EXHIBIT 10.4
DEVELOPMENT AGREEMENT
THIS AGREEMENT is effective on this 1st day of January 1997, by and
between Mallinckrodt Inc., acting by and through its Pharmaceutical
Chemicals division ("Mallinckrodt"), and Entropin, Inc. ("Entropin").
WHEREAS, Entropin is the owner of certain formulae, patents and other
intellectual property relative to a prescription strength dosage analgesic
currently in the early stages of development known as Esterom ("Product");
WHEREAS, Entropin is desirous of entering into an agreement with
another party to develop the bulk active ingredient of Product ("Bulk
Active");
WHEREAS, Mallinckrodt is capable of undertaking the development of the
Bulk Active and Entropin is willing to contract with Mallinckrodt for the
provision of such services;
WHEREAS, Entropin is also in need of a third party to manufacture and
supply Bulk Active to Entropin on a continuing basis once the Product has
been developed; and
WHEREAS, Mallinckrodt has the expertise and capability to supply
Entropin with its requirements for the Bulk Active and Entropin is willing
to purchase its requirements of the Bulk Active from Mallinckrodt;
NOW, THEREFORE, in consideration of the promises and mutual covenants
and undertakings set forth herein, Entropin and Mallinckrodt hereby agree
as follows:
1. Duty of Mallinckrodt to Develop Bulk Active.
-------------------------------------------
(a) Mallinckrodt will employ all reasonable efforts to develop the
Bulk Active in accordance with the timetable and milestones set forth on
Exhibit A attached hereto. In the event that, despite the efforts of
Mallinckrodt to prevent any delay, there is a delay in the development
and/or production of the Bulk Active, Mallinckrodt will have no liability
to Entropin whatsoever; provided that, in the event that Mallinckrodt
becomes aware of any reasonably possible delay in development and/or
production, Mallinckrodt shall give notice to Entropin as soon as possible
of the nature of any such delay, the anticipated length of any such delay,
the reasons therefor and the steps that Mallinckrodt intends to adopt to
shorten or eliminate any such delay. Entropin agrees to provide
Mallinckrodt with any cooperation Mallinckrodt reasonably requests to
shorten or eliminate any such delay. Furthermore, the parties agree that
if any delay in meeting the milestones set forth in Exhibit A is not
occasioned by any action of or omission to act by Mallinckrodt but is
instead the result of circumstances that are unavoidable and/or not
reasonably foreseeable, then the parties will agree to
a revision to Exhibit A that, under the circumstances, is appropriate and
provides Mallinckrodt with a fair chance of success in achieving any such
revised timetable.
(b) The Bulk Active to be developed by Mallinckrodt hereunder will
have specifications meeting or exceeding those set forth on Exhibit B
attached hereto. In the event that either party, during the course of the
development of the Bulk Active, deems it necessary or advisable to change
the specifications set forth on Exhibit B, such party shall give notice to
the other party of the nature of the change desired and the reasons
therefor. In the event Entropin is the party requesting the change,
Mallinckrodt shall have the right to withhold its consent to such change;
provided, however, if Mallinckrodt does provide its consent to such change,
Mallinckrodt shall have the right to demand reasonable compensation or
other contractual relief (including, without limitation, alteration of the
timetable and milestones set forth on Exhibit A hereto) by notice to
Entropin and, should Entropin fail to agree to such demands by
Mallinckrodt, Mallinckrodt shall have the right, immediately upon notice to
Entropin, to terminate this Agreement and its responsibilities hereunder
without liability of any kind, in addition to any other right of
termination it may have hereunder. In the event Mallinckrodt is the party
requesting the change, Entropin shall have the right to withhold its
consent to such change, if it determines that doing so will adversely
affect the marketability, FDA approvability, or cost of the Product and
such change will increase materially the amount of time required to
complete development of the Bulk Active.
(c) Nothwithstanding the foregoing subsections (a) and (b), the
parties agree to cooperate fully with each other in the development of the
Bulk Active, and to that end each party will provide the other with such
access to its confidential information and personnel as is reasonably
necessary under the circumstances to allow the development of the Bulk
Active to proceed in accordance with the provisions hereof.
(d) In its performance hereunder, Mallinckrodt will take all actions
necessary to comply with all requirements of the FDA, including complying
with current Good Manufacturing Practices requirements. Entropin, for its
part, will keep Mallinckrodt fully apprised of all written or oral
communications with the FDA that may affect Mallinckrodt's performance
hereunder in any manner.
2. Progress Reports, Meetings and Rights of Review.
-----------------------------------------------
(a) The parties understand that there will be difficulties and issues
to be dealt with during the process of development of the Bulk Active and,
therefore, Entropin and Mallinckrodt shall each designate one (1) technical
representative to meet on a regular basis, but no less often than
quarterly, during the term
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hereof to discuss the development of the Bulk Active hereunder. These
meetings are for informational and coordination purposes only and such
representatives shall not have the right, by their joint agreement or
otherwise, to modify any term or provision of this Agreement, which
modification may be accomplished only by a writing executed by authorized
individuals of both of the parties hereto. Each party may change its
designated technical representative at any time immediately and upon notice
to the other party.
(b) In addition to the meetings contemplated by subsection (a) above,
Mallinckrodt shall deliver to Entropin on the tenth day of each month
during the term hereof a written report on its development activities and
progress during the immediately preceding calendar month. Such report
shall contain any information Mallinckrodt deems reasonably relevant but,
at a minimum, such report shall indicate actual performance against the
timetable and milestones set forth in Exhibit A, any problems in
development that have been encountered or could reasonably be anticipated
(along with the reasons therefor and the proposed solutions, if any, to
such problems) and any changes in specifications or any other term or
provision hereof that Mallinckrodt feels is reasonably indicated.
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(c) No less often than quarterly senior executives of both
Mallinckrodt and Entropin shall meet, at a time and place satisfactory to
all participants, to discuss any issues or problems relating to the
performance of either party hereunder and to discuss the resolution of any
such problems or issues.
