EXHIBIT 10.20

 

*** Text omitted and filed separately

Confidential Treatment Requested

under 17 C.F.R. §§200.80 (b)(4) and 240.24b-2

 

Drug Product Development and Clinical Supply Agreement

 

THIS AGREEMENT is effective as of the 1st day of April, 2005 (the “Effective
Date”).

 

BY AND BETWEEN:

 

NEUROBIOLOGICAL TECHNOLOGIES, INC., a corporation organized and existing under
the laws of Delaware, with its principal offices located at 3260 Blume Drive,
Suite 500, Richmond, California 94806 (hereinafter referred to as “NTI”)

 

AND:

 

BAXTER PHARMACEUTICAL SOLUTIONS LLC, a Delaware limited liability company, with
a place of business located at 927 South Curry Pike in Bloomington, Indiana
47403 (hereinafter referred to as “BPS”);

 

WHEREAS, NTI is the owner of patents, formulations and know-how related to each
Drug Product, as defined below;

 

WHEREAS, BPS has the expertise and the manufacturing facility suitable for the
Production (as defined below) of Drug Product;

 

WHEREAS, NTI wishes to have BPS Produce Drug Product, and BPS wishes to Produce
Drug Product for NTI;

 

NOW, THEREFORE, in consideration of the premises and the undertakings, terms,
conditions and covenants set forth below, the parties hereto agree as follows:

 

Article 1, DEFINITIONS.

 

  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 NTI and BPS, 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 BILL OF MATERIALS may refer to either a manufacturing bill of materials or
packaging bill of materials and in each case shall mean the document specifying
the Components, excipients and other materials required for Production of Drug
Product, which in each instance required shall be developed by BPS and agreed to
in writing by NTI. In each instance so required, BPS shall deliver the Bill of
Materials to NTI. NTI

 

*** Certain confidential portions of this Exhibit were omitted by means of
blackout of the text (the “Mark”). This Exhibit has been filed separately with
the Secretary of the Commission without the Mark pursuant to the Company’s
Application Requesting Confidential Treatment under Rule 24b-2 under the 1934
Act.

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shall review and approve or modify said Bill of Materials. If approved, NTI
shall execute and return one (1) fully executed original or copy to BPS. If NTI
proposes modifications to said Bill of Materials, NTI shall submit said changes
to BPS for review. Said Bill of Materials shall continue to be exchanged in such
manner until the parties are in agreement, at which time BPS shall submit the
Bill of Materials to NTI for final approval, and NTI shall execute and return
one (1) fully executed original or copy to BPS.

 

  1.4 BPS SOPs shall mean BPS’ Standard Operating Procedures which shall be
deemed reviewed and approved by NTI prior to entering into each Project Plan,
and Drug Product-Specific SOPs; provided, however, if BPS proposes to modify any
Drug Product-Specific SOPs after commencement of a Project Plan, then such
modification to such Drug Product-Specific SOP shall not be implemented unless
and until NTI has reviewed and confirmed approval of such modification.

 

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

 

  1.6 cGMP shall mean current Good Manufacturing Practices as defined in the FDA
rules and regulations, or as defined in another Regulatory Authority’s rules and
regulations as explicitly set forth in a Project Plan, including, without
limitation, the United States regulations set forth at 21 CFR Parts 210-211 and
600-610, as appropriate.

 

  1.7 CANCELLATION FEES shall mean the fees set forth in Section 3.3 that are
payable by NTI in the event that NTI cancels the Production of any Batch of Drug
Product set forth in the Project Plan, except as otherwise provided herein.

 

  1.8 COMPONENTS shall mean all components used by BPS in Production of Drug
Product under this Agreement. Components are listed in the Bill of Materials
and/or the Project Plan, and such Components are identified as Components
supplied by NTI (“NTI Supplied Components”) and Components supplied by BPS (“BPS
Supplied Components”).

 

  1.9 CONFIDENTIAL INFORMATION shall mean all information and data provided by
the disclosing party to the receiving party (“Recipient”), subject to Section
10.7, except any portion of such information and data which:

 

  (a) is known to the Recipient as evidenced by its written records before
receipt thereof from the disclosing party;

 

  (b) is lawfully disclosed to the Recipient on a non-confidential basis by a
third person who has the right to make such disclosure;

 

  (c) is or becomes part of the public domain through no fault of the Recipient;
or

 

  (d) the Recipient can reasonably establish is independently developed by
Recipient without use of the information disclosed by the disclosing party.

 

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  1.10 DEVELOPMENT shall mean studies or activities conducted by BPS to develop,
to optimize or to transfer from NTI to BPS a process to Produce Drug Product, in
accordance with the Specifications and cGMP. Development activities shall be
identified in the Development Plan.

 

  1.11 DEVELOPMENT PLAN shall mean the written plan(s) containing the parameters
for Development of Drug Product that shall be developed by BPS and agreed to in
writing by NTI for each Drug Product under this Agreement, as it may be amended
from time to time by written mutual agreement of the parties. Prior to
commencing Development for any Drug Product, BPS shall deliver two (2) signed
originals of the Development Plan to NTI. NTI shall review the Development Plan,
and if acceptable, shall sign both originals of the Development Plan and return
one (1) fully executed original to BPS. Each fully executed Development Plan
shall be incorporated herein by reference and made a part of this Agreement. BPS
shall have no obligation to commence Development for a Drug Product until NTI
has executed and returned the Development Plan for such Drug Product to BPS. In
the event of a conflict between any of the provisions of this Agreement and the
Development Plan, the provisions of this Agreement shall govern.

 

  1.12 DRUG PRODUCT shall mean each pharmaceutical product set forth in a
Development Plan, or set forth in a Project Plan that is to be Produced by BPS
in finished dosage form for development and/or clinical use only.

 

  1.13 DRUG PRODUCT-SPECIFIC SOPs shall mean the standard operating procedures
(SOPs) that are specific to Drug Product.

 

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

 

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

 

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

 

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

 

  1.18 PRODUCTION or PRODUCE shall mean all or a portion of the process of
formulating, filling, packaging, inspecting, labeling, and testing of Drug
Product by BPS (or by a BPS subcontractor on behalf of BPS).

 

  1.19

PROJECT PLAN shall mean the written plan(s) containing the parameters for
Production of Drug Product, which shall be developed by BPS and agreed to in
writing by NTI for each Drug Product under this Agreement, as it may be amended
from time to time by written mutual agreement of the parties. Prior to
commencing Production of any Drug Product, BPS shall deliver two (2) signed
originals of the Project Plan to NTI. NTI shall review the Project Plan, and if
acceptable, shall sign both originals of the Project Plan and return one (1)
fully executed original to BPS. Each fully executed Project Plan shall be
incorporated herein by reference and made a part of this Agreement. BPS shall

 

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have no obligation to commence Production of a Drug Product until NTI has
executed and returned the Project Plan for such Drug Product to BPS. In the
event of a conflict between any of the provisions of this Agreement and the
Project Plan, the provisions of this Agreement shall govern.

 

  1.20 PURCHASE PRICE shall mean the amount to be paid by NTI, as specified in
each Development Plan and Project Plan.

 

  1.21 QUALITY AGREEMENT shall mean a written agreement that sets forth the
responsibilities of BPS and NTI with respect to Production activities and
quality assurance activities in connection with the Development Plans, Project
Plans and this Agreement. Each Quality Agreement shall be incorporated herein by
reference and made a part of this Agreement. In the event of a conflict between
any of the provisions of this Agreement and the Quality Agreement, the
provisions of this Agreement shall govern.

 

  1.22 QUALITY CONTROL MASTER DOCUMENT (“QCMD”) shall mean a listing of the
analytical testing and corresponding specifications (including Specifications,
as set forth in Section 1.26 below) to be performed on the Bulk Drug Substance,
raw materials, and Drug Product.

