
rooms, main mechanical rooms, electrical rooms, and public lobbies, engineering and cleaning
staging areas, and other areas not leased or held for lease within the Building but which are
reasonably necessary for the proper utilization of the Building or to provide customary services to
the Building, plus an allocation of any On-Floor Common Areas to the General Common Areas on the
floor for floors that contain General Common Areas. The allocation of the square footage of the
General Common Areas shall be equal to the total square footage of the General Common Areas
multiplied by a fraction, the numerator of which is the Rentable Square Kept of the Leased Premises
(excluding the total square footage of the General Common Areas) and the denominator of which is
the total of all Rentable Square Feet contained in the Building (excluding the
allocation
.
of the General Common Areas).
“On-Floor Common Areas” shall mean the total square footage of all areas within (and measured
from the midpoint of the walls enclosing) public corridors, elevator foyers, rest rooms, mechanical
rooms, janitor closets, telephone and equipment rooms, and other similar facilities for the use of
all tenants on the floor on which the Leased Premises are located. The allocation of the square
footage of the On-Floor Common Areas shall be equal to the total On-Floor Common Areas on said
floor multiplied by a fraction, the numerator of which is the Rentable Square Feet of the portion
of the Leased Premises (excluding the allocations of General Common Areas and On-Floor Common
Areas) located on said floor and the denominator of which is the total of all Rentable Square Feet
on said floor (excluding the allocations of General .Common Areas and On-Floor Common Areas on the
floor).
“Parking Facility” shall mean the parking structure that is constructed and located
adjacent to the Building (the “Adjacent Parking Facility”), the surface parking area adjacent to
the Building (the “Surface Parking Area”), and the existing garage located across Kensington Place
(the
2
“Kensington Parking Facility”) as shown and labeled on
Exhibit A
(which shall only be
used by Tenant as parking for Tenant’s employees and the employees of other office tenants, not
customer parking), together with any connecting walkways, covered walkways, or other means of
access to said building or buildings, the grounds related thereto and any additional improvements
at any time related thereto. The Parking Facility may be operated by a parking contractor charging
commercially reasonable rates as designated from time to time by Landlord.
(c) Within twenty (20) days after the Commencement Date
-
(defined below),
Landlord shall deliver to Tenant
Exhibit G,
attached hereto and incorporated herein, which
shall contain an acknowledgment of the date upon which the Commencement Date (defined below) of
this Lease occurred, Landlord’s calculation of the exact number of square feet of Rentable Square
Feet within the Leased Premises, including a breakdown of Landlord’s calculations with regard to
Service Areas, General Common Areas and On-Floor Common Areas, and such other information regarding
this Lease and the Leased Premises as Landlord shall then reasonably stipulate. Tenant shall have
the right to object to
Exhibit G
by delivering written notice to Landlord within twenty
(20) days after Landlord delivers
Exhibit G
to Tenant, failing which Tenant shall be deemed
to have agreed that all information contained in
Exhibit G
is correct. If Tenant objects to
Exhibit G
within said twenty (20) day period, Landlord and Tenant shall work together to
resolve their differences and, after such differences have been resolved, Landlord shall execute
Exhibit G
and deliver same to Tenant and Tenant shall have a period of five (5) days to
give written notice to Landlord objecting to
Exhibit G,
failing which Tenant shall be
deemed to have agreed that
Exhibit G
is correct. Upon Tenant agreeing or being deemed to
have agreed. that all information contained in
Exhibit G
is correct, the Commencement Date
as shown on
Exhibit G
shall be the Commencement Date for purposes of Section 1.02(a) of
this Lease and for all other purposes under this Lease and the Rentable Square Feet of the Leased
Premises as shown on
Exhibit G
shall replace the Rentable Square Feet of the Leased
Premises as shown in Section 1.01(a) and as defined in Section 1.01(b) and shall be deemed to be
the Rentable Square Feet of the Leased Premises for all purposes under this Lease. All payments of
Rental (hereinafter defined) shall be made as. and when required herein, notwithstanding any
unresolved objections to
Exhibit G.
All such payments shall be based upon the
Exhibit
G
prepared by Landlord until such objections have been finally resolved, whereupon any
overpayment or any underpayment theretofore made shall be adjusted by increasing or reducing, as
the case may be, the next installment of Base Rental coming due. At any time after the execution of
this Lease, Landlord shall also provide Tenant with a subordination, non-disturbance and attornment
agreement in accordance with Section 7.08 of this Lease.
(d) This Lease does not grant Tenant any rights
,
to light, air or view over or
about the Land or any other real property. Landlord specifically excepts and reserves to itself all
rights to and the use of any roofs, the exterior portions of the Leased Premises, the Land,
improvements and air and other rights below the improved floor level of the Leased Premises, the
improvements and air and other rights above the improved ceiling of Leased Premises, the
improvements and air and other rights located outside the demising walls of the Leased Premises and
such areas within the Leased Premises as are required for installation of utility lines and other
installations required to serve the Building or any occupants of the Building, and Landlord
specifically reserves to itself the
3
right to use, maintain and repair same, and no rights with respect thereto are conferred
upon Tenant, unless otherwise specifically provided herein. Provided, however, Landlord shall not
construct additional improvements to the Leased Premises which reduce the volume of Tenant’s space.
(e) Tenant’s taking possession of the Leased Premises or any portion thereof shall be
conclusive evidence against Tenant that such portion of the Leased Premises was then in good order
and satisfactory condition. Tenant acknowledges that no promise by or on behalf of Landlord, any of
Landlord’s beneficiaries, the managing agent of the Building, the leasing agent of the Building or
any of their respective agents, partners or employees to alter, remodel, improve, repair, decorate
or clean the Leased Premises has been made to or relied upon by Tenant, and that no representation
respecting the condition of the Leased Premises or the Building by or on behalf of Landlord, any of
Landlord’s beneficiaries, the managing agent of the Building, the leasing agent of the Building or
any of their respective agents, partners or employees has been made to or relied upon by Tenant,
except, to the extent expressly set forth in this Lease.
1.02.
Term.
(a) Subject to and upon the terms and conditions set forth herein, or in any exhibit hereto,
the term of this Lease shall commence on the Commencement Date (defined below) and shall expire on
the last day of the month that is one hundred twenty (120) calendar months after the Commencement
Date at 6:00 P.M.
(b) As used herein, “Commencement Date” means the earlier to occur of (i) the date Tenant
occupies the Leased Premises for the purpose of conducting business; or (ii) November 1, 2000.
1.03. Use. The Leased Premises are to be used and occupied by Tenant (and its permitted
assignees and subtenants) solely for the purpose of office space and for no other purpose. The
Leased Premises shall not be used for any purpose which would create unreasonable elevator loads or
otherwise unreasonably interfere with Building operations, and Tenant shall not engage in any
activity which is not in keeping with the first class standards of the Building. In no event shall
the Leased Premises be used for the purpose of installing, marketing, operating, or providing
electronic telecommunications, information or data processing, storage or transmissions, or other
electronic office services or equipment for tenants or other occupants of the Building on a
shared-usage basis through a central switch or a local area network.
1.04.
Intentionally Deleted
1.05.
Surrender of Premises.
(a) Upon the termination of this Lease by lapse of time or otherwise or upon the earlier
termination of Tenant’s right of possession, Tenant shall quit and surrender possession of the
Leased Premises to Landlord, broom clean, in the same condition as upon delivery of possession to
Tenant hereunder, normal wear and tear and fire and casualty excepted; provided, however, Tenant
shall deliver to Landlord any and all insurance proceeds Tenant receives for damage to its
Tenant’s
4
improvements to the Leased Premises. Before surrendering possession of the Leased
Premises, Tenant shall, without expense to Landlord, remove all signs, furnishings, equipment
(including all communication and other cables), trade fixtures, merchandise and other personal
property installed or placed in the Leased Premises and all debris and rubbish, and Tenant shall
repair all damage to the Leased Premises resulting from such removal; provided if Tenant is then in
default under this Lease, Tenant shall not remove any such item unless Tenant receives written
directions from Landlord authorizing or directing the removal thereof. If Tenant fails to remove
any of the signs, furnishings, equipment, trade fixtures, merchandise and other personal property
installed or placed in the Leased Premises by the expiration or termination of this Lease, then
Landlord may, after written notice to Tenant, at its sole option, (i) treat Tenant as a holdover,
in which event the provisions of this Lease regarding holding over shall apply, (ii) deem any or
all of such items abandoned and the sole property of Landlord, or (iii) remove any and all such
items and dispose of same in any manner. Tenant shall pay Landlord on demand any and all expenses
incurred by Landlord in the removal of such items, including, without limitation, the cost of
repairing any damage to the Leased Premises or the Building caused by such removal and storage
charges. (if Landlord elects to store such property).
(b) All installations, additions, partitions, hardware, cables, wires, fixtures and
improvements, temporary or permanent (including, but not limited to, Tenant’s Extra Work), except
for Tenant’s signs, furnishings, equipment, communication cables, telephone switches, trade
fixtures, merchandise and other personal property, in or upon the Leased Premises, whether placed
there by Tenant or Landlord, shall, upon the termination of this lease by lapse of time or
otherwise or upon the earlier termination of Tenant’s right of possession, become Landlord’s
property and shall remain upon the Leased Premises, all without compensation, allowance or credit
to Tenant; provided,. however, that if at the time Landlord consents to Tenant’s installation of
any installations, additions, partitions, hardware, cables, wires, fixtures and improvements or at
any time prior to termination of this Lease, Landlord requires removal of the same upon
termination, then Tenant,. at Tenant’s sole cost and expense, upon termination of this Lease by
lapse of time or otherwise or upon the earlier termination of Tenant’s right of possession, shall
promptly remove such designated items placed in or upon the Leased Premises by ‘or on behalf of
Tenant and, repair any damage to the Leased Premises or the Building caused by such removal,
failing which Landlord may remove the same and repair the Leased Premises or the Building, as the
case maybe, and Tenant shall pay the actual cost of such removal thereof to Landlord on written
demand.
1.06.
Survival.
Any claim, cause of action, liability or obligation arising under the
term of this Lease and under the provisions hereof in favor of a party hereto against or obligating
the other party hereto and all of Tenant’s indemnification obligations hereunder shall survive the
expiration or any earlier termination of this Lease.
5
ARTICLE II.
2.01.
Rental Payments.
(a) Commencing on the Commencement Date and continuing thereafter throughout the full term of
this Lease, Tenant hereby agrees to pay the Base Rental (defined below), and Tenant’s Forecast
Additional Rental (defined below) and Tenant’s Additional Rental Adjustment (defined below) in
accordance with this Article. The Base Rental and Tenant’s Forecast Additional Rental shall be due
and payable in equal monthly installments on the first day of each calendar month during the
initial term of this Lease and any extensions or renewals hereof, and Tenant hereby agrees to so
pay such rent to Landlord at Landlord’s address as provided herein (or such other address as may be
designated by Landlord from time to time) monthly in advance.
(b) If the Commencement Date is other than the first day of a calendar month, then the
installments of Base Rental and Tenant’s Forecast Additional Rental for such month shall be
prorated and the installment or installments so prorated shall be paid in advance. Said
installments for such prorated month shall be calculated by multiplying the equal monthly
installment by a fraction, the numerator of which shall be the number of days of the Lease term
occurring during said commencement or expiration month, as the case maybe, and the denominator of
which shall be thirty (30). If the term of this Lease commences or expires on other than , the
first day of a calendar year, Tenant’s Forecast Additional Rental and Tenant’s Additional Rental
shall be prorated for such commencement or expiration year, as the case may be, by multiplying
Tenant’s Forecast Additional Rental and Tenant’s Additional Rental by a fraction, the numerator of
which shall be the-number of whole and partial months of the Lease term during the commencement or
expiration year, as the case may be, and the denominator of which shall be. twelve (12). In such
event the Tenant’s Additional Rental Adjustment shall be made as soon as reasonably possible after
the termination of this Lease.
(c) For purposes hereof, the term “Rental” shall mean and collectively refer to the Base
Rental, Tenant’s Forecast Additional Rental, Tenant’s Additional Rental Adjustment and other sums
payable by Tenant hereunder. Tenant agrees to pay all Rental at the times and in the manner
provided in this Lease, without abatement, demand, notice, set-off, deduction or counterclaim, and
all sums payable under this Lease by Tenant shall be deemed to be rent due and owing hereunder. All
Rental shall bear interest from the fifth (5th) day after the date due thereof until paid at the
lesser of (i) a per annum rate equal to the “prime rate” announced by Chase Manhattan Bank, New
York, New York, or its successor, (or if the “prime rate” is discontinued, the rate announced as
that being charged to the most credit-worthy commercial borrowers) plus two percent (2%) or (ii)
the maximum interest rate per annum allowed by law; provided, however, Landlord shall, no more than
two (2) times per twelve (12) month period, provide Tenant with written notice of its failure to
timely, pay the Rental due hereunder prior to imposing the interest penalty set forth in this
subsection 2.01(c).
2.02.
Base Rental.
Throughout the full term of this Lease, Tenant hereby agrees
to pay a base annual rental (the “Base Rental”) in accordance with the schedule attached hereto as
Exhibit
6
H, as such dollar amount may be adjusted from lease year to lease year pursuant to the
terms of this Lease.
2.03.
Additional Rental
.
(a) Commencing with the calendar year in which the Commencement Date occurs and continuing
thereafter for each calendar year during the full term of this Lease, Landlord shall present to
Tenant prior to the beginning of said calendar year (or for the calendar year in which the Lease
term commences, on the Commencement Date) a statement of Tenant’s Forecast Additional Rental.
Landlord’s failure to deliver such a statement of Tenant’s Forecast Additional Rental shall not
operate to excuse Tenant from the payment of the monthly installment of Tenant’s Forecast
Additional Rental due under Section 2.01(a). Rather, Tenant shall continue to pay the monthly
installment of Tenant’s Forecast Additional Rental based on Landlord’s most recent calculation
thereof until such a statement is delivered to Tenant, with such statement being applied
retroactively to the beginning of the calendar year and Tenant making up any under payments
immediately upon its receipt of such statement. Landlord may, from time to time, but not more than
two (2) times per year, recalculate Tenant’s Forecast Additional Rental in order to more accurately
reflect Landlord’s good faith estimate of Tenant’s Additional Rental, and Tenant shall commence
paying the recalculated Tenant’s Forecast Additional Rental, in accordance with Section 2.01(a)
hereof, immediately after receiving notice thereof.
(b) As used herein, “Tenant’s Forecast Additional Rental” shall mean Landlord’s reasonable
estimate of Tenant’s Additional Rental (defined below) for the coming calendar year (or, in the
calendar year in which the lease term commences, for such calendar year).
(c) Landlord shall absorb and be responsible for paying Operating Expenses (defined below)
during any calendar year to the extent such Operating Expenses are less than or equal to Six and
90/100 Dollars ($6.90) per square foot of space in the Building leased to rent paying tenants (the
“Expense Stop”). As part of Tenant’s Additional Rental, Tenant shall be responsible for paying its
pro rata share of the Operating Expenses for any calendar year in excess of the Expense Stop. For
purposes hereof, “Tenant’s Additional Rental” for any calendar year shall mean Tenant’s Percentage
Share (defined below) of the Operating Expenses for such calendar year in excess of the Expense
Stop. As used herein, “Tenant’s Percentage Share” shall mean a fraction, the numerator of which is
the total number of square feet of Rentable Square Feet within the Leased Premises and the
denominator of which is the greater of (i) ninety-five percent (95%) of the total square footage of
all Rentable Square Feet in the Building (exclusive of any retail space) held for lease, or (ii)
the total square footage of all Rentable Square Feet in the Building (exclusive of any retail
space) actually leased to rent paying tenants.
(d) Landlord shall use reasonable efforts. to provide Tenant, within one hundred twenty
(120) days after the end of the calendar year in which the Commencement Date occurs and of each
calendar year thereafter during the term of this Lease, with a statement detailing the Operating
Expenses for each such calendar year (the “Annual Operating Expense Statement”) and
7
a statement prepared by Landlord comparing Tenant’s Forecast Additional Rental with Tenant’s
Additional Rental. In the event that Tenant’s Forecast Additional Rental exceeds Tenant’s
Additional Rental for said calendar year, Landlord shall, within thirty (30) days, pay Tenant (in
the form of a credit against rentals next due or, upon expiration of this Lease, in the form of
Landlord’s check) an amount equal to such excess. In the event that the Tenant’s Additional Rental
exceeds Tenant’s Forecast Additional Rental for said calendar year, Tenant hereby agrees to pay
Landlord, within thirty (30) days of receipt of the statement, an amount equal to such difference
(“Tenant’s Additional Rental Adjustment”).
(e) Tenant, at Tenant’s sole cost and expense, shall have the right, to be exercised by
written notice given to Landlord within sixty (60) days after receipt of the Annual Operating
Expense Statement for any calendar year, to audit Landlord’s books and records pertaining only to
the Operating Expenses for such calendar year, provided such audit must commence within sixty (60)
days after Tenant’s notice to Landlord and thereafter proceed regularly and continuously to
conclusion and, provided, further, that such audit must be conducted by a nationally recognized
independent public accounting firm in a manner that does not unreasonably interfere with the
conduct of Landlord’s business. Notwithstanding the foregoing, Tenant shall not have the right to
audit Landlord’s books and records regarding the Operating Expenses for any calendar year if (i)
the Annual Operating Expense Statement for such calendar year was prepared by a nationally
recognized independent public accounting firm, or (ii) Tenant is in default under the terms of this
Lease or any circumstance exists which with the giving of notice, the passage of time, or both,
would constituted such a default. Landlord agrees to cooperate in good faith with Tenant in the
conduct of any such audit. Tenant (and its agents, employees and accountants) shall hold the
results of such audits in strict confidence and not disclose the same to any third party, except as
is necessary during any dispute between Landlord and Tenant related thereto or as required by law.
