Sample Business Contracts

Custom Manufacturing Agreement - Johnson Matthey Inc. and Celgene Corp.

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This Custom Manufacturing Agreement (this "Agreement") is entered into between
Johnson Matthey Inc., having an office at 2003 Nolte Drive, West Deptford, NJ
08066 ("JMI"), and Celgene Corporation, having an office at 7 Powder Horn Drive,
Warren, New Jersey 07059 ("Celgene"), to establish terms and conditions upon
which JMI will manufacture for and sell to Celgene d-methylphenidate
hydrochloride in bulk, non-sterile form ("Material"). This Agreement may be
referenced in orders and other correspondence related hereto as Agreement No.


     1.1    The "Effective Date" of this Agreement is June 1, 2000.

     1.2    "cGMP" means those current practices, as amended from time to time,
            related to the manufacture of pharmaceutical active ingredients and
            their precursors laid down in guidelines and regulations such as the
            United States Code of Federal Regulations (Title 21, Parts 210-211),
            and the Guide to Inspection of Bulk Pharmaceutical Chemicals (U.S.
            Department of Health and Human Services, Revised September 1991).

     1.3    "DEA" means the United States Drug Enforcement Administration

     1.4    "Defective Material" means Material that does not conform to the
            warranties provided by JMI pursuant to Sections 7.1 and 7.2
            hereunder, as determined in accordance with this Agreement.

     1.5    "FDA" means the United States Federal Food and Drug Administration.

     1.6    "Manufacturing Procedure" means Celgene's description of the
            synthesis of Material as provided by Celgene to JMI, attached
            hereto and incorporated herein as Exhibit A.

     1.7    "NDA" means Celgene's New Drug Application to the FDA for formulated

     1.8    "Pilot Phase" means the period of time commencing upon the execution
            of this Agreement and continuing until the delivery of the Pilot
            Phase Material.

     1.9    "Pilot Phase Material" means d-methylphenidate hydrochloride in
            bulk, non-sterile form manufactured by JMI and supplied to Celgene
            during the Pilot Phase.

     1.10   "Raw Material Specifications" means Celgene's specifications for
            Resolving Agent as provided by Celgene to JMI, attached hereto and
            incorporated herein as Exhibit E.

     1.11   "Resolving Agent" means dibenzoyl-D-tartaric acid that meets the Raw
            Material Specifications.

     1.12   "Specifications" means Celgene's specifications for Material and the
            validated analytical methods for the testing and release of
            Material, all as provided by Celgene to JMI, attached hereto and
            incorporated herein as Exhibit B.

     1.13   "Validation Phase Material" means d-methylphenidate hydrochloride in
            bulk, non-sterile form manufactured by JMI and supplied to Celgene
            during the Validation Phase.

     1.14   "Validation Phase" means the period of time commencing upon the
            conclusion of the Pilot Phase and continuing until the completion of
            the regulatory filing described in Section 4.5.


     2.1    Term

            This Agreement shall commence on the Effective Date and shall expire
            on March 31, 2006; provided, however, that this Agreement shall
            terminate on June 10, 2005, in the event that Celgene is no longer
            supplying product using d-methylphenidate hydrochloride to Novartis
            Pharmaceuticals Corporation, or its affiliates, licensees,
            successors or assigns ("NPC"), beyond such earlier termination date.

     2.2    Exclusivity

            During the term of this Agreement, Celgene agrees to buy from JMI
            Material in quantities that shall equal at least fifty percent (50%)
            of Celgene's requirements for all formulations of Material from any
            bulk manufacturer thereof in each calendar year, including NPC;
            provided, however, that during calendar years 2001 and 2002, Celgene
            agrees to buy from JMI all of Celgene's requirements for all
            formulations of Material. During the terms of this Agreement, JMI
            agrees not to sell d-methylphenidate hydrochloride to any party
            other than Celgene; provided, however, that JMI shall not be
            prevented from selling the racemic mixture of methylphenidate
            hydrochloride to any third parties.


     3.1    Price for Development Services

            The parties hereto acknowledge and agree that process development,
            scale-up and validation work must be accomplished prior to the
            commencement of the purchase and supply obligations identified in
            Article 6. Celgene has paid to JMI, upon the delivery by JMI to
            Celgene of the first lot of Pilot Phase Material pursuant to Section
            3.3, in addition to the prices for Material specified in Sections
            3.2 and 4.1, $300,000 for the foregoing services performed by JMI.



