Exhibit 10.16(a)
TOLL MANUFACTURING AND PACKAGING AGREEMENT
This Toll Manufacturing and Packaging Agreement (this "Agreement") is
made as of this 24th day of August, 1999, by and between Cephalon, Inc., 145
Brandywine Parkway, West Chester, PA 19380-4245 ("CEPHALON") and Catalytica
Pharmaceuticals, Inc., P.O. Box 1887, Greenville, NC 27835-1887 ("CATALYTICA").
WHEREAS, CEPHALON holds certain rights to manufacture, market and sell
in certain countries the pharmaceutical product modafinil;
WHEREAS, CEPHALON possesses certain know how and other confidential and
proprietary information relating to the process of manufacturing and packaging
modafinil in finished dosage form;
WHEREAS, CEPHALON wishes to engage CATALYTICA to formulate and package
modafinil tablets in dosage form for subsequent commercial sale by CEPHALON in
certain countries and for certain clinical and other purposes; and
WHEREAS, CATALYTICA has suitable facilities and equipment and
sufficient qualified personnel at its plant in Greenville, North Carolina to
formulate and package commercial quantities of modafinil in dosage form, and is
willing to provide such services on the terms and conditions set forth below.
NOW, THEREFORE, the parties hereto agree as follows:
I. DEFINITIONS
As used in this Agreement:
1.1 "Active Drug Substance" means the compound modafinil having
those specifications as set forth on Schedule A hereto.
1.2 "Adverse Experience" or "AE" shall mean any unfavorable and
unintended change in the structure, function, or chemistry of
the body temporally associated with any use of a Product or of
a derivative thereof, whether or not the adverse experience is
considered to be related to the use of the Product, including
but not limited to any of the following: an unexpected side
effect, injury, toxicity or sensitivity reaction, which may
include an experience of unexpected incidence and severity; an
adverse experience occurring in the course of the use of a
drug product in professional practice; an adverse experience
occurring in clinical studies; an adverse experience occurring
from drug overdose, whether accidental or intentional; an
adverse experience occurring from drug abuse; an adverse
experience occurring from drug withdrawal; and any significant
failure of expected pharmacological action.
**Certain portions of this document have been omitted based upon a
request for confidential treatment that has been filed with the Commission.
The omitted portions have been filed separately with the Commission.
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1.3 "Affiliate" means any corporation or other business entity
which, directly or indirectly, is controlled by, controls, or
is under common control with CEPHALON or CATALYTICA. For this
purpose, "control" shall be deemed to mean ownership of fifty
percent (50%) or more of the stock or other equity of such
entity.
1.4 "Confidential Information" means all information, data,
know-how and all other business, technical and financial data
disclosed hereunder by one party or any of its Affiliates to
the other party or any of its Affiliates, except any portion
thereof which:
(a) at the time of disclosure, is in the public
knowledge;
(b) after disclosure, becomes part of the public
knowledge by publication or otherwise, except by
breach of this Agreement by the recipient;
(c) the recipient can demonstrate by its written records
was in the recipient's possession at the time of such
disclosure, and which was not acquired, directly or
indirectly, from the disclosing party;
(d) is lawfully disclosed to the recipient on a
non-confidential basis by a third party who is not
obligated to the disclosing party or any other third
party to retain such Confidential Information in
confidence;
(e) results from research and development by the
recipient independent of such disclosure as shown by
competent evidence; or
(f) is required to be disclosed by legal process;
provided, in each case the party so disclosing
information timely informs the other party and uses
its best efforts to limit the disclosure and maintain
confidentiality to the extent possible and, if
possible, permits the other party to attempt by
appropriate legal means to limit such disclosure.
Written Confidential Information shall be identified by the
disclosing party as being confidential by stamping the cover
pages of such information "Confidential." Confidential
Information disclosed orally, visually and/or in another
tangible form shall be identified by the disclosing party to
the receiving party as confidential at the time of such
disclosure and confirmed to the receiving party within thirty
(30) days after such disclosure in a writing marked
"Confidential."
1.5 "Conversion Fee" means, for each unit of Product, the
applicable tolling fee minus CATALYTICA's labor and materials
costs directly relating thereto.
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1.6 "Product" means modafinil in final packaged dosage forms
meeting the Product specifications set forth in Schedule B
hereto.
1.7 "Starting Material" means the raw material necessary to
formulate and package the Product as set forth in Schedule A
hereto (but excluding the Active Drug Substance and magnesium
silicate Compressil(R) (hereinafter Compressil)).
1.8 "Trademark" or "Trademarks" shall mean Provigil(R), as well as
any other trademark owned or used by CEPHALON in connection
with the Product and listed on Schedule A hereto.
II. APPOINTMENT AND TERM
2.1 Appointment. CEPHALON hereby appoints CATALYTICA, and
CATALYTICA hereby accepts appointment, as a toll manufacturer
to formulate and package the Product at CATALYTICA'S
Greenville, NC facility.
2.2 Manufacturing and Packaging Services. During the term of this
Agreement, CATALYTICA shall formulate Product, which shall
include the validation of commercial batches of the Product in
accordance with the procedures set forth in Schedule D hereto,
and the preparation of the Product for commercial sale to
customers and for clinical and other purposes by CEPHALON. In
addition, CATALYTICA shall label and package Product in
accordance with those specifications and instructions set
forth in Schedule A hereto, or otherwise as may be provided by
CEPHALON and reasonably agreed to by Catalytica. CEPHALON will
supply approved artwork for labels, package inserts and
packaging. The content of the labels, package inserts and
packaging shall be the sole and exclusive responsibility of
CEPHALON. CATALYTICA will provide or procure, and test,
inspect and approve all labels, package inserts and packaging
used for the Product. CATALYTICA will submit artwork proofs of
all new labels, package inserts and packaging used for Product
to CEPHALON for approval prior to use, such approval not to be
unreasonably withheld.
2.3 Cooperation. CEPHALON will cooperate with CATALYTICA as may be
necessary and customary in consideration of industry practice,
and will disclose all material information necessary to enable
CATALYTICA to perform under this Agreement in a timely
fashion.
2.4 Specific Duties. In addition to its general obligations
relating to formulating and packaging, CATALYTICA shall
perform the following services at CATALYTICA's cost, except
where indicated:
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(i) receiving and storing all Active Drug Substance and
Compressil in accordance with instructions provided
by CEPHALON and reasonably agreed upon by CATALYTICA;
(ii) placing orders for, acquiring and storing all
Starting Material and packaging components;
(iii) quality control and testing of all Active Drug
Substance, Compressil, Starting Material, in process
materials, bulk tablets, finished dosage Product and
packaging components, in order to monitor compliance
with all applicable standards and specifications;
(iv) at CEPHALON's cost, managing clearance of customs for
all Starting Materials and packaging components, as
necessary;
(v) conducting stability testing of Product in accordance
with the procedures set forth in Schedule D hereto;
(vi) summarizing implemented changes and supplying latest
versions of approved critical documentation, and, at
CEPHALON's cost, preparing, submitting, and obtaining
all regulatory filings relating to the manufacture of
the Product under the terms of this Agreement, and as
agreed upon in writing by the parties (preparation of
transfer documentation is separately addressed at
Section 10.2 of this Agreement); and
(vii) performing such other services as agreed upon in
writing by the parties.
2.5 Term. Unless terminated in accordance with the provisions of
Article XXIII, this Agreement will remain in effect for a
period of five (5) years from the date hereof (the "Initial
Term"), and, unless either party gives written notice of
non-renewal at least one hundred eighty (180) days prior to
the end of the Initial Term (or any renewal term), this
Agreement shall be renewed for consecutive terms of one year,
subject to the mutual agreement of the parties regarding the
terms of the renewal, including without limitation those
pertaining to price and minimum purchase volumes.
III. PRODUCT QUANTITY, QUALITY AND MANUFACTURING PROCESSES
3.1 Quantity. Subject to the terms and conditions of this
Agreement, CATALYTICA will manufacture, package and supply to
CEPHALON quantities of Product ordered by CEPHALON or an
Affiliate thereof for subsequent sale by CEPHALON or an
Affiliate or agent thereof in the United States, Mexico,
Japan, the United Kingdom, Ireland, Italy and for certain
other territories or for certain clinical or other purposes as
may be determined by CEPHALON and agreed to by
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CATALYTICA. CEPHALON agrees to place orders and CATALYTICA
agrees to reserve capacity for the minimum quantities of
Product as defined in Schedule F. If the actual annual
quantity exceeds the minimum annual quantity by twenty-five
percent (25%) or less in any year, this excess will reduce the
minimum annual quantity in the following year. CATALYTICA
shall have no obligation to supply quantities in excess of
those set forth in Schedule F, but shall use its commercially
reasonable efforts to accommodate CEPHALON demand for excess
quantities.
During each year of the Initial Term, CEPHALON shall purchase
the minimum quantities for such year as set forth in Schedule
F. The parties agree that if this Agreement is renewed beyond
the Initial Term, they shall negotiate minimum quantities for
years beyond the Initial Term in good faith. If CEPHALON does
not purchase such minimum quantities in any year CEPHALON will
pay CATALYTICA the Conversion Fee for the amount of such
minimum quantities not purchased; provided, however, that if
CATALYTICA sells its reserved capacity for such period, and
the Conversion Fee on any such sales of reserved capacity
shall be deducted from the amount CEPHALON would otherwise be
obligated to pay pursuant to this Section 3.1.
3.2 Quality. All Product manufactured and packaged by CATALYTICA
for CEPHALON under this Agreement will meet the Product and
Packaging specifications set forth in Schedule B hereto (the
"Specifications"), as well as the quality assurance standards
established in Schedule C hereto (the "Quality Agreement").
Such Specifications, as well as the terms and conditions of
the Quality Agreement, are subject to modification from time
to time by mutual agreement of the parties. In the event
CEPHALON changes the Specifications, CEPHALON shall promptly
advise CATALYTICA in writing of such changes, and if such
changes are reasonably acceptable to CATALYTICA, CATALYTICA
shall promptly advise CEPHALON as to any scheduling and/or
price adjustments which may result from such changes.
CATALYTICA may suggest Specifications changes, which shall be
subject to CEPHALON's written approval, which shall not be
unreasonably withheld or delayed. Prior to implementation of
any Specification changes, the Parties agree to negotiate in
good faith in an attempt to reach agreement on (a) the new
price for any Product manufactured hereunder by CATALYTICA
which embodies such changes, based solely on the effect of
such changes on CATALYTICA's manufacturing costs for the
Product and (b) any other amendments to this Agreement which
may be necessitated by such changes (i.e., an adjustment to
the lead time for purchase orders). CEPHALON agrees to
reimburse CATALYTICA for the reasonable expenses incurred by
CATALYTICA as a result of such changes, including, but not
limited to, reimbursing CATALYTICA for its validation and
development costs, capital expenditure costs and costs for any
packaging components or other materials and in-process
materials rendered unusable as a result of such changes. If
during the term of this Agreement CEPHALON amends or is
required by law to amend the Specifications so as to render
Starting Material and/or packaging components or
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in-process materials for the Product obsolete, CEPHALON shall
purchase from CATALYTICA, at CATALYTICA's cost, that amount of
inventory of Starting Material, packaging components,
in-process materials and/or Product, as the case may be, so
rendered obsolete.