(d) Upon reasonable advance notice, Entropin shall have the right to
inspect any production facilities or systems, and any production or quality
control records of Mallinckrodt used directly in or related to the
development of Bulk Active hereunder.
3. Ownership of Technology.
-----------------------
(a) It is understood by the parties that Mallinckrodt will have sole
and exclusive ownership of the Drug Master File with respect to the Bulk
Active that is generated as a consequence of the development activities
hereunder.
(b) Except as set forth in subsection (a) immediately above, Entropin
shall have sole and exclusive ownership of any patented or other technology
or intellectual property arising out of the development activities of
Mallinckrodt hereunder ("Entropin Technology"), except for (i) any
technology utilized by or developed by Mallinckrodt to the extent related
to the process of manufacture of the Bulk Active, whether or not such
technology is unique to such manufacturing process or has application
relative to the manufacture or production of one or more other chemical
substances and (ii) any technology related in any way to the discovery,
development or production of any other chemical substance, which technology
was known to or in the possession of Mallinckrodt on or prior to the date
hereof.
(c) Entropin hereby agrees to indemnify, defend and hold harmless
Mallinckrodt, its personnel, agents and representatives from and against
any and all claims, losses, costs, damages or injuries of any kind
(including, without limitation, reasonable attorneys' fees) arising out of
or resulting from any actual or alleged infringement of, misappropriation
of or interference with the rights of any third party by the Entropin
Technology or by Entropin in any manner in connection with the Entropin
Technology.
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4. Consideration for Development Services.
--------------------------------------
(a) Subject to the provisions of Section 1(b) above, Mallinckrodt
agrees to develop the Bulk Active in accordance with the terms hereof, and
in particular the performance of such duties and tasks as are necessary to
accomplish the milestones set forth on Exhibit A attached hereto, entirely
at its own cost and expense.
(b) In consideration for the performance by Mallinckrodt of its
development services hereunder, Entropin agrees to enter into an agreement
with Mallinckrodt, substantially in the form attached hereto as Exhibit C,
whereby Mallinckrodt will have the exclusive right to supply Entropin's
requirements for Bulk Active in North America.
(c) Additionally, Entropin understands that Mallinckrodt has an
interest in being involved in the marketing of any newly developed dosage
formulations related to Product and Entropin agrees to make Mallinckrodt
aware of its plans with respect thereto and explore with Mallinckrodt the
possibility of Mallinckrodt's involvement in any such marketing.
5. Term and Termination.
--------------------
(a) This Agreement shall be in effect from the date hereof until the
later of (i) the date on which Mallinckrodt certifies to Entropin in
writing that it has completed the development of the Bulk Active in
accordance with the requirements hereof or (ii) the execution by the
parties of the agreement substantailly in the form of Exhibit C, as
contemplated by the provisions of Section 4(b) above.
(b) In addition to other provisions in this Agreement that may
provide for a right of termination by either or both parties, this
Agreement may be terminated by either party effective upon written notice
for cause. For purposes of the immediately preceding sentence, "cause"
shall mean (without limitation):
(i) any material breach of this Agreement by the other party,
which breach remains uncorrected for a period of thirty (30)
days after written notice of such breach has been given to
the defaulting party,
(ii) notwithstanding clause (i) set forth immediately above, any
material breach of this Agreement by the other party that is
by its nature uncurable,
(iii)the institution by the other party of voluntary proceedings
in bankruptcy or under any insolvency law or law for the
relief of debtors,
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(iv) the making by the other party of an assignment for the
benefit of creditors or any dissolution or liquidation by
said other party,
(v) the filing of an involuntary petition under any bankruptcy
or insolvency law against the other party, if such petition
is not dismissed or set aside within sixty (60) days from
the date of its filing,
(vi) the appointment of a receivor or trustee for the assets or
business of the other party, if such appointment is not
dismissed or set aside within sixty (60) days from the date
of such appointment, or
(vii)The other party, in connection with its performance
hereunder, violates or is in material violation of any laws,
rules or regulations applicable with respect to its
performance hereunder.
(c) This Agreement may be terminated by Entropin, effective upon
written notice by Entropin to Mallinckrodt, in the event that Mallinckrodt
has failed by more than three (3) months to meet the completion dates for
any of milestone numbers 7, 9 or 14 as set forth on Exhibit A; provided
that, Entropin shall not have the right to so terminate this Agreement in
the event that Mallinckrodt's failure to meet any applicable completion
date is (i) not due to any action or inaction on the part of Mallinckrodt
but instead is a consequence of unavoidable and/or reasonably unforseeable
circumstances or (ii) is due in whole or in part to any action of or
omission to act by Entropin.
(d) The rights and obligations of the parties contained in Sections
7 and 8 shall survive termination or expiration of this Agreement for any
reason.
(e) In the event of any termination of this Agreement by Entropin
under and pursuant to subsections (b) or (c) of this Section 5,
Mallinckrodt shall have no right to any of the consideration to be provided
to Mallinckrodt by Entropin pursuant to subsections (b) and (c) of Section
4 hereof and in the event that on the date of any such termination by
Entropin, the agreement attached hereto as Exhibit C has been executed it
shall be deemed terminated on and as of such date by the mutual consent of
the parties.
6. Force Majeure.
-------------
Neither party shall be charged with any liability for delay in
performance of an obligation under this Agreement to the extent, and for so
long as, such delay is due to delays caused by
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acts of God or the public enemy, compliance in good faith with any
applicable domestic or foreign governmental or judicial regulation or
order, war, civil commotion, destruction of production facilities or
materials by fire, flood, earthquake or storm, riots, labor strikes or
disturbances, unusually severe weather, interruption of raw material supply
beyond the reasonable control of the affected party, actions by the FDA or
other governmental (state or federal agencies) which prevent or restrict
development or manufacture, or any other cause beyond the reasonable
control of the affected party ("Force Majeure"), provided that the affected
party (i) shall take whatever reasonable steps are necessary to relieve the
effect of such cause as rapidly as possible, (ii) shall give prompt notice
to the other party of the commencement of such cause and (iii) shall give
prompt notice to the other party of the termination of such cause. In the
event such cause continues for more than one hundred eighty (180) days, the
other party shall have the right to terminate this Agreement by written
notice to the affected party by specific reference to this section of the
Agreement.
