Sample Business Contracts


Supply Agreement - Pharmaceutical Group of Mallinckrodt Inc. and DrugAbuse Sciences Inc.


                    DRUGABUSE SCIENCES, INC. SUPPLY AGREEMENT

         This Supply Agreement is made and entered into effective on and as of
June 9, 2000 by and between the Pharmaceutical Group of Mallinckrodt Inc.
("Mallinckrodt") and DrugAbuse Sciences ("DAS").

         WHEREAS, DAS has need of a certain compound known as Naltrexone Base
Anhydrous (hereinafter "Product") and is desirous of having Product
manufactured and supplied by Mallinckrodt on the conditions set forth herein;
and

         WHEREAS, Mallinckrodt currently manufactures and markets Product and is
capable and desirous of undertaking the supply of Product for DAS in accordance
with the terms and conditions set forth herein;

         NOW, THEREFORE, in consideration of the promises, covenants and
representations of the parties set forth herein, and other good and sufficient
consideration receipt of which is hereby acknowledged, DAS and Mallinckrodt
agree as follows:

         1.   SUPPLY OF PRODUCT.

              (a)  For the consideration provided herein and in accordance
                   with all terms, conditions, representations and warranties
                   set forth herein, and for the term hereof, Mallinckrodt
                   will provide DAS with such amounts of Product as DAS shall
                   request. DAS agrees that it shall purchase at least
                   [******] of its requirements for Product from Mallinckrodt
                   hereunder during every Contract Year during the term of
                   this Agreement. For purposes of the preceding sentence
                   "Contract Year" shall mean (i) for the first year of this
                   Agreement, the period beginning on June 9, 2000 and ending
                   on June 30, 2001, and (ii) for each year thereafter during
                   the term of this Agreement, the twelve (12) month period
                   beginning on July 1 and ending on June 30. All Product
                   supplied hereunder shall be manufactured by Mallinckrodt
                   strictly in accordance with the Specifications (defined
                   below) and current Good Manufacturing Practices ("cGMP")
                   as determined by the United States Food and Drug
                   Administration ("FDA") using the manufacturing process
                   described in Mallinckrodt's Drug Master File. If and as
                   applicable, Mallinckrodt shall comply with the cGMP of
                   those countries outside the United States represented on
                   Exhibit B.

              (b)  The specifications for Product (including, without
                   limitation, specifications for all components and raw
                   materials, whether active or inactive) are described on
                   Exhibit A attached hereto ("Specifications").

              (c)  Notwithstanding anything to the contrary herein and if,
                   for any Contract Year after the first Contract Year of
                   this Agreement, Mallinckrodt is unable to supply DAS with
                   such quantities of Product as DAS shall order hereunder,
                   the minimum amount of Product that Mallinckrodt shall be
                   obligated to supply to DAS in any given Contract Year
                   thereafter, shall be that amount of Product ordered by DAS
                   in any such subsequent Contract Year which represents the
                   [******] sold by Mallinckrodt to all unaffiliated parties
                   and to other Mallinckrodt business

[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION, CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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          CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED
          AND FILED SEPARATELY WITH THE COMMISSION, CONFIDENTIAL TREATMENT
          HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

              units in such subsequent Contract Year as the [******] in the
              immediately previous Contract Year bears to the [******] of all
              forms of [******] to all [******] and to [******] business
              units in such immediately previous Contract Year.

    2.   RAW MATERIALS.

         Subject to the provisions of Section 4 below, all raw materials and
         other resources required in connection with the production of Product
         to be supplied hereunder shall be provided by Mallinckrodt [******].

    3.   QUALITY CONTROL.

         (a)  Mallinckrodt will take all steps reasonably necessary to ensure
              that it has the facilities, equipment, instrumentation, resources
              and trained personnel to provide all raw materials, in-process and
              product assays, analysis and other testing (including preparing,
              submitting and maintaining a foreign Drug Master File for Product
              if required by DAS), as compliance with cGMP standards, other FDA
              standards, or the standards of the regulatory agencies of European
              countries listed in Exhibit B may require in connection with
              Mallinckrodt's supply of Product. Mallinckrodt shall provide a
              complete certificate of analysis for each lot of Product supplied
              hereunder at the time of shipment.

         (b)  Mallinckrodt shall maintain complete and accurate documentation of
              all validation data, stability testing data, batch records,
              quality control and laboratory testing and any other data required
              under cGMP or other FDA requirements or the requirements of the
              regulatory agencies of European countries listed in Exhibit B in
              connection with the supply of Product hereunder.