3.3 Manufacturing Processes. CATALYTICA has furnished CEPHALON
with a copy of its production procedures and has identified to
CEPHALON the equipment to be used to produce the Product, all
as set forth in Schedule G hereto. CATALYTICA agrees that it
will not modify these procedures, nor modify any method of
formulating, packaging, labeling or testing the Product
(including analytical procedures, components, process,
Specifications, controls, storage, stability protocols),
without notifying CEPHALON or obtaining CEPHALON's prior
written consent as required in Schedule C hereto, which
consent shall not be unreasonably withheld or delayed. Costs
incurred by CATALYTICA as a result of any such changes or
modifications requested by the FDA or by CEPHALON and relating
primarily to the production of the Product will be borne by
CEPHALON; costs for other changes affecting CATALYTICA's cGMP
compliance or affecting products generally will be borne by
CATALYTICA.
3.4 Documentation. CEPHALON shall provide CATALYTICA with initial
methods and specifications for manufacturing and packaging the
Product as set forth in the attached Schedules A, B, and D.
CEPHALON shall also promptly provide CATALYTICA with all
available safety data and information concerning the Product,
process and related materials, including without limitation
all MSDS'.
After review, consideration and acceptance of such
specifications and methods by CATALYTICA for all markets in
which the Product manufactured hereunder will be sold,
CATALYTICA will provide CEPHALON with any revised methods and
specifications deemed necessary or appropriate by CATALYTICA.
The parties will then use their good faith, commercially
reasonable best efforts to establish mutually acceptable
specifications and methods within a reasonable period of time.
3.5 Communication. CATALYTICA and CEPHALON will respond to
requests for support, information and approvals within five
(5) working days. If a complete response is not possible
within such five (5)-day period, the party owing the response
shall communicate within such five (5)-day period the reason
for the delay and when the response will be available.
IV. TOLLING FEES
For each unit of Product (including each unit in connection with
stability and validation batches) made and supplied to CEPHALON under this
Agreement (provided it meets the quality requirements established herein),
CEPHALON will pay CATALYTICA a tolling fee in
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accordance with the terms established in Schedule E hereto. The tolling fee
shall be increased each year during the Initial Term and any renewal term by the
percentage increase in the Producer Price Index (PPI) during the prior year,
Pharmaceutical Preparations, Ethical (Prescription), series code PCU-2834 #1, as
published by the Bureau of Labor Statistics of the U.S. Department of Labor for
the region in which the production facility is located, or comparable successor
index.
V. CONFIDENTIAL INFORMATION
5.1 The parties acknowledge that they have provided Confidential
Information to each other in connection with the formulation
and packaging of the Product, and further acknowledge that all
such Confidential Information (as well as any additional
Confidential Information provided by one party to the other
hereunder) shall be subject to the provisions of this Article
V. Any and all information, knowledge, technology, and trade
secrets relating to the Product and provided by CEPHALON shall
be deemed Confidential Information.
5.2 CATALYTICA will disclose to CEPHALON all Confidential
Information concerning the Product developed by or for
CATALYTICA during the term of this Agreement, promptly as it
is developed.
5.3 During the term of this Agreement and for five (5) years
thereafter, all Confidential Information disclosed or
confirmed in writing and designated as confidential by the
disclosing party, shall be held in confidence by the receiving
party, shall not be used by the receiving party for any
purpose except as provided hereunder and shall not be
disclosed to third parties except for disclosure to its
Affiliates or governmental authorities, or except as otherwise
necessary to carry out the receiving party's obligations under
this Agreement. If a receiving party finds it necessary to
disclose such Confidential Information to a third party, the
receiving party will not do so without first obtaining the
written consent of the disclosing party (which shall not be
unreasonably withheld) and entering into an agreement with the
third party which binds the third party to the same
obligations of restricted use and disclosure as are undertaken
by the parties in this Agreement.
5.4 Neither party shall distribute any Confidential Information of
the other except to its employees or agents who have a need to
know in connection with the performance of their duties in
satisfying the obligations of such party hereunder. Any
employee or agent who receives Confidential Information shall
be advised as to the confidential nature thereof and the
prohibitions contained herein. All copies of any portions of
any Confidential Information distributed as provided in this
section will be identified as confidential. Upon termination
of this Agreement, and upon the request of the disclosing
party, the receiving party shall return or destroy all such
Confidential Information and any copies thereof in its
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possession, except that each party may retain one copy of
Confidential Information solely for archival purposes.
5.5 CEPHALON acknowledges that CATALYTICA possesses certain
inventions, processes, know-how, trade secrets, improvements,
other intellectual properties and other assets, including but
not limited to procedures and techniques, computer technical
expertise, software, and certain technical expertise and
conceptual expertise in the area of drug processing and
manufacturing, which have been independently developed by
CATALYTICA or its Affiliates without the benefit of any
information provided by CEPHALON (collectively "CATALYTICA
Property"). Subject to the provisions of Section XIX hereof,
CEPHALON and CATALYTICA agree that any CATALYTICA Property or
improvements thereto which are used, improved, modified or
developed by CATALYTICA under or during the term of this
Agreement are the product of CATALYTICA's technical expertise
possessed and developed by CATALYTICA or its Affiliates prior
to or during the performance of this Agreement and are the
sole and exclusive property of CATALYTICA or its Affiliates,
as the case may be.
5.6 If CATALYTICA is required to take specific actions to protect
CEPHALON's Confidential Information, CEPHALON will be required
to compensate CATALYTICA for the cost of such actions.
5.7 Termination of this Agreement shall not operate to extinguish
either party's obligation to treat Confidential Information as
provided herein, and the same shall continue in effect in
accordance with this Article for five (5) years from the
termination or expiration of this Agreement with respect to
such Confidential Information.
5.8 Nothing contained herein shall be deemed to grant either
party, either expressed or implied, a license or other right
or interest in the Confidential Information of the other or in
any patent, trademark or other similar property of the other,
except as expressly provided hereunder.
5.9 CATALYTICA shall not use the name of CEPHALON, or disclose the
existence of this Agreement for any marketing, advertising or
promotional purpose, without CEPHALON's prior written consent,
which shall not be unreasonably withheld or delayed.
5.10 During the term hereof, and for a period of one (1) year after
the termination of this Agreement, CATALYTICA agrees not to
manufacture pharmaceutical compositions comprising modafinil
for any third party.
VI. COMPONENT SUPPLY
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6.1 Active Drug Substance and Compressil. CEPHALON will provide
free of charge, and deliver to CATALYTICA at its designated
production facility not less than sixty (60) days in advance
of the delivery date of Product, appropriate quantities of
Active Drug Substance and Compressil which meet the
specifications established in Schedule A. Following such
delivery, CATALYTICA shall assume full responsibility for the
safekeeping and safe handling, and shall bear all risk of loss
(subject to the agreed yield loss as described below), of all
such Active Drug Substance and Compressil that is in its
possession. Legal title to all Active Drug Substance and
Compressil will remain with CEPHALON, provided however, that
CATALYTICA shall reimburse CEPHALON for the actual documented
replacement cost of any Active Drug Substance and Compressil
that is lost, contaminated, or destroyed while in the
possession of CATALYTICA (subject to the agreed yield loss as
described below). CATALYTICA will use its commercially
reasonable best efforts to obtain maximum yield of Product
from the Active Drug Substance provided by CEPHALON in
connection with the formulation and packaging services
provided hereunder. The parties anticipate that the combined
yield loss suffered in the course of formulating and packaging
the Product in any given lot will not exceed [**]. Yield loss
is defined as:
Yield Loss = 100 (modafinil - (tablets)(dose))/modafinil
where modafinil = starting modafinil amount in granulation, gram
tablets = total number of tablets produced
= (total packages) (quantity per package)
or for bulk tablets:
= (total tablet weight, gram) / (nominal tablet
weight, gram)
[**]
[**]
Notwithstanding the above, if the yield loss over any given
twelve-month period during the term hereof exceeds [ ], then
CATALYTICA will reimburse CEPHALON for its actual documented
costs for that amount of Active Drug Substance lost that
exceeds the aforementioned [**] maximum threshold.
6.2 Starting Material. CATALYTICA will obtain at its expense
Starting Material which meets the specifications established
in Schedule A. CATALYTICA
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assumes full responsibility and liability for the storage and
handling of all Starting Material.
6.3 Packaging Components. Product will be labeled and packaged in
accordance with instructions and specifications provided by
CEPHALON. CATALYTICA will submit to CEPHALON artwork proofs of
all labels, package inserts and packaging prior to use for
approval by CEPHALON, which approval shall not be unreasonably
withheld or delayed. Upon approval by CEPHALON, CATALYTICA
will procure, test, inspect and approve all labels, package
inserts and packaging used in connection with the Products.
VII. FORECASTS AND ORDERS
7.1 Orders. CEPHALON will submit firm written purchase orders to
CATALYTICA not less than ninety (90) days lead time in advance
of the requested delivery date. CEPHALON shall deliver all
Active Drug Substance and Compressil necessary to formulate
Product for any given shipment to CATALYTICA not less than
sixty (60) days in advance of said delivery date. If CEPHALON
fails to provide such Active Drug Substance and Compressil
within such period, CATALYTICA's lead time for the delivery of
Product under the affected purchase order shall be extended
for a period of two (2) days for each day of delay in the
supply of Active Drug Substance and Compressil. CATALYTICA
shall make deliveries within fourteen (14) days of the
requested delivery date for orders giving at least the
required minimum lead time.
7.2 Forecasts and Forecast Changes. Upon execution of this
Agreement, CEPHALON will provide CATALYTICA with an initial
volume forecast setting forth CEPHALON's anticipated quantity
requirements for the forthcoming twelve (12) months on or
about the effective date, and with rolling, updated volume
forecasts on a quarterly basis thereafter. Except for the
initial forecast provided upon execution of this Agreement,
each forecast shall be for the twelve (12) months beginning
three (3) months after the date the of the forecast. Other
than the initial forecast provided upon execution of this
Agreement, the first three (3) months of each forecast shall
be binding on CEPHALON while the other nine (9) months of each
forecast are for planning purposes only. CEPHALON can increase
or decrease its firm order quantities with CATALYTICA's prior
agreement and CATALYTICA can adjust its shipping quantities
with CEPHALON's prior agreement. Both parties shall use their
commercially reasonable best efforts to accommodate reasonable
change requests from the other.
VIII. SHIPMENT AND PAYMENT
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8.1 CATALYTICA's Responsibilities. CATALYTICA will properly
prepare the Product so that it may be lawfully and safely
shipped to warehouse locations in the United States, Mexico,
Japan, the United Kingdom, Ireland, Italy, and other countries
as designated by CEPHALON and agreed upon by CATALYTICA.
CATALYTICA will prepare and execute all reasonably necessary
shipping documents, consisting of Packing List, Dangerous
Goods Declaration, and MSDS. CEPHALON will choose the carrier
by indicating the same on its purchase order provided to
CATALYTICA.
8.2 Terms of Shipment. CATALYTICA will ship Product F.O.B.
CATALYTICA's Greenville, North Carolina plant to CEPHALON's
warehouse or other designated sites. All transport costs and
risk of loss during shipment will be borne by CEPHALON.
8.3 Terms of Payment. CEPHALON will pay CATALYTICA the toll fee
within thirty (30) days after the date on which CEPHALON
receives said invoice from CATALYTICA, together with copies of
all documentation required for Product release as provided in
Schedule C hereto. Late payments shall bear interest at the
rate of 1 1/2 % per month, or if less, the highest rate
permitted under applicable law.
IX. INSPECTION AND ANALYSIS
9.1 Inspection by CATALYTICA. CATALYTICA will analyze each Product
lot for compliance with the Specifications set forth in
Schedule B. CATALYTICA will send to CEPHALON a certificate of
analysis and a certificate of release (together with any other
documentation required under the procedures set forth in
Schedule C hereto) prior to, or together with, each shipment
of Product. In this regard, CATALYTICA agrees to retain all
records and documents necessary to fulfill the requirements
established by all applicable regulatory agencies. The parties
acknowledge that, subject to the terms set forth in Schedule C
hereof, under the laws and regulations of the United Kingdom,
Ireland and Italy, CEPHALON or its authorized agent shall
serve as the designated "Qualified Person" under the laws and
regulations of the European Union for purposes of releasing
the Product into the market.