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7. Indemnification.
---------------
(a) Entropin shall indemnify, defend, and hold harmless Mallinckrodt,
its officers, directors, agents, owners, and employees from and against any
and all loss, damage, claim injury, cost or expense, including reasonable
attorney's fees and expenses of litigation, in connection with any illness
or personal injury, including death, or property damage that arises out of
Entropin's negligence or willful misconduct or material breach of the terms
of this Agreement; provided that:
(i) Entropin is notified promptly of any claim or lawsuit for
which indemnification is sought,
(ii) Entropin is given complete control over the conduct and
disposition of any such claim or lawsuit, and
(iii) Entropin receives Mallinckrodt's full cooperation during the
pendency of such claim or lawsuit.
(b) Mallinckrodt shall indemnify, defend, and hold harmless Entropin,
its officers, directors, agents, owners, and employees from and against any
and all loss, damage, claim, injury, cost or expense, including reasonable
attorney's fees and expenses of litigation, in connection with any illness
or personal injury, including death, or property damage that arises out of
Mallinckrodt's negligence or willful misconduct or material breach of the
terms of this Agreement; provided that:
(i) Mallinckrodt is notified promptly of any claim or lawsuit
for which indemnification is sought,
(ii) Mallinckrodt is given complete control over the conduct and
disposition of any such claim or lawsuit, and
(iii) Mallinckrodt receives Entropin's full cooperation during the
pendency of such claim or lawsuit.
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8. Confidentiality.
---------------
(a) During the term of this Agreement it may be necessary for one
party to disclose to the other (but only to those individuals who need to
know) certain confidential information including, but not limited to
certain business information and intellectual property ("Confidential
Information"). For a period of five (5) years after the termination or
expiration of this Agreement, the party receiving any such Confidential
Information from the disclosing party hereunder shall exercise due care at
all times to prevent the disclosure of such information to any third party
without the consent of the disclosing party or the use of Confidential
Information in a manner not authorized by the disclosing party.
(b) The obligations of confidentiality set forth in subsection (a)
above shall not apply to:
(i) information which is known to the receiving party prior to
disclosure or is independently developed by the receiving
party, as evidenced by such party's written records,
(ii) information disclosed to the receiving party hereunder by a
third party who has a right to make a disclosure and does
not have an obligation of confidentiality to the disclosing
party hereunder with respect to such information,
(iii)information which is or becomes (through no breach or fault
of the receiving party) patented, published or otherwise
part of the public domain, and
(iv) information which is required to be disclosed under penalty
of law, provided that the receiving party has taken all
reasonable steps available (short of the institution of
legal action) to protect this information and, prior to any
disclosure, notifies the disclosing party hereunder of its
obligation to make the disclosure and provided further, that
the disclosing party takes all steps necessary to limit the
disclosure to that portion of the Confidential Information
which is absolutely required to be disclosed.
9. Remedies Cumulative.
-------------------
The remedies provided in this Agreement shall be cumulative and shall
not preclude assertion by any party hereto of any other
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rights (whether legal or equitable in nature) or the seeking of any other
remedies against any other party hereto.
10. Binding Effect and Assignment.
-----------------------------
This Agreement shall inure to the benefit of and be binding upon the
parties hereto, their successors and assigns; provided, however, that
neither party shall, without the prior written consent of the other party
(which will not unreasonably be withheld), assign or transfer any of its
rights, benefits, obligations, or other interest under this Agreement to
any other party.
11. Notices.
-------
All notices, consents, approvals or other notifications required to be
sent by one party to the other party hereunder shall be in writing and
shall be deemed served upon the other party if delivered by hand or sent by
United States registered or certified mail, postage prepaid, with return
receipt requested, or by facsimile, air courier or telex, addressed to such
other party at the address set out below, or the last address of such party
as shall have been communicated to the other party. If a party changes its
address, written notice shall be given promptly to the other party of the
new address. Notice shall be deemed given on the day it is sent (in the
case of delivery by method other than hand delivery) or the date of
delivery (in the case of delivery by hand) in accordance with the
provisions of this paragraph. The addresses for notices are as follows:
If to Mallinckrodt:
Mallinckrodt Inc.
c/o Pharmaceutical Chemicals Division
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
with a copy to:
Mallinckrodt Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
If to Entropin:
Entropin, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chairman
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and CEO
12. Governing Law and Jurisdiction.
------------------------------
This Agreement shall be governed by and construed in accordance with
the substantive and procedural laws (as opposed to the conflicts of law
provisions) of the State of Missouri.
13. Waiver.
------
The failure by any party to exercise any of its rights hereunder or to
enforce any of the terms or conditions of this Agreement on any occasion
shall not constitute or be deemed a waiver of that party's rights
thereafter to exercise any rights hereunder or to enforce each and every
term and condition of this Agreement.
14. Severability.
------------
A determination that any portion of this Agreement is unenforceable or
invalid shall not affect the enforceability or validity of any of the
remaining portions hereof or of this Agreement as a whole. In the event
that any part of any of the covenants, sections or provisions herein may be
determined by a court of law or equity to be overly broad or against
applicable precedent or public policy, thereby making such covenants,
sections or provisions invalid or unenforceable, the parties shall attempt
to reach agreement with respect to a valid and enforceable substitute for
the deleted provisions, which shall be as close in its intent and effect as
possible to the deleted portions.
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15. Headings.