 

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

 

  1.24 REGULATORY PLAN shall mean the written plan(s) containing the parameters
for regulatory services and support services provided by BPS in connection with
NTI’s development and maintenance of regulatory submissions and supporting
documentation, as it may be amended from time to time by written mutual
agreement of the parties. Upon the written request of NTI (in its sole
discretion), a Regulatory Plan will be developed by BPS, and if acceptable to
NTI, BPS shall deliver two (2) signed originals of the Regulatory Plan to NTI.
NTI shall review the Regulatory Plan, and if acceptable, shall sign both
originals of the Regulatory Plan and return one (1) fully executed original to
BPS. Upon full execution, the Regulatory Plan shall be incorporated herein by
reference and made a part of this Agreement. BPS shall have no obligation to
perform regulatory services or provide support services for a Drug Product until
NTI has executed and returned the Regulatory Plan for such Drug Product to BPS.
For the avoidance of doubt, BPS acknowledges and agrees that NTI manages, and
shall continue to manage, regulatory affairs for all NTI products, including
Drug Products. In the event of a conflict between any of the provisions of this
Agreement and the Regulatory Plan, the provisions of this Agreement shall
govern.

 

  1.25 RELEASED EXECUTED BATCH RECORD shall mean the completed Batch record, and
associated exception reports and QCMD that are created for each Batch of Drug
Product.

 

  1.26 SPECIFICATIONS shall mean the specifications for the Drug Product that
are set forth in the QCMD and in the Master Batch Record for that Drug Product,
and to the extent that BPS is required to test the Bulk Drug Substance, the
specifications for the Bulk Drug Substance.

 

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Article 2, DEVELOPMENT AND PRODUCTION OF DRUG PRODUCT.

 

  2.1 Initiation: NTI hereby engages BPS, and BPS hereby agrees, to Develop and
Produce Drug Product(s) and to perform services in compliance with the
Development Plan(s), Project Plan(s) and/or the Regulatory Plan(s) and the
Quality Agreement (as applicable). Each such executed Quality Agreement,
Development Plan, Project Plan and Regulatory Plan constitutes an integral part
of this Agreement, and is incorporated herein by reference. Upon execution of a
Project Plan for each Drug Product, BPS shall commence Production of such Drug
Product pursuant to the Project Plan. Upon execution of a Regulatory Plan for
each Drug Product, BPS shall commence providing services pursuant to the
Regulatory Plan.

 

  2.2 Documentation: Drug Product-specific Master Batch Records shall be
reviewed and approved by BPS and by NTI prior to commencement of Production of
such Drug Product. Any material change to an approved Drug Product-specific
Master Batch Record will be reviewed and approved by BPS and by NTI prior to
said change being implemented. For purposes of clarification, “material” changes
include (without limitation) changes that may or would affect the strength,
identity, safety, purity or quality or the Drug Product, or changes in any
process described in the Master Batch Record. For each Batch of Drug Product
Produced hereunder, BPS shall use a copy of the Master Batch Record. Each such
copy of the Master Batch Record that is used for such Batch of Drug Product
Produced hereunder shall be assigned a unique batch number by BPS. NTI may, in
its sole discretion, assign and add an additional unique lot number. Any
deviation from the manufacturing process that is specified in the Master Batch
Record shall be documented in the copy of the Master Batch Record for that
Batch, and shall be investigated in accordance with approved BPS policies for
such investigations and the Quality Agreement. BPS shall provide NTI with
complete copies of all such Master Batch Record copies that are assigned a
unique batch number, as well as complete copies of all supporting Development
and Production documentation in a form reasonably suitable for NTI’s submission
to the FDA and other Regulatory Authorities as specified in a Project Plan.
Also, BPS shall provide NTI with complete copies of each Released Executed Batch
Record.

 

  2.3 Bulk Drug Substance and Components Supply: NTI, at its sole cost and
expense (including, without limitation, shipping costs), shall supply to BPS, in
a timely manner, all amounts of Bulk Drug Substance required to satisfy the
terms of this Agreement and all NTI Supplied Components. Except as otherwise
specifically set forth in the Development Plan or the Project Plan, on receipt
of the Bulk Drug Substance, BPS’ sole obligations with respect to evaluation of
the Bulk Drug Substance shall be to review the accompanying certificate of
analysis to confirm that the Bulk Drug Substance conforms with the
specifications for the Bulk Drug Substance.

 

  2.4 Bulk Drug Substance and Component Delivery Delays:

 

  2.4.1  BPS shall have no responsibility for delays in delivery of Drug Product
caused by delays in receipt of Bulk Drug Substance or NTI Supplied Components.

 

  2.4.2 

BPS shall have no responsibility for delays in delivery of Drug Product caused
by delays in receipt of BPS Supplied Components, provided that BPS complied with
the applicable BPS Supplied Component vendor’s ordering lead times. If

 

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NTI places an order that provides both parties with reasonable opportunity to
comply with their respective Component vendor’s lead times, and the following
conditions are met, *** shall be entitled to ***: (a) NTI complies with NTI
Supplied Component vendor’s lead times, (b) BPS does not comply with a BPS
Supplied Component vendor’s lead times, and (c) such failure by BPS to comply
with BPS Supplied Component vendor’s lead time will cause a delay in Production
of Drug Product of more than *** days. Notwithstanding the foregoing, in the
event that NTI places an order with a requested delivery date that does not
allow sufficient opportunity for BPS to comply with a BPS Supplied Component
vendor’s ordering lead times, BPS will have no responsibility for resulting
delays in delivery caused by delays in receipt of such BPS Supplied Components.

 

Notwithstanding anything in this Agreement to the contrary, in the event that
BPS receives the Bulk Drug Substance and/or NTI Supplied Components needed for
Production of Drug Product from NTI with less time than requested in the
applicable Project Plan, BPS may ***, which shall be *** promptly to BPS prior
to such commencement of Production of Drug Product, and BPS shall Produce such
Drug Product as per the original schedule set forth in the applicable Project
Plan; provided, however, that this sentence shall not be applicable ***.
Notwithstanding anything in this Agreement to the contrary, in the event that
BPS receives the Bulk Drug Substance and/or NTI Supplied Components needed for
Production of Drug Product from NTI with less time than requested in the
applicable Project Plan prior to the scheduled date of Production of such Drug
Product, and without sufficient time to complete Production of such Drug Product
on or before the scheduled completion date (as determined by BPS in its sole
discretion), BPS shall reschedule Production of such Drug Product *** as
described above in this Section 2.4).

 

  2.5 Importer of Record: In the event that any material or equipment to be
supplied by or on behalf of NTI hereunder, including, without limitation, NTI
Supplied Components and Bulk Drug Substance, is imported into the United States
for delivery to BPS (“Imported Goods”), such Imported Goods shall be imported
DDP Bloomington, IN (Incoterms 2000). NTI shall bear all costs and risk of loss
associated with delivery of Imported Goods to BPS. NTI shall be the “Importer of
Record” of such Imported Goods. As the Importer of Record, NTI shall be
responsible for all aspects of the Imported Goods, including, without
limitation, (a) customs and other applicable 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 to
BPS, and (c) all records, documents, correspondence and tracking information
required by applicable laws, rules and regulations arising out of or in
connection with the importation or delivery of the Imported Goods.

 

  2.6 Material Safety Data Sheet: NTI shall provide BPS a Material Safety Data
Sheet for Bulk Drug Substance and for each Drug Product. BPS shall immediately
notify NTI of any unusual health or environmental occurrence relating to Drug
Product, including, but not limited to, any claim or complaint by any employee
of BPS (or an employee of any of its Affiliates or a third party acting on
behalf of BPS in connection with this Agreement) that the operations of BPS
pursuant to this Agreement have resulted in any unusual health or safety effect
on such employee. BPS shall advise NTI immediately of any safety or

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toxicity problem of which it becomes aware regarding the Bulk Drug Substance or
any Drug Product.

 

  2.7 Vendor and Supplier Audit and Certification: NTI shall be responsible for
certifying and auditing all Drug Product-related vendors and suppliers. Upon ***
request, *** will provide *** from any audits previously conducted by *** with
respect to vendors and suppliers of *** Supplied Components *** that will be
used in the Production of Drug Product under a Project Plan. *** may redact such
summary as necessary to comply with *** confidentiality obligations to a third
party.

