Exhibit 10.1

 

COLLABORATION AND SERVICES AGREEMENT

 

This COLLABORATION AND SERVICES AGREEMENT (the “Agreement”), dated as of
November 28, 2005 (the “Effective Date”), is by and between NEUROBIOLOGICAL
TECHNOLOGIES, INC., a Delaware corporation (“NTI”) and NEUTRON LTD., a Bermuda
limited company (“CELTIC”). NTI and CELTIC are sometimes hereinafter referred to
individually as a “Party” and collectively as the “Parties.”

 

WITNESSETH:

 

WHEREAS, pursuant to the terms of that certain Asset Purchase Agreement, dated
as of September 19, 2005 (the “Purchase Agreement”), by and between NTI and
CELTIC, NTI has sold, transferred, and assigned to CELTIC certain assets
relating to the pharmaceutical product XERECEPT® (as further defined in the
Purchase Agreement, the “Product”); and

 

WHEREAS, CELTIC desires that NTI provide, and NTI has agreed to provide, certain
services in connection with the research and development of the Product; and

 

WHEREAS, NTI currently has the technology, know-how, personnel, and other
resources useful in the development of the Product.

 

NOW, THEREFORE, in consideration of the above premises and the covenants
contained herein and for other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the Parties agree as follows:

 

ARTICLE 1

DEFINITIONS

 

1.1 Certain Definitions. When used in this Agreement, each of the following
terms, whether used in the singular or plural, shall have the meanings set forth
in Section 1.1 or referred to in Section 1.2. Other capitalized terms used but
not defined herein shall have the meanings set forth in the Purchase Agreement.

 

“Calendar Quarter” means any three (3) month period ending on
March 31, June 30, September 30 or December 31.

 

“Collaboration Inventions” means and collectively includes all Intellectual
Property Rights, including information, trade secrets, data, inventions,
technology, know-how, and pre-clinical, clinical, chemical, pharmacological,
toxicological, assay, control, manufacturing, and adverse event information,
concerning or relating to the Product that are made, conceived and/or reduced to
practice, actually and/or constructively, by employees, consultants or
subcontractors of either Party in conducting the Collaboration Work that are
necessary or useful for the research, development, registration, manufacture,
use, sale or other disposition of the Product.

 

“Commercial Product” means the Product with Marketing Approval with respect to
any country in the Territory.

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“Dollars” or numbers preceded by the symbol “$” mean amounts in United States
Dollars.

 

“First Indication” means the treatment of Peritumoral Brain Edema.

 

“NTI Knowledge” shall mean the actual knowledge of any of NTI’s officers or
senior managers.

 

“NTI Technology” means any Intellectual Property Rights which were owned or
licensed by NTI prior to the Effective Date, including Licensed IP but expressly
excluding the Acquired Intellectual Property, or which are developed by NTI
subsequent to the Effective Date and are outside the scope and unrelated to the
Product or the subject matter of this Agreement. For the avoidance of doubt, NTI
Technology expressly excludes any Collaboration Inventions.

 

“Territory” means, collectively, the U.S. Territory and the ROW Territory.

 

“ROW Territory” shall mean all nations, states, possessions and territories that
are not a part of the U.S. Territory.

 

“U.S. Territory” shall mean the United States, its territories and possessions,
including the Commonwealth of Puerto Rico.

 

1.2 Other Definitions. Certain other terms are defined in the Sections cited
below:

 

Definition

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Section

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Collaboration Work

   2.1

Confidential Information

   8.1

Damages

   6.1

Effective Date

   Preamble

Notice Period

   9.3

Product

   Preamble

Purchase Agreement

   Preamble

Research Expenses

   2.6

Steering Committee

   2.2(a)

Term

   9.1

 

1.3 Interpretation. The headings preceding the text of Articles and Sections
included in this Agreement and the headings to the Schedules hereto are for
convenience of reference only and should not be deemed a part of this Agreement
or be given any effect in interpreting this Agreement. The use of masculine,
feminine or neuter gender or the single or plural form of words herein shall not
limit the applicability of any provision of this Agreement to such gender or
form. The use of the term “including” or “include” shall in all cases herein
mean “including, without limitation,” or “include, without limitation,”
respectively. Underscored references to Articles, Sections or Schedules shall
refer to those portions of this Agreement. The use of the terms “hereunder,”
“hereof” and words of similar import shall refer to this Agreement as a whole
and not to any particular Article or Section of, or Schedule to, this Agreement.

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ARTICLE 2

PRODUCT DEVELOPMENT

 

2.1 General. The Steering Committee will have sole authority and responsibility
for the clinical development of the Product for all indications, including the
First Indication (collectively, the “Collaboration Work”). Subject to the
Purchase Agreement, CELTIC will have sole authority and responsibility for any
commercialization of the Product in each jurisdiction within the Territory that
CELTIC determines in its sole discretion, is feasible and commercially
attractive for the commercialization of the Product, such authority and
responsibility to include the filing and maintenance of any and all applicable
Marketing Approvals. The Collaboration Work will be allocated among the Parties
in accordance with Section 2.3 and Schedule A hereto.

