Sample Business Contracts

Supply and Manufacturing Agreement - DrugAbuse Sciences Inc. and Eon Labs Manufacturing Inc.

Sponsored Links


         Agreement, dated as of July 20, 2000 (the "Effective Date"), by and
between DRUGABUSE SCIENCES, INC. ("DAS"), a California corporation with offices
at 330 Distel Circle, Suite 150, Los Altos, CA 94022, and EON LABS
MANUFACTURING, INC. ("Eon"), a Delaware corporation with offices at 227-15 North
Conduit Ave., Laurelton, NY 11413.

         The Parties hereby agree as follows:

                                 ARTICLE I


         1.1 "AFFILIATE" shall mean (a) any corporation directly or indirectly
controlling, controlled by, or under common control with (to the extent of fifty
percent (50%) or more of its issued capital entitled to vote for the election of
directors) a Party or (b) any partnership, joint venture or other entity
directly or indirectly controlled by, controlling, or under common control with
(to the extent of fifty percent (50%) or more of voting power or otherwise
having power to control its general activities) a Party, but in each case only
for so long as such ownership or control shall continue.

         1.2 "AGREEMENT" shall mean this Supply and Manufacturing Agreement, as
amended from time to time.

         1.3 "DELIVERY DATE" shall mean a date for which delivery of Product is
requested in a Purchase Order.

         1.4 "FDA" shall mean the United States Food and Drug Administration.

         1.5 "LOT QUANTITY" or "LOT QUANTITIES" shall [******], or such other
amounts as the Parties may agree to in writing from time to time.

         1.6 "NET MARGIN" shall mean revenue actually received by DAS for
Product sold by DAS, less discounts, rebates, shelf adjustments, stock
adjustments, returns for credit and including the price paid to Eon for the
Product, and transportation cost for Product shipped to DAS's distribution

         1.7 "PARTY" shall mean either Eon or DAS; "PARTIES" shall mean Eon and

         1.8 "PRODUCT" shall mean [******] hereunder by Eon that meet the

         1.9 "PURCHASE ORDER" shall mean a firm order for Product submitted by
DAS to Eon.

         1.10 "REGULATORY AUTHORITY" shall mean the FDA or such other agency or
instrumentality of the United States to which the responsibilities of the FDA
are given or delegated.


         1.11 "PRODUCT ANDA" shall mean the Abbreviated New Drug Application
approval issued to Eon by the FDA and designated as ANDA #75-434 (as defined
below) for the Product, including any amendments or modifications thereto.

         1.12 "SPECIFICATIONS" shall mean the specifications for Product
manufactured and delivered by Eon as set forth in Exhibit I hereto (as such
Exhibit may be amended by the Parties from time to time). The "PACKAGING
SPECIFICATIONS" for the Product are set forth in Exhibit I-A.

         1.13 "TABLETS" shall mean [******].

         1.14 "TERM" shall have the meaning set forth in Section 6.1 hereof.

         1.15 "TERRITORY" shall mean the United States of America and its
territories and possessions.

                                  ARTICLE II

                          SALE AND PURCHASE OF PRODUCT

         2.1 SALE AND PURCHASE. Eon agrees to manufacture and supply DAS such
Lot Quantities of Product as DAS may order pursuant to and in accordance with
this Agreement, for DAS's use, distribution and sale; PROVIDED, HOWEVER, that
DAS may only distribute and sell Product to customers located in the Territory.

         2.2 PURCHASE ORDERS.

         (a) All purchases of Product hereunder shall be made by Purchase
Orders, and shall be subject to the terms of this Agreement. No additional terms
may be imposed by a Purchase Order.

         (b) Each Purchase Order shall include the total amount of Product
ordered in Lot Quantities with a [******] and the required Delivery Date, which
shall be no less than [******] after the receipt by Eon of such Purchase Order.
DAS may specify any proportion of [******] and [******] in a Purchase Order. Eon
will confirm receipt of each Purchase Order within [******] days of receipt.