--------
The parties agree that the section and article headings are inserted
only for ease of reference, shall not be construed as part of this
Agreement, and shall have no effect upon the construction or interpretation
of any part hereof.
16. Counterparts.
------------
This Agreement may be executed in several counterparts, and each
executed counterpart shall be considered an original of this Agreement.
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17. Entire Agreement.
----------------
This Agreement and the exhibits attached hereto represent the entire
agreement and understanding of the parties hereto with respect to their
subject matter and supercede any and all prior agreements, understanding or
discussions, whether written or oral, between the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
ENTROPIN, INC. MALLINCKRODT INC.
Pharmaceutical Chemicals Division
By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------- --------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, President
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Exhibit C
SUPPLY AGREEMENT
THIS AGREEMENT, is effective on and as of the 1st day of January,
1997, by and between Entropin, Inc. ("Entropin") and Mallinckrodt Inc.
acting by and through its Pharmaceutical Chemicals division
("Mallinckrodt").
WHEREAS, Mallinckrodt has previously performed development services
for Entropin relative to the bulk active substance ("Bulk Active")
contained in the dosage pharmaceutical product known as Esterom ("Product")
pursuant to that certain Agreement between Entropin and Mallinckrodt dated
January 1, 1997 ("Development Agreement");
WHEREAS, in order to market Product effectively Entropin is in need of
a stable source of supply of Bulk Active and Mallinckrodt has the expertise
and capability to supply Entropin with its requirements for Bulk Active on
a long-term basis; and
WHEREAS, in consideration of the development services provided by
Mallinckrodt pursuant to the Development Agreement, as recited in Section
4(b) of said Development Agreement Entropin is willing to purchase all of
its requirements for Bulk Active from Mallinckrodt on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the promises, covenants and
representations of the parties set forth herein, and other good and
sufficient consideration receipt of which is hereby acknowledged, Entropin
and Mallinckrodt agree as follows:
1. Requirements for Bulk Active
----------------------------
(a) Entropin hereby agrees to purchase from Mallinckrodt, during the
term of this Agreement and any renewal hereof and on the terms
and conditions set forth herein, all of its North American
requirements for the Bulk Active, the specifications for which
substance are set forth on Exhibit A attached hereto.
(b) Entropin further grants Mallinckrodt a right of first refusal to
supply Entropin's Bulk Active requirements for all other portions
of the world outside of North America. In the event that, at any
future time during the term hereof, Entropin determines that it
requires any Bulk Active for markets outside North America,
Entropin shall give Mallinckrodt notice thereof in reasonable
detail and Mallinckrodt shall have the right, by return notice to
Entropin within sixty (60) days of Entropin's original notice, to
exercise its right of first refusal to provide Bulk Active on a
competitive basis and otherwise on terms and conditions
that are substantially similar to those set forth herein.
2. Representations and Warranties of the Parties
---------------------------------------------
(a) Mallinckrodt warrants that: (i) it is a corporation, duly
organized, validly existing and in good standing under the laws
of the state of New York, (ii) this agreement has been duly
executed and delivered by Mallinckrodt and constitutes the legal,
valid and binding obligation of Mallinckrodt enforceable in
accordance with its terms, (iii) Bulk Active supplied hereunder
shall conform to the specifications set forth on Exhibit A
attached hereto (hereafter, "Specifications") and will be
manufactured in accordance with current Good Manufacturing
Practices ("cGMP") as defined by the FDA, and (iv) Product shall
not, at the time of shipment or delivery, be merchandise which
may not be introduced into interstate commerce under the Act or
be merchandise which may not be legally transported or sold under
the provisions of any other applicable federal, state, or
municipal law. MALLINCKRODT MAKES NO OTHER WARRANTIES, EXPRESS OR
IMPLIED, WITH RESPECT TO BULK ACTIVE. ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE, ARE HEREBY DISCLAIMED.
(b) Entropin warrants that: (i) it is a corporation, duly organized,
validly existing and in good standing under the laws of the state
of California, (ii) this agreement has been duly executed and
delivered by Entropin and constitutes the legal, valid and
binding obligation of Entropin enforceable in accordance with its
terms, and (iii) it shall comply with all applicable federal,
state, and known municipal statutes, laws, ordinances and
regulations, including but not limited to the Act and state
equivalents regarding distribution, disposal, promotion, and sale
of Product incorporating any Bulk Active supplied hereunder.
3. Supply of Product and Forecasts
-------------------------------
(a) Mallinckrodt agrees to supply on a timely basis to Entropin such
amount of Bulk Active as Entropin shall request from Mallinckrodt
in writing, by purchase order or other written acknowledgment.
Notwithstanding any other provision hereof, the terms of any
purchase order, written acknowledgment or other document
submitted by either Entropin or Mallinckrodt shall in no case be
deemed as varying or, in any manner
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inconsistent herewith, as supplementing the terms of this
Agreement. All written requests for Bulk Active by Entropin are
subject to acceptance by Mallinckrodt.
(b) At least sixty (60) days prior to the start of the calendar
quarter commencing on January 1, 1998 and at least sixty (60)
days prior to the start of every calendar quarter thereafter
during the term hereof, Entropin shall submit to Mallinckrodt a
twelve (12) month rolling forecast for orders Entropin expects to
place for Bulk Active. The portion of such forecast relating to
the next calendar quarter shall constitute a firm purchase order
by Entropin for amounts of Bulk Active listed on the forecast as
required by Entropin during said calendar quarter. Absent
agreement of the parties to the contrary and subject to the
provisions of Section 10 below, Mallinckrodt shall be obligated
to deliver any firm forecasted portion of the rolling annual
forecast provided for herein no later than sixty (60) days after
the commencement of the calendar quarter for which the forecast
is firm. Any orders for Bulk Active by Entropin, if not rejected
by Mallinckrodt within ten (10) days of receipt, shall be
considered accepted and are not subject to change without the
written consent of Entropin and Mallinckrodt.