 

2.2 Steering Committee.

 

(a) Promptly after the Effective Date, the Parties shall form a steering
committee (the “Steering Committee”) to which CELTIC shall have the right to
designate such number of representatives as CELTIC deems appropriate from time
to time and NTI shall have the right to designate two (2) representatives.
CELTIC’s representatives shall include one or more of its managing partners from
time to time and NTI’s representatives shall be its chief executive officer and
such other representative as it deems fit from time to time. CELTIC shall
designate the Chairman of the Steering Committee. Subject to the foregoing, the
respective individual representatives of any Party to the Steering Committee may
be removed and replaced from time to time at the discretion of such Party by
sending written notice of such action to the other Party. Each representative of
NTI and CELTIC shall have one (1) vote to cast in matters coming to a vote
before the Steering Committee. Except as provided in Section 2.11, all decisions
of the Steering Committee shall be made by majority vote of the representatives
on the Steering Committee. In the event an issue arises that the Steering
Committee cannot resolve by majority vote, the Chairman shall cast an additional
tie-breaking vote; provided, however, that no such vote shall require NTI to
spend money or devote human resources above those committed herein, without
NTI’s express written approval.

 

(b) The Steering Committee shall meet once per Calendar Quarter, or at such
other intervals as the Steering Committee may decide, at such times and at such
locations as shall be decided by the Steering Committee, provided such meetings
shall be held only outside of the territories of the United States or the United
Kingdom. Meetings may be held in person or via teleconference. At least fifteen
(15) business days prior to each regularly scheduled meeting of the Steering
Committee, the Steering Committee shall cause a written report to be submitted
to the Parties concerning the progress of any Collaboration Work, such report to
include a summary of (i) progress achieved since the previous meeting;
(ii) critical issues or problems encountered or anticipated; and (iii) a
statement of goals for the scheduled activities. CELTIC shall provide an agenda
and minutes of each meeting of the Steering Committee. Minutes shall be deemed
approved unless NTI objects to the accuracy of such minutes within ten (10) days
of its receipt thereof. The parties agree that the Steering Committee shall meet
and otherwise exercise its functions and duties only outside of the territories
of the United States or the United Kingdom and their respective territories.

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(c) Notwithstanding any of the foregoing, until the earlier of: (x) FDA approval
of the First Indication, (y) the third anniversary of the Effective Date or
(z) the consummation of a Change of Control with respect to NTI, all decisions
relating to clinical trial designs and regulatory affairs, including regulatory
submissions and communications with the FDA in respect of the First Indication
in the U.S. shall be subject to the unanimous consent of the Steering Committee.

 

2.3 Collaboration Work. The Steering Committee shall have sole authority and
responsibility for the conduct and allocation of Collaboration Work. Although it
is the present intent of the Parties that a substantial amount of Collaboration
Work will be performed by NTI or its Affiliates, the Steering Committee may
allocate all or any portion of the Collaboration Work to Persons other than NTI,
including CELTIC, CELTIC’s Affiliates or third party contract research
organizations and consultants. Plans for Collaboration Work shall be subject to
periodic revision by the Steering Committee for any reason deemed appropriate by
the Steering Committee, including based upon timelines of Collaboration Work,
results obtained or changes in competitive products or market forces. In the
event that, after instructing NTI to perform any Collaboration Work, the
Steering Committee requests NTI to cease performing such Collaboration Work or
reallocates such Collaboration Work from NTI to other Persons, the Steering
Committee shall give NTI ninety (90) days prior written notice thereof and
CELTIC’s sole obligation to NTI with respect to such Collaboration Work shall be
to pay NTI any fees for services rendered then due and owing to NTI because of
such Collaboration Work hereunder as well as all actual costs, including
committed costs, paid by NTI to complete activities associated with the
termination and orderly close out of such Collaboration Work, provided that
CELTIC shall not pay any such costs incurred under any agreement entered into by
NTI after the date NTI receives written notice of such reallocation. Subject to
Section 8.1, information generated by Collaboration Work will be freely shared
between the Parties upon the reasonable request from one Party to the other. No
allocation or reallocation of Collaboration Work shall require NTI to spend
money or devote human resources above those committed pursuant to Schedule A
without NTI’s express written approval.

 

2.4 Drug Approval Applications. CELTIC shall have sole authority and
responsibility for preparing and filing applications for Marketing Approval of
the Product in the Territory. Such applications shall be filed in CELTIC’S name,
CELTIC shall be responsible for prosecuting them, and CELTIC shall be the owner
of all ensuing Marketing Approvals. NTI shall provide reasonable cooperation and
assistance to CELTIC in the application for or other acquisition of any
Marketing Approvals, including making available (i) such of NTI’s then-current
employees, consultants and advisors (including, where applicable, any named
inventors) knowledgeable about the Product, and (ii) any information, data,
reports, studies or results in NTI’s possession or under its control and related
to the Product. CELTIC shall reimburse NTI for any reasonable and documented
expenses incurred by or on behalf of NTI’s employees, consultants and advisors,
including consultants’ fees, in providing such cooperation and assistance.

 

2.5 Research and Development Efforts. NTI will use its Commercially Reasonable
Efforts to perform and complete the Collaboration Work set forth opposite its
name on Schedule A.

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2.6 Research Funding. During the Term and subject to the terms and conditions of
this Agreement, CELTIC shall bear the reasonable and documented costs and
expenses of the Collaboration Work (the “Research Expenses”) as set forth in
this Section 2.6.

 

(a) The Steering Committee shall, prior to commissioning any Collaboration Work
to a Party, solicit such Party’s good faith estimate as to (i) the actual dollar
amount of Research Expenses that would be incurred by such Party in performing
such Collaboration Work and (ii) how long it would take such Party to perform
such Collaboration Work. Such Party shall, promptly after the Steering
Committee’s solicitation therefor, report such good faith estimate in writing to
the Steering Committee, and, if such good faith estimate is accepted by the
Steering Committee in writing, then such Party shall perform such Collaboration
Work for such amounts and during such time period.