      3.2   Price for Pilot Material

            The price for Pilot Phase Material is $8.00 per gram.

      3.3   Development Laboratory Lot

            The first lot of Pilot Phase Material has been manufactured in JMI's
            development laboratory and was supplied to Celgene on June 20, 2000.
            This lot provided gram quantities in an amount sufficient for
            qualification testing in accordance with the Specifications.

     3.4    Pilot Lots

            In addition to the lot manufactured pursuant to Section 3.3, JMI
            manufactured and on July 31, 2000, supplied to Celgene two lots of
            Pilot Phase Material in JMI's plant. Both lots together consisted of
            approximately forty (40) kilograms total of Pilot Phase Material.

     3.5    Manufacturing Conditions and Use

            Each of the two (2) lots of Pilot Phase Material supplied pursuant
            to Section 3.4 were manufactured under non-validated cGMP
            conditions. JMI supplied the Pilot Phase Material to Celgene for
            evaluation and regulatory filing purposes only and Celgene covenants
            that such Pilot Phase Material shall not be used for human
            consumption. All Pilot Phase Material is supplied without express or
            implied warranties. Full Material testing identified in the
            Specifications has been performed by Celgene on the Pilot Phase

     3.6    Delivery

            Samples of Pilot Phase Material were supplied by JMI to Celgene on
            or about July 30, 2000.


     4.1    Price for Validation Phase Material

            The price for all Validation Phase Material is $8.00 per gram.

     4.2    Validation Loss

            JMI manufactured three (3) lots of Validation Phase Material
            consisting of approximately sixty (60) kilograms each.



     4.3    Manufacturing Conditions and Use

            The Validation Phase Material was manufactured by JMI in conformance
            with cGMPs and in accordance with the synthetic route outlined in
            Exhibit A and tested to the Specifications specified in Exhibit B.
            JMI supplied the Validation Phase Material to Celgene for purposes
            of completing the process validation for Material.

     4.4    Delivery

            All Validation Phase Material was supplied by JMI to Celgene on
            December 14, 2000.

     4.5    Regulatory Filing

            JMI shall file a Drug Master File and provide Celgene with a
            reference letter for Material upon completion of the Validation
            Phase Material and three (3) months of stability testing.

     4.6    Testing

            The parties hereto acknowledge and agree that JMI will qualify
            analytical methods as provided by Celgene and perform the tests
            specified for Material in Exhibit B.


     5.1    Celgene will provide all Resolving Agent needed by JMI to
            manufacture the Pilot Phase Material, Validation Phase Material and
            Material at no cost to JMI.

     5.2    Celgene shall ensure that all Resolving Agent delivered to JMI shall
            include instructions on proper handling requirements, including a
            Material Safety Data Sheet, and shall be packaged, labeled and
            transported in accordance with all applicable rules, regulations,
            tariffs, ordinances and statutes.

     5.3    Celgene warrants that the Resolving Agent supplied hereunder to JMI
            is suitable for use in manufacturing Material pursuant to the
            Manufacturing Procedure to meet the Specifications and shall conform
            to the Raw Material Specifications as described in Exhibit E
            attached hereto and incorporated herein, as such specifications may
            from time-to-time be amended by mutual written agreement or by
            requirement of the FDA or other governmental body.


     6.1    The price of the commercial batches of Material is specified on
            Exhibit C attached hereto and incorporated herein.


     6.2    Celgene shall provide a firm written order for Material
            approximately three (3) months prior to the date of the anticipated
            FDA approval of Celgene's NDA and shall also provide to JMI a
            written forecast of its requirements for Material for the next
            succeeding nine (9) months. Every three (3) months thereafter for
            the term of the Agreement, Celgene shall provide JMI with a firm
            order for the next three (3) months and a revised nine (9) month
            forecast; JMI shall be entitled to rely upon the first three (3)
            months of such nine (9) month rolling forecast for purposes of
            obtaining the raw materials from its suppliers (other than Celgene)
            for Material. JMI agrees to process and deliver quantities ordered
            by Celgene within three (3) months of the date of receipt of
            Celgene's firm order; provided that Celgene shall supply, free of
            charge, Resolving Agent to JMI in sufficient quantities for JMI to
            fill such purchase order, at least four (4) months in advance of the
            anticipated delivery date for such ordered Material. Forecasts or
            firm orders shall be revised in writing by Celgene should the
            quantity of a forecast or firm order change exceed ten percent (10%)
            of Celgene's most recent projections. JMI shall use reasonable
            efforts to process and deliver quantities called for in the revised
            forecasts, and Article 11 hereof shall apply to production of such
            quantities. For example, if Celgene anticipates FDA approval in
            April of 2001, Celgene shall provide in December, 2000 a firm order
            for Material for April, May and June for 2001 and a forecast for
            Material requirements for July, 2001 through March, 2002. Celgene
            shall take delivery of such firm order Material for the firm order
            period. If the forecasted requirements change exceeds ten (10)
            percent of the forecasted quantities for any month between July,
            2001 and March, 2002, a new forecast shall be provided to JMI. In
            March 2001, Celgene shall provide a firm order for Material for July
            through September, 2001 and a revised forecast for the months
            October, 2001 through June, 2002. Material for firm orders for this
            period shall agree within ten (10) percent of the previous forecast
            as provided for in this section.