9.2 Inspection by CEPHALON. CEPHALON or its authorized
representative will inspect all shipments upon their receipt
and will report any reasonably discernible defects in the
Product to CATALYTICA within thirty (30) days of its receipt
of the Product and related records. Any defects not reasonably
discernible will be reported to CATALYTICA by CEPHALON within
ten (10) days of CEPHALON's discovery of the same.
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9.3 Non-Conforming Product. If any Product does not meet the
Product Specifications set forth in Schedule B or in the
Quality Agreement set forth in Schedule C as determined by
CEPHALON's testing and inspection of the Product, then solely
at its option CEPHALON may, as its sole remedy, either (i)
demand that CATALYTICA remanufacture or repackage (as
appropriate) said Product at no charge to CEPHALON and pay all
round-trip shipping charges to and from the destination of the
original shipment as well as pay for that portion of the
acquisition cost of the Active Ingredients and other materials
supplied by CEPHALON to CATALYTICA hereunder which are used in
such nonconforming Product and which are lost or otherwise
rendered unusable as a result of CATALYTICA's producing
non-conforming Product, or (ii) be relieved of any obligation
to pay CATALYTICA the toll fees otherwise payable for the
manufacture of said Product, and CATALYTICA shall reimburse
CEPHALON for the reasonable costs incurred by CEPHALON in
properly disposing of the Product, as well as that portion of
the acquisition cost of the Active Ingredients and other
materials supplied by CEPHALON to CATALYTICA hereunder which
are used in such nonconforming Product. Any notice given
hereunder shall specify the manner in which the Product fails
to conform to the purchase order therefor or fails to meet
such warranty or the Specifications. If it is determined that
the nonconformity (a) is due to damage to the Product (i)
caused by CEPHALON or its agents or (ii) which occurs
subsequent to delivery of such Product to the carrier at the
point of origin, or (b) results from Active Ingredients or
other materials supplied by CEPHALON, CATALYTICA shall have no
liability to CEPHALON with respect thereto and CEPHALON shall
pay for such Product in accordance with the terms of this
Agreement. Nothing herein shall be construed to limit
CATALYTICA's obligations established in Section 6.1 hereof.
9.4 Independent Testing. If CEPHALON notifies CATALYTICA that any
Product does not meet applicable Specifications or quality
assurance guidelines, and CATALYTICA does not agree with
CEPHALON's position, the parties will attempt to reach a
mutually acceptable resolution of the dispute. If they are
unable to do so after a reasonable period of time (such period
not to exceed one month from the date of original
notification), the matter will be submitted to an independent
testing laboratory acceptable to both parties. Both parties
will accept the judgment of the independent laboratory. The
cost of such testing will be borne by the party whose position
is determined to have been in error. If the Product is
determined by said independent laboratory to have been
conforming, then the provisions of Section 9.3 hereof shall
not apply, and CEPHALON shall not be relieved of its
obligations to pay CATALYTICA for the production of such
Product.
X. REGULATORY MATTERS; REGULATORY FILINGS AND APPROVALS
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10.1 General. CATALYTICA shall be responsible for obtaining and
maintaining all site licenses for the manufacture of the
Product and shall comply on behalf of CEPHALON with other
applicable regulations promulgated by, but not limited to, the
Food and Drug Administration ("FDA"), Drug Enforcement
Administration ("DEA"), Environmental Protection Agency
("EPA"), and Occupational Safety and Health Administration
("OSHA") in connection with CATALYTICA's manufacture of the
Product. Should changes in applicable laws or regulations
after the date of this Agreement and relating to the Product
result in increased costs for CATALYTICA in connection with
CATALYTICA's performance under this Agreement (other than
changes affecting CATALYTICA's cGMP compliance or products
generally), such costs shall be passed on to, and paid for by,
CEPHALON on a dollar for dollar basis.
10.2 Scale-Up and Post-approval Changes. CATALYTICA agrees to
prepare the chemistry, manufacturing, and controls
documentation necessary for the SUPAC supplement to transfer
manufacture of the Product to CATALYTICA. Preparation of that
documentation will be charged to CEPHALON on an hourly basis.
CEPHALON is responsible for the determination of the
regulatory filing strategy and for filing the documentation
with the FDA.
10.3 Import and Export Registrations. At CEPHALON's cost,
CATALYTICA will prepare, obtain, and maintain all necessary
DEA manufacturing, import, and export registrations necessary
to perform its obligations under this Agreement.
XI. REPRESENTATIONS AND WARRANTIES
11.1 General. CATALYTICA represents and warrants to CEPHALON that
(i) it has and will maintain throughout the pendency of this
Agreement, the expertise, with respect to personnel and
equipment, to fulfill the obligations established hereunder,
and has obtained all requisite licenses, authorizations and
approvals required by federal, state or local government
authorities including, but not limited to, the Food and Drug
Administration ("FDA"), Drug Enforcement Administration
("DEA"), Environmental Protection Agency ("EPA"), Occupational
Safety and Health Administration ("OSHA"), etc. to manufacture
the Product; (ii) the production facility, equipment and
personnel to be employed to formulate and package the Product
will be qualified to manufacture product according to Current
Good Manufacturing Practices, as defined in 21 U.S.C. ("cGMP")
at the time each such batch of Product is produced, and that
the production facility to be employed is in compliance with
all applicable laws and regulations, provided however, that
CEPHALON acknowledges that CATALYTICA shall not be required to
establish or to maintain a dedicated production facility
solely on the basis of this representation; (iii) there are no
pending or uncorrected citations or adverse conditions noted
in any inspection of the production facility to be employed
which would cause the Product to be misbranded or adulterated
within the meaning of
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the federal Food, Drug and Cosmetic Act, as amended; (iv) it
has provided to CEPHALON all FDA inspection reports and Form
483s received by CATALYTICA in the last two (2) years, and
that the documents provided are true and complete copies
thereof (except as noted); (v) the execution, delivery and
performance of this Agreement by CATALYTICA does not conflict
with, or constitute a breach of any order, judgment,
agreement, or instrument to which CATALYTICA is a party; (vi)
the execution, delivery and performance of this Agreement by
CATALYTICA does not require the consent of any person or the
authorization of (by notice or otherwise) any governmental or
regulatory authority (other than those relating to the
granting of approval to commercialize the Product); and (vii)
CATALYTICA has not been debarred by the United States Food and
Drug Administration under the Generic Drug Enforcement Act of
1992 (or by any analogous agency or under any analogous law or
regulation), and neither it nor, to its knowledge, any of its
officers or directors has ever been convicted of a felony
under the laws of the United States for conduct relating to
the development or approval of a drug product or relating to
the marketing or sale of a drug product, and further, to its
knowledge, that no individual or firm debarred by any
governmental authority will participate in the performance,
supervision, management or review of the production of Product
supplied to CEPHALON under this Agreement. CEPHALON represents
and warrants to CATALYTICA that (i) the execution, delivery
and performance of this Agreement by CEPHALON does not
conflict with, or constitute a breach of any order, judgment,
agreement, or instrument to which CEPHALON is a party; and
(ii) the execution, delivery and performance of this Agreement
by CEPHALON does not require the consent of any person or the
authorization of (by notice or otherwise) any governmental or
regulatory authority (other than those relating to the
granting of approval to commercialize the Product).
11.2 Manufacturing Warranty. CATALYTICA warrants that all Products
supplied to CEPHALON will be manufactured in accordance with
cGMPs in effect at the time of manufacture. A statement to
this effect shall be printed on CATALYTICA's certificate of
analysis for each batch of Product delivered. Moreover,
CATALYTICA will provide to CEPHALON concurrent with each
invoice the applicable batch records and test results
establishing such compliance, as provided in Schedule C
hereto.
11.3 Product Warranty. CATALYTICA hereby warrants that all Product
delivered to CEPHALON (i) will not be adulterated, misbranded,
or otherwise prohibited within the meaning of any European
Union, national, state or local law or regulation, (ii) will
be free from defects in materials, other than with respect to
the Active Drug Substance and Compressil (a) unless defects
therein are caused by CATALYTICA's negligence or willful
misconduct or (b) unless defects therein are related solely to
applicable standards and specifications for which CATALYTICA
is testing pursuant to Section 2.4 (iii) hereof, and (iii)
will conform to Specifications as established in Schedule B
hereto. CEPHALON
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hereby warrants that (i) the Product is not a product that may
not be introduced into interstate commerce, (ii) Active Drug
Substance and Compressil will not be adulterated, misbranded,
or otherwise prohibited within the meaning of any European
Union, national, state or local law or regulation, (iii)
Active Drug Substance and Compressil will be free from
defects, and (iv) Active Drug Substance and Compressil will be
suitable for use by CATALYTICA in manufacturing the Product.
11.4 Environmental Warranty. CATALYTICA warrants that all waste
generated in its operations under this Agreement will be
stored, transported and disposed of in a safe and
environmentally sound manner consistent with all federal,
state and local laws and regulations. CATALYTICA further
warrants that it will conduct its business so as to comply
materially with the terms and conditions of all air pollution
control permits, sanitary sewer discharge permits, and
authorizations required by applicable federal, state and local
laws, rules and regulations relating to the protection of the
environment. CATALYTICA will not knowingly undertake any
production or development activities for itself or on behalf
of a third party, which, together with the emissions from
activities under this Agreement, would cause air emissions
from isopropyl alcohol or any other substance to exceed any
applicable legal limits.
11.5 Technology Warranty. CEPHALON hereby represents and warrants
to CATALYTICA that the technology established in the
Specifications, or as otherwise disclosed hereunder
(collectively, the "Technology") is sufficient to enable
CATALYTICA to manufacture and package the Product as
contemplated hereunder. Except as otherwise disclosed to
CATALYTICA in writing, CEPHALON owns all right, title and
interest to said Technology, free and clear of any adverse
ownership claims. Except as otherwise disclosed to CATALYTICA
in writing, CEPHALON has not received any notice that any
portion of the Technology infringes upon the patent, trade
secret or other intellectual property rights or interests of
any third party and, to the best knowledge of CEPHALON, there
has been no such infringement.
11.6 Warranty Disclaimer. NEITHER CATALYTICA NOR CEPHALON MAKES ANY
WARRANTY THAT THE PRODUCT WILL BE MERCHANTABLE, AND CATALYTICA
MAKES NO WARRANY THAT THE PRODUCT WILL BE FIT FOR ANY
PARTICULAR PURPOSE. NEITHER PARTY MAKES ANY WARRANTIES WITH
RESPECT TO THE PRODUCT, EXPRESS OR IMPLIED, EXCEPT AS
EXPRESSLY STATED IN THIS AGREEMENT.
XII. YEAR 2000 COMPLIANCE
CATALYTICA will use all commercially reasonable efforts to ensure that
there will be no failure or production of erroneous data as a consequence of the
inability to
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receive, store, process or output date information regardless of the date(s)
utilized (including, without limitation, relating to the change of century) in
any computer software, computer hardware, automation systems or other devices
owned, licensed, or otherwise used by CATALYTICA or any suppliers of CATALYTICA
that would result in the inability of CATALYTICA to either (i) successfully
carry out any services hereunder or (ii) manufacture and supply Products and
supporting documentation and information under this Agreement
XIII. QUALITY CONTROL, RECORDS AND INSPECTIONS
13.1 Product and Component Samples. CATALYTICA will maintain a
sample of each chemical component (including Active Drug
Substance) as required by applicable regulatory standards or
as otherwise mutually agreed by CEPHALON and CATALYTICA.