A copy of the results of any such audit shall be promptly provided to Landlord, and Landlord may
conduct an independent review of the same. If there is any disagreement regarding the results of
any such audit, the parties shall select a third party auditor to resolve the dispute.
2.04.
Operating Expenses.
(b) “Operating Expenses”, for each calendar year, shall consist of (i) all Operating Costs
(defined below) for the Building, plus (ii) an amount equal to the sum of the total ownership,
management, maintenance, repair, replacement and operating costs accruing during each such calendar
year for portions of the Project not within the Building that are designated or maintained from
time to time as common areas, including, but not limited to, fifty (50%) percent of the cost of
maintaining the Kensington Place roadway adjoining the Project and those areas which are for the
benefit of the occupants of the Project whether or not so designated or maintained as common areas
(net of any contribution received from time to time from the owners of the other portions of the
Project for such expenses):
(b) For the purposes of this Lease, “Operating Costs” shall mean all expenses, costs and
accruals (excluding therefrom, however, specific costs billed to or otherwise incurred for the
particular benefit of specific tenants of the Building) of every kind and nature, computed on an
accrual basis, incurred or accrued in connection with, or relating to, the ownership, operation,
8
management, maintenance, repair and replacement of the Building during each calendar year,
including, but not limited to, the following:
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(i)
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wages and salaries, including taxes, insurance
and benefits, of all on and off-site employees engaged in operations,
management, maintenance, repair, replacement or access control, as
reasonably allocated by Landlord and rent for the Building’s management
office exclusive of that portion of such office used for leasing;
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(ii)
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cost of all supplies, tools, equipment and
materials to the extent used in operations, management, maintenance,
repairs or replacements, as reasonably allocated by Landlord;
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(iii)
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cost of all utilities, including, but not
limited to, the cost of electricity, the cost of water and the cost of
power for heating, lighting, air conditioning and ventilating;
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(iv)
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the cost of trash and garbage removal,
cleaning, vermin extermination, snow, ice and debris removal, and other
services;
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(v)
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cost related to and fees payable under all
maintenance, management and service agreements, including, but not
limited to, a management fee contribution equal to three percent (3%)
of the gross revenues;
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(vi)
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costs related to those agreements related to
access control services, garage operations, window cleaning, elevator
maintenance, janitorial service, pest control and landscaping
maintenance;
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(vii)
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cost of inspections, repairs, maintenance and
replacements (except to the extent covered by proceeds of insurance);
provided the cost of capital repairs and replacements shall be
amortized over such reasonable period of time as Landlord shall
reasonably determine and only the portion of such costs allocable to
any calender year (plus interest on the unpaid balance of such costs)
may be included in the Operating Costs for such calendar year;
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(viii)
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the reasonable cost of legal and accounting services incurred by
Landlord relating to management and maintenance of the Building but not
including any such expenses related to leasing of space in the
Building;
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(ix)
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amortization of the cost (plus interest on the unpaid balance of
such costs) of any system, apparatus, device, or equipment which is
installed
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for the principal purpose of (i) reducing
Operating Expenses, (ii) promoting safety or (iii) complying with
governmental requirements;
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(x)
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the cost of all insurance, including, but not
limited to, the cost of casualty, rental loss and liability insurance,
and insurance on Landlord’s personal property, plus the cost of all
deductible and co-insurance payments made by Landlord in connection
therewith;
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(xi)
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amounts due under easements, operating
agreements, parking operating agreements, declarations, covenants or
instruments encumbering the Land;
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(xii)
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reasonable replacement reserves;
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(xiii)
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cost of maintaining, striping, repairing, replacing, repaving and
lighting grounds, streets, parking areas, sidewalks, curbs, walkways,
landscaping, drainage and lighting facilities; and
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(xiv)
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all taxes, assessments and governmental charges, whether or not
directly paid by Landlord, whether federal, state, county or municipal
and whether they be by taxing districts or authorities presently taxing
the Building and said common areas or by others subsequently created or
otherwise, and any other taxes, assessments and governmental charges
attributable to the Building and that portion of the common areas or
their operation, excluding, however, taxes and assessments attributable
to the personal property of other tenants, federal and state taxes on
income, death taxes, franchise taxes, and any taxes imposed or measured
on or by the income of Landlord from the operation of the Building or
imposed in connection with any change of ownership of the Building;
provided, however, that if at any time during the term of this Lease,
the present method of taxation or assessment shall be so changed that
the whole or any part of the taxes, assessments, levies, impositions or
charges now levied, assessed or imposed on real estate and the
improvements thereon shall be discontinued and as a substitute
therefor, or in lieu of or in addition thereto, taxes, assessments,
levies, impositions or charges shall be levied, assessed or imposed,
wholly or partially, as a capital levy or otherwise, on the rents
received from the Building or the rents reserved herein or any part
thereof, then such substitute or additional taxes, assessments, levies,
impositions or charges, to the extent so levied, assessed or imposed
with respect to the Building, shall be deemed to be included within the
Operating Costs. Consultation, legal fees and costs resulting from any
challenge of tax assessments as reasonably allocated by Landlord shall
also be included in Operating Costs. It is agreed that Tenant will be
responsible for ad valorem taxes on its personal property and on the
value of the leasehold improvements in the Leased Premises
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to the extent that the same exceed the Tenant Improvement
Allowance (and if the taxing authorities do not separately assess
Tenant’s leasehold improvements, Landlord may make a reasonable
allocation of the ad valorem taxes allocated to the Building to give
effect to this sentence). In the case of special taxes and
assessments which may be payable in installments, only the amount of
each installment accruing during a calendar year shall be included
in the Operating Costs for such year.
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(c) Notwithstanding any language contained herein to the contrary, Tenant hereby agrees that,
during any calendar year in which the entire Building is not provided with Building Standard
Services or is not completely occupied, Landlord shall compute all Variable Operating Costs
(defined below) for such calendar year as though the entire Building were provided with Building
Standard Services and were completely occupied. For purposes of this Lease the term “Variable
Operating Costs” shall mean any operating cost that is variable with the level of occupancy of the
Building (e.g. utilities and cleaning services). In the event that Landlord excludes from
“Operating Costs” any specific costs billed to or otherwise incurred for the particular benefit of
specific tenants of the Building or to other buildings or projects on the Land, Landlord shall have
the right to increase “Operating Costs” by an amount equal to the cost of providing standard
services similar to the services for which such excluded specific costs were billed or incurred. In
no event shall Landlord receive from all tenants of the Building more than one hundred percent
(100%) of any Operating Costs.
(d) Except as expressly provided in Section 2.05(b), Operating Costs shall not include:
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(i)
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costs of alterations and other leasehold
improvements (including the supervision and administration of such
construction) and relocations of the premises of tenants of the
Building;
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(ii)
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the cost of construction of the Base Building;
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(iii)
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the cost of correcting defects in the initial
construction of the Base Building, other than (1) normal repair and
maintenance, or (2) minor
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repairs equivalent to those
normally undertaken by Landlord whether or not resulting from a
construction defect;
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(iv)
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interest and principal payments on mortgages or
any loan fees or _other loan related costs or expenses payable in
connection therewith;
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(v)
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ground rental payments;
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(vi)
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legal fees in connection with negotiating
leases with tenants in the Building or in connection with enforcing
lease obligations of tenants in the Building;
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(vii)
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interest, fines and penalties on late
payments;
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(viii)
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real estate brokerage and leasing commissions;
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(ix)
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costs and expenses attributable to leased
retail or storage areas (as reasonably determined by Landlord) and
which are directly reimbursable by retail or storage tenants in the
Building;
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(x)
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any expenditures for which Landlord has been
directly reimbursed by tenants of the Building (other than pursuant to
rent escalation or tax and operating expense reimbursement provisions
in leases);
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(xi)
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the costs of providing services to other
tenants of the Building without a charge (i.e., excluding any services
paid for by such tenants through payment of operating expenses and
taxes) that are in excess of those services provided or made available
to Tenant without a charge (i.e., excluding any services provided to
Tenant and paid for through payment of operating expenses), to the
extent of such excess;
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(xii)
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legal, appraisal and accounting fees,
disbursements and charges incurred in connection with the leasing, sale
or refinancing of the Building;
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(xiii)
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legal, appraisal and accounting fees, disbursements and charges
incurred in connection with disputes with tenants or occupants of the
Building;
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(xiv)
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costs of investigating the presence of,
removal or other remediation of hazardous substances existing in the
Building on the Commencement Date and required by environmental laws in
effect on the Commencement Date;
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(xv)
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salaries paid to any executive employees above the grade of
regional building manager and regional building engineer (which are
includable only to the extent that such regional building manager and
regional building engineer are engaged in servicing the Building);
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(xvi)
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expenses for repairs, maintenance or
replacements for which Landlord is reimbursed from or pursuant to
insurance or condemnation proceeds (or for which Landlord would have
been so reimbursed had it maintained the insurance required hereunder);
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(xvii)
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advertising, entertainment and promotional expenditures relating
to leasing of space at the Building;
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(xviii)
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costs of capital improvements made to cure violations of laws
existing as of the Commencement Date, including any fines or penalties
imposed by legal authorities having jurisdiction thereof by reason of
such existing violations;
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(xix)
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costs of electricity furnished to individual
tenant spaces, to the extent such costs are separately charged and
payable by such tenants (other than pursuant to provisions in such
tenants’ leases providing for reimbursement of operating expenses and
taxes of the Building);
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(xx)
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overhead and profit increment paid to
subsidiaries or affiliates of Landlord for services to the Building, to
the extent only that the costs of such services exceed the competitive
cost of such services were they not so rendered by a subsidiary or
affiliate (provided that this exclusion shall in no way reduce or
affect the management or administration fees otherwise permitted
hereunder);
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(xxi)
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cost of acquisition of sculptures, paintings
or other works of art displayed in. the public areas of the Building;
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(xxii)
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damages awarded .to a tenant. of the Building against Landlord by
reason of Landlord’s breach of that tenant’s lease or Landlord’s
negligent or willful conduct;
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(xxiii)
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costs for repairs, maintenance, replacements or services for which
Landlord is directly reimbursed from warranties, guaranties or any
other source (other than payments by tenants of operating expenses);
and
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(xxiv)
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the costs of any judgment, settlement or arbitration award resulting
from Landlord’s liability for failure to perform its obligations under
any lease or other contract by which it may be bound.
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2.05.
Intentionally Deleted.
2.06.
Intentionally Deleted.
13
ARTICLE III.
3.01.
Services.
Landlord shall furnish the following services to Tenant during the
term of this Lease (“Building Standard Services”):
(a) Hot and cold domestic water to common use rest rooms and toilets, in commercially
reasonable amounts.
(b) Subject to curtailment as required by governmental laws, rules or mandatory regulations,
central heat and air conditioning in season, at such temperatures and in such amounts as are
reasonably determined by Landlord and on such dates and at such times as are more particularly
described on
Exhibit E
attached hereto and incorporated herein.
(c) Electric lighting service for all public areas and special service areas of the Building
in such amounts and locations as are reasonably determined by Landlord.
(d) Janitor service shall be provided five (5) days per week, exclusive of holidays, in such
manner as Landlord reasonably. determines, but similar to other suburban Nashville Class A
buildings; provided, however, if Tenant’s floor coverings or other improvements are other than
building standard commercial grade, Tenant shall pay one hundred and fifteen percent (115%) of the
actual additional cleaning cost, if any, attributable thereto. Landlord shall inform Tenant upon
completion of Tenant’s improvements whether any such improvements require janitorial services in
excess of building standard.
(e) Access control for the Building shall be provided to the extent and in the manner
reasonably determined by Landlord; provided, however, Landlord shall have no responsibility to
prevent, and shall not be liable to Tenant for, any liability or loss to Tenant, its agents,
employees and visitors arising out of losses .due .to theft, burglary, or damage or injury to
persons or property caused by persons gaining access to the Leased Premises, and Tenant hereby
releases Landlord from all liability for such losses, damages or injury, Landlord’s gross
negligence and willful misconduct excepted.
(f) Electrical service shall be provided to Tenant as specified in
Exhibit C
hereto.
Should Tenant’s total rated electrical design load exceed the Building Standard rated
electrical design load for either low or high voltage electrical consumption, or if Tenant’s
electrical design requires low voltage or high voltage circuits in excess of Tenant’s share of the
Building Standard Shell Condition circuits, Landlord will (at Tenant’s expense) install one (1)
additional high voltage panel and/or one (1) additional low voltage panel with associated
transformer, space for which has been provided in the base building electrical closets based on a
maximum of two (2) such additional panels per floor for all tenants on the floor (which additional
panels and transformers shall be hereinafter referred to as the “additional electrical equipment”).
If the additional electrical equipment is installed because Tenant’s low or high voltage rated
electrical design load exceeds the
14
applicable Building Standard rated electrical design load, then a meter shall also be added
(at Tenant’s expense for the actual cost of such separately metered electricity and after notice to
Tenant) to measure the electricity used through the additional electrical equipment.
The design and installation of any additional electrical equipment (or any related meter)
required by Tenant shall be subject to the prior approval of Landlord (which approval shall not be
unreasonably withheld). All expenses incurred by Landlord in connection with the review and
approval of any additional electrical equipment shall also be reimbursed to Landlord by Tenant.
Tenant shall also pay on demand the actual metered cost of electricity consumed through the
additional electrical equipment (if applicable), plus any actual accounting expenses incurred by
Landlord in connection with the metering thereof.
If any of Tenant’s electrical equipment requires conditioned air in excess of Building
Standard Shell Condition air conditioning, the same shall, after written notice to Tenant, be
installed by Landlord (on Tenant’s behalf), and Tenant shall pay all design, installation, metering
and operating costs relating thereto.
If Tenant requires that certain areas within Tenant’s demised premises must operate in excess
of the normal Building Operating Hours (as defined in Exhibit E attached hereto), the electrical
service to such areas shall, after written notice to Tenant, be separately circuited and metered
such that Tenant shall be billed the costs associated with electricity consumed during hours other
than Building Operating Hours.
(g) All Building Standard fluorescent bulb replacement in all areas and all incandescent bulb
replacement in General Common Areas, Service Areas and On-Floor Common Areas.
(h) Non-exclusive multiple cab passenger service to the Leased Premises during Building
Operating Hours (as defined in
Exhibit E)
and at least one (1) cab passenger service to the
Leased Premises twenty-four (24) hours per day and non-exclusive freight elevator service during
Building Operating Hours (all subject to temporary cessation for ordinary repair and maintenance
and during times when life safety systems override normal building operating systems) with such
freight elevator service available at other times upon reasonable prior notice and the payment by
Tenant to Landlord of any additional expense actually incurred by Landlord in connection therewith.
To the extent the services described in subsection (a), (b), (c), (f) and (h) above
require electricity and water supplied by public utilities, Landlord’s covenants thereunder shall
only impose on Landlord the obligation to use its good faith, reasonable efforts to cause the
applicable public utilities. to furnish the same. Failure by Landlord to furnish the services
described in this Section, or any cessation thereof, shall not render Landlord liable for damages
to either person or property, nor be construed as an eviction of Tenant, nor work an abatement of
rent, nor relieve Tenant from fulfillment of any covenant or agreement hereof. In addition to the
foregoing, should any of the equipment or machinery, for any cause except Landlord’s gross
negligence, fail to operate, or
15
function properly, Tenant shall have no claim for rebate of rent or damages on account of an
interruption in service occasioned thereby or resulting therefrom and Tenant shall rely on its own
business interruption insurance; provided, however, Landlord agrees to use reasonable efforts to
repair said equipment or machinery promptly and to restore said services.
3.02.
Keys and Locks.
Landlord shall install a card reader on the elevator servicing
the Leased Premises that restricts after hours access to the Leased Premises. Landlord shall also
supply Tenant with two (2) keys for. each Building Standard lockset on code required doors entering
the Leased Premises from public areas. Additional keys will be furnished by Landlord upon an order
signed by Tenant and at Tenant’s expense, which shall be at Landlord’s actual cost plus ten percent
(10%). All such keys shall remain the property of Landlord. No additional locks shall be allowed on
any door of the Leased Premises without Landlord’s permission, and Tenant shall not make or permit
to be made any duplicate keys. Upon termination of this Lease, Tenant shall surrender to Landlord
all keys to any locks on doors entering or within the Leased Premises, and give to Landlord the
explanation of the combination of all locks for safes, safe cabinets and vault doors, if any, in
the Leased Premises.
3.03.
Graphics, Building Directory and Name.
Landlord shall provide and install all
graphics, letters, and numerals at the entrance to the Leased Premises on multi-tenant floors, if
any (it being understood that Tenant shall be responsible for all graphics on full floors occupied
by Tenant. Landlord shall maintain an electronic directory in such main lobby which shall include
such information relating to Tenant, including the names of Tenant’s officers and senior employees.
All such letters and numerals shall be in the Building standard graphics (font
.
size to
be approved by Landlord). Tenant agrees that Landlord shall not- be liable for any inconvenience or
damage occurring as a result of any error or omission in any directory or graphics. Tenant at
Tenant’s sole cost and expense, upon prior written consent of Landlord which shall not be
unreasonably withheld, shall be entitled to install signage incorporating the firm’s name and
standard logo within the Leased Premises, or within the elevator lobby for any floor or floor which
Tenant occupies an entire floor. Tenant shall be responsible for removing such signage from the
elevator lobby or lobbies prior to the expiration of this Lease. No signs, numerals, letters or
other graphics shall be used or permitted on the exterior of, or may be visible from outside, the
Leased Premises, unless approved in writing by Landlord. All on-floor graphics for full-floor
tenants shall be removed by Tenant upon lease expiration.
3.04.
Parking.
(a) Subject to the other provisions hereof, Landlord hereby agrees to make available,
or to cause the lessee or operator of the Parking Facility (the “Garage Operator”), to make
available to Tenant up to one (1) permit per two hundred and fifty (250) RSF to park in the
Kensington Parking Facility upon Terms and conditions set forth below (the “Parking Permits”).