 

  2.8 Storage: During the term of this Agreement, BPS shall not be required to
store Bulk Drug Substance for more than *** days prior to commencement of
Production of Drug Product; provided, however, upon NTI’s request, BPS may agree
to store such Bulk Drug Substance for a period longer than *** days by its prior
written agreement, and NTI shall reimburse BPS for all reasonable costs incurred
by BPS in connection with such storage of Bulk Drug Substance as specified in a
Project Plan. In no event shall BPS be required to store a shipment of Drug
Product for more than *** days after BPS’ release of the Released Executed Batch
Record for such the Drug Product; provided, however, that BPS may agree to store
such Batch of Drug Product for a period longer than *** days by its prior
written agreement, and further provided that NTI may agree to reimburse BPS for
all reasonable costs incurred by BPS in connection with such extended storage
period as specified in a Project Plan. All storage fees imposed by BPS pursuant
to this Section 2.8 shall be specified in writing by BPS in advance.

 

  2.9 Delivery Terms: BPS shall ship all accepted and released Drug Product to
NTI (or to a third party designated by NTI in writing). All shipments shall be
shipped EXW (Incoterms 2000) Bloomington, Indiana, freight collect, by a common
carrier designated by NTI, at NTI’s expense; provided, however, that BPS shall
be responsible for loading of the Drug Product on departure, and BPS shall bear
all costs of such loading. NTI shall procure, at its cost, insurance covering
damage or loss of Drug Product after loading and during shipping to NTI or its
designee. All shipping instructions of NTI shall be accompanied by the name and
address of the recipient and NTI’s desired shipping date.

 

  2.10 Subsequent Export: NTI is and shall remain the owner of all goods and
materials that are transferred by NTI to BPS in connection with this Agreement,
and that are Produced by BPS for NTI hereunder. At no time shall BPS assume
ownership in or title to such goods and materials of NTI. In the event that Drug
Product is destined for subsequent export or re-export by NTI, then NTI, as
owner of the Drug Product, is responsible for such subsequent export or
re-export, and will comply with all applicable U.S. laws and regulations
relating to such subsequent export or re-export.

 

  2.11 Foreign Corrupt Practices Act: NTI acknowledges that it is not an agent
of BPS in connection with the sale or resale of Drug Product. To the extent
applicable to any Drug Product, NTI shall be responsible for compliance with The
Foreign Corrupt Practices Act, as set forth in Title 15 of the United States
Code (as it may be amended from time to time).

 

  2.12 Deposits and Payment for Drug Product and Development: Promptly after
execution of each Development Plan and Project Plan, NTI shall pay to BPS the
deposit, if any, set

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forth therein. After completion of each phase of Development as set forth in the
applicable Development Plan or Project Plan, BPS shall invoice NTI for the
Development costs for such phase, as set forth in the applicable Development
Plan or Project Plan. NTI shall pay such Development costs within *** days of
each such invoice date. Upon completion of the filling of a Batch of Drug
Product, BPS shall invoice NTI for the Purchase Price for such Batch, as set
forth in the Project Plan. NTI shall make payment within *** days of such
invoice date for such Batch of Drug Product. Any payment due under this
Agreement that is not made by NTI within the time periods noted above shall bear
interest at the lesser of (a) the maximum rate permitted by law, and (b) *** per
*** on the outstanding balance.

 

  2.13 Default in Payment Obligations: In addition to all other remedies
available to BPS in the event of an NTI default (except in the event of a
reasonable, good faith dispute regarding a payment), if NTI fails to make
payments as required hereunder, BPS may refuse all further purchase orders,
refuse to Produce any Drug Product until NTI’s undisputed account is paid in
full, place the account on a letter of credit basis, require full or partial
payment in advance, and/or suspend deliveries of Drug Product until NTI provides
assurance of payment reasonably satisfactory to BPS.

 

  2.14 Returns: Any Drug Product returned by third parties shall be the
responsibility of NTI; provided, however, that NTI may seek damages and/or
reimbursement from BPS with respect to such returned Drug Product pursuant to
the provisions of Articles 5, 6, 11 and 13, as applicable.

 

Article 3, TERM AND TERMINATION.

 

  3.1 Term: This Agreement shall commence on the Effective Date and will
continue until the Development and Production of all Drug Products, as described
in the corresponding Development Plans and Project Plans, have been completed,
unless this Agreement is earlier 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 At Will by NTI: NTI, in its sole discretion, may terminate
this Agreement upon *** days’ prior written notice to BPS, subject to the
Cancellation Fee set forth in Section 3.3.

 

  3.2.2  Termination for Breach: Either party may terminate this Agreement upon
the material breach of any provision of this Agreement by the other party, if
such material breach is not cured by the breaching party (a) within ten (10)
business days for monetary defaults, and (b) for non-monetary defaults, within
thirty (30) calendar days (or within such additional time as may be reasonably
necessary to cure such non-monetary default, provided the breaching party has
commenced a cure within the 30-day period set forth herein, and is diligently
pursuing completion of such cure) after receipt by the breaching party of the
non-breaching party’s written notice identifying such monetary or non-monetary
default and requiring its cure. At the option of the non-breaching party, such

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termination may be with respect to the entire Agreement, or only with respect to
the Drug Product that is the subject of a particular material breach.

 

  3.2.3  Termination for Financial Matters: This Agreement may be terminated
immediately by either party upon delivery to the other party of written notice
of termination in the event such other party makes a general assignment for the
benefit of its creditors, or if proceedings 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 debt; provided that such termination
shall not be effective unless and until such proceedings continue undismissed,
or an order with respect to the foregoing is entered and continues unstated, for
a period of more than sixty (60) days.

 

  3.2.4  Cooperation: In the event of termination of this Agreement under
Section 3.2.1, 3.2.2 or 3.2.3 above, BPS shall, upon reasonable notice and as
reasonably requested by NTI, copy the documentation that is necessary for NTI’s
Drug Product regulatory filings ***. BPS shall invoice NTI and NTI shall pay for
all reasonable expenses and charges incurred during this process. NTI and BPS
shall agree on the reasonable and appropriate amount of time and effort to be
expended by BPS pursuant to this Section 3.2.4. BPS shall not be liable for
NTI’s loss of use or profits or other collateral, special, consequential or
other damages, losses, or expenses, whether such claims are founded in tort or
contract, to the extent any such damages, losses, costs, or expenses result
directly or indirectly from NTI’s use, interpretation and/or extrapolation of
the data, information and records provided by BPS pursuant to this Section
3.2.4.

 

  3.3 Payment on Termination: In the event of early termination of this
Agreement by BPS pursuant to Section 3.2 or by NTI pursuant to Section 3.2.1,
NTI shall reimburse BPS for (a) all Components ordered prior to termination that
are not cancelable or returnable at no cost to BPS, (b) all work-in-process
commenced by BPS prior to delivery of the notice of termination, and (c) all
finished Drug Product; provided, however, that BPS shall use commercially
reasonable efforts to mitigate the costs incurred by NTI pursuant to this
sentence. In the event of a cancellation by NTI of the Production of any Batch
set forth in an executed Project Plan, NTI shall pay the Cancellation Fees as
hereinafter set forth: (x) NTI shall be subject to a charge of *** percent
(***%) of the Purchase Price if a Batch is canceled less than nine (9) weeks
from the scheduled fill date; (y) NTI shall be subject to a charge of ***
percent (***%) of the Purchase Price if a Batch is canceled less than six (6)
weeks from the scheduled fill date; and (z) NTI shall be subject to a charge of
*** percent (***%) of the Purchase Price if a Batch is canceled less than three
(3) weeks from the scheduled fill date. In addition, NTI shall compensate BPS
for any materials ordered pursuant to the Project Plan that cannot be canceled
or returned, and for any Batch-related testing that has been completed prior to
the date of cancellation. For purposes of this Section 3.3, one (1) week is
equivalent to seven (7) calendar days. Following expiration or termination of
this Agreement, or following NTI’s cancellation

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of the Production of any Batch, upon NTI’s request BPS shall ship to NTI (at
NTI’s cost and per NTI’s instructions) all such materials for which NTI has paid
BPS. NTI shall make payment for all amounts described in this Section 3.3 within
*** days after the date *** of a corresponding invoice.

 

  3.4 Survival: Termination or expiration of this Agreement through any means or
for any reason 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. The provisions of Articles 6, 9, 10, 11, 12, 13, 14, and 15 and
Sections 3.2.4, 3.3 and 5.2(b) hereof shall survive expiration or termination of
this Agreement.