CATALYTICA will be responsible for maintaining retention
samples of the Product as may be required by applicable
regulatory standards.
13.2 Validation. CATALYTICA will validate all process, methods,
equipment, utilities, facilities and computers used in the
formulation, packaging, storage, testing and release of
Product in conformance with the provisions of Schedule D
hereto, and all applicable laws and regulations. CEPHALON will
have the right to review the results of said validation upon
request.
13.3 Quality Compliance. CATALYTICA will provide CEPHALON with
timely notification of all significant deviations, notes to
file, and other deficiencies that may reasonably be expected
to impact the quality of the Product, as well as all FDA
reports regarding testing, manufacture, packaging or labeling
of the Product.
13.4 Manufacturing Records. CATALYTICA will maintain complete and
accurate records relating to the Product and the manufacture,
packaging, labeling and testing thereof for the period
required by applicable Regulatory Standards, and CATALYTICA
shall provide copies thereof to CEPHALON upon CEPHALON's
request. The records shall be subject to audit and inspection
under this Article XIII.
13.5 Batch Records. CATALYTICA will supply for each batch of
Product, including each pilot batch, complete batch production
and control records. Records which include the information
relating to the manufacturing, packaging and quality operation
for each lot of Product will be prepared by CATALYTICA at the
time such operations occur. The records will include, without
limitation, mixing and filling records; container and
component traceability records; equipment usage records;
in-process and final laboratory testing results; in-process
and final Product physical inspection results; yield
reconciliation for bulk and finished Product; labeling and
packaging records; and records relating to deviations from
approved procedure, as well as CATALYTICA's investigation and
corrective
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actions. Copies of batch records will be forwarded to CEPHALON
prior to or along with shipment of each Product lot.
13.6 Records Retention. CATALYTICA will retain records and
documents for periods meeting all applicable regulations of
the FDA and DEA.
13.7 Regulatory Inspections. CATALYTICA will promptly inform
CEPHALON of any contact, inspection or audit by any
governmental agency (other than EPA and OSHA inspections),
related to or affecting the Product (other than contacts,
inspections or audits affecting products generally).
CATALYTICA will promptly provide CEPHALON with copies of any
government-issued inspection observation reports (including
without limitation FDA Form 483s and equivalent forms from
other regulatory bodies) and agency correspondence, that may
reasonably be expected to adversely affect the Product.
CATALYTICA and CEPHALON will cooperate in resolving any
concerns with any governmental agency. CATALYTICA will also
inform CEPHALON of any action taken by any governmental agency
against CATALYTICA or any of its officers and employees which
may reasonably be expected to adversely affect the Product or
CATALYTICA's ability to supply Product hereunder within 24
hours after the action is taken.
13.8 CEPHALON Inspections. No more than three (3) CEPHALON
employees or CEPHALON authorized representatives will have the
right during normal business hours, at reasonable intervals
and on reasonable prior notice, to conduct one (1) inspection
per year, at CEPHALON's sole expense, of CATALYTICA's
facilities used in the manufacturing, packaging, storage,
testing, shipping or receiving of Product and Product
components. All such employees and representatives shall be
qualified to conduct such inspections, shall be escorted by
CATALYTICA employees or representatives at all times while at
CATALYTICA's facility, shall be bound by the same
confidentiality obligations as contained herein, and shall
abide at all times with CATALYTICA's rules and regulations,
including without limitation safety rules and regulations.
Such inspections may include GMP inspections and system
audits. Persons conducting such inspections will have access
only to documents, records, reports, data, procedures,
facilities, regulatory submissions, and all other information
required to be maintained by applicable government regulations
relating directly to the Product. CATALYTICA shall take
appropriate actions to adopt reasonable suggestions of
CEPHALON to correct any deficiencies identified by such
inspection or audit. In addition, CEPHALON shall have the
right to observe from time to time the manufacture, packaging
and quality control testing of the Product by CATALYTICA,
including without limitation, the right to arrange, at its
cost and expense, to have a CEPHALON employee or other
representative located on the premises of CATALYTICA's
production facility to participate in the monitoring of
Product production, testing, packaging and labeling under this
Agreement. No testing of the Product by CEPHALON and no
inspection or audit
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by CEPHALON of the CATALYTICA production facility under this
Agreement shall operate as a waiver of or otherwise diminish
CATALYTICA's responsibility with respect to Product quality
under this Agreement. The duration of an audit will be limited
to no more than 3 days (audits that last over 3 days will be
charged at CATALYTICA's specified FTE rates), and audits may
not interfere with CATALYTICA's normal operations.
XIV. COMPLAINTS, ADVERSE EXPERIENCES AND RECALLS
14.1 Product Complaints and AE's. CEPHALON shall maintain complaint
files with respect to the Product in accordance with cGMPs.
CATALYTICA will promptly notify CEPHALON by facsimile
transmission of all Product complaints and AEs received by
CATALYTICA within two (2) days of its receipt thereof. All
such notices shall be sent to the attention of the Director,
Medical Affairs at CEPHALON, facsimile number (610) 738-6313.
CEPHALON shall promptly provide CATALYTICA with copies of any
complaints received by CEPHALON relating to the manufacture or
packaging of the Product. CEPHALON shall have responsibility
for responding to all complaints, and for promptly providing
CATALYTICA with a copy of any responses to complaints relating
to the manufacture or packaging of the Product. CEPHALON or
its affiliates shall have responsibility for reporting all
complaints relating to the Product to the FDA and any other
regulatory authorities, including, but not limited to,
complaints relating to the manufacture or packaging of the
Product as well as adverse experience (AE) reports. CEPHALON
will correspond with complainants as to any complaints
associated with Product, whether received during or after the
term hereof. CATALYTICA will assist CEPHALON in investigating
Product complaints relating to the manufacture or packaging of
the Product by analyzing Product, manufacturing processes and
components to determine the nature and cause of an alleged
Product manufacturing defect or alleged Product failure.
CATALYTICA will also assist CEPHALON in the investigation of
any Adverse Experience (AE) reported to either party when such
AEs are reasonably believed to be attributable to the
manufacture or packaging of the Product. If CEPHALON
determines that any reasonable physical, chemical, biological
or other evaluation should be conducted in relation to an AE
or Product complaint relating to the manufacture or packaging
of the Product, CATALYTICA will conduct the evaluation and
provide CEPHALON with a written report of such evaluation
within thirty (30) days from receipt of CEPHALON's written
request for same, together with samples of the Product from
the relevant lot.
14.2 Recall Action. If CEPHALON should elect or be required to
initiate a Product recall, withdrawal or field correction
because of (i) supply by CATALYTICA of Product that does not
conform to the Specifications and warranties established by
this Agreement or (ii) the negligent or intentional wrongful
act or omission of CATALYTICA, CEPHALON will notify CATALYTICA
and provide
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CATALYTICA a copy of its recall letter prior to initiation of
the recall. CATALYTICA will assist CEPHALON (and its
designated Affiliate) in an investigation to determine the
cause and extent of the problem. All regulatory authority
contacts and coordination of any recall activities will be
initiated by, and will be the sole responsibility of,
CEPHALON.
14.3 Recall Expenses. If any Product is recalled as a result of (i)
supply by CATALYTICA of Product that does not conform to the
warranties contained in Sections 11.1, 11.2 and 11.3 hereof or
(ii) the negligent or intentional wrongful act or omission of
CATALYTICA, then CATALYTICA will bear all reasonable costs and
expenses of such recall. Recalls for any other reason will be
at CEPHALON's sole expense. Notwithstanding the foregoing or
any other provision of this Agreement, CATALYTICA's aggregate
liability with regard to Product recalls shall not exceed the
amount of consideration received by CATALYTICA from CEPHALON
hereunder.
14.4 Recall Records. CATALYTICA will maintain complete and accurate
records for such periods as may be required by applicable law
or regulation.
XV. EQUIPMENT
Notwithstanding anything to the contrary herein, the parties
acknowledge that CEPHALON will, promptly upon CATALYTICA's request, reimburse
CATALYTICA for any out-of-pocket expenses incurred by CATALYTICA in connection
with the purchase of certain tooling and other specialized equipment required
for the manufacture, packaging and labeling of the Product (the "Equipment"),
including without limitation punches and dies for tablet presses, and special
change parts for bottle handling. The parties shall agree in writing on the need
for, specifications and costs of any such Equipment and related materials prior
to such purchase. CATALYTICA agrees to use said Equipment solely in connection
with the performance of its duties and obligations established hereunder.
CATALYTICA shall maintain all such Equipment in good working order. CEPHALON
will be responsible for the cost of purchasing replacement Equipment at the end
of its useful life, provided however, that CATALYTICA will be responsible for
any such costs stemming from damage or premature or undue wear and tear to the
Equipment based upon neglect or misuse by CATALYTICA. CEPHALON shall retain
title to such Equipment, which will be returned by CATALYTICA at the request of
CEPHALON following termination of this Agreement; provided, however, CATALYTICA,
at its option, may purchase such Equipment at its depreciated book value upon
termination of this Agreement. CEPHALON shall reimburse CATALYTICA for all costs
incurred by CATALYTICA in connection with the removal and return of the
Equipment, including CATALYTICA's facility restoration costs. A schedule of
currently identified Equipment to be purchased by CEPHALON, along with certain
other equipment for which CATALYTICA shall reimburse CEPHALON and which shall be
owned by CATALYTICA, is provided in Schedule G, and such Equipment shall be
purchased and delivered to CATALYTICA within two (2) months of the effective
date of this Agreement.
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XVI. TECHNOLOGY TRANSFER
Within fifteen (15) days of the effective date, CEPHALON will transfer
all necessary technology and documentation relating to the manufacture and
packaging of Product to CATALYTICA to support CATALYTICA's technology transfer
activities, including without limitation all documentation related to Product,
process or material safety (including all MSDS'). CEPHALON will pay CATALYTICA's
actual costs to perform the technology transfer and validation activities
(hereafter "Activities") related to the manufacture of three validation batches
of Product within a commercially reasonable period of time after the effective
date of this Agreement (as described in CATALYTICA's proposal dated October 12,
1998, CATALYTICA estimates the cost of the Activities will be [**]). The
Activities will include process evaluation at commercial scale, including
evaluation of process parameters, sampling, and preparation of process
evaluation batches, as well as the manufacture of three consecutively successful
batches (with full testing per the validation protocol), and the preparation of
mutually agreed upon process evaluation and validation reports. The
aforementioned [**] cost estimate does not include the manufacturing of the
validation batches, and these batches will be charged to CEPHALON at the
commercial price per this Agreement.
XVII. INSURANCE
17.1 During the term hereof, CATALYTICA shall maintain product
liability/completed operations insurance, providing coverage
of not less than TEN MILLION AND 00/100 DOLLARS
($10,000,000.00) per occurrence and in the aggregate, insuring
CATALYTICA against all costs, fees, judgments, and liabilities
arising out of or alleged to arise out of its obligations and
representations and warranties under this Agreement. In
addition, CATALYTICA will maintain at all times sufficient
property casualty insurance to cover the total quantity of
Active Drug Substance and Product on hand at its full cost of
replacement. CATALYTICA will provide to CEPHALON, upon
request, evidence of such insurance coverages. CATALYTICA
further agrees to cause such policies to name CEPHALON as an
additional insured at no cost to CEPHALON.
