1.1

AFFILIATE of a party hereto shall mean any entity that controls or is controlled by such party, or is under common control with such party. For purposes of this definition, an entity shall be deemed to control another entity if it owns or controls, directly or indirectly, at least fifty percent (50%) of the voting equity of another entity (or other comparable interest for an entity other than a corporation).

1.2

BATCH shall mean a specific quantity of a Drug Product comprising a number of units mutually agreed upon between CLIENT and ALTHEA, and that (a) is intended to have uniform character and quality within specified limits, and (b) is produced according to a single manufacturing order during the same cycle of manufacture.

1.3

BULK DRUG SUBSTANCE shall mean the active compound, as set forth in the Project Plan, to be supplied by CLIENT for use in Production of Drug Product.

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1.4

cGMP shall mean current Good Manufacturing Practices as defined in the FDA rules and regulations, 21 CFR Parts 210-211.

1.5

CANCELLATION FEES shall mean the fees payable by CLIENT in the event that CLIENT cancels the Production of any Batch of Drug Product set forth in the Project Plan, except in the event of a default by ALTHEA as set forth in Section 3.3.

1.6

COMPONENTS shall mean all Components used by ALTHEA in Production of Drug Product under this Agreement. Components are listed in the Project Plan, such Components identified as Components supplied by CLIENT (“CLIENT Supplied Components”) and Components supplied by ALTHEA (“ALTHEA Supplied Components”).

1.7

CONFIDENTIAL INFORMATION shall mean all information and data provided by one party to the other party except any portion of such information and data which:

(i)

is known to the recipient as evidenced by its written records before receipt thereof from the disclosing party;

(ii)

is disclosed to the recipient by a third person who has the right to make such disclosure;

(iii)

is or becomes part of the public domain through no fault of the recipient; or

(iv)

the recipient can reasonably establish is independently developed by recipient without use of the information disclosed by the disclosing party.

1.8

ALTHEA SOPs shall mean ALTHEA’s Standard Operating Procedures which shall be deemed reviewed and approved by CLIENT prior to entering into each Project Plan.

1.9

DEVELOPMENT shall mean studies, if any, conducted by ALTHEA to develop a process to Produce Drug Product, in accordance with the Specifications and cGMP. Development activities, if any, shall be identified in the Development & Regulatory Plan.

1.10

DRUG PRODUCT shall mean each pharmaceutical product set forth in a Project Plan to be Produced by ALTHEA in bulk or finished dosage form for development and/or clinical use only.

1.11

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

1.12

FD&C ACT shall mean the United States Federal Food, Drug and Cosmetic Act, as may be amended from time to time.

1.13

IND shall mean an Investigational New Drug Exemption Application for Drug Product, as defined in the United States Food and Drug Administration (FDA) rules and regulations, 21 CFR.

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1.14

LABELING shall mean all labels and other written, printed, or graphic matter upon: (i) Drug Product or any container, carton, or wrapper utilized with Drug Product or (ii) any written material accompanying Drug Product.

1.15

MASTER BATCH RECORD (MBR) shall mean the formal set of instructions for Production of Drug Product. The MBR shall be developed and maintained in ALTHEA’s standard format by ALTHEA, using CLIENT’s master formula and technical support.

1.16

PRODUCTION or PRODUCE shall mean the formulation (if any), filling, lyophilization, packaging, inspection, labeling, and testing of Drug Product by ALTHEA.

1.17

PRODUCT SPECIFICATION SHEET shall mean a listing of the analytical testing and corresponding Specifications, to be performed on the Bulk Drug Substance and Drug Product in connection with the stability program.

1.18

PROJECT PLAN shall mean the document containing the parameters for Production of Drug Product which shall be developed by ALTHEA and agreed to in writing by CLIENT for each Drug Product under this Agreement. Prior to commencing Production of any Drug Product, ALTHEA shall deliver two (2) signed originals of the Project Plan to CLIENT. CLIENT shall sign both originals of the Project Plan and return one (1) fully executed original to ALTHEA. Each fully executed Project Plan shall be incorporated by reference and made a part of this Agreement. ALTHEA shall have no obligation for Production of a Drug Product until CLIENT has executed and returned the Project Plan for such Drug Product to ALTHEA.

1.19

PURCHASE PRICE shall mean the amount to be paid by CLIENT as specified in each Project Plan.