 

Article 4, CERTIFICATES OF ANALYSIS AND MANUFACTURING COMPLIANCE.

 

  4.1 Certificates of Analysis: At NTI’s cost and expense, BPS shall test, or
shall cause to be tested by a third party(ies), in accordance with the
Specifications, each Batch of Drug Product Produced pursuant to this Agreement
before delivery to NTI. A QCMD containing the certificate of analysis for each
Batch so Produced shall set forth the items tested, Specifications, and test
results. BPS shall also indicate on the final page of the Released Executed
Batch Record that all Batch Production and control records have been reviewed
and approved by the appropriate quality unit. BPS shall send, or shall cause to
be sent, such certificates of analysis to NTI prior to BPS’ shipment of Drug
Product (unless Drug Product is shipped under quarantine). Any testing performed
by BPS (including tests to confirm that such Batch meets the Specifications) may
be used by NTI for final release of each Batch of Drug Product without
additional testing by NTI. However, as required by the FDA, NTI shall assume
full responsibility for final release of each Batch of Drug Product.

 

  4.2 Manufacturing Compliance: BPS shall advise NTI as soon as practicable (but
in any event within forty-eight (48) hours) if an authorized agent of any
Regulatory Authority or any regulatory body visits BPS’ manufacturing facility
and makes an inquiry regarding BPS’ Production of Drug Product for NTI, and
shall provide to NTI copies of any Form 483s or equivalent documents delivered
by such Regulatory Authority or regulatory body as a result of such visit as
they specifically relate to the Drug Product (including Production of Drug
Product), provided however that BPS reserves the right to appropriately redact
non-Drug Product-specific information to comply with its obligations of
confidentiality to third parties. NTI shall advise BPS as soon as practicable
(but in any event within forty-eight (48) hours) if an authorized agent of any
Regulatory Authority or any regulatory body plans to visit or accompany NTI on a
visit to BPS’ manufacturing facility. Manufacturing exceptions which occur
during Production of Drug Product shall not in and of themselves be a basis for
rejecting Drug Product as non-conforming; non-conformity shall be determined
under Article 5. BPS shall notify NTI as soon as practicable (but in any event
within forty-eight (48) hours) of the initiation of any investigation for any
level II exceptions.

 

  4.3 Reserve Samples: NTI shall be responsible for obtaining and maintaining
sufficient quantities of Bulk Drug Substance reserve samples in accordance with
cGMP.

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  4.4 Annual Quality Review: NTI shall be responsible for evaluating, at least
annually, the quality standards of Drug Product to determine the need for
changes in Specifications, manufacturing processes, and/or controlled documents.
NTI shall supply BPS a copy of its evaluation and recommendations, if any.

 

  4.5 Distribution Records: BPS shall maintain distribution records that contain
all of the appropriate information as specified in cGMP.

 

  4.6 Customer Complaints and Adverse Events: NTI, as required by cGMP, shall
maintain all customer complaint and adverse event files relating to Drug
Products. Any such complaints received by BPS shall be forwarded to NTI. NTI
shall be responsible reviewing each such complaint or adverse event to determine
the need for an investigation or the need to report such complaint or adverse
event to the FDA, as required by cGMP. NTI shall send to BPS all Drug Product
performance or manufacturing-related complaints which require investigation, and
shall provide to BPS a list of, and a sample of, all Batches of Drug Product
which are the subject of such complaints. BPS shall conduct an investigation, if
required by applicable SOPs, for each such Batch of Drug Product for which BPS
receives such sample from NTI, and BPS shall report its findings and follow-up
of each such investigation to NTI. NTI shall make a copy of these complaint
files available to BPS in the event they are required by BPS during an FDA
inspection related to a Drug Product(s).

 

  4.7 Audits: NTI or its representatives, upon prior written notice and during
normal business hours, shall have the right to inspect, *** each calendar year,
BPS Batch records and the portions of BPS’ facility used for Production, storage
and shipping of Drug Product; provided, however that NTI shall have the right to
perform an additional audit or inspection of such Batch records and facility if
such audit is for cause. For the avoidance of doubt, such audits are not
intended to, and will not, include any financial information/records other than
invoices issued by BPS to NTI and payments made by NTI (or on its behalf) to BPS
hereunder. If NTI chooses to audit BPS more than *** in a calendar year, NTI
agrees to reimburse BPS for BPS’ reasonable expenses incurred in hosting the
audit. All audited data, records and the like will be treated as Confidential
Information of BPS or NTI (as applicable), and NTI shall not be permitted to
copy or remove audited data or records without BPS’ prior consent, which consent
shall not be unreasonably withheld or delayed.

 

  4.8 Production Visits: BPS shall permit NTI to designate up to two
representatives of NTI to be present at BPS’ facility at any time during any
shift during BPS’ Production of Drug Product. Such representatives of NTI shall
be restricted to areas of BPS’ facility where BPS is performing such
Production-related activities, and shall be restricted to observing Production
of Drug Product. Such representatives of NTI shall comply with all applicable
BPS policies and procedures (copies of which have been provided to NTI prior to
execution of this Agreement), and may, at BPS’ option, be escorted by BPS
personnel.

 

  4.9 Regulatory Compliance: Unless otherwise stated, BPS is responsible for
compliance with all federal, state and local laws and regulations
(“Regulations”) as they apply generally to development, production, handling and
storage of pharmaceutical products. NTI shall be responsible for compliance with
all Regulations as they apply to all other

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aspects of the Production, use, and sale of Drug Product, which responsibility
shall include, without limitation, all contact with the FDA regarding the
foregoing.

 

Article 5, ACCEPTANCE OF DRUG PRODUCT.

 

  5.1 Non-Conforming Drug Product: Within *** after the date of Production of
any Batch pursuant to the Project Plan, BPS shall promptly forward to NTI, or to
NTI’s designee, reasonable quantities of samples of such Batch as specified in
the MBR. Within *** days after receipt by NTI (or by NTI’s designee) of the
samples, or within *** days after receipt by NTI (or by NTI’s designee) of the
Released Executed Batch Record, whichever is later, NTI shall determine whether
such Batch of Drug Product conforms to the Master Batch Record, BPS SOPs,
Specifications and the Project Plan (collectively the “Product Requirements”).

 

  5.1.1 If (a) any Batch of Drug Product conforms to the Product Requirements,
or (b) NTI fails to notify BPS within the applicable time period that any Batch
of Drug Product does not conform to the Product Requirements, then NTI shall be
deemed to have accepted the Drug Product and waived its right to revoke
acceptance.

 

  5.1.2 If NTI believes any Batch of Drug Product does not conform to the
Product Requirements, it shall notify BPS by telephone (including a detailed
explanation of the non-conformity), and thereafter shall confirm such notice in
writing via overnight delivery to BPS. Upon BPS’ receipt of such notice, BPS
will investigate such alleged non-conformity, and (a) if BPS agrees that such
Batch of Drug Product is non-conforming, deliver to NTI a corrective action plan
within *** days after receipt of NTI’s written notice of non-conformity, or such
additional time as may be reasonably required if such investigation or plan by
BPS requires data from sources other than NTI or BPS, or (b) if BPS disagrees
with NTI’s determination that such Batch of Drug Product is non-conforming, BPS
shall so notify NTI by telephone within the *** period, and shall confirm such
notice in writing by overnight delivery to NTI.

 

  5.1.3 If the parties reasonably dispute whether a Batch of Drug Product is
conforming or non-conforming, samples of such Batch of Drug Product will be
submitted to a mutually acceptable outside laboratory or consultant for
resolution, whose determination of conformity or non-conformity, and the cause
thereof if non-conforming, shall be binding upon the parties. The party that
incorrectly determined the conformity or non-conformity (as the case may be) of
the Batch of Drug Product shall bear the cost of such outside laboratory or
consultant.

 

  5.2 Remedies for Non Conforming Product: In the event BPS agrees that the
Batch of Drug Product is non-conforming solely as a result of the negligence or
willful misconduct of BPS, or if the outside laboratory or consultant determines
under Section 5.1.3 that the Batch of Drug Product is non-conforming solely as a
result of the negligence or willful misconduct of BPS, then at NTI’s option and
with BPS’ consent (not to be unreasonably withheld or delayed), BPS shall (a)
***, replace such non-conforming Drug Product with conforming Drug Product
within *** days from the date of BPS’ receipt of replacement Bulk

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Drug Substance from NTI (subject to NTI supply of the replacement Bulk Drug
Substance at its expense, and NTI’s payment for the non-conforming Drug
Product), or (b) refund the Purchase Price of the non-conforming Drug Product.