17.2 During the term hereof, CEPHALON agrees to maintain, and upon
request, to provide evidence of product liability insurance
for and providing coverage of not less than TEN MILLION AND
00/100 DOLLARS ($10,000,000.00) per occurrence and in the
aggregate providing a defense for and insuring CEPHALON
against all costs, fees, judgments and liabilities arising out
of or alleged to arise out of its obligations and
representations and warranties under this Agreement. CEPHALON
will provide to CATALYTICA, upon request, evidence of such
insurance coverages. CEPHALON further agrees to cause such
policies to name CATALYTICA as an additional insured at no
cost to CATALYTICA.
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XVIII. TRADEMARKS
18.1 CATALYTICA shall have the non-exclusive right to use the
Trademarks in packaging the Product in connection with
fulfilling its obligations hereunder. The rights granted
CATALYTICA hereunder to use the Trademarks shall in no way
affect CEPHALON's ownership of such Trademarks. No other
right, title or interest in the Trademarks is established
hereby, and nothing herein shall be construed to grant any
right or license to CATALYTICA to use the CEPHALON trademark
or the name CEPHALON, other than as specifically set forth
herein.
18.2 CATALYTICA shall not knowingly make any use or take any action
with respect to the Trademarks to prejudice or infringe
CEPHALON's rights thereto including the use of any confusingly
similar trademark and shall forthwith, upon objection by
CEPHALON, desist from any use thereof or action therewith
which is demonstrated to be in violation of this Agreement.
18.3 CATALYTICA will only market the Product using the relevant
Trademarks as listed in Schedule A during the term of this
Agreement. Upon termination of this Agreement, CATALYTICA will
cease all use of the Trademarks and cancel any license to such
Trademarks granted hereunder.
18.4 CATALYTICA will use the Trademarks in strict accordance with
the instructions given by CEPHALON, and shall refrain from
making any changes in connection therewith without first
obtaining CEPHALON's written consent.
18.5 In the event of any claim or litigation by a third party
against CATALYTICA alleging that any of the Trademarks
imitates or infringes a trademark of such third party or is
invalid, CATALYTICA shall promptly give notice of such claims
or litigation to CEPHALON and CEPHALON shall assume
responsibility for and control of the handling, defense, or
settlement thereof. CATALYTICA shall cooperate fully with
CEPHALON during the pendency of any such claim or litigation.
CEPHALON shall keep CATALYTICA notified of the current status
of any trademark claim, litigation or infringement of any of
the Trademarks and shall permit CATALYTICA to assume the
handling, defense or settlement thereof if CEPHALON declines
to do so. CEPHALON may at any time modify, adopt or withdraw
from use any Trademark without any liability to CATALYTICA.
XIX. INVENTIONS
Any inventions, discoveries, improvements, or trade secrets made by
CATALYTICA in the performance of this Agreement that relate to the Product
(including any new use or any
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change in the method of producing, testing or storing the Product) shall be
owned by CEPHALON, and CATALYTICA shall have a non-exclusive, perpetual,
royalty-free worldwide license to use any such invention, discovery,
improvement, or trade secret, excluding, during the term of this Agreement and
one (1) year thereafter, the right to use any such invention, discovery,
improvement, or trade secret to manufacture or produce pharmaceutical
compositions comprising modafinil. Any other invention, discovery, improvement,
or trade secret made by CATALYTICA in the performance of this Agreement shall be
owned by CATALYTICA, but CEPHALON shall have a nonexclusive, perpetual,
nontransferable, royalty-free license to use any such invention, discovery,
improvement, or trade secret to make or have made the Product in a facility
owned by CEPHALON or a third party selected by CEPHALON, provided such third
party agrees to use such invention, discovery, improvement, or trade secret
solely for the purpose of manufacturing pharmaceutical compositions comprising
modafinil for CEPHALON. Each party shall execute such instruments as shall be
required to evidence or effectuate the other party's ownership of any such
inventions, and shall cooperate upon reasonable request (and at the expense of
the requesting party) in the prosecution of patents and other intellectual
property rights related to any such invention.
XX. INDEMNIFICATION
20.1 By CATALYTICA. CATALYTICA will indemnify and hold CEPHALON,
its Affiliates, directors, officers, employees, agents,
successors, and assigns harmless from any and all liability,
damage, loss, cost, or expense (including reasonable
attorneys' fees), including liability arising out of
third-party claims, which arise from i) CATALYTICA's breach of
any of the covenants, warranties, and representations
contained herein, or ii) CATALYTICA's negligence or other
willful misconduct. Notwithstanding the foregoing or any other
provision of this Agreement, CATALYTICA's aggregate liability
pursuant to this Section 20.1 provided that CATALYTICA'S
conduct is not willful misconduct, shall not exceed the amount
of consideration received by CATALYTICA from CEPHALON under
this Agreement.
20.2 By CEPHALON. CEPHALON will indemnify and hold CATALYTICA, its
Affiliates, directors, officers, employees, agents,
successors, and assigns harmless from any and all liability,
damage, loss, cost, or expense (including reasonable
attorneys' fees), including liability arising out of third
party claims, relating to this Agreement and either party's
performance of its obligations hereunder, including without
limitation claims relating to the infringement or violation of
any patent or other intellectual property rights, other than
that arising from i) CATALYTICA's breach of any of the
covenants, warranties, and representations contained herein or
ii) CATALYTICA's negligence or other willful misconduct.
20.3 By Each Party. In the event that negligence or willful
misconduct of both CATALYTICA and CEPHALON contribute to any
such loss, damage, claim, injury, cost or expense, CATALYTICA
and CEPHALON will each indemnify
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and hold harmless the other with respect to that portion of
the loss, damage, claim, injury, cost or expense attributable
to its negligence or willful misconduct.
20.4 Procedures. In the event that one party receives notice of a
claim, lawsuit, or liability for which it is entitled to
indemnification by the other party, the party receiving notice
shall give prompt notification to the indemnifying party. The
party being indemnified shall cooperate fully with the
indemnifying party throughout the pendency of the claim,
lawsuit or liability, and the indemnifying party shall have
complete control over the conduct and disposition of the
claim, lawsuit, or liability including the retention of legal
counsel engaged to handle such matter. The indemnifying party
hereunder will be liable for any costs associated with the
settlement of any claim or action brought against it or the
other party unless it has received prior notice of the
settlement negotiations and has agreed to the settlement.
XXI. LIMITATION OF LIABILITY
In no event shall CEPHALON or CATALYTICA be liable to the other for
incidental, special, consequential or punitive damages, including, but not
limited to, any claim for damages based upon lost profits. Except as set forth
in Section 20.1, in no event shall CATALYTICA's aggregate liability pursuant to
this Agreement exceed the amount of consideration received by CATALYTICA from
CEPHALON under this Agreement.
XXII. FURTHER ENGAGEMENTS/DEVELOPMENTS
22.1 If CEPHALON develops a revised formulation of the Product, or
otherwise desires to engage CATALYTICA to formulate or package
pharmaceutical products other than the Product, then the
parties will negotiate in good faith to reach agreement on
mutually acceptable terms and conditions under which this
Agreement shall be expanded to cover such additional
engagement(s).
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22.2 It is the Parties' intent to negotiate in good faith to reach
agreement on future activities related to Product, including,
but not limited to, larger-scale manufacturing operations
(i.e., larger batch sizes and lower prices per unit as set
forth in Schedule E) for current and/or new formulations of
Product, evaluation of alternate drying method(s) (e.g., fluid
bed and/or microwave), and transfer and validation of new
Product formulations, as well as the preparation and
submission of scale-up and post-approval changes filings
related to such future products or developments. Such future
activities may be negotiated and based on, among other things,
the full-time equivalent employee/contractor hours and
materials involved in conducting such activities, and any
corresponding Agreement will include an estimate of
CATALYTICA's costs, and CATALYTICA will agree not to incur
costs in excess of this estimate without CEPHALON's approval.
XXIII. TERMINATION
23.1 Without Cause. Either party may terminate this Agreement,
effective on the fifth anniversary of the date hereof or on
subsequent anniversary date(s), if applicable, by giving
one-hundred-eighty (180) days written notice to the other
party.
23.2 Breach. If either party hereto commits a material breach of
any of its obligations hereunder, the non-breaching party may,
at its option, terminate this Agreement by giving the other
party at least ninety (90) days prior written notice (twenty
(20) days with respect to a payment default) of its intent to
terminate this Agreement, which notice shall specify the
breach and the termination date, unless the breaching party
cures said breach prior to the specified termination date (or
prior to the expiration of a longer period as may be
reasonably necessary to cure a non-payment breach, provided
that the breaching party is making diligent efforts to cure
such breach, and provided further that such longer period
shall not in any event exceed one hundred twenty (120) days
from the date of notice).
23.3 Insolvency. Either party may terminate this Agreement
immediately in its entirety if the other Party files a
petition of bankruptcy, is adjudged bankrupt, takes advantage
of any insolvency act, or executes a bill of sale, deed of
trust, or assignment for the benefit of creditors.
23.4 Survival. The rights and obligations contained in sections
covering representations and warranties, indemnification and
confidentiality will survive termination of this Agreement, as
will any rights to payment or other rights or obligations that
have accrued under this Agreement prior to termination.
Termination will not affect the liability of either party by
reason of any act, default, or occurrence prior to said
termination.
23.5 Transfer. If either party terminates this Agreement,
CATALYTICA will upon request and at CEPHALON's expense provide
reasonable assistance in
-24-
transferring production of Product to a facility owned by
CEPHALON or a third party selected by CEPHALON.
23.6 Return of Product and Components. Upon termination under this
Article, CATALYTICA shall, at CEPHALON's expense, return
promptly to CEPHALON all Product, Active Drug Substance, in
process materials and packaging components in its possession
on the effective date of termination. CEPHALON shall promptly
pay for all such Product, in-process materials and packaging
components.
XXIV. ALTERNATE DISPUTE RESOLUTION
Any dispute concerning or arising out of this Agreement or concerning
the existence or validity hereof, shall be determined by the following
procedure.
24.1 Both parties understand and appreciate that their long term
mutual interest will be best served by effecting a rapid and
fair resolution of any claims or disputes which may arise out
of services performed under this contract or from any dispute
concerning contract terms. Therefore, both parties agree to
use their best efforts to resolve all such disputes as rapidly
as possible on a fair and equitable basis. Toward this end
both parties agree to develop and follow a process for
presenting, rapidly assessing, and settling claims on a fair
and equitable basis.
24.2 If any dispute or claim arising under this contract cannot be
readily resolved by the parties pursuant to the process
described in Section 24.1, the parties agree to refer the
matter to a panel consisting of one (1) senior executive
employed by each party who is not directly involved in the
claim or dispute for review and resolution. A copy of the
contract terms, agreed upon facts (and areas of disagreement),
and concise summary of the basis for each side's contentions
will be provided to both such senior executives who shall
review the same, confer, and attempt to reach a mutual
resolution of the issue.
24.3 If the matter has not been resolved utilizing the process set
forth in this Article XXV, and the parties are unwilling to
accept the non-binding decision of the panel, either or both
parties may elect to pursue resolution through litigation, or
other legal remedies available to the parties.
XXV. MISCELLANEOUS
25.1 Headings. The headings and captions used herein are for the
convenience of the parties only and are not to be construed to
define, limit or affect the construction or interpretation
hereof.
-25-
25.2 Severability. In the event that any provision of this
Agreement is found to be invalid or unenforceable, then the
offending provision shall not render any other provision of
this Agreement invalid or unenforceable, and all other
provisions shall remain in full force and effect and shall be
enforceable, unless the provisions which have been found to be
invalid or unenforceable shall substantially affect the
remaining rights or obligations granted or undertaken by
either party.