     6.3    Material shall be shipped FOB JMI's plant in such containers as may
            be agreed upon by the parties, packed in accordance with Department
            of Transportation and DEA requirements for interstate shipment.

     6.4    A ten percent (10%) over-run or under-run based on the quantity
            indicated on Celgene's purchase order is allowed so long as DEA
            manufacturing or procurement quotas for Material are not exceeded.


     7.1    Material shall conform to the Specifications, as the Specifications
            may from time-to-time be amended by mutual written agreement or by
            requirement of the FDA, other governmental body or the then current
            edition of the U.S. Pharmacopeia; and JMI's production of Material
            shall conform to all applicable regulations of the FDA, and other
            cognizant governmental bodies as required; provided, however, that
            JMI shall not be responsible for adulteration of Material or
            Defective Material to the extent that such adulteration or Defective
            Material is due to a faulty Manufacturing Procedure or raw materials
            specified by Celgene. In the event that the Specifications are
            changed in a manner that results in increased


            costs to JMI the parties shall negotiate in good faith a price
            increase that is commensurate with the cost increase.

     7.2    JMI warrants and guarantees that, as of the date of each shipment
            hereunder of any articles subject to the provisions of the Federal
            Food, Drug and Cosmetic Act (the "Act"), such article is not, when
            shipped from JMI's West Deptford, New Jersey plant, adulterated or
            misbranded within the meaning of the Act or of any applicable state
            law in which the definitions of adulteration and misbranding are
            substantially the same as those contained in the Act, or an article
            which may not, under the provisions of Sections 404, 505, or 512 of
            the Act, be introduced into interstate commerce. EXCEPT FOR SECTION

     7.3    JMI will provide Celgene with the results of all assays required to
            be run under the Specifications. JMI will ship Material to Celgene
            in accordance with Articles 6 and 11. Material will be deemed
            accepted by Celgene upon final release by Celgene's Quality
            Assurance Department, but in no event later than sixty (60) days
            after receipt of the Material sold hereunder; provided, however, in
            the case of Material having latent defects resulting in a recall of
            products incorporating such Material, which upon diligent
            examination in accordance with the quality control testing
            procedures set out in the Specifications upon receipt could not have
            been discovered during such period, Celgene shall have the right to
            revoke its acceptance of such Material no later than at the time
            Celgene first becomes aware of the latent defect causing such
            Material to be Defective Material. Celgene, after becoming aware of
            such, shall promptly notify JMI in writing if the Material is
            Defective Material or is subject to any claim of damage in shipment
            or shortage. In the event the Material is Defective Material, or is
            subject to any claim of damage in shipment or shortage, the rejected
            Material shall not be used by Celgene and the entire shipment shall
            promptly be returned by Celgene to JMI at JMI's expense, or such
            other mutually agreed upon response shall be undertaken. JMI shall
            have the right, but not the obligation, to re-test the rejected
            Material in accordance with Exhibit B. In the event that JMI
            disputes Celgene's determination that Material is Defective Material
            or has been damaged or is subject to a shortage in quantity, the
            parties shall meet to resolve, in good faith, such dispute. In the
            event that JMI disputes Celgene's determination of Defective
            Material and the parties are unable to resolve such dispute, the
            parties shall promptly name an independent and mutually acceptable
            laboratory (the "Laboratory") that has been qualified for the
            appropriate testing method(s). The Laboratory shall test the
            Material in accordance with the Specifications, and such test
            results obtained by the Laboratory shall be final and controlling.



     7.4    Upon return of any rejected Material, and JMI's agreement, or a
            final determination in accordance with this Agreement, that such
            Material is Defective Material or has been damaged, JMI will replace
            the Material at JMI's cost and will resubmit to Celgene within sixty
            (60) days of receipt of additional raw materials from Celgene and
            JMI's other suppliers. CELGENE'S EXCLUSIVE REMEDY FOR BREACH OF
            THE TIME PERIOD STATED. In the event that JMI fails to replace the
            Material or fails to do so within the time period stated, Celgene
            shall have the right to demand a credit of the purchase price
            therefor. Subject to Section 7.7, JMI shall not be liable for, and
            Celgene assumes responsibility for, all injuries or damages to any
            person or property resulting from the handling, possession, or use
            of the Material following Celgene's receipt of the Material.

            extent otherwise provided under Section 7.7, Celgene agrees to
            indemnify and hold harmless JMI from all losses, liability, damages,
            and/or expenses which may be sustained or claimed against JMI
            arising out of the handling, possession, or use of the Material,
            following Celgene's receipt of the Material.

     7.6    Celgene assumes and will bear the expenses of, and will hold JMI
            harmless against, any loss, suit, claim or damage arising from or
            out of any intellectual property liability for Material manufactured
            to Celgene's Specifications or by the Manufacturing Procedure
            provided by Celgene, including, without limitation, for actual or
            alleged infringement of any U.S. or foreign patents because of use
            of Material or such Manufacturing Procedure, including, without
            limitation, manufacturing Material with and use of Resolving Agent.

            JMI agrees to promptly notify Celgene in writing of all claims and
            threatened claims against JMI for which JMI may be entitled to
            indemnity hereunder. Celgene shall have the right to defend and/or
            settle any such claim and JMI shall give Celgene such information
            and assistance as may be reasonably necessary in the conduct of such
            defense. JMI shall have the right to participate in such defense at
            its cost.



     7.7    JMI assumes and will bear the expense of, and will hold Celgene
            harmless against, any loss, suit, claim, or damage asserted by a
            third party resulting from or out of Defective Material; provided
            that in no event shall JMI's liability in connection with its
            performance under this Agreement, regardless of the basis of the
            claim, exceed twenty million dollars ($20,000,000) in the aggregate.

     7.8    Celgene agrees to promptly notify JMI in writing of all claims and
            threatened claims against Celgene for which Celgene may be entitled
            to indemnity hereunder. JMI shall have the right to defend and/or
            settle any such claim and Celgene shall give JMI such information
            and assistance as may be reasonably necessary in the conduct of such
            defense. Celgene shall have a right to participate in such defense
            at its cost.


     8.1    Original agreed upon times are not to be deemed of the essence of an
            accepted order and reasonable variations from originally agreed upon
            times will be accepted by Celgene. JMI's obligations to process and
            Celgene's obligations to take, Material shall be subject to any
            delays caused by acts of God, fires, floods, explosion, sabotage,
            riot, accidents; orders of, or failure to issue or continue in
            effect all necessary permits by, civil or military authorities
            whether relating to manufacture and sale of the Material, or
            discharge of materials into the environment or otherwise; delays by
            suppliers of fuel, power, raw materials (including Resolving Agent),
            containers or transportation; breakage or failure of machines,
            strikes, lockouts or labor trouble; perils of the sea; or any other
            cause beyond such party's reasonable control; provided that no event
            of force majeure shall excuse Celgene from taking and paying for
            Material that JMI has made or that is in the process of being made
            and is subject to a firm order therefor.

     8.2    The party invoking this Article 8 shall give the other party prompt
            written notice of any event that is likely to delay shipment or
            acceptance. No such delay shall result in cancellation of quantities
            required hereunder, or of this Agreement, provided that either party
            may cancel or amend the quantities delayed wihout penalty if any
            delay lasts longer than ninety (90) days.

     8.3    If for any reason JMI is unable or unwilling to supply such quantity
            and/or quality of Material to Celgene as contemplated hereunder,
            Celgene shall have the right to qualify an alternate source of
            Material and purchase such quantity of Material from such source,
            without further obligation to JMI hereunder with respect to such
            Material that JMI does not supply; provided, however, that upon
            written notice by JMI that JMI is able to resume the supply of
            Material, Celgene shall resume its purchasing from JMI; provided
            further, however, that Celgene may not invoke the provisions of this
            Article 8 due to its inability to supply Resolving Agent to JMI if
            Celgene is able to supply Resolving Agent to any third party.