(c) All Bulk Active shall be delivered F.O.B. destination.
(d) Mallinckrodt shall provide to Entropin a complete certificate of
analysis for any lot of Bulk Active delivered to Entropin
hereunder and shall further provide such other documentation as
Entropin shall reasonably request. Entropin shall be responsible
to pay Mallinckrodt its out-of-pocket costs in providing any
documentation (other than a certificate of analysis) relative to
the supply of Bulk Active hereunder.
(e) Mallinckrodt will use its best reasonable efforts to supply Bulk
Active to Entropin as and when Entropin requests delivery of Bulk
Active.
4. Consideration and Payment.
-------------------------
(a) For each liter (of the first 1000 liters ordered) of Bulk Active
supplied to Entropin hereunder, Entropin agrees to pay
Mallinckrodt the sum of Two Thousand Four Hundred Dollars
($2,400). For each liter above the initial 1000 liters ordered,
Entropin agrees to pay Mallinckrodt the sum of One Thousand Six
Hundred Fifty Dollars ($1,650). The prices set forth in the
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preceding two sentences shall, whichever is applicable, be
referred to herein as the "Basic Price".
(b) The parties agree that the Basic Price shall remain firm through
the end of the first anniversary hereof. For purposes hereof, the
term "contract year" shall mean each consecutive twelve (12)
month period occurring during the term hereof, beginning with the
twelve (12) month period commencing on January 1, 1997 and ending
on December 31, 1997.
(c) Notwithstanding the immediately foregoing subsection (b), it is
the intent of the parties hereto that increases or decreases in
the cost of key raw materials, process chemicals, labor, steam
and electricity and any other manufacturing costs incurred by
Mallinckrodt or anyone on Mallinckrodt's behalf and related
directly to the production of Bulk Active hereunder shall be
passed through to Entropin in the form of an adjustment to the
Basic Price, (whichever one is applicable) for Bulk Active. Any
adjustments to the Basic Price (whichever one is applicable)
shall be made on an annual basis, effective at the beginning of
each contract year during the term hereof. Mallinckrodt will
notify Entropin of the nature and amounts of any increases or
decreases to the Basic Price (whichever one is applicable) within
fifteen (15) days after the commencement of any contract year for
which such adjustments are effective and shall, in connection
therewith, provide such documentation as Entropin shall
reasonably request in support of such price adjustments. The
adjustments that shall be made by Mallinckrodt to the Basic Price
(whichever one is applicable) on an annual basis for any
particular contract year during the term hereof are as follows:
(i) increases or decreases in the raw materials (A) Cocaine
Alkaloid and (B) salt of cocaine, in both cases determined
from the average annual cost of the aforementioned raw
materials during the immediately previous contract year,
with average annual cost being determined utilizing the
value of beginning inventory for the prior contract year as
adjusted for raw material used during such fiscal year on a
first in, first out basis,
(ii) increases or decreases in labor cost (A) as determined from
the fully loaded labor costs chargeable during such contract
year in accordance with the collective bargaining agreement
between Mallinckrodt and the United Auto Workers relative to
those employees who provide direct labor relative to the
supply of
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Bulk Active hereunder and (B) as determined from the fully
loaded labor costs of all free enterprise personnel who
provide direct labor relative to the supply of Bulk Active
hereunder based on the cost of their salaries and benefits
at the beginning of the contract year in question,
(iii)increases or decreases in the cost of all process chemicals
utilized by Mallinckrodt for the manufacture of Bulk Active,
such increases or decreases determined in each case from the
average annual cost during the preceding contract year of
each of the process chemicals utilized in the manufacture of
Bulk Active hereunder,
(iv) increases and decreases in the cost of steam and electricity
applicable to the manufacture by Mallinckrodt of Bulk Active
hereunder, such increases or decreases determined in each
case from the average annual cost during the preceding
contract year of such utilities, and
(v) increases and decreases in all other manufacturing costs
applicable to the manufacture by Mallinckrodt of Bulk Active
hereunder, such increases or decreases determined in each
case from the average annual cost thereof during the
preceding contract year.
(d) All Bulk Active supplied hereunder shall be invoiced in writing
by Mallinckrodt to Entropin at the time of Bulk Active delivery.
The balance of any invoice shall be due and payable within thirty
(30) days of the date of Mallinckrodt's invoice. Payment shall
be made in United States dollars. Late payment of any amount(s)
due Mallinckrodt shall result in an additional charge of one
percent (1%) per month, calculated from thirty-one (31) days
after the date of the applicable invoice.
(e) Notwithstanding any other provision hereof, Entropin shall have
the right periodically (but no more often than annually) and upon
reasonable advance notice, to employ a mutually agreed upon third
party auditor to audit the books and records of Mallinckrodt as
may be necessary to establish, as applicable, the elements of
Mallinckrodt's cost of producing Bulk Active and therefore the
correct amount of any cost increase or decrease resulting in
adjustment of the Basic Price by Mallinckrodt in accordance with
subsection (c) of this Section 4. In the event that, as a result
of any such audit, Entropin reasonably concludes that corrections
should be made in adjustments to the Basic Price with respect to
any one or more calendar quarters or contract years (as
applicable) then Entropin shall
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notify Mallinckrodt of any corrections and Mallinckrodt shall
make payment for any corrections within thirty (30) days of such
notification; provided that, Mallinckrodt shall not be required
to make all or any portion of such payment if, within thirty (30)
days of receiving such notification from Entropin, Mallinckrodt
provides detailed notice to Entropin of the existence and nature
of any good faith dispute Mallinckrodt has with respect to some
or all of the corrections proposed. In the event Mallinckrodt
disputes a portion but not all of the cost corrections as
proposed by Entropin, then Mallinckrodt shall pay the undisputed
portion in accordance with the relevant terms hereof. In the
event that Mallinckrodt and Entropin are unable to resolve any
dispute within sixty (60) days after the date on which
Mallinckrodt gives notice to Entropin of any such good faith
dispute, the parties may agree on a submission of such dispute to
arbitration or they may pursue any remedies available to them at
law or in equity for the resolution of such dispute.