 

(b) Upon reasonable written notice to NTI, CELTIC shall have the right, either
itself or using CELTIC’s independent certified public accountants, to audit
those books and records as may be necessary to verify the accuracy of the
reports furnished by NTI to CELTIC pursuant to Section 2.9. If an independent
certified public accountant is used by CELTIC for the conduct of such audits,
the report prepared by such independent public accountant shall be provided to
NTI at the same time it is sent or otherwise provided to CELTIC and shall
contain the conclusions of the independent public accountant regarding the
audit. In the event an audit conducted by an independent public accountant
concludes there has been any overpayment by CELTIC, NTI shall remit to CELTIC
within thirty (30) days after NTI’s receipt of the auditor’s report, (i) the
amount of such overpayment and (ii) if such overpayment exceeds five percent
(5%) of the total amount paid or payable for the calendar year then being
audited, the reasonable fees and expenses of CELTIC in commissioning or
performing such audit, subject to reasonable substantiation. Any NTI information
received or obtained by CELTIC in connection with an audit under this
Section 2.6 is Confidential Information for purposes of Section 8.1.

 

2.7 Access to Personnel. NTI shall make available to CELTIC, upon reasonable
notice and during normal business hours, the reasonable assistance of all of
NTI’s then-current employees, consultants, and advisors (including, where
applicable, any named inventors) who are knowledgeable about Collaboration
Inventions and/or Acquired Intellectual Property in order to facilitate CELTIC’s
efforts to develop and commercialize the Product. CELTIC shall reimburse NTI for
any reasonable and documented expenses incurred by or on behalf of NTI’s
employees, pre-approved consultants and advisors, including the reasonable and
documented fees of pre-approved consultants, in providing such cooperation and
assistance.

 

2.8 Mutual Cooperation. The Parties shall cooperate with each other in
connection with the performance of the Collaboration Work, including, without
limitation, by developing reasonable procedures with respect to information
sharing, transfer of data and similar matters. Each Party shall make available
on a timely basis to the other Party all information and materials reasonably
requested in respect of the Collaboration Work. CELTIC hereby grants NTI a
non-exclusive, fully-paid, royalty-free license to use CELTIC’s documentation,
data and other

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materials to the extent reasonably required to perform the Collaboration Work.
This Section 2.8 does not transfer title or other rights to any such materials
or other assets of CELTIC.

 

2.9 Books and Records. During the Term, NTI shall keep materially complete and
accurate books and records of the Collaboration Work it performs and reasonable
supporting documentation of all out-of-pocket costs incurred in connection with
the Collaboration Work, and shall make such books and records available to
CELTIC upon reasonable notice and during normal business hours.

 

2.10 Manufacturing and Supply. NTI agrees that CELTIC may require NTI to supply,
at the cost of CELTIC, clinical quantities of the Product in the Territory.

 

2.11 Other Indications. Notwithstanding anything herein, until the earlier of:
(x) FDA approval of the First Indication, (y) the third anniversary of the
Effective Date or (z) the consummation of a Change of Control with respect to
NTI, the Steering Committee shall not authorize, and CELTIC shall not engage in
any tests or trials of the Product for any indications other than malignant
brain tumors, nor make any regulatory submissions relating to the foregoing,
that NTI reasonably believes may adversely affect in any material respect the
application for FDA approval of the First Indication.

 

ARTICLE 3

PRODUCT COMMERCIALIZATION

 

3.1 General. Subject to its obligations set forth in the Purchase Agreement,
CELTIC shall have sole authority, responsibility for and discretion over the
manufacture, marketing, distribution and sale of Commercial Products in the
Territory. CELTIC shall set prices for Commercial Products in the Territory and
shall obtain all Marketing Approvals as may be required in connection with such
pricing. CELTIC will prepare or have prepared any and all advertising and
education materials for the Commercial Products in the Territory. Decisions
regarding matters such as advertising and promotion shall be made in the sole
discretion of CELTIC. CELTIC shall be responsible for developing and registering
trademarks for the Commercial Products in the Territory and shall be the sole
owner of all such trademarks.

 

ARTICLE 4

FEES; PAYMENTS

 

4.1 Fees and Expenses. CELTIC shall reimburse NTI for the reasonable and
documented out-of-pocket expenses actually incurred by NTI in its performance
under this Agreement, including reasonable and documented travel and lodging
expenses actually incurred in connection with the development of the Product.
NTI shall invoice CELTIC for such fees and expenses monthly, based on the
operating costs it allocates to the Product in its financial statements;
provided, however, that such allocation shall not include any amounts in respect
of overhead or fixed costs (e.g., office, organization, management, lease,
insurance or other overhead items.) All invoiced amounts shall be due and
payable within forty-five (45) days after the date of the invoice. If CELTIC
fails to make any payment due under this Section 4.1 when it is due, then such
late payment shall bear interest at a rate equal to four percent (4%) above the

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then-applicable prime commercial lending rate of Citibank, N.A. San Francisco,
California (or the maximum amount permitted by law, if less) from the date first
due until the date paid, provided that, no such interest will accrue or be
payable if any applicable non-payment or late payment is subject to a bona fide
dispute between the Parties.

 

4.2 Taxes. In addition to the fees and other amounts payable by CELTIC to NTI
under this Agreement, CELTIC shall pay any applicable taxes or assessments,
including any sales, use or excise taxes, that may be levied or assessed by any
government or other taxing authority in connection with the performance by NTI
of the Collaboration Work, or any receipts therefor, other than federal, state
or local income or withholding taxes (including both regular and alternative
minimum taxes) or other federal, state or local taxes based upon NTI’s income
(whether gross or net), taxable income or alternative taxable income. Official
receipts indicating proof of payment of any such taxes shall be secured and made
available to the other Party upon request as evidence of payment.