25.3 Entire Agreement. This Agreement, including all those
Schedules appended hereto, contains the entire agreement of
the Parties regarding the subject matter hereof and supersedes
all prior agreements, understandings or conditions (whether
oral or written) regarding the same. Further, this Agreement
may not be changed, modified, amended or supplemented except
by a written instrument signed by both parties.
25.4 Assignability. This Agreement and the rights hereunder may not
be assigned or transferred by either party without the prior
written consent of the other party (other than for rights to
payment), provided however, that either party may assign this
Agreement to an Affiliate, and provided further that in the
event of a merger, acquisition or sale of substantially all of
the assets of either party, the rights and obligations of such
party under this Agreement may be assigned to the survivor or
purchaser in that transaction. In the event that this
Agreement is assigned, it shall be binding upon and inure to
the benefit of the parties and their respective successors and
assigns.
25.5 Subcontractors. With CEPHALON'S prior approval which shall not
be unreasonably withheld or delayed, CATALYTICA may use
qualified subcontractors to perform parts of the work under
this Agreement so long as such subcontractors are bound by a
confidentiality agreement with CATALYTICA and meet such other
quality standards as are imposed on CATALYTICA under this
agreement; e.g., cGMP compliant. For example, with CEPHALON'S
prior approval (which shall not be unreasonably withheld or
delayed), CATALYTICA may have cleaning verification/methods
validation performed by a cGMP compliant laboratory.
CEPHALON's prior approval shall not be required with respect
to subcontractors performing services on CATALYTICA's premises
relating to CATALYTICA's business generally and not
specifically related to the Product.
25.6 Further Assurances. Each party hereto agrees to execute,
acknowledge and deliver such further instruments, and to take
such other actions, as may be necessary or appropriate in
order to carry out the purposes and intent of this Agreement.
25.7 Waiver. The waiver by either party of a breach of any
provisions contained herein shall be effective only if made in
writing and shall in no way be
-26-
construed as a waiver of any succeeding breach of such
provision or the waiver of the provision itself.
25.8 Force Majeure. A party shall not be liable for nonperformance
or delay in performance (other than of obligations regarding
any payments or of confidentiality) caused by any event
reasonably beyond the control of such party including, without
limitation, wars, hostilities, revolutions, riots, civil
disturbances, national emergencies, strikes, lockouts,
unavailability of supplies, epidemics, fires, floods,
earthquakes, other forces of nature, explosions, embargoes, or
any other Acts of God, or any laws, proclamations,
regulations, ordinances, or other acts or orders of any court,
government or governmental agency. Any occurrence of Force
Majeure shall be reported promptly to the other party. A party
whose performance has been excused will perform such
obligation as soon as is reasonably practicable after the
termination or cessation of such event or circumstance.
25.9 Remedies. Each party agrees and acknowledges that its
disclosure of Confidential Information in breach of this
Agreement may cause irreparable harm to other party, and
therefore that any such breach or threatened breach will
entitle such party to injunctive relief, in addition to any
other legal remedies available in a court of competent
jurisdiction.
25.10 Governing Law. This Agreement shall in all respects be
construed and enforced in accordance with the law of the State
of North Carolina.
25.11 Independent Contractors. The parties are independent
contractors under this Agreement. Nothing contained in this
Agreement is to be construed so as to constitute CEPHALON and
CATALYTICA as partners, agents or employees of the other,
including with respect to this Agreement. Neither party hereto
shall have any express or implied right or authority to assume
or create any obligations on behalf of, or in the name of, the
other party or to bind the other party to any contract,
agreement or undertaking with any third party unless expressly
so authorized in writing by the other party.
25.12 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be considered and shall have
the force and effect of an original.
25.13 Notices. Except as set forth in Section 14.1 above, or as
otherwise stated herein, all notices, consents or approvals
required by this Agreement shall be in writing and sent by
certified or registered air mail, postage prepaid or by
facsimile or cable (confirmed by such certified or registered
mail) to the parties at the following addresses or such other
addresses as may be designated in writing by the respective
parties. Notices shall be deemed effective on the date of
mailing.
-27-
Sr. Director, Technical Operations
CEPHALON, Inc.
145 Brandywine Parkway
West Chester, PA 19380-4245
Facsimile: (610) 344-7563
Dr. Gabriel R. Cipau
CATALYTICA Pharmaceuticals, Inc.
P.O. Box 1887
Greenville, NC 27835-1887
Facsimile: (252) 707-2450
All invoices and/or charges in billing should be directed to the
Accounting Department at:
CEPHALON, Inc.
145 Brandywine Parkway
West Chester, PA 19380-4245
Attention: Accounts Payable
IN WITNESS WHEREOF, the undersigned parties have caused this Agreement
to be executed as of the date first above written.
CEPHALON, INC.
By: \s\ J. Kevin Buchi
-------------------------------------
CATALYTICA PHARMACEUTICALS, INC.
By: \s\ Gabriel R. Cipau
-------------------------------------
-28-
Schedule A
----------
Active Drug Substance and Starting Material Specifications
----------------------------------------------------------
The parties have agreed upon all those applicable specifications for the Active
Drug Substance and Starting Material as set forth in the following documents.
The parties shall agree upon any modifications to any such specifications.
[**]
-29-
The following packaging components apply to this Agreement:
[**]
TRADEMARKS
- ----------
[GRAPHIC OMITTED]
Provigil(R)
Cephalon(R)
-30-
Schedule B
----------
Product Specifications
----------------------
The parties have agreed upon all those applicable specifications for the Product
as set forth in the following documents. The parties shall agree upon any
modifications to any such specifications.
[**]
-31-
Schedule C
----------
Quality Agreement
-----------------
INTERCOMPANY QUALITY AGREEMENT
CEPHALON, Inc.
145 Brandywine Parkway
West Chester, PA 19380
(hereafter called "CLIENT")
Approved by: \s\ J. Kevin Buchi Date: 7/21/99
Representative, CLIENT
AND
Catalytica Pharmaceuticals, Inc.
Greenville, North Carolina
(hereafter called "C*P")
Approved by: \s\ Joyce Aydlett Date: 8/24/99
Vice President, Quality Operations, C*P
The Products Listed in Appendix I
(hereafter called "the PRODUCTS")
are subject to the following conditions:
-32-
Section TABLE OF CONTENTS Page
------- ----------------- ----
1 QUALITY AGREEMENT...................................... 4
-----------------
1.1 Purpose................................................ 4
1.2 Relationship to Definitive Agreement 4
2 PRODUCTS.............................................. 4
--------
3 ADMINISTRATIVE INFORMATION............................ 4
--------------------------
4 DURATION OF AGREEMENT................................. 5
---------------------
5 MANUFACTURING GMP COMPLIANCE.......................... 5
----------------------------
5.1 General............................................... 5
5.2 Premises.............................................. 5
5.3 GMP Guidelines........................................ 5
5.4 Materials............................................. 5
5.5 Master Production Records ............................ 6
5.6 Standard Operating Procedures......................... 6
5.7 Batch Numbers......................................... 6
5.8 Dates of Manufacture and Expiration................... 7
5.9 Manufacturing and Equipment Data...................... 7
5.10 Storage and Shipment.................................. 7
6 QUALITY CONTROL....................................... 8
---------------
6.1 General............................................... 8
6.2 Materials Supplied by C*P............................. 8
6.3 In-Process and Product Testing........................ 8
6.4 Retain Samples........................................ 8
6.5 Routine Stability Program............................. 9
6.6 Out-of-Specification (OOS) Investigations............. 9
7 QUALITY ASSURANCE..................................... 9
-----------------
7.1 Deviations and Investigations......................... 9
7.2 Batch Disposition..................................... 10
7.3 Product Release....................................... 10
7.4 Product Complaints and Recall......................... 10
7.5 Records Retention..................................... 11
7.6 QA Presence in the Manufacturing Facility............. 11
8 REGULATORY COMPLIANCE................................. 11
---------------------
8.1 Regulatory Inspections................................ 11
8.2 Regulatory Audit ..................................... 12
8.3 Audit Closeout........................................ 12
Section TABLE OF CONTENTS (Cont'd) Page
------- -------------------------- ----
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9 DISPUTE RESOLUTION.................................... 12
------------------
9.1 Non-Conformity Dispute................................ 12
9.2 Test Result Dispute................................... 12
10 CHANGE MANAGEMENT..................................... 13
-----------------
10.1 Controlled Documentation.............................. 13
10.2 Change Control........................................ 13
11 PRODUCT AND PROCESS VALIDATION........................ 13
------------------------------
11.1 Process............................................... 13
11.2 Cleaning Validation................................... 13
11.3 Equipment, Computer, Facility and Utilities
Qualification......................................... 13
11.4 Laboratory Qualification.............................. 13
12 ANNUAL PRODUCT REVIEW, ANNUAL REPORT AND DRUG
---------------------------------------------
LISTING............................................... 14
-------
12.1 Annual Product Review................................. 14
12.2 Annual Manufacturing Process Change Report............ 14
12.3 Drug Listing.......................................... 14
APPENDIX I - The PRODUCTS........................... 15
APPENDIX II - List of Quality Contracts.............. 16
APPENDIX III - Release Documentation.................. 17
-34-
1. QUALITY AGREEMENT
-----------------
1.1 Purpose
1.1.1 This agreement defines the roles and responsibilities
for the C*P Quality Operations in carrying out the
services for the PRODUCTS.
1.1.2 This agreement also defines how the C*P Quality
Operations and the CLIENT Quality Department will
interact with each other.
1.2 Relationship to Definitive Agreement
1.2.1 This agreement shall be incorporated within and
constitute a part of the Definitive Agreement between
the two companies.
1.2.2 In the event of a conflict between any of the
provisions of the Quality Agreement and the
Definitive Agreement, the provisions of the
Definitive Agreement shall govern.
2. PRODUCTS
--------
2.1 The PRODUCTS prepared for CLIENT by C*P are described in
Appendix I.
3. ADMINISTRATIVE INFORMATION
--------------------------
3.1 CLIENT contact names: See Appendix II
3.2 C*P contact names: See Appendix II
3.3 Emergency contact names and numbers, during and outside
working hours:
Robert J. Urban
Sr. Director, Technical Operations
Work: (610) 738-6119
Home: (610) 644-3760
Beeper: (888) 346-2141
Joyce Aydlett
Vice President, Quality Operations
Work: (252) 707-7104
Home: (252) 756-1759
Beeper: (252) 757-7504
-35-
4. DURATION OF AGREEMENT
---------------------
The agreement will expire with termination of the Definitive Agreement.
The agreement can be modified as needed with the written approval of
both parties.
5. MANUFACTURING GMP COMPLIANCE
----------------------------
5.1 General
5.1.1 The manufacturing operations for the PRODUCTS to be
performed by C*P are defined in the Definitive
Agreement.
5.2 Premises
5.2.1 C*P will manufacture the PRODUCTS at the Greenville
site.
5.2.2 The premises and equipment used to manufacture the
PRODUCTS will be according to current regulatory
requirements and in accordance with the controlled
documentation approved by CLIENT.
5.2.3 The production of the PRODUCTS will be conducted in a
suitably controlled environment and such facilities
will be regularly monitored for parameters critical
to the process to demonstrate compliance with cGMP
guidelines and any conditions registered in the
manufacturing authorization.
5.2.4 C*P will maintain controlled access to the premise.
All visitors must sign-in and are escorted during any
visit to the areas of the premise used to
manufacture, test, and store the PRODUCTS.