         (c)  Mallinckrodt warrants that it will not engage in any act which
              causes any packaged and labeled Product produced by Mallinckrodt
              to become adulterated or misbranded, and agrees that such Product
              will not be adulterated or misbranded, within the meaning of the
              federal Food, Drug and Cosmetic Act, as amended, when Product is
              delivered to DAS.

         (d)  Mallinckrodt agrees to inform DAS of any significant changes
              related to the Product Drug Master File ("DMF") that would
              required a NDA supplement from DAS, and Mallinckrodt agrees to
              continue to supply unmodified Product to DAS as ordered under the
              terms of and subject to the conditions and limitations of this
              Agreement for a maximum of two (2) years after DAS is informed in
              writing of the new DMF change filing with all applicable
              regulatory agencies.

    4.   COMPENSATION SERVICES PERFORMED BY MALLINCKRODT.

         (a)  For each kilogram of Product supplied hereunder produced in
              accordance with the requirements hereof, DAS shall pay
              Mallinckrodt, for Product to

[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION, CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

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          CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED
          AND FILED SEPARATELY WITH THE COMMISSION, CONFIDENTIAL TREATMENT
          HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

              be produced and delivered in any particular Contract Year during
              the term hereof; as follows (the "Product Price"):

              (i)   [******]

              (ii)  [******] and

              (iii) [******]; for the sake of clarity, this means that if, for
                    example, [******]

              The Product Price set forth in the immediately preceding
              sentence shall be firm through the first Contract Year ending
              on June 30, 2001, the date of June 30 (since it is the end of
              every Contract Year during the term hereof) being hereinafter
              referred to as the "Adjustment Date." From and after the
              Adjustment Date, the Product Price shall be adjusted upward or
              downward (as the case may be) to reflect actual increases or
              decreases in the cost to Mallinckrodt of all raw materials,
              directly associated regulatory compliance costs and all
              directly allocated labor (all of which costs are hereinafter
              referred to at "Product Costs"), in accordance with the
              following procedures; provided, however, that if the Product
              Price increases in any year by more than [******] Mallinckrodt
              agrees that DAS can hire, at its own expense, an independent
              third party to audit Mallinckrodt's books and records to
              determine whether Mallinckrodt's increase in the Product Price
              complies with the terms of this Agreement. Within [******]
              prior to the end of each Contract Year hereunder during the
              term hereof, Mallinckrodt will notify DAS in writing of the
              amount by which its Product Costs hereunder have increased or
              decreased during the immediately preceding Contract Year period
              and the adjusted Product Price to be charged for the Contract
              Year [******] just commenced as a consequence of such increases
              or decreases ("Annual Adjustment Notice"). The amount of any
              increase or decrease in the Product Price as set forth in any
              Annual Adjustment Notice shall be effective for all Product
              invoiced by Mallinckrodt to DAS in accordance herewith during
              the Contract Year for which such Annual Adjustment Notice is
              issued.

         (b)  At the time of shipment by Mallinckrodt to DAS of any lot of
              Product hereunder, Mallinckrodt shall submit to DAS an invoice
              setting forth the total amount of Product being shipped to DAS and
              the amount due to Mallinckrodt under subscate of analysis and a
              certification that the Product for which DAS is being billed has
              been produced fully in conformance with applicable Specifications,
              cGMP and the requirements hereof. Any such invoice shall be
              payable by DAS in United States dollars [******].

    5.   FORECASTS, ORDER PLACEMENT AND DELIVERY.

         (a)  Three (3) months prior to anticipated manufacture of Product,
              Mallinckrodt will notify DAS in writing of the anticipated
              manufacture date. No less than [******] prior to the
              anticipated manufacture date that has been provided by
              Mallinckrodt to DAS in accordance with the preceding sentence,
              [******] (in accordance with the requirements and procedures
              hereof) all Product required by DAS for the [******] following
              such anticipated manufacture date. DAS may specify that Product
              shall be delivered monthly along with the amounts to be so
              delivered, or according to any reasonable alternative schedule,
              and Mallinckrodt shall deliver Product according to such
              schedule and in the quantities specified.

         (b)  Product shall be ordered by DAS only in writing. Mallinckrodt will
              not accept verbal orders of any kind for the production of
              Product. Any written work order will contain the following
              information: (i) the precise quantity of Product desired and
              required delivery dates (consistent with subsection (a) set forth
              immediately above), (ii) the anticipated shipping destination for
              Product and (iii) such other information as DAS wishes to

[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION, CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

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              provide or that Mallinckrodt might find necessary or useful in
              completing a specific work order.