 

ARTICLE 5

REPRESENTATIONS AND WARRANTIES

 

5.1 Representations and Warranties of CELTIC and NTI. CELTIC and NTI each hereby
represent and warrant to the other that:

 

(a) This Agreement is a legal and valid obligation binding upon each Party and
enforceable in accordance with its terms. The execution, delivery, and
performance of this Agreement by each Party does not conflict with any
agreement, instrument, or understanding, oral or written, to which it is a party
or by which it is bound, nor violate any law or regulation of any court,
governmental body, or administrative or other agency having jurisdiction over
it. Each Party expressly represents and warrants that it has full power and
authority to execute and deliver this Agreement and to perform the obligations
contemplated hereby.

 

(b) Each Party will duly and punctually perform all duties, agreements,
covenants, and undertakings on the part of the Party contained in this
Agreement.

 

(c) All of its employees, officers, and consultants have executed written
agreements requiring assignment to the Party of all inventions made during the
course of and as a result of their association with such Party and obliging the
individual to maintain as confidential the Confidential Information of such
Party.

 

(d) To its knowledge, no consent, approval, waiver, order or authorization of,
or registration, declaration or filing with, any Governmental Entity is required
in connection with its execution, delivery and performance of this Agreement, or
any agreement or instrument contemplated by this Agreement.

 

(e) It will not knowingly infringe any Third Party Intellectual Property Rights
in the course of performing any Collaboration Work or otherwise performing its
obligations hereunder.

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ARTICLE 6

INDEMNITY AND INSURANCE

 

6.1 Indemnification of NTI by CELTIC. CELTIC agrees to indemnify, hold harmless,
and defend NTI and its shareholders, directors, officers, employees, and agents
from and against any and all costs, losses, liabilities, fines, penalties,
demands, damages, expenses, court costs, costs of counsel, consultants, and
experts (regardless of outcome) (“Damages”) arising directly or indirectly out
of any Third Party claim or action arising from:

 

(a) any breach of any representation or warranty made by CELTIC in this
Agreement or any agreement, instrument, or document delivered by CELTIC pursuant
to the terms of this Agreement;

 

(b) any violation of applicable law, or other act or omission of CELTIC with
respect to the operation of CELTIC’s business or any of CELTIC’s activities
under this Agreement;

 

(c) the breach by CELTIC of any material term of this Agreement; or

 

(d) the negligence or intentional misconduct of CELTIC or any of its agents or
employees, except to the extent such claims result from conduct of NTI or its
shareholders, directors, officers, employees, agents or sublicensees.

 

Nothing in the provisions of this Section 6.1 shall prevent NTI from instituting
direct actions against CELTIC or from obtaining direct damages in any such
action.

 

6.2 Indemnification of CELTIC by NTI. NTI agrees to indemnify, hold harmless,
and defend CELTIC and its shareholders, directors, officers, employees, and
agents against any and all Damages arising directly or indirectly out of any
Third Party claim or action arising from:

 

(a) any breach of any representation or warranty made by NTI in this Agreement
or any agreement, instrument, or document delivered by NTI pursuant to the terms
of this Agreement;

 

(b) any violation of applicable law, or other any act or omission of NTI with
respect to the operation of NTI’s business or any of NTI’s activities under this
Agreement;

 

(c) the breach by NTI of any material term of this Agreement; or

 

(d) the negligence or intentional misconduct of NTI or any of its agents or
employees, except to the extent such claims result from conduct of CELTIC or its
shareholders, directors, officers, employees, agents or sublicensees.

 

Nothing in the provisions of this Section 6.2 shall prevent CELTIC from
instituting direct actions against NTI or from obtaining direct damages in any
such action.

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6.3 Conduct of Claims. If a Party or any of its shareholders, directors,
officers, employees, and agents has a right to be indemnified under Section 6.1
or 6.2 (each, an “Indemnified Party”), such Indemnified Party shall give prompt
notice of such Third Party claim to the Party from whom indemnification is
sought hereunder (the “Indemnifying Party”) and shall cooperate with the
Indemnifying Party. The Indemnifying Party will have the right to defend at its
own expense and by counsel of its own choice any Third Party claims for which it
is obligated to provide indemnification to the Indemnified Party; provided,
however, that it will not settle any such Third Party claim without the prior
written consent of the Indemnified Party, which consent shall not be
unreasonably withheld. If the Indemnifying Party is defending a Third Party
claim, the Indemnified Party shall have the right to be present in person or
through counsel of its own choosing, at the expense of the Indemnifying Party.

 

6.4 Steering Committee Members. No member of the Steering Committee shall be
personally liable to any Party by reason of the actions of such person in the
conduct of the business of the Steering Committee, except for actions involving
fraud or willful misconduct.

 

6.5 Insurance. The Parties shall obtain and maintain at their own expense
appropriate insurance, in amounts customary in the pharmaceutical industry, but
in no event less than $5 million general liability and $3 million covering human
clinical trials, in accordance with standard commercial practices, and to cover
the indemnities granted in Sections 6.1 and 6.2, and such insurance policies
shall name the other Party as an additional insured. Such insurance policies
shall be written to cover claims incurred, discovered, manifested, or made in
connection with clinical development and sale of the Product in the Territory.
Each Party shall provide evidence of such coverage to the other Party. Each
Party shall provide at least thirty (30) days prior written notice to the other
Party in the event that such Party becomes aware that such coverage may not be
renewed, is not renewed, or is canceled.