Landlord shall also provide (or cause the Garage Operator to provide) visitor parking in a portion
of the Parking Facility on a “first come-first served” pay basis at such published rates and upon
such conditions as Landlord or the Garage Operator, as applicable, shall establish from time to
time, as shown on
Exhibit J.
At any time during the Term, Tenant may elect to relinquish up
to fifteen (15) Parking Permits by giving thirty (30) days prior written notice to Landlord (or
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its designee), in which event Tenant shall have no further right to or interest in such
relinquished Parking Permits and Landlord shall have no further obligation to provide such Parking
Permits in order to meet the ratio set forth hereinabove.
(b) Tenant shall notify Landlord within thirty (30) days following the Commencement Date of
the number of Parking Permits that it intends to utilize. Neither Landlord nor the Garage Operator
shall be obligated to hold any Parking Permits that Tenant does not elect to utilize.
(c) Tenant shall pay as rental for the Parking Permits at the rate charged from time to time
by Landlord (or the Garage Operator), in its sole and absolute discretion; provided the rate
charged for the Parking
.
Permits shall be prorated for any partial months during the
term of this Lease. The initial charge to Tenant for each Parking Permit shall be Forty Dollars
($40.00) per month. In the event the rate charged for the Parking Permits is increased, Tenant may
elect as its sole remedy with respect to such increase to relinquish all or a portion of the
Parking Permits by giving written notice to Landlord (or its designee) within thirty (30) days
after receiving notice of such increase, in which event Tenant shall have no further right to or
interest in such Parking Permit and neither Landlord nor the Garage Operator shall have any
obligation to provide replacement parking for Tenant. If the rate charged for the Parking Permits
is increased and Tenant fails to notify Landlord, in writing, of its election to relinquish all or
a portion of the Parking Permits within thirty (30) days after receiving notice of such increase,
then Tenant shall be deemed to have agreed to such increase and shall have no further right to
relinquish its Parking Permits on account thereof. Unless Landlord directs otherwise, Tenant shall
pay the monthly charges established from time to time in accordance with this Lease by the Garage
Operator for parking in the Kensington Parking Facility to Landlord and Landlord shall collect such
payments, on behalf of the Garage Operator, monthly in advance, at the same time and place as
Tenant makes payments of Base Rent under the terms of this Lease.
(d) In the event the parking spaces covered by the Parking Permits are not available to Tenant
due to causes beyond the control of Landlord or the Garage Operator and Landlord is unable to
provide replacement parking to Tenant, neither Landlord nor Garage Operator shall be liable for any
damages that Tenant suffers on account thereof, nor shall such fact be construed as a constructive
eviction of Tenant, entitle Tenant to an abatement of any Rental, or relieve Tenant from
fulfillment of any covenant or agreement hereof.
(e) Landlord or the Garage Operator may make, modify and enforce reasonable rules and
regulations relating to the parking of vehicles in the Parking Facility, and Tenant agrees to abide
by such rules and regulations; provided such rules and regulations do not materially reduce
Tenant’s parking rights provided hereunder. Except as expressly provided herein, this Lease does
not grant Tenant (or its agents, employees, contractors and visitors) the right to use the Parking
Facilities or any other parking areas located on the Land or serving the Building. So long as
Landlord ensures that there is sufficient parking available in the Parking Facilities to
accommodate the holders of the Parking Permits, Landlord or the Garage Operator may, from
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time to time, designate specific portions of the Parking Facilities as reserved areas and
Tenant shall have no right to park in such reserved areas, except Tenant may park in reserved areas
made available to tenants of the Building to the extent Tenant has purchased Parking Permits
specifically entitling Tenant to use the same. Landlord agrees to make (or cause the Garage
Operator to make) parking for Tenant’s guests and visitors available on a non-exclusive basis in
the Parking Facility. Landlord or the Garage Operator may restrict Tenant’s right to utilize the
Parking Permits on weekends and after 6:00 p.m. in the evening when athletic events are scheduled
in the nearby athletic facilities.
ARTICLE IV.
4.01.
Care of Leased Premises.
Tenant shall not commit or allow to be committed by
Tenant’s employees, agents or contractors, any waste or damage to any portion of the Leased
Premises or the Building. Upon the expiration or any earlier termination of this Lease, Landlord
shall have the right to re-enter and resume possession of the Leased Premises immediately.
4.02.
Entry for Repairs and Inspection.
Tenant shall permit Landlord and its
contractors, agents or representatives to enter into and upon any part of the Leased Premises
during reasonable hours to inspect or clean the same, make repairs, alterations or additions
thereto, and, upon reasonable prior notice to Tenant, for the purpose of showing the same to
prospective tenants or purchasers and Tenant shall not be entitled to any abatement or reduction of
rent by reason thereof. Landlord shall use its reasonable efforts not to interfere materially with
the operation of Tenant’s business during any such entry.
4.03.
Nuisance.
Tenant shall conduct its business and control its agents, employees,
invitees, contractors and visitors in such a manner as not to create any nuisance, or interfere
with, annoy or disturb any other tenant or Landlord in its operation of the Building.
4.04.
Laws and Regulations: Encumbrances; Rules of Building.
Tenant shall comply with,
and Tenant shall cause its employees, contractors and agents to comply with, and shall use its best
efforts to cause its visitors and invitees to comply with, (i) all laws, ordinances, orders, rules
and regulations of all state, federal, municipal and other governmental or judicial agencies or
bodies relating to the use, condition or occupancy of the Leased Premises, (ii) all recorded
easements, operating agreements, parking agreements, declarations, covenants and instruments
encumbering the Leased Premises, and (iii) the rules of the Building reasonably adopted and altered
by Landlord from time to time for the safety, care and cleanliness of the Leased Premises and
Building and for the preservation of good order therein. The initial rules of the Building are
attached hereto and incorporated herein as
Exhibit F
. Landlord warrants that the Building
shall be in compliance in all material respects with applicable municipal, county, state and
federal laws, codes and requirements as of the Commencement Date.
4.05.
Legal Use and Violations of Insurance Coverage.
Tenant shall not occupy or
use the Leased Premises, or permit any portion of the Leased Premises to be occupied or used, for
any business or purpose which is unlawful or knowingly deemed to be hazardous in any manner, or
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permit anything to be done which would in any way increase the rate of fire, liability, or any
other insurance coverage on the Building or its contents.
4.06.
Hazardous Substances.
Tenant shall comply, at its sole expense, with all laws,
ordinances, orders, rules and regulations of all state, federal, municipal and other governmental
or judicial agencies or bodies relating to the protection of public health, safety, welfare or the
environment (collectively, “Environmental Laws”) in the use, occupancy and operation of the Leased
Premises. Tenant agrees that no Hazardous Substances (as hereinafter defined) shall be used,
located, stored or processed on the Leased Premises or be brought onto any other portion of the
Building by Tenant or any of its agents, employees, contractors, assigns, subtenants, guests or
invitees, and no Hazardous Substances will be released or discharged from the Leased Premises
(including, but not limited to, ground water contamination). The term “Hazardous Substances” shall
mean and include all hazardous and toxic substances, waste or materials, any pollutant or
contaminant, including, without limitation, PCB’s, asbestos and raw materials that include
hazardous constituents or any other similar substances or materials that are now or hereafter
included under or regulated by any Environmental Laws or that would pose a health, safety or
environmental hazard. Tenant hereby agrees to indemnify, defend and hold harmless Landlord from and
against any and all losses, liabilities (including, but not limited to, strict liability), damages,
injuries, expenses (including, but not limited
to, court costs, litigation expenses,
reasonable attorneys’ fees and costs of settlement or judgment), suits and claims of any and every
kind whatsoever paid, incurred or suffered by, or asserted against, Landlord by any person, entity
or governmental agency for, with respect to, or as a direct or indirect result of, the presence in
or the escape, leakage, spillage, discharge, emission or release from the Leased Premises of any
Hazardous Substances or the presence of any Hazardous Substances placed on or discharged from the
Building by Tenant or any of its agents, employees, contractors, assigns, subtenants, guests or
invitees, including, without limitation, any losses, liabilities (including, but not limited to,
strict liability), damages, injuries, expenses (including, but not limited to, court costs,
litigation expenses, reasonable attorneys’ fees and costs of settlement or judgment), suits and
claims asserted or arising under the Comprehensive Environmental Response, Compensation and
Liability Act (“CERCLA”), any so-called federal, state or local “Superfund” or “Superlien” laws or
any other Environmental Law.
Landlord hereby confirms that, to its knowledge, there are no Hazardous Substances (as
now defined) existing at the Building in violation of applicable environmental laws (as now
existing). Without limitation of the foregoing, Landlord agrees, as to any Hazardous Substances (as
now defined) existing in the Leased Premises or the Building or the Land on the Commencement Date,
to remove or otherwise remediate such Hazardous Substances to the extent required by law (as now
existing), at Landlord’s sole cost and expense. Tenant shall cooperate with Landlord in allowing
proper access to the Leased Premises to perform the foregoing removal or remediation activities,
and shall use reasonable efforts not to take any action which may worsen any such environmental
condition once discovered. Landlord shall restore any damage caused to the Leased Premises as a
result of such access by Landlord under this Section 4.06, to the extent such damage was not caused
by Tenant’s negligence or willful misconduct or Tenant’s breach of its obligations hereunder. In
any
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entry into the Leased Premises under this Section 4.06, Landlord shall use commercially
reasonable efforts to minimize interference with Tenant’s business operations at the Leased
Premises.
4.07.
Tenant Taxes.
Tenant shall pay promptly when due all taxes directly or
indirectly imposed or assessed upon Tenant’s gross sales, business operations, machinery,
equipment, trade fixtures and other personal property or assets, whether such taxes are assessed
against Tenant, Landlord or the Building. In the event that such taxes are imposed or assessed
against Landlord or the Building, Landlord shall furnish Tenant with all applicable tax bills,
public charges and other assessments or impositions and Tenant shall forthwith pay the same either
directly to the taxing authority or, at Landlord’s option, to Landlord.
ARTICLE V.
5.01.
Leasehold Improvements.
(a) Tenant shall receive a tenant improvement allowance of $31.00 per square foot of Rentable
Square Feet (the “Tenant Improvement Allowance”), to be paid in installments in accordance with
Exhibit D
, no more often than once per month. Tenant may elect to increase the Tenant
Improvement Allowance by up to an additional $5.00 per square foot of Rentable Square Feet by
giving written notice of its desire to do so to Landlord on or before the Floor Ready Date, in
which event the Initial Base Rental payable hereunder shall increase by $0.18 per Rental Square
Foot per annum for each dollar of increase of Tenant Improvement Allowance which Tenant elects to
use above the primary allowance of $31.00 per RSF. Tenant hereby agrees that the provisions of
Exhibit D
shall govern the construction of Tenant’s initial leasehold improvements. Tenant
shall not install any improvements which are not compatible with Landlord’s plans and
specifications for the Building or which are not approved by Landlord or Landlord’s architect.
Landlord shall at Landlord’s cost provide to Tenant on-floor improvements as described in
Exhibit C
“Base Building Shell Condition.”
(b) Notwithstanding any language contained herein or in
Exhibit D
to the contrary, if
for any reason the Leased Premises should not be ready for occupancy by the Commencement Date,
Landlord shall not be liable or responsible for any claims, damages or liabilities in connection
therewith or by reason thereof.
(c) Tenant shall not make or allow to be made any alterations or physical additions in or to
the Leased Premises, or place safes, vaults or other heavy furniture or equipment within the Leased
Premises, without first obtaining the written consent of Landlord which consent shall not be
unreasonably withheld so long as said alterations do not impact on Building systems or structure
and are not visible from outside the Leased Premises. Tenant shall deliver to Landlord a copy of
the record drawings for all alterations or physical additions so made in or to the Leased Premises.
Tenant further specifically agrees that no food, soft drink or other vending machine will be
installed within the Leased Premises without the written consent of Landlord, which consent will
not be unreasonably withheld, delayed or conditioned, provided that Tenant shall be allowed to
install such vending machines for the sole use of Tenant’ s employees so long as the vending
machine is not visible from outside of the Leased Premises.
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(d) Tenant shall indemnify and hold Landlord harmless from and against all costs (including
reasonable attorneys’ fees and costs of suit), losses, liabilities, or causes of action arising out
of or relating to any alterations, additions or improvements made by Tenant to the Leased Premises,
including, but not limited to, any mechanics’ or materialmen’s liens asserted in connection
therewith. No portion of Landlord’s interest in the Building shall be subject to attachment on
account of any work performed by or on account of Tenant, and Tenant shall provide written notice
of same to all of its contractors.
(e) Should any mechanic’s or other liens be filed against any portion of the Building by
reason of Tenant’s acts or omissions or because of a claim against Tenant, Tenant shall cause the
same to be canceled or discharged of record by bond or otherwise within thirty (30) days after
notice by Landlord. If Tenant shall fail to cancel or discharge said lien or liens, within said
thirty (30) day period, Landlord may, at its sole option, cancel or discharge the same and upon
Landlord’s demand, Tenant shall promptly reimburse Landlord for all reasonable costs incurred in
canceling or discharging such liens, and if canceling or discharging such liens requires active
managerial oversight by Landlord, Landlord shall be entitled to collect an administrative fee equal
to fifteen percent (15%) of the cost thereof.
5.02.
Repairs by Landlord.
All repairs, alterations or additions that affect the
Building’s structural components or the Building’s mechanical, electrical and plumbing systems
shall be made solely by Landlord or its contractor, and Landlord shall timely cause such repairs to
be made. In the event of any damage to such components or systems or any other portion of the
Building caused by Tenant or Tenant’s agents, contractors, employees, visitors or invitees, the
cost of repair or restoration of such damage shall be paid for solely by Tenant in an amount equal
to Landlord’s costs plus ten percent (10%) for administrative cost recovery. Landlord shall make
such repairs to Building Standard Shell Condition improvements as may be deemed necessary by
Landlord for normal maintenance operations and Landlord shall not otherwise be obligated to make
improvements to, or repairs of, the Leased Premises.
5.03.
Repairs by Tenant.
Subject to Section 5.02 and 6.03, Tenant shall at its own
cost and expense, keep the Leased Premises and all leasehold improvements in a condition similar to
the condition as of the Commencement Date, normal wear and tear excepted, and Tenant shall perform
all maintenance, repairs and replacements necessary to accomplish the same. In addition, Tenant
shall perform all maintenance, repairs, replacements and improvements required by any governmental
law, ordination, rule or regulation. If Tenant fails to commence any maintenance, repairs,
replacements or improvements which it is required to perform hereunder within ten (10) days after
written notice from Landlord to Tenant and thereafter diligently proceed with such work until
completion, Landlord may, at its option, perform any such maintenance, repairs, replacements or
improvements deemed necessary by Landlord, and Tenant shall pay to Landlord on demand Landlord’s
cost thereof plus a charge of ten percent (10%) for administrative cost recovery.
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ARTICLE VI.
6.01.
Condemnation.
If all or substantially all of the Leased Premises, or such
portion of the Leased Premises or the Building as would render, in Landlord’s reasonable judgment,
the continuance of Tenant’s business from the Leased Premises impracticable, shall be permanently
taken or condemned for any public purpose, then this Lease, at the option of Tenant or Landlord
upon the giving of written notice to the other party within ten (10) days from the date of such
condemnation or taking, shall forthwith cease and terminate. If less than all or substantially all
of the Leased Premises or any portion of the Building shall be permanently taken or condemned for
any public purpose, then Landlord shall have the option of terminating this Lease by written notice
to Tenant within ten (10) days from the date of such condemnation or taking. If this Lease is
terminated as provided above, this Lease shall cease and expire as if the date of transfer of
possession of the Leased Premises, the Building, or any portion thereof, was the expiration date of
this Lease. In the event that this Lease is not terminated by either Landlord or Tenant as
aforesaid, Tenant shall pay the Rental up to the date of transfer of possession of such portion of
the Leased Premises so taken or condemned and this Lease shall thereupon cease and terminate with
respect to such portion of the Leased Premises so taken or condemned as if the date of transfer of
possession of the Leased Premises was the expiration date of the term of this Lease relating to
such portion of the Leased Premises. Thereafter the Base Rental, Tenant’s Forecast Additional
Rental and Tenant’s Additional Rental shall be adjusted on a pro rata, net rentable square foot
basis. In the event of any such condemnation or taking and this Lease is not so terminated,
Landlord shall promptly repair the Leased Premises or the Building, as the case may be, to Building
Standard Shell Condition so that the remaining portion of the Leased Premises or Building, as the
case may be, shall constitute an architectural unit, fit for Tenant’s occupancy and business;
provided, however, that Landlord’s obligation to repair hereunder shall be limited to the extent of
the net proceeds made available to Landlord for such repair from any such condemnation or taking.
In the event of any temporary taking or condemnation for any public purpose of the Leased Premises
or any portion thereof, then this Lease shall continue in full force and effect except that Base
Rental, Tenant’s Forecast Additional Rental, and Tenant’s Additional Rental shall be adjusted on a
pro rata net rentable square foot basis for the period of time that the Leased Premises are so
taken as of the date of transfer of possession of the Leased Premises and Landlord shall be under
no obligation to make any repairs or alterations. In the event of any condemnation or taking of the
Leased Premises, Tenant hereby assigns to Landlord the value of all or any portion of the unexpired
term of the Lease and all leasehold improvements and Tenant may not assert a claim for a
condemnation award therefor; provided, however, Tenant may pursue a separate attempt to recover an
award or compensation against or from the condemning authority provided such pursuit does not
reduce Landlord’s award.
6.02.
Damages from Certain Causes.
