Exhibit
4.40


 


	
   

  	
  WARNER-LAMBERT JULY 1,
  1999 AMENDED & RESTATED

  
	
   

  	
  MANUFACTURE & SUPPLY
  AGREEMENT (DPI)

  
	
   

  	
  FILE 2

  



 


 


Amended and Restated


MANUFACTURE AND SUPPLY AGREEMENT


 


BETWEEN


WARNER-LAMBERT CANADA INC.


AND


DRAXIS PHARMA INC.


 


DATED AS OF JULY 1,
1999


 





















 


TABLE OF CONTENTS


 


	
  Section 1.

  	
  Definitions

  	
   

  
	
  1.1.

  	
  Definitions

  	
   

  
	
  1.2.

  	
  Terms Generally

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.

  	
  Equipment

  	
   

  
	
  2.1.

  	
  Purchase and Installation of Equipment, Molds and
  Tooling

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.

  	
  Supply and Purchase Requirements;
  Orders; Shipment and Delivery Terms; Inventory

  	
   

  
	
  3.1.

  	
  Agreement to Supply

  	
   

  
	
  3.2.

  	
  Use of Facility Equipment, Molds and Tooling;
  Notice

  	
   

  
	
  3.3.

  	
  Orders

  	
   

  
	
  3.4.

  	
  Production Requirements; Required Tolerance

  	
   

  
	
  3.5.

  	
  Forecasts

  	
   

  
	
  3.6.

  	
  Standard Forms

  	
   

  
	
  3.7.

  	
  Quantitative Defects

  	
   

  
	
  3.8.

  	
  Supply of Raw Materials, Ingredients and Packaging
  Materials

  	
   

  
	
  3.9.

  	
  Product Samples

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.

  	
  Price, Payment, Price Adjustments

  	
   

  
	
  4.1.

  	
  Determination of Price/Cost of Materials

  	
   

  
	
  4.2.

  	
  Payment Provisions

  	
   

  
	
  4.3.

  	
  Shipping Instructions; Risk of Loss

  	
   

  
	
  4.4.

  	
  Taxes

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.

  	
  Manufacturing Standards, Quality
  Control Inspection, Rejection and Recall of Products

  	
   

  
	
  5.1.

  	
  Manufacturing Standards

  	
   

  
	
  5.2.

  	
  Storage Requirements

  	
   

  
	
  5.3.

  	
  Use of Packaging Materials

  	
   

  
	
  5.4.

  	
  Production Codes

  	
   

  
	
  5.5.

  	
  Maintenance of Facility, Equipment and Molds

  	
   

  
	
  5.6.

  	
  Legal and Regulatory Filings and Requests

  	
   

  
	
  5.7.

  	
  Analysis of Materials

  	
   

  
	
  5.8.

  	
  Non-conforming Materials

  	
   

  
	
  5.9.

  	
  Quality Tests and Checks

  	
   

  
	
  5.10.

  	
  Non-complying Products

  	
   

  
	
  5.11.

  	
  Disposal of Rejected Products and Materials

  	
   

  
	
  5.12.

  	
  Maintenance and Retention of Records and/or
  Samples

  	
   

  
	
  5.13.

  	
  Rejection of Shipments; Disposal of Rejected
  Shipments; Dispute Resolution

  	
   

  
	
  5.14.

  	
  Customer Complaints; Recalls

  	
   

  
	
  5.15.

  	
  Government Inspections, Seizures and Recalls

  	
   

  
	
  5.16.

  	
  Inspections and Audits by Warner

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.

  	
  Representations and Warranties and
  Covenants

  	
   

  
	
  6.1.

  	
  Representations, Warranties and Covenants

  	
   

  
	
  6.2.

  	
  Notice of Material Events

  	
   

  
	
  6.3.

  	
  Survival

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.

  	
  Ownership; Trademarks; Proprietary
  Information

  	
   

  
	
  7.1.

  	
  Warner’s Ownership of Intellectual and Other
  Property

  	
   

  



 





















 


	
  7.2.

  	
  The Manufacturer’s Ownership of Other Property

  	
   

  
	
  7.3.

  	
  Reproduction of and Right to Use Trademarks Etc

  	
   

  
	
  7.4.

  	
  Manufacture of Competing Products

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.

  	
  Indemnification

  	
   

  
	
  8.1.

  	
  The Manufacturer’s Indemnification of Warner

  	
   

  
	
  8.2.

  	
  Warner’s Indemnification of the Manufacturer

  	
   

  
	
  8.3.

  	
  Assertion of Claim

  	
   

  
	
  8.4.

  	
  Survival

  	
   

  
	
  8.5.

  	
  Consequential Damages

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.

  	
  Insurance

  	
   

  
	
  9.1.

  	
  Coverage

  	
   

  
	
  9.2.

  	
  Certificates of Insurance; Maintenance of Coverage

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 10.

  	
  Confidential
  Information

  	
   

  
	
  10.1.

  	
  Confidential
  Information

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 11.

  	
  Term,
  Termination

  	
   

  
	
  11.1.

  	
  Initial Term; Term

  	
   

  
	
  11.2.

  	
  Termination

  	
   

  
	
  11.3.

  	
  Effect of Termination

  	
   

  
	
  11.4.

  	
  Unused Materials

  	
   

  
	
  11.5.

  	
  Returns of Materials, etc. Supplied by Warner

  	
   

  
	
  11.6.

  	
  Maintenance of Records

  	
   

  
	
  11.7.

  	
  Harmonization
  Plans; Transition

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 12.

  	
  Force Majeure

  	
   

  
	
  12.1.

  	
  Force Majeure

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 13.

  	
  Miscellaneous

  	
   

  
	
  13.1.

  	
  Year 2000 Compliance

  	
   

  
	
  13.2.

  	
  Compliance with Laws

  	
   

  
	
  13.3.

  	
  Relationship of the
  Parties

  	
   

  
	
  13.4.

  	
  Assignment

  	
   

  
	
  13.5.

  	
  Notice

  	
   

  
	
  13.6.

  	
  Entire Agreement

  	
   

  
	
  13.7.

  	
  Incorporation of
  Schedules

  	
   

  
	
  13.8.

  	
  Severability

  	
   

  
	
  13.9.

  	
  Waiver

  	
   

  
	
  13.10.

  	
  Headings

  	
   

  
	
  13.11.

  	
  Counterparts

  	
   

  
	
  13.12.

  	
  Governing Law

  	
   

  
	
  13.13.

  	
  Language

  	
   

  
	
  13.14.

  	
  Paramountcy

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule A

  	
   

  
	
  Schedule B

  	
   

  
	
  Schedule C

  	
   

  
	
  Schedule D

  	
   

  
	
  Schedule E

  	
   

  
	
  Schedule F

  	
   

  



 


ii





















 


Amended and Restated


MANUFACTURE AND SUPPLY AGREEMENT


 


MANUFACTURE AND SUPPLY AGREEMENT dated as of July 1, 1999, by and
between WARNER-LAMBERT CANADA INC. (“Warner”), a corporation duly organized and
incorporated under the laws of the province of Ontario having its principal
office located at 2200 Eglinton Avenue East, Scarborough, Ontario, Canada, M1L
2N3, and DRAXIS PHARMA INC. (the “Manufacturer”), a corporation
incorporated under the laws of Canada, and having its principal office located
at 16751 Trans Canada Highway, Kirkland, Quebec, H9H 4J4.


 


WITNESSETH:


 


WHEREAS, Warner desires to have the Manufacturer manufacture and supply
Warner with its requirements of Warner’s products listed in Schedule A
attached hereto;


 


WHEREAS, the Manufacturer desires to manufacture and supply Warner with
its requirements of such products; and


 


WHEREAS, the parties are willing to carry out the foregoing pursuant to
the terms and conditions set forth in this Agreement;


 


NOW, THEREFORE, in consideration of these premises and the covenants,
agreements and stipulations hereinafter set forth, the parties hereto agree as
follows:


 


Section 1.                                         Definitions.


 


1.1.                                                                            Definitions.


 


The following terms (except as otherwise expressly provided) for all
purposes of this Agreement shall have the following respective meanings:


 


“Action or Proceeding” shall mean any action, claim, suit,
proceeding, arbitration or Governmental or Regulatory Authority action,
notification, investigation or audit.


 


“Affiliate” shall mean any Person that directly or indirectly through one or more
intermediaries controls or is controlled by or is under common control with the
Person specified. For purposes of this definition, control of a Person means
the power, direct or indirect, to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.


 


“Agreement” shall mean this Manufacturing and Supply Agreement and all Schedules
attached hereto, as the same may be amended, supplemented or otherwise modified
from time to time pursuant to the terms set forth herein.


 





















 


Warner-Lambert/Draxis Pharma


Manufacture and Supply Agreement


 


“Annual Product Review” shall have the meaning set forth in Section II(1)
of Schedule D.


 


“Business Day” means a day other than a Saturday or Sunday
or a statutory holiday in the Province of Quebec.


 


“Consumer Price Index” or “CPI” means
the consumer price index established and published, from time to time, by
Statistics Canada for the relevant period or periods and described as “All
Items – Canada”, or any successor index or organization.


 


“Environmental Laws” shall mean all federal, provincial, foreign,
local, city or municipal laws, statutes, by-laws and regulations and, to the
extent they have the force of law, all rules, orders, codes, protocols,
guidelines, policies, directions, actions, judicial or administrative decrees
promulgated pursuant to such laws, statutes and regulations relating to or
controlling, in whole or in part and in any manner whatever, the environment,
employee and public health and safety and the assets and undertaking of the
Manufacturer and the intended uses thereof and includes, without limitation,
Environmental Laws relating to the storage, generation, use, handling,
manufacture, processing, labelling, transportation, treatment, release or
disposal of Hazardous Materials.


 


“Environmental Losses” shall mean any and all fines, penalties,
costs, liabilities, damages, losses or expenses (including sampling, monitoring
or remediation costs, liabilities based on a finding of successor liability,
reasonable attorneys’, consultants’ or engineering fees and disbursements,
costs of defense and interest expense) incurred by Warner or for which Warner
or an Affiliate of Warner is liable or obligated pursuant to any Environmental
Law and (i) arising out of the operation, ownership or control of the Facility,
or (ii) relating to, arising from, or in any way connected with the
manufacturing, generation, processing, storage, transportation, distribution,
treatment, disposal or other handling of products (including the Products),
associated by-products, raw materials, intermediates, wastes, Hazardous
Materials, emissions, releases, spills, leaks or discharges or returned
products (including the Products), by the Manufacturer or its permitted
assignees.


 


“Facility” shall mean the Manufacturer’s manufacturing facility located at 16751
Trans Canada Highway, Kirkland, Quebec, H9H 4J4, and, subject to Warner’s prior
written approval, such other facilities used by the Manufacturer in the
manufacture and storage of Products or Materials utilized in the manufacture of
Products hereunder.


 


“Formulate” shall mean to effect the operation required in the manufacture,
processing, testing, packaging, labelling or storage, as the case may be, of
the Products by the Manufacturer.


 


“Formulation” shall mean any operation required in the
manufacture, processing, testing, packaging, labelling or storage, as the case
may be, of the Products by the Manufacturer.


 


2





















 


“Good Manufacturing Practices” or “GMP” shall
mean those good manufacturing practices as shall be required by applicable Laws
in Canada.


 


“Governmental or Regulatory Authority” shall mean any court, tribunal, arbitrator,
agency, commission, official or other instrumentality of Canada, any foreign
country or any territory, or any domestic or foreign state, province, county,
city or other political subdivision thereof.