 

ARTICLE 7

INVENTIONS; INFRINGEMENT BY OTHERS;

PROTECTION OF PATENTS

 

7.1 Ownership of Collaborative Inventions.

 

(a) CELTIC shall solely own all right, title and interest in and to
Collaboration Inventions, irrespective of the inventorship thereof. NTI shall
promptly notify CELTIC in writing of all Collaboration Inventions of which an
employee, consultant or subcontractor of NTI is an inventor in sufficient detail
to permit evaluation of same by CELTIC. NTI shall not disclose any Collaboration
Invention or any information related thereto to any Third Party without the
prior written consent of CELTIC, and each Collaboration Invention shall be
deemed CELTIC’s Confidential Information hereunder.

 

(b) NTI shall assign (or cause to be assigned) and hereby does assign to CELTIC
all of NTI’s right, title and interest in and to all Collaboration Inventions
and any and all Intellectual Property Rights thereto, and shall execute all
documents necessary to effectuate or record such transfer of title. NTI further
agrees to reasonably assist CELTIC, or its designee, upon CELTIC’s request and
at CELTIC’s expense, to

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obtain, enforce, and defend CELTIC’s rights in Collaboration Inventions and any
Intellectual Property Rights relating thereto in any and all countries, and to
execute all documents reasonably necessary for CELTIC to do so. In addition, to
the extent allowed by law, any Collaboration Inventions which constitute
copyrightable subject matter shall be considered “works made for hire” as that
term is defined in the United States Copyright Act.

 

(c) NTI agrees that if, in the course of performing any Collaboration Work, NTI
incorporates into any Collaboration Invention(s) any NTI Technology, CELTIC is
hereby granted and shall have a non-exclusive, fully-paid, royalty-free,
perpetual, irrevocable, worldwide license to make, have made, make derivative
works of, reproduce, display, perform, use, offer for sale, sell, and import
such NTI Technology in connection with the applicable Collaboration Invention(s)
and/or the Product.

 

(d) Upon the termination of this Agreement, or upon CELTIC’s earlier request,
NTI will deliver to CELTIC all documents and materials relating to, and all
tangible embodiments of, Collaboration Inventions in NTI’s possession or
control.

 

7.2 Infringement of Intellectual Property Rights. Each Party shall promptly
inform the other of any suspected infringement of any Acquired Intellectual
Property or Collaboration Inventions by a Third Party. CELTIC shall have the
right, at its sole discretion, on its own behalf and expense, to institute,
prosecute and control any action or proceeding relating to the enforcement of
any Intellectual Property Rights in the Acquired Intellectual Property and the
Collaboration Inventions. NTI agrees to be joined as a party if necessary to
prosecute the action or proceeding and shall provide, at CELTIC’s expense, all
reasonable cooperation, including any necessary use of its name, required to
prosecute such litigation. CELTIC shall have sole control of any such suit and
all negotiations for its settlement or compromise and shall bear all costs and
expenses of the suit. Any amounts recovered as a result of such actions shall be
dealt with as follows: (x) first, the cost of litigating such action shall be
deducted and may be retained from the amounts recovered by CELTIC; (y) second,
the cost of any royalty or license payments to Third Parties shall be deducted
and may be retained from the amounts recovered by CELTIC; and (z) as to any
amounts remaining, CELTIC may retain all such remainder, provided that such
remainder shall be deemed to be Gross Margin or Net Sales, as applicable,
occurring in the calendar quarter in which it is received and for which CELTIC
shall pay NTI U.S. Profit Sharing Payments or ROW Royalty Payments, as
applicable, under Section 7.2 of the Purchase Agreement.

 

7.3 Declaratory Actions and Counterclaims. In the event that an action alleging
invalidity or non-infringement of any of the Acquired Intellectual Property or
Collaboration Inventions shall be brought against CELTIC, CELTIC, at its sole
discretion, shall have the right, to control the action at its own expense. NTI
agrees to be joined as a party if necessary to prosecute the action and shall
provide all reasonable cooperation, at CELTIC’s expense, including any necessary
use of its name, required to prosecute such litigation. CELTIC shall have sole
control of any such suit and all negotiations for its settlement or compromise
and shall bear all costs and expenses of the suit. Any recovery obtained from
such litigation, proceeding or settlement shall belong to CELTIC.

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7.4 Infringement Charges Against a Party. If CELTIC, NTI or their respective
Affiliates is threatened with suit or sued by a third party for infringement of
Intellectual Property Rights because of activities in connection with the
Collaboration Work or the manufacture, offer for sale, sale, importation and/or
distribution of the Product, the Party which has been threatened with suit or
sued shall promptly notify the other Party in writing of such event. CELTIC and
NTI agree to take whatever reasonable action the Steering Committee deems
appropriate in connection with such claim or suit; provided, however, that
(i) CELTIC shall be solely responsible for the costs (including attorneys’ fees)
of defending and/or settling any such suit related solely to its performance of
the Collaboration Work or the manufacture, offer for sale, sale, importation
and/or distribution of the Product, and (ii) NTI shall be solely responsible for
the costs (including attorneys’ fees) of defending and/or settling any such suit
related solely to its performance of the Collaboration Work other than in strict
accordance with any protocols or instructions provided by the Steering
Committee. Each Party agrees that it shall cooperate with the other Party in
defending the suit, even if not a party to the suit, and shall join the suit if
deemed a necessary party. Notwithstanding the foregoing, NTI shall bear all
costs (including attorneys’ fees) of defending and/or settling any such suit
which arises directly or indirectly out of a breach of the representations and
warranties made by NTI pursuant to Section 5.1(e) of this Agreement or
Section 4.9 of the Purchase Agreement.

 

ARTICLE 8

CONFIDENTIALITY

 

8.1 Confidential Information. Section 6.4 of the Purchase Agreement shall apply
to all Confidential Information disclosed hereunder, and is hereby incorporated
into this Agreement.