Landlord shall not be liable or responsible to
Tenant for any loss or damage to any property or person occasioned by theft, fire, act of God,
public enemy, riot, strike, insurrection, war, act or omission of any tenant or occupant of the
Building, any nuisance or interference caused or created by any tenant or occupant of the Building,
requisition or order of governmental body or authority, court order or injunction, or any cause
beyond Landlord’s control or, except in the case of the gross negligence or intentional misconduct
of Landlord, for any damage
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or inconvenience which may arise through repair or alteration of any part of the
Building. Tenant shall notify Landlord of any damage to the Leased Premises, regardless of the
cause of such damage.
6.03.
Casualty Clause
.
(a) In the event any portion of the Leased Premises or any portion of the General Common Areas
is damaged by fire or other casualty, earthquake or flood or by any other cause of any kind or
nature (hereinafter collectively referred to as the “damaged property”) and the damaged property
can, in the opinion of the Landlord’s architect, be repaired within ninety (90) calendar days from
the date of notice of Landlord’s architect’s opinion, then Landlord shall proceed to rebuild or
restore the damaged property to Building Standard Shell Condition, subject to subsection (e)
hereof.
(b) In the event the damaged property can not, in the reasonable opinion of Landlord’s
architect, be repaired within ninety (90) days from the date of notice of Landlord’s architect’s
opinion, but can be repaired within one hundred eighty
(180) days from the date of notice
of Landlord’s architect’s opinion, Landlord, at Landlord’s sole option, shall have the right (i) to
terminate this Lease by notifying Tenant of such termination within twenty (20) days of receipt of
Landlord’s architect’s opinion, or (ii) to restore or rebuild the damaged property to Building
Standard Shell Condition, subject to subsection (e) hereof.
(c) If, in the opinion of Landlord’s architect, damage to the damaged property cannot be
repaired within one hundred eighty (180) days from the date of notice of Landlord’s
architect’s opinion, then both Landlord and Tenant shall have the right to terminate this Lease by
notifying the other party in writing of such termination within twenty (20) days of receipt of
Landlord’s architect’s opinion.
(d) Notwithstanding any language herein to the contrary, if at the time of any such damage,
less than one (1) year remains in the term of this Lease, exclusive of any renewal options, then
Landlord, at Landlord’s sole option, shall have the right to terminate this Lease.
(e) If at anytime during the term of this Lease the Building is damaged and the cost of
repairing and restoring the same exceeds twenty-five percent (25%) of the replacement cost of the
improvements comprising the Building, then Landlord, at Landlord’s sole option, shall have the
right to terminate this Lease.
(f) Notwithstanding any language contained herein to the contrary, in the event this
Lease is not terminated as provided hereunder (i) Landlord shall be obligated to rebuild or restore
the damaged property only to the extent of the net insurance proceeds available to Landlord for the
purpose of rebuilding and restoration, (ii) if the
damaged property is all or any
portion of the Leased Premises Landlord shall be obligated to rebuild or restore the damaged
property only to Building Standard Shell Condition, except that Tenant shall have the right to
require Landlord to rebuild or restore the damaged property substantially to the condition which
existed immediately prior to such damage, provided that Tenant shall bear all costs and expenses,
including without
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limitation, rentals that are lost due to extended construction time, in excess of the lesser
of (A) any net insurance proceeds available to Landlord for the purpose of rebuilding or
restoration, or (B) the cost to Landlord of rebuilding and restoring the damaged property to
Building Standard condition (with Building Standard Tenant Allowances); and (iii) if Landlord is
able to obtain rental loss insurance on reasonable terms and conditions (and Landlord shall carry
such rental loss insurance so long as it is reasonably available), then Tenant shall be entitled to
a pro rata abatement of Base Rental, Tenant’s Forecast Additional Rental, and Tenant’s Additional
Rental during the period of time the Leased Premises, or any portion thereof, are untenantable due
to such damage. Landlord’s architect’s opinion shall be delivered to both Landlord and Tenant
within thirty (30) days from the date of any such damage. In the event of any termination of this
Lease under this Section, this Lease shall cease and terminate as if the date of such damage was
the expiration date of the term of this Lease. Notwithstanding any contrary language in this
Section, if the Leased Premises, the Building, or any portion thereof shall be damaged through the
negligence or willful misconduct of Tenant and the cost of repairing the same is not covered by
Landlord’s insurance, such damage shall be repaired by Landlord at the sole expense of Tenant and
rent shall continue hereunder unabated.
(g) If any portion of Tenant’s leasehold improvements (including, but not limited to, Tenant’s
Extra Work), alterations, additions, improvements, fixtures, furnishing, equipment or trade
fixtures are damaged by fire or other casualty, earthquake or flood or by any other cause of any
kind or nature, Tenant shall immediately restore the same to the condition existing immediately
prior to such damage, unless such damage is so extensive as to permit termination of this Lease as
provided herein and the Lease is terminated in accordance with such provisions.
6.04.
Casualty Insurance.
Landlord shall maintain all-risk property insurance on
the Building and on all Building Standard Shell Condition improvements. Said insurance shall be
maintained with an insurance company authorized to do business in Tennessee, at full replacement
cost and payments for losses thereunder shall be made solely to Landlord. Tenant shall maintain at
its expense business interruption insurance and all-risk property insurance on the full replacement
cost of all its personal property, including removable trade fixtures, located in the Leased
Premises and on Tenant’s Extra Work and all other, additions and improvements (including fixtures)
made by Tenant and not required to be insured by Landlord above, regardless of whether such
improvements were made at Landlord’s or Tenant’s expense. If the annual premiums to be paid by
Landlord shall exceed the standard rates because of Tenant’s operations within, or contents of, the
Leased Premises or because the improvements to the Leased Premises are in excess of improvements
contemplated by the Tenant Improvement Allowance, Tenant shall either (i) promptly pay the excess
amount of the premium upon request by Landlord (and if necessary, Landlord may allocate the
insurance costs of the Building to give effect to this sentence), or (ii), if the insurance company
agrees to reduce the premium to the premium prior to the increase due to Tenant’s operations, cease
the operation that caused the increase in insurance premiums. Upon the request of Landlord, a duly
executed certificate of insurance, reflecting Tenant’s maintenance of the insurance required under
this Section 6.04 and Section 6.05, shall be delivered to Landlord.
6.05.
Liability Insurance.
Landlord and Tenant shall each maintain a policy or
policies of commercial general liability insurance with the premiums thereon fully paid on or
before the due dates, issued by and binding upon a solvent insurance company authorized to transact
business in
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Tennessee. Such insurance shall be written on an occurrence basis and shall afford minimum
protection (which may be affected by primary and/or excess coverage) of not less than $2,000,000.00
combined single limit for bodily injury and property damage in any one occurrence; provided,
however, Tenant shall carry such greater limits of coverage as Landlord may reasonably request from
time to time so long as Landlord maintains similar limits of coverage.
6.06.
Hold Harmless.
Landlord shall not be liable to Tenant, its agents, servants,
employees, contractors, customers or invitees for any damage to person or property caused by any
act, omission or neglect of Tenant. Without limiting or being limited by any other indemnity in
this Lease, but rather in confirmation and furtherance thereof, Tenant agrees to indemnify, defend
by its in house or outside counsel, and hold Landlord, Landlord’s beneficiaries (if Landlord is a
land trust), the managing agent of the Building, the leasing agent of the Building and their
respective agents, partners, shareholders, officers, directors and employees of the Building
harmless of, from and against any and all losses, damages, liabilities, claims, liens, costs and
expenses (including, but not limited to, court costs, reasonable attorneys’ fees and litigation
expenses) in connection with injury to or death of any person or damage to or theft, loss or loss
of the use of any property occurring in or about the Leased Premises or the Building arising from
Tenant’s occupancy of the Leased Premises, or the conduct of its business or from any activity,
work, or thing done, permitted or suffered by Tenant in or about the Leased Premises or the
Building, or from any breach or default on the part of Tenant in the performance of any covenant or
agreement on the part of Tenant to be performed pursuant to the terms of this Lease, or due to any
other act or omission or willful misconduct of Tenant or any of its agents, employees, contractors,
assigns, subtenants, guest or invitees.
6.07.
Waiver of Subrogation Rights.
Anything, in this Lease to the contrary
notwithstanding, Landlord and Tenant each hereby waives any and all rights of recovery, claim,
action or cause of action, against the other, its agents, servants, partners, shareholders,
officers or employees, for personal injury, loss or damage to business, and loss or damage that may
occur to the Leased Premises, the Building or any improvements thereto or thereon or any personal
property of such party therein or thereon by reason of fire, the elements, or any other cause to
the extent such loss or damage is covered by terms of the all-risk property insurance policies
referred to in Section 6.04 hereof or any other insurance policy maintained by Landlord or Tenant,
as applicable, regardless of cause or origin, including negligence of the other party hereto, its
agents, officers, partners, shareholders, servants or employees, and covenants that no insurer
shall hold any right of subrogation against such other party. The foregoing waiver shall apply
regardless of the cause or origin of such claim, including but not limited to the negligence of a
party, or such party’s agents, officers, employees or contractors, but shall not apply if it would
have the effect, but only to the extent of such effect, of invalidating any insurance coverage of
Landlord or Tenant. Each party shall obtain any special endorsements, if any, required by their
respective insurers to evidence compliance with the aforementioned waiver.
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ARTICLE VII.
7.01.
Default and Remedies.
(a) The occurrence of any of the following shall constitute a default under and breach of this
Lease by Tenant (an “Event of Default”):
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(i)
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Failure by Tenant to pay any Rental within (5)
days after the same becomes due hereunder; provided that no more than
two (2) times per twelve (12) month period Landlord shall deliver
written notice to Tenant that the Rental is more than five (5) days
past due and Tenant shall have (5) days from the date such notice is
sent to pay such Rental;
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(ii)
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The Leased Premises are deserted, vacated for
more than thirty (30) days, or not used as regularly or consistently as
would normally be expected for similar premises put to general office
use, even though the Tenant continues to pay the stipulated monthly
rent;
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(iii)
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Failure by Tenant to observe or perform any of
the covenants in respect of assignment and subletting set forth in
Article VIII;
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(iv)
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Failure by Tenant to cure forthwith,
immediately after receipt of notice from Landlord, any hazardous
condition which Tenant has created or permitted in violation of law or
of this Lease;
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(v)
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Failure by Tenant to complete, execute and
deliver any instrument or document required to be completed, executed
and delivered by Tenant pursuant to Section 7.08 or Section 7.09 of
this Lease, within ten (10) days after the initial written demand
therefor to Tenant;
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(vi)
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Failure by Tenant to observe or perform any
other covenant, agreement, condition or provision of this Lease, if
such failure shall continue for thirty (30) days after written notice
thereof from Landlord to Tenant; provided that such thirty (30) day
period shall be extended for the time reasonably required to complete
such cure, if such failure cannot reasonably be cured within said
thirty (30) day period and Tenant commences to cure such failure within
said thirty (30) day period and thereafter diligently and continuously
proceeds to cure such failure;
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(vii)
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The levy upon execution or the attachment by legal process of
the leasehold interest of Tenant, or the filing or creation of a lien
in respect of such leasehold interest, which lien shall not be released
or discharged within fifteen (15) days from the date of such filing;
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(viii)
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Tenant or any guarantor of Tenant’s obligations under this Lease
becomes insolvent or bankrupt or admits in writing its inability to
pay its debts as they mature, or makes an assignment for the benefit
of creditors, or applies for or consents to the appointment of a
trustee or receiver for all or a major part of its property;
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(ix)
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A trustee or receiver is appointed for Tenant,
any guarantor of Tenant’s obligations under this Lease or for a major
part of either party’s property and is not discharged within ninety
(90) days after such appointment;
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(x)
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Any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding, or other proceeding for relief
under any bankruptcy law or similar law for the relief of debtors, is
instituted (A) by Tenant or any guarantor of Tenant’s obligations under
this Lease, or (B) against Tenant or any guarantor of Tenant’s
obligations under this Lease and is allowed against it or is consented
to by it or is not dismissed within sixty (60) days after such
institution;
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(xi)
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Tenant’s repeated or continued failure to
timely pay any Rental due Landlord hereunder where such failure shall
continue or be repeated for two (2) consecutive months, or for a total
of four (4) months in any period of twelve (12) consecutive months; or
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(xii)
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Tenant’s repeated failure to observe or
perform any of the other covenants; terms or conditions hereof more
than six (6) times, in the aggregate, in any period of twelve (12)
consecutive months.
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(b) Upon the occurrence of an Event of Default, Landlord shall have the option to do and
perform any one or more of the following in addition to, and not in limitation of, any other remedy
or right permitted it by law or in equity or by this Lease:
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(i)
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Landlord, with or without terminating this Lease, may immediately
or at any time thereafter re-enter the Leased Premises and correct or
repair any condition which shall constitute a failure on Tenant’s part
to keep, observe, perform, satisfy, or abide by any term, condition,
covenant, agreement, or obligation of this Lease or of the Rules and
Regulations now in effect or hereafter adopted or of any notice given
Tenant by Landlord pursuant to the terms of this Lease, and Tenant
shall fully reimburse and compensate Landlord on demand.
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(ii)
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Landlord, with or without terminating this Lease, may
immediately or at any time thereafter demand in writing that Tenant
vacate the
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Leased Premises and thereupon Tenant shall vacate the Leased Premises
and remove therefrom all property thereon belonging to or placed on the
Leased Premises by, at the direction of, or with consent of Tenant
within ten (10) days of receipt by Tenant of such notice from Landlord,
whereupon Landlord shall have the right to re-enter and take possession
of the Leased Premises. Any such demand, re-entry and taking possession
of the Leased Premises by Landlord shall not of itself constitute an
acceptance by Landlord of a surrender of this Lease or of the Leased
Premises by Tenant and shall not of itself constitute a termination of
this Lease by Landlord.
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(iii)
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Landlord, with or without terminating this
Lease, may immediately or at any time thereafter, re-enter the Leased
Premises and remove therefrom Tenant and all property belonging to or
placed on the Leased Premises by, at the direction of, or with consent
of Tenant. Any such re-entry and removal by Landlord shall not of
itself constitute an acceptance by Landlord of a surrender of this
Lease or of the Leased Premises by Tenant and shall not of itself
constitute a termination of this Lease by Landlord.
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(iv)
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Landlord, with or without terminating this
Lease, may immediately or at any time thereafter relet the Leased
Premises or any part thereof for such time or times, at such rental or
rentals and upon such other terms and conditions as Landlord in its
sole discretion may deem advisable, and Landlord may make any
alterations or repairs to the Leased Premises which it may deem
necessary or proper to facilitate such reletting; and Tenant shall pay
all costs of such reletting including but not limited to the cost of
any such alterations and repairs to the Leased Premises, attorneys’
fees, leasing inducements, and brokerage commissions; and if this Lease
shall not have been terminated, Tenant shall continue to pay all rent
and all other charges due under this lease up to and including the date
of beginning of payment of rent by any subsequent tenant of part or all
of the Leased Premises, and thereafter Tenant shall pay monthly during
the remainder of the term of this Lease the difference, if any, between
the rent and other charges collected from any such subsequent tenant or
tenants and the rent and other charges reserved in this Lease, but
Tenant shall not be entitled to receive any excess of any such rents
collected over the rents reserved herein.
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(v)
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Landlord may immediately or at any time
thereafter terminate this Lease, and this Lease shall be deemed to have
been terminated upon receipt by Tenant of written notice of such
termination; upon such termination Landlord shall recover from Tenant
all damages Landlord may suffer by reason of such termination
including, without
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limitation, unamortized sums expended by Landlord for leasing
commissions and construction of tenant improvements, all arrearages
in rentals, costs, charges, additional rentals, and reimbursements,
the cost (including court costs and attorneys’ fees) of recovering
possession of the Leased Premises, the cost of any alteration of or
repair to the Leased Premises which is necessary or proper to
prepare the same for reletting and, in addition thereto, Landlord at
its election shall have and recover from Tenant either (A) an amount
equal to the excess, if any, of the total amount of all rents and
other charges to be paid by Tenant for the remainder of the term of
this Lease over the then reasonable rental value of the Leased
Premises for the remainder of the term of this Lease, or (B) the
rents and other charges which Landlord would be entitled to receive
from Tenant pursuant to the provisions of Section 7.01(b)(iv) if the
Lease were not terminated. Such election shall be made by Landlord
by serving written notice upon Tenant of its choice of one of the
two said alternatives within thirty (30) days of the notice of
termination.
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(c) If Landlord re-enters the Leased Premises or terminates this Lease pursuant to any of the
provisions of this Lease, Tenant hereby waives all claims for damages which may be caused by such
re-entry or termination by Landlord. Tenant shall and does hereby indemnify and hold Landlord
harmless from any loss, cost (including court costs and attorneys’ fees), or damages suffered by
Landlord by reason of such re-entry or termination. No such re-entry or termination shall be
considered or construed to be a forcible entry.
(d) The exercise by Landlord of any one or more of the rights and remedies provided in this
Lease shall not prevent the subsequent exercise by Landlord of any one or more of the other rights
and remedies herein provided. All remedies provided for in this Lease are cumulative and may, at
the election of Landlord, be exercised alternatively, successively, or in any other manner and are
in addition to any other rights provided for or allowed by law or in equity.
(e) No act by Landlord with respect to the Leased Premises shall terminate this Lease,
including, but not limited to, acceptance of the keys, institution of an action for detainer or
other dispossessory proceedings, it being understood that this Lease may only be terminated by
express written notice from Landlord to Tenant, and any reletting of the Leased Premises shall be
presumed to be for and on behalf of Tenant, and not Landlord, unless Landlord expressly provides
otherwise in writing to Tenant.
7.02.
Insolvency or Bankruptcy.