         2.3 EXCLUSIVITY. During the Term, [******] and [******]; provided,
however, [******] (and only under) [******].

         2.4 TABLET TOOLING. Eon will, through its usual and customary sources
and subject to DAS's prior written approval given on a case-by-case basis and at
DAS's cost, order appropriate tooling that meets DAS's specifications for use in
the production of the Product (the "TOOLING"), provided that such specifications
comply with the requirements of the Product ANDA. Eon shall use the Tooling to
produce the Product and Eon shall only use the Tooling to produce Product to be
sold to DAS. Eon shall, at its cost, validate, use and maintain the Tooling



in accordance with its current standard operating procedures. Upon
termination of this Agreement, Eon shall, at DAS's option, either provide the
Tooling to DAS or destroy it.

         2.5 QUANTITY; FORECASTS. DAS shall deliver to Eon on a quarterly basis
during the Term a non-binding forecast of DAS quantity requirements for Product
for the following twelve (12) month period. Eon understands and agrees that DAS
forecasts are nonbinding until Purchase Orders are placed and that forecasts for
orders may be adjusted or cancelled by DAS in its sole discretion.

         2.6 MINIMUM PURCHASES. Subject to the terms and conditions of this
Agreement, DAS shall purchase a minimum of [******]. In the [******]. In each
[******] period thereafter during the Term, DAS [******].

         2.7 SHORTAGES. In the event there is inadequate [******] raw material
with which to manufacture all of the Product forecasted or ordered by DAS, Eon
shall immediately notify DAS of the shortfall and allocate the available supply
between DAS and Eon pro-rata based upon each Party's sales of Product over the
immediately preceding three (3) month period.


              (a) Eon shall manufacture the Product (i) according to the
Specifications, (ii) in compliance with all applicable FDA Good Manufacturing
Practices ("GMP"), the Federal Food, Drug, and Cosmetic Act (the "ACT"), and
all regulations promulgated under the Act, and (iii) in a GMP facility
inspected and approved by the applicable Regulatory Authority for the
manufacture of the Product. Eon shall provide DAS reasonable advance notice
before making any change to the Product manufacturing process that would
require notification to the FDA or any other Regulatory Authority. Eon will
inform DAS of any deviations from GMP procedures that may affect the quality,
potency or strength of the Product. If in the event that all or any of Eon's
GMP procedures that could effect the Product are or become the subject of an
investigation, inspection or other inquiry by a Regulatory Authority and such
investigation, inspection or inquiry results in the issuance of corrective
actions, warning letters or other notices (whether or not they require
immediate corrective action) related to GMP procedures for the Product, Eon
shall promptly inform DAS of such actions and provide DAS an opportunity to
review and consult with Eon regarding the situation and Eon's intended course
of action.

              (b) Eon shall package and label the Product in accordance with
the Packaging Specifications and the Product ANDA.

              (c) Eon shall ship Product in full Lot Quantities F.O.B. DAS's
designated facilities in accordance with DAS's instructions and no earlier
than three (3) days prior to the applicable Delivery Date, subject to the
commercial availability of the raw material [******]. DAS shall take title to
and risk of loss of each shipment of Product hereunder upon delivery to the
carrier of such shipment. For each lot of Product shipped to DAS, Eon will
send to DAS's offices copies of all applicable quality and testing records,
and any other documents reasonably required for DAS to demonstrate that the
Product conforms to all applicable Regulatory Authority requirements, which
shall be in a form reasonably acceptable to DAS. Eon shall prepay the freight
charges for each shipment of Product and add them to the appropriate invoice.




              (a) DAS may reject any portion of any Lot Quantities that (i)
does not fully conform to the Specifications or (ii) is adulterated or
misbranded within the meaning of the Federal Food, Drug and Cosmetic Act. In
order to reject a shipment, DAS must (i) give notice to Eon of DAS's intent
to reject the shipment within fifteen (15) business days (i.e., a day on
which DAS and Eon are each open for business) of receipt together with a
written indication of the reasons for such possible rejection, and (ii) as
promptly as reasonably possible thereafter provide Eon with notice of final
rejection and the full basis therefor; provided, however, that in the case of
Product having a latent defect that could not have been discovered upon
reasonable examination, DAS must only give notice of its intent to reject
within five (5) business days after discovery of such defects. Eon shall
notify DAS within thirty (30) days after receipt of a rejection notice from
DAS as to whether it accepts DAS's basis for such rejection.

              (b) DAS shall be entitled to a refund of the purchase price
(together with freight charges) of properly rejected Product at the time it
is ultimately rejected by DAS, provided that if Eon disputes the rejection,
refund shall be made, if at all, at the time the dispute is finally resolved
as set forth in Article IV. Eon shall notify DAS within thirty (30) days
whether it accepts DAS's basis for any rejection.

              (c) Whether or not Eon accepts DAS's basis for rejection,
promptly on receipt of a notice of rejection, Eon shall use all diligent
efforts, at DAS's request, to provide replacement Product within sixty (60)
days after receipt of a rejection notice from DAS.

              (d) DAS shall return rejected Product to Eon at Eon's cost.

         2.10 STABILITY STUDIES AND RELATED TESTING. It is DAS's intention to
develop [******] for Product. In support of DAS, and at DAS's request, Eon shall
perform all applicable tests, release testing, and stability studies for the
Product for [******] specifications developed by DAS in accordance with the Eon
ANDA, as more specifically set forth in Exhibit III. DAS shall [******]
conducting such studies on [******].

                                  ARTICLE III

                                QUALITY DISPUTES

         3.1 PRODUCT QUALITY DISPUTES. If DAS rejects any Product and if the
Parties have not agreed mutually on a remedy, the Parties shall timely consult
with each other and attempt to resolve the discrepancies. If the Parties cannot
resolve the discrepancies in a timely manner, they shall promptly nominate an
independent, reputable laboratory, which shall carry out analyses with respect
to such Product as may be jointly agreed upon by Eon and DAS and at the Parties'
joint expense. The results obtained by the laboratory shall be binding on the
Parties for purposes of this Agreement.

         If the results conclude that the Product conformed to the
Specifications, DAS shall reimburse Eon amounts paid to the testing laboratory.
If the results conclude that the Product does not conform to the Specifications,
Eon shall reimburse DAS amounts paid to the



laboratory. In the event the laboratory cannot conclude whether the Product
conforms or not to the Specifications, the Parties shall equally share the
laboratory expenses.

         3.2 NONPAYMENT FOR NONCONFORMING PRODUCT. If DAS rejects any Product
and the laboratory determines that such Product does not conform with the
Specifications, Eon shall at DAS's option either replace the nonconforming
Product as soon as reasonably possible (but no later than sixty (60) days) or
issue a refund therefor. In the event of refunds, the purchase price of such
Product (along with other applicable costs such as insurance and freight
charges) shall be promptly refunded to DAS.

                                  ARTICLE IV

                               PRICE AND PAYMENTS

         4.1 PRICE/PAYMENTS. DAS shall pay Eon the amounts set forth in Exhibit
II hereto for Product delivered by Eon pursuant to this Agreement. In addition,
DAS shall pay [******]: (a) [******] and (b) [******].

         4.2 METHOD OF PAYMENT. All payments for Product delivered to DAS by Eon
hereunder shall be [******] therefor.

         4.3 ROYALTIES. [******]. Beginning [******] after DAS has sold the
first Product, [******] (each a "Period"): (a) [******]; (b) [******], and (c)
[******] during such Period. [******] of the end of the [******] (each, a


              (a) Within sixty (60) days after the end of each Quarter, DAS
shall provide Eon with reports indicating the total number of Tablets sold
during such Quarter, and reasonably detailed calculations of the
corresponding Net Margin. Such reports shall be subject to Eon's audit and

              (b) No more than once in any twelve (12) month period during
the term and for one (1) year thereafter, Eon shall be entitled to appoint an
independent auditor bound to confidentiality to audit, during regular
business hours and upon reasonable prior notice, DAS's relevant books and
records for the purpose of verifying the accuracy of the calculations of Net
Margin provided pursuant to Section 4.4(a) hereof. Eon shall bear the cost
and expense of any such audit, unless such audit shows underpayment by DAS by
more than five percent (5%), in which case DAS will bear the cost and expense
of such audit.

                                   ARTICLE V


         5.1 QUALITY CONTROL. Eon agrees to keep DAS reasonably informed on
Product quality control and any other issues concerning the Product or the
manufacture thereof. The parties agree to discuss in good faith the appropriate
course of action with respect to any such



issues. In the event of an inspection by the FDA or any other Regulatory
Authority that relates to the Product or the manufacture thereof, Eon shall
notify DAS within twenty (20) business days in writing of the details and
results of any such investigation.

         5.2 SAFETY/REGULATORY MATTERS. DAS shall give Eon notice within five
(5) business days of any complaints it receives regarding the Product. Eon shall
give DAS notice as described below of any confirmed complaints or other
information it receives regarding the safety of the Product, including any
information on adverse, serious or unexpected events associated with the use of
the Product. However, for serious, unexpected events, notice must be given by
telephone and fax to the appropriate representative of the other party
immediately after receipt of the information and followed by written notice not
more than one business day thereafter. Eon shall promptly inform DAS of any
environmental non-compliance or regulatory issues that could jeopardize Eon's
ability to manufacture, package and supply the Product hereunder. Eon shall
inform DAS's Vice President of Regulatory Affairs via telephone and fax within
two business days of receipt of any communication from the FDA or other
Regulatory Authority regarding the Product and will promptly furnish DAS with
copies of any such communication (including any notice, form, warning, report or
claim). Eon is responsible for reporting all adverse events to the appropriate
Regulatory Authority. Eon shall notify DAS prior to making any changes to the
Product label.

         5.3 RECALLS. If DAS reasonably decides to or is required to initiate a
Product recall, withdrawal or field correction with respect to, or if there is
any governmental seizure of, any Product supplied hereunder (collectively
"RECALL"), DAS shall notify Eon promptly of the details regarding such Recall,
and provide copies of all relevant documentation concerning such Recall. Eon
shall cooperate with and use all reasonable efforts to assist DAS in
investigating any such Recall. DAS will be responsible for coordinating any such
Recall, including providing appropriate notice to DAS's customers. All
regulatory contacts that are made and all other activities concerning seizure,
recall, withdrawal or field correction shall be coordinated by Eon in
consultation with DAS. If any such Recall arises substantially out of any act,
omission or fault of Eon (or its representatives or agents), Eon shall replace
all recalled Product on a timely basis at no cost or charge to DAS.

         5.4 INSURANCE. DAS agrees to maintain, throughout the term of this
Agreement for so long as it is commercially reasonable, [******] with a minimum
[******]. Eon agrees to maintain, throughout the term of this Agreement for so
long as it is commercially reasonable, [******] with a minimum of [******].

                                   ARTICLE VI


         6.1 TERM. Unless otherwise terminated pursuant to Section 6.2
hereof, this Agreement shall begin on the Effective Date and continue in
effect thereafter for a period of five (5) years from the date Effective
Date. Thereafter this Agreement shall automatically renew for additional two
(2) years periods unless either Party gives written notice of intent to
terminate not less than one (1) year prior to the expiration of the then
current term (the initial term and any renewal terms shall be referred to
collectively as the "TERM").



         6.2 TERMINATION. This Agreement may be terminated in its entirety by
either Party immediately upon the occurrence of any of the following events:

              (a) if the other Party entirely ceases to do business, or
otherwise completely terminates its business operations;

              (b) if the other Party breaches any material provision of this
Agreement and fails to cure such breach within sixty (60) days of receipt of
written notice describing such breach.

extent expressly provided to the contrary, the following provisions shall
survive the termination of this Agreement: ARTICLE III, ARTICLE IV, ARTICLE V,
this Section 6.3, ARTICLE VII, ARTICLE VIII, and ARTICLE IX. Any rights of Eon
to payments accrued through the termination of this Agreement as well as
obligations of the Parties under firm orders for purchase and delivery of
Product at the time of such termination shall remain in effect, except that in
the case of termination under Section 6.2 hereof, the terminating Party may
elect whether obligations under firm orders shall remain in effect.

                                ARTICLE VII


         7.1 COVENANTS.

              (a) DAS covenants and agrees that:

                   (i) It will promote the sale and distribution of the
Product in a manner consistent with that employed by DAS in its promotion of
other products of similar character, and shall use diligent efforts to
facilitate the initiation of the sale of the Product;

                   (ii) During the Term it will not [******]; and

                   (iii) It will comply with all applicable local, state or
federal rules, regulations, statutes and laws (collectively, "LAWS") in
promoting, marketing, distributing and selling the Product.

              (b) Eon covenants and agrees that:

                   (i) All Product shall, [******] after the date of delivery
of such Lot Quantity to DAS (i.e., that Product performance/potency/efficacy
during the entire shelf life period shall comply with the Specifications);



                   (ii) Product shall be registered with the State Boards of
Pharmacy in all states, territories and possessions of the United States
where such registration is required to market the Product, within six months
of the Effective Date;

                   (iii) The Product will be manufactured, packaged, stored
and shipped in conformance with all applicable GMP's;

                   (iv) The Product will be manufactured, packaged and stored
in facilities which are approved by the FDA at the time of such manufacture,
packaging and storage, to the extent such approval is required by Law;

                   (v) Eon has obtained and will maintain and comply with all
licenses, permits and approvals of applicable governmental agencies as may be
required for Eon's facility and to manufacture, package, store and ship the
Product; and

                   (vi) Eon will have sole responsibility for adopting and
enforcing safety procedures for the manufacture, packaging, storage, and
shipment of Product at Eon's facility.


              (a) Eon hereby represents and warrants that: (i) the
manufacture, use and/or sale of the Product does not infringe any patent,
trademark, trade secret or other intellectual property or proprietary right
of any third party; (ii) it has full authority to enter into this Agreement
and has all rights and licenses necessary to manufacture and sell the Product
to DAS; (iii) there is nothing contained in any other agreements to which Eon
is a party which prohibits or restricts Eon from entering into this
Agreement; (iv) Eon is licensed to sell the Product in all states,
territories and possessions of the United States where licensure is required
for sale; and (v) Eon shall maintain the Product ANDA in accordance with all
applicable laws and regulations.

              (b) DAS hereby represents and warrants that: (i) it has full
authority to enter into this Agreement and has all rights and licenses
necessary to market, distribute and sell the Product; and (iii) there is
nothing contained in any other agreements to which DAS is a party which
prohibits or restricts DAS from entering into this Agreement.


              (a) Each Party hereby [******].

              (b) The foregoing indemnity obligations are conditioned upon
the Indemnified Party providing the Indemnifying Party (a) prompt notice of
any claim, proceeding or suit, (b) sole control of the defense and settlement
of any such claim, proceeding or suit, and (c) reasonable cooperation, at the
Indemnifying Party's expense, in connection with the defense of the matter
subject to indemnification. The Indemnifying Party shall keep the Indemnified
Party fully informed as to the progress of the defense and any proposed
settlement, and the Indemnifying Party shall furnish the Indemnified Party
with copies of all litigation and settlement papers in connection therewith.
The Indemnified Party shall have the right to



participate (subject to the control of the Indemnifying Party), at its own
cost and expense and through counsel selected by it, and subject to court
approval, in the defense of any such claim.


                                  ARTICLE VIII

                             PROPRIETARY INFORMATION

         8.1 Each Party agrees that it (i) shall treat and maintain as
confidential, (ii) shall not use (except as contemplated by this Agreement and
then only on a confidential basis), and (iii) shall not disclose, in whole or in
part, to any third party (other than such Party's agents, officers, employees
and consultants (collectively, "REPRESENTATIVES") to whom disclosure is
permitted under paragraph 8.2) any information received from the other Party in
connection with this Agreement that is marked or identified as confidential or
proprietary information at or before the time of disclosure (all such
information being hereinafter referred to as "PROPRIETARY INFORMATION").

         8.2 The provisions of Section 8.1 shall not apply to any Proprietary
Information which the receiving Party can show (i) was in the public domain at
the time of its receipt, (ii) is published or otherwise becomes, after its
receipt thereof, a part of the public domain other than by reason of any of the
receiving Party's acts or omissions (but only after, and only to the extent
that, it is published or otherwise becomes part of the public domain), (iii) has
been put in the receiving Party's possession or knowledge (as evidenced by
written records), prior to the time of its receipt thereof from the other Party,
by any third party or by employees of the receiving Party (acting directly or
indirectly for or on its behalf) as a matter of right and without restriction on
use or disclosure, (iv) was in the receiving Party's possession or knowledge (as
evidenced by written records) prior to the date of this Agreement, (v) is
developed by the receiving party independently of any disclosure received by the
disclosing party, as evidenced by contemporaneous written records, or (vi) is
required to be disclosed by the receiving Party pursuant to FDA regulations, law
or judicial order, provided that, in such event, the receiving party shall
notify the disclosing party promptly so that the disclosing party may seek a
protective order.

         8.3 The Parties shall restrict the Proprietary Information to their
Representatives who are directly involved in the performance of this Agreement
to the extent that they have need of such, and then only on a confidential
basis. The receiving party shall be responsible for the breach of this ARTICLE
VIII by it or any of its Representatives.

         8.4 The Parties acknowledge and agree that damages from a material
breach of this ARTICLE VIII shall be difficult or impossible to ascertain, and
further agrees that the other Party may therefore enforce the provisions of this
ARTICLE VIII by seeking preliminary and/or permanent injunctive relief.



                                   ARTICLE IX


         9.1 FORCE MAJEURE. No failure or omission by a Party in the performance
of any obligation under this Agreement shall be deemed a breach of this
Agreement or create any liability if such failure or omission shall arise from
any cause or causes beyond the reasonable control of such Party which cannot be
overcome through due diligence, including, but not limited to, strikes, riots,
war, acts of God, invasion, fire, explosion, floods, delay of carrier,
unexpected shortage or failure in the supply of raw materials, energy shortage
and acts of government or governmental agencies or instrumentalities. The Party
affected by any such event shall keep the other Party informed of the status
thereof and shall use diligent efforts to overcome such event.

         9.2 ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the Parties regarding the subject matter hereof and supersedes all prior
agreements, understandings and negotiations regarding the same. This Agreement
may not be changed, modified, amended or supplemented except by a written
instrument signed by both Parties.

         9.3 ASSIGNABILITY. This Agreement may not be assigned by either Party
without the prior consent of the other Party (and any attempt to do so shall be
void); provided, however, that either Party may assign this Agreement to any
entity that acquires substantially all of its stock, assets or business.

         9.4 SEVERABILITY. If any provision of this Agreement shall be held
illegal or unenforceable, that provision shall be limited or eliminated to the
minimum extent necessary so that this Agreement shall otherwise remain in full
force and effect and enforceable.

         9.5 FURTHER ASSURANCES. Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts as may be
necessary or appropriate to carry out the purposes and intent of this Agreement.

         9.6 NOTICE AND REPORTS. All notices and other communications hereunder
and all legal process in regard hereto shall be validly given, made or served if
in writing, (i) on the date delivered, if delivered personally (by courier
service or otherwise) or via confirmed facsimile, (ii) on the business day after
the date sent, if sent by nationally recognized overnight courier service using
its highest priority service, or (iii) four (4) days after the date sent, if
mailed by first-class registered mail, postage-prepaid and return receipt
requested, to the address of the Party to receive such notice or other
communication set forth below, or at such other address as any Party may from
time to time advise the other Party pursuant to this Section 9.6:

           To Eon:                   Eon Labs Manufacturing, Inc.
                                     Attn: Chief Executive Officer:
                                     227-15 North Conduit Avenue
                                     Laurelton, NY 11413
                                     Tel: (718) 276-8699
                                     Fax: (718) 949-3120



           To DAS:                   DrugAbuse Sciences, Inc.
                                     Attn:  Chief Executive Officer
                                     330 Distel Circle, Suite 150
                                     Los Altos, CA  94022
                                     Tel:  (650) 417-2300
                                     Fax:  (650) 417-2400

         9.7 RELATIONSHIPS OF THE PARTIES. The relationship between the Parties
is that of independent contractors. Neither Party is an agent, partner or
employee of the other Party and neither Party has any right or any other
authority to enter into any contract or undertaking in the name of or for the
account of the other Party or to assume or create any obligation of any kind,
express or implied, on behalf of the other Party, nor will the act or omissions
of either create any liability for the other Party. The Agreement shall in no
way constitute or give rise to a partnership between the Parties.

         9.8 WAIVER. The waiver by either Party of a breach of any provisions
contained herein must be in writing and shall in no way be construed as a waiver
of any subsequent breach of such provision or the waiver of the provision

         9.9 GOVERNING LAW. This Agreement shall be governed by and construed
pursuant to the laws of the State of New York, without regard to conflict of
laws provisions thereof.

         9.10 CAPTIONS. Paragraph captions are for convenience only and in no
way are to be construed to define, limit or affect the construction or
interpretation hereof.

         9.11 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

         IN WITNESS WHEREOF, the Parties have executed this Agreement to be
effective as of the date first written above.

                                 Eon Labs Manufacturing, Inc.

                                 By:    /s/ Frank Dellafera  7/25/00
                                 Title: V.P. Sales & Marketing

                                 DrugAbuse Sciences, Inc.

                                 By:    /s/ Elizabeth Greetham  7/31/00
                                 Title: CFO and Sr. VP Business Development



                                    EXHIBIT I

                             PRODUCT SPECIFICATIONS

A.       TABLETS

         Tablets shall be produced utilizing [******].


         All Product supplied by Eon will meet all applicable specifications
         approved by the FDA or other Regulatory Authority and will continue to
         meet such specifications up through the Product expiration date.


                                  EXHIBIT I-A

                            PACKAGING SPECIFICATIONS

The Product shall be packaged and labeled in accordance with mutually agreed
upon specifications and Eon's ANDA in [******] Tablets. The [******] a child
resistant closure.


                                   EXHIBIT II


The sales price to DAS will be Eon's [******] as calculated following Generally
Accepted Accounting Principles [******]. Generally Accepted Accounting
Principles utilized are to be consistent with those used internally by Eon to
determine cost of their other products.

As the date of signing this contract Eon's cost and DAS's purchase price are as

                                            EON'S COST                   PURCHASE PRICE
         Bottles of 30 tablets                   $ [******]                     $ [******]

         Bottles of 100 tablets                  $ [******]                     $ [******]

DAS's purchase price [******] may be added to DAS's purchase price.

The [******], when Eon performs [******]. Except in conjunction with a general
updating of its standards, Eon will not be required to [******]. DAS will be
notified of the [******].

Eon's cost and DAS's purchase price will be [******].

Cost of the Product as determined under Generally Accepted Accounting Principals
include [******]. Indirect costs include but are not limited to [******], etc.

Costs from the following departments are to be excluded in determining Eon's
cost of the Product:  [******].

Eon will permit DAS duly authorized certified public account, to whom Eon has no
reasonable objection to inspect the books and records of Eon for up to two prior
years at reasonable times during regular business hours for the purpose of
verifying Eon's cost of the Product. Such accountants shall treat any
information obtained from Eon as confidential and will disclose to DAS only
whether Eon's costs have been verified.

In the event that the certified public accountant engaged by DAS and Eon do not
agree on the cost of the Product, a mutually agreed upon certified public
accountant will be engaged. The decision of the mutually agreed upon certified
public accountant will be binding on both parties. The cost of the mutually
agreed upon certified public accountant will be shared equally regardless of
their decision.


                                   EXHIBIT III

                                   CMC STUDIES

Eon shall be responsible for receiving FDA approval of Product produced or
packaged with any new tooling or packaging formats. Eon will be responsible for
conducting all [******]. In the event that DAS would like to introduce an
[******], Eon will be responsible for conducting any [******].