         (c)  Product shall be delivered F.O.B. North American shipping
              destination (with the specific destination to be determined by
              DAS), freight prepaid by Mallinckrodt, no earlier than three (3)
              days prior to the requested delivery date, and no later than the
              delivery date. Mallinckrodt will be responsible to make such
              arrangements regarding the shipping of Product to designated
              destinations as DAS shall reasonably request.

    6.   ACCEPTANCE AND REJECTIONS AND RECALLS.

         (a)  If DAS reasonably determines that any Product is defective in
              material or workmanship, not in conformance with applicable
              Specifications, is adulterated or misbranded, or is otherwise not
              in conformity with this Supply Agreement (Product meeting any or
              all of such circumstances hereinafter referred to as a "Defective
              Product"), then (DAS), in addition to any other rights it may have
              under this Supply Agreement, may reject and return any such
              Products to Mallinckrodt. At the time of any such rejection, DAS
              shall provide Mallinckrodt with a written notice describing in
              detail the circumstances surrounding the rejection and DAS'
              reasons therefor. If DAS rejects any such Products it will, at
              Mallinckrodt's option, either return them to Mallinckrodt or
              destroy or dispose of them in the least expensive and most
              environmentally sound manner. In any event, Mallinckrodt shall be
              responsible for the costs of any such return, destruction or
              disposal. It is understood that DAS' sole remedies hereunder in
              the event of a Defective Product it has rejected will either be
              (i) the replacement by Mallinckrodt of rejected Products that have
              either been returned or destroyed with Products that are not
              Defective Products or (ii) a full refund of any amount paid
              hereunder by DAS for such Defective Products, including all
              reasonable transportation and testing costs.

         (b)  Any Product received by DAS from Mallinckrodt that has not been
              rejected by DAS within sixty (60) days after receipt shall be
              deemed to have been accepted, except where such Product contains a
              nonconformity that was not discovered by DAS after reasonable
              inspection, in which case DAS shall have an additional sixty (60)
              days after it discovers such nonconformity within which to reject
              such Product according to the procedures set forth in Section 6(a)
              above.

         (c)  If DAS reasonably decides to or is required to initiate a product
              recall, withdrawal or field correction with respect to, or if
              there is any governmental seizure of, its products containing any
              Product supplied hereunder which action is due, in whole or in
              part, to (i) a failure of any of the Product manufactured by
              Mallinckrodt hereunder to conform to applicable Specifications
              (including, without limitation, it being

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              adulterated or misbranded), or any warranty or other requirement
              set forth in this Supply Agreement, (ii) the failure by
              Mallinckrodt to comply in all material respects with any
              applicable law, rule, regulation, standard, court order or decree
              or (iii) the negligent or intentional wrongful act or omission of
              Mallinckrodt in connection with the production of Product
              hereunder, DAS will notify Mallinckrodt promptly of the details
              regarding such action, including providing copies of all relevant
              documentation concerning such action. Mallinckrodt will fully
              cooperate with and use diligent efforts to assist DAS in
              investigating any such situation. All regulatory contacts that are
              made and all activities concerning seizure, recall, withdrawal or
              field correction will be coordinated by DAS and Mallinckrodt. The
              costs of the same shall be apportioned as set forth below.

         (d)  If any such recall, withdrawal, field correction or seizure occurs
              due solely to (i) a failure of any Product sold by Mallinckrodt
              hereunder to conform to applicable Specifications (including,
              without limitation, it being adulterated or misbranded) or any
              warranty or other requirement set forth in this Supply Agreement,
              (ii) the failure by Mallinckrodt to comply in all material
              respects with any applicable law, rule, regulation, standard,
              court order or decree or (iii) the negligent or intentional
              wrongful act or omission of Mallinckrodt in connection with the
              production of Product hereunder, then Mallinckrodt shall bear the
              full cost and expense of any such seizure, recall, withdrawal or
              field correction. If any such recall, withdrawal, field correction
              or seizure occurs due solely to (i) any pharmaceutical product
              manufactured, sold or distributed by DAS that contains Product
              failing to conform to its applicable specifications (including,
              without limitation, it being adulterated or misbranded) or
              otherwise being defective, (ii) the failure of DAS to comply in
              all material respects with any applicable law, rule, regulation,
              standard, court order or decree or (iii) the negligent or
              intentional wrongful act or omission of DAS, then DAS shall bear
              the full cost and expense of any such seizure, recall, withdrawal
              or field correction, If both Mallinckrodt and DAS contribute to
              the cause of a seizure, recall, withdrawal or field correction,
              the cost and expenses thereof will be shared in proportion to each
              party's contribution to the problem.