5.3 GMP Guidelines
5.3.1 The principles detailed in the US Current Good
Manufacturing Practices (21 CFR 200, 211, and 600)
and the "Rules Governing Medicinal Product in The
European Community - Volume IV Good Manufacturing
Practice for Medicinal Products" and/or World Health
Organization's cGMP Guidelines will cover the
standards of manufacture of the PRODUCTS, as well as,
the product specifications and any applicable product
license or pharmacopoeia or formulatory requirements.
5.4 Materials
5.4.1 C*P will use only chemical materials, packaging, and
labeling components approved by CLIENT and tested in
accordance with the documentation reviewed and
approved by CLIENT.
-36-
5.4.2 Materials procured by C*P
5.4.2.1 C*P is responsible for ensuring that all
material and components procured by C*P for
use in the product is in full compliance
with the specifications. Raw Materials are
given a repass date upon the satisfactory
completion of all initial testing. Repass
testing will be performed at defined time
intervals to ensure the chemical and
physical stability of the raw materials
unless client provides an official
expiration date.
5.4.2.2 C*P is responsible for ensuring that all
materials are used correctly, are
appropriately tested upon receipt, and by
holding the relevant Certificate of Analysis
for the materials.
5.4.3 Materials Provided by CLIENT for C*P
5.4.3.1 Client is responsible for ensuring that all
materials and components provided by CLIENT
for use in the product is in full compliance
with the specifications registered. CLIENT
will provide C*P a Certificate of
Conformance statement for the vendors that
CLIENT is responsible for qualifying. C*P
will perform ID tests on any materials
provided by CLIENT.
5.5 Master Production Records
5.5.1 C*P may transcribe the manufacturing information
(i.e., formulation, filing work order, packaging work
order) into its own format and must obtain written
approval from CLIENT for each document version before
manufacturing. However, agreed upon changes to
documentation will be handled as outlined by Change
Management (see section 10)
5.6 Standard Operating Procedures
5.6.1 C*P is responsible for maintaining any SOPs required
to manufacture, test, and store the PRODUCTS at C*P
and to support GMPs.
5.7 Batch Numbers
5.7.1 The convention for the C*P "Batch Identification
Number" (BIN) is as follows:
o The first digit of the BIN is the last
number of the year that the working formula
was issued or the labwork was requested.
-37-
o The second digit of the BIN is the letter
that corresponds to the month that the
working formula was issued or the labwork
was requested. The letter assignment is as
listed for the following years:
From 1997 through 2006
----------------------------------------------
A = January G = July
----------------------------------------------
B = February H = August
----------------------------------------------
C = March I = September
----------------------------------------------
D = April J = October
----------------------------------------------
E = May K = November
----------------------------------------------
F = June L= December
----------------------------------------------
From 2007 through 2016
----------------------------------------------
M = January T = July
----------------------------------------------
N = February U = August
----------------------------------------------
O = March W = September
----------------------------------------------
P = April X = October
----------------------------------------------
R = May Y= November
----------------------------------------------
S = June Z= December
----------------------------------------------
o The third through the sixth digits are four
sequential numbers that are assigned from
the reserved number series (1200 to 2599)
designated for routine pharmaceutical
production.
5.8 Dates of Manufacture and Expiration
5.8.1 Date of Manufacture - C*P will allocate the Date of
Manufacture based on the first day of compounding the
PRODUCT.
5.8.2 Expiration Date - C*P will calculate the expiry date
from the Date of Manufacture using the currently
approved expiry period. The expiration date will be
the last day of the month computed above. The current
approved expiration date periods can be found in
Appendix I.
5.9 Manufacturing and Equipment Data
5.9.1 C*P is responsible for keeping records of equipment
usage (previous PRODUCT produced is non-dedicated
equipment), cleaning, and any maintenance/calibration
performed.
-38-
5.10 Storage and Shipment
5.10.1 Storage - C*P will store the PRODUCTS (Schedule IV
controlled substances) under conditions in compliance
with applicable DEA regulations and approved by
CLIENT. C*P will ensure that during storage before
shipping of the PRODUCTS that there is no possibility
of deterioration, interference, theft, product
contamination, or admixture with any other materials.
CLIENT will provide details of any labeling
requirements and container sealing and integrity.
5.10.2 Packaging and Labeling for Transit - The PRODUCTS
will be suitably packaged for transit, each pallet or
outer container being labeled with:
o PRODUCT'S Approved Name
o C*P Batch Number
o Quantity
o CLIENT Name and Address
5.10.3 Mixing of PRODUCTS - C*P will maintain proper
segregation of the PRODUCTS according to systems
reviewed and approved by CLIENT. Different lots of a
single PRODUCT or different types of PRODUCTS will
not be mixed on a pallet.
5.10.4 Shipment of Product to CLIENT - Only approved,
finished (unless required by CLIENT), labeled
PRODUCTS will be shipped by C*P to CLIENT or CLIENT'S
agents. Any shipment of product from C*P which is
Unapproved or under Quarantine requires prior written
consent by the CLIENT's Quality Unit. This
authorization will be on a lot basis.
6. QUALITY CONTROL
---------------
6.1 General
6.1.1 The testing activities for the PRODUCTS are to be
performed by C*P are defined in the Definitive
Agreement. In general, C*P is responsible for GMP
compliance assays and for product release.
6.2 Materials supplied by C*P
6.2.1 Quality control of materials supplied by C*P will be
undertaken by C*P.
6.3 In-Process and Product Testing
6.3.1 C*P will perform all in-process and finished product
testing using the specifications and methods of
analysis listed in Appendix IV and other applicable
licenses.
-39-
6.3.2 A C*P Qualified Person/QA Representative will sign a
Certificate of Conformity/Analysis confirming that
the product has been manufactured, packaged, tested,
and meets the requirements of the Master Batch
Record. The current release documentation information
can be found in Appendix III.
6.3.3 CLIENT may perform testing to confirm the C*P data.
CLIENT may perform confirmatory testing during the
initial term of the agreement to validate the C*P
data. Periodically thereafter, CLIENT may test
material to confirm the C*P data. Dispute resolutions
in conflicting test data will be handled per Section
9.
6.4 Retain Samples
6.4.1 Retain Samples
6.4.1.1 Active Ingredients - C*P will retain samples
of the active ingredients for at least one
year beyond the expiry period of the
PRODUCTS in which used. The amount of sample
retained will be twice the quantity required
to carry out all of the tests required to
determine if the material meets its
specifications, with the exception of
sterility and pyrogen testing. (CFR 21 1.1
70a)
6.4.1.2 Products - C*P will retain samples of the
PRODUCTS for at least one year beyond the
expiry period. The amount of sample retained
will be twice the quantity required to carry
out all of the tests required to determine
if the material meets its specifications,
with the exception of sterility and pyrogen
testing. (CFR 211.170b)
6.5 Routine Stability Program
6.5.1 C*P is responsible for maintaining a routine
stability testing program for the PRODUCTS and will
provide a stability report to CLIENT annually or on
request. The stability program will be in compliance
with any license commitments as notified by CLIENT.
At a minimum one lot of each product, of each
strength and in each package type (largest and
smallest) will be placed on stability each year. The
stability program will generally follow ICH
guidelines. The stability protocol or any changes
must be approved by CLIENT.
6.5.2 Stability Failures - Any confirmed problems that
arise as a result of the stability program will be
immediately communicated by C*P to CLIENT.
-40-
6.6 Out-of-Specification (OOS) Investigations
6.6.1 C*P is responsible for investigating any testing
performed by C*P that fails to meet specification.
C*P will immediately notify CLIENT in the event of a
specification failure. Each investigation will be
reviewed by C*P's designated Quality person, and will
follow the procedures recommended by regulatory
agencies.
7 QUALITY ASSURANCE
-----------------
7.1 Deviations and Investigations
7.1.1 Deviations - Any deviation from the process during
manufacture must be carefully explained and
documented in the batch records, justified, and
approved by C*P Quality Assurance and Production
Managers and included in the document package. Batch
records that contain significant process deviations
will be highlighted to CLIENT.
7.1.2 Failure Investigations - C*P is responsible for
investigating any test result or in-process test
which fails to meet specification. Each investigation
will be reviewed and approved by C*P's designated
Quality person and by CLIENT. The investigation must
document that any failure has not jeopardized the
safety, efficacy, or quality of the PRODUCT.
7.1.3 C*P will notify the CLIENT of any batch of PRODUCTS
rejected by C*P.
7.1.4 C*P will notify the CLIENT if any problems are
discovered that may impact PRODUCTS batch(s)
previously shipped to CLIENT.
7.1.5 Some deviations/failures may require that additional
testing, stability, or validation be conducted. This
work will be performed by C*P as agreed by both
parties.
7.2 Batch Disposition
7.2.1 For each batch, C*P will provide the documentation
required in Appendix III.
7.2.2 Certificate of Compliance
7.2.2.1 C*P is responsible for ensuring and
certifying that the PRODUCTS have been
manufactured according to the
specifications/procedures documented in the
Master Production Records.
-41-
7.2.2.2 C*P Qualified Person/QA Representative will
sign a Certificate of Compliance confirming
that the PRODUCTS have been manufactured,
tested and stored according to the
requirements of the Master Production
Record.
7.3 Product Release
7.3.1 Release of the PRODUCTS is the absolute
responsibility of CLIENT Quality and will be
undertaken by CLIENT based on CLIENT's internal
procedures, the full document package provided by
C*P, and completion of any release testing required
by CLIENT Quality Control.
7.3.2 Any problem discovered by CLIENT likely to cause
rejection of the PRODUCTS will be communicated to C*P
within 30 days from receipt of the full release
documentation package (see Appendix III).
7.4 Product Complaints and Recalls
7.4.1 Product Complaints - CLIENT is responsible for
receiving and initially investigating any PRODUCTS
complaints. CLIENT will notify C*P of any problems
thought to be due to manufacture, which are found
during the distribution of the product. When
requested by CLIENT, C*P will promptly perform
investigations for these problems. Investigation
reports will be forwarded to CLIENT within 30 days.
7.4.2 Product Recall - CLIENT is responsible for
instituting a PRODUCTS recall due to any defect
considered sufficiently serious. CLIENT will notify
C*P of any recall which may be due to the
manufacturing of PRODUCTS. C*P will provide a rapid
initial response and a full report within ten working
days.
7.5 Records Retention
7.5.1 C*P will retain, at a minimum, batch production
records for the PRODUCTS and materials for the expiry
date of the PRODUCTS plus one year.
7.6 QA Presence in the Manufacturing Facility
7.6.1 C*P will maintain adequate QA presence in the
manufacturing facility during the manufacture of the
PRODUCTS to ensure compliance with GMPs.
7.6.2 C*P will permit CLIENT presence in the manufacturing
facility during the manufacture of the PRODUCTS, if
requested by CLIENT.
-42-
8 REGULATORY COMPLIANCE
---------------------
8.1 Regulatory Inspections
8.1.1 C*P will immediately inform CLIENT of any regulatory
inspections that may involve the PRODUCTS and permit
a representative from CLIENT Quality to be present,
if required by CLIENT.
8.1.2 C*P will secure CLIENT's agreement prior to making
any commitment to a regulatory agency regarding
CLIENT's PRODUCTS.
8.1.3 Additionally, C*P will immediately forward any
regulatory correspondence on the PRODUCTS to CLIENT.
8.1.4 CLIENT will inform C*P in writing of any regulatory
issue that impacts C*P's ability to manufacture the
PRODUCTS.
8.2 Regulatory Actions
8.2.1 CLIENT will notify C*P of any regulatory actions on
the PRODUCTS that may impact C*P.
8.2.2 C*P is responsible for supporting all batch record
investigations associated with regulatory actions.