5. Returns and Inspections
-----------------------
(a) Entropin shall inspect all Bulk Active delivered to it within
thirty (30) working days from actual receipt by using its
standard inspection and sampling procedures. Bills of lading and
all other necessary forms must be appropriately marked by
Entropin if any shipment appears to be damaged upon arrival. All
claims for shortage or breakage must be made within thirty (30)
calendar days of receipt of any shipment of Bulk Active. Any
claim by Entropin for defects in the manufacture of Bulk Active
must be made with full particulars in writing to Mallinckrodt
within ten (10) business days after any defect is identified.
Any such claim by Entropin for defects shall be considered a
rejection by Entropin of the Bulk Active in question. If
Entropin shall fail to make any claims for defect or damage
timely and in the manner specified above, the Bulk Active in
question shall be deemed to have been accepted by Entropin.
(b) In case of a justifiable claim for defect in any portion of the
delivered Bulk Active because of its failure to conform to the
specifications appearing on Exhibit A or because it is defective
in material and workmanship, is adulterated or misbranded or is
otherwise not merchantable, Mallinckrodt shall, without charge to
Entropin, promptly replace the defective portion of Bulk Active
with material which remedies the claimed defect. The parties
understand and agree that the replacement of the defective
portion of any Bulk Active is the responsibility of Mallinckrodt
and is the
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sole right and remedy of Entropin with regard to defective
products hereunder.
(c) Any Bulk Active which has been rejected by Entropin in accordance
herewith will be returned to Mallinckrodt, at Mallinckrodt's
expense, for appropriate disposition or, if Mallinckrodt so
chooses, will be disposed of or destroyed by Entropin in a
reasonable and environmentally prudent manner, the cost of such
disposal or destruction to be reimbursed by Mallinckrodt upon
presentation by Entropin of documentation indicating the cost
therefor; provided, however, that Mallinckrodt will not reimburse
Entropin for an amount greater than the cost Mallinckrodt would
have incurred had it disposed of such Bulk Active. If
Mallinckrodt does not agree with Entropin that any shipment of
Bulk Active rejected by Entropin qualified for rejection in
accordance herewith, the matter will be submitted to an
independent laboratory mutually agreed to by the parties whose
determination shall be binding upon the parties. The cost of the
analysis shall be borne by the party whose analysis was in error.
(d) The specifications for Bulk Active set forth on Exhibit B may be
amended from time to time by mutual written agreement of the
parties or as required by applicable law. Any amendments
requested by a party shall be subject to the consent of the other
party, but such consent shall not unreasonably be withheld.
Notwithstanding any other provision hereof (including Section 4
hereof) any increase in cost of Bulk Active arising from revision
of the specifications requested by Entropin (which changes would
not otherwise have been made by Mallinckrodt) shall be borne by
Entropin.
(e) Upon reasonable advance notice, Entropin shall have the right to
inspect any production facilities or systems, and any production
or quality control records of Mallinckrodt used directly in or
related to the production of Bulk Active hereunder.
6. ADE's, Complaints and Inspections
---------------------------------
(a) Entropin shall notify Mallinckrodt in writing within one (1)
working day of obtaining any information or knowledge concerning
any visit or inspection of Entropin by the FDA regarding Product
or Bulk Active and any serious or unexpected side effect, injury,
toxicity, or sensitivity reaction, or any adverse drug experience
reports and the severity thereof associated with Bulk Active
whether or not finally determined to be related to use of the
Bulk Active included in
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Product. Such notice to Mallinckrodt shall be sent by fax, to
the attention of St. Louis Plant Quality Specialist and/or
Quality Assurance Manager ((▇▇▇) ▇▇▇-▇▇▇▇ fax) with an original
sent on the same day pursuant to the procedures set forth in
Section 14. "Serious," as used in this Agreement, refers to an
experience which results in death, permanent or substantial
disability, a vegetative state, inpatient hospitalization or
prolongation of hospitalization, a congenital anomaly, cancer, an
overdose, or is life threatening. "Unexpected," as used in this
Agreement, means an adverse drug experience that is not listed in
the current labeling for the drug and includes an event that may
be symptomatically and pathophysiologically related to an event
listed in the labeling, but differs from the event because of
greater severity or specificity.
(b) Mallinckrodt shall notify Entropin in writing within one (1)
working day of obtaining any information or knowledge concerning
any visit or inspection of Mallinckrodt by the FDA regarding Bulk
Active supplied to Entropin and any serious or unexpected side
effect, injury, toxicity, or sensitivity reaction, any unexpected
incidents, or any adverse drug experience reports and the
severity thereof associated with such Bulk Active whether or not
finally determined to be related to use of such Bulk Active.
Such notice to Entropin shall be sent by fax, to the attention of
an individual to be specified by Entropin with an original sent
on the same day pursuant to the procedures set forth in Section
14.
(c) Product complaint reports that might in any manner relate to the
Bulk Active received by Entropin will be sent to Mallinckrodt by
fax to the attention of St. Louis Plant Quality Specialist and/or
Quality Assurance Manager ((▇▇▇) ▇▇▇-▇▇▇▇ fax) with an original
sent on the same day pursuant to the procedures set forth in
Section 14. Product complaint reports relating in any manner to
the Bulk Active which may meet FDA Field-alert Report criteria
codified at 21 CFR 314.81 (b) (1) will be communicated to
Mallinckrodt within one (1) working day of receipt by Entropin,
and Mallinckrodt will notify the FDA of such reports within three
(3) working days following receipt. Mallinckrodt will investigate
all complaints associated with the Bulk Active and provide a
written response to
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such complaints, with a copy to Entropin pursuant to the
procedures set forth in Section 14. Entropin will investigate
all other complaints associated in any manner with Product and
provide a written response to such complaints, with a copy to
Mallinckrodt pursuant to the procedures set forth in Section 15.