    7.   REGULATORY COMPLIANCE.

         (a)  Mallinckrodt will comply in all material respects with all
              federal, state and local laws, regulations and standards
              applicable to production by Mallinckrodt and its performance of
              its obligations hereunder, and will also use best efforts to
              comply with any applicable laws, regulations and standards of
              those European countries set forth on Exhibit B.

         (b)  Mallinckrodt will promptly furnish DAS with pertinent portions of
              all FDA (or other applicable regulatory authority) inspection
              reports and

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              related correspondence directly related to and affecting its
              performance hereunder as and when such reports and correspondence
              become available to Mallinckrodt.

         (c)  Mallinckrodt will notify DAS immediately upon receipt of, and
              promptly provide DAS a copy of, the relevant portions of any
              warning (including any FDA Form 483), citation, notice,
              indictment, claim, lawsuit or proceeding issued or instituted by
              any federal, foreign, state or local governmental entity or agency
              against Mallinckrodt or any of its affiliates or of any revocation
              of any license or permit issued to Mallinckrodt or any of its
              affiliates, to the extent that any such occurrence relates to
              Mallinckrodt's performance hereunder.

    8.   CERTAIN REPRESENTATIONS AND WARRANTIES OF MALLINCKRODT.

         (a)  Mallinckrodt represents and warrants that all Product sold
              hereunder will (i) be produced in full compliance with cGMPs
              applicable to the Product, and (ii) will meet all Specifications,
              and (iii) will have a minimum shelf-life of twenty-four (24)
              months after the date of delivery to DAS (i.e., that Product
              during the entire shelf-life will comply with the Specifications).
              Upon request from DAS, Mallinckrodt will provide to DAS all data
              it has collected concerning the shelf-life of the Product beyond
              the twenty-four (24) month period referenced above.

         (b)  Mallinckrodt represents and warrants that there is no claim, suit,
              proceeding or investigation pending or, to the knowledge of
              Mallinckrodt, threatened against Mallinckrodt or any of its
              affiliates which might prevent or interfere with Mallinckrodt's
              performance under this Supply Agreement.

         (c)  Mallinckrodt represents and warrants to DAS that Product sold
              hereunder by Mallinckrodt will not be:

              (i)   in violation of Sections 5 or 12 of the Federal Trade
                    Commission Act or improperly labeled under applicable
                    Federal Trade Commission Trade Practice Rules, or other
                    similar European laws (for the countries set forth on
                    Exhibit B), as and to the extent applicable hereunder,

              (ii)  adulterated or misbranded within the meaning of the federal
                    Food, Drug and Cosmetic Act, as amended, within the meaning
                    of any regulations of any Regulatory Agency of European
                    countries listed in Exhibit B or any state or municipal law
                    in which the definition of adulteration and misbranding are
                    substantially identical to those contained in the United
                    States Federal Food, Drug and Cosmetic Act, or articles
                    which may not under the provisions of Sections 404 or 505 of
                    said Act be introduced into interstate commerce or which

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                    may not under similar provisions of any foreign, state or
                    municipal law be introduced into commerce,

              (iii) manufactured or sold in violation of the federal Controlled
                    Substances Act, as amended, or any substantially similar
                    legislation of applicable European country (for the
                    countries set forth on Exhibit B) or state law,

              (iv)  manufactured or sold in violation of any of the provisions
                    of the Fair Labor Standards Act of 1938, as amended,

              (v)   manufactured or sold in violation of The Occupational Safety
                    and Health Act of 1970, as amended,

              (vi)  manufactured in violation of any applicable federal, state
                    or local environmental law or regulation, or

              (vii) manufactured in violation of any agreement (commercial or
                    otherwise), judgment, order or decree to which Mallinckrodt
                    is a party.

         (d)  Mallinckrodt certifies that neither it nor any of its affiliates
              nor any member of their staff has been disqualified or debarred by
              the FDA, or any other domestic regulatory authority, or any other
              applicable regulatory agency of any of the European countries set
              forth in Exhibit B for any purpose.

         (e)  Mallinckrodt warrants and represents that neither it nor any of
              its affiliates nor any member of their staff have been charged
              with or convicted under federal law, or other applicable laws of
              the European countries set forth in Exhibit B, for conduct
              relating to the development or approval, or otherwise relating to
              the regulation of any drug product under the Generic Drug
              Enforcement Act of 1992 or any other relevant statute, law or
              regulation.

         (f)  Mallinckrodt hereby represents and warrants that: Mallinckrodt has
              all rights and licenses necessary to manufacture and sell the
              Product to DAS.

         (g)  EXCEPT AS SET FORTH ABOVE IN THIS SECTION 8, MALLINCKRODT MAKES NO
              OTHER WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, CONCERNING
              ITS PERFORMANCE HEREUNDER, INCLUDING ANY WARRANTY OF
              MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT
              TO "PRODUCT." UNDER NO CIRCUMSTANCES WILL MALLINCKRODT BE LIABLE
              HEREUNDER FOR CONSEQUENTIAL, INDIRECT, EXEMPLARY OR SPECIAL
              DAMAGES OF ANY KIND (INCLUDING, WITHOUT LIMITATION, LOST PROFITS),
              WHETHER OR NOT IN ANY PARTICULAR

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          CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED
          AND FILED SEPARATELY WITH THE COMMISSION, CONFIDENTIAL TREATMENT
          HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

              CIRCUMSTANCE SUCH DAMAGES ARE FORESEEABLE AND WHETHER OR NOT
              MALLINCKRODT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

    9.   FACILITY ACCESS.

         DAS, through its employees, consultants or other representatives will
         have the right during normal business hours and at a time mutually
         agreed to inspect Mallinckrodt's manufacturing operations to determine
         whether or not Mallinckrodt is complying in all respects with its
         obligations hereunder. DAS warrants that all such inspections and
         audits shall be carried out in a manner calculated not to unreasonably
         interfere with Mallinckrodt's conduct of business and to insure the
         continued confidentiality of Mallinckrodt's business and technical
         information. Further, DAS agrees to comply with all of Mallinckrodt's
         safety and security requirements during any visits to the Mallinckrodt
         facilities. Following an inspection which will in any way affect the
         production of Product for supply to DAS by the FDA or any other
         European Community authority (as set forth on Exhibit B), Mallinckrodt
         will notify DAS in writing of any material issues that may be pertinent
         to the supply of Product to DAS. The parties agree to cooperate in good
         faith and engage in an active dialogue in an effort to resolve any
         issues resulting from any such inspections.

    10.  FORCE MAJEURE.

         Neither party to this Supply Agreement shall be liable for or be in
         breach of any provision hereof for any failure or delay on its part to
         perform any obligation (other then the obligation to make payments when
         due) under any provision of this Supply Agreement because of an event
         of "force majeure," including, but not limited to, any act of God,
         fire, flood, explosion, unusually severe weather, war, insurrection,
         riot, sabotage, labor unrest, strikes or work stoppages or any other
         cause whatsoever, whether similar or dissimilar to those enumerated
         herein, beyond any reasonable possibility of control of such party, if
         and only if the party affected shall have used all reasonable efforts
         under the circumstances to avoid such occurrence and to remedy it
         promptly if it shall have occurred. If an event of force majeure
         causes a failure or delay in performance hereunder by Mallinckrodt
         for more than one hundred eighty (180) continuous days, DAS, at its
         option, may (i) terminate this Supply Agreement effective upon
         written notice to Mallinckrodt or (ii) may extend the delivery or
         performance period by the amount of time during which such delivery
         or performance was omitted or delayed.


    11.  RELATIONSHIP OF PARTIES.

         For all purposes hereof, Mallinckrodt shall be deemed to be an
         independent contractor and this Supply Agreement shall not create an
         agency, partnership, joint venture, or employer/employee relationship
         between DAS and Mallinckrodt, and nothing hereunder shall be deemed to
         authorize either party hereto to act for, represent or bind the other
         or any of its affiliates except as expressly provided in this Supply
         Agreement.

[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION, CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

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    12.  CONFIDENTIALITY.

         (a)  DAS and Mallinckrodt shall maintain in confidence and not use or
              disclose to any third party, except as is specifically
              contemplated herein or is otherwise necessary to perform their
              respective obligations under this Supply Agreement, and then only
              on a confidential basis satisfactory to both parties, any
              information, including without limitation business and technical
              information, experience or data regarding any facility, programs,
              laboratories, processes, products, costs, equipment operation or
              customers, relating to the manufacture or sale of Product
              hereunder. The foregoing obligations of confidentiality and
              non-use shall survive the termination or expiration of this Supply
              Agreement for a period of five (5) years. Nothing herein shall
              prevent either party from disclosing any information required by
              statute or governmental regulations to be disclosed in a judicial
              or administrative proceeding, after the disclosing party has been
              given a reasonable opportunity, to the extent possible, to pursue
              all legal remedies for maintaining such information in confidence,
              or from using information which (i) has been published or has
              become part of the public domain other than by acts, omissions or
              fault of such party, (ii) was lawfully received by such party from
              a third party free of any obligation of confidence to such third
              party, (iii) or a party can demonstrate from its records was
              already in its possession prior to receipt thereof, directly or
              indirectly, from the other party. The party asserting the
              applicability of one of the exclusions from the obligation of
              confidentiality set forth in the immediately preceding sentence
              shall have the burden of proving the applicability of any such
              exclusion in any particular circumstance.

         (b)  Each party acknowledges that any breach by it of the
              confidentiality obligations set forth in this Section 12 would
              cause the other party irreparable harm for which compensation by
              monetary damages would be inadequate and, therefore, the party
              that has been harmed by any such breach shall have the right to an
              injunction or decree for specific performance, in addition to any
              other rights and remedies such party may have at law or in equity.

         (c)  Upon any termination of this Agreement, each recipient party will
              promptly return or destroy, at the discretion of the disclosing
              party, any confidential information of the disclosing party.

    13.  INDEMNIFICATION.

         (a)  Subject to the provisions of Section 8(g) hereof, Mallinckrodt (on
              behalf of itself and its affiliates) hereby agrees to indemnify,
              defend and hold harmless DAS and its affiliates from and against
              any and all demands, claims, actions, causes of action,
              assessments, losses, damages, injuries, liabilities, costs and
              expenses, including without limitation, interest, penalties and
              reasonable attorneys' fees and expenses (collectively

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          CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED
          AND FILED SEPARATELY WITH THE COMMISSION, CONFIDENTIAL TREATMENT
          HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.



              "Damages") asserted against, resulting to, imposed upon or
              incurred by DAS or its affiliates, directly or indirectly related
              to, arising out of or resulting from:

              (i)   any breach or failure of any of the representations,
                    warranties and covenants of Mallinckrodt contained herein,
                    including (without limitation) any breach or failure by
                    Mallinckrodt to perform any obligations contained herein,
                    and

              (ii)  any failure of Mallinckrodt to observe or comply in all
                    material respects with any laws, rules or regulations for
                    which and to the extent Mallinckrodt has promised compliance
                    hereunder.

         (b)  DAS hereby agrees to indemnify, defend and hold harmless
              Mallinckrodt and any of its affiliates from and against any and
              all Damages asserted against, resulting to, imposed upon or
              incurred by Mallinckrodt, directly or indirectly related to,
              arising out of or resulting from:

              (i)   any breach or failure of any of the representations,
                    warranties and covenants of DAS contained herein,

              (ii)  any failure of DAS to observe or comply in all material
                    respects with any laws, rules or regulations directly
                    related to DAS' performance hereunder, and

              (iii) DAS' or DAS' agents', distributors' or customers' use,
                    processing, transportation possession, disposal or sale of
                    any dosage Product manufactured by DAS, and whether used
                    alone or in combination with any other material.

         (c)  In the event of any claim being made against a party (the
              "Indemnified Party"), which triggers the indemnity obligations of
              the other party (the "Indemnifying Party") as set forth above,
              such indemnification shall be conditioned on compliance with the
              procedure outlined below. Provided that prompt notice is given of
              any claim or suit, the Indemnifying Party shall have the right to
              defend, contest, or otherwise protect against any such claim or
              suit, including by way of settlement and release, at its own
              expense and cost. The Indemnifying Party shall be entitled to sole
              control of the defense and settlement of any such claim or suit,
              and the Indemnified Party shall cooperate and provide such
              assistance as the Indemnifying Party may reasonably request in
              connection with the defense of the matter subject to
              indemnification.

    14.  TERM AND TERMINATION.

         (a)  Unless sooner terminated in accordance herewith, the initial
              term of this Supply Agreement shall be for a period commencing
              on June 9, 2000 and ending June 30, 2005, and shall
              automatically be renewed for additional one (1) year terms
              thereafter unless either party shall give written notice to the
              other, at least six (6) months prior to the end of the initial
              term or any renewal term, that it does not wish the Supply
              Agreement to be renewed for an additional one (1) year period.

[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION, CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       10
<PAGE>

          CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED
          AND FILED SEPARATELY WITH THE COMMISSION, CONFIDENTIAL TREATMENT
          HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

         (b)  In addition to any other right of termination specifically
              provided for hereunder, this Supply Agreement may be terminated by
              either party for cause upon written notice to the other. For
              purposes of the preceding sentence, "cause" shall mean (without
              limitation):

              (i)   any material breach of this Agreement by a party which shall
                    go uncorrected for a period of thirty (30) days after
                    written notice of such breach has been given to the
                    defaulting party,

              (ii)  the institution by a party of voluntary proceedings in
                    bankruptcy or under any insolvency law or law for the relief
                    of debtors,

              (iii) the making by a party of an assignment for the benefit of
                    creditors or any dissolution or liquidation,

              (iv)  the filing of an involuntary petition under any bankruptcy
                    or insolvency law against a party, unless such petition is
                    dismissed or set aside within sixty (60) days from the of
                    its filing, or

              (v)   the appointment of a receiver or trustee for the assets or
                    business of a party, unless such appointment is dismissed or
                    set aside within sixty (60) days from the date of such
                    appointment.

         (c)  The representations and warranties of the parties hereunder,
              covenants which by their terms have effect after the termination
              or expiration hereof, and the parties' indemnification and
              confidentiality obligations shall survive termination or
              expiration of this Supply Agreement.

         (d)  In the event of any termination or expiration of this Supply
              Agreement, for any reason, Mallinckrodt shall (i) notwithstanding
              the effective date of any termination or the expiration, as the
              case may be, complete any orders for Product that were made by DAS
              and accepted by Mallinckrodt prior to such date, and DAS shall pay
              Mallinckrodt for any Product produced in accordance with such
              orders at the then applicable Product Price in effect on the
              effective date of termination hereunder or expiration (as the case
              may be). No less than thirty (30) days prior to the effective
              date of termination or expiration (as the case may be), DAS
              shall have the option to place an estimated order (+/- 20%) for
              all Product required for the twelve (12) month period following
              the effective date of termination or expiration (as the case
              may be) to be shipped according to Section 5c; provided that,
              Mallinckrodt shall not be required to accept all or any portion
              of such orders in the event this agreement has been terminated
              by Mallinckrodt pursuant to Section 14(b).

    15.  REMEDIES CUMULATIVE.

         The remedies provided in this Supply Agreement shall be cumulative and
         shall not preclude assertion by any party hereto of any other rights
         (whether legal or equitable in nature) or the seeking of any other
         remedies against party other party hereto.

[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION, CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       11
<PAGE>

    16.  BINDING EFFECT AND ASSIGNMENT.

         This Supply Agreement shall inure to the benefit of and be binding upon
         the parties hereto, their successors and assigns; provided, however,
         that neither party shall, without the prior written consent of the
         other party, assign or transfer any of its rights, benefits,
         obligations, or other interest under this Supply Agreement to any other
         party, except that, without seeking consent of the other party, either
         party may assign this Supply Agreement to any entity or person it
         controls, it is controlled by or is under common control with, or to
         any entity or person that acquires all or substantially all of its
         stock, assets or business or acquires that portion of its business to
         which this Supply Agreement relates, whether by merger, acquisition,
         sale or otherwise.

    17.  NOTICE.

         All notices, consents, approvals or other notifications required to be
         sent by one party to the other party hereunder shall be in writing and
         shall be deemed served upon the other party if delivered by hand or
         sent by United States registered or certified mail, postage prepaid,
         with return receipt requested, or by facsimile, or air courier,
         addressed to such other party at the address set out below, or the last
         address of such party as shall have been communicated to the other
         party. If a party changes its address, written notice shall be given
         promptly to the other party of the new address. Notice shall be deemed
         given on the day it is sent (in the case of delivery by method other
         than hand delivery) or the date of delivery (in the case of delivery by
         hand) in accordance with the provisions of this paragraph. The
         addresses for notices are as follows:

                  If to Mallinckrodt:

                           Mallinckrodt Inc.
                           c/o Pharmaceuticals Group
                           675 McDonnell Boulevard
                           Hazelwood, Missouri  63042
                           Attn:  Pat E. Cunningham
                                  Vice President Pharmaceuticals Group

                  with a copy to:

                           Mallinckrodt Inc.
                           675 McDonnell Boulevard
                           Hazelwood, Missouri  63042
                           Attn:  C. Stephen Kriegh
                                  Staff Vice President

                                       12
<PAGE>

                  If to DAS:

                           DrugAbuse Sciences
                           330 Distel Circle, Suite 150
                           Los Altos, CA  94022
                           Attn:  Philippe Pouletty,
                                  Chairman and Chief Executive Officer
                           Telephone:  (650) 417-2300
                           Fax:  (650) 417-2400

    18.  GOVERNING LAW AND JURISDICTION.

         This Agreement shall be governed by and construed in accordance with
         the substantive and procedural laws (as opposed to the conflicts of law
         provisions) of the State of New York.

    19.  WAIVER.

         The failure by any party to exercise any of its rights hereunder or to
         enforce any of the terms or conditions of this Supply Agreement on any
         occasion shall not constitute or be deemed a waiver of that party's
         rights thereafter to exercise any rights hereunder or to enforce each
         and every term and condition of this Supply Agreement.

    20.  MODIFICATIONS.

         This Supply Agreement may not be amended or modified except by a
         writing specifically referring to this Supply Agreement and executed by
         duly authorized representatives of both parties. The obligations of the
         parties are governed by the terms and conditions of this Supply
         Agreement and none of the general terms and conditions of any DAS
         purchase order or any Mallinckrodt acknowledgment or any substantially
         similar documents of either party will in any case be controlling or
         supersede the provisions hereof.

    21.  SEVERABILITY.

         A determination that any portion of this Supply Agreement is
         unenforceable or invalid shall not affect the enforceability or
         validity of any of the remaining portions hereof or of this Supply
         Agreement as a whole. In the event that any part of any of the
         covenants, sections or provisions herein may be determined by a court
         of law or equity to be overly broad or against applicable precedent or
         public policy, thereby making such covenants, sections or provisions
         invalid or unenforceable, the parties shall attempt to reach agreement
         with respect to a valid and enforceable substitute for the deleted
         provisions, which shall be as close in its intent and effect as
         possible to the deleted portions.

                                       13
<PAGE>

    22.  HEADINGS.

         The parties agree that the section and article headings are inserted
         only for ease of reference, shall not be construed as part of this
         Supply Agreement, and shall have no effect upon the construction or
         interpretation of any part hereof.

    23.  COUNTERPARTS.

         This Supply Agreement may be executed in several counterparts, and each
         executed counterpart shall be considered an original of this Supply
         Agreement.

    24.  ENTIRE AGREEMENT.

         This Supply Agreement represents the entire agreement and understanding
         of the parties hereto with respect to its subject matter and supersedes
         any and all prior agreements, understanding or discussions, whether
         written or oral, between the parties.

                                       14
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Supply
Agreement to be executed as of the day and year first above written.

                                        MALLINCKRODT INC.
DRUGABUSE SCIENCES, INC.                Pharmaceuticals Group

By:      /s/ Philippe Pouletty          By:      /s/ Pat E. Cunningham
   ----------------------------------      ---------------------------------
Name Printed:  Philippe Pouletty, M.D.     Pat E. Cunningham
Title Printed: Chairman and CEO            Vice President, Pharmaceuticals Group

Date:  June 8, 2000                        Date:  June 8, 2000

<PAGE>

                                    EXHIBIT A

                             PRODUCT SPECIFICATIONS

                            NALTREXONE BASE ANHYDROUS


                                                         
ITEM CODE:                                  [******]

FORMULA:                                    [******]

CAS REGISTRY No.:                           [******]

MOLECLLNIZ WEIGHT:                          [******]

APPEARANCE:                                 [******]

IDENTIFICATION:                             [******]

WATER CONTENT:                              [******]

TITRATION ASSAY:                            [******]

HEAVY METALS:                               [******]

RELATED SUBSTANCES:                         [******]

                                            [******] [******] [******] [******]

                                            [******]

HPLC ASSAY:                                 [******]

BIO-BURDEN/ENDOTOXIN LIMITS:

                                            DrugAbuse Sciences as part of our
                                            scale up and R&D efforts will be
                                            determining [******]. These limits
                                            will be based on the process and
                                            agreed upon by the parties at a
                                            later date.



<PAGE>



                                    EXHIBIT B

                               EUROPEAN COUNTRIES

France
Germany
Italy
Netherlands
Norway
Portugal
Spain
Sweden
Switzerland
United Kingdom


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