 

ARTICLE 9

TERM AND TERMINATION

 

9.1 Term. This Agreement shall commence on the Effective Date and, unless
terminated earlier pursuant to Sections 9.2, 9.3, 9.4 or 9.5, shall expire on
the sixth (6th) anniversary of the date hereof (the “Term”).

 

9.2 Termination prior to Marketing Approval of First Indication. Until the
earlier of: (x) FDA approval of the First Indication, or (y) the third
anniversary of the Effective Date:

 

(a) this Agreement may only be terminated by CELTIC (i) pursuant to Sections 9.4
or 9.5, (ii) with NTI’s prior written consent, (iii) immediately, upon the
termination of the Purchase Agreement pursuant to Article 9 thereof, or
(iv) immediately, upon a Change of Control of NTI or a Sale Transaction.

 

(b) this Agreement may only be terminated by NTI (i) pursuant to Sections 9.4 or
9.5, (ii) with CELTIC’s prior written consent, or (iii) immediately, upon the
termination of the Purchase Agreement pursuant to Article 9 thereof.

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9.3 Termination after Marketing Approval of First Indication. After:

 

(a) the earlier of (x) FDA approval of the First Indication, or (y) three
(3) years after the Effective Date, CELTIC shall have the right to terminate
this Agreement (i) pursuant to Sections 9.4 or 9.5, (ii) in its sole discretion
upon ninety (90) days prior written notice to NTI, (iii) immediately, upon the
termination of the Purchase Agreement pursuant to Article 9 thereof, or
(iv) immediately, upon a Change of Control of NTI or a Sale Transaction.

 

(b) the earlier of (x) FDA approval of the First Indication, or (y) three
(3) years after the Effective Date, NTI shall have the right to terminate this
Agreement (i) pursuant to Sections 9.4 or 9.5 or (ii) immediately, upon the
termination of the Purchase Agreement pursuant to Article 9 thereof.

 

(c) FDA approval of the First Indication, NTI shall have the right to terminate
the Agreement in its sole discretion upon ninety (90) days prior written notice
to CELTIC.

 

9.4 Termination for Material Breach. If either Party commits a material breach
of this Agreement and such breach is not cured within sixty (60) days after
written notice thereof by the non-breaching Party (the “Notice Period”), or if
such breach is incapable of cure during the Notice Period, the breaching Party
fails to make good faith efforts to cure such breach during the Notice Period,
then, in each such case the non-breaching Party may terminate this Agreement
upon expiration of the Notice Period.

 

9.5 Termination for Insolvency. If either Party:

 

(a) makes a general assignment for the benefit of its creditors or becomes
insolvent;

 

(b) files an insolvency petition in bankruptcy;

 

(c) petitions for or acquiesces in the appointment of any receiver, trustee, or
similar officer to liquidate or conserve its business or any substantial part of
its assets;

 

(d) commences under the laws of any jurisdiction any proceeding involving its
insolvency, bankruptcy, reorganization, adjustment of debt, dissolution,
liquidation, or any other similar proceeding for the release of financially
distressed debtors; or

 

(e) becomes a party to any proceeding or action of the type described above in
(c) or (d), and such proceeding or action remains undismissed or unstayed for a
period of more than sixty (60) days, then, in each case, the other Party may by
written notice terminate this Agreement in its entirety with immediate effect.

 

9.6 Duties upon Termination; Accrued Obligations. In the event of termination of
this Agreement, all work under this Agreement shall cease to the extent
practicable, and no additional work shall be undertaken or additional
obligations incurred. Except where expressly provided for otherwise in this
Agreement, termination of this Agreement shall not relieve the Parties hereto of
any liability which accrued hereunder prior to the effective date of such
termination, nor preclude any Party from pursuing all rights and remedies it may
have hereunder

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or at law or in equity with respect to any breach of this Agreement nor
prejudice any Party’s right to obtain performance of any obligation.

 

9.7 Surviving Obligations. Upon the expiration or early termination of this
Agreement and except as expressly provided to the contrary herein, all rights
and obligations of the Parties shall cease, except for the following
obligations, which shall continue:

 

(a) CELTIC’S obligation to make payments pursuant to Article 4 up to the
effective date of termination and under Section 2.3 as set forth therein;

 

(b) any cause of action or claim of CELTIC or NTI, accrued or to accrue, because
of any breach or default by the other Party prior to the expiration or early
termination of this Agreement; and

 

(c) the provisions of Articles and Sections 1, 6, 7, 8, 9.6, 9.7, 9.8, 10 and
11.

 

9.8 Bankruptcy. All rights and licenses granted under or pursuant to this
Agreement or the Purchase Agreement by NTI to CELTIC are, and shall otherwise be
deemed to be, for purposes of Section 365(n) of the Bankruptcy Code, licenses of
rights to “intellectual property” as defined under Section 101(52) of the
Bankruptcy Code. The Parties agree that CELTIC, as a licensee of such rights
under this Agreement, shall retain and may fully exercise all of its rights and
elections under the Bankruptcy Code. The Parties further agree that in the event
of the commencement of a bankruptcy proceeding by or against NTI under the
Bankruptcy Code, CELTIC shall be entitled to a complete duplicate of, or
complete access to, as appropriate, any such intellectual property and all
embodiments of such intellectual property, and the same, if not already in its
possession, shall be promptly delivered to CELTIC (a) upon any such commencement
of a bankruptcy proceeding upon written request therefor by CELTIC unless NTI
elects to continue to perform all of its obligations under this Agreement, or
(b) if not delivered under (a) above, upon the rejection of this Agreement by or
on behalf of NTI upon written request therefor by CELTIC.