     9.1    It is the further intent of the parties hereto that they shall
            mutually benefit from the terms, conditions and provisions of this
            Agreement, and in the event that either party shall suffer a gross
            inequity resulting from such terms, conditions or provisions, or
            from a substantial change in circumstances or conditions, the
            parties shall negotiate in good faith to resolve or remove such
            inequity. It is mutually understood and agreed, however, that
            nothing herein shall be construed to relieve either party of any of
            its obligations under this Agreement, unless and until such changes
            have been agreed to in writing by both parties.


     10.1   Celgene will remit payment in U.S. dollars within thirty (30) days
            from the date of the invoice. Celgene agrees to pay an interest
            charge equal to one and one-half percent (1.5%) per month on the
            unpaid balance on any invoice.

     10.2   Price Charges - The price of Material shall be automatically subject
            to price escalation on the first day of each calendar year beginning
            with January 1, 2002, by a percentage equal to the percentage change
            in the producer price index ("PPI"). The PPI referenced herein shall
            be determined from Table VI of the Producer Prices and Price Index,
            commodity code 063 for drugs and pharmaceuticals, Bureau of Labor
            Statistics (or if discontinued such equivalent index as is mutually
            agreed to by the parties). The percentage change in the PPI shall be
            determined by dividing the final annual average PPI for the
            immediately preceding calendar year by the final annual average PPI
            for the next preceding calendar year. For example, the price
            increase effective January 1, in year X would be determined under
            the above formula by dividing the final annual average from calendar
            year X-1 by the final annual average PPI from calendar year X-2. If
            such percentage change is less than zero percent (0.00%), the prices
            shall remain unchanged.

     10.3   Any present or future duty, sales, use, excise or other taxes other
            than taxes on income, whether Federal, State or local, applicable to
            this transaction are not included in the price herein stated and
            when due shall be paid by Celgene without cost or charge to JMI.


     11.1   The Material is scheduled under the Federal Controlled Substances
            Act. JMI is required to obtain a quota from the DEA before producing
            Material. DEA quotas are limited, therefore, in order to assure
            Celgene of the supplies agreed to hereunder, JMI agrees to use its
            reasonable best efforts to obtain DEA manufacturing quota and
            Celgene shall use its reasonable best efforts to cooperate with
            JMI's request for manufacturing quota and obtain DEA procurement
            quota sufficient to allow JMI to process Celgene orders for



     11.2   Each party's obligation hereunder is subject to obtaining the
            necessary DEA quota. Neither party shall be liable to the other for
            that quantity of Material which the other party is unable to supply
            or take as a result of failure to obtain the necessary DEA quota so
            long as it has used reasonable best efforts to obtain sufficient DEA

     11.3   Each party shall use its best efforts consistent with reasonable
            business practices and its obligations under this Agreement to
            inform the other party of any hazards or precautions which need to
            be taken, of which the party is or becomes aware, with respect to
            the manufacture or handling of Material and Resolving Agent and the
            use of Manufacturing Procedure during every phase under this


     12.1   In addition to termination as provided for in Article 2, this
            Agreement can be terminated by JMI for nonpayment of any sums due
            hereunder (remaining unpaid for more than thirty (30) days after
            notice to Celgene), or by either party at any time with 90 days'
            advance written notice:

            (i)    on account of a material violation of the Agreement by the
                   other party, provided, however, that such notice shall be
                   null and void if the offending party cures the violation
                   before expiration of the ninety (90) days notice period; or

            (ii)   when the other party makes a general assignment for the
                   benefit of its creditors, has a custodian, receiver or any
                   trustee appointed for it or a substantial part of its
                   assets, commences any voluntary proceeding under any
                   bankruptcy law; or

            (iii)  when a court having jurisdiction over the other party shall
                   enter a decree or order for relief in any involuntary case
                   under applicable bankruptcy law and such decree or order
                   shall continue unstayed and in effect for a period of sixty
                   (60) days or more; or

            (iv)   product withdrawal by Celgene, FDA or DEA.

     12.2   Termination for any reason by either party under this Article 12
            shall not prejudice that party's remaining contractual rights
            hereunder, including without limitation rights to direct damages,
            nor terminate obligations set forth in Articles 7 and 17 hereof.


     13.1   This Agreement constitutes the entire agreement between the parties.
            No modifications to, supplementation of, or addition of terms or
            conditions to this Agreement, whether contained in any purchase
            order, confirmation or otherwise, shall be effective unless made in
            writing and signed by the party to be charged with modification. In
            furtherance and not in limitation of the foregoing, the parties



            acknowledge and agree that the terms of the purchase orders issued
            hereunder shall be binding for quantities and delivery dates only,
            and any other terms and conditions contained thereon shall be of no
            force and effect.