 

  5.3 Non-conforming Bulk Drug Substance: If Drug Product is rejected by NTI,
and such Drug Product’s failure to meet the Product Requirements is the result
of non-conforming Bulk Drug Substance, then such non-conformity shall not be
deemed to be non-conforming as a result of the negligence or willful misconduct
of BPS.

 

Article 6, DRUG PRODUCT RECALLS.

 

  6.1 Drug Product Recalls: In the event that NTI shall be required to recall
any Drug Product because such Drug Product may violate local, state or federal
laws or regulations, the laws or regulations of any applicable foreign
government or agency, or the Drug Product Specifications, or in the event that
NTI elects to institute a voluntary recall of any Drug Product, NTI shall be
responsible for coordinating such recall. NTI promptly shall notify BPS if any
Drug Product is the subject of a recall, and shall provide BPS with a copy of
all documents relating to such recall. BPS shall cooperate with NTI in
connection with any such recall, at NTI’s expense. NTI shall be responsible for
all of the costs and expenses of such recall.

 

Article 7, FORCE MAJEURE.

 

  7.1 Force Majeure Events: Failure of either party to perform an obligation
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 of
God, acts of terrorism, 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
affected party, whether or not foreseeable, provided that written notice of such
event is promptly delivered to the other party.

 

Article 8, CHANGES IN PRODUCTION.

 

  8.1 Changes to Master Batch Records and Drug Product Specifications: BPS
agrees to inform NTI within *** days of any regulatory development that
materially affects Production of Drug Product or any material change to a Drug
Product-Specific SOP and/or Master Batch Record and/or Drug Product
Specification that may or will materially affect the Production of Drug Product.
For purposes of clarification, “material” changes or effects include (without
limitation) such developments or changes that may or would affect the strength,
identity, safety, purity or quality of the Drug Product. BPS shall notify NTI
of, and obtain prior written approval from NTI for, any material changes to Drug
Product-specific SOPs, Master Batch Records and/or to Drug Product
Specifications prior to the Production of subsequent Batches of Drug Product.

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  8.2 Drug Product-Specific Changes: If facility, equipment, process or system
changes are required of BPS as a result of requirements set forth by the FDA or
any other Regulatory Authority, and such regulatory changes apply primarily to
the Production and/or supply of one or more Drug Products for NTI, then NTI and
BPS will review such requirements and will agree in writing to any and all
facility, equipment, process and/or system changes necessitated by such
requirements. The parties shall discuss in good faith and mutually agree upon an
agreed *** of the reasonable costs thereof.

 

Article 9, CONFIDENTIALITY.

 

  9.1 Confidentiality: It is contemplated that, in the course of the parties’
performance under this Agreement, each party may, from time to time, disclose
Confidential Information to the other party.

 

  9.2 Prior Confidentiality Agreement: This Agreement, by reference,
incorporates the Confidentiality Agreement signed by NTI and BPS on January 5,
2005, and such Confidentiality Agreement is made a part hereof as though fully
set forth herein. Disclosures of Confidential Information under this Agreement
shall be governed by the terms and conditions of such Confidentiality Agreement.

 

  9.3 Third Party Disclosure: BPS shall be permitted to disclose Drug Product
information on an “as needed” basis to third party developmental and analytical
services providers that are contractually bound to BPS in connection with
performance of BPS’ obligations hereunder; provided that all such third party
providers shall be subject to confidentiality and non-use obligations regarding
NTI’s Confidential Information that are similar to those applicable to BPS
hereunder. Either party may disclose Confidential Information of the other party
to those Affiliates, agents, advisors and consultants who need to know such
information to accomplish the purposes of this Agreement (collectively,
“Permitted Recipients”); provided that such Permitted Recipients are subject to
confidentiality and non-use obligations that are similar to those applicable to
BPS and NTI hereunder.

 

  9.4 Litigation and Governmental Disclosure: Each party may disclose
Confidential Information of the other party hereunder only to the extent such
disclosure is reasonably necessary for prosecuting or defending litigation,
complying with applicable governmental regulations or conducting pre-clinical or
clinical trials; provided that if a party is required by applicable law or
regulation or by regulatory agencies to make any such disclosure of the other
party’s Confidential Information, that party (a) will, except where impractical
for necessary disclosures (for example, in the event of a medical emergency),
give prompt advance written notice to the other party of such disclosure
requirement, and (b) will use good faith efforts to assist such other party to
secure a protective order or confidential treatment of, or to otherwise prevent
disclosure of, such Confidential Information required to be disclosed.

 

  9.5 Limitation of Disclosure: The parties agree that, except as otherwise may
be required by applicable laws, regulations, rules or orders, including, without
limitation, the rules and regulations promulgated by the United States
Securities and Exchange Commission, and except as may be authorized pursuant to
Section 9.4, no information concerning this

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Agreement and the transactions contemplated herein shall be made public by
either party without the prior written consent of the other party.

 

  9.6 Publicity and SEC Filings: The parties agree that the public announcement
of the execution of this Agreement shall only be by one or more press releases
mutually agreed to by the parties. The failure of a party to return a draft of a
press release, with its proposed amendments or modifications to such press
release, to the other party within five (5) business days of such party’s
receipt of such draft press release shall be deemed to be such party’s approval
of such draft press release as received from the other party. Each party agrees
that it shall cooperate fully and in a timely manner with the other party with
respect to all disclosures to the Securities and Exchange Commission and any
other governmental or regulatory agencies, including requests for confidential
treatment of Confidential Information of either party included in any such
disclosure.

 

  9.7 Duration of Confidentiality; Return of Confidential Information: All
obligations of confidentiality and non-use imposed upon the parties under this
Agreement shall expire ten (10) years after the expiration or earlier
termination of this Agreement. Upon written request, the Recipient shall
promptly return or destroy all Confidential Information of the requesting party,
including all copies thereof; provided that the Recipient may retain a single
copy of such Confidential Information for the sole purpose of determining the
scope of its obligations hereunder.

 

Article 10, INTELLECTUAL PROPERTY.

 

  10.1 Existing Intellectual Property: Except as the parties may otherwise
expressly agree in writing, each party owns, and shall continue to own, its
existing patents, trademarks, copyrights, trade secrets and other intellectual
property, without conferring any interests therein on the other party. Without
limiting the generality of the preceding sentence, NTI shall retain all right,
title and interest arising under the United States Patent Act, the United States
Trademark Act, the United States Copyright Act and all other applicable laws,
rules and regulations in and to all Drug Products, Bulk Drug Substance, Labeling
and trademarks associated therewith, and all data, documents and records
provided by NTI and specifically relating to Drug Product (including Drug
Product-specific information contained within MBRs, Released Executed Batch
Records, Specifications, Project Plan(s) and Regulatory Plan(s) (collectively,
“NTI Intellectual Property”)). Neither party shall acquire any right, title,
license or other interest in the other party’s intellectual property by virtue
of this Agreement or otherwise, except to the extent expressly provided herein.

 

  10.2

Intellectual Property Arising Under this Agreement: The parties do not
anticipate that discoveries, inventions, improvements or new technology
(collectively, “New IP”) will arise in connection with this Agreement.
Notwithstanding the foregoing, except as the parties may otherwise agree in
writing, all New IP (as defined herein) which is conceived, reduced to practice,
or created solely by a party in the course of performing its obligations under
this Agreement shall be solely owned and subject to use and exploitation by that
inventing party without a duty to account to the other party (collectively the
“Individually Owned New IP.”) For purposes of this Agreement, “New IP” shall
mean information relating to any invention, innovation, improvement,
development, discovery, computer program, device, trade secret, method,
know-how,

 

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process, technique or the like, whether or not written or otherwise fixed in any
form or medium, regardless of the media on which contained and whether or not
patentable or copyrightable. BPS hereby grants to NTI (a) ***, worldwide,
irrevocable and transferable license, with the right to grant sublicenses, under
each Individually Owned New IP that is owned by BPS to the extent it relates
solely to the Drug Product, and (b) ***, worldwide, irrevocable and transferable
license, with the right to grant sublicenses, under all other Individually Owned
New IP that is owned by BPS and described in this Section 10.2, to use such New
IP to research, develop, conduct clinical trials for, formulate, manufacture,
test, seek regulatory approval for, market, commercialize, make, have made, use,
sell, offer for sale, import, distribute and otherwise exploit the Bulk Drug
Substance or the Drug Product.