 

ARTICLE 10

LIMITATIONS AND EXCLUSIONS OF LIABILITY

 

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

 

10.2 Exclusion of Liability. IN NO EVENT SHALL EITHER PARTY, ITS DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS OR AFFILIATES BE LIABLE TO THE OTHER PARTY FOR ANY
INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT
LIMITED TO LOST PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS
AGREEMENT, REGARDLESS OF ANY NOTICE OF THE POSSIBILITY OF SUCH DAMAGES. This
Section 10.2 shall not be construed to

--------------------------------------------------------------------------------

limit either Party’s obligations under Sections 6.1 or 6.2. Notwithstanding the
foregoing, the Parties have explicitly agreed that direct damages shall not be
subject to the foregoing limitation.

 

10.3 Limitation of Liability. EACH PARTY’S RESPECTIVE AGGREGATE LIABILITY
ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT SHALL BE LIMITED TO
TWENTY MILLION ($20,000,000). This Section 10.3 shall not be construed to limit
either Party’s obligations under Section 6.1 or 6.2.

 

ARTICLE 11

MISCELLANEOUS

 

11.1 Subcontractors; Assignment.

 

(a) With the prior written consent of the Steering Committee, each Party shall
have the right in its sole discretion to use subcontractors, consultants or
other Third Parties to perform its obligations hereunder, provided that such
Party shall remain responsible for the performance of its subcontracted
obligations.

 

(b) Except as provided in Section 11.1(a), neither Party may assign or delegate
this Agreement, nor any of its rights or obligations hereunder, without the
other Party’s prior written consent; provided, however, that each Party may
freely assign or delegate this Agreement: (i) to any of its Affiliates, or
(ii) in connection with the acquisition of all, or substantially all, of its
assets, or any merger, acquisition or reorganization of or by the assigning
Party. Any purported assignment or delegation of this Agreement in violation of
this Section 11 shall be null and void and of no effect. Subject to the
foregoing provisions of this Section 11.1, this Agreement shall be binding upon
and inure to the benefit of all successors and permitted assigns of the Parties.

 

11.2 JURISDICTION OF DISPUTES; WAIVER OF JURY TRIAL. IN THE EVENT ANY PARTY TO
THIS AGREEMENT COMMENCES ANY LITIGATION, PROCEEDING OR OTHER LEGAL ACTION IN
CONNECTION WITH OR RELATING TO THIS AGREEMENT, ANY RELATED AGREEMENT OR ANY
MATTERS DESCRIBED OR CONTEMPLATED HEREIN OR THEREIN, WITH RESPECT TO ANY OF THE
MATTERS DESCRIBED OR CONTEMPLATED HEREIN OR THEREIN, THE PARTIES TO THIS
AGREEMENT HEREBY (A) AGREE THAT ANY LITIGATION, PROCEEDING OR OTHER LEGAL ACTION
SHALL BE INSTITUTED IN A COURT OF COMPETENT JURISDICTION LOCATED WITHIN THE CITY
OF NEW YORK, NEW YORK, WHETHER A STATE OR FEDERAL COURT; (B) AGREE THAT IN THE
EVENT OF ANY SUCH LITIGATION, PROCEEDING OR ACTION, SUCH PARTIES WILL CONSENT
AND SUBMIT TO PERSONAL JURISDICTION IN ANY SUCH COURT DESCRIBED IN CLAUSE (A) OF
THIS SECTION 11.2 AND TO SERVICE OF PROCESS UPON THEM IN ACCORDANCE WITH THE
RULES AND STATUTES GOVERNING SERVICE OF PROCESS (IT BEING UNDERSTOOD THAT
NOTHING IN THIS SECTION SHALL BE DEEMED TO PREVENT ANY PARTY FROM SEEKING TO
REMOVE ANY ACTION TO A FEDERAL COURT IN NEW YORK, NEW YORK; (C) AGREE TO WAIVE
TO THE FULL EXTENT PERMITTED BY LAW ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER
HAVE TO THE VENUE OF ANY SUCH LITIGATION, PROCEEDING OR

--------------------------------------------------------------------------------

ACTION IN ANY SUCH COURT OR THAT ANY SUCH LITIGATION, PROCEEDING OR ACTION WAS
BROUGHT IN AN INCONVENIENT FORUM; (D) DESIGNATE, APPOINT AND DIRECT CT
CORPORATION SYSTEM AS ITS AUTHORIZED AGENT TO RECEIVE ON ITS BEHALF SERVICE OF
ANY AND ALL PROCESS AND DOCUMENTS IN ANY LEGAL PROCEEDING IN THE STATE OF NEW
YORK; (E) AGREE TO NOTIFY THE OTHER PARTIES TO THIS AGREEMENT IMMEDIATELY IF
SUCH AGENT SHALL REFUSE TO ACT, OR BE PREVENTED FROM ACTING, AS AGENT AND, IN
SUCH EVENT, PROMPTLY TO DESIGNATE ANOTHER AGENT IN THE CITY OF NEW YORK,
SATISFACTORY TO NTI AND CELTIC, TO SERVE IN PLACE OF SUCH AGENT AND DELIVER TO
THE OTHER PARTY WRITTEN EVIDENCE OF SUCH SUBSTITUTE AGENT’S ACCEPTANCE OF SUCH
DESIGNATION; (F) AGREE AS AN ALTERNATIVE METHOD OF SERVICE TO SERVICE OF PROCESS
IN ANY LEGAL PROCEEDING BY MAILING OF COPIES THEREOF TO SUCH PARTY AT ITS
ADDRESS SET FORTH IN SECTION 11.4 FOR COMMUNICATIONS TO SUCH PARTY; (G) AGREE
THAT ANY SERVICE MADE AS PROVIDED HEREIN SHALL BE EFFECTIVE AND BINDING SERVICE
IN EVERY RESPECT; AND (H) AGREE THAT NOTHING HEREIN SHALL AFFECT THE RIGHTS OF
ANY PARTY TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY DISPUTE IN
CONNECTION WITH OR RELATING TO THIS AGREEMENT, ANY RELATED AGREEMENT OR ANY
MATTERS DESCRIBED OR CONTEMPLATED HEREIN OR THEREIN, AND AGREE TO TAKE ANY AND
ALL ACTION NECESSARY OR APPROPRIATE TO EFFECT SUCH WAIVER.