     14.1   This Agreement shall be interpreted in accordance with the laws of
            the state of New Jersey where it is deemed to have been executed and
            where both parties have their principal place of business relevant
            to the subject matter of this Agreement.


     15.1   Neither party shall, without the prior written consent (not to be
            unreasonably withheld or delayed) of the other party having been
            obtained, assign or transfer this Agreement to any person on entity,
            in whole or in part, provided that, each party may assign or
            transfer this Agreement to any Affiliate or to any successor by
            merger of such party or its pharmaceutical business to which this
            Agreement relates, or upon a sale of all or substantially all of
            such parties assets, or the assets or its pharmaceutical business to
            which this Agreement relates, and provided further that Celgene may
            assign this Agreement to NPC, in each case, without the prior
            written consent of the other party hereto. All of the terms and
            provisions of this Agreement shall be binding upon and inure the
            benefit of and be enforceable by the parties hereto and their
            respective successors and assigns. Notwithstanding the foregoing,
            this Agreement is entered into solely for the benefit of the parties
            hereto and not for the benefit of any other persons or entities. No
            other persons or entities may enforce it for their benefit nor shall
            they have any claim or remedy for its breach.


     16.1   All notices, requests, and other communications, hereunder shall be
            deposited in the United States mail, registered or certified,
            postage prepaid, addressed as follows:

            If to Celgene:                        With a copy to:
            Celgene Corporation                   Proskauer Rose LLP
            7 Powder Horn Drive                   1585 Broadway
            Warren, NJ 07059                      New York, NY 10036-8299
            Attn: Joseph J. Day Jr.               Attn: Robert A. Cantone
            Senior Vice President
            Planning & Business Development

            If to JMI:                            With a copy to:
            Johnson Matthey Inc.                  Johnson Matthey Inc.
            2003 Nolte Drive                      460 E. Swedesford Road
            West Deptford, NJ 08066               Wayne, PA 19087
            Attn: Vice President &                Attn: Vice President &
                  General Manager                       General Counsel




     17.1   Neither party shall disclose to any third party, except as may be
            required by law in a manner that preserves confidentiality to the
            maximum extent permitted by law, the substance of this Agreement.
            All written information provided by either party to the other
            hereunder including, but not limited to, volume requirements,
            pricing, delivery schedules, and process data, is the disclosing
            party's confidential information, as the same is defined in that
            certain Confidentiality Agreement between the parties, dated
            effective February 28, 2000, a copy of which is attached hereto as
            Exhibit D and incorporated herein as if fully rewritten.
            Notwithstanding anything to the contrary contained in such
            Confidentiality Agreement, the receiving party agrees not to use or
            disclose any such information or use such information except for
            purposes of performance hereunder, and then only in a manner that
            preserves confidentiality to the maximum extent permitted by law,
            during the term of this Agreement and for a period of five (5) years
            after the termination of this Agreement, provided that the receiving
            party may use or disclose any such information that (1) is already
            known to it at the time of disclosure to the receiving party; (2)
            becomes publicly known through no fault of the receiving party; or
            (3) is disclosed to the receiving party by a third party who is free
            to make such disclosure.

     17.2   Celgene, and NPC on behalf of Celgene, shall have the right, on
            reasonable advance notice and during normal business hours, to
            inspect JMI's facilities and operations to confirm compliance with
            JMI's obligations under this Agreement; provided that JMI shall have
            the right to safeguard its confidential information and information
            that is subject to JMI's obligations of confidentiality to a third
            party; provided further, that any inspection by NPC shall be
            subject to he execution of a confidentiality agreement, on terms
            reasonably satisfactory to JMI, between JMI and NPC.


     18.1   In operating under this Agreement, each party shall act
            independently and this Agreement shall not be construed as creating
            any partnership, joint venture or incorporated business entity.
            Neither party shall have any authority to incur any liability or
            obligation whatsoever on behalf of the other.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives.


By /s/ Sol J. Barer                    By /s/ Forrest K. Sheff
   -----------------------------          --------------------------------------
   -----------------------------          --------------------------------------
   TITLE: President & COO                 TITLE: Vice President/General Manager
   -----------------------------          --------------------------------------
   Date: 3/1/01                           Date: 3/5/01
   -----------------------------          --------------------------------------

March 5, 2001