(d) Each party shall notify the other party in the event a party is
debarred or receives notice of action or threat of action with
respect to debarrment under the Generic Drug Enforcement Act of
1992.
7. Recalls
-------
In the event that Entropin believes a Bulk Active recall or withdrawal
is necessary, Entropin shall immediately notify Mallinckrodt. The
parties will consult on the necessity of a recall or withdrawal, but
if either party believes such action is necessary, it will be taken.
In the event that a decision is made for a Bulk Active recall or
withdrawal, Entropin shall take all actions necessary to recall or
withdraw such Bulk Active. Mallinckrodt shall reimburse Entropin for
all reasonable out-of-pocket expenses and costs associated with any
recall to the extent and only to the extent caused by the negligence
of Mallinckrodt or by Mallinckrodt's failure to manufacture Bulk
Active according to applicable cGMP standards or to manufacture,
package, or ship Bulk Active in accordance with the requirements of
this Agreement or applicable law. To the extent that any recall or
Bulk Active withdrawal is caused by the negligent act or omission to
act by Entropin all costs and expenses attributable thereto shall be
borne by Entropin.
8. Term and Termination
--------------------
(a) This Agreement shall be in effect for a period of ten (10) years,
commencing on January 1, 1997 and ending on December 31, 2006 and
shall automatically be extended for successive two (2) year
periods unless either party shall give notice of non-renewal in
writing to the other party one (1) year in advance of the end of
the initial term of this Agreement or any renewal term.
(b) In addition to other provisions in this Agreement that may
provide for a right of termination by either or both parties,
this Agreement may be terminated by either party effective upon
written notice for cause. For purposes of the immediately
preceding sentence, "cause" shall mean (without limitation):
(i) any material breach of this Agreement by the other party,
which breach remains uncorrected for a period of thirty (30)
days after written notice of such breach has been given to
the defaulting party (and for purposes hereof any failure by
any party to pay any amounts of money to the other party as
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and when due hereunder shall be deemed a material breach),
(ii) notwithstanding clause (i) set forth immediately above, any
material breach of this Agreement by the other party that is
by its nature uncurable,
(iii)the institution by the other party of voluntary proceedings
in bankruptcy or under any insolvency law or law for the
relief of debtors,
(iv) the making by the other party of an assignment for the
benefit of creditors or any dissolution or liquidation by
said other party,
(v) the filing of an involuntary petition under any bankruptcy
or insolvency law against the other party, if such petition
is not dismissed or set aside within sixty (60) days from
the date of its filing,
(vi) the appointment of a receivor or trustee for the assets or
business of the other party, if such appointment is not
dismissed or set aside within sixty (60) days from the date
of such appointment,
(vii)in the event the other party becomes debarred or receives
notice of action or threat of action with respect to
debarrment under the Generic Drug Enforcement Act of 1992,
or
(viii)the other party, in any manner in connection with its
performance hereunder, violates or is in material violation
of any laws, rules or regulations applicable with respect to
its performance hereunder.
(c) In the event that that certain Development Agreement between the
parties hereto dated January 1, 1997 is rightfully terminated by
Entropin pursuant to the provisions of subsections (b) or (c) of
Section 5 thereof, this Agreement shall be deemed terminated by
the mutual agreement of the parties and all rights or either
party hereunder shall thereupon cease and determine except as set
forth in subsection (d) immediately below.
(d) The rights and obligations of the parties contained in Sections
1(b), 10 and 11 shall survive termination or expiration of this
Agreement for any reason. Upon any expiration or termination of
this Agreement, or failure of renewal of this Agreement, any firm
orders existing
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at the time of expiration or termination shall remain binding on
both parties.
9. Force Majeure
-------------
Neither party shall be charged with any liability for delay in
performance of an obligation under this Agreement, including in the
case of Mallinckrodt for non-delivery of Bulk Active to Entropin, to
the extent, and for so long as, such delay is due to delays caused by
acts of God or the public enemy, compliance in good faith with any
applicable domestic or foreign governmental or judicial regulation or
order, war, civil commotion, destruction of production facilities or
materials by fire, flood, earthquake or storm, riots, labor strikes or
disturbances, unusually severe weather, interruption of raw material
supply beyond the reasonable control of the affected party, actions by
the FDA or other governmental (state or federal agencies) which
prevent or restrict the sale or manufacture of Bulk Active, or any
other cause beyond the reasonable control of the affected party
("Force Majeure"), provided that the affected party (i) shall take
whatever reasonable steps are necessary to relieve the effect of such
cause as rapidly as possible, (ii) shall give prompt notice to the
other party of the commencement of such cause and (iii) shall give
prompt notice to the other party of the termination of such cause. In
the event such cause continues for more than one hundred eighty (180)
days, the other party shall have the right to terminate this Agreement
by written notice to the affected party by specific reference to this
section of the Agreement.
10. Indemnification
---------------
(a) Entropin shall indemnify, defend, and hold harmless Mallinckrodt,
its officers, directors, agents, owners, and employees from and against any
and all loss, damage, claim injury, cost or expense, including reasonable
attorney's fees and expenses of litigation, in connection with any illness
or personal injury, including death, or property damage that arises out of
Entropin's negligence or willful misconduct or material breach of the terms
of this Agreement, provided that:
(i) Entropin is notified promptly of any claim or lawsuit for
which indemnification is sought,
(ii) Entropin is given complete control over the conduct and
disposition of any such claim or lawsuit, and
(iii)Entropin receives Mallinckrodt's full cooperation during the
pendency of such claim or lawsuit.