 

  10.3 Jointly Owned New IP Arising Under this Agreement: All New IP which is
conceived, reduced to practice, or created jointly by the parties and/or their
respective agents (i.e., employees or agents who would be or are properly named
as co-inventors under the laws of the United States on any patent application
claiming such New IP) in the course of the performance of this Agreement shall
be owned jointly by the parties (collectively the “Jointly Owned New IP.”) Each
party shall have full rights to exploit such Jointly Owned New IP for its own
commercial purposes without any obligation to the other. The parties shall share
equally in the cost of mutually agreed patent filings with respect to all such
Jointly Owned New IP. The decision to file for patent coverage on Jointly Owned
New IP shall be mutually agreed upon, and the Parties shall select a mutually
acceptable patent counsel to file and prosecute patent applications based on
such Jointly Owned New IP. BPS hereby grants to NTI an ***, worldwide,
irrevocable and transferable license, with the right to grant sublicenses, under
BPS’ right, title and interest in and to all Jointly Owned New IP to the extent
it relates solely to the Drug Product, to use such New IP to research, develop,
conduct clinical trials for, formulate, manufacture, test, seek regulatory
approval for, market, commercialize, make, have made, use, sell, offer for sale,
import, distribute and otherwise exploit the Bulk Drug Substance or the Drug
Product.

 

  10.4 Disclaimer: Except as otherwise expressly provided herein, nothing
contained in this Agreement shall be construed or interpreted, either expressly
or by implication, estoppel or otherwise, as: (a) a grant, transfer or other
conveyance by a party to the other party of any right, title, license or other
interest of any kind in any New IP or other intellectual property owned by that
party, (b) creating an obligation on the part of a party to make any such grant,
transfer or other conveyance or (c) requiring a party to participate with the
other party in any cooperative development program or project of any kind or to
continue with any such program or project.

 

  10.5 Rights in Intellectual Property: The party owning any New IP arising
hereunder shall have the worldwide right to control the drafting, filing,
prosecution and maintenance of patents covering such New IP, including decisions
about the countries in which to file patent applications. Patent costs
associated with the patent activities described in this Section 10.5 shall be
borne by the sole owner. Each party will reasonably cooperate with the other
party in the filing and prosecution of patent applications. Such cooperation
will include, but not be limited to, furnishing supporting data and affidavits
for the prosecution of patent applications and completing and signing forms
needed for the prosecution, assignment and maintenance of such patent
applications.

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  10.6 Master Batch Record: Subject to Section 10.7, each MBR shall be the
property of BPS; however, all information, data and results contained within the
MBR and which (a) is generated or obtained by BPS in the course of its
performance of this Agreement; (b) is not BPS Existing Intellectual Property,
BPS Individually Owned New IP or Jointly Owned New IP; and (c) relates solely to
Bulk Drug Substance or Drug Product, shall be owned by NTI.

 

  10.7 Confidentiality of Intellectual Property: As provided in this Article 10,
intellectual property shall be deemed to be the Confidential Information of the
party that owns such intellectual property (whether or not the party that
discloses such Confidential Information or intellectual property to the other
party is the owner), and to the extent any *** or *** is *** shall not disclose
such intellectual property (or corresponding Confidential Information) without
the prior written consent of ***. The protection of each party’s Confidential
Information is described in Article 9. It shall be the responsibility of the
party preparing a patent application to use reasonable efforts to limit the
disclosure of the other party’s Confidential Information in any patent
application. Should a party need to disclose the other party’s Confidential
Information to comply with a patent office’s disclosure requirements the party
must obtain the written permission of the other party to use or disclose the
other party’s Confidential Information in the patent application before the
application is filed and for other disclosures made during the prosecution of
the patent application.

 

Article 11, REPRESENTATIONS AND WARRANTIES.

 

  11.1 Mutual Representations and Warranties: Each party hereby represents and
warrants to the other party that (a) the person executing this Agreement is
authorized to execute this Agreement; (b) this Agreement is legal and valid and
the obligations binding upon such party are enforceable by their terms; and (c)
the execution, delivery and performance of this Agreement does not conflict with
any agreement, instrument or understanding, oral or written, to which such party
may be bound, nor violate any law or regulation of any court, governmental body
or administrative or other agency having jurisdiction over it.

 

  11.2 BPS Representations and Warranties: BPS represents and warrants that: (a)
it shall use commercially reasonable efforts to perform its obligations
hereunder; (b) that none of it, its officers, directors, employees, or those of
its Affiliates are debarred under the Generic Drug Enforcement Act or convicted
of a crime which could lead to debarment, and it has not knowingly utilized, and
will not knowingly utilize, the services of any individual or entity in the
performance of any plan or project under this Agreement that has been debarred
under the Generic Drug Enforcement Act or convicted of a crime that could lead
to debarment; (c) that it will conduct each plan or project in conformity with
applicable cGMP, according to *** (without any warranty by BPS that Drug Product
Produced hereunder will *** to *** when Produced in compliance with ***), all
applicable FDA regulatory requirements relating generally to production of
pharmaceutical products, all applicable laws and regulations, and the procedures
and parameters set forth in the applicable plan; and (d) that the Drug Product
shall not have been and shall not be adulterated, misbranded, misused,
contaminated, or tampered with

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due to the negligence or willful misconduct of BPS. In the event that BPS
receives notice of the debarment or threatened debarment of any individual or
entity utilized by BPS in connection with a plan or project, BPS shall notify
NTI immediately, and NTI shall have the right to terminate this Agreement upon
written notice without further cost or liability, except for payments of accrued
and unpaid obligations to the date of termination. BPS further represents and
warrants that it has obtained (or will obtain prior to Producing Drug Product),
and will remain in compliance with during the term of this Agreement, all
permits, licenses and other authorizations (the “Permits”) which are required
under federal, state and local laws, rules and regulations applicable to the
Production only of Drug Product as specified in the Project Plan; provided,
however, BPS shall have no obligation to obtain Permits relating to the sale,
marketing, distribution or use of Bulk Drug Substance or Drug Product or with
respect to the Labeling of Drug Product. BPS makes no representation or warranty
with respect to the sale, marketing, distribution or use of the Bulk Drug
Substance or as to printed materials specified by NTI or its agents.

 

  11.3 Disclaimer of BPS Warranties: Except for those warranties set forth in
Sections 11.1 and 11.2 of this Agreement, BPS makes no warranties, written,
oral, express or implied, with respect to Drug Product or the Development and
Production of Drug Product. ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING,
WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE AND NONINFRINGEMENT, HEREBY ARE DISCLAIMED BY BPS. NO
WARRANTIES OF BPS MAY BE CHANGED BY ANY REPRESENTATIVES OF BPS. Any acceptance
of Drug Product by NTI in accordance with this Agreement shall be subject to the
terms of this Section 11.3.

 

  11.4 NTI Representations and Warranties: NTI represents and warrants that (a)
it has the right to give BPS any information provided to BPS by NTI hereunder
and that BPS has the right to use such information for the Production of Drug
Product, and (b) as of the Execution Date of this Agreement (as defined at the
end of this Agreement), to the actual knowledge of NTI, there are no (i) patents
or other intellectual rights that would be infringed by BPS’ Production of Drug
Product under this Agreement, or (ii) proprietary rights of third parties which
would be violated by BPS’ performance hereunder. NTI further warrants that the
Bulk Drug Substance provided to BPS hereunder (1) conforms to the Bulk Drug
Substance specifications and (2) is not adulterated or misbranded within the
meaning of the FD&C Act.

 

  11.5 Disclaimer of NTI Warranties: Except for those warranties set forth in
Sections 11.1 and 11.4 of this Agreement, NTI makes no warranties, written,
oral, express or implied, with respect to Drug Product or the Development and
Production of Drug Product. ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING,
WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE AND NONINFRINGEMENT, HEREBY ARE DISCLAIMED BY NTI. NO
WARRANTIES OF NTI MAY BE CHANGED BY ANY REPRESENTATIVES OF NTI.

 

Article 12, LIMITATION OF LIABILITY AND RISK OF LOSS.

 

  12.1

Limitation of Liability: Notwithstanding any other provision of this Agreement,
BPS shall not be liable for NTI’s loss of use or profits or other collateral,
special,

 

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consequential or other damages, losses, or expenses, including, but not limited
to, the cost of cover or the cost of a recall by NTI in connection with, or by
reason of, the Production and delivery of Drug Product under this Agreement,
whether such claims are founded in tort or contract. Except as provided in
Articles 3, 5 and 13, the foregoing constitutes the sole and exclusive liability
of BPS. All claims by NTI for breach or default under this Agreement shall be
brought within one (1) year after the cause of action accrued or the cause of
action shall be deemed waived.

 

  12.2 Risk of Loss: All BPS Supplied Components and equipment used by BPS in
the Production of Drug Product (collectively, “BPS Property”) shall at all times
remain the property of BPS, and BPS assumes risk of loss for such property until
delivery of Drug Product to a common carrier as specified under Section 2.9. BPS
hereby waives any and all rights of recovery against NTI and its Affiliates, and
against any of their respective directors, officers, employees, agents or
representatives, for any loss or damage to BPS Property to the extent the loss
or damage is covered or could be covered by insurance (whether or not such
insurance is described in this Agreement). All NTI Supplied Components, all Bulk
Drug Substance supplied by NTI, and all Drug Product (collectively, “NTI
Property”) shall at all times remain the property of NTI and NTI assumes all
risk of loss for the NTI Property. NTI hereby waives any and all rights of
recovery against BPS and its Affiliates, and against any of their respective
directors, governors, members, officers, employees, agents or representatives,
for any loss or damage to the NTI Property; NTI shall procure, at its cost,
insurance covering such loss or damage.

 

  12.3 Waiver of Claims: In connection with providing services hereunder, BPS
represents only that it will use reasonable care in providing such services as
they specifically relate to development studies, formulation, primary packaging
and manufacturing process development conducted by BPS in connection and
accordance with this Agreement. BPS makes no representation or warranty relating
to the stability, efficacy, safety, or toxicity of Drug Product developed,
formulated, packaged or Produced in accordance with this Agreement (including
the Project Plan), and NTI expressly waives all claims against BPS and its
Affiliates, and any of their respective agents or employees, arising out of or
in connection with any claims relating to the stability, efficacy, safety, or
toxicity of such Drug Product.

 

Article 13, INDEMNIFICATION.

 

  13.1

NTI Indemnification: NTI shall indemnify, defend and hold harmless BPS and its
Affiliates, and any of their respective directors, governors, members, officers,
employees, subcontractors and agents (collectively, the “BPS Indemnitees”) from
and against any and all liabilities, obligations, penalties, claims, judgments,
demands, actions, disbursements of any kind and nature, suits, losses, damages,
costs and expenses (including, without limitation, reasonable attorneys’ fees)
arising out of or in connection with property damage or personal injury
(including, without limitation, death) of third parties (collectively “Claims”),
including, without limitation, Claims allegedly resulting in part by the
negligent acts or omissions of the BPS Indemnitees or for acts or omissions for
which the BPS Indemnitee(s) otherwise would be strictly liable, in connection
with (a) the storage, promotion, labeling, marketing, distribution, use or sale
of Bulk Drug Substance or Drug Product by or on behalf of NTI, (b) NTI’s
negligence or willful misconduct in the performance of its obligations under
this Agreement, (c) NTI’s

 

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material breach of its obligations under this Agreement, or (d) any claim that
the use, sale, Production, marketing or distribution of Bulk Drug Substance or
Drug Product by BPS or NTI violates the patent, trademark, copyright or other
proprietary rights of any third party, except if any of the foregoing (a) or (d)
is caused solely by the negligence or willful misconduct of BPS in the
performance of its obligations under this Agreement, or solely by a material
breach by BPS of its obligations under this Agreement.

 

  13.2 BPS’ Indemnification: BPS shall indemnify, defend and hold harmless NTI
and its Affiliates, and any of their respective directors, governors, members,
officers, employees, subcontractors and agents (collectively, the “NTI
Indemnitees”) from and against any and all Claims resulting solely from either
(a) BPS’ negligence or willful misconduct in the performance of its obligations
under this Agreement, or (b) BPS’ material breach of its obligations under this
Agreement.

 

  13.3 Indemnitee Obligations: A party (the “Indemnitee”) which intends to claim
indemnification under this Article 13 shall promptly notify the other party (the
“Indemnitor”) in writing of any action, claim or other matter in respect of
which the Indemnitee or any of its Affiliates, or any of their respective
directors, governors, members, officers, employees, subcontractors, or agents,
intend to claim such indemnification; provided, however, that failure to provide
such notice within a reasonable period of time shall not relieve the Indemnitor
of any of its obligations hereunder, except to the extent the Indemnitor is
prejudiced by such failure. The Indemnitee shall permit, and shall cause its
Affiliates, and their respective directors, governors, members, officers,
employees, subcontractors and agents to permit, the Indemnitor, at its
discretion, to settle any such action, claim or other matter, and the Indemnitee
agrees to the complete control of such defense or settlement by the Indemnitor.
Notwithstanding the foregoing, the Indemnitor shall not enter into any
settlement that would 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 such rights, without Indemnitee’s prior written
consent, which shall not be unreasonably withheld or delayed. No such action,
claim or other matter shall be settled without the prior written consent of the
Indemnitor, which shall not be unreasonably withheld or delayed. The Indemnitee,
its Affiliates, and their respective directors, governors, members, officers,
employees, subcontractors and agents shall fully cooperate with the Indemnitor
and its legal representatives in the investigation and defense of any action,
claim or other matter covered by the indemnification obligations of this Article
13. The Indemnitee shall have the right, but not the obligation, to be
represented in such defense by counsel of its own selection and at its own
expense.

 

  13.4 Injunction: In the event that the Production of a Drug Product is
enjoined due to alleged infringement by either party of the proprietary rights
of a third party, such action shall be deemed a breach of this Agreement by NTI
and subject to the terms of Article 3.

 

Article 14, INSURANCE.

 

  14.1 NTI Insurance: NTI shall procure and maintain, during the Term of this
Agreement and for a period *** beyond the expiration date of Drug Product,
Commercial General Liability Insurance, including without limitation, Product
Liability and Contractual

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Liability coverage (the “NTI Insurance”). The NTI Insurance shall cover amounts
not less than *** dollars ($***) combined single limit and shall be with an
insurance carrier with an AM Best rating of A-VII of better. BPS shall be named
as an additional insured on the NTI Insurance, and before commencement of
Production of Drug Product (as set forth in the Project Plan), NTI shall deliver
a certificate of NTI Insurance and endorsement of additional insured to BPS
evidencing such coverage within five (5) days of execution of this Agreement. If
NTI fails to furnish such certificates or endorsements coverage within five (5)
days of execution of this Agreement, or if at any time thereafter during the
Term of this Agreement BPS is notified of the cancellation or lapse of the NTI
Insurance, and NTI fails to rectify the same within *** calendar days after
written notice from BPS, BPS, at its option, may obtain such NTI Insurance and
NTI promptly shall reimburse BPS for the cost of the same. Any deductible and/or
self insurance retention shall be the sole responsibility of NTI.

 

  14.2 BPS Insurance: BPS shall, during the Term of this Agreement and for a
period *** beyond the expiration date of Drug Product, obtain and maintain at
its own cost and expense, any combination of insurance or self-insurance, in
BPS’ sole discretion, for its commercial liability with respect to its
activities hereunder. Any deductible and/or self insurance retention of BPS
shall be the sole responsibility of BPS.

 

  14.3 Limitation: In no event will the liability of either party be limited to
that which is recoverable by insurance.

 

Article 15, ALTERNATIVE DISPUTE RESOLUTION; INJUNCTION.