8.2.3 C*P agrees to supply CLIENT with any manufacturing,
testing, or storage data within 48 hours, if
requested, as the result of a regulatory inspection,
or a potential regulatory exposure such as a recall
or significant product complaint.
8.3 Right to Audit
8.3.1 C*P will allow representatives from CLIENT Quality to
have access to their manufacturing, warehousing,
laboratory premises, and records for audit purposes
listed below in 8.3.2 through 8.3.4. CLIENT
representatives will be escorted at all times by C*P
personnel.
8.3.2 C*P will permit CLIENT Quality to conduct preparatory
audits either for initiation of GMP manufacture of
the PRODUCTS or for preapproval inspections (PAI).
8.3.3 C*P will permit CLIENT Quality to conduct audits to
address significant product quality or safety
problems.
8.3.4 C*P will permit CLIENT Quality to perform one
standard GMP compliance audit per year.
-43-
8.4 Audit Closeout
8.4.1 An exit meeting will be held with representatives
from C*P and CLIENT to discuss significant audit
observations.
8.4.2 CLIENT will provide a written report of all
observations within 30 days to C*P. Within 30 days of
the audit report receipt, C*P will provide a written
response to all findings that details corrective
action to be implemented. C*P will follow up to
ensure that all corrective actions are implemented.
9 DISPUTE RESOLUTION
------------------
9.1 Non-Conformity Dispute
9.1.1 In the event that a dispute arises between C*P and
CLIENT in the nonconformity of a batch of the
PRODUCTS, the heads of Quality from both companies
shall in good faith promptly attempt to reach an
agreement. Whatever the outcome, CLIENT Quality
retains the absolute right to determine product
release status. Financial liability is determined in
the Definitive Agreement.
9.2 Test Result Dispute
9.2.1 In the event that a dispute arises between C*P and
CLIENT in the testing performed by C*P for the
PRODUCTS, the resolution will proceed in stages. The
first stage requires direct communication between
analysts from both parties to determine that the
methods of analysis are the same and are being
executed in the same manner at both sites. Second,
carefully controlled and split samples should be sent
from one site to another in an attempt to reach
agreement. Should there be a failure to achieve
resolution, analysts from both parties will be
required to meet to work through the analysis of a
mutually agreeable sample. If these actions fail to
achieve resolution, and only after these avenues have
been exhausted, a qualified referee laboratory will
be used to achieve resolution. This laboratory must
be agreeable to both parties prior to use. The
results from this referee laboratory will be used as
final authority to determine responsibilities, but
whatever the outcome, CLIENT retains the right to
determine product release status. Financial liability
is determined in the Definitive Agreement.
-44-
10. CHANGE MANAGEMENT
-----------------
10.1 Controlled Documentation
10.1.1 All manufacturing, testing, and storage operations
performed by C*P for the PRODUCTS will have CLIENT
Quality review and written approval.
10.1.2 Any significant changes as described in CLIENT's
Change Control Procedure/Form for Contracted
Suppliers or to this agreement will be mutually
agreed upon prior to implementation. All required
regulatory approvals will be obtained prior to
implementation.
10.2 Change Control
10.2.1 Changes to the controlled documents or to validated
equipment and systems specific to the PRODUCTS must
have CLIENT Quality written approval, prior to
implementation.
10.2.2 Administrative changes to the controlled documents
(e.g., typo corrections, formatting) do not require
CLIENT Quality written approval prior to
implementation, but these changes must be submitted
to CLIENT Quality in a timely way for review and
approval.
11. PRODUCT AND PROCESS VALIDATION
------------------------------
11.1 Process - C*P is responsible for ensuring that the
manufacturing process is validated. The validation should
ensure that the process is capable of consistently achieving
the PRODUCTS acceptance specification.
11.2 Cleaning Validation - C*P is responsible for ensuring that
adequate cleaning is carried out between batches of different
products to prevent contamination. CLIENT will provide
information (i.e. LD50, toxicity, solubility, batch size, fill
volume, product min dose/70Kg patient) to establish cleaning
limits. The cleaning procedure and analytical methodology will
be reviewed before the first product batches are made.
11.3 Equipment, Computer, Facility, and Utilities Qualification -
C*P is responsible for all equipment, computer, facility, and
utility qualification activities associated with the PRODUCTS.
11.4 Laboratory Qualification - C*P is responsible for ensuring
that all laboratories are compliance with cGMP's and are
qualified in all of the methodology associated with the
PRODUCTS. If analytical work is performed at C*P then the
client will also provide any existing analytical documentation
to assist in methods transfer or methods validation. In
addition, if analytical work is not performed at the
Greenville site, C*P may elect to perform an audit on vendors
to be used for analytical testing.
-45-
12. ANNUAL PRODUCT REVIEW, ANNUAL REPORT AND DRUG LISTING
-----------------------------------------------------
12.1 Annual Product Review
12.1.1 C*P will perform an Annual Product Review for the
PRODUCTS and will issue a report to CLIENT. This
report will cover all manufacturing, testing, and
storage activities performed by C*P. It will be a
review of stability data, investigations, and any
changes at C*P in the manufacturing, testing, storage
or validation of the PRODUCTS in the previous
calendar year and a summary of lots made, released,
and rejected. Also, control charting or trend
analysis of key product parameters will be performed.
Any abnormalities will be explained in the annual
review.
12.1.2 Client is responsible for preparing any Annual Report
as required by applicable regulations, including 21
CFR 314.7(g)(3), 314.81(b)(2), and/or 601.12(d),
(f)(3). At least 90 calendar days before the Annual
Report due date, CLIENT shall request in writing from
C*P the chemistry, manufacturing, and controls data
required for submission of the Annual Report. C*P
will provide the requested information to CLIENT
within 30 days.
12.2 Annual Manufacturing Process Change Report
12.2.1 CLIENT is responsible for preparing the Annual
Manufacturing Process Change Report as required by 21
CFR 601.12(d). At least 90 calendar days before the
Annual Report due date, CLIENT shall request in
writing from C*P the chemistry, manufacturing, and
controls data required for submission of the Annual
Report. C*P will provide the requested information to
CLIENT within 30 days.
12.3 Drug Listing
12.3.1 C*P is responsible for drug listing as the
manufacturer of the PRODUCTS, while CLIENT is
responsible for drug listing as the distributor of
the PRODUCTS. CLIENT will provide C*P with all
required information needed by them for their
listing. CLIENT will notify C*P of the scheduled
product launch.
-46-
APPENDIX I
The PRODUCTS
Provigil 100 mg, bulk tablets
Provigil 100 mg, 30 count blister
Provigil 100 mg, 100 count bottle
Provigil 200 mg, bulk tablets
Provigil 200 mg, 6 count bottle
Carton x 2 bottles
Provigil 200 mg x 100 count
-47-
APPENDIX II
List of Quality Contacts
(name, phone, fax, e-mail)
- -------------------------------------------------------------------------------------
ISSUE CLIENT C*P
- -------------------------------------------------------------------------------------
Product Release Timothy Sheehan Jason Williams
Ph: (610) 738-6574 Ph: (252) 707-2182
Fax: (610) 738-6642 Fax: (252) 707-7306
tsheehan@cephalon.com jwilliams@catalytica-pharm.com
---------------------
- -------------------------------------------------------------------------------------
QC Testing Matthew Hulbert
Ph: (610) 738-6513
Fax: (610) 738-6315
mhulbert@cephalon.com
---------------------
- -------------------------------------------------------------------------------------
Investigations Timothy Sheehan Kathleen Bussell
Ph: (610) 738-6574 Ph: (252) 707-2128
Fax: (610) 738-6642 Fax: (252) 707-2207
tsheehan@cephalon.com kbussell@catalytica-pharm.com
---------------------
- -------------------------------------------------------------------------------------
Stability Joseph Johnson Kirit Amin
Ph: (610) 738-6462 Ph: (252) 707-2372
Fax: (610) 738-6640 Fax: (252) 707-7027
jjohnson@cephalon.com kamin@catalytica-pharm.com
---------------------
- -------------------------------------------------------------------------------------
Validation Robert Urban
Ph: (610) 738-6119
Fax: (610) 738-6315
rurban@cephalon.com
-------------------
- -------------------------------------------------------------------------------------
Compliance Audits Timothy Sheehan Kathleen Bussell
Ph: (610) 738-6574 Ph: (252) 707-2128
Fax: (610) 738-6642 Fax: (252) 707-2207
tsheehan@cephalon.com kbussell@catalytica-pharm.com
---------------------
- -------------------------------------------------------------------------------------
Product Complaints Timothy Sheehan Kathleen Bussell
Ph: (610) 738-6574 Ph: (252) 707-2128
Fax: (610) 738-6642 Fax: (252) 707-2207
tsheehan@cephalon.com kbussell@catalytica-pharm.com
---------------------
- -------------------------------------------------------------------------------------
Change Management Robert Urban Maduhkar Mehta
Ph: (610) 738-6119 Ph: (252) 707-2004
Fax: (610) 738-6315 Fax: (252) 707-2134
rurban@cephalon.com mmehta@catalytica-pharm.com
-------------------
- -------------------------------------------------------------------------------------
-48-
APPENDIX III
Release Documentation
The Batch/Lot Release Document Package will include a Certificate of Analysis
and a Certificate of Compliance.
A Certificate of Analysis (CofA)
- -------------------------
This document will include the name of the PRODUCT, the batch number and the
date of manufacture. The COA will list the In-Process QC tests performed by C*P
and actual test results. The COA will also list the product release QC tests
performed by C*P and actual test results.
A Certificate of Compliance (CofC)
- ---------------------------
This document will attest to the fact that the batch of PRODUCTS was made in
accordance with all applicable regulations, product licenses, and company
policies. This annulment will include the batch quantity approved, the batch
yield, and the expiration date. It will also include a listing of all
manufacturing variances and/or incidents for the batch that have been
adjudicated
-49-
Schedule D
----------
Product Validation and Stability Testing Procedures
---------------------------------------------------
The parties have agreed upon all those applicable specifications for Product
validation and stability testing as set forth in the following documents. The
parties shall agree upon any modifications to any such specifications.
[**]
-50-
Schedule E
----------
Tolling Fees
------------
CEPHALON shall pay CATALYTICA the following amounts in consideration of
the formulation and packaging services rendered hereunder:
[**]
Beginning on the first anniversary of the effective date of this
Agreement and on each anniversary thereafter, the above tolling fees shall be
increased by the percentage change from the immediately preceding anniversary
date in the Producer Price Index (PPI), Pharmaceutical Preparations, Ethical
(Prescription), series code PCU-2834 #1, as published by the Bureau of Labor
Statistics of the U.S. Department of Labor for the region in which the
production facility is located, or comparable successor index. The tolling fees
shall be renegotiated and agreed upon by the parties prior to any renewal term.
-51-
Schedule F
----------
Minimum Quantities
------------------
The minimum annual quantities to be purchased by CEPHALON and capacity to be
reserved by CATALYTICA, are as follows for the initial term of this agreement:
Year* Quantity
---- --------
2000 [**]
2001 [**]
2002 [**]
2003 [**]
2004 [**]
Pursuant to Section 3.1, if the actual annual quantity exceeds the minimum
annual quantity in any year by twenty-five percent (25%) or less, this excess
will reduce the minimum annual quantity in the following year.
-52-
Schedule G
----------
Equipment
---------
The following Product-specific equipment will be [**], and [**] shall have no
[**] with respect thereto:
[**]
The following equipment will be [**] and [**] (such equipment shall be [**]
therefor):
[**]
The following equipment (make, model, size) will be utilized by CATALYTICA to
manufacture the Product:
[**]
-53-