The appointment of a receiver to take possession
of all or substantially all of the assets of Tenant or any guarantor of Tenant’s obligations under
this Lease, or any general assignment by Tenant or any guarantor of Tenant’s obligations under this
Lease for the benefit of creditors, or any action taken or suffered by Tenant or any guarantor of
Tenant’s obligations under this Lease under any insolvency, bankruptcy, or reorganization act,
shall, at
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Landlord’s option, constitute a breach of this Lease by Tenant. Upon the happening of any such
event or at any time thereafter, this Lease shall terminate five (5) days after written notice of
termination from Landlord to Tenant. In no event shall this Lease be assigned or assignable by
operation of law or by voluntary or involuntary bankruptcy proceedings or otherwise and in no event
shall this Lease or any rights or privileges hereunder be an asset of Tenant under any bankruptcy,
insolvency, or reorganization proceedings.
7.03.
Late Payments.
Tenant shall pay, as a one (1) time late charge on each
installment of any Rental owed by Tenant hereunder that is not paid when due, an amount equal to
five percent (5%) of the amount due for each and every thirty (30) day period that said amount
remains unpaid (but in no event shall the amount of such late charge exceed an amount based upon
the highest legally permissible rate chargeable at any time by Landlord under the circumstances).
Should Tenant make a partial payment of past due amounts, the amount of such partial payment shall
be applied first to reduce all accrued and unpaid late charges, in inverse order of their maturity,
and then to reduce all other past due amounts, in inverse order of their maturity.
7.04.
Attorney’s Fees.
If either party initiates any action to enforce its rights
under this Lease or the terms hereof, the prevailing party shall be entitled to collect from the
non-prevailing party all court costs, reasonable attorneys fees and litigation expenses, including,
but not limited to, costs of depositions and expert witnesses, that Landlord incurs in connection
with such action.
7.05.
Waiver of Homestead.
Tenant hereby waives and renounces all homestead or
exemption rights which Tenant may have under or by virtue of the Constitutions and Laws of the
United States, the State of Tennessee, and any other State as against any debt or sum Tenant may
owe Landlord under this Lease and hereby transfers, conveys, and assigns to Landlord all homestead
or exemption rights which maybe allowed or set apart to Tenant, including such as may be set apart
in any bankruptcy proceeding, to pay any debt or sum owing by Tenant to Landlord hereunder.
7.06.
No Waiver of Rights.
No failure or delay of Landlord to exercise any right or
power given it herein or to insist upon strict compliance by Tenant of any obligation imposed on it
herein and no custom or practice of either party hereto at variance with any term hereof shall
constitute a waiver or a modification of the terms hereof by Landlord or any right it has herein to
demand strict compliance with the terms hereof by Tenant. No waiver of any right of Landlord or any
default by Tenant on one occasion shall operate as a waiver of any of Landlord’s other rights or of
any subsequent default by Tenant. No express waiver shall affect any condition, covenant, rule,
or regulation other than the one specified in such waiver and then only for the time and
in the manner specified in such waiver. No person has or shall have any authority to waive any
provision of this Lease unless such waiver is expressly made in writing and signed by an authorized
officer of Landlord.
7.07.
Holding Over.
In the event of holding over by Tenant after expiration or
termination of this Lease without the written consent of Landlord, Tenant shall pay as liquidated
damages, solely for such holding over, one hundred and fifty percent of the Rental that would have
been payable if this Lease had not so terminated or expired for the first two (2) months of the
holdover period, and double the Rental for the remainder of the holdover period. No holding over by
Tenant after the
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term of this Lease shall be construed to extend this Lease, and Tenant shall be deemed a
tenant at will, terminable on five (5) days notice from Landlord. In the event of any unauthorized
holding over, Tenant shall indemnify Landlord against all claims for damages by any other tenant to
whom Landlord shall have leased all or any part of the Leased Premises effective upon the
termination of this Lease. Any holding over with the express written consent of Landlord shall
thereafter constitute this Lease to be a lease from month to month (terminable by either party on
thirty (30) days notice) at a Base Rental, Tenant’s Forecast Additional Rental, and all other sums
required to be paid by Tenant prior to the expiration or termination of this Lease as may be
determined by Landlord.
7.08.
Subordination.
(a) Landlord may have heretofore or may hereafter encumber with a mortgage, deed of trust,
deed to secure debt, financing statement or other security interests (collectively, a “Mortgage”)
the Land, the Project or any part thereof or any interest therein, may sell and lease back the
Land, the Project or any part thereof, and may encumber the leasehold estate under such a sale and
leaseback arrangement with a Mortgage. (The holder of any Mortgage is herein called a “Mortgagee.”
A lease creating Landlord’s interest in the Land, the Project or part thereof is herein called a
“Ground Lease” and the lessor under any such Ground Lease is herein called a “Ground Lessor.”) This
Lease and the rights of Tenant hereunder shall be and are hereby expressly made subject to and
subordinate at all times to any Mortgage and to any Ground Lease now or hereafter existing, and to
all amendments, modifications, renewals, extensions, consolidations and replacements thereof, and
to all advances made or hereafter to be made upon the security thereof, provided, however, that the
Mortgagee or Ground Lessor shall not, so long as Tenant shall not be in default under this Lease,
disturb Tenant in its possession of the Leased Premises or terminate Tenant’s rights hereunder.
Tenant agrees to execute and deliver to Landlord such further instruments, including a
subordination, nondisturbance and attornment agreement in a form acceptable to the Mortgagee or
Ground Lessor, consenting to or confirming the subordination of this Lease to any Mortgage and to
any Ground Lease and containing such other provisions which may be requested in writing by Landlord
within ten (10) days after Tenant’s receipt of such written request.
(b) Tenant agrees that if Landlord defaults in the performance or observance of any covenant
or condition of this Lease required to be performed or observed by Landlord hereunder, Tenant will
give written notice specifying such default by certified or registered mail, postage prepaid, to
any Mortgagee or Ground Lessor of which Tenant has been notified in writing, and before Tenant
exercises any right or remedy which it may have on account of any such default of Landlord, such
Mortgagee or Ground Lessor shall have a reasonable amount of time to cure such default of Landlord,
if such default can be cured without such Mortgagee or Ground Lessor taking possession of the
mortgaged or leased estate, or to obtain possession of the mortgaged or leased estate and then
to cure such default of Landlord, if such default cannot be cured without such Mortgagee
or Ground Lessor taking possession of the mortgaged or leased estate.
(c) If any Mortgage is foreclosed, or Landlord’s interest under this Lease is conveyed or
transferred in lieu of foreclosure, or if any Ground Lease is terminated:
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(i)
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No person or entity which as the result of any of the foregoing has
succeeded to the interest of Landlord in this Lease (any such person
or entity being hereafter called a “Successor”) shall be liable for
any default by Landlord or any other matter which occurred prior to
the date such Successor succeeded to Landlord’s interest in this
Lease, nor shall such Successor be bound by or subject to any
offsets or defenses which Tenant may have against Landlord or any
other predecessor in interest to such Successor.
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(ii)
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Upon request of any Successor assuming the
rights of Landlord hereunder, Tenant will attorn to such Successor, as
Landlord under this Lease, subject to the provisions of this Section
7.08(c) and Section 7.08(e), and will execute and deliver such
instruments as may be necessary or appropriate to evidence such
attornment within ten (10) days after receipt of a written request to
do so.
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(iii)
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No Successor shall be bound to recognize any
prepayment by more than thirty (30) days of any Rental payable by
Tenant hereunder.
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(d) Notwithstanding anything to the contrary contained herein, any Mortgagee may subordinate,
in whole or in part, its Mortgage to this Lease by sending Tenant notice in writing subordinating
all or any part of such Mortgage to this Lease, and Tenant agrees to execute and deliver to such
Mortgagee such further instruments consenting to or confirming the subordination of all or any
portion of its Mortgage to this Lease and containing such other provisions which may be requested
in writing by such Mortgagee within ten (10) days after Tenant’s receipt of such written request.
(e) Whether or not any Mortgage is foreclosed or any Ground Lease is terminated, or any
Mortgagee or Ground Lessor succeeds to any interest of Landlord under this Lease, no Mortgagee or
Ground Lessor shall, have any liability to Tenant for any security deposit paid to Landlord by
Tenant hereunder, unless such security deposit has actually been received by such Mortgagee or
Ground Lessor.
(f) Should any prospective Mortgagee or Ground Lessor require a modification or modifications
of this Lease, which modification or modifications will not cause an increased cost or expense to
Tenant or in any other way materially and adversely change the rights and obligations of Tenant
hereunder, in the reasonable judgment of Tenant, then and in such event, Tenant agrees that this
Lease may be so modified and agrees to execute whatever documents are required therefor and deliver
the same to Landlord within ten (10) days following written request therefor. Should any
prospective Mortgagee or Ground Lessor require execution of a short form of this Lease for
recording (containing, among other customary provisions, the names of the parties, a description of
the Premises and the term of this Lease), Tenant agrees to execute such short form of lease and
deliver the same to Landlord within ten (10) days following the request therefor. Landlord will
reimburse Tenant for Tenant’s reasonable attorneys fees, not to exceed $500.00, for reviewing such
required short form pursuant to this subsection (f).
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(g) No Mortgagee or Ground Lessor of which Tenant has been notified, in writing, shall be
bound any amendment or modification of this Lease made without the written consent of such
Mortgagee or Ground Lessor.
7.09.
Estoppel Certificate.
Tenant agrees that, from time to time upon not less than
fifteen (15) days’ prior request by Landlord, or any existing or prospective Mortgagee or Ground
Lessor, Tenant will, and Tenant will cause any subtenant, licensee, concessionaire or other
occupant of the Leased Premises claiming by, through or under Tenant, to complete, execute and
deliver to Landlord or Landlord’s designee or to any existing or prospective mortgagee or ground
lessor, a written estoppel certificate certifying (i) that this Lease is unmodified and is in full
force and effect (or if there have been modifications, that this Lease, as modified, is in full
force and effect and setting forth the modifications); (ii) the amounts of the monthly installments
of Base Rental, Tenant’s Forecast Additional Rental, Tenant’s Additional Rental Adjustment and
other sums then required to be paid under this Lease by Tenant; (iii) the date to which the Base
Rental, Tenant’s Forecast Additional Rental, Tenant’s Additional Rental Adjustment and other sums
required to be paid under this Lease by Tenant have been paid; (iv) that Landlord is not in default
under any of the provisions of this Lease, or if in default, the nature thereof in detail and what
is required to cure same; and (v) such other information concerning the status of this Lease or the
parties’ performance hereunder reasonably requested by Landlord or the party to whom such estoppel
certificate is to be addressed. If Tenant fails to execute such estoppel certificate within the
time permitted then Landlord shall give written notice thereof to Tenant and if Tenant fails to
execute the same or furnish specific written objections to such certificate within five (5) days
after such notice, then the facts contained therein shall be conclusively presumed to be correct.
ARTICLE VIII.
8.01.
Sublease or Assignment by Tenant.
(a) The Tenant shall not, without the Landlord’s prior written consent, (i) assign, convey,
mortgage, pledge, encumber, or otherwise transfer (whether voluntarily, by operation of law, or
otherwise) this Lease or any interest hereunder; (ii) allow any lien to be placed upon Tenant’s
interest hereunder; (iii) sublet the Leased Premises or any part thereof; or (iv) permit the use or
occupancy of the Leased Premises or any part thereof by any one other than Tenant. Any attempt to
consummate any of the foregoing without Landlord’s consent shall be void and of no force or effect.
For purposes hereof, the transfer of the ownership or voting rights in a controlling interest of
the voting stock of Tenant (if Tenant is a corporation) or the transfer of a general partnership
interest or a majority of the limited partnership interest in Tenant (if Tenant is a partnership),
at any time throughout the term of this Lease, shall be deemed to be an assignment of this Lease.
Notwithstanding anything to the contrary contained herein, Tenant may assign this lease to an
affiliate, subsidiary, parent company with the same financial strength or Northwestern Mutual Life
Insurance Company (each a “Permitted Transferee”) without the prior consent of, but upon prior
written notice (including, as applicable, financial statements and other documentation of
affiliation) to, Landlord.
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(b) Notwithstanding anything herein to the contrary, if at any time or from time to time
during the term of this Lease, Tenant desires to sublet all or any portion of the Leased Premises
or assign all or any portion of Tenant’s interest in this Lease, Tenant shall notify Landlord in
writing (hereinafter referred to in this Section as the “Notice”) of the terms of the proposed
subletting or assignment, the identity of the proposed sublessee or assignee, the area proposed to
be sublet or covered by the assignment (hereinafter referred to as “Sublet Space”), and such other
information as Landlord may reasonably request to evaluate Tenant’s request to sublet or assign.
Landlord shall then have the option (i) to terminate this Lease as to the Sublet Space as provided
in subsection (d) hereof or (ii) to allow the proposed sublease or assignment subject only to the
final review for approval as provided in subsection (e) hereof. Landlord’s option to sublet, to
terminate, or to allow the proposed sublease or assignment subject to final review, as the case may
be, shall be exercisable by Landlord in writing within a period of thirty (30) calendar days after
receipt of the Notice and any failure by Landlord to exercise any of such options within said
thirty (30) day period shall be deemed to constitute the election of option (ii) above.
(c) Intentionally deleted.
(d) If Landlord elects to terminate this Lease pursuant to Landlord’s options set forth above,
then this Lease shall terminate as to the Sublet Space on the date set forth in Landlord’s notice
to Tenant, which date shall be no less than thirty (30) days and no more than ninety (90) days
after the date of such notice. If the Sublet Space does not constitute the entire Leased Premises
and Landlord exercises its option to terminate this Lease with respect to the Sublet Space, as to
that portion of the Leased Premises which is not part of the Sublet Space, this Lease shall remain
in full force and effect except that Base Rental, Tenant’s Forecast Additional Rental, and Tenant’s
Additional Rental shall be calculated on the difference between the Rentable Square Feet prior to
such termination and the Rentable Square Feet of the Sublet Space. Notwithstanding anything to the
contrary in this subsection (d), if Landlord elects this option to terminate the Lease, Tenant
shall: have a maximum of five (5) days after the date that the notice of such election to terminate
is sent to Tenant in which to rescind its notice of its desire to sublet the Sublet Space.
(e) If Landlord elects or is deemed to have elected to allow the proposed sublease or
assignment subject to final review, Tenant shall submit to Landlord, within ten (10) calendar days
after receipt of Landlord’s notice of election (or the expiration of said thirty (30)-day period if
no such election is made), a copy of the proposed sublease or assignment, which sublease or
assignment must provide for the assumption of all of Tenant’s obligations under this Lease, and
such additional information concerning the business, reputation and credit-worthiness of the
proposed sublessee or assignee as shall be sufficient to allow Landlord to form a commercially
reasonable judgment with respect thereto. Landlord agrees not to unreasonably withhold its approval
of any proposed sublease or assignment and, in the event Landlord fails to approve or disapprove
any such sublease or assignment within thirty (30) days after Landlord’s receipt of such submission
from Tenant, such sublease or assignment shall be deemed to be approved; provided, however, that if
Landlord approves any proposed sublease or assignment, Landlord shall receive from Tenant as
additional rent hereunder fifty percent (50%) of any rents or other sums received by Tenant
pursuant to said sublease or assignment in excess of the rentals payable to Landlord by Tenant
under this Lease with respect to the Sublet Space (after deducting all of Tenant’s reasonable costs
associated therewith,
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including reasonable brokerage fees and the reasonable cost of remodeling or otherwise improving
the Leased Premises for said sublessee or assignee), as such rents or other sums are received by
Tenant from the approved sublessee or assignee. Landlord may require that any rent or other sums
paid by a sublessee or assignee be paid directly to Landlord. If Landlord approves in writing the
proposed sublessee or assignee and the terms of the proposed sublease or assignment, but a fully
executed counterpart of such sublease or assignment is not delivered to Landlord within sixty (60)
calendar days after the date of Landlord’s written approval, then Landlord’s approval of the
proposed sublease or assignment shall be deemed null and void and Tenant shall again comply with
all the conditions of this Section as if the Notice and options hereinabove referred to had not
been given, received or exercised. If Landlord fails to approve the form of sublease or assignment
or the sublessee or assignee, Landlord shall notify Tenant of its reason not to approve such form
of sublease or assignment and Tenant shall have the right to submit amended forms or other
sublessees or assignees to Landlord to review for approval.
(f) Notwithstanding the giving by Landlord of its consent to any sublease or assignment with
respect to the Leased Premises, no sublessee or assignee, except a Permitted Transferee, may
exercise any expansion option, right of first refusal option, or renewal option under this Lease
except in accordance with a separate written agreement entered into directly between such sublessee
or assignee and Landlord, and Tenant may not exercise any such right with respect to any space that
Tenant has sublet or assigned, except as to space that Tenant has sublet or assigned to a Permitted
Transferee.
(g) Notwithstanding the giving by Landlord of its consent to any subletting, assignment or
occupancy as provided hereunder or any language contained in such lease, sublease or assignment to
the contrary, unless this Lease is expressly terminated by Landlord, Tenant shall not be relieved
of any of Tenant’s obligations or covenants under this Lease and Tenant shall remain fully liable
hereunder.
(h) If, with the consent of the Landlord, the Leased Premises or any part thereof is sublet or
occupied by other than Tenant or this Lease is assigned, Landlord may, after default by Tenant,
collect rent from the subtenant, assignee or occupant, and apply the net amount collected to the
Rental herein reserved. No such subletting, assignment, occupancy, or collection shall be deemed
(i) a waiver of any of Tenant’s covenants contained in this Lease, (ii) a release of Tenant from
further performance by Tenant of its covenants under this Lease, or (iii) a waiver of any of
Landlord’s other rights hereunder.
(i) In no event shall Tenant assign this Lease or enter into any sublease, license, concession
or other agreement for use, occupancy or utilization of any part of the Leased Premises which
provides for a rental or other payment for such use, occupancy or utilization based in whole or in
part on the income or profits derived by any person from the Leased Premises leased, used, occupied
or utilized (other than an amount based on a fixed percentage or percentages of gross receipts of
sales), and Tenant agrees that all assignments, subleases, licenses, concessions or other
agreements for use, occupancy or utilization of any part of the Leased Premises shall provide that
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the person having an interest in the possession, use, occupancy or utilization of the Leased
Premises shall not enter into any lease, sublease, license, concession or other agreement for use,
occupancy or utilization of space in the Leased Premises which provides for a rental or other
payment for such use, occupancy or utilization based in whole or in part on the income or profits
derived by any person from the Leased Premises leased, used, occupied or utilized (other than an
amount based on a fixed percentage or percentages of gross receipts of sales) and any such
purported assignment, sublease, license, concession or other agreement shall be absolutely void and
ineffective as a conveyance of any right or interest in the possession, use, occupancy or
utilization of any part of the Leased Premises.
8.02.
Assignment by Landlord.
Landlord shall have the right to transfer and assign, in
whole or in part, all its rights and obligations hereunder, in the Building, the Land and all other
property referred to herein, and in such event and upon such transfer and transferee’s assumption
of Landlord’s obligations hereunder (any such transferee to have the benefit of, and be subject to,
the provisions of Sections 8.03 and 8.04 hereof) no further liability or obligation shall
thereafter accrue against Landlord hereunder.
8.03.
Peaceful Enjoyment.
Landlord covenants that Tenant shall and may peacefully
have, hold and enjoy the Leased Premises free from hindrance by Landlord or any person claiming by,
through or under Landlord but subject to the other terms hereof, provided that Tenant pays the
rental and other sums herein recited to be paid by Tenant and performs all of Tenant’s covenants
and agreements herein contained. It is understood and, agreed that this covenant and any and all
other covenants of Landlord contained in this Lease shall be binding upon Landlord and its
successors only with respect to breaches occurring during the ownership of the Landlord’s interest
hereunder.
8.04.
Limitation of Landlord’s Personal Liability.
Tenant specifically agrees to look
solely to Landlord’s equity interest in the Building for the recovery of any monetary judgment
against Landlord, it being agreed that Landlord (and its partners and shareholders) shall never be
personally liable for any such judgment. The provision contained in the foregoing sentence is not
intended to, and shall not, limit any right that Tenant might otherwise have to obtain injunctive
relief against Landlord or Landlord’s successors in interest or any suit or action in connection
with enforcement or collection of amounts which may become owing or payable under or on account of
insurance maintained by Landlord.
8.05.
Force Majeure.
Landlord and Tenant (except with respect to the payment of Rental
or any other monetary obligation under this Lease, including any obligations arising pursuant to
Exhibit D
hereto) shall be excused for the period of any delay and shall not be deemed in
default with respect to the performance of any of the terms, covenants and conditions of this Lease
when prevented from so doing by a cause or causes beyond the Landlord’s or Tenant’s (as the case
may be) control (excluding financial inability to perform), which shall include, without
limitation, all labor disputes, governmental regulations or controls, fire or other casualty,
inability to obtain any material or services, acts of God, or any other cause not within the
reasonable control of Landlord or Tenant (as the case maybe); provided, however, that any delay or
prevention caused by Tenant Delay Items (defined in
Exhibit D)
shall be deemed to be due to
a cause or causes within Tenant’s control.
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ARTICLE IX.
9.01.
Notices.
Any notice or other communications required or permitted to be given
under this Lease must be in writing and shall be effectively given or delivered if (i) hand
delivered to the addresses for Landlord and Tenant stated below, (ii) sent by certified or
registered United States Mail, return receipt requested, to said addresses, or (iii) sent by
nationally recognized overnight courier (such as Federal Express, UPS Next Day Air or Airborne
Express), with all delivery charges paid by the sender and signature required for delivery, to said
address. Any notice mailed shall be deemed to have been given upon receipt or refusal thereof.
Notice effected by hand delivery shall be deemed to have been given at the time of actual delivery.
Either party shall have the right to change its address to which notices shall thereafter be sent
and the party to whose attention such notice shall be directed by giving the other party notice
thereof in accordance with the provisions of this Section 9.01. The initial addresses of the
parties for purposes of this Lease are:
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To:
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Hines Interests Limited Partnership
70 West Madison, Suite 440
Chicago, IL 60602-4205
Attn: C. Kevin Shanahan and Thomas J. Danilek
Telecopy: (312) 346-4180
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With a copy to:
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Hines Interests Limited Partnership
2800 Post Oak Boulevard, 50th Floor
Houston, TX 77056-6118
Attn: Jeffrey C. Hines and C. Hastings Johnson
Telecopy: (713) 966-2020
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With copy to:
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Nashville Hines Development, LLC
Property Management Office
2525 West End Avenue
Nashville, TN 37203
Attn: Project Manager
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Tenant:
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Robert W. Baird & Co. Incorporated
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attn: D. Michael Schaefer, First Vice President
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With a copy to:
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Robert W. Baird & Co. Incorporated
2525 West End Avenue, Suite 1000
Nashville, Tennessee 37203
Attn: Branch Manager
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Tenant shall also send a copy of each such notice to each Mortgagee that notifies Tenant in writing
of its interest and the address to which notices are to be sent.
9.02.
Miscellaneous.
(a) This Lease shall be binding upon and inure to the benefit of the successors and assigns of
Landlord, and shall be binding upon and inure to the benefit of Tenant, its successors, and, to the
extent assignment may be approved by Landlord hereunder, Tenant’s assigns. Where appropriate the
pronouns of any gender shall include the other gender, and either the singular or the plural shall
include the other.
(b) All rights and remedies of Landlord and Tenant under this Lease shall be cumulative and
none shall exclude any other rights or remedies allowed by law. This Lease is declared to be a
Tennessee contract, and all of the terms hereof shall be construed according to the laws of the
State of Tennessee.
(c) This Lease may not be altered, changed or amended, except by an instrument in writing
executed by all parties hereto. Further, the terms and provisions of this Lease shall not be
construed against or in favor of a party hereto merely because such party is the “Landlord” or the
“Tenant” hereunder or such party or its counsel is the draftsman of this Lease.
(d) If Tenant is a corporation, partnership or other entity, Tenant warrants that all consents
or approvals required of third parties (including but not limited to its Board of Directors or
partners) for the execution, delivery and performance of this Lease have been obtained and that
Tenant has the right and authority to enter into and perform its covenants contained in this Lease.
Likewise, if Landlord is a corporation, partnership or other entity, Landlord warrants that all
consent or approvals required of third parties (including but not limited to its Board of Directors
or partners) for the execution, delivery and performance of this Lease have been obtained and that
Landlord has the right and authority to enter into and perform its covenants contained in this
Lease.
(e) IN THE EVENT LANDLORD COMMENCES ANY PROCEEDINGS FOR NONPAYMENT OF RENT OR ANY OTHER
AMOUNTS PAYABLE HEREUNDER, TENANT SHALL NOT INTERPOSE ANY COUNTERCLAIM OF WHATEVER NATURE OR
DESCRIPTION IN ANY SUCH PROCEEDING, UNLESS THE FAILURE TO RAISE THE SAME WOULD CONSTITUTE A WAIVER
THEREOF. THIS SHALL NOT, HOWEVER, BE CONSTRUED AS A WAIVER OF TENANT’S RIGHT TO ASSERT SUCH CLAIMS
IN ANY SEPARATE ACTION BROUGHT BY TENANT.
(f) Wherever in this Lease there is imposed upon Landlord the obligation to use best or
reasonable efforts or due diligence, Landlord shall be required to do so only to the extent the
same is economically feasible and otherwise will not impose upon Landlord extreme financial or
other burdens.
(g) If any term or provision of this Lease, or the application thereof to any person or
circumstance, shall to any extent be invalid or unenforceable, the remainder of this Lease, or the
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application of such provision to persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each provision of this Lease shall be
valid and shall be enforceable to the extent permitted by law.
(h) Time is of the essence in this Lease.
(i) This Lease agreement shall not convey any leasehold estate from Landlord to Tenant.
Landlord and Tenant hereby agree that this Lease creates only the interest of a usufruct in Tenant
which may not be levied upon or assigned without Landlord’s permission.
(j) Tenant represents and warrants to Landlord that Tenant did not deal with any broker in
connection with this Lease other than The John Buck Company and Eakin & Smith Real Estate
(collective referred to herein as “Broker”), who shall be paid by Landlord. Tenant shall indemnify,
defend and hold Landlord, Landlord’s beneficiaries, the managing agent of the Building, the leasing
agent of the Building and their respective agents, partners and employees and the Building harmless
of, from and against any and all losses, damages, liabilities, claims, liens, costs and expenses
(including, without limitation, court costs, reasonable attorneys’ fees and litigation expenses)
arising from any claims or demands of any other broker or brokers or finders for any
commission alleged to be due such other broker or brokers or finders claiming to have dealt with
Tenant in connection with this Lease or with whom Tenant hereafter deals or whom Tenant employs.
The provisions of this subsection shall survive the expiration or earlier termination of this
Lease.
(k) If Tenant comprises more than one person, corporation, partnership, limited liability
company or other entity, the liability hereunder of all such persons, corporations, partnerships or
other entities shall be joint and several.
(1) Landlord’s receipt of any Rental payable by Tenant hereunder with knowledge of the breach
of a covenant or agreement contained in this Lease shall not be deemed a waiver of the breach. No
acceptance by Landlord of a lesser amount than the installment of Rental which is due shall
be considered, nor shall any endorsement or statement on any check or any letter accompanying
any check or payment be deemed, an accord and satisfaction. Landlord may accept a check or payment
without prejudice to Landlord’s right to recover the balance due or to pursue any other remedy
provided in this Lease.
(m) Wherever Landlord’s consent or approval is required pursuant to the terms of this Lease,
unless provided otherwise in the specific provision, Landlord may grant or withhold the same in
Landlord’s sole and absolute discretion, except as otherwise expressly provided herein.
(n) Tenant covenants and agrees to keep strictly confidential all of the financial terms of
this Lease and not to disseminate any such information to any third parties without the prior
written consent of Landlord. Tenant further covenants and agrees that, at all times after the date
of this Lease and prior to the Commencement Date, unless consented to in writing by Landlord, no
press release or other public disclosure concerning this Lease shall be made by Tenant.
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(o) Submission of this instrument for examination shall not constitute a reservation of or
option to lease the Leased Premises or in any manner bind Landlord, and no lease or obligation on
Landlord shall arise until this instrument is signed and delivered by Landlord and Tenant;
provided, however, the execution and delivery by Tenant of this Lease to Landlord, or the managing
agent of the Building or the leasing agent of the Building shall constitute an irrevocable offer by
Tenant to lease the Premises on the terms and conditions herein contained, which offer may not be
revoked for fifteen (15) days after such delivery.
(p)
Financial Statements.
Tenant shall, upon Landlord’s reasonable requests from time
to time, deliver to Landlord such financial information regarding Tenant as may be reasonably
available.
9.03.
Tenant’s Right of First Offer.
Provided at the time Tenant exercises its Right
of First Offer, Tenant shall not be in default of any of its obligations under this Lease and no
material adverse change shall have occurred in Tenant’s financial condition, Landlord agrees that
it shall not lease any of the remaining space on the ninth floor of the Building, containing
approximately 11,000 RSF, prior to August 1, 2000, and during such time Tenant shall have the
option to lease all of such space on the same terms and conditions as are set
forth herein for the initial Leased Premises. If Tenant has not elected to lease such space,
Landlord may lease the same after August 1, 2000, provided that Landlord shall notify Tenant if
Landlord intends to enter into a lease for any of such space prior to September 1, 2000, and Tenant
shall have five (5) business days after its receipt of such notice to elect to lease the balance of
the ninth floor on the terms and conditions set forth herein for the Initial Leased Premises. If
Tenant does not exercise such right by September 1, 2000, such right shall terminate. Landlord
hereby agrees that after September 1, 2000, Landlord shall not enter into a lease for the remaining
space on the Ninth Floor with any other tenant with a term of longer than five (5) years (a “Ninth
Floor Lease”). If Landlord does enter into such a Ninth Floor Lease, Tenant shall have a one (1)
time right of first offer (the “Right of First Offer”), to lease the leased premises as defined in
such Ninth Floor Lease (excluding any roof or storage space rights contained in such Ninth Floor
Lease)(an “Available Space”) subject to the following:
(a) At the time Tenant exercises a Right of First Offer and at the time the Available Space is
available for leasing by Tenant:
(i) Tenant shall not be in default of any of its obligations under this Lease.
(ii) No material adverse change shall have occurred in Tenant’s financial condition.
(b) Landlord shall not offer any such Available Space on the open market unless and until
Landlord has first notified Tenant in writing (the “Offer Notice”) at least ten (10) months prior
to the Ninth Floor Lease expiration date that the Ninth Floor Lease is set to expire and Landlord
intends to offer the designated Available Space to third parties. Within five (5) business days
after a request from Tenant, Landlord shall advise Tenant of the then current Market Rental Rate
for such space. Landlord shall not offer such Available Space on the open market until
40
thirty (30) days have lapsed from the date of the Offer Notice without Tenant having notified
Landlord in writing of Tenant’s desire to lease all of the designated Available Space (“Tenant’s
Acceptance”). The Offer Notice shall:
(i) Describe the amount and location of the Available Space that will become
available and attach a floor plan showing the Available Space cross-hatched; and
(ii) Contain the date on which the Available Space will be available for leasing by
Tenant.
(c) If Tenant delivers Tenant’s Acceptance within the thirty (30) days following the Offer
Notice, the Available Space shall become a part of the Leased Premises and shall be leased by
Tenant at the then current Market Rental Rate for similar expansion space. Market Rental Rate shall
be mutually agreed upon by Landlord and Tenant, taking into account floor location, leasehold
improvements, allowances for expansion space in the Building, the remaining term of the Lease, age
and location of the Building within the market, and the total square footage within the Building
leased and occupied by Tenant. The commencement date of the lease for each particular Available
Space shall be the earlier of (i) ninety (90) days after delivery of such Available Space if it is
first generation space, or sixty (60) days after delivery if it has previously been occupied by a
tenant; or (ii) Tenant’s occupancy of the Available Space, and the termination date shall be the
same as for the Leased Premises. The Available Space shall be delivered to the Tenant broom clean,
free of tenants or other occupants. If the Available Space has not previously been leased then it
shall be delivered to Tenant in Base Building Shell Condition.
(d) If Tenant declines or fails to effectively exercise the Right of First Offer as provided
herein, Landlord shall thereafter be free to offer the Available Space on the open market and to
lease some or all of that Available Space at any time without regard to the restrictions in this
Section and on whatever terms Landlord may decide in its sole discretion.
(e) Landlord shall use commercially reasonable efforts to remove any holdover tenants or other
occupants from the Available Space Tenant leases under this Section. Although Landlord shall not be
liable for any damages for any holdover tenant or other occupant (unless Landlord is not using
commercially reasonable efforts to remove the holdover tenant or other occupant), all of Tenant’s
obligations regarding the Available Space shall be abated until the holdover tenant or other
occupant is removed and the commencement date for the Available Space shall be delayed until the
holdover tenant or other occupant is removed, following which Tenant’s occupancy shall commence as
provided in Section 9.03(d), above.
9.04.
Renewal Option.
Subject to the provisions hereinafter set forth, Landlord
hereby grants to Tenant an option to extend the Term of this Lease on the same terms, conditions
and provisions as contained in this Lease, except as otherwise provided herein, for one period of
five (5)
41
years (the “Renewal Period”) after the expiration of the initial Term, which Renewal Period
shall commence on the day after the expiration date for the initial ten (10) year term (the
“Renewal Period Commencement Date”) and end on the day before the fifth (5) anniversary thereof.
(a) Said option shall be exercisable by written notice from Tenant to Landlord of
Tenant’s election to exercise said option given not earlier than the date which is
twenty-four (24) months prior to the Renewal Period Commencement Date, nor later than twelve
(12) months prior to such date, time being of the essence. If Tenant’s option is not so
exercised, said option shall thereupon expire.
(b) Tenant may only exercise said option, and an exercise thereof shall only be
effective, if at the time of Tenant’s exercise of said option and on the Renewal Period
Commencement Date this Lease is in full force and effect and Tenant is not in Default under
this Lease. No sublessee shall be entitled to exercise the renewal option under this Section
9.04.
(c) Rent per Rentable Square Foot of the Leased Premises payable during the Renewal
Period with respect to all space included in the Leased Premises as of the Renewal Period
Commencement Date shall be equal to the Market Rental Rate for the Building, taking into
account other pecuniary concessions such as rent abatement and tenant improvement
allowances. Landlord shall give Tenant written notice of the proposed Market Rental Rate
within thirty (30) days following written request by Tenant made not earlier than fourteen
(14) months prior to the Renewal Period Commencement Date.
(d) If Tenant has validly exercised said option, within thirty (30) days after request
by either party hereto Landlord and Tenant shall enter into a written amendment to this
Lease confirming the terms, conditions and provisions applicable to the Renewal Period as
determined in accordance herewith, with such revisions to the rental provisions of this
Lease as may be necessary to conform such provisions to the Market Rental Rate.
9.05.
Satellite Dish
Subject to the terms and conditions hereinafter set forth,
Landlord grants to Tenant, during the Term, the right to install, maintain, repair and replace one
(1) satellite or microwave dish relating to Tenant’s business in the Leased Premises on the roof of
the Building where designated by Landlord, for receiving signals relayed by satellite and, except
as otherwise provided, to connect such equipment through existing mechanical shafts to the Leased
Premises. Such satellite dish or microwave dish shall be no greater than twenty-four (24) inches in
diameter.
(a) If Tenant desires to exercise such right, Tenant shall give a written notice to that
effect to Landlord (a “Satellite Notice”). The Satellite Notice shall specify in detail the
requirements of such installation, all of which shall be subject to the approval of Landlord.
Landlord shall not unreasonably withhold its approval provided that the use of the roof for such
purposes shall (i) be compatible with Landlord’s use of the roof, (ii) be subject to Landlord’s
supervision, (iii) be non-penetrating and shall not adversely affect the structural safety or
integrity of the Building, (iv) meet reasonable aesthetic and other standards of Landlord and
Landlord’s architect and (v) satisfy other
42
conditions hereinafter set forth. If Landlord approves Tenant’s use of the roof for such
purposes, Landlord shall designate by written notice to Tenant an appropriate area for such
installation (“Installation Area”). Landlord shall use good faith efforts to select an Installation
Area which will be consistent with adequate reception. The right granted to Tenant under this
Section shall be subject to the following conditions precedent: (1) there must be available space
on the roof and existing mechanical shafts from the roof to the Leased Premises for Tenant’s
proposed installation; (2) Landlord’s architect shall approve of the location of the Installation
Area and the appearance of those portions of the equipment to be visible to the public; (3)
Landlord’s structural engineer shall approve of the location of the Installation Area, the design
and specifications of the equipment, the load caused on the roof of the Building by such equipment,
and other structural requirements of the installation; (4) the installation must comply with the
applicable requirements of any covenant, condition or restriction of record and any municipal,
county, state, federal or other governmental ordinance, law, rule or regulation including, but not
limited to zoning ordinances; and (5) the installation and operation of such equipment shall not
interfere with the safety or operations of the Building or reduce or affect its structural
integrity, and shall comply with the terms of this lease.
(b) Tenant shall pay all costs and expenses of any kind related to the installation,
operation, maintenance or removal of its communication equipment, including any reasonable
architect’s or engineering fees incurred in connection with required approvals, but Tenant shall
not be obligated to pay any fee for the roof or access thereto. Tenant shall maintain all such
equipment in good repair. Tenant shall be responsible for any damage, loss or injury to the
Building or other property and for any injury to persons caused by installation, operation,
maintenance or removal of such equipment. Upon the expiration or earlier termination of this Lease,
Tenant shall, at its sole cost and expense, (i) remove the communication equipment and restore that
portion of the roof of the Building where the communications equipment was located to its condition
existing prior to the installation thereof, ordinary wear and tear excepted, and (ii) repair any
damage or destruction caused by such removal. Restoration and repair herein required to be
performed by Tenant shall be completed under the supervision of Landlord or Landlord’s
representative. Notwithstanding the fore-going, Tenant shall not remove, and shall not be
reimbursed for the cost thereof, any portion of the communication equipment which is
embedded or permanently attached in or to the Building including, but not limited
to, cables and other wiring, unless Landlord so directs otherwise. Tenant shall enter into such
roof license agreement with respect to Tenant’s roof rights under this Section 9.05 as may be
reasonably required by Landlord. To the extent not expressly prohibited by law, Tenant agrees to
hold Landlord and its constituent members, and each such party’s respective agents, servants and
employees, harmless and to indemnify each of them against claims and liabilities, including
reasonable attorney’s fees, for injuries to persons and damage to or theft, misappropriation or
loss of property occurring in or about the Building and arising out of the installation,
maintenance, operation, removal or other use of the communications equipment installed hereunder.
43
IN WITNESS WHEREOF, the parties hereto have executed and sealed this Lease as of the date
aforesaid.
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LANDLORD:
NASHVILLE HINES DEVELOPMENT, LLC
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By:
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/s/ Tom Owens
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Name:
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Tom Owens
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Title:
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Manager
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TENANT:
ROBERT W. BAIRD & CO. INCORPORATED
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By:
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/s/ James D. Bell
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Name:
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James D. Bell
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Title:
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Man. Dir. & CAO
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44
EXHIBIT A — SITE PLAN AND LOCATION OF THE BUILDING
Exhibit A — Page 1
EXHIBIT A-1— DESCRIPTION OF LAND
Tract 1 / 3.01 Acres
Being a parcel of land in Nashville, First Civil District, Eighteenth Councilmanic District,
Davidson County, Tennessee, generally located on the southerly side of West End Avenue between
Twenty-Fifth Avenue South and Natchez Trace, being part of Lot 1, Vanderbilt University
Consolidation Plat of record in Plat Book 9700, page 522, R.O.D.C. and being more particularly
described as follows:
Beginning at a mag nail (new) in the westerly right-of-way line of Twenty-Fifth Avenue South
(50-foot right-of-way) at the southerly terminus of a curve return to the southerly right-of-way
line of West End Avenue (right-of-way varies);
THENCE, along said westerly right-of-way line of Twenty-Fifth Avenue South, S 36° 59' 53" E, 179.61
to an iron pipe (old) at the northeast corner of property conveyed to Vanderbilt University by deed
of record in Book 5157, page 991, R.O.D.C.;
THENCE, along the northerly line of said property, S 53° 09' 57" W, 150.00 feet to an “x” in conc.
wall;
THENCE, along the westerly line of said property, S 36° 59' 53" E, 179.81 feet to an iron pin (set)
in the northerly line of a fifty foot wide ingress and egress easement;
THENCE, along the northerly line of said ingress and egress easement the following calls; S 53° 08'
25" W, 90.85 feet to an iron pin (set) at the beginning of a curve to the left;
Along said curve to the left, 136.18 feet to a railroad spike (new), said curve-having a central
angle of 17° 56' 44", a radius of 434.80 feet, a tangent of 68.65 feet and a chord of S 44° 10'
03." W, 135.63 feet;
S 35° 11' 41" W, 8.07 feet to a mag nail (new);
THENCE, leaving the northerly line of said ingress .and egress easement and along a severance line
the following calls:
N 36° 59' 13" W, 103.37 feet to a mag nail (new);
S 53° 00' 47" W, 43.57 feet to a mag nail (new);
N 36° 59' 13" W, 3.57 feet to a mag nail (new);
S 53° 00' 47" W, 12.00 feet to a mag nail (new);
N 36° 59' 13" W, 285.90 feet to a mag nail (new) in the southerly right-of-way line of West End
Avenue; THENCE, along said right-of-way the following calls;
N 54° 13' 39" E, 33.07 feet to a mag nail (new);
N 53° 00' 47" E, 394.99 feet to an “x” in conc. (new) at the westerly terminus of a curve
return to the right to the westerly right-of-way line of Twenty-Fifth Avenue South; Along said
curve to the right 15.71 feet to
Exhibit A-1 — Page 1
the point of beginning, said curve having a central angle of 89° 59' 19", a radius of 10.00
feet, a tangent of 10.00 feet and a chord of S 81° 59' 33" E, 14.14 feet;
Containing 3.01 acres, more or less.
Exhibit A-1 — Page 2
EXHIBIT B — FLOOR PLAN OF LEASED PREMISES
Exhibit B — Page 1
EXHIBIT C BASE BUILDING SHELL CONDITION
The following Base Building Condition shall be provided by Landlord at Landlord’s sole cost and
shall not be deducted from the Tenant Construction Allowance:
1. Service Core
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a.
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Stairways in compliance with code.
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b.
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Electrical, telephone, and mechanical rooms.
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c.
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Finished men’s and women’s washrooms.
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d.
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Domestic water and drainage.
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2. Core Doors
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a.
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Building standard core doors for stairwells, electrical, mechanical, and
telephone rooms and all washrooms.
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b.
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Doors finished and complete with frame, trim, hardware, locking devices,
electric door releases and closers (where applicable).
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3. Wall and Windows
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a.
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Curtain wall installed and sealed.
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b.
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Exterior windows installed and sealed.
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c.
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Insulation. from. slab-to-slab installed and sealed.
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d.
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Core walls and elevator lobby walls all installed, sheet rocked, taped, sanded,
patched, filled, dusted and ready to receive primer or other finish.
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e.
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Window blinds,. stacked on the floor, for all exterior windows.
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4. Floors
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a.
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Smooth concrete floors with troweled finish within a tolerance of 1/2 inch in
10 feet non-cumulative.
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b.
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Design to support minimum live load of 50 lbs. per square foot, plus 20-lbs.
partition load. Interior core areas are designed for 100 lbs. per square foot live
load.
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5. Heating, Ventilating and Conditioned Air (HVAC)
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a.
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Central HVAC systems in place with 11 perimeter zones per floor.
b. HVAC systems to service core.
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c.
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Main air distribution system with primary air loop around the floor; connected
to core; all required fire dampers.
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d.
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Condenser water taps available.
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e.
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Access to general exhaust system for any use by tenant requiring special
exhaust.
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6. Electrical service to floors with plug-in type bus risers sized to provide 8.0 watts per useable
square foot of electrical connected load capacity for tenant use above and beyond
Exhibit C — Page 1
the base building electrical requirements. Of that, 6.0 watts per useable square foot of
electrical connected load capacity will be available in 480/277V panels for tenant use
leaving 2.0 watts per useable square foot available in the bus riser for future tenant
electrical loads. Of the 6.0 watts per useable square foot, 3.0 watts per useable square
foot of electrical connected load capacity will be available in 208/120V panels for tenant
use leaving 3.0 watts per useable square foot of capacity in the 480/277V panels for future
tenant electrical loads. This capacity is part of the 6.0 watts per useable square foot of
power for tenant’s use noted above.
7. Life Safety
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a.
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Sprinkler system installed to code, main loop connected to core and drops in
place with heads installed pursuant to code for an unoccupied floor.
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b.
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Firehouse and extinguisher cabinets installed at each stairwell (or as
otherwise required by code for an unoccupied floor).
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c.
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Exit signs at all stairwells.
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d.
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Smoke detectors, fire extinguishers, fire horns, electric door releases,
speakers, cameras and any other life safety equipment required by code for an
unoccupied floor.
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Sleeves in core telephone rooms for telephone access.
All work contained within the core of the floor (i.e., restrooms, HVAC, electrical, condenser
water, elevators, etc.) will be complete prior to tenant’s occupancy but not on the delivery of the
premises for tenant’s construction if delivery occurs prior to September 1, 2000. Connection points
for electrical service, condenser water, HVAC and telecommunications-will be available on the
delivery date but may not be operational until September 1, 2000. Additionally, prior to August 15,
the southwest corner of the floors may be open for the external hoist access. Landlord will use
reasonable efforts during its completion of the Base Building not to interfere with Tenant’s Work.
Exhibit C — Page 2
EXHIBIT D — CONSTRUCTION OF INITIAL LEASEHOLD IMPROVEMENTS
I.
SCHEDULE OF CRITICAL DATES
The following is a schedule of certain critical dates relating to Landlord’s and Tenant’s
respective obligations with respect to construction of the leasehold improvements for the Leased
Premises.
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1.
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Within five (5) days after the execution of this Lease, (“Initial Space Plan
Delivery Date”) Landlord shall furnish Tenant with its outline building specifications
consistent with Exhibit C sufficient for use by Tenant’s space planner. On or before
the Initial Space Plan Delivery Date, Tenant will prepare and submit for Landlord’s
review a space plan consistent with the requirements of Article IV below (the “Space
Plan”), which Space Plan will be used to prepare the Tenant Working Drawings (defined
below).
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2.
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Within five (5) business days after the Initial Space Plan Delivery Date,
Landlord will advise Tenant of any required changes to. the Initial Space Plan.
Additionally, at Tenant’s request Landlord will meet with Tenant on or before the
Initial Space Plan Review Date to confer informally on certain estimated costs and/or
potential time delays which Landlord may have identified with respect to any
improvements depicted in the initial Space Plan other than the Base Building Shell
Condition described in
Exhibit C.
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3.
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Tenant will prepare and deliver to Landlord working drawings for the Leased
Premises consisting of complete sets. of detailed architectural, structural,
mechanical, electrical and plumbing plans and specifications consistent with the
requirements of Article V below (“Tenant Working Drawings”).
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4.
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Within five (5) business days from Landlord’s receipt of the Tenant Working
Drawings, Landlord will review the Tenant Working Drawings as they relate to
coordination with the Building Standard Shell Condition improvements to be constructed
by Landlord. Landlord’s review shall not assess the accuracy or constructability of
the Tenant Working Drawings.
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5.
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Upon receipt of Landlord’s review of the Tenant Working Drawings, Tenant will
revise the Working Drawings to incorporate such revisions into the Final Working
Drawings. The Final Working Drawings shall be submitted to Landlord no later than the
Final Working Drawing Delivery Date. Landlord’s approval of the Tenant Working
Drawings shall acknowledge that the Tenant Working Drawings correctly depict the
proper layout of all improvements desired by Tenant for the Leased Premises.
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Exhibit D — Page 1
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6.
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Tenant may elect to engage Landlord to perform construction coordination
services for a fee not to exceed five percent (5%) of the cost of Tenant’s
Improvements.
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II.
CERTAIN PROVISIONS RELATING TO CONSTRUCTION
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1.
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The failure of Tenant to comply with the requirements of this
Exhibit
D
shall constitute a default by Tenant under this Lease.
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2.
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The following provisions shall apply to all work necessary or desirable to
prepare the Leased Premises for initial occupancy by Tenant (the “Tenant Work”):
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(a)
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Tenant’s Work shall be completed by Tenant. Landlord shall
provide the following in connection with Tenant’s Work at reasonable and
competitive rates, but the cost thereof shall be paid by Tenant as a part of
the costs of Tenant’s Work: after hour hoisting ($76.00 per hour) and
electrical power ($200.00 per floor per week)(there will be no fee charged for
vertical transportation during Tenant’s build-out, move-in or move-out in
excess of Landlord’s actual out-of-pocket costs), as provided by the General
Contractor constructing the Base Building.
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(b)
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The architects, engineers and contractors selected by Tenant to
perform Tenant’s Work shall be subject to the reasonable approval of Landlord.
Tenant’s Contractor shall perform Tenant’s Work in a first-class, workmanlike
manner, using only good commercial grades of materials, in accordance with this
Lease and the plans and specifications reasonably (where Landlord may consider,
without limitation, the compatibility and consistency with other tenant’s.
plans) approved hereunder, Landlord’s insurance requirements and with all
applicable governmental laws, ordinances, codes, rules and regulations, and
Tenant’s Work shall be subject to Landlord’s reasonable administrative
supervision. Tenant’s Work shall not commence until the Tenant’s Contractor has
delivered to Landlord a copy of the building permit issued for the Tenant’s
Work and evidence of insurance, both of which are satisfactory to Landlord in
all respects. Upon completion of Tenant’s Work, Tenant shall deliver to
Landlord evidence of payment, contractors’ affidavits and sworn statements,
full and final waivers of lien from contractors and subcontractors for labor,
services and materials and all other documents required by Landlord, together
with record drawings, in both electronic and paper form, reflecting as built
conditions of the Leased Premises.
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(c)
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Tenant shall indemnify, defend by counsel reasonably
acceptable to Landlord and hold harmless Landlord, Landlord’s beneficiaries,
the managing agent of the Project and their respective agents, partners and
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Exhibit D — Page 2
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employees and the Project of, from and against any and all liabilities,
losses, costs, charges, claims, damages, liens, fees and expenses, including
without limitation reasonable attorneys’ fees and expenses, relating to the
Tenant’s Work. Landlord shall permit Tenant and Tenant’s Contractor to have
reasonable access to the Leased Premises immediately upon completion of the
Base Building Shell Condition for purposes of constructing Tenant’s Work,
provided that Tenant and Tenant’s Contractor shall abide by the rules of the
site applicable to all contractors, shall coordinate and schedule their
access to the Premises for labor and materials delivery through the general
contractor for the Building, or the managing agent of the Project if so
directed by Landlord, and shall not interfere with or delay the work of the
general contractor for the Building or any other contractor working in
connection with the Project.
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(d)
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Any entry to the Project, the Building or the Premises by or on
behalf of Tenant or Tenant’s Contractor prior to the Commencement Date shall be
under and subject to all of the terms and provisions of this Lease, the same as
if the Commencement Date had occurred, except that Tenant shall not be
obligated to pay any Base Rent or Additional Rent prior to the Commencement
Date. To the extent not prohibited by law, all entry to the Project, the
Building or the Premises by or on behalf of Tenant or Tenant’s Contractor prior
to the Commencement Date shall be solely at the risk of Tenant and Tenant’s
Contractor, and Landlord, Landlord’s beneficiaries, the managing agent of the
Project and their respective agents, partners and employees shall not be liable
in any way, and Tenant hereby waives and releases them from any liability, for
any
injury or damage to or theft, robbery, pilferage, loss or loss of the use
of any property of. Tenant, Tenant’s Contractor or any other person or entity
or any of the Tenant’s Work in or about the Premises or the Project which
occurs during. such period; provided, however, Landlord, Landlord’s
beneficiaries, the managing agent of the Project and their respective. agents,
partners and employees shall be liable, and Tenant does not waive or release
them from liability, for their respective negligence or willful misconduct
which occurs during such period and causes any injury to or death of any
person. The foregoing waiver and release of claim shall be in addition to and
shall not limit or be limited by any other releases or waivers of claims in
this Lease.
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3.
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Except as provided in Paragraph 5, below, Tenant shall pay the cost of all the
Tenant’s Work, including without limitation the cost of all items necessary or
desirable to complete the Tenant’s Work, such as the fees and expenses arising out of
the preparation of Tenant’s Plans and Specifications, the fees and expenses of Tenant’s
Contractor, and the cost of the items described in the second sentence of Paragraph
3(a), above.
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Exhibit D — Page 3
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4.
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Landlord shall pay the Tenant Improvement Allowance to Tenant as follows:
installments of Tenant Improvement Allowance shall be paid by Landlord pro rata on the
basis of the total estimated cost for Tenant’s Work as such costs are incurred by
Tenant; provided, however; it shall be a condition to the obligation of Landlord to pay
amounts pursuant to this Paragraph 5 or Section 5.01(a) that Tenant shall have provided
Landlord with appropriate requests for payment, invoices, contractors’ affidavits and
sworn statements, contractors’ and subcontractors’ lien waivers, and other documents as
may be reasonably required (i) by Landlord to demonstrate the correctness of the amount
requested by Tenant, (ii) to induce the issuer of the policy of title insurance
insuring Landlord’s interest in the Development to issue an endorsement to the policy
of title insurance insuring Landlord’s interest in the Development to be subject to no.
mechanics’ liens or claims therefor resulting from the Tenant’s Work and (iii) to
satisfy any other conditions (including that Tenant demonstrate that it has sufficient
funds in addition to Tenant Improvement Allowance to complete the Tenant’s Work and pay
any invoiced amounts for Tenant’s Work in excess of Tenant’s Improvement Allowance) as
may be reasonably imposed by Landlord. Upon completion of Tenant’s Work, and provided
that Tenant has satisfied all of the conditions for payment of Tenant Improvement
Allowance described in this Paragraph 5 and Section 5.01(a) of the Lease and has taken
possession of all of the Leased Premises for purposes of conducting its business,
Tenant may elect, upon written notice thereof to Landlord delivered within three (3)
months after the Commencement Date, to apply any portion of the Tenant Improvement
Allowance not needed for the payment in full of the cost of Tenant’s Work (such amount
being hereafter referred to as the “Balance”) towards (x) the cost of moving,
installation of telephone, data systems and cabling, furniture, plans and
specifications and professional services, to the extent the same are related to this
lease or Tenant’s moving into the Premises, or until the Balance is applied in full (y)
an abatement of Rent payable under the Lease (after the initial month’s Rent) until the
Balance is applied in full, provided that if Tenant is in default under this Lease at
the time when an installment of Rent is due, such abatement shall instead be deferred
and applied against the next portion of Rent coming due after such default has been
cured.
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III.
MINIMUM INFORMATION REQUIRED FOR SPACE PLAN
The Space Plan shall include drawings, plans and specifications prepared by Tenant’s architect
showing the intended design, character and finishes of the Leased Premises, including partitions
and door locations, all in sufficient detail to enable the Tenant Working Drawings to be prepared.
IV.
MINIMUM INFORMATION REQUIRED OF INITIAL WORKING DRAWINGS
Floor Plans Indicating:
Exhibit D — Page 4
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1.
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Location and type of all partitions.
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2.
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Location and types of all doors — indicate hardware and provide keying
schedule.
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3.
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Location and type of glass partitions, windows and doors — indicate framing if
not part of Building Standard Shell Condition.
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4.
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Location of telephone equipment room accompanied by an approval of the
telephone company if required.
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5.
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Indicate critical dimensions necessary for construction, such as millwork,
special partitions, etc.
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6.
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Location of all electrical items — outlets, switches, telephone outlets.
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7.
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Location and type of all non-building electrical items, including lighting.
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8.
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Location and type of equipment that will require special electrical
requirements. Provide manufacturers’ specifications for use and operation.
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9.
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Location, weight per square foot and description of any exceptionally heavy
equipment or filing system exceeding 50 psf live load except in areas designed
specifically for special Tenant loads.
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10.
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Requirement for special air conditioning or ventilation.
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11.
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Type and locations of all finishes.
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12.
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Location and type of plumbing equipment and services.
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13.
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Location and type of kitchen equipment and services.
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14.
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Location of all HVAC controls, fire alarm, security and life safety equipment.
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15.
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Location and type of all graphics. and signage.
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16.
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Location of all Tenant fixtures, furniture and equipment (“FF&E”).
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17.
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Location and size of any floor openings required. Also include structural
loading data for vaults, vault walls, slab depressions, special stairs, file rooms,
elevators, libraries, etc.
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Details Showing:
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1.
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All millwork with dimensions and dimensions of all equipment to be built-in.
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2.
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Corridor entrance.
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3.
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Bracing or support of special walls, glass partitions, etc., if desired. If not
included with the Tenant Space Plan, the Building architect will design, at Tenant’s
expense, all support or bracing required.
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VI.
DEFINITIONS
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1.
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“Initial Space Plan Delivery Date” shall mean the date Tenant delivers to
Landlord a copy for its review and comment an Initial Space Plan as defined for all of
Tenant’s Leased Premises (“Tenant’s Space Plans”).
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2.
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“Initial Space Plan Review Date” shall mean the date Landlord provides Tenant
comments on the Tenant’s initial Space Plan consistent with Section IV, above.
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Exhibit D — Page 5
3. “Final Space Plan Delivery Date” shall mean the date Tenant delivers to Landlord its
final version of Tenant’s Space Plan (“Tenant’s Final Space Plan”), revised to reflect
Landlord’s comments.
4. “Initial Working Drawing Delivery Date” shall mean the date Tenant delivers to Landlord a
fully coordinated and complete set of detailed architectural, structural, mechanical,
electrical and plumbing plans and specifications (“Tenant’s Working Drawings”) based upon
the Tenant’s Final Space Plan.
5. “Initial Working Drawing Review Date” shall mean the date Landlord provides Tenant
comments on Tenant’s initial Working Drawings.
6. “Final Working Drawing Delivery Date” shall mean the date Tenant provides Landlord
Tenant’s Working Drawings revised to incorporate comments made in Landlord’s Initial Working
Drawing Review (“Tenant’s Final Working Drawings”).
Exhibit D — Page 6
EXHIBIT E — AIR CONDITIONING AND HEATING SERVICES
Subject to the provisions of Section 3.01(b), Landlord will furnish Building Standard air
conditioning and heating between 8 a.m. and 6 p.m. on weekdays (from Monday through Friday,
inclusive) and between 8 a.m. and 1:00 p.m. on Saturdays, all exclusive of Holidays as defined
below (the “Building Operating Hours”). Upon request of Tenant made in accordance with the rules
and regulations for the Building, Landlord will furnish air conditioning and heating at other times
(that is, at times other than the times specified above), in which event Tenant shall reimburse
Landlord for Landlord’s actual cost of furnishing such services, plus an amount equal to fifteen
percent (15%) of such costs to cover Landlord’s administrative costs.
The Building Standard heating, ventilation and air conditioning system shall meet the
following design conditions, at the stated outside design conditions, based on one person per 100
square feet:
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1.
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Summer — Outdoor conditions 92 degrees Fahrenheit dry bulb, 75
degrees Fahrenheit wet bulb; indoor conditions 75 degrees Fahrenheit dry bulb,
50% relative humidity at design condition.
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2.
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Winter — Outdoor conditions. minus 16 degrees Fahrenheit dry
bulb; indoor conditions 72 degrees Fahrenheit dry bulb.
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The following dates shall constitute “Holidays” as said term is used in this Lease:
|
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(a)
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New Year’s Day
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(b)
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Memorial Day
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(c)
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Independence Day
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(d)
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Labor Day
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(e)
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Thanksgiving Day
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(f)
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Christmas
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Building standard hours of operation shall include all days that the New York Stock Exchange
is open for business.
Exhibit E — Page 1
EXHIBIT F — BUILDING RULES AND REGULATIONS
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1.
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Sidewalks, doorways, vestibules, halls, stairways, and other similar areas shall not be
used for the disposal of trash, be obstructed by tenants, or be used by tenants for any
purpose other than entrance to and exit from the Leased Premises and for going from one
part of the Building to another part of the Building.
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2.
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Plumbing fixtures shall be used only for the purposes for which they are designed, and no
sweepings, rubbish, rags or other unsuitable materials shall be disposed into them. Damage
resulting to any such fixtures from misuse by a tenant shall be the liability of said
tenant.
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|
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3.
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Signs, advertisements, or notices visible in or from public corridors or from outside the
Building shall be subject to Landlord’s prior written approval.
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4.
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Movement in or out of the Building of furniture, office equipment, or any other bulky or
heavy materials shall be restricted to such hours as Landlord shall reasonably designate.
Landlord will determine the method and routing of said items so as to ensure the safety of
all persons and property concerned. Advance written notice of intent to move such items must
be made to the Building management office.
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5.
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All routine deliveries to a tenant’s Leased Premises during 8:00 a.m. to 5:00 p.m. weekdays
shall be made through the freight elevators. Passenger elevators are to be used only for the
movement of persons, unless an exception is approved by the Building management office.
Delivery vehicles shall be permitted only in such areas as are designated by Landlord, from
time to time, for deliveries to the Building.
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6.
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Building management shall have the authority to prescribe the manner that heavy furniture
and equipment are positioned.
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7.
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Corridor doors, when not in use, shall be kept closed. Tenant space that is visible from
public areas must be kept neat and clean.
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8.
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Tenant Space that is visible from public areas must be kept neat and clean.
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|
9.
|
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All freight elevator lobbies are to be kept neat and clean. The disposal of trash or
storage of materials in these areas is prohibited.
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|
10.
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No animals shall be brought into or kept in, on or about the Building, except for
seeing-eye dogs.
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|
|
11.
|
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Tenant shall not tamper with or attempt to adjust temperature control thermostats in the
Leased Premises. Landlord shall adjust thermostats as required to maintain the Building
standard temperature.
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Exhibit F — Page 1
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12.
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Tenant will comply with all security procedures during business hours and after hours and on
weekends.
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|
13.
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Tenants are requested to lock all office doors leading to corridors and to turn out all
lights at the close of their working day.
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|
|
14.
|
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All requests for overtime air conditioning or heating must be submitted in writing to the
Building management office by 2:00 p.m. on the day desired for weekday requests, by 2:00 p.m.
Friday for weekend requests and by 2:00 p.m. on the preceding business day for holiday
requests.
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|
15.
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No flammable or explosive fluids or materials shall be kept or used within the Building
except in areas approved by Landlord, and Landlord and Tenant shall comply with all applicable
building and fire codes relating thereto.
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16.
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Tenant may not place any items on the balconies of the Building that alter the exterior
appearance of the Building without obtaining Landlord’s prior written consent.
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17.
|
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Any motor vehicle exceeding the height restrictions of the Parking Facility shall not be
parked at any location on the Land or Parking Area.
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|
|
18.
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Tenant may not make any modifications, additions or repairs to the Leased Premises and may
not install any furniture, fixtures or equipment in the Leased Premises which is in violation
of any applicable building and/or fire code governing the Leased Premises or the Building.
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19.
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Except in those areas designated by Landlord, if any, smoking is prohibited in the Building
(including, but not limited to, the Leased Premises, the main building lobby, public
corridors, elevator lobbies, service elevator vestibules, stairwells, restrooms and other
common areas within the Building).
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20.
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All Tenant contractors shall abide by the contractor’s rules and regulations promulgated by
Landlord from time to time.
|
Landlord reserves the right to rescind any of these rules and regulations and to make such other
and further rules and regulations as in its. reasonable judgment shall, from time to time, be
required for the safety, protection, care and cleanliness of the Building, the operation thereof,
the preservation of good order therein and the protection and comfort of the tenants and their
agents, employees and invitees. Such rules and regulations, when made and written notice thereof is
given to a tenant, shall be binding upon it in like manner as if originally herein prescribed.
Exhibit F — Page 2
EXHIBIT G RENTABLE SQUARE FEET AND COMMENCEMENT DATE
Rentable Square Feet of Leased Premises: 40,000 square feet
The above Calculation represents Landlord’s final determination of the Rentable Square Feet
of Tenant’s Leased Premises and shall be used to define the Rentable Square Feet of the Leased
Premises for purposes of Section 1.01(c) of the Lease between Landlord and Tenant to which this
Exhibit G
is attached.
The below date represents Landlord’s determination of the Commencement Date, as defined in
Section 1.02(b) of the Lease between Landlord and Tenant to which this
Exhibit G
is
attached, and shall be deemed to be the Commencement Date for all purposes under the Lease.
Commencement Date: November 1, 2000
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LANDLORD:
NASHVILLE HINES DEVELOPMENT, LLC
|
|
|
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By:
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/s/ Thomas J. Danilek
|
|
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|
|
|
Name:
|
Thomas J. Danilek
|
|
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|
|
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Title:
|
Senior Vice President
|
|
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|
|
TENANT:
ROBERT W. BAIRD & CO. INCORPORATED
|
|
|
|
By:
|
/s/ James D. Bell
|
|
|
|
|
|
Name:
|
James D. Bell
|
|
|
|
|
|
Title:
|
Managing Director / CAO
|
|
|
|
EXHIBIT H — BASE RENTAL
|
|
|
|
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|
|
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|
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|
|
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|
|
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Year
|
|
Commencing
|
|
|
Rent
|
|
|
Rentable Square Feet*
|
|
Base Rental
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
$
|
23.90
|
|
|
40,000
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
$
|
24.62
|
|
|
40,000
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
$
|
25.36
|
|
|
40,000
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
$
|
26.12
|
|
|
40,000
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
$
|
26.90
|
|
|
40,000
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
|
|
$
|
27.71
|
|
|
40,000
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7
|
|
|
|
|
|
$
|
28.54
|
|
|
40,000
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8
|
|
|
|
|
|
$
|
29.39
|
|
|
40,000
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
|
|
|
|
$
|
30.28
|
|
|
40,000
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
|
|
|
|
|
|
$
|
31.18
|
|
|
40,000
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Actual rentable square footage to be determined in accordance with the Lease
|
Exhibit H — Page 1
EXHIBIT I — RULES APPLICABLE TO SATELLITE DISHES
Rules and Regulations Regarding the Location of Satellite Dish Antenna on Roof
A satellite dish antenna (“Antenna”) will be permitted in the area of the roof of the
building designated in Section 9.06 of the Lease for so long as the Tenant occupies the Leased
Premises, provided that the Tenant agrees to comply with the following requirements:
1. Tenant will pay all costs and expenses related to the installation of the Antenna.
2. Prior to the installation of the equipment, Tenant shall submit to Landlord for Landlord’s
prior written approval, which approval shall not be unreasonably withheld or delayed so long as
the equipment cannot be seen from the ground or from any tenant space, (i) reasonably detailed
plans and specifications showing all alterations and improvements to the roof (including, but not
limited to, all work relating to the installation of the Antenna on the roof) and (ii) the name of
Tenant’s contractor. Landlord shall have the right to request such other information relating to
the Antenna as Landlord may reasonably determine to be necessary.
3. Tenant shall obtain, and shall maintain during the term of this agreement, at its sole
cost and expense, all governmental approvals, consents, permits and licenses required to install,
maintain, transmit and/or operate the Antenna and shall pay any penalties imposed by reason of
violations. of laws, ordinances, rules.. and regulations. Tenant shall deliver copies of all such
approvals, consents, permits and/or licenses to Landlord prior to the installation of the Antenna.
4. Tenant shall maintain, repair and replace the Antenna at its sole cost and expense. Upon
the expiration of the Tenant’s lease, Tenant shall remove the Antenna and all conduits and cables.
appurtenant thereto, and shall restore the building’s roof to the condition existing prior to said
installation, less ordinary wear and tear.
5. Landlord
hereby grants to Tenant the right, upon reasonable prior notice to Landlord, to
enter upon the building’s roof in connection with the installation, maintenance, inspection,
repair, replacement and/or removal of the Antenna so long as a representative of the Landlord
accompanies the Tenant or its agents.
6. Tenant hereby agrees to hire Landlord’s base building roof contractor to do all work
involving the building’s roof, and any penetrations thereto, and warrants that such work shall not
violate the provisions of any warranty relating to the roof.
7. Tenant acknowledges and agrees that, in connection with an assignment of the lease or
sublease of all or part of the premises, Tenant shall not have the right to assign its rights
under this Exhibit or grant permission to any person or entity to use the Antenna without
obtaining the prior
Exhibit I — Page 1
written consent of Landlord in each instance, which consent Landlord may withhold in its discretion
except with respect to parents, subsidiaries or affiliates of Tenant.
8. Tenant covenants and agrees that the Antenna shall be used solely for the transmission and
receipt of information relating to Tenant’s operations at the Project. Tenant covenants and agrees
further that the Tenant shall not permit any other person or entity to use the equipment for
transmitting or receiving information or data, and that Tenant shall not sell such information,
data or data processing services to any person or entity.
9. Tenant shall indemnify and defend Landlord against any and all claims, loss, costs,
damages, expenses or liabilities, including, without limitation, reasonable attorney’s fees and
disbursements for any injury or damage to any person or property whatsoever, when such injury or
damage has been caused in part or in whole by any act, fault or omission of Tenant, its agents,
employees, or invitees, or arises out of or in connection with the operation, use, maintenance,
repair, replacement and/or removal of the Antenna.
10. Tenant shall not in any way interfere with the transmission or reception of antennas,
dishes or other microwave equipment located on the roof of the building which existed prior to the
installation of the Antenna. Tenant agrees that if the Antenna interferes with the transmission or
reception of any antenna, dish or other microwave equipment installed prior to the installation of
the Antenna, then Tenant shall relocate promptly, or cause to be relocated. promptly, the Antenna
at its sole cost and expense.
11. If any antenna, dish or other microwave equipment installed on the roof of the building
after the installation of the Antenna interferes with the transmission or reception of the Antenna,
then Landlord agrees. to cause said antenna,- dish or other microwave equipment to be relocated:.
In addition,. if the method, type or direction of transmission from, or the reception by, any
antenna, dish or other microwave equipment on the roof of the building is altered. or changed after
the installation of the Antenna, and if such alteration or change results in said antenna, dish. or
other microwave equipment interfering with the transmission or the reception of the Antenna, . then
Landlord agrees to cause said antenna, dish or other microwave equipment to be relocated promptly
or to cause the owner of said antenna, dish or other microwave equipment to undo promptly the
alteration or change.
12. All notices provided for in this Exhibit shall be in writing and given to the parties at
the addresses set forth in the Lease Agreement, or at such address as the parties hereto may
hereinafter specify in writing.
13. If any provision of this Exhibit shall be held invalid or unenforceable according to law,
the remaining provisions herein shall not be affected thereby and shall continue in full force and
effect.
Exhibit I — Page 2
EXHIBIT J — VISITOR PARKING AREA
Exhibit I — Page 3
EXHIBIT
B TO SUBLEASE
SUBLEASED PREMISES