 

  15.1 Dispute Resolution: The parties undertake to amicably solve any disputes
between them arising out of or relating to the operation or interpretation of
this Agreement or concerning its validity. If they fail to do so, such dispute
shall be first referred to the Senior Director, Pharmaceutical Services of BPS
and to the Vice President, Product Development of NTI (collectively,
“Executives”) for resolution, upon one party providing the other party with
written notice that such dispute exists. The Executives shall attempt to resolve
such dispute through good faith discussions. In the event that the Executives
cannot resolve such dispute within thirty (30) days of such other party’s
receipt of such written notice, either party may request that such dispute be
resolved by binding arbitration before one independent and impartial arbitrator
in accordance with the CPR Non-Administered Arbitration Rules in effect on the
date of this agreement, applying the substantive law specified in Section 16.9.
The parties shall jointly select the arbitrator. The arbitrator will not have
the right to modify the terms and conditions of this Agreement; as a result, the
rights and obligations of the parties will be determined by the arbitrator in
accordance with this Agreement, and any decision or award will only be in
accordance with this Agreement. Within three (3) months of the conclusion of an
arbitration proceeding, the arbitration decision shall be rendered in writing
and shall specify the basis on which the decision was made. The arbitration
shall be governed by the United States Arbitration Act, 9 U.S.C. Sec. 1-16, and
judgment upon any such award may be entered in any court having jurisdiction
thereof. Arbitration shall be conducted in New York City, New York.
Notwithstanding the foregoing, this Section 15.1 shall not apply to any disputes
arising under Article 9 (Confidentiality) or to any disputes relating

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to a party’s Intellectual Property, as defined in Article 10 (including, without
limitation, the validity or infringement of patents or scope of patent claims).

 

  15.2 Injunctions: Notwithstanding anything to the contrary contained in this
Article 15, in the event of any breach or threatened breach of this Agreement by
either party that the other party believes will cause irreparable harm and
damage to it, such party shall be entitled to seek an injunction, restraining
order restraining such breach or threatened breach by the other party and all
other remedies which shall be available to it at law or in equity and the
parties irrevocably submit to the jurisdiction of any state or federal court
sitting in New York City, NY over any such suit, action or proceeding.

 

Article 16, GENERAL PROVISIONS.

 

  16.1 Notices: All notices hereunder shall be delivered by facsimile (with
confirmation copy provided by overnight delivery), or by overnight delivery with
a reputable overnight delivery service, to the following address of the
respective parties:

 

If to NTI:    Neurobiological Technologies, Inc.      3260 Blume Drive, Suite
500      Richmond, California 94806      Attn:        Vice President and Chief
Financial Officer      Telephone:             (510) 262-1730     
Facsimile:              (510) 262-0204 With a copy to:    Neurobiological
Technologies, Inc.      115 River Road, Third Floor      Edgewater, New Jersey
07020-1034      Attn:        Vice President, Product Development     
Telephone:             (201) 512-8847      Facsimile:              (201)
512-8848 If to BPS:    Baxter Pharmaceutical Solutions LLC      927 South Curry
Pike      Bloomington, IN 47403      Attn:        Contract Management     
Telephone:             (812) 333-0887      Facsimile:              (812)
332-3079

 

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With a copy to:    Baxter Healthcare Corporation      One Baxter Parkway     
Deerfield, IL 60015-4633      Attn:        General Counsel     
Telephone:            (847) 948-2600      Facsimile:              (847) 948-2450

 

Notices shall be effective on the day following the date of transmission, if
sent by facsimile, and on the day of delivery, if sent by overnight delivery. A
party may change its address listed above by notice to the other party that is
provided in accordance with this Section 16.1.

 

  16.2 Entire Agreement; Amendment: Except for the Confidentiality Agreement
signed by NTI and BPS on January 5, 2005, which is incorporated herein pursuant
to Section 9.2, the parties hereto acknowledge and agree that this Agreement
(including all Development Plans, Project Plans and Regulatory Plans
incorporated herein, as well as all Quality Agreements) 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. In
the event of a conflict between the terms set forth in the body of this
Agreement and any of the documents incorporated herein by reference (the
Confidentiality Agreement, Quality Agreement, Development Plan, Project Plan and
Regulatory Plan), the terms set forth in the body of this Agreement shall
control. 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
an authorized agent or representative of each of the parties hereto. No course
of dealing or usage of trade shall be used to modify the terms and conditions
herein.

 

  16.3 Waiver: None of the provisions of this Agreement shall be considered
waived by a party hereto unless such waiver is agreed to, in writing, by
authorized agents of each of the parties. The failure of a party to insist upon
strict conformance to any of the terms and conditions hereof, or any 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.

 

  16.4 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.

 

  16.5

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
or transferred 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) a transfer to a wholly-owned
subsidiary or (b) a 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. Either party may, without such consent, assign this
Agreement to an Affiliate of such party, provided that the assignee assumes all
obligations of the assigning party under this Agreement, and in the case of an
assignment by BPS to an Affiliate of BPS, further provided that such assignment
does not result in a transfer of Production of Drug Product hereunder from BPS’
facilities in Bloomington, IN. No

 

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assignment shall relieve any party of its responsibility for the performance of
its obligations hereunder.

 

  16.6 Successors and Assigns: This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto, their successors and permitted
assigns.

 

  16.7 Taxes: NTI shall pay all national, state, municipal or other sales, use,
excise, import, property, value added, or other similar taxes, assessments or
tariffs assessed upon or levied against the sale of Drug Product to NTI pursuant
to this Agreement, or the sale or distribution of Drug Product by NTI (or, at
NTI’s sole expense, NTI shall defend against the imposition of such taxes and
expenses). BPS shall notify NTI of any such taxes that any governmental
authority is seeking to collect from BPS, and NTI may assume the defense thereof
in BPS’ name, if necessary, and BPS agrees to fully cooperate in such defense to
the extent of the capacity of BPS, at NTI’s expense. BPS shall pay all national,
state, municipal or other taxes on the income resulting from the sale by BPS of
the Drug Product to NTI under this Agreement, including but not limited to,
gross income, adjusted gross income, supplemental net income, gross receipts,
excess profit taxes, or other similar taxes.

 

  16.8 Independent Contractor: BPS shall act as an independent contractor for
NTI in providing the services required hereunder, and shall not be considered an
agent of, or a joint venturer with, NTI. Unless otherwise provided herein to the
contrary, BPS 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.

 

  16.9 Governing Law: This Agreement is being delivered and executed in the
State of Delaware. In any action brought regarding the validity, construction
and enforcement of this Agreement, it shall be governed in all respects by the
laws of the State of Delaware, without regard to the principles of conflicts of
laws.

 

  16.10  Attorneys’ Fees: The successful party in any litigation or other
dispute resolution proceeding to enforce the terms and conditions of this
Agreement shall be entitled to recover from the other party reasonable
attorneys’ fees and related costs involved in connection with such litigation or
dispute resolution proceeding.

 

  16.11  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.

 

  16.12  Headings, Interpretation: The headings used in this Agreement are for
convenience only and are not part of this Agreement.

 

  16.13  Counterparts; Facsimile: This Agreement may be executed by original or
facsimile signature in several counterparts, each of which need not contain the
signature of more than one party, but all such counterparts taken together shall
constitute one and the same agreement.

 

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IN WITNESS WHEREOF, the parties hereto have each caused this Drug Product
Development and Clinical Supply Agreement to be executed by their duly
authorized representatives as of June 23, 2005 (the “Execution Date”), and to be
effective as of the Effective Date set forth in the preamble to this Agreement.

 

NEUROBIOLOGICAL TECHNOLOGIES, INC.       BAXTER PHARMACEUTICAL SOLUTIONS LLC

By:

  /s/    STEPHEN J. PETTI              

By:

  /s/    KELLY L. ZALESKI, PH.D.        

Name:  

  Stephen J. Petti      

Name:  

  Kelly L. Zaleski, Ph.D.

Title:

  Vice President, Product Development      

Title:

  Sr. Director, Pharmaceutical Services

 

By:

  /s/    JONATHAN R. WOLTER                    

Name:  

  Jonathan R. Wolter            

Title:

  Vice President & Chief Financial Officer            

 

By:

  /s/    PAUL E. FREIMAN                    

Name:  

  Paul E. Freiman            

Title:

  Chief Executive Officer            

 

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