1.20

REGULATORY AUTHORITY shall mean those agencies or authorities responsible for regulation of Drug Product in the United States and overseas. ALTHEA shall have no obligation to Produce Drug Product in compliance with the requirements of a Regulatory Authority not specified in the applicable Project Plan.

1.21

RELEASED EXECUTED BATCH RECORD shall mean the completed Batch record and associated deviation reports, investigation reports, and Certificates of Analysis created for each Batch of Drug Product produced according to the applicable Project Plan.

1.22

SPECIFICATIONS shall mean those specifications set forth in Product Specification Sheet and the Master Batch Record for Drug Product, and to the extent that ALTHEA is required to test the Bulk Drug Substance, for the Bulk Drug Substance.

2.1

Initiation: Upon execution of this Agreement and the corresponding Project Plan for each Drug Product, ALTHEA shall commence Production of such Drug Product pursuant to the Project Plan.

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2.2

Documentation: The Master Batch Record shall be reviewed and approved by ALTHEA and by CLIENT prior to commencement of Production. Any material change to an approved Master Batch Record will be reviewed and approved by ALTHEA and by CLIENT prior to said change being implemented. Each Batch of Drug Product shall be Produced by using a copy of the Master Batch Record. Each copy of the Master Batch Record for such Batch of Drug Product shall be assigned a unique batch number. Any deviation from the manufacturing process specified in the Master Batch Record must be documented in the copy of the Master Batch Record for that Batch. ALTHEA shall provide CLIENT with required supporting Development and Production documentation in a form reasonably suitable and sufficient for CLIENT’s submission to the FDA.

2.3

Bulk Drug Substance and Components Supply: CLIENT, at its sole cost and expense (including, without limitation, shipping costs), shall supply to ALTHEA, in a timely manner, (a) all Bulk Drug Substance required to satisfy the terms of this Agreement and (b) all other CLIENT Supplied Components, all to be delivered to ALTHEA as set forth in the applicable Project Plan for Production of such Drug Product. Except as may otherwise be set forth specifically in the Project Plan, on receipt of the Bulk Drug Substance and CLIENT Supplied Components as set forth above, ALTHEA’s sole obligation with respect to evaluation of the Bulk Drug Substance and CLIENT Supplied Components shall be to review the accompanying certificate of analysis to confirm that the Bulk Drug Substance and CLIENT Supplied Components (if applicable) conform with the Specifications and component specifications, respectively.

2.4

Bulk Drug Substance and Component Delivery Delays : ALTHEA shall have no responsibility for delays in delivery of Drug Product caused by delays in receipt of Bulk Drug Substance or CLIENT Components. Notwithstanding anything in this Agreement to the contrary, in the event that ALTHEA receives the Bulk Drug Substance for Production of Drug Product from CLIENT with less time than requested in the applicable Project Plan prior to the scheduled date of Production of such Drug Product, but within sufficient time to Produce such Drug Product on such scheduled date, as determined in good faith by ALTHEA, ALTHEA shall Produce such Drug Product as per the original schedule and CLIENT shall be responsible for any additional costs incurred by ALTHEA as a result of such situation, such additional costs not to exceed Five Thousand Dollars ($5000.00). Notwithstanding anything in this Agreement to the contrary, in the event that ALTHEA receives the Bulk Drug Substance for Production of Drug Product from CLIENT with less time than requested in the applicable Project Plan prior to the scheduled date of Production of such Drug Product, but without sufficient time to Produce such Drug Product on the scheduled date, as determined in good faith by ALTHEA, ALTHEA shall reschedule Production of such Drug Product and shall charge CLIENT the applicable Cancellation Fee.

2.5

Importer of Record: In the event any material or equipment to be supplied by CLIENT, including without limitation CLIENT Supplied Components and Bulk Drug Substance, is imported into the United States for delivery to ALTHEA (“Imported Goods”), CLIENT shall be the “Importer of Record” of such Imported Goods. As the Importer of Record, CLIENT shall be responsible for all aspects of the Imported Goods including, without limitation (a) customs and other regulatory clearance of Imported Goods, (b) payment of all tariffs, duties, customs, fees, expenses and charges payable in connection with the importation and delivery of the Imported Goods, and (c) keeping all records, documents,

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2.6

Material Safety Data Sheet : CLIENT shall provide ALTHEA a Material Safety Data Sheet for Bulk Drug Substance and for each Drug Product. ALTHEA shall immediately notify CLIENT of any unusual health or environmental occurrence relating to Drug Product, including, but not limited to any claim or complaint by any employee of ALTHEA or any of its Affiliates or third party that the operations of ALTHEA pursuant to this Agreement have resulted in any adverse health or safety effect on an employee or third party. ALTHEA agrees to advise CLIENT immediately of any safety or toxicity problems of which it becomes aware regarding the Drug Product.

2.7

Vendor and Supplier Audit and Certification : CLIENT shall certify and audit all Drug Product-related vendors and suppliers, or approve ALTHEA’S selection of vendors and suppliers by way of signing this agreement.

2.8

Delivery Terms: ALTHEA shall ship all Drug Product to CLIENT or to CLIENT’s designated consignee. All shipments shall be shipped FOB ALTHEA, by a common carrier designated by CLIENT, at CLIENT’s expense; provided, however, ALTHEA shall be responsible for the loading of the Drug Product on departure and shall bear risk of loss and all costs of such loading. CLIENT shall procure, at its cost, insurance covering damage or loss of Drug Product during shipping. All shipping instructions of CLIENT shall be accompanied by the name and address of the recipient and the shipping date.

2.9

Exporter of Record: CLIENT shall be the exporter of record for any Product shipped out of the United States, as CLIENT remains the owner of the Product. CLIENT warrants that all shipments of Product exported from the United States will be made in compliance with all applicable United States export laws and regulations and all applicable import laws and regulations into the country of deportation.

2.10

Foreign Corrupt Practices Act . Each party to this Agreement represents and warrants that it has not paid, and covenants that it will not pay, anything of value to any government employee in connection with the production or resale of the Product.

2.11

Deposits and Payment for Drug Product and Development: Promptly upon signing of each Project Plan and receipt of an invoice by ALTHEA, CLIENT shall pay to ALTHEA fifty percent (50%) of the total fees of this agreement. Thereafter ALTHEA will invoice CLIENT monthly, based on the specific services completed during the month. The final invoice for the Drug Product will be issued upon the delivery of released Drug Product to CLIENT by ALTHEA. CLIENT shall pay all invoices within thirty (30) days of the invoice date therefore. Any payment due under this Agreement not received within the times noted above shall bear interest at the lesser of (a) the maximum rate permitted by law, and (b) 1.5% per month on the outstanding balance compounded monthly.

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2.12

Default in Payment Obligations: In addition to all other remedies available to ALTHEA in the event of a CLIENT default, if CLIENT fails to make payments as required hereunder, ALTHEA may take appropriate measures to assure prompt and full payment, including refuse to Produce any Drug Product until CLIENT’s account is paid in full, modify the foregoing terms of payment, place the account on a letter of credit basis, require full or partial payment in advance, suspend deliveries of Drug Product until CLIENT provides assurance of performance reasonably satisfactory to ALTHEA, and/or take other reasonable means as ALTHEA may determine.

3.1

Term: This Agreement shall commence on the date first above written and will continue until the Production activities, as described in the Project Plan, have been completed, unless sooner terminated pursuant to Section 3.2 herein (the “Term”).

3.2

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

3.2.1

Termination for Breach: Either party may terminate this Agreement upon the breach of any provision of this Agreement by the other party if such breach is not cured by the breaching party within thirty (30) calendar days (or such additional time reasonably necessary to cure such default provided the breaching party has commenced a cure within the thirty (30) day period and is diligently pursuing completion of such cure) after receipt by the breaching party of written notice of such default. At the option of the non-breaching party, such termination may be with respect to the entire Agreement, or only with respect to the Drug Product that is subject to the breach.

3.2.2

Termination for Financial Matters : This Agreement may be terminated immediately by either party by giving the other party written notice thereof in the event such other party makes a general assignment for the benefit of its creditors, or proceedings of a case are commenced in any court of competent jurisdiction by or against such party seeking (a) such party’s reorganization, liquidation, dissolution, arrangement or winding up, or the composition or readjustment of its debts, (b) the appointment of a receiver or trustee for or over such party’s property, or (c) similar relief in respect of such party under any law relating to bankruptcy, insolvency, reorganization, winding up or composition or adjustment of