 


“Group I Products” shall mean the product(s) listed as Group I
Products in Schedule A attached hereto, as such Schedule may be
amended from time to time by mutual agreement of the parties


 


“Group II Products” shall mean the product(s) listed as Group II
Products in Schedule A attached hereto, as such Schedule may be
amended from time to time by mutual agreement of the parties


 


“Hazardous Materials” shall mean any pollutant, contaminant,
hazardous or toxic substance, constituent or material, other wastes or
substances regulated under any Environmental Law.


 


“Initial Term” shall have the meaning ascribed thereto in Section 11.1.


 


“Laws” shall mean any law, statute, rule, regulation, guideline (including
current GMP), ordinance or other pronouncements of any Governmental or
Regulatory Authority having the effect of law in Canada, any foreign country or
any territory, or any domestic or foreign state, province, county, city or
other political subdivision, including without limitation any Requirements of
Environmental Law.


 


“Losses” shall mean any and all damages, fines, fees, settlements, payments,
obligations, penalties, deficiencies, losses, costs and expenses (including,
without limitation, Environmental Losses, interest, court costs, reasonable
fees of attorneys, accountants and other experts and other reasonable expenses
of litigation or other proceedings or of any claim, default or assessment).


 


“Materials” shall mean all raw materials, ingredients, packaging materials and any
other materials used in the manufacture and packaging of Products by the
Manufacturer.


 


“Person” shall mean any natural person, entity, corporation, general
partnership, limited partnership, proprietorship, other business organization,
trust, union, association or Governmental or Regulatory Authority.


 


“Price” shall mean the price per unit to be charged by the Manufacturer for
Products manufactured and supplied hereunder, as set forth in Schedule C
attached hereto.


 


“Product(s)”
shall mean collectively the Group I Products and the Group II Products as
listed in Schedule A attached hereto, as such Schedule may be amended
from time to time by mutual agreement of the parties.


 


3





















 


“Quality Agreement” shall mean the quality agreement entered into
between Warner and the Manufacturer as of the date hereof, which details the
quality obligations and responsibilities of the parties with respect to the
Products and attached hereto as Schedule D.


 


“Recall” shall mean with respect to any and all Products, any “recall”, “product
withdrawal” or “stock recovery” withdrawal, as those terms are defined in the
Product Recall Procedures issued by the Health Protection Branch of Health
Canada, as the same may be amended from time to time, and all as the same may
be amended from time to time (collectively, the “Recall Procedures”), and shall
include any post-sale warning or mailing of information regarding such Product,
including those warnings or mailings described in the Recall Procedures.


 


“Requirements of Environmental Law” shall mean all requirements of Environmental
Law including but not limited to, all such requirements relating to: (i) the
protection, preservation or remediation of the natural environment (the air,
land, surface water or groundwater); (ii) solid, gaseous or liquid waste
generation, handling, treatment, storage, disposal or transportation; and (iii)
hazardous substances or conditions (matters that are prohibited, controlled or
otherwise regulated, such as contaminants, pollutants, toxic substances,
dangerous goods, wastes, hazardous wastes, liquid industrial wastes, hazardous
materials, urea formaldehyde foam type of insulation, asbestos or asbestos
containing materials, polychlorinated biphenyls (PCBs) or PCB contaminated
fluids or equipment, explosives, radioactive substances, petroleum and
associated products, underground storage tanks or surface impoundments and any
emissions, spills, leaks, discharges, releases and threatened releases thereof
or therefrom).


 


“Specifications” shall mean the specifications required by
Warner for the manufacture, processing, packaging and supply of the Products,
including all formulae, raw materials and packing materials requirements, and
standards of quality control, quality assurance and sanitation, all as mutually
agreed upon by the parties in writing and attached hereto as Schedule F
and pursuant to the drug manufacturing procedures, as such Specifications may
be amended, supplemented or otherwise modified from time to time by mutual
agreement of the parties.


 


“Term” shall
have the meaning ascribed thereto in Section 11.1.


 


“Year 2000 Compliance” shall mean: (i) the accurate processing of
date/time data (including, but not limited to, calculating, comparing and
sequencing) from, into and between the twentieth and twenty-first centuries and
during the years 1999 and 2000, including leap year calculations (2000 being a
leap year), and (ii) the accurate and uninterrupted functioning of hardware,
software and other systems and equipment before, during and after January 1,
2000, without any change in operations associated with the advent of 1999 or
the twenty-first century.


 


4





















 


1.2.                                                                            Terms Generally.


 


The definitions in Section 1 shall apply equally to both the
singular and plural forms of the terms defined. The words “include”, “includes”
and “including” shall be deemed to be followed by the phrase “without
limitation”. All references herein to Sections, paragraphs, clauses and
Schedules shall be deemed references to Sections, paragraphs and clauses of
this Agreement and Schedules to this Agreement unless the context shall
otherwise require.


 


Section 2.                                          Equipment


 


2.1.                                                                            Purchase
and Installation of Equipment, Molds and Tooling.


 


The Manufacturer shall be responsible for purchasing, installing and
validating at its Facility all new equipment, molds, tooling, and/or
modifications to existing equipment, molds and/or tooling necessary for the
manufacture, packaging, labelling and shipment of Products hereunder, and all
costs and expenses associated therewith. Notwithstanding the foregoing, Warner
shall be responsible for all costs and expenses associated with the purchase,
installation and validation at the Facility of all new equipment, molds,
tooling and/or modifications to existing equipment, molds and/or tooling which
are required, after the date hereof, as a result of any change made in the manufacturing
or packaging of the Products, provided that such change was made at Warner’s
request and not for the purpose of complying with the Specifications or GMP.
The installation of the foregoing equipment, molds and tooling shall be
conducted in accordance with all applicable Laws and the Specifications (as
relevant). At the request of Warner, the Manufacturer shall return to Warner
all equipment, molds, tooling and operating supplies relating to any Product
that were provided or paid for by Warner.


 


Section 3.                                          Supply and Purchase
Requirements; Orders; Shipment and Delivery Terms; Inventory.


 


3.1.                                                                            Agreement to Supply.


 


(a)                                  During the Term of this Agreement, and
subject to the provisions of this Agreement, the Manufacturer shall
manufacture, package and exclusively supply to Warner (and/or its Affiliates or
designees) the Products in accordance with the Specifications and this
Agreement.


 


(b)                                 The manufacturing by the Manufacturer with
respect to Group I Products commenced on or about April 1, 1999 in accordance
with the Manufacture and Supply Agreement dated as of February 1, 1999
between the parties. The manufacturing by the Manufacturer with respect to
Group II Products shall commence on or about October 1, 1999, provided
that such manufacturing shall not commence, with respect to certain of the
Group II Products, until such later date as Warner notifies the Manufacturer.
Provided Warner notifies the Manufacturer not less than ninety (90) days in
advance of the proposed manufacturing commencement date for any Group II
Product, the Manufacturer shall conduct such validation it considers necessary,
and in accordance with this Agreement, to ensure that the commencement of
manufacturing of Group II Products will occur as required by Warner.


 


5





















 


3.2.                                                                            Use of Facility Equipment,
Molds and Tooling; Notice.


 


(a)                                  All manufacturing, packaging and storage
activities shall be carried out by the Manufacturer at the Facility and
utilizing equipment, molds and tooling in the manner set forth in the
Specifications, except to the extent that the Manufacturer receives Warner’s
advance written permission to alter the location or specified usage of the
foregoing.


 


(b)                                 Following receipt of Warner’s advance written
permission, as contemplated in paragraph (a) of this Section 3.2, the
Manufacturer shall notify Warner in writing prior to making any change to (i)
the location of any manufacturing, packaging or storage activities carried out
hereunder, or (ii) the equipment used in the manufacture or packaging of the
Products hereunder.


 


3.3.                                                                            Orders.


 


***


 


3.4.                                                                            Production Requirements;
Required Tolerance.


 


The Manufacturer shall Formulate and deliver to Warner the Products and
devote the necessary capacity to meet Warner’s firm purchase commitments and
weekly requirements for the Products in a timely fashion. Throughout the Term
of this Agreement, the Manufacturer shall: (i) Formulate and deliver 98% of
orders on the delivery date specified within each purchase order, or within 3
Business Days thereof; and (ii) deliver 95% of the quantity ordered by Warner
pursuant to each purchase order.


 


3.5.                                                                            Forecasts.


 


***


 


3.6.                                                                            Standard Forms.


 


In ordering and delivering the Products pursuant hereto, Warner and the
Manufacturer may employ their standard forms, but nothing in those forms shall
be construed to modify, amend or supplement the terms of this Agreement and, in
the case of any conflict herewith, the terms of this Agreement shall control.


 


3.7.                                                                            Quantitative Defects.


 


Warner shall inform the Manufacturer in writing of any claim relating
to quantitative defects in shipments of Products within thirty (30) days
following actual receipt of such shipments by Warner and Warner shall provide
to the Manufacturer copies of any appropriate documents relating to such
defects. The Manufacturer shall, at its own expense, provide Warner with any
missing quantities of such Products as soon as reasonably possible


 


6





















 


after
receipt of notice from Warner. Warner shall only be obligated to pay for actual
quantities of Products received by Warner. Any claim for a quantitative defect
which is not made within such thirty (30) day period shall be deemed to have
been waived by Warner.


 


3.8.                                                                            Supply of Raw Materials,
Ingredients and Packaging Materials.


 


(a)                                  The Manufacturer shall procure all Materials
relating hereto. All Materials shall comply with the Specifications. The
Manufacturer may not substitute or otherwise replace any Material and/or any
supplier thereof without the prior written consent of Warner. The costs of such
Materials including the cost of procuring such Materials (e.g. freight) are
included in the Price of the Products.


 


(b)                                 Warner shall supply to the Manufacturer all
labelling, artwork, text and copy to be used by the Manufacturer in Product
packaging and labelling.


 


3.9.                                                                            Product Samples.


 


The Manufacturer shall provide Warner or any such other Person as
Warner shall designate with representative lot samples of each production batch
of Product promptly upon request. Such Product samples shall be shipped to
Warner or such other Person at Warner’s expense in accordance with the
provisions set forth in Schedule B hereof, or as otherwise instructed by
Warner. Warner shall pay for such samples when invoiced in accordance with Section 4.2 hereof.
Any disputes as to whether any such Product samples conform to the
Specifications shall be resolved in accordance with the provisions of Section 5.13
hereof.


 


Section 4.                                          Price,
Payment, Price Adjustments.


 


4.1.                                                                            Determination
of Price/Cost of Materials.


 


***


 


4.2.                                                                            Payment
Provisions.


 


***


 


 


7





















 


4.3.                                                                            Shipping Instructions; Risk
of Loss.


 


***


 


4.4.                                                                            Taxes.


 


***


 


Section 5.                                          Manufacturing Standards,
Quality Control Inspection, Rejection and Recall of Products.


 


5.1.                                                                            Manufacturing Standards.


 


(a)                                  The Manufacturer shall manufacture, process
and package the Products (including without limitation disposing of all waste
and other materials) strictly in accordance with the Specifications, applicable
Laws including current GMP.


 


(b)                                 If, at any time during the Term, there occurs
a material change in current GMP, including a change which requires the
revalidation of the manufacturing process, or a significant portion of the
process, the parties will negotiate in good faith to settle the proportion of
the cost of implementing such material change to be borne by each of the
parties.


 


5.2.                                                                            Storage Requirements.


 


The Manufacturer shall store all Materials and finished Products in a
clean, dry area, free from insects and rodents, in a manner to prevent entry of
foreign materials. Storage and handling of the foregoing shall be strictly in
accordance with the provisions of all applicable Laws including current GMP and
the quality control programs and standards set forth in the Specifications.


 


8





















 


5.3.                                                                            Use of Packaging Materials.


 


Packaging materials supplied by Warner and/or
used in the packaging and supply of the Products hereunder may only be used by
the Manufacturer in connection with its packaging and supply of the Products
hereunder and for purposes consistent with the terms of this Agreement and for
no other purpose (e.g., such packaging materials shall not be used for storage
or waste disposal purposes).


 


5.4.                                                                            Production
Codes.


 


The Manufacturer agrees that production codes
placed on the Products shall be in accordance with the Specifications.


 


5.5.                                                                            Maintenance of Facility, Equipment and Molds.


 


The Manufacturer shall maintain all
equipment, tooling and molds utilized in the manufacture and supply of Products
hereunder in good operating condition and shall maintain such equipment,
tooling and molds in accordance with, or in a manner that shall meet the
requirements of (i) all applicable Laws, including current GMP and (ii) all
requirements set forth in the Specifications. The Manufacturer shall maintain
the Facility in accordance with, or in a manner that shall meet the
requirements of all material Laws including current GMP and all requirements
set forth in the Specifications. In the event that the Manufacturer fails or
anticipates to fail to meet any of the foregoing requirements relating to the
Manufacturer’s maintenance of the Facility or any equipment, tooling or molds
utilized in connection herewith, or in the event that the Manufacturer receives
any notice from any Governmental or Regulatory Authority relating to its
maintenance of, or failure to maintain, the Facility or any equipment, tooling
or molds utilized in connection herewith, the Manufacturer shall promptly
contact Warner, and the Manufacturer shall take any actions as may be required
under the Specifications.


 


5.6.                                                                            Legal
and Regulatory Filings and Requests.


 


The Manufacturer and Warner shall cooperate
and be diligent in responding to all requests for information from, and in
making all legally required filings with, Governmental and Regulatory
Authorities having jurisdiction to make such requests or require such filings.
The Manufacturer shall obtain and comply with all material licenses, consents,
permits and Laws which may from time to time be required by appropriate
Governmental and Regulatory Authorities with respect to its manufacturing
processes and the Facility and otherwise to permit the performance of its
obligations hereunder.


 


5.7.                                                                            Analysis
of Materials.


 


Prior to use in production, the Manufacturer
shall have shipments of Materials analyzed for such matters in accordance with
the Specifications and the Manufacturer shall ensure that all Materials
strictly comply with the Specifications. Such analyses may be conducted, at the
option of Warner, by the Manufacturer internally or by an outside laboratory
retained by the Manufacturer and approved by Warner. For purposes of this
Agreement, such tests shall be considered routine and shall be performed at the
Manufacturer’s expense. All test


 


9





















 


results
are to be carefully documented and available for inspection or statistical
summary at Warner’s request.


 


5.8.                                                                            Non-conforming Materials.


 


The Manufacturer shall not use any Materials that do not strictly
comply with the Specifications (without the prior written approval of Warner)
and applicable Laws. If the Manufacturer uses any non-conforming Material
without receiving the prior written approval of Warner, the Manufacturer shall
be responsible for all Losses suffered or incurred by Warner as a result of
such use, including, without limitation, any expenses incurred by the
Manufacturer or Warner in the correction thereof and any expenses incurred by
Warner arising out of any Recall of any affected Product or other corrective
measures taken with respect thereto. The Manufacturer shall be responsible for
pursuing all resolutions with the applicable supplier of non-conforming
Materials.


 


5.9.                                                                            Quality Tests and Checks.


 


The Manufacturer shall perform all stability, validation, raw material
and in-process and finished product tests or checks required by the
Specifications and applicable Laws in order to ensure the quality of the
Products manufactured and supplied hereunder. For purposes of this Agreement,
such tests and/or checks shall be considered routine and shall be performed at
the Manufacturer’s expense. All tests and test results shall be carefully
performed, documented and summarized by the Manufacturer in accordance with the
Specifications and applicable Laws. To the extent necessary in relation to the
release of any Product by Warner, the Manufacturer shall supply to Warner a
certificate of analysis with respect to each production batch of Product
tested.


 


5.10.                                                                     Non-complying
Products.


 


No Product shall be released for shipment by the Manufacturer unless
such Product strictly complies with the Specifications, the provisions of Schedule D
of this Agreement and all applicable Laws. The Manufacturer shall quarantine
any non-complying Products and shall advise Warner of such non-compliance and
of the testing or inspection results of such batch or batches of Product.
Products that do not strictly comply and are quarantined should be properly
tagged and isolated and may be released only with the prior written approval of
Warner.


 


5.11.                                                                     Disposal of Rejected
Products and Materials.


 


All Products rejected pursuant to Section 5.13 and Materials
rejected pursuant to Section 5.8 shall be removed (if applicable) and
disposed of by either Warner or the Manufacturer in a manner consistent with
applicable Laws and as approved in advance by Warner, acting reasonably, (such
disposal cost to be at the expense of the party responsible therefor pursuant
to the terms of Section 5.8 or 5.13, as the case may be). No rejected
Materials, Product or Product in process shall be sold as salvage or for any
other purpose by the Manufacturer or designees or agents of the Manufacturer
without the prior written approval of Warner. The Manufacturer shall replace
such rejected Products or Materials at the expense of the party responsible
therefor, in accordance with the provisions of Section 5.8 or 5.13 hereof.


 


10





















 


5.12.                                                                     Maintenance and Retention of
Records and/or Samples.


 


(a)                                  The Manufacturer shall maintain detailed
records with respect to raw and packaging material usage and finished Product
production, which records shall include production code dates and shipping
information relating to the Products, so that Products can be easily traced in
case of a Recall or rejection of Products or Materials. The Manufacturer’s
records shall be sufficient such that the Manufacturer shall be capable of
responding to inquiries by Warner within 2 days Business Days of notification,
including providing the production code date and the location of the Products
in question. Warner shall be responsible for responding to all customers’
inquiries and/or complaints relating to the Products and the recordkeeping relating
thereto.


 


(b)                                 The Manufacturer shall retain, for periods
required by applicable Law, and upon request by Warner make available to
Warner, (i) copies of the batch manufacturing records, stability study and
quality control records maintained pursuant hereto or otherwise maintained in
relation to the Products, (ii) copies of testing results of all the tests
performed pursuant hereto or otherwise performed in relation to the Products,
(iii) samples of the Materials, and (iv) samples of each batch of Products to
the extent reasonably instructed by Warner or required by applicable Laws. The
Manufacturer shall send reasonable quantities of samples of each batch of
Products for analysis to Warner’s laboratory or a third party laboratory
designated by Warner when reasonably requested to do so by Warner. The expense
of such routine testing shall be paid by Warner. Any disputes as to whether any
such Product samples fail to conform to the Specifications shall be resolved in
accordance with the provisions of Section 5.13 hereof.


 


5.13.                                                                     Rejection of Shipments;
Disposal of Rejected Shipments; Dispute Resolution.


 


(a)           Within thirty (30)
days following receipt by Warner of any given shipment of Products hereunder,
Warner shall have the right to give the Manufacturer notice of rejection (“Rejection
Notice”) in respect of any shipment of Products that fails in whole or in
part to meet the Specifications (“Rejected Products”); provided,
however, that there shall be no time restrictions applicable to Warner’s
provision of a Rejection Notice where any of the following have occurred or are
present:


 


(i)                                     latent defects in the shipped Products that
have not been caused by components or ingredients supplied by Warner (assuming
proper storage and handling by the Manufacturer of such components or
ingredients supplied by Warner and compliance by the Manufacturer with the
terms hereof),


 


(ii)                                 defects in the shipped Products that are not
readily apparent on visual inspection, or


 


(iii)                              breach by the Manufacturer of any of its representations warranties or
obligations hereunder.


 


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Except
in the instances set forth in clauses (i), (ii) and (iii) of this paragraph
(a), failure on the part of Warner to give a Rejection Notice shall mean acceptance
by it of the shipment to which the Rejection Notice would have otherwise
applied.


 


(b)                                 The Manufacturer shall have thirty (30) days
from receipt of a Rejection Notice within which to accept or reject Warner’s
claims. The Manufacturer will promptly, following receipt of the Rejection
Notice, submit a report on all Rejected Products, including the investigation
and testing done and the recommended disposition to Warner. Warner shall review
such report and notify the Manufacturer that Warner either requests additional
data, approves the recommended disposition of the Rejected Products or will
otherwise direct the Manufacturer as to how the Rejected Products should be
disposed. All such Rejected Products shall be disposed of at the Manufacturer’s
expense.


 


(c)                                  If Warner and the Manufacturer agree that all
or part of the Rejected Products may be reworked or reclaimed, Warner shall
return such Products to the Manufacturer forthwith, and the Manufacturer shall
reimburse Warner for all reasonable expenses associated with such return.


 


(d)                                 In the event of a dispute between Warner and
the Manufacturer as to whether a shipment of Products fails in whole or part to
meet the Specifications, the resolution of such dispute shall proceed as
follows:


 


(i)                                     firstly, analysts from each of Warner and the
Manufacturer shall meet to determine that the methods of analysis are the same
and that such analysis was executed in the same manner by each party;


 


(ii)                                  secondly, controlled, split samples of the
disputed Product shall be sent from one party to the other for analysis in the
manner agreed to in (d)(i);


 


(iii)                               thirdly, if the analysis in (d)(ii) does not resolve the dispute,
analysts from each party shall meet and mutually proceed with the analysis of a
mutually agreed sample;


 


(iv)                              fourthly, if there is still no resolution of the dispute, the parties
shall retain an independent testing organization mutually chosen by the
parties, the appointment of which shall not be unreasonably delayed by either
party. The determination of such independent testing organization shall be
binding on both parties.


 


Until
a dispute is resolved, Warner shall properly tag and isolate all Rejected
Products and shall not dispose of any Rejected Products without prior
authorization from the Manufacturer. In any event, whatever the results of the
analysis and the resolution of the dispute, Warner retains the right to
determine the disputed Product’s release status. The fees and costs of the
testing organization, and storage, handling and, if applicable, replacement and
disposal of the Products shall be borne by the party whose position is not
sustained by the testing organization.


 


(e)                                  Warner shall have the right to withhold
payment for any shipment of Rejected Products. If it is ultimately determined
that the Rejected Products were properly


 


12





















 


rejected
by Warner, Warner shall have no obligation to pay for the Rejected Products and
the Manufacturer shall promptly reimburse Warner for any payment made in
respect of the Rejected Products prior to receipt by the Manufacturer of the
Rejection Notice and for all other costs incurred. If it is ultimately
determined that the Rejected Products were not properly rejected by Warner,
Warner shall be obligated to pay the outstanding balance owing in respect of
the Rejected Products within 30 days of receipt of the determination made by
the independent testing organization pursuant to paragraph (d) above.


 


(f)                                    If at the time of delivery of a Rejection
Notice Warner requires a replacement shipment of Rejected Products “Replacement
Products”), Warner shall provide a written request for such Replacement
Products along with the Rejection Notice. The Manufacturer shall use
commercially reasonable best efforts to deliver the Replacement Products within
90 days of the date of receipt of the Rejection Notice. Warner shall be
obligated to pay for such Replacement Products in accordance with Section 4.2
of the Agreement.


 


(g)                                 The provisions of this Section 5.13
shall survive termination of this Agreement with respect to shipments of
Products (or any portions thereof) manufactured by the Manufacturer that are
received by Warner subsequent to the termination or expiration of this
Agreement; provided, that subsequent to the termination or expiration of
this Agreement, Warner, in lieu of having the Manufacturer replace such
rejected Products, may elect in its sole discretion to have the Manufacturer
reimburse Warner for the reasonable costs associated with the replacement of
such rejected Products (including any applicable freight charges) by Warner or
a third party selected by Warner.


 


5.14.                                                                     Customer
Complaints; Recalls.


 


(a)                                  The Manufacturer shall provide all reasonable
assistance requested by Warner in investigating customer complaints regarding
any Product that, in Warner’s reasonable opinion, are related to or arise from
the manufacturing and/or packaging of such Product, including, without
limitation, testing of the Product in accordance with Warner’s Specifications.


 


(b)                                 Warner shall be responsible for all Recalls
of Products. Upon the reasonable request of Warner, the Manufacturer shall
assist Warner, to the extent reasonably necessary or relevant, in implementing
Recalls of Products from the market. Upon the receipt by either party of any
direction to Recall any Product from the market from any Governmental or
Regulatory Authority, the receiving party shall notify the other party in
accordance with the terms of Section 5.15 hereof. Warner shall be
responsible for all costs of the Recall unless such Recall results from the
negligence, wilful misconduct or breach of this Agreement by the Manufacturer.


 


5.15.                                                                     Government
Inspections, Seizures and Recalls.


 


If any Governmental or Regulatory Authority conducts an inspection at
the Facility, seizes any Product and/or its Materials, requests a Recall of any
Product, or otherwise notifies the Manufacturer of any violation or potential
violation of any applicable Law relating to a Product or Products, or the
manufacture or storage thereof, Warner shall be notified immediately by the
Manufacturer and the Manufacturer shall take such actions as may be required
under the Specifications or reasonably instructed by Warner. The Manufacturer
shall


 


13





















 


promptly
send any reports relating to such inspection, seizure, request or notification
to Warner. In the event that any such Governmental or Regulatory Authority
requests, but does not seize, the Product in connection with any such
inspection, the Manufacturer (i) shall promptly notify Warner of such request,
(ii) shall follow any reasonable procedures instructed by Warner in responding
to such request, provided that such procedures do not interfere with the
Manufacturer’s compliance with the Governmental or Regulatory Authority’s
request, and (iii) shall promptly send any samples of the Product requested by
the Authority to Warner.


 


5.16.                                                                     Inspections
and Audits by Warner.


 


Representatives of Warner shall have access to every Facility for the
purpose of (i) conducting inspections of such Facility and the Manufacturer’s
maintenance and usage of the equipment and the molds and tooling utilized in
the manufacture or packaging of Products, (ii) performing quality control
audits or (iii) witnessing manufacturing, processing, packaging, storage or
transportation of the Products or Materials, all as relating to the manufacture
and supply of Products pursuant to this Agreement (collectively referred to as
inspections). Such inspections do not relieve the Manufacturer of any of its
obligations under this Agreement or create new obligations on the part of
Warner. Such visits by Warner’s representatives shall be conducted at mutually
agreed times during normal business hours with reasonable prior written notice.
Warner shall have access to the results of any tests performed by the
Manufacturer or at the Manufacturer’s direction relating to Products or
Materials or the processes used in the manufacturing or packaging of the
Products. The Manufacturer shall, upon not less than 10 Business Days notice,
make available to an independent chartered accountant, selected by Warner and
reasonably acceptable to the Manufacturer, all books, records and other data
reasonably necessary to evaluate any adjustment made in connection with Price
adjustments. Warner may exercise this right to an audit not more than once in
any calendar year, and then only with respect to adjustments made during the
preceding two calendar years. The independent chartered accountant selected
shall agree not to disclose any confidential information and shall only
disclose to Warner such information as is necessary to determine whether such
adjustments were accurate. Such accountant shall also agree to disclose to the
Manufacturer the results of the review.


 


Section 6.                                         Representations
and Warranties and Covenants. 


 


6.1.                                                                            Representations,
Warranties and Covenants.


 


(a)                                  The Manufacturer hereby represents, warrants
and covenants to Warner that:


 


(i)                                     The Facility, all equipment, tooling and
molds utilized in the manufacture and supply of Products hereunder, and the
procedures and processes (including installation, operation and performance
qualifications) instituted by the Manufacturer in connection herewith are, as
of the date hereof, and shall continue during the Term of this Agreement to be
in material compliance with all applicable Laws and maintained in good
operating condition.


 


(ii)                                  The manufacturing, packaging and storage
operations utilized in and with respect to the production of Products
hereunder; the installation,


 


14





















 


operation and maintenance (and repair or replacement, if any) of the
Facility and the equipment, tooling and molds utilized in connection herewith;
and the procedures and processes (including installation, operation and
performance qualifications and disposal of all waste) carried out by the
Manufacturer hereunder, have been conducted and carried out, as of the date
hereof, and shall continue during the Term of this Agreement to be conducted
and carried out, in material compliance with all applicable Laws, including
current GMP and health and safety Laws.


 


(iii)                               The Manufacturer holds, as of the date hereof, and shall continue
during the Term of this Agreement to hold all material licenses, permits and
similar authorizations of Governmental and Regulatory Authorities necessary or
required for the Manufacturer to conduct its operations and business in the
manner currently conducted and as otherwise contemplated herein.


 


(iv)                              The Products furnished by the Manufacturer to Warner under this
Agreement:


 


(1)                                  shall be of the quality specified in, and
shall conform with, the Specifications, and all applicable Laws, including, but
not limited to, requirements of all applicable Government and Regulatory Authorities
and current GMP;


 


(2)                                  shall be manufactured, processed, packaged,
stored and delivered in conformity with the Specifications and all applicable
Laws, including, but not limited to, requirements of all applicable Government
and Regulatory Authorities and current GMP;


 


(3)                                  shall not contain any material that would
cause the Products to be adulterated within the meaning of the Food and Drug
Act (Canada), as amended, or which material has not been used, handled or
stored in accordance with the Specifications, the provisions of Schedule D
of this Agreement, and all applicable Laws, including, but not limited to,
requirements of all applicable Governmental and Regulatory Authorities and
current GMP; and


 


(4)                                  shall be free from material defects in
materials and workmanship not otherwise caused by components or ingredients
supplied by Warner (assuming proper handling and storage by the Manufacturer of
such components or ingredients supplied by Warner and compliance by the
Manufacturer with the terms hereof).


 


Except
as set forth above, the Manufacturer makes no representation or warranty,
express or implied, with respect to the Products, whether as to
merchantability, fitness for a particular purpose or otherwise. Notwithstanding
any provisions of this Agreement, neither the Manufacturer nor any of its
affiliates, employees, agents, directors, officers, assigns or subcontractors
shall have any liability for special, incidental, consequential, punitive or


 


15





















 


exemplary damages (other than actual damages resulting from the breach
by the Manufacturer of the foregoing representations, warranties and covenants)
or for economic loss.


 


(b)                                 Warner hereby represents, warrants and
covenants to the Manufacturer that:


 


(i)                                     it shall obtain and maintain all necessary
permits, registrations and licenses required for it to perform its obligations
to the Manufacturer under this Agreement and shall comply with all applicable
Laws.


 


(ii)                                  to the extent that Warner provides any
Materials with respect to any of the Products, all such Materials will comply
with the Specifications and all applicable Laws.


 


(iii)                               it shall provide all information necessary for the Manufacturer to
manufacture the Products in accordance with the Specifications and all
applicable Laws.


 


6.2.                                                                            Notice of Material Events.


 


The Manufacturer hereby agrees to promptly notify Warner of any actual
or anticipated events that have or may be reasonably expected to have a
material adverse effect on any Product or on the Manufacturer’s ability to
manufacture the Products in accordance with the provisions set forth herein,
including, but not limited to, any labour difficulties, strikes, shortages in
materials, plant closings, interruptions in activity and the like.


 


6.3.                                                                            Survival.


 


The representations, warranties and obligations of the Manufacturer and
Warner under this Section 6 shall survive any termination of this
Agreement.


 


Section 7.                                          Ownership;
Trademarks; Proprietary Information.


 


7.1.                                                                            Warner’s
Ownership of Intellectual and Other Property.


 


(a)                                  It is agreed that Warner is the sole owner of
the Products and any intellectual property relating thereto. If any
improvements or modifications to the Products are developed by Warner or the
Manufacturer, either jointly or severally, such improvements or modifications
shall be the exclusive property of Warner and shall be held in confidence by
the Manufacturer for Warner’s sole benefit. The Manufacturer shall disclose to
Warner and receive the approval of Warner with respect to all such improvements
or modifications. Any trademarks, trade names, brand names, patents, slogans,
logos, copyrights, trade dress, know-how (except as otherwise provided herein)
and goodwill associated with the Products shall be the sole and exclusive
property of Warner. The Manufacturer shall have no right or license to use any
such rights at any time before, during or after the Term of this Agreement,
except as necessary for the manufacturing, processing, packaging and supplying
of Products for Warner hereunder.


 


16





















 


(b)                                 It is agreed that Warner is the sole owner of
any and all tools, Specifications, blueprints and designs supplied or paid for
by Warner, and the Manufacturer shall not use, transfer, loan or publicize any
of the above except as necessary for its performance under this Agreement. The
Manufacturer shall maintain the above in good working order and shall ensure
that they remain free and clear of all liens and encumbrances.


 


(c)                                  The provisions of this Section 7.1 shall
survive the termination or expiration of this Agreement.


 


7.2.                                                                            The Manufacturer’s Ownership
of Other Property.


 


Except
as otherwise specified herein, it is agreed that the Manufacturer is the sole
owner of any and all machinery and equipment used by the Manufacturer in
connection with the Formulation of the Products in accordance with this
Agreement. This Agreement shall not be construed to grant to Warner any right,
title or interest to any trademark, trade name, copyright, patent or other proprietary
technology owned by or licensed to the Manufacturer or any improvements or
modifications thereto.


 


7.3.                                                                            Reproduction of and Right to
Use Trademarks Etc.


 


(a)                                  In connection with the Manufacturer’s
performance of this Agreement, Warner hereby grants the Manufacturer the right
to reproduce and print on the Products and/or Product packaging such
trademarks, trade dress, brand names and/or trade names of Warner that Warner
may designate in writing from time to time, strictly in accordance with trademark
usage and packaging guidelines set forth in the Specifications or otherwise
provided by Warner. Samples of all such uses of Warner’s trademarks, trade
dress, brand names and/or trade names on the Products or Product packaging
shall be submitted to Warner for its written approval prior to production. The
permission granted to the Manufacturer herein is restricted to usage of such
trademarks, trade dress, brand names and/or trade names on or in connection
with the Products supplied under this Agreement, and such permission extends
only for the Term of this Agreement or such shorter period as may be designated
or required by Warner.


 


(b)                                 Nothing set forth in this Agreement shall be
construed to grant to the Manufacturer any title, right or interest in or to
any trademark, trade dress, trade name, brand name, copyright, patent or other
proprietary technology owned by or licensed to Warner or any of its Affiliates.
The Manufacturer’s use of such trademarks, trade dress, trade names, brand
names, copyrights, patents or other proprietary technology shall be limited
exclusively to its performance of this Agreement. Any other use of said
trademarks, trade dress, trade names, brand names, copyrights, patents or other
proprietary technology (unless otherwise specified herein) shall constitute an
infringement thereof and/or violation of Warner’s rights.


 


7.4.                                                                            Manufacture of Competing
Products.


 


***


 


 


17





















 


***


 


Section 8.                                          Indemnification.


 


8.1.                                                                            The
Manufacturer’s Indemnification of Warner.


 


The Manufacturer shall indemnify and hold Warner, its Affiliates and
their respective officers, directors, employees and agents harmless from and
against any and all Losses suffered, incurred or sustained by any of them or to
which any of them becomes subject at any time, by reason of any Action or
Proceeding to the extent arising out of or resulting from (i) any breach of its
representations, warranties or obligations under this Agreement (including a
breach that results in a rejection or Recall of the Products), or
nonfulfillment of or failure to perform any covenant or agreement made by the
Manufacturer in this Agreement; (ii) any actual or alleged injury to Person or
property or death occurring to any Manufacturer employees, subcontractors,
agents or any individuals on the Manufacturer’s premises; (iii) the possession,
use or consumption by any person of any Product supplied by the Manufacturer
under this Agreement that does not comply with the Specifications therefor; or
(iv) any other negligent act or omission on the part of the Manufacturer, its
Affiliates or their respective employees or agents; unless in any such event
such Losses arise as a result of any negligent act or omission on the part of
Warner, its Affiliates or their respective employees or agents, any breach by
Warner of its representations, warranties or obligations under this Agreement,
or nonfulfillment of or failure to perform any covenant or agreement made by
Warner in this Agreement.


 


8.2.                                                                            Warner’s Indemnification of the
Manufacturer.


 


Warner shall indemnify and hold the Manufacturer, its Affiliates and
their respective officers, directors, employees and agents harmless from and
against any and all Losses suffered, incurred or sustained by any of them or to
which any of them becomes subject at any time, by reason of any Action or
Proceeding to the extent arising out of or resulting from any breach of its
representations, warranties or obligations under this Agreement, or
nonfulfillment of or failure to perform (i) any covenant or agreement made by
Warner in this Agreement, (ii) the use, manufacture, marketing, sale and/or
distribution of any or all of the Products, unless such liability arises as a
result of (A) any negligent act or omission on the part of the Manufacturer,
its Affiliates or their respective employees or agents, (B) any breach by the
Manufacturer of its representations, warranties or obligations under this
Agreement or (C) nonfulfillment of or failure to perform any covenant or
agreement made by the Manufacturer in this Agreement, or (iii) the infringement
by Warner of the intellectual property rights of any person.


 


8.3.                                                                            Assertion of Claim.


 


In the event that any claim is asserted against any party hereto, or
any party hereto is made a party defendant in any Action or Proceeding, and
such Action or Proceeding involves a matter which is subject to a claim for
indemnification under this Section 8, then such party (an “Indemnified
Party”) shall promptly give
written notice to the other party (the “Indemnifying Party”) of such
Action or Proceeding, and such Indemnifying Party shall have the


 


18





















 


right
to join in the defense of said Action or Proceeding, at such Indemnifying Party’s
own cost and expense. If the Indemnifying Party agrees in writing to be bound
by and to promptly pay the full amount of any final judgment from which no
further appeal may be taken and if the Indemnified Party is reasonably assured
of the Indemnifying Party’s ability to satisfy such agreement, then at the
option of the Indemnifying Party, such Indemnifying Party may take over the
defense of such Action or Proceeding, except that, in such case, the
Indemnified Party shall have the right to approve any attorney or counsel
selected by the Indemnifying Party (which approval shall not be unreasonably
delayed or withheld) and to join in the defense of said Action or Proceeding at
its own cost and expense. In no event shall (i) the Manufacturer institute,
settle or otherwise resolve any Action or Proceeding or potential Action or
Proceeding relating to the Products or any trademarks, patents or other
intellectual property of or licensed to Warner without the prior written
consent of Warner, which consent shall not be unreasonably withheld or delayed;
or (ii) Warner institute, settle or otherwise resolve any Action or Proceeding
or potential Action or Proceeding relating to any patents or other intellectual
property of or licensed to the Manufacturer without the prior written consent
of the Manufacturer, which consent shall not be unreasonably withheld or
delayed.


 


8.4.                                                                            Survival.


 


The indemnification obligations set forth in this Section 8 shall
survive termination or expiration of this Agreement.


 


8.5.                                                                            Consequential Damages.


 


Notwithstanding any provisions of this Agreement which might otherwise
be to the contrary, neither party shall be liable to the other for lost profits
or consequential damages.


 


Section 9.                                          Insurance.


 


9.1.                                                                            Coverage.


 


The Manufacturer shall, as of the date hereof, obtain and keep in force
throughout the Term of this Agreement and for a period of three (3) years from
the date of the last delivery of Products to Warner hereunder, policies of
insurance from carriers reasonably acceptable to Warner providing coverage as
specified in Schedule E attached hereto and incorporated herein by
reference.


 


9.2.                                                                            Certificates of Insurance;
Maintenance of Coverage.


 


The Manufacturer shall submit a certificate of such insurance (which
shall include, without limitation, such information as set forth in Schedule E)
to Warner for its approval within thirty (30) days after execution of this
Agreement. If such certificate is not furnished within such thirty (30) day
period, Warner shall notify the Manufacturer in writing and give the
Manufacturer thirty (30) days to cure such breach. If the Manufacturer fails to
provide the certificate during such thirty (30) day cure period, Warner may, at
its option, immediately terminate this Agreement.


 


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Section 10.                                   Confidential Information


 


10.1.                                                                     Confidential Information.


 


(a)                                  In performing the obligations under this
Agreement, each party shall come in contact with certain confidential and
proprietary information of the other party (“Information”). Each party
agrees that it will:


 


(i)                                     use such Information obtained from the other
party hereunder only in connection with the activities to be undertaken by each
party as contemplated hereunder;


 


(ii)                                  use its best efforts to restrict disclosure
of such Information within its own organization to those of its employees and
employees of its consultants having a reasonable need to know and inform such
employees of the confidential nature of such Information and the parties’
obligations with respect thereto; and


 


(iii)                               not divulge to third parties, without the prior written consent of the
other party, any Information obtained from the other party hereunder.


 


The
foregoing confidentiality obligations shall not apply if and to the extent
that:


 


(i)                                     the Information is known to the receiving
party prior to obtaining the same from the disclosing party, as properly
demonstrated by the receiving party’s written records;


 


(ii)                                  the Information is, at the time of
disclosure, in the public domain, or comes into the public domain without any
fault of the receiving party or its Affiliates;


 


(iii)                               the Information is obtained by the receiving party from a third party
who is not obligated to keep the Information confidential;


 


(iv)                              the Information is independently developed by employees of the receiving
party and/or by employees of any of its Affiliates, as properly demonstrated by
the receiving party’s written records; or


 


(v)                                 the Information is required by Law to be
disclosed, in which case the party required to disclose such Information shall
provide as much prior notice to the other party as is practicable under the
circumstances in order to permit the other party to obtain confidential
treatment of such Information.


 


Upon
expiration or termination of this Agreement, each party shall return to the
other party all Information received from the other party.


 


(b)                                 The Manufacturer agrees not to use or refer
to Warner’s name or this Agreement in any public statements, whether oral or
written, including but not limited to,


 


20





















 


annual
reports or shareholder reports, statements to other customers or prospective
customers or other communications, without Warner’s prior written consent,
which consent shall not be unreasonably withheld or delayed.


 


Section 11.                                   Term,
Termination


 


11.1.                                                                     Initial
Term; Term.


 


Unless terminated in accordance with the provisions of this Agreement,
the initial term (the “Initial Term”) of this Agreement shall commence
as of the date hereof and shall continue until December 31, 2004. Following
the expiry of the Initial Term, this Agreement shall, subject to Section 11.2,
automatically renew for consecutive one year periods unless and until either
party hereto submits to the other party hereto written notice of its intention
not to renew this Agreement given:


 


(i)                                     in the case of Group I Products, at least
twenty-four (24) months prior to the end of the Initial Term or thereafter at
any time on not less than twenty-four (24) months prior written notice; and


 


(ii)                                  in the case of Group II Products, at least
eighteen (18) months prior to the end of the Initial Term or thereafter at any
time on not less than eighteen (18) months prior written notice.


 


The
Initial Term and all renewals thereof collectively shall be referred to herein
as the “Term”.


 


11.2.                                                                     Termination.


 


This Agreement may be terminated at any time:


 


(a)                                  by either party immediately, upon written
notice to the other party, if (i) such other party (1) applies for or consents
to the appointment of, or the taking of possession by, a receiver, receiver and
manager, custodian, trustee or liquidator of itself or of all or a substantial
part of its property, (2) makes an assignment in bankruptcy for the benefit of
its creditors under the Bankruptcy and
Insolvency Act (Canada), (3) makes a proposal in bankruptcy under
the Bankruptcy and Insolvency Act (Canada),
(4) files a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or
readjustment of debts, including without limitation the Companies’ Creditors Arrangement Act (Canada),
or (5) takes any corporate action for the purpose of effecting any of the
foregoing; or (ii) a proceeding or case shall be commenced without the
application or consent of such other party, in any court of competent
jurisdiction, seeking (1) such other party’s liquidation, reorganization,
dissolution or winding-up, or the composition or readjustment of its debts, (2)
the appointment of a trustee, receiver, receiver and manager, custodian,
liquidator or the like of such other party or of all or any substantial part of
its assets, or (3) similar relief in respect of such other party under any law
relating to bankruptcy, insolvency, reorganization, winding-up, or composition
or adjustment of debts, including without limitation the Companies’ Creditors Arrangement Act (Canada),
and such proceeding or case shall continue undismissed, or an
order, judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of thirty (30) or


 


21





















 


more
days, or an order for relief against such other party shall be entered in an
involuntary case under the Bankruptcy and
Insolvency Act (Canada); or


 


(b)                                 subject to the following subparagraph, by
either party upon a material breach of this Agreement by the other party if
such other party fails to cure such breach within thirty (30) days after
receipt of written notice thereof; or


 


(c)                                  by Warner upon written notice to the
Manufacturer if in Warner’s reasonable opinion an inspection pursuant to this
Agreement reveals that any Facility does not comply with current GMP or other
requirements of applicable Law to such an extent that in Warner’s reasonable
opinion the Manufacturer cannot perform its obligations under this Agreement
and if the Manufacturer fails to cure such lack of compliance within thirty
(30) days of notice being given; or


 


(d)                                 by either party in the event of the direct or
indirect change in ownership or control or corporate reorganization of the
other party, which results in a new party or group assuming control of the
other party, upon notice given by the first party within ninety (90) days of
such change; provided that any such notice of termination shall only be
effective within the time period contemplated in Section 11.1 (i) or (ii),
as the case may be; or


 


(e)                                  by Warner with respect to any Product upon at
least ninety (90) days prior written notice to the Manufacturer in the event
that such Product is discontinued by Warner for any reason; provided
that Warner shall comply with the provisions of Schedule B hereof with
respect to such Product; or


 


(f)                                    by either party with respect to any Product
in the event that such Product is the subject of a final executed sale
agreement between Warner and a third party; provided that both parties
shall comply with the provisions of Schedule B hereof with respect to such
Product; or


 


(g)                                 pursuant to Section 9.2, 12.1 or 13.4 of
this Agreement.


 


11.3.                                                                     Effect of Termination.


 


Termination of this Agreement shall not affect any obligation to pay
money, indemnify, reimburse or maintain confidentiality which either party
hereto may have incurred during the Term hereof.


 


11.4.                                                                     Unused Materials.


 


Within ninety (90) days of the effective date of the expiration or
termination of this Agreement for any reason, Warner may, at its option,
purchase at cost any Materials that the Manufacturer has purchased exclusively
for Warner in accordance with this Agreement for the production of the
Products. Upon the expiration or termination of this Agreement, Warner may, at
its option, place orders with the Manufacturer for the manufacture of
additional Products in order to exhaust existing stocks of Materials. Any
packaging materials associated with the Products that are not purchased by
Warner pursuant to this Section 11.4 shall be disposed of or destroyed in
accordance with Warner’s instructions.


 


22





















 


11.5.                                                                     Returns of Materials, etc.
Supplied by Warner.


 


(a)                                  Upon the effective date of expiration or
termination of this Agreement for any reason whatsoever, the Manufacturer shall
immediately deliver to Warner all Specifications (and copies thereof), artwork,
labels, bottles, all premiums and packaging materials purchased by Warner and
all other materials, supplies, equipment or proprietary materials provided by
Warner; provided, however, that, at Warner’s option, to the
extent that Warner has supplied any equipment, molds and/or any tablet press tooling
to the Manufacturer in connection herewith, the Manufacturer will remove such
equipment, molds and tablet press tooling from the Facility and have such
equipment, molds and tooling on its dock ready for Warner to transport; and
such reasonable removal and transportation costs shall be borne by Warner
except to the extent otherwise provided herein. Warner shall be liable for all
risk of loss, except any risk due to the Manufacturer’s negligence (or that of
its employees, agents or contractors) once such equipment, molds and tablet
press tooling are loaded onto the Manufacturer’s dock. The Manufacturer shall
maintain ownership of all other equipment utilized in connection herewith.


 


(b)                                 Upon the effective date of expiration or
termination of this Agreement for any reason whatsoever, the Manufacturer shall
also deliver to Warner, in accordance with Section 4.3, all Products
manufactured hereunder and shall invoice Warner in accordance with the terms of
Section 4.2. Any Product quarantined by the Manufacturer at the time of
expiration or termination of this Agreement shall be disposed of or destroyed
in accordance with Warner’s instructions. Notwithstanding the foregoing, on
termination of this Agreement by Warner in accordance with Section 11.2(a),
(b), (c), (d) or (g), the Manufacturer shall be responsible for the costs of
any Materials purchased in accordance with forecast requirements and for any
above-mentioned removal and transportation costs, in addition to any other
remedies available to Warner. Notwithstanding the foregoing, on termination of
this Agreement by the Manufacturer in accordance with Section 11.2(a),
(b), (d) or (g), Warner shall be responsible for the costs of any Materials
purchased in accordance with forecast requirements and for any above-mentioned
removal and transportation costs, in addition to any other remedies available
to the Manufacturer. Subsequent to the expiration or termination of this
Agreement, the parties shall continue to be responsible for rejected Products,
in accordance with the terms of Section 5.13.


 


11.6.                                                                     Maintenance of Records.


 


Upon the effective date of expiration or termination of this Agreement,
all quality control and assurance records will be maintained by the
Manufacturer for a minimum of three (3) years following production, or such
other reasonable time period specified by Warner in writing.


 


11.7.                                                                     Harmonization Plans;
Transition.


 


(a)                                  ***


 


23





















 


***


 


Section 12.            Force Majeure.


 


12.1.                       Force Majeure.


 


No
failure or omission by the parties hereto in the performance of any obligation
of this Agreement shall be deemed a breach of this Agreement nor shall it
create any liability, if the same shall arise from any cause or causes beyond
the reasonable control of the affected party (an event of “Force Majeure”),
including, but not limited to, the following: acts of God; fire; storm; flood;
earthquake; accident; war; rebellion; insurrection; riot; invasion; strikes;
and lockouts or the like; provided that the party so affected shall use
commercially reasonable best efforts to avoid or remove such causes of
non-performance and shall continue performance


 


24





















 


hereunder with the utmost
dispatch whenever such causes are removed. The party prevented from performing
its obligations or duties because of Force Majeure shall promptly notify the
other party hereto of the occurrence and particulars of such Force Majeure and
shall provide the other party hereto, from time to time, with its best estimate
of the duration of such Force Majeure and with notice of the termination
thereof. In the event a Force Majeure prevents performance by one party for
more than three (3) months the other party shall have the right to immediately
terminate this Agreement. Neither of the parties shall be liable to the other
party for direct, indirect, consequential, incidental, special, punitive or
exemplary damages arising out of or relating to the suspension or termination
of any of its obligations or duties under this Agreement by reason of the
occurrence of Force Majeure.


 


Section 13.            Miscellaneous.


 


13.1.                       Year 2000 Compliance.


 


The
Manufacturer has adopted and is implementing a Year 2000 Compliance work plan
and hereby represents and warrants to Warner that Year 2000 Compliance will not
have a material adverse effect on the Manufacturer’s ability to Formulate and
deliver the Products for and to Warner in accordance with the terms and conditions
of this Agreement and the Quality Agreement or to otherwise comply with its
obligations under this Agreement.


 


13.2.                       Compliance with Laws.


 


The
Manufacturer shall not be required to manufacture or otherwise be involved in
the distribution of any Product as to which:


 


(i)            any Person claims the manufacture or
distribution infringes or otherwise violates any Law respecting patent or trade
marks unless Warner secures its indemnification hereunder with respect to same
in a manner reasonably satisfactory to the Manufacturer;


 


(ii)           any Governmental or Regulatory Authority alleges such manufacture or
distribution violates any Law. Warner shall provide immediate written notice of
any claim of any Governmental or Regulatory Authority to the Manufacturer.
Warner shall promptly reimburse the Manufacturer for all of the Manufacturer’s
cost and expense incurred as a result of any action or allegations described in
this Section to the extent not otherwise payable by Warner pursuant to this
Agreement.


 


13.3.                       Relationship of the Parties.


 


The
parties shall be deemed independent contractors with respect to the terms and
provisions of this Agreement and shall not in any respect act as an agent or
employee of the other party. All persons employed by the Manufacturer in connection
with the manufacture and supply of the Products to Warner shall be employees,
agents or contractors of the Manufacturer. Under no circumstances shall
employees or agents of one party be deemed to be employees or agents of the
other party.


 


25





















 


13.4.                       Assignment.


 


Neither
party shall, without the prior written consent of the other party, delegate,
transfer, convey, assign or pledge any of its rights or obligations under this
Agreement to any other Person without the other party’s prior written consent; provided,
however, that if at any time during the Term of this Agreement, the
Manufacturer is acquired by or becomes an Affiliate of a competitor of Warner,
which competitor is a manufacturer, supplier and/or distributor of products
competitive with the Products, then Warner may terminate this Agreement upon
thirty (30) days written notice. This Agreement shall be binding upon and,
subject to the terms of the foregoing sentence, inure to the benefit of the parties
hereto, their respective successors, legal representatives and permitted
assigns.


 


13.5.                       Notice.


 


Unless
otherwise set forth herein, all notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally (including by overnight courier) or by facsimile
transmission (receipt confirmed by telephone) to the party at the following
address or facsimile numbers set forth:


 


	
  If to Warner:

  	
  Warner-Lambert Canada Inc.

  
	
   

  	
  2200 Eglinton Avenue East

  
	
   

  	
  Scarborough, Ontario

  
	
   

  	
  Canada

  	
  M1L 2N3

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Vice-President, Finance

  
	
   

  	
  Facsimile No.:

  	
  416-288-2424

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
  Warner-Lambert Company

  
	
   

  	
  201 Tabor Road

  
	
   

  	
  Morris Plains, NJ

  
	
   

  	
  U.S.A.

  	
  07950

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention: 

  	
  General Counsel

  
	
   

  	
  Facsimile No.:

  	
  973-540-3927

  
	
   

  	
   

  	
   

  
	
  If to the Manufacturer:

  	
  Draxis Pharma Inc.

  
	
   

  	
  16751 Trans Canada Highway

  
	
   

  	
  Kirkland, Quebec

  
	
   

  	
  Canada 

  	
  H9H 4J4

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  President

  
	
   

  	
  Facsimile No.:

  	
  514-694-3841

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
  Draxis Health Inc.

  
	
   

  	
  6870 Goreway Drive

  
	
   

  	
  Mississauga, Ontario

  
	
   

  	
  Canada 

  	
  L4V 1P1

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention: 

  	
  General Counsel

  
	
   

  	
  Facsimilie No.:

  	
  905-677-5494

  
				



 


26





















 


 


The
above addresses for receipt of notice may be changed by either party by notice,
given as provided herein.


 


13.6.                       Entire Agreement.


 


This
Agreement, including the Specifications and all Schedules attached hereto and
made a part hereof, contains the entire understanding of the parties,
superseding in all respects any and all prior oral or written agreements or
understandings pertaining to the subject matter hereof. This Agreement may be
amended or modified only by written agreement executed by the parties hereto.


 


13.7.                       Incorporation of Schedules.


 


The
Schedules attached to this Agreement are incorporated by reference herein and
made a part hereof.


 


13.8.                       Severability.


 


If
any provision of this Agreement is held to be illegal, invalid or unenforceable
under any applicable present or future Law, and if the rights or obligations of
any party hereto under this Agreement will not be materially and adversely
affected thereby, (a) such provision will be fully severable, (b) this
Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (c) the remaining
provisions of this Agreement will remain in full force and effect and will not
be affected by the illegal, invalid or unenforceable provision or by its
severance therefrom and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement, a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.


 


13.9.                       Waiver.


 


Any
term or condition of this Agreement may be waived at any time by the party that
is entitled to the benefit thereof, but no such waiver shall be effective
unless set forth in a written instrument duly executed by or on behalf of the
party or parties waiving such term or condition. No waiver by any party of any
term or condition of this Agreement, in any one or more instances, shall be
deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under
this Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.


 


13.10.                     Headings.


 


Headings
in this Agreement are included for ease of reference only and have no legal
effect.


 


27





















 


13.11.                     Counterparts.


 


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


 


13.12.                     Governing Law.


 


This
Agreement shall be governed by and construed in accordance with the laws of the
Province of Ontario and the laws of Canada applicable thereon, without giving
effect to the conflict of laws principles that might otherwise govern.


 


13.13.                     Language.


 


The
Parties have expressly requested that this Agreement as well as all documents
relating hereto be drawn up in the English language. Les parties exigent que
cette convention et tous les documents s’y rattachant soient rédigés en
anglais.


 


13.14.                     Paramountcy.


 


In
the event of any inconsistency or conflict between or among the provisions of
this Agreement and those of any of the Schedules (including any agreement
entered into pursuant to this Agreement or the Schedules), the terms of this
Agreement shall prevail and the parties hereto shall take such steps as may be
required or desirable to conform the conflicting provisions thereof to this
Agreement.


 


IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and to be effective as of the date first above written.


 


	
   

  	
  WARNER-LAMBERT
  CANADA INC. 

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jennifer Smith

  	
   

  
	
   

  	
   

  	
  Name: Jennifer Smith

  
	
   

  	
   

  	
  Title: VP & General Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter Kaju

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  PETER KAJU

  
	
   

  	
   

  	
  Title:  FINANCIAL SERVICES DIRECTOR

  
	
   

  	
   

  	
   

  
	
   

  	
  DRAXIS
  PHARMA INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dwight Gorham

  	
   

  
	
   

  	
   

  	
  Name:  DWIGHT GORHAM

  
	
   

  	
   

  	
  Title:  PRESIDENT

  
					



 


28





















 


SCHEDULE A


 


PRODUCTS TO BE SUPPLIED BY THE
MANUFACTURER


 


Group I Products


 


	
  Product
  No.

  	
   

  	
  Product Description

  	
   

  	
  Product Size

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Lidosporin ear-drop

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Polysporin eye/ear

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Polysporin eye/ear

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Polysporin Ophthalmic

  	
   

  	
  ***

  



 


Group II Products


 


	
  Product
  No.

  	
   

  	
  Product Description

  	
   

  	
  Product Size

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Lidosporin Cream

  	
   

  	
  ***

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Polysporin Plus Pain Relief

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Polysporin Plus Pain Relief

  	
   

  	
  ***

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Polysporin Ointment

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Polysporin Ointment

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Poly.Triple Antibiotic Oin.

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Poly.Triple Antibiotic Oin.

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Poly.Triple Oint.

  	
   

  	
  ***

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Zincofax Xtra-Strength

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Zincofax Original

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Zincofax Original

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Zincofax Orig.Club/Whs

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Zincofax Fragrance Free

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Zincofax Original

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Zincofax Fragrance Free

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Zincofax Fragrance Free

  	
   

  	
  ***

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Actifed Plus Caplets

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Actifed Plus Caplets

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Actifed Tablets

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Actifed Tablets

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Actifed Tablets

  	
   

  	
  ***

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Sudafed C/C Cap. ES

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Sudafed C/C Cap. ES

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Sudafed Decongestant 12hr

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Sudafed Decongestant 12hr

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Sudafed Decongestant ES

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Sudafed Decongestant ES

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Sudafed Decongestant ES

  	
   

  	
  ***

  



 





















 


	
  Product
  No.

  	
   

  	
  Product Description

  	
   

  	
  Product Size

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Sudafed Decongestant ES 60mg

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Sudafed Decongestant 30mg

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Sudafed Head Cold&Sinus

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Sudafed Head Cold&Sinus

  	
   

  	
  ***

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Lanolelle Cream

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  U.S. Borofax

  	
   

  	
  ***

  



 


2





















 


SCHEDULE A(2)


 


***


 


 





















 


SCHEDULE B


 


OPERATING PROVISIONS


 


***


 


 


 





















 


***


 


 


 


2





















 


***


 


3





















 


***


 


4





















 


***


 


 


 


5





















 


SCHEDULE C


 


PRICE SCHEDULE


 


Group I Products


 


	
  Product
  No.

  	
   

  	
  Product Description

  	
   

  	
  Product Size

  	
   

  	
  Product Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Lidosporin ear-drop

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Polysporin eye/ear

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Polysporin eye/ear

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Polysporin Ophthalmic

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  



 


Group II Products


 


	
  Product
  No.

  	
   

  	
  Product Description

  	
   

  	
  Product Size

  	
   

  	
  Product Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Lidosporin Cream

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Polysporin Plus Pain Relief

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Polysporin Plus Pain Relief

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Polysporin Ointment

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Polysporin Ointment

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Poly.Triple Antibiotic Oin.

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Poly.Triple Antibiotic Oin.

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Poly.Triple Oint.

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Zincofax Xtra-Strength

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Zincofax Original

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Zincofax Original

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Zincofax Orig.Club/Whs

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Zincofax Fragrance Free

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Zincofax Original

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Zincofax Fragrance Free

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Zincofax Fragrance Free

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Actifed Plus Caplets

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Actifed Plus Caplets

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Actifed Tablets

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Actifed Tablets

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Actifed Tablets

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Sudafed C/C Cap. ES

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Sudafed C/C Cap. ES

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Sudafed Decongestant 12hr

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Sudafed Decongestant 12hr

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Sudafed Decongestant ES

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Sudafed Decongestant ES

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Sudafed Decongestant ES

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  



 


 





















	
  Product
  No.

  	
   

  	
  Product Description

  	
   

  	
  Product Size

  	
   

  	
  Product Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	 
	
  ***

  	
   

  	
  Sudafed Decongestant ES 60mg

  	
   

  	
  ***

  	
   

  	
  $

  	
   

  	
   

  
	 
	
  ***

  	
   

  	
  Sudafed Decongestant 30mg

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	 
	
  ***

  	
   

  	
  Sudafed Head Cold&Sinus

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	 
	
  ***

  	
   

  	
  Sudafed Head Cold&Sinus

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	 
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	 
	
  ***

  	
   

  	
  Lanolelle Cream

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	 
	
  ***

  	
   

  	
  U.S. Borofax

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
										



 


Upon shipment of any Product, the Manufacturer shall invoice Warner at
the Price for such Product.


 


 


 


2





















 


***


 


 


 


3





















 


SCHEDULE D


 


CANADA


 


QUALITY AGREEMENT


 


Capitalized terms used in
this Quality Agreement shall have the meaning set forth in the Manufacturing
and Supply Agreement to which this Quality Agreement is attached (the “Supply
Agreement”). Warner and Manufacturer hereby agree to the following terms
relating to key quality and regulatory systems involved in the manufacture of
the Products. These agreements may be modified only in writing signed by both
parties.


 


I.              Definitions


 


The
terms set forth in this Quality Agreement shall have the meanings as set out
below:


 


“Action Plan” shall have the meaning set out in Section XIV(2).


 


“Certificate of Analysis” shall mean the certificate prepared by the
Manufacturer in respect of each Product lot which shall summarize, inter alia, (i) any and all test methods
used in respect of said Product lot, (ii) any and all Specifications for such
test methods, and (iii) any and all test results obtained, all as from time to
time may be required by applicable Laws.


 


“Certificate of Compliance” shall mean the certificate prepared by the
Manufacturer in respect of each Product lot which shall confirm, inter alia, that such Product lot was
Formulated in accordance with the Specifications, GMP and applicable Laws, all
as from time to time may be required by applicable Laws.


 


“Establishment License” shall mean the annual license issued to the
Manufacturer pursuant to the Health Canada Therapeutics Products Program.


 


“Expiration Date” shall have the meaning set out in Section VI(6).


 


“Marketing Authorization” shall mean, with respect to each Product, any
and all authorizations necessary to sell such Product in the applicable country
as granted by the relevant Governmental or Regulatory Authority.


 


“Out-of-Specification” or “OOS” shall
mean, with respect to any Product, a deviation from or failure to comply with
or conform to the Specifications for said Product.


 





















 


“Site Reference File” shall have the meaning set forth in the Site
Reference File Guideline issued by the Canadian Bureau of Drugs Surveillance,
as the same may be amended from time to time.


 


“Warner Quality Assurance employee” shall mean the Warner employee who is
responsible for monitoring, maintaining and ensuring compliance with the terms
and conditions of this Quality Agreement and shall include his/her replacement,
successor or designee, as the case may be.


 


“Warner Regulatory Affairs employee” shall mean the Warner employee who is
responsible for monitoring, maintaining and ensuring compliance with applicable
regulatory requirements in the United States and Canada, as applicable, and
shall include his/her replacement, successor or designee, as the case may be.


 


“Work in Progress” shall mean any Materials which have been partially converted into, but
are not yet, Products and any Products that have not yet been released for sale
or distribution by the Manufacturer.


 


II.            Annual Product Reviews and Reports


 


(1)           The Manufacturer shall prepare an APR for each Product. Each APR shall
include, but shall not necessarily be limited to, the following information:
(i) stability data, (ii) the total number of Product batches Formulated during
the APR period, including related analytical data for all Product batches which
passed or failed quality or other testing during the APR period, (iii) an
investigation summary in respect of each Canadian Product batch failure, and
(iv) a summary of any significant Product processing, packaging or analytical
changes. A copy of the final APR must be forwarded by the Manufacturer to
Warner within five (5) Business Days of completion.


 


III.           Document and Sample Retention


 


(1)           The Manufacturer shall retain all documents, records and reports associated
with the Formulation of any and all Product lots, including any and all
investigation reports related thereto, for at least one (1) year following the
Expiration Date for each such finished Product lots, or as otherwise directed
by Warner.  All such documents, records
and reports shall be stored and maintained by the Manufacturer in such a manner
that they are (i) readily retrievable and (ii) protected from damage or loss.
At the request of Warner, acting reasonably, the Manufacturer shall provide
copies of all such documents, records and reports to Warner.


 


(2)           The Manufacturer shall retain samples from each incoming lot of Material
in an amount sufficient to permit the performance of at least two (2) full rounds
of analytical testing. The Manufacturer shall hold and retain such samples for
a minimum of one (1) year following the expiration of the last


 


2





















 


lot
of finished Product containing said Material. At the request of Warner, acting
reasonably, the Manufacturer shall provide such samples to Warner.


 


IV.           Deviations and Failures


 


(1)           The Manufacturer shall have a written procedure in place for performing
a systematic investigation for cause in the event that (i) any Product or process
fails to meet Specifications or (ii) any process deviation occurs in respect of
any Product.


 


(2)           The Manufacturer shall not void OOS results by retesting unless (i) the
investigation determines that laboratory error caused the OOS results, or (ii)
the cause of the OOS results cannot be determined.


 


(3)           All OOS data and investigation results, whether or not the OOS results are
voided by the Manufacturer, shall be retained by the Manufacturer pursuant to
Section III(1) hereof.


 


(4)           Except as noted in Sections V and VI, the Manufacturer shall notify the
Warner Quality Assurance employee within three (3) Business Days of the occurrence
of any OOS results or major process deviation in respect of any Product. All
quality decisions regarding any such OOS results or major process deviation
shall be made by the Manufacturer in consultation with Warner.


 


(5)           All OOS or process deviation investigations shall be completed, documented
and approved by the Manufacturer prior to the issuance of a Certificate of
Compliance or a Certificate of Analysis pursuant to Section XV.


 


V.            Complaint and Adverse Event Handling


 


(1)           The Manufacturer shall notify, in writing, the Warner Quality Assurance
employee within twenty-four (24) hours of initial receipt by the Manufacturer
of any complaint, whether oral or written, concerning suspected or actual
Product tampering, mix-up or contamination. 
The Manufacturer shall notify, in writing, the Warner Quality Assurance employee
within four (4) Business Days of initial receipt by the Manufacturer of all
other Product-related complaints, whether oral or written.


 


(2)           At the request of the Warner Quality Assurance employee, the Manufacturer
shall investigate Product complaints and shall comply with all reasonable
requests for documents, retained samples or information made by Warner in
connection with a Product complaint or Product complaint investigation. If
appropriate, the Warner Quality Assurance


 


3





















 


employee
shall provide to the Manufacturer a recommended Product complaint investigation
plan.


 


(3)           The Manufacturer shall complete and document each Product complaint investigation
within thirty (30) Business Days following initial receipt of the complaint by
the Manufacturer, or such later date as may be consented to, in writing, by
Warner, which consent shall not be unreasonably withheld; provided, however,
that the Product complaint investigation shall be completed by the Manufacturer
within sixty (60) Business Days following initial receipt by the Manufacturer
of the Product complaint.


 


(4)           In the event Warner consents to an extension of a Product complaint investigation,
pursuant to Section V(3) above, the Manufacturer shall, deliver to the Warner
Quality Assurance employee an interim Product complaint investigation report on
or before the 30th Business Day of the Product complaint investigation.  The interim Product complaint investigation
report shall include, but shall not be limited to, test results obtained to
date and a target completion date.


 


(5)           The Manufacturer shall deliver to the Warner Quality Assurance employee
the final Product complaint investigation report within five (5) Business Days
following completion of the Product complaint investigation. Warner shall be
solely responsible for determining when a Product complaint investigation has
been completed and shall have sole responsibility for responding to a Product
complaint.


 


(6)           The Manufacturer shall retain all unused Product complaint samples in properly
labelled storage containers for a minimum of ninety (90) calendar days
following delivery to Warner of the final Product complaint investigation
report.


 


(7)           The Manufacturer shall notify the Warner Quality Assurance employee of any
OOS results in respect of any Product complaint sample within one (1) Business
Day following the occurrence or detection of such OOS results.  The Manufacturer shall investigate any and
all OOS results in respect of a Product complaint sample as described in
Section IV.


 


(8)           The Manufacturer shall notify the Warner Quality Assurance employee or the
Warner Regulatory Affairs employee, as appropriate, immediately and, in any
event, within one (1) calendar day of receipt of a report, whether oral or
written, from any source of any adverse event in respect of any Product. Warner
shall be solely responsible for investigating any adverse event and for
determining if, when and to what extent such adverse event shall be reported to
a Governmental or Regulatory Authority. At the request of Warner, the
Manufacturer shall assist Warner with the evaluation or investigation of any
adverse event, including, but


 


4





















 


not
limited to, testing Product samples and reviewing Product batch manufacturing
and analytical records.


 


(9)           The Manufacturer shall retain all unused Product samples in respect of
each adverse event in properly labelled storage containers for a minimum of
twelve (12) months following the date on which the Manufacturer first notified
Warner of such adverse event.


 


VI.           Stability


 


(1)           The Manufacturer shall be responsible for conducting stability testing
on the Products in accordance with written stability protocols approved in writing
in advance by Warner.  The Manufacturer
shall retain at least three (3) times the minimum number of Product samples
required for full stability testing through expiration.


 


(2)           The Manufacturer shall continue through to completion all stability
studies initiated by the Manufacturer, notwithstanding Product discontinuation
or transfers or contract termination.


 


(3)           The Manufacturer shall place on stability all finished Product lots
which are selected for the annual stability program no later than thirty (30) calendar
days following final completion of finished Product release testing. The
finished Product release test results shall serve as the initial (time zero)
stability results. In the event that any finished Product lot is not placed on
stability within thirty (30) calendar days following final completion of
finished Product release testing, the Manufacturer shall promptly notify the
Warner Quality Assurance employee and shall repeat finished Product release
testing for said Product in order to establish an initial (time zero) stability
test result.


 


(4)           The Manufacturer shall initiate Product stability testing to be
performed at monthly intervals within seven (7) calendar days following the
scheduled pull date for the Product sample; provided, however, that any such Product
sample shall not be pulled in advance of the scheduled pull date.


 


(5)           The Manufacturer shall initiate Product stability testing to be
performed at intervals of three (3) months or longer within fourteen (14)
calendar days following the scheduled pull date for the Product sample;
provided, however, that any such Product sample shall not be pulled more than seven
(7) calendar days in advance of the scheduled pull date.


 


(6)           Product stability samples which are to be tested at the expiry test
station shall be pulled no earlier than seven (7) calendar days in advance of
the last day of the month in which the applicable Product lot expires (the “Expiration
Date”). The Manufacturer shall initiate Product stability testing of said
samples no later than seven (7) calendar days following the relevant Expiration
Date.


 


5





















 


(7)           Product stability samples which are required for bioassay and microbiological
Product stability testing shall be pulled no later than seven (7) calendar days
before or after the scheduled pull date; provided, however, that any such
Product sample shall be pulled within the calendar month in which testing is
due.


 


(8)           The Manufacturer shall report any OOS results (including any initial
OOS results) in respect of any Product lot to the Warner Quality Assurance
employee within one (1) Business Day following the occurrence or detection of
any such OOS results.  The Manufacturer
shall use its best efforts to complete and document an investigation with
respect to any such OOS results within twenty (20) Business Days following
occurrence of such OOS results, or such later date as may be consented to by Warner
in writing, which consent shall not be unreasonably withheld; provided,
however, that such OOS investigation shall be completed by the Manufacturer
within forty (40) Business Days following the occurrence of the OOS results. In
the event that the Manufacturer and Warner agree that any OOS investigation will
exceed twenty (20) Business Days, the Manufacturer shall provide to the Warner
Quality Assurance employee on or before the 20th Business Day of any
such OOS investigation an interim report which shall include current test
results and a target completion date. The Manufacturer shall deliver a copy of
the final OOS investigation report to Warner within five (5) Business Days
following completion of such OOS investigation. At the request of Warner,
acting reasonably, the Manufacturer shall also provide to Warner any and all
information regarding any and all OOS investigations.


 


(9)           The Manufacturer’s quality unit shall track and review Product
stability data on a regular basis. The Manufacturer shall include Product
stability data in each APR.  At the
request of Warner, the Manufacturer shall make available to Warner for its
review and inspection any and all Product stability data.


 


VII.          Validation


 


(1)           Manufacturer will be responsible for validation procedures which
include cleaning, equipment, facility, process and packaging in accordance with
GMP and in compliance with applicable regulations. Process and packaging
validation protocols and final reports will be approved by Warner and
Manufacturer. All validation shall be properly documented and accessible to Warner
on request.


 


VIII.        Compliance


 


(1)           All Product lots which are supplied by the Manufacturer to Warner shall
be formulated in accordance with GMP, the Specifications, applicable Laws and
any and all Marketing Authorizations.


 


6





















 


(2)           The Manufacturer shall fully comply with Health Canada Therapeutics
Product Program (TPP) regulations and guidelines at all times and shall
complete all filings required thereunder, including, but not limited to, the
filing of an Establishment License and the preparation of a Site Reference
File.


 


IX.           Recalls


 


Warner
shall be solely responsible for determining whether and when to Recall any
Product lot and for all matters relating to the implementation of the Recall.
At the request of Warner, the Manufacturer shall provide reasonable assistance
and cooperation with any Recall decisions.


 


X.            Control Document and Change Control
Implementation


 


The
Manufacturer shall maintain a formal system for controlling changes which may
affect the Formulation of Products, including, but not limited to, changes to
Materials and Product processing, packaging and analytical methods. Warner
shall be notified of and shall approve, in writing, any and all such changes
prior to implementation. The Manufacturer shall provide copies of all revised
master batch manufacturing orders to Warner on a timely basis.


 


XI.           Label Control


 


(1)           The Manufacturer shall maintain a formal system for Product label
control which shall ensure, inter alia, that
only those labels, graphics, printed matter and other packaging Materials which
have been approved and/or provided by Warner shall be used. The Manufacturer’s
Product label control system shall include, but shall not be limited to: (i)
secure storage of all packaging Materials, (ii) accountability records, (iii) on-line
verification of cut labels, and (iv) packaging line clearance of labelling. The
Manufacturer shall ensure that a sample of the label used in respect of a
Product shall be included in the batch/packaging record for the Product.


 


(2)           The Manufacturer shall sample, examine and approve all packaging Materials
prior to use.


 


(3)           Warner shall review and approve, in writing, all standards used by the Manufacturer
for comparison to samples of packaging Materials.


 


XII.         Training


 


(1)           The Manufacturer shall ensure that its staff, employees and other
personnel (i) are familiar with applicable GMP and (ii) receive initial and
ongoing GMP and other training relevant and specific to their job
responsibilities.


 


7





















 


(2)           All training shall be conducted by qualified personnel in accordance
with a written program.


 


(3)           The Manufacturer shall retain all training records and shall
periodically assess the effectiveness of its ongoing training program.


 


XIII.        Regulatory Contacts


 


(1)           Warner shall be solely responsible for all
contacts and communications with any and all Governmental or Regulatory
Authorities in respect of the Products.


 


(2)           Unless required by applicable Laws, the Manufacturer
shall have no contact or communication with any Governmental or Regulatory
Authority in respect of the Products without the prior written consent of
Warner, which consent shall not be unreasonably withheld.  The Manufacturer shall notify the Warner
Quality Assurance employee or the Warner Regulatory Affairs employee, as
applicable, immediately and, in any event, no later than one (1) calendar day
following receipt by the Manufacturer of any contact or communication from a
Governmental or Regulatory Authority that in any way relates to any Product.


 


(3)           The Manufacturer shall provide to the Warner
Quality Assurance employee or the Warner Regulatory Affairs employee, as the
case may be, copies of any and all communications received from or sent to any Governmental
or Regulatory Authority with respect to any Product within one (1) calendar day
following receipt or sending of the communication, as the case may be.


 


XIV.        Audits by Warner


 


(1)           Upon reasonable prior written notice to the
Manufacturer and during the Manufacturer’s normal business hours, Warner shall
be permitted to:


 


(i)            periodically audit the Facility and all
documents and information associated with the Products; and,


 


(ii)           enter the Facility to review the Facility and all records associated
with the Products.


 


(2)           If, during the course of an audit, it is observed that the Manufacturer
is not operating in compliance with GMP, the Manufacturer shall prepare and
commence an action plan (the “Action Plan”) detailing the resolution of the
identified issues from the audit within thirty (30) calendar days following
receipt of Warner’s audit report.  Such
Action Plan shall be reasonably satisfactory to Warner.  Implementation of the Action Plan shall be at
the Manufacturer’s sole cost and expense. 
Failure on the part of the Manufacturer to implement the Action Plan in
a timely manner (in accordance with its terms) shall be grounds for termination
by Warner of


 


8





















 


this
Quality Agreement and the Supply Agreement pursuant to Section 11 thereof.


 


XV.         Disposition of Materials


 


(1)           The Manufacturer shall formulate, hold and test any and all Product
lots in accordance with GMP, applicable Laws and the applicable Marketing Authorization
for such Products.


 


(2)           Prior to shipping or delivering any Product to Warner or its
Affiliates, the Manufacturer shall test each batch of Product to ensure that it
meets Specifications.  The Manufacturer
acknowledges that Warner will not accept Product lots that an outside alert or
release limits, as set forth in the Specifications. In the event Warner
determines that testing and/or record reviews for Product lots do not satisfy
GMP, Specifications or applicable Laws, Warner may return such Product lots to the
Manufacturer in accordance with the provisions of Section 5.13 of the Supply
Agreement.


 


(3)           The Manufacturer shall ensure that all Product batch records discrepancies
and samples have been reviewed by an employee of the Manufacturer with GMP and
other appropriate training to determine proper disposition thereof.


 


(4)           The Manufacturer shall provide to the Warner Quality Assurance employee
a copy of the Certificate of Compliance, the Certificate of Analysis and all
investigation reports relating to a Product batch.


 


(5)           The Manufacturer shall have in place a written procedure to ensure that
any and all Materials, packaging Materials, Work in Progress and Products that
do not conform to Specifications or applicable Laws are protected from
inadvertent use or resale. Such procedures shall include, but shall not be limited
to, the identification, segregation, evaluation and disposition of
non-conforming Materials, packaging Materials, Work in Progress and Products.  The Manufacturer shall maintain a designated area
for the storage of rejected Materials, packaging Materials, Work in Progress
and Products and shall ensure that same are disposed of in an environmentally
safe and timely manner consistent with all applicable Laws, the terms and
conditions of this Quality Agreement and the Supply Agreement, and, in any
event, as approved, in writing, in advance by Warner.


 


XVI.        Notices and Communications


 


The
parties shall forthwith exchange lists identifying (i) the names, titles,
addresses and telephone and telecopier numbers of all employees referred to in
this Agreement and (ii) the names and emergency telephone numbers (including
home, cell phone and mobile numbers, as applicable) of persons to be contacted


 


9





















 


in
the event of a Recall.  Each party shall
promptly inform, in writing, the other party of any additions, deletions or
other revisions to such lists.


 


XVII.       Term


 


The
term of this Quality Agreement shall commence as of the date hereof and shall
terminate upon termination or expiration of the Supply Agreement.


 


XVIII.     Assignment


 


The
Manufacturer shall not, without the prior written consent of Warner, delegate,
transfer, convey, assign or pledge any of its rights or obligations under this
Quality Agreement to any other Person.


 


XIX.        Headings


 


Headings
in this Quality Agreement are included for ease of reference only and have no
legal effect.


 


10





















 


SCHEDULE E


 


INSURANCE


 


The
Manufacturer shall acquire and maintain at its sole cost and expense:


 


(i)            Statutory Worker’s
Compensation Insurance and Employer’s Liability Insurance; and


 


(ii)           Comprehensive
General Liability Insurance, including Contract Liability, Products Liability,
Bodily Injury and Property Damage Insurance,


 


(with a Broad Form Vendor’s
Endorsement naming Warner, its subsidiaries and affiliated companies and the
officers, directors, employees and agents thereof, as well as its authorized
distributors and customers, as additional insureds) with a combined single
limit of not less than $5,000,000.


 


The Manufacturer shall
require its subcontractors, to the extent approved hereunder, to provide the
aforementioned coverages, and any deficiencies in the coverages or policy
limits of said subcontractors will be the sole responsibility of the
Manufacturer.


 


The certificate(s) of
insurance delivered to Warner hereunder will specify the dates such coverage
expires and provide further that no policy will be cancelled or amended to
reduce the amount of coverage or to eliminate coverage without thirty (30) days
prior written notice to Warner.


 





















 


SCHEDULE F


 


SPECIFICATIONS


 


***