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(b) Mallinckrodt shall indemnify, defend, and hold harmless Entropin,
its officers, directors, agents, owners, and employees from and against any
and all loss, damage, claim, injury, cost or expense, including reasonable
attorney's fees and expenses of litigation, in connection with any illness
or personal injury, including death, or property damage that arises out of
Mallinckrodt's negligence or willful misconduct or material breach of the
terms of this Agreement; provided that:
(i) Mallinckrodt is notified promptly of any claim or lawsuit
for which indemnification is sought,
(ii) Mallinckrodt is given complete control over the conduct and
disposition of any such claim or lawsuit, and
(iii)Mallinckrodt receives Entropin's full cooperation during the
pendency of such claim or lawsuit.
(c) In the event any loss, cost, damage, claim or expense relating to
Bulk Active supplied and/or distributed or sold hereunder arises from the
negligence, willful midconduct or material breach of this Agreement by both
parties, then Mallinckrodt and Entropin shall each be responsible in
connection therewith for that portion of the loss, cost, damage, claim or
expense to which its actions contributed.
11. Confidentiality
---------------
(a) During the term of this Agreement it may be necessary for one
party to disclose to the other (but only to those individuals who need to
know) certain confidential information including, but not limited to
certain business information and intellectual property ("Confidential
Information"). For a period of five (5) years after the termination or
expiration of this Agreement, the party receiving any such Confidential
Information from the disclosing party hereunder shall exercise due care at
all times to prevent the disclosure of such information to any third party
without the consent of the disclosing party or the use of Confidential
Information in a manner not authorized by the disclosing party.
(b) The obligations of confidentiality set forth in subsection (a)
above shall not apply to:
(i) information which is known to the receiving party prior to
disclosure or is independently developed by the receiving
party, as evidenced by such party's written records,
(ii) information disclosed to the receiving party hereunder by a
third party who has a right to make a disclosure and does
not have an obligation of
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confidentiality to the disclosing party hereunder with
respect to such information,
(iii)Information which is or becomes (through no breach or fault
of the receiving party) patented, published or otherwise
part of the public domain, and
(iv) information which is required to be disclosed under penalty
of law, provided that the receiving party has taken all
reasonable steps available (short of the institution of
legal action) to protect this information and, prior to any
disclosure, notifies the disclosing party hereunder of its
obligation to make the disclosure and provided further, that
the disclosing party takes all steps necessary to limit the
disclosure to that portion of the Confidential Information
which is absolutely required to be disclosed.
12. Remedies Cumulative.
-------------------
The remedies provided in this Agreement shall be cumulative and shall
not preclude assertion by any party hereto of any other rights (whether
legal or equitable in nature) or the seeking of any other remedies against
any other party hereto.
13. Binding Effect and Assignment.
-----------------------------
This Agreement shall inure to the benefit of and be binding upon the
parties hereto, their successors and assigns; provided, however, that
neither party shall, without the prior written consent of the other party
(which will not be unreasonably withheld), assign or transfer any of its
rights, benefits, obligations, or other interest under this Agreement to
any other party, except that, without seeking the consent of Entropin,
Mallinckrodt may assign this Agreement to any entity or person it controls,
it is controlled by or is under common control with.
14. Notices.
-------
All notices, consents, approvals or other notifications required to be
sent by one party to the other party hereunder shall be in writing and
shall be deemed served upon the other party if delivered by hand or sent by
United States registered or certified mail, postage prepaid, with return
receipt requested, or
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by facsimile with a copy by registered or certified mail, air courier or
telex, addressed to such other party at the address set out below, or the
last address of such party as shall have been communicated to the other
party. If a party changes its address, written notice shall be given
promptly to the other party of the new address. Notice shall be deemed
given on the day it is sent (in the case of delivery by method other than
hand delivery) or the date of delivery (in the case of delivery by hand) in
accordance with the provisions of this paragraph. The addresses for
notices are as follows:
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If to Mallinckrodt:
Mallinckrodt Inc.
c/o Pharmaceutical Chemicals Division
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
with a copy to:
Mallinckrodt Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
If to Entropin:
Entropin, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chairman
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and CEO
15. Governing Law and Jurisdiction.
------------------------------
This Agreement shall be governed by and construed in accordance with
the substantive and procedural laws (as opposed to the conflicts of law
provisions) of the State of Missouri.
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16. Waiver.
------
The failure by any party to exercise any of its rights hereunder or to
enforce any of the terms or conditions of this Agreement on any occasion
shall not constitute or be deemed a waiver of that party's rights
thereafter to exercise any rights hereunder or to enforce each and every
term and condition of this Agreement.
17. Modifications.
-------------
This Agreement may not be amended or modified except by a writing
specifically referring to this Agreement and executed by duly authorized
representatives of both parties.
18. Severability.
------------
A determination that any portion of this Agreement is unenforceable or
invalid shall not affect the enforceability or validity of any of the
remaining portions hereof or of this Agreement as a whole. In the event
that any part of any of the covenants, sections or provisions herein may be
determined by a court of law or equity to be overly broad or against
applicable precedent or public policy, thereby making such covenants,
sections or provisions invalid or unenforceable, the parties shall attempt
to reach agreement with respect to a valid and enforceable substitute for
the deleted provisions, which shall be as close in its intent and effect as
possible to the deleted portions.
19. Headings.
--------
The parties agree that the section and article headings are inserted
only for ease of reference, shall not be construed as part of this
Agreement, and shall have no effect upon the construction or interpretation
of any part hereof.
20. Counterparts.
------------
This Agreement may be executed in several counterparts, and each
executed counterpart shall be considered an original of this Agreement.
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21. Entire Agreement.
----------------
This Agreement and the exhibits attached hereto represent the entire
agreement and understanding of the parties hereto with respect to their
subject matter and supercede any and all prior agreements, understanding or
discussions, whether written or oral, between the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
ENTROPIN, INC. MALLINCKRODT INC.
Pharmaceutical Chemicals Division
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------- -----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, President
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