 

11.3 Injunctive Relief. Notwithstanding anything herein, either Party may seek
(i) injunctive relief for the protection of such Party’s Intellectual Property
Rights or Confidential Information, and (ii) to enforce judgments, in any court
of competent jurisdiction.

 

11.4 Notices. Any notice required or provided for by the terms of this Agreement
shall be in writing and shall be (a) sent by registered or certified mail,
return receipt requested, postage prepaid, (b) sent via overnight courier
service, or (c) sent by facsimile transmission, in each case properly addressed
as follows:

 

If to CELTIC:

 

c/o Celtic Pharma Management L.P.

Wessex House

45 Reid Street, 4th Floor

Hamilton HM 12

Bermuda

Attention: General Counsel

Facsimile No.: +441-299-7441

 

with copies to:

 

Celtic Pharma

110 East 59th Street

Suite 3303

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New York, NY 10022

Attention: General Counsel

Facsimile No.: 212-668-3370

 

and

 

Mayer, Brown, Rowe & Maw LLP

1675 Broadway

New York, NY 10019

Attention: Philip O. Brandes

Facsimile No.: 212-262-1910

 

If to NTI:

 

Neurobiological Technologies, Inc.

3260 Blume Drive

Suite 500

Richmond, California 94806

U.S.A.

Attention: President and CEO

Facsimile No.: 510-595-6006

 

with a copy to:

 

Heller Ehrman LLP

4350 La Jolla Village Drive, 7th Floor

San Diego, CA 92122

Attention: Stephen C. Ferruolo

Facsimile No.: 858-587-5930

 

Either Party may change its address upon written notice to the other Party.

 

11.5 Entire Agreement. This Agreement embodies the entire understanding between
the Parties relating to the subject matter hereof and supersedes all prior
understandings and agreements, whether written or oral. None of the terms of
this Agreement can be amended or waived except by an instrument in writing
executed by authorized representatives of each Party.

 

11.6 Governing Law. This Agreement shall be construed and the respective rights
and obligations of the Parties determined according to the substantive laws of
the State of New York, notwithstanding any contrary conflict of laws provisions
thereof; provided that matters of intellectual property law which matters shall
be determined in accordance with the national intellectual property laws
relevant to the intellectual property in question.

 

11.7 Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
of enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction. If the final judgment of a court of competent
jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the

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parties agree that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope, duration, or area of
the term or provision, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision with a term or provision that is
valid and enforceable, and this Agreement shall be enforceable as so modified
after the expiration of the time within which the judgment may be appealed.

 

11.8 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument. Facsimile signatures shall be deemed to
have the same effect as their originals.

 

11.9 Independent Contractors. It is understood and agreed that the Parties are
independent contractors and nothing contained in this Agreement is intended to
make either Party a general or special agent, legal representative, joint
venturer, partner or employee of the other or otherwise as participants in a
joint or common undertaking for any purpose. Personnel supplied by a Party shall
work for that Party and shall not, for any purpose, be considered as partners,
joint venturers, employees or agents of the other Party. Each Party assumes full
responsibility for the acts of its personnel while performing services hereunder
and shall be responsible solely for their supervision, direction and control,
compensation, benefits and taxes. Neither Party has, expressly or by
implication, or may represent itself as having, directly or indirectly, any
authority to act for or on behalf of the other Party or to make contracts or
enter into any agreements in the name of the other Party, or to obligate or bind
the other Party in any manner whatsoever.

 

11.10 Force Majeure. Neither Party shall be held liable or responsible to the
other Party nor be deemed to have defaulted under or breached this Agreement for
failure or delay in fulfilling or performing any term of the Agreement when such
failure or delay is caused by or results from causes beyond the reasonable
control of the affected Party, including, fire, floods, earthquakes, natural
disasters, embargoes, war, acts of war (whether war be declared or not),
insurrections, riots, terrorism, civil commotions, strikes, lockouts or other
labor disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority or the other Party to the extent beyond the reasonable
control of the affected Party.

 

11.11 Amendment. This Agreement may be modified or amended only by written
agreement of the Parties hereto.

 

11.12 Delays or Omissions. It is agreed that no delay or omission to exercise
any right, power, or remedy accruing to any Party, upon any breach, default or
noncompliance under this Agreement shall impair any such right, power, or
remedy, nor shall it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of any similar breach, default or
noncompliance thereafter occurring. It is further agreed that any waiver,
permit, consent, or approval of any kind or character on any part of any breach,
default or noncompliance under the Agreement or any waiver by a Party of any
provisions or conditions of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement, by law, or otherwise afforded to the
Parties, shall be cumulative and not alternative.

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IN WITNESS WHEREOF, the Parties hereto have executed this Collaboration and
Services Agreement in duplicate originals by their duly authorized officers or
representatives.

 

NEUROBIOLOGICAL TECHNOLOGIES, INC.

By:

 

/s/ Paul E. Freiman

   

Name:

       

Title:

   

NEUTRON LTD.

By:

 

/s/ Stephen Evans-Freke

   

Name:

       

Title: