Document:

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                                                                Exhibit 10.16(a)

                   TOLL MANUFACTURING AND PACKAGING AGREEMENT

         This Toll Manufacturing and Packaging Agreement (this "Agreement") is
made as of this 24th day of August, 1999, by and between Cephalon, Inc., 145
Brandywine Parkway, West Chester, PA 19380-4245 ("CEPHALON") and Catalytica
Pharmaceuticals, Inc., P.O. Box 1887, Greenville, NC 27835-1887 ("CATALYTICA").

         WHEREAS, CEPHALON holds certain rights to manufacture, market and sell
in certain countries the pharmaceutical product modafinil;

         WHEREAS, CEPHALON possesses certain know how and other confidential and
proprietary information relating to the process of manufacturing and packaging
modafinil in finished dosage form;

         WHEREAS, CEPHALON wishes to engage CATALYTICA to formulate and package
modafinil tablets in dosage form for subsequent commercial sale by CEPHALON in
certain countries and for certain clinical and other purposes; and

         WHEREAS, CATALYTICA has suitable facilities and equipment and
sufficient qualified personnel at its plant in Greenville, North Carolina to
formulate and package commercial quantities of modafinil in dosage form, and is
willing to provide such services on the terms and conditions set forth below.

         NOW, THEREFORE, the parties hereto agree as follows:

I.       DEFINITIONS

         As used in this Agreement:

         1.1      "Active Drug Substance" means the compound modafinil having
                  those specifications as set forth on Schedule A hereto.

         1.2      "Adverse Experience" or "AE" shall mean any unfavorable and
                  unintended change in the structure, function, or chemistry of
                  the body temporally associated with any use of a Product or of
                  a derivative thereof, whether or not the adverse experience is
                  considered to be related to the use of the Product, including
                  but not limited to any of the following: an unexpected side
                  effect, injury, toxicity or sensitivity reaction, which may
                  include an experience of unexpected incidence and severity; an
                  adverse experience occurring in the course of the use of a
                  drug product in professional practice; an adverse experience
                  occurring in clinical studies; an adverse experience occurring
                  from drug overdose, whether accidental or intentional; an
                  adverse experience occurring from drug abuse; an adverse
                  experience occurring from drug withdrawal; and any significant
                  failure of expected pharmacological action.

      **Certain portions of this document have been omitted based upon a
request for confidential treatment that has been filed with the Commission.
The omitted portions have been filed separately with the Commission.

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         1.3      "Affiliate" means any corporation or other business entity
                  which, directly or indirectly, is controlled by, controls, or
                  is under common control with CEPHALON or CATALYTICA. For this
                  purpose, "control" shall be deemed to mean ownership of fifty
                  percent (50%) or more of the stock or other equity of such
                  entity.

         1.4      "Confidential Information" means all information, data,
                  know-how and all other business, technical and financial data
                  disclosed hereunder by one party or any of its Affiliates to
                  the other party or any of its Affiliates, except any portion
                  thereof which:

                  (a)      at the time of disclosure, is in the public
                           knowledge;

                  (b)      after disclosure, becomes part of the public
                           knowledge by publication or otherwise, except by
                           breach of this Agreement by the recipient;

                  (c)      the recipient can demonstrate by its written records
                           was in the recipient's possession at the time of such
                           disclosure, and which was not acquired, directly or
                           indirectly, from the disclosing party;

                  (d)      is lawfully disclosed to the recipient on a
                           non-confidential basis by a third party who is not
                           obligated to the disclosing party or any other third
                           party to retain such Confidential Information in
                           confidence;

                  (e)      results from research and development by the
                           recipient independent of such disclosure as shown by
                           competent evidence; or

                  (f)      is required to be disclosed by legal process;
                           provided, in each case the party so disclosing
                           information timely informs the other party and uses
                           its best efforts to limit the disclosure and maintain
                           confidentiality to the extent possible and, if
                           possible, permits the other party to attempt by
                           appropriate legal means to limit such disclosure.

                  Written Confidential Information shall be identified by the
                  disclosing party as being confidential by stamping the cover
                  pages of such information "Confidential." Confidential
                  Information disclosed orally, visually and/or in another
                  tangible form shall be identified by the disclosing party to
                  the receiving party as confidential at the time of such
                  disclosure and confirmed to the receiving party within thirty
                  (30) days after such disclosure in a writing marked
                  "Confidential."

         1.5      "Conversion Fee" means, for each unit of Product, the
                  applicable tolling fee minus CATALYTICA's labor and materials
                  costs directly relating thereto.

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         1.6      "Product" means modafinil in final packaged dosage forms
                  meeting the Product specifications set forth in Schedule B
                  hereto.

         1.7      "Starting Material" means the raw material necessary to
                  formulate and package the Product as set forth in Schedule A
                  hereto (but excluding the Active Drug Substance and magnesium
                  silicate Compressil(R) (hereinafter Compressil)).

         1.8      "Trademark" or "Trademarks" shall mean Provigil(R), as well as
                  any other trademark owned or used by CEPHALON in connection
                  with the Product and listed on Schedule A hereto.

II.      APPOINTMENT AND TERM

         2.1      Appointment. CEPHALON hereby appoints CATALYTICA, and
                  CATALYTICA hereby accepts appointment, as a toll manufacturer
                  to formulate and package the Product at CATALYTICA'S
                  Greenville, NC facility.

         2.2      Manufacturing and Packaging Services. During the term of this
                  Agreement, CATALYTICA shall formulate Product, which shall
                  include the validation of commercial batches of the Product in
                  accordance with the procedures set forth in Schedule D hereto,
                  and the preparation of the Product for commercial sale to
                  customers and for clinical and other purposes by CEPHALON. In
                  addition, CATALYTICA shall label and package Product in
                  accordance with those specifications and instructions set
                  forth in Schedule A hereto, or otherwise as may be provided by
                  CEPHALON and reasonably agreed to by Catalytica. CEPHALON will
                  supply approved artwork for labels, package inserts and
                  packaging. The content of the labels, package inserts and
                  packaging shall be the sole and exclusive responsibility of
                  CEPHALON. CATALYTICA will provide or procure, and test,
                  inspect and approve all labels, package inserts and packaging
                  used for the Product. CATALYTICA will submit artwork proofs of
                  all new labels, package inserts and packaging used for Product
                  to CEPHALON for approval prior to use, such approval not to be
                  unreasonably withheld.

         2.3      Cooperation. CEPHALON will cooperate with CATALYTICA as may be
                  necessary and customary in consideration of industry practice,
                  and will disclose all material information necessary to enable
                  CATALYTICA to perform under this Agreement in a timely
                  fashion.

         2.4      Specific Duties. In addition to its general obligations
                  relating to formulating and packaging, CATALYTICA shall
                  perform the following services at CATALYTICA's cost, except
                  where indicated:

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                  (i)      receiving and storing all Active Drug Substance and
                           Compressil in accordance with instructions provided
                           by CEPHALON and reasonably agreed upon by CATALYTICA;

                  (ii)     placing orders for, acquiring and storing all
                           Starting Material and packaging components;

                  (iii)    quality control and testing of all Active Drug
                           Substance, Compressil, Starting Material, in process
                           materials, bulk tablets, finished dosage Product and
                           packaging components, in order to monitor compliance
                           with all applicable standards and specifications;

                  (iv)     at CEPHALON's cost, managing clearance of customs for
                           all Starting Materials and packaging components, as
                           necessary;

                  (v)      conducting stability testing of Product in accordance
                           with the procedures set forth in Schedule D hereto;

                  (vi)     summarizing implemented changes and supplying latest
                           versions of approved critical documentation, and, at
                           CEPHALON's cost, preparing, submitting, and obtaining
                           all regulatory filings relating to the manufacture of
                           the Product under the terms of this Agreement, and as
                           agreed upon in writing by the parties (preparation of
                           transfer documentation is separately addressed at
                           Section 10.2 of this Agreement); and

                  (vii)    performing such other services as agreed upon in
                           writing by the parties.

         2.5      Term. Unless terminated in accordance with the provisions of
                  Article XXIII, this Agreement will remain in effect for a
                  period of five (5) years from the date hereof (the "Initial
                  Term"), and, unless either party gives written notice of
                  non-renewal at least one hundred eighty (180) days prior to
                  the end of the Initial Term (or any renewal term), this
                  Agreement shall be renewed for consecutive terms of one year,
                  subject to the mutual agreement of the parties regarding the
                  terms of the renewal, including without limitation those
                  pertaining to price and minimum purchase volumes.

III.     PRODUCT QUANTITY, QUALITY AND MANUFACTURING PROCESSES

         3.1      Quantity. Subject to the terms and conditions of this
                  Agreement, CATALYTICA will manufacture, package and supply to
                  CEPHALON quantities of Product ordered by CEPHALON or an
                  Affiliate thereof for subsequent sale by CEPHALON or an
                  Affiliate or agent thereof in the United States, Mexico,
                  Japan, the United Kingdom, Ireland, Italy and for certain
                  other territories or for certain clinical or other purposes as
                  may be determined by CEPHALON and agreed to by

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                  CATALYTICA. CEPHALON agrees to place orders and CATALYTICA
                  agrees to reserve capacity for the minimum quantities of
                  Product as defined in Schedule F. If the actual annual
                  quantity exceeds the minimum annual quantity by twenty-five
                  percent (25%) or less in any year, this excess will reduce the
                  minimum annual quantity in the following year. CATALYTICA
                  shall have no obligation to supply quantities in excess of
                  those set forth in Schedule F, but shall use its commercially
                  reasonable efforts to accommodate CEPHALON demand for excess
                  quantities.

                  During each year of the Initial Term, CEPHALON shall purchase
                  the minimum quantities for such year as set forth in Schedule
                  F. The parties agree that if this Agreement is renewed beyond
                  the Initial Term, they shall negotiate minimum quantities for
                  years beyond the Initial Term in good faith. If CEPHALON does
                  not purchase such minimum quantities in any year CEPHALON will
                  pay CATALYTICA the Conversion Fee for the amount of such
                  minimum quantities not purchased; provided, however, that if
                  CATALYTICA sells its reserved capacity for such period, and
                  the Conversion Fee on any such sales of reserved capacity
                  shall be deducted from the amount CEPHALON would otherwise be
                  obligated to pay pursuant to this Section 3.1.

         3.2      Quality. All Product manufactured and packaged by CATALYTICA
                  for CEPHALON under this Agreement will meet the Product and
                  Packaging specifications set forth in Schedule B hereto (the
                  "Specifications"), as well as the quality assurance standards
                  established in Schedule C hereto (the "Quality Agreement").
                  Such Specifications, as well as the terms and conditions of
                  the Quality Agreement, are subject to modification from time
                  to time by mutual agreement of the parties. In the event
                  CEPHALON changes the Specifications, CEPHALON shall promptly
                  advise CATALYTICA in writing of such changes, and if such
                  changes are reasonably acceptable to CATALYTICA, CATALYTICA
                  shall promptly advise CEPHALON as to any scheduling and/or
                  price adjustments which may result from such changes.
                  CATALYTICA may suggest Specifications changes, which shall be
                  subject to CEPHALON's written approval, which shall not be
                  unreasonably withheld or delayed. Prior to implementation of
                  any Specification changes, the Parties agree to negotiate in
                  good faith in an attempt to reach agreement on (a) the new
                  price for any Product manufactured hereunder by CATALYTICA
                  which embodies such changes, based solely on the effect of
                  such changes on CATALYTICA's manufacturing costs for the
                  Product and (b) any other amendments to this Agreement which
                  may be necessitated by such changes (i.e., an adjustment to
                  the lead time for purchase orders). CEPHALON agrees to
                  reimburse CATALYTICA for the reasonable expenses incurred by
                  CATALYTICA as a result of such changes, including, but not
                  limited to, reimbursing CATALYTICA for its validation and
                  development costs, capital expenditure costs and costs for any
                  packaging components or other materials and in-process
                  materials rendered unusable as a result of such changes. If
                  during the term of this Agreement CEPHALON amends or is
                  required by law to amend the Specifications so as to render
                  Starting Material and/or packaging components or

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                  in-process materials for the Product obsolete, CEPHALON shall
                  purchase from CATALYTICA, at CATALYTICA's cost, that amount of
                  inventory of Starting Material, packaging components,
                  in-process materials and/or Product, as the case may be, so
                  rendered obsolete.

         3.3      Manufacturing Processes. CATALYTICA has furnished CEPHALON
                  with a copy of its production procedures and has identified to
                  CEPHALON the equipment to be used to produce the Product, all
                  as set forth in Schedule G hereto. CATALYTICA agrees that it
                  will not modify these procedures, nor modify any method of
                  formulating, packaging, labeling or testing the Product
                  (including analytical procedures, components, process,
                  Specifications, controls, storage, stability protocols),
                  without notifying CEPHALON or obtaining CEPHALON's prior
                  written consent as required in Schedule C hereto, which
                  consent shall not be unreasonably withheld or delayed. Costs
                  incurred by CATALYTICA as a result of any such changes or
                  modifications requested by the FDA or by CEPHALON and relating
                  primarily to the production of the Product will be borne by
                  CEPHALON; costs for other changes affecting CATALYTICA's cGMP
                  compliance or affecting products generally will be borne by
                  CATALYTICA.

         3.4      Documentation. CEPHALON shall provide CATALYTICA with initial
                  methods and specifications for manufacturing and packaging the
                  Product as set forth in the attached Schedules A, B, and D.
                  CEPHALON shall also promptly provide CATALYTICA with all
                  available safety data and information concerning the Product,
                  process and related materials, including without limitation
                  all MSDS'.

                  After review, consideration and acceptance of such
                  specifications and methods by CATALYTICA for all markets in
                  which the Product manufactured hereunder will be sold,
                  CATALYTICA will provide CEPHALON with any revised methods and
                  specifications deemed necessary or appropriate by CATALYTICA.
                  The parties will then use their good faith, commercially
                  reasonable best efforts to establish mutually acceptable
                  specifications and methods within a reasonable period of time.

         3.5      Communication. CATALYTICA and CEPHALON will respond to
                  requests for support, information and approvals within five
                  (5) working days. If a complete response is not possible
                  within such five (5)-day period, the party owing the response
                  shall communicate within such five (5)-day period the reason
                  for the delay and when the response will be available.

IV.      TOLLING FEES

         For each unit of Product (including each unit in connection with
stability and validation batches) made and supplied to CEPHALON under this
Agreement (provided it meets the quality requirements established herein),
CEPHALON will pay CATALYTICA a tolling fee in

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accordance with the terms established in Schedule E hereto. The tolling fee
shall be increased each year during the Initial Term and any renewal term by the
percentage increase in the Producer Price Index (PPI) during the prior year,
Pharmaceutical Preparations, Ethical (Prescription), series code PCU-2834 #1, as
published by the Bureau of Labor Statistics of the U.S. Department of Labor for
the region in which the production facility is located, or comparable successor
index.

V.       CONFIDENTIAL INFORMATION

         5.1      The parties acknowledge that they have provided Confidential
                  Information to each other in connection with the formulation
                  and packaging of the Product, and further acknowledge that all
                  such Confidential Information (as well as any additional
                  Confidential Information provided by one party to the other
                  hereunder) shall be subject to the provisions of this Article
                  V. Any and all information, knowledge, technology, and trade
                  secrets relating to the Product and provided by CEPHALON shall
                  be deemed Confidential Information.

         5.2      CATALYTICA will disclose to CEPHALON all Confidential
                  Information concerning the Product developed by or for
                  CATALYTICA during the term of this Agreement, promptly as it
                  is developed.

         5.3      During the term of this Agreement and for five (5) years
                  thereafter, all Confidential Information disclosed or
                  confirmed in writing and designated as confidential by the
                  disclosing party, shall be held in confidence by the receiving
                  party, shall not be used by the receiving party for any
                  purpose except as provided hereunder and shall not be
                  disclosed to third parties except for disclosure to its
                  Affiliates or governmental authorities, or except as otherwise
                  necessary to carry out the receiving party's obligations under
                  this Agreement. If a receiving party finds it necessary to
                  disclose such Confidential Information to a third party, the
                  receiving party will not do so without first obtaining the
                  written consent of the disclosing party (which shall not be
                  unreasonably withheld) and entering into an agreement with the
                  third party which binds the third party to the same
                  obligations of restricted use and disclosure as are undertaken
                  by the parties in this Agreement.

         5.4      Neither party shall distribute any Confidential Information of
                  the other except to its employees or agents who have a need to
                  know in connection with the performance of their duties in
                  satisfying the obligations of such party hereunder. Any
                  employee or agent who receives Confidential Information shall
                  be advised as to the confidential nature thereof and the
                  prohibitions contained herein. All copies of any portions of
                  any Confidential Information distributed as provided in this
                  section will be identified as confidential. Upon termination
                  of this Agreement, and upon the request of the disclosing
                  party, the receiving party shall return or destroy all such
                  Confidential Information and any copies thereof in its

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                  possession, except that each party may retain one copy of
                  Confidential Information solely for archival purposes.

         5.5      CEPHALON acknowledges that CATALYTICA possesses certain
                  inventions, processes, know-how, trade secrets, improvements,
                  other intellectual properties and other assets, including but
                  not limited to procedures and techniques, computer technical
                  expertise, software, and certain technical expertise and
                  conceptual expertise in the area of drug processing and
                  manufacturing, which have been independently developed by
                  CATALYTICA or its Affiliates without the benefit of any
                  information provided by CEPHALON (collectively "CATALYTICA
                  Property"). Subject to the provisions of Section XIX hereof,
                  CEPHALON and CATALYTICA agree that any CATALYTICA Property or
                  improvements thereto which are used, improved, modified or
                  developed by CATALYTICA under or during the term of this
                  Agreement are the product of CATALYTICA's technical expertise
                  possessed and developed by CATALYTICA or its Affiliates prior
                  to or during the performance of this Agreement and are the
                  sole and exclusive property of CATALYTICA or its Affiliates,
                  as the case may be.

         5.6      If CATALYTICA is required to take specific actions to protect
                  CEPHALON's Confidential Information, CEPHALON will be required
                  to compensate CATALYTICA for the cost of such actions.

         5.7      Termination of this Agreement shall not operate to extinguish
                  either party's obligation to treat Confidential Information as
                  provided herein, and the same shall continue in effect in
                  accordance with this Article for five (5) years from the
                  termination or expiration of this Agreement with respect to
                  such Confidential Information.

         5.8      Nothing contained herein shall be deemed to grant either
                  party, either expressed or implied, a license or other right
                  or interest in the Confidential Information of the other or in
                  any patent, trademark or other similar property of the other,
                  except as expressly provided hereunder.

         5.9      CATALYTICA shall not use the name of CEPHALON, or disclose the
                  existence of this Agreement for any marketing, advertising or
                  promotional purpose, without CEPHALON's prior written consent,
                  which shall not be unreasonably withheld or delayed.

         5.10     During the term hereof, and for a period of one (1) year after
                  the termination of this Agreement, CATALYTICA agrees not to
                  manufacture pharmaceutical compositions comprising modafinil
                  for any third party.

VI.      COMPONENT SUPPLY

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         6.1      Active Drug Substance and Compressil. CEPHALON will provide
                  free of charge, and deliver to CATALYTICA at its designated
                  production facility not less than sixty (60) days in advance
                  of the delivery date of Product, appropriate quantities of
                  Active Drug Substance and Compressil which meet the
                  specifications established in Schedule A. Following such
                  delivery, CATALYTICA shall assume full responsibility for the
                  safekeeping and safe handling, and shall bear all risk of loss
                  (subject to the agreed yield loss as described below), of all
                  such Active Drug Substance and Compressil that is in its
                  possession. Legal title to all Active Drug Substance and
                  Compressil will remain with CEPHALON, provided however, that
                  CATALYTICA shall reimburse CEPHALON for the actual documented
                  replacement cost of any Active Drug Substance and Compressil
                  that is lost, contaminated, or destroyed while in the
                  possession of CATALYTICA (subject to the agreed yield loss as
                  described below). CATALYTICA will use its commercially
                  reasonable best efforts to obtain maximum yield of Product
                  from the Active Drug Substance provided by CEPHALON in
                  connection with the formulation and packaging services
                  provided hereunder. The parties anticipate that the combined
                  yield loss suffered in the course of formulating and packaging
                  the Product in any given lot will not exceed [**]. Yield loss
                  is defined as:

                        Yield Loss = 100 (modafinil - (tablets)(dose))/modafinil

                where modafinil = starting modafinil amount in granulation, gram

                        tablets = total number of tablets produced

                                = (total packages) (quantity per package)

                                or for bulk tablets:

                                = (total tablet weight, gram) / (nominal tablet
                                  weight, gram)

                                [**]

                                [**]

                  Notwithstanding the above, if the yield loss over any given
                  twelve-month period during the term hereof exceeds [ ], then
                  CATALYTICA will reimburse CEPHALON for its actual documented
                  costs for that amount of Active Drug Substance lost that
                  exceeds the aforementioned [**] maximum threshold.

         6.2      Starting Material. CATALYTICA will obtain at its expense
                  Starting Material which meets the specifications established
                  in Schedule A. CATALYTICA

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                  assumes full responsibility and liability for the storage and
                  handling of all Starting Material.

         6.3      Packaging Components. Product will be labeled and packaged in
                  accordance with instructions and specifications provided by
                  CEPHALON. CATALYTICA will submit to CEPHALON artwork proofs of
                  all labels, package inserts and packaging prior to use for
                  approval by CEPHALON, which approval shall not be unreasonably
                  withheld or delayed. Upon approval by CEPHALON, CATALYTICA
                  will procure, test, inspect and approve all labels, package
                  inserts and packaging used in connection with the Products.

VII.     FORECASTS AND ORDERS

         7.1      Orders. CEPHALON will submit firm written purchase orders to
                  CATALYTICA not less than ninety (90) days lead time in advance
                  of the requested delivery date. CEPHALON shall deliver all
                  Active Drug Substance and Compressil necessary to formulate
                  Product for any given shipment to CATALYTICA not less than
                  sixty (60) days in advance of said delivery date. If CEPHALON
                  fails to provide such Active Drug Substance and Compressil
                  within such period, CATALYTICA's lead time for the delivery of
                  Product under the affected purchase order shall be extended
                  for a period of two (2) days for each day of delay in the
                  supply of Active Drug Substance and Compressil. CATALYTICA
                  shall make deliveries within fourteen (14) days of the
                  requested delivery date for orders giving at least the
                  required minimum lead time.

         7.2      Forecasts and Forecast Changes. Upon execution of this
                  Agreement, CEPHALON will provide CATALYTICA with an initial
                  volume forecast setting forth CEPHALON's anticipated quantity
                  requirements for the forthcoming twelve (12) months on or
                  about the effective date, and with rolling, updated volume
                  forecasts on a quarterly basis thereafter. Except for the
                  initial forecast provided upon execution of this Agreement,
                  each forecast shall be for the twelve (12) months beginning
                  three (3) months after the date the of the forecast. Other
                  than the initial forecast provided upon execution of this
                  Agreement, the first three (3) months of each forecast shall
                  be binding on CEPHALON while the other nine (9) months of each
                  forecast are for planning purposes only. CEPHALON can increase
                  or decrease its firm order quantities with CATALYTICA's prior
                  agreement and CATALYTICA can adjust its shipping quantities
                  with CEPHALON's prior agreement. Both parties shall use their
                  commercially reasonable best efforts to accommodate reasonable
                  change requests from the other.

VIII.    SHIPMENT AND PAYMENT

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         8.1      CATALYTICA's Responsibilities. CATALYTICA will properly
                  prepare the Product so that it may be lawfully and safely
                  shipped to warehouse locations in the United States, Mexico,
                  Japan, the United Kingdom, Ireland, Italy, and other countries
                  as designated by CEPHALON and agreed upon by CATALYTICA.
                  CATALYTICA will prepare and execute all reasonably necessary
                  shipping documents, consisting of Packing List, Dangerous
                  Goods Declaration, and MSDS. CEPHALON will choose the carrier
                  by indicating the same on its purchase order provided to
                  CATALYTICA.

         8.2      Terms of Shipment. CATALYTICA will ship Product F.O.B.
                  CATALYTICA's Greenville, North Carolina plant to CEPHALON's
                  warehouse or other designated sites. All transport costs and
                  risk of loss during shipment will be borne by CEPHALON.

         8.3      Terms of Payment. CEPHALON will pay CATALYTICA the toll fee
                  within thirty (30) days after the date on which CEPHALON
                  receives said invoice from CATALYTICA, together with copies of
                  all documentation required for Product release as provided in
                  Schedule C hereto. Late payments shall bear interest at the
                  rate of 1 1/2 % per month, or if less, the highest rate
                  permitted under applicable law.

IX.      INSPECTION AND ANALYSIS

         9.1      Inspection by CATALYTICA. CATALYTICA will analyze each Product
                  lot for compliance with the Specifications set forth in
                  Schedule B. CATALYTICA will send to CEPHALON a certificate of
                  analysis and a certificate of release (together with any other
                  documentation required under the procedures set forth in
                  Schedule C hereto) prior to, or together with, each shipment
                  of Product. In this regard, CATALYTICA agrees to retain all
                  records and documents necessary to fulfill the requirements
                  established by all applicable regulatory agencies. The parties
                  acknowledge that, subject to the terms set forth in Schedule C
                  hereof, under the laws and regulations of the United Kingdom,
                  Ireland and Italy, CEPHALON or its authorized agent shall
                  serve as the designated "Qualified Person" under the laws and
                  regulations of the European Union for purposes of releasing
                  the Product into the market.

         9.2      Inspection by CEPHALON. CEPHALON or its authorized
                  representative will inspect all shipments upon their receipt
                  and will report any reasonably discernible defects in the
                  Product to CATALYTICA within thirty (30) days of its receipt
                  of the Product and related records. Any defects not reasonably
                  discernible will be reported to CATALYTICA by CEPHALON within
                  ten (10) days of CEPHALON's discovery of the same.

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         9.3      Non-Conforming Product. If any Product does not meet the
                  Product Specifications set forth in Schedule B or in the
                  Quality Agreement set forth in Schedule C as determined by
                  CEPHALON's testing and inspection of the Product, then solely
                  at its option CEPHALON may, as its sole remedy, either (i)
                  demand that CATALYTICA remanufacture or repackage (as
                  appropriate) said Product at no charge to CEPHALON and pay all
                  round-trip shipping charges to and from the destination of the
                  original shipment as well as pay for that portion of the
                  acquisition cost of the Active Ingredients and other materials
                  supplied by CEPHALON to CATALYTICA hereunder which are used in
                  such nonconforming Product and which are lost or otherwise
                  rendered unusable as a result of CATALYTICA's producing
                  non-conforming Product, or (ii) be relieved of any obligation
                  to pay CATALYTICA the toll fees otherwise payable for the
                  manufacture of said Product, and CATALYTICA shall reimburse
                  CEPHALON for the reasonable costs incurred by CEPHALON in
                  properly disposing of the Product, as well as that portion of
                  the acquisition cost of the Active Ingredients and other
                  materials supplied by CEPHALON to CATALYTICA hereunder which
                  are used in such nonconforming Product. Any notice given
                  hereunder shall specify the manner in which the Product fails
                  to conform to the purchase order therefor or fails to meet
                  such warranty or the Specifications. If it is determined that
                  the nonconformity (a) is due to damage to the Product (i)
                  caused by CEPHALON or its agents or (ii) which occurs
                  subsequent to delivery of such Product to the carrier at the
                  point of origin, or (b) results from Active Ingredients or
                  other materials supplied by CEPHALON, CATALYTICA shall have no
                  liability to CEPHALON with respect thereto and CEPHALON shall
                  pay for such Product in accordance with the terms of this
                  Agreement. Nothing herein shall be construed to limit
                  CATALYTICA's obligations established in Section 6.1 hereof.

         9.4      Independent Testing. If CEPHALON notifies CATALYTICA that any
                  Product does not meet applicable Specifications or quality
                  assurance guidelines, and CATALYTICA does not agree with
                  CEPHALON's position, the parties will attempt to reach a
                  mutually acceptable resolution of the dispute. If they are
                  unable to do so after a reasonable period of time (such period
                  not to exceed one month from the date of original
                  notification), the matter will be submitted to an independent
                  testing laboratory acceptable to both parties. Both parties
                  will accept the judgment of the independent laboratory. The
                  cost of such testing will be borne by the party whose position
                  is determined to have been in error. If the Product is
                  determined by said independent laboratory to have been
                  conforming, then the provisions of Section 9.3 hereof shall
                  not apply, and CEPHALON shall not be relieved of its
                  obligations to pay CATALYTICA for the production of such
                  Product.

X.       REGULATORY MATTERS; REGULATORY FILINGS AND APPROVALS

                                      -12-

<PAGE>

         10.1     General. CATALYTICA shall be responsible for obtaining and
                  maintaining all site licenses for the manufacture of the
                  Product and shall comply on behalf of CEPHALON with other
                  applicable regulations promulgated by, but not limited to, the
                  Food and Drug Administration ("FDA"), Drug Enforcement
                  Administration ("DEA"), Environmental Protection Agency
                  ("EPA"), and Occupational Safety and Health Administration
                  ("OSHA") in connection with CATALYTICA's manufacture of the
                  Product. Should changes in applicable laws or regulations
                  after the date of this Agreement and relating to the Product
                  result in increased costs for CATALYTICA in connection with
                  CATALYTICA's performance under this Agreement (other than
                  changes affecting CATALYTICA's cGMP compliance or products
                  generally), such costs shall be passed on to, and paid for by,
                  CEPHALON on a dollar for dollar basis.

         10.2     Scale-Up and Post-approval Changes. CATALYTICA agrees to
                  prepare the chemistry, manufacturing, and controls
                  documentation necessary for the SUPAC supplement to transfer
                  manufacture of the Product to CATALYTICA. Preparation of that
                  documentation will be charged to CEPHALON on an hourly basis.
                  CEPHALON is responsible for the determination of the
                  regulatory filing strategy and for filing the documentation
                  with the FDA.

         10.3     Import and Export Registrations. At CEPHALON's cost,
                  CATALYTICA will prepare, obtain, and maintain all necessary
                  DEA manufacturing, import, and export registrations necessary
                  to perform its obligations under this Agreement.

XI.      REPRESENTATIONS AND WARRANTIES

         11.1     General. CATALYTICA represents and warrants to CEPHALON that
                  (i) it has and will maintain throughout the pendency of this
                  Agreement, the expertise, with respect to personnel and
                  equipment, to fulfill the obligations established hereunder,
                  and has obtained all requisite licenses, authorizations and
                  approvals required by federal, state or local government
                  authorities including, but not limited to, the Food and Drug
                  Administration ("FDA"), Drug Enforcement Administration
                  ("DEA"), Environmental Protection Agency ("EPA"), Occupational
                  Safety and Health Administration ("OSHA"), etc. to manufacture
                  the Product; (ii) the production facility, equipment and
                  personnel to be employed to formulate and package the Product
                  will be qualified to manufacture product according to Current
                  Good Manufacturing Practices, as defined in 21 U.S.C. ("cGMP")
                  at the time each such batch of Product is produced, and that
                  the production facility to be employed is in compliance with
                  all applicable laws and regulations, provided however, that
                  CEPHALON acknowledges that CATALYTICA shall not be required to
                  establish or to maintain a dedicated production facility
                  solely on the basis of this representation; (iii) there are no
                  pending or uncorrected citations or adverse conditions noted
                  in any inspection of the production facility to be employed
                  which would cause the Product to be misbranded or adulterated
                  within the meaning of

                                      -13-

<PAGE>

                  the federal Food, Drug and Cosmetic Act, as amended; (iv) it
                  has provided to CEPHALON all FDA inspection reports and Form
                  483s received by CATALYTICA in the last two (2) years, and
                  that the documents provided are true and complete copies
                  thereof (except as noted); (v) the execution, delivery and
                  performance of this Agreement by CATALYTICA does not conflict
                  with, or constitute a breach of any order, judgment,
                  agreement, or instrument to which CATALYTICA is a party; (vi)
                  the execution, delivery and performance of this Agreement by
                  CATALYTICA does not require the consent of any person or the
                  authorization of (by notice or otherwise) any governmental or
                  regulatory authority (other than those relating to the
                  granting of approval to commercialize the Product); and (vii)
                  CATALYTICA has not been debarred by the United States Food and
                  Drug Administration under the Generic Drug Enforcement Act of
                  1992 (or by any analogous agency or under any analogous law or
                  regulation), and neither it nor, to its knowledge, any of its
                  officers or directors has ever been convicted of a felony
                  under the laws of the United States for conduct relating to
                  the development or approval of a drug product or relating to
                  the marketing or sale of a drug product, and further, to its
                  knowledge, that no individual or firm debarred by any
                  governmental authority will participate in the performance,
                  supervision, management or review of the production of Product
                  supplied to CEPHALON under this Agreement. CEPHALON represents
                  and warrants to CATALYTICA that (i) the execution, delivery
                  and performance of this Agreement by CEPHALON does not
                  conflict with, or constitute a breach of any order, judgment,
                  agreement, or instrument to which CEPHALON is a party; and
                  (ii) the execution, delivery and performance of this Agreement
                  by CEPHALON does not require the consent of any person or the
                  authorization of (by notice or otherwise) any governmental or
                  regulatory authority (other than those relating to the
                  granting of approval to commercialize the Product).

         11.2     Manufacturing Warranty. CATALYTICA warrants that all Products
                  supplied to CEPHALON will be manufactured in accordance with
                  cGMPs in effect at the time of manufacture. A statement to
                  this effect shall be printed on CATALYTICA's certificate of
                  analysis for each batch of Product delivered. Moreover,
                  CATALYTICA will provide to CEPHALON concurrent with each
                  invoice the applicable batch records and test results
                  establishing such compliance, as provided in Schedule C
                  hereto.

         11.3     Product Warranty. CATALYTICA hereby warrants that all Product
                  delivered to CEPHALON (i) will not be adulterated, misbranded,
                  or otherwise prohibited within the meaning of any European
                  Union, national, state or local law or regulation, (ii) will
                  be free from defects in materials, other than with respect to
                  the Active Drug Substance and Compressil (a) unless defects
                  therein are caused by CATALYTICA's negligence or willful
                  misconduct or (b) unless defects therein are related solely to
                  applicable standards and specifications for which CATALYTICA
                  is testing pursuant to Section 2.4 (iii) hereof, and (iii)
                  will conform to Specifications as established in Schedule B
                  hereto. CEPHALON

                                      -14-

<PAGE>

                  hereby warrants that (i) the Product is not a product that may
                  not be introduced into interstate commerce, (ii) Active Drug
                  Substance and Compressil will not be adulterated, misbranded,
                  or otherwise prohibited within the meaning of any European
                  Union, national, state or local law or regulation, (iii)
                  Active Drug Substance and Compressil will be free from
                  defects, and (iv) Active Drug Substance and Compressil will be
                  suitable for use by CATALYTICA in manufacturing the Product.

         11.4     Environmental Warranty. CATALYTICA warrants that all waste
                  generated in its operations under this Agreement will be
                  stored, transported and disposed of in a safe and
                  environmentally sound manner consistent with all federal,
                  state and local laws and regulations. CATALYTICA further
                  warrants that it will conduct its business so as to comply
                  materially with the terms and conditions of all air pollution
                  control permits, sanitary sewer discharge permits, and
                  authorizations required by applicable federal, state and local
                  laws, rules and regulations relating to the protection of the
                  environment. CATALYTICA will not knowingly undertake any
                  production or development activities for itself or on behalf
                  of a third party, which, together with the emissions from
                  activities under this Agreement, would cause air emissions
                  from isopropyl alcohol or any other substance to exceed any
                  applicable legal limits.

         11.5     Technology Warranty. CEPHALON hereby represents and warrants
                  to CATALYTICA that the technology established in the
                  Specifications, or as otherwise disclosed hereunder
                  (collectively, the "Technology") is sufficient to enable
                  CATALYTICA to manufacture and package the Product as
                  contemplated hereunder. Except as otherwise disclosed to
                  CATALYTICA in writing, CEPHALON owns all right, title and
                  interest to said Technology, free and clear of any adverse
                  ownership claims. Except as otherwise disclosed to CATALYTICA
                  in writing, CEPHALON has not received any notice that any
                  portion of the Technology infringes upon the patent, trade
                  secret or other intellectual property rights or interests of
                  any third party and, to the best knowledge of CEPHALON, there
                  has been no such infringement.

         11.6     Warranty Disclaimer. NEITHER CATALYTICA NOR CEPHALON MAKES ANY
                  WARRANTY THAT THE PRODUCT WILL BE MERCHANTABLE, AND CATALYTICA
                  MAKES NO WARRANY THAT THE PRODUCT WILL BE FIT FOR ANY
                  PARTICULAR PURPOSE. NEITHER PARTY MAKES ANY WARRANTIES WITH
                  RESPECT TO THE PRODUCT, EXPRESS OR IMPLIED, EXCEPT AS
                  EXPRESSLY STATED IN THIS AGREEMENT.

XII.     YEAR 2000 COMPLIANCE

         CATALYTICA will use all commercially reasonable efforts to ensure that
there will be no failure or production of erroneous data as a consequence of the
inability to

                                      -15-

<PAGE>

receive, store, process or output date information regardless of the date(s)
utilized (including, without limitation, relating to the change of century) in
any computer software, computer hardware, automation systems or other devices
owned, licensed, or otherwise used by CATALYTICA or any suppliers of CATALYTICA
that would result in the inability of CATALYTICA to either (i) successfully
carry out any services hereunder or (ii) manufacture and supply Products and
supporting documentation and information under this Agreement

XIII.    QUALITY CONTROL, RECORDS AND INSPECTIONS

         13.1     Product and Component Samples. CATALYTICA will maintain a
                  sample of each chemical component (including Active Drug
                  Substance) as required by applicable regulatory standards or
                  as otherwise mutually agreed by CEPHALON and CATALYTICA.
                  CATALYTICA will be responsible for maintaining retention
                  samples of the Product as may be required by applicable
                  regulatory standards.

         13.2     Validation. CATALYTICA will validate all process, methods,
                  equipment, utilities, facilities and computers used in the
                  formulation, packaging, storage, testing and release of
                  Product in conformance with the provisions of Schedule D
                  hereto, and all applicable laws and regulations. CEPHALON will
                  have the right to review the results of said validation upon
                  request.

         13.3     Quality Compliance. CATALYTICA will provide CEPHALON with
                  timely notification of all significant deviations, notes to
                  file, and other deficiencies that may reasonably be expected
                  to impact the quality of the Product, as well as all FDA
                  reports regarding testing, manufacture, packaging or labeling
                  of the Product.

         13.4     Manufacturing Records. CATALYTICA will maintain complete and
                  accurate records relating to the Product and the manufacture,
                  packaging, labeling and testing thereof for the period
                  required by applicable Regulatory Standards, and CATALYTICA
                  shall provide copies thereof to CEPHALON upon CEPHALON's
                  request. The records shall be subject to audit and inspection
                  under this Article XIII.

         13.5     Batch Records. CATALYTICA will supply for each batch of
                  Product, including each pilot batch, complete batch production
                  and control records. Records which include the information
                  relating to the manufacturing, packaging and quality operation
                  for each lot of Product will be prepared by CATALYTICA at the
                  time such operations occur. The records will include, without
                  limitation, mixing and filling records; container and
                  component traceability records; equipment usage records;
                  in-process and final laboratory testing results; in-process
                  and final Product physical inspection results; yield
                  reconciliation for bulk and finished Product; labeling and
                  packaging records; and records relating to deviations from
                  approved procedure, as well as CATALYTICA's investigation and
                  corrective

                                      -16-

<PAGE>

                  actions. Copies of batch records will be forwarded to CEPHALON
                  prior to or along with shipment of each Product lot.

         13.6     Records Retention. CATALYTICA will retain records and
                  documents for periods meeting all applicable regulations of
                  the FDA and DEA.

         13.7     Regulatory Inspections. CATALYTICA will promptly inform
                  CEPHALON of any contact, inspection or audit by any
                  governmental agency (other than EPA and OSHA inspections),
                  related to or affecting the Product (other than contacts,
                  inspections or audits affecting products generally).
                  CATALYTICA will promptly provide CEPHALON with copies of any
                  government-issued inspection observation reports (including
                  without limitation FDA Form 483s and equivalent forms from
                  other regulatory bodies) and agency correspondence, that may
                  reasonably be expected to adversely affect the Product.
                  CATALYTICA and CEPHALON will cooperate in resolving any
                  concerns with any governmental agency. CATALYTICA will also
                  inform CEPHALON of any action taken by any governmental agency
                  against CATALYTICA or any of its officers and employees which
                  may reasonably be expected to adversely affect the Product or
                  CATALYTICA's ability to supply Product hereunder within 24
                  hours after the action is taken.

         13.8     CEPHALON Inspections. No more than three (3) CEPHALON
                  employees or CEPHALON authorized representatives will have the
                  right during normal business hours, at reasonable intervals
                  and on reasonable prior notice, to conduct one (1) inspection
                  per year, at CEPHALON's sole expense, of CATALYTICA's
                  facilities used in the manufacturing, packaging, storage,
                  testing, shipping or receiving of Product and Product
                  components. All such employees and representatives shall be
                  qualified to conduct such inspections, shall be escorted by
                  CATALYTICA employees or representatives at all times while at
                  CATALYTICA's facility, shall be bound by the same
                  confidentiality obligations as contained herein, and shall
                  abide at all times with CATALYTICA's rules and regulations,
                  including without limitation safety rules and regulations.
                  Such inspections may include GMP inspections and system
                  audits. Persons conducting such inspections will have access
                  only to documents, records, reports, data, procedures,
                  facilities, regulatory submissions, and all other information
                  required to be maintained by applicable government regulations
                  relating directly to the Product. CATALYTICA shall take
                  appropriate actions to adopt reasonable suggestions of
                  CEPHALON to correct any deficiencies identified by such
                  inspection or audit. In addition, CEPHALON shall have the
                  right to observe from time to time the manufacture, packaging
                  and quality control testing of the Product by CATALYTICA,
                  including without limitation, the right to arrange, at its
                  cost and expense, to have a CEPHALON employee or other
                  representative located on the premises of CATALYTICA's
                  production facility to participate in the monitoring of
                  Product production, testing, packaging and labeling under this
                  Agreement. No testing of the Product by CEPHALON and no
                  inspection or audit

                                      -17-

<PAGE>

                  by CEPHALON of the CATALYTICA production facility under this
                  Agreement shall operate as a waiver of or otherwise diminish
                  CATALYTICA's responsibility with respect to Product quality
                  under this Agreement. The duration of an audit will be limited
                  to no more than 3 days (audits that last over 3 days will be
                  charged at CATALYTICA's specified FTE rates), and audits may
                  not interfere with CATALYTICA's normal operations.

XIV.     COMPLAINTS, ADVERSE EXPERIENCES AND RECALLS

         14.1     Product Complaints and AE's. CEPHALON shall maintain complaint
                  files with respect to the Product in accordance with cGMPs.
                  CATALYTICA will promptly notify CEPHALON by facsimile
                  transmission of all Product complaints and AEs received by
                  CATALYTICA within two (2) days of its receipt thereof. All
                  such notices shall be sent to the attention of the Director,
                  Medical Affairs at CEPHALON, facsimile number (610) 738-6313.
                  CEPHALON shall promptly provide CATALYTICA with copies of any
                  complaints received by CEPHALON relating to the manufacture or
                  packaging of the Product. CEPHALON shall have responsibility
                  for responding to all complaints, and for promptly providing
                  CATALYTICA with a copy of any responses to complaints relating
                  to the manufacture or packaging of the Product. CEPHALON or
                  its affiliates shall have responsibility for reporting all
                  complaints relating to the Product to the FDA and any other
                  regulatory authorities, including, but not limited to,
                  complaints relating to the manufacture or packaging of the
                  Product as well as adverse experience (AE) reports. CEPHALON
                  will correspond with complainants as to any complaints
                  associated with Product, whether received during or after the
                  term hereof. CATALYTICA will assist CEPHALON in investigating
                  Product complaints relating to the manufacture or packaging of
                  the Product by analyzing Product, manufacturing processes and
                  components to determine the nature and cause of an alleged
                  Product manufacturing defect or alleged Product failure.
                  CATALYTICA will also assist CEPHALON in the investigation of
                  any Adverse Experience (AE) reported to either party when such
                  AEs are reasonably believed to be attributable to the
                  manufacture or packaging of the Product. If CEPHALON
                  determines that any reasonable physical, chemical, biological
                  or other evaluation should be conducted in relation to an AE
                  or Product complaint relating to the manufacture or packaging
                  of the Product, CATALYTICA will conduct the evaluation and
                  provide CEPHALON with a written report of such evaluation
                  within thirty (30) days from receipt of CEPHALON's written
                  request for same, together with samples of the Product from
                  the relevant lot.

         14.2     Recall Action. If CEPHALON should elect or be required to
                  initiate a Product recall, withdrawal or field correction
                  because of (i) supply by CATALYTICA of Product that does not
                  conform to the Specifications and warranties established by
                  this Agreement or (ii) the negligent or intentional wrongful
                  act or omission of CATALYTICA, CEPHALON will notify CATALYTICA
                  and provide

                                      -18-

<PAGE>

                  CATALYTICA a copy of its recall letter prior to initiation of
                  the recall. CATALYTICA will assist CEPHALON (and its
                  designated Affiliate) in an investigation to determine the
                  cause and extent of the problem. All regulatory authority
                  contacts and coordination of any recall activities will be
                  initiated by, and will be the sole responsibility of,
                  CEPHALON.

         14.3     Recall Expenses. If any Product is recalled as a result of (i)
                  supply by CATALYTICA of Product that does not conform to the
                  warranties contained in Sections 11.1, 11.2 and 11.3 hereof or
                  (ii) the negligent or intentional wrongful act or omission of
                  CATALYTICA, then CATALYTICA will bear all reasonable costs and
                  expenses of such recall. Recalls for any other reason will be
                  at CEPHALON's sole expense. Notwithstanding the foregoing or
                  any other provision of this Agreement, CATALYTICA's aggregate
                  liability with regard to Product recalls shall not exceed the
                  amount of consideration received by CATALYTICA from CEPHALON
                  hereunder.

         14.4     Recall Records. CATALYTICA will maintain complete and accurate
                  records for such periods as may be required by applicable law
                  or regulation.

XV.      EQUIPMENT

         Notwithstanding anything to the contrary herein, the parties
acknowledge that CEPHALON will, promptly upon CATALYTICA's request, reimburse
CATALYTICA for any out-of-pocket expenses incurred by CATALYTICA in connection
with the purchase of certain tooling and other specialized equipment required
for the manufacture, packaging and labeling of the Product (the "Equipment"),
including without limitation punches and dies for tablet presses, and special
change parts for bottle handling. The parties shall agree in writing on the need
for, specifications and costs of any such Equipment and related materials prior
to such purchase. CATALYTICA agrees to use said Equipment solely in connection
with the performance of its duties and obligations established hereunder.
CATALYTICA shall maintain all such Equipment in good working order. CEPHALON
will be responsible for the cost of purchasing replacement Equipment at the end
of its useful life, provided however, that CATALYTICA will be responsible for
any such costs stemming from damage or premature or undue wear and tear to the
Equipment based upon neglect or misuse by CATALYTICA. CEPHALON shall retain
title to such Equipment, which will be returned by CATALYTICA at the request of
CEPHALON following termination of this Agreement; provided, however, CATALYTICA,
at its option, may purchase such Equipment at its depreciated book value upon
termination of this Agreement. CEPHALON shall reimburse CATALYTICA for all costs
incurred by CATALYTICA in connection with the removal and return of the
Equipment, including CATALYTICA's facility restoration costs. A schedule of
currently identified Equipment to be purchased by CEPHALON, along with certain
other equipment for which CATALYTICA shall reimburse CEPHALON and which shall be
owned by CATALYTICA, is provided in Schedule G, and such Equipment shall be
purchased and delivered to CATALYTICA within two (2) months of the effective
date of this Agreement.

                                      -19-

<PAGE>

XVI.     TECHNOLOGY TRANSFER

         Within fifteen (15) days of the effective date, CEPHALON will transfer
all necessary technology and documentation relating to the manufacture and
packaging of Product to CATALYTICA to support CATALYTICA's technology transfer
activities, including without limitation all documentation related to Product,
process or material safety (including all MSDS'). CEPHALON will pay CATALYTICA's
actual costs to perform the technology transfer and validation activities
(hereafter "Activities") related to the manufacture of three validation batches
of Product within a commercially reasonable period of time after the effective
date of this Agreement (as described in CATALYTICA's proposal dated October 12,
1998, CATALYTICA estimates the cost of the Activities will be [**]). The
Activities will include process evaluation at commercial scale, including
evaluation of process parameters, sampling, and preparation of process
evaluation batches, as well as the manufacture of three consecutively successful
batches (with full testing per the validation protocol), and the preparation of
mutually agreed upon process evaluation and validation reports. The
aforementioned [**] cost estimate does not include the manufacturing of the
validation batches, and these batches will be charged to CEPHALON at the
commercial price per this Agreement.

XVII.    INSURANCE

         17.1     During the term hereof, CATALYTICA shall maintain product
                  liability/completed operations insurance, providing coverage
                  of not less than TEN MILLION AND 00/100 DOLLARS
                  ($10,000,000.00) per occurrence and in the aggregate, insuring
                  CATALYTICA against all costs, fees, judgments, and liabilities
                  arising out of or alleged to arise out of its obligations and
                  representations and warranties under this Agreement. In
                  addition, CATALYTICA will maintain at all times sufficient
                  property casualty insurance to cover the total quantity of
                  Active Drug Substance and Product on hand at its full cost of
                  replacement. CATALYTICA will provide to CEPHALON, upon
                  request, evidence of such insurance coverages. CATALYTICA
                  further agrees to cause such policies to name CEPHALON as an
                  additional insured at no cost to CEPHALON.

         17.2     During the term hereof, CEPHALON agrees to maintain, and upon
                  request, to provide evidence of product liability insurance
                  for and providing coverage of not less than TEN MILLION AND
                  00/100 DOLLARS ($10,000,000.00) per occurrence and in the
                  aggregate providing a defense for and insuring CEPHALON
                  against all costs, fees, judgments and liabilities arising out
                  of or alleged to arise out of its obligations and
                  representations and warranties under this Agreement. CEPHALON
                  will provide to CATALYTICA, upon request, evidence of such
                  insurance coverages. CEPHALON further agrees to cause such
                  policies to name CATALYTICA as an additional insured at no
                  cost to CATALYTICA.

                                      -20-

<PAGE>

XVIII.   TRADEMARKS

         18.1     CATALYTICA shall have the non-exclusive right to use the
                  Trademarks in packaging the Product in connection with
                  fulfilling its obligations hereunder. The rights granted
                  CATALYTICA hereunder to use the Trademarks shall in no way
                  affect CEPHALON's ownership of such Trademarks. No other
                  right, title or interest in the Trademarks is established
                  hereby, and nothing herein shall be construed to grant any
                  right or license to CATALYTICA to use the CEPHALON trademark
                  or the name CEPHALON, other than as specifically set forth
                  herein.

         18.2     CATALYTICA shall not knowingly make any use or take any action
                  with respect to the Trademarks to prejudice or infringe
                  CEPHALON's rights thereto including the use of any confusingly
                  similar trademark and shall forthwith, upon objection by
                  CEPHALON, desist from any use thereof or action therewith
                  which is demonstrated to be in violation of this Agreement.

         18.3     CATALYTICA will only market the Product using the relevant
                  Trademarks as listed in Schedule A during the term of this
                  Agreement. Upon termination of this Agreement, CATALYTICA will
                  cease all use of the Trademarks and cancel any license to such
                  Trademarks granted hereunder.

         18.4     CATALYTICA will use the Trademarks in strict accordance with
                  the instructions given by CEPHALON, and shall refrain from
                  making any changes in connection therewith without first
                  obtaining CEPHALON's written consent.

         18.5     In the event of any claim or litigation by a third party
                  against CATALYTICA alleging that any of the Trademarks
                  imitates or infringes a trademark of such third party or is
                  invalid, CATALYTICA shall promptly give notice of such claims
                  or litigation to CEPHALON and CEPHALON shall assume
                  responsibility for and control of the handling, defense, or
                  settlement thereof. CATALYTICA shall cooperate fully with
                  CEPHALON during the pendency of any such claim or litigation.
                  CEPHALON shall keep CATALYTICA notified of the current status
                  of any trademark claim, litigation or infringement of any of
                  the Trademarks and shall permit CATALYTICA to assume the
                  handling, defense or settlement thereof if CEPHALON declines
                  to do so. CEPHALON may at any time modify, adopt or withdraw
                  from use any Trademark without any liability to CATALYTICA.

XIX.     INVENTIONS

         Any inventions, discoveries, improvements, or trade secrets made by
CATALYTICA in the performance of this Agreement that relate to the Product
(including any new use or any

                                      -21-

<PAGE>

change in the method of producing, testing or storing the Product) shall be
owned by CEPHALON, and CATALYTICA shall have a non-exclusive, perpetual,
royalty-free worldwide license to use any such invention, discovery,
improvement, or trade secret, excluding, during the term of this Agreement and
one (1) year thereafter, the right to use any such invention, discovery,
improvement, or trade secret to manufacture or produce pharmaceutical
compositions comprising modafinil. Any other invention, discovery, improvement,
or trade secret made by CATALYTICA in the performance of this Agreement shall be
owned by CATALYTICA, but CEPHALON shall have a nonexclusive, perpetual,
nontransferable, royalty-free license to use any such invention, discovery,
improvement, or trade secret to make or have made the Product in a facility
owned by CEPHALON or a third party selected by CEPHALON, provided such third
party agrees to use such invention, discovery, improvement, or trade secret
solely for the purpose of manufacturing pharmaceutical compositions comprising
modafinil for CEPHALON. Each party shall execute such instruments as shall be
required to evidence or effectuate the other party's ownership of any such
inventions, and shall cooperate upon reasonable request (and at the expense of
the requesting party) in the prosecution of patents and other intellectual
property rights related to any such invention.

XX.      INDEMNIFICATION

         20.1     By CATALYTICA. CATALYTICA will indemnify and hold CEPHALON,
                  its Affiliates, directors, officers, employees, agents,
                  successors, and assigns harmless from any and all liability,
                  damage, loss, cost, or expense (including reasonable
                  attorneys' fees), including liability arising out of
                  third-party claims, which arise from i) CATALYTICA's breach of
                  any of the covenants, warranties, and representations
                  contained herein, or ii) CATALYTICA's negligence or other
                  willful misconduct. Notwithstanding the foregoing or any other
                  provision of this Agreement, CATALYTICA's aggregate liability
                  pursuant to this Section 20.1 provided that CATALYTICA'S
                  conduct is not willful misconduct, shall not exceed the amount
                  of consideration received by CATALYTICA from CEPHALON under
                  this Agreement.

         20.2     By CEPHALON. CEPHALON will indemnify and hold CATALYTICA, its
                  Affiliates, directors, officers, employees, agents,
                  successors, and assigns harmless from any and all liability,
                  damage, loss, cost, or expense (including reasonable
                  attorneys' fees), including liability arising out of third
                  party claims, relating to this Agreement and either party's
                  performance of its obligations hereunder, including without
                  limitation claims relating to the infringement or violation of
                  any patent or other intellectual property rights, other than
                  that arising from i) CATALYTICA's breach of any of the
                  covenants, warranties, and representations contained herein or
                  ii) CATALYTICA's negligence or other willful misconduct.

         20.3     By Each Party. In the event that negligence or willful
                  misconduct of both CATALYTICA and CEPHALON contribute to any
                  such loss, damage, claim, injury, cost or expense, CATALYTICA
                  and CEPHALON will each indemnify

                                      -22-

<PAGE>

                  and hold harmless the other with respect to that portion of
                  the loss, damage, claim, injury, cost or expense attributable
                  to its negligence or willful misconduct.

         20.4     Procedures. In the event that one party receives notice of a
                  claim, lawsuit, or liability for which it is entitled to
                  indemnification by the other party, the party receiving notice
                  shall give prompt notification to the indemnifying party. The
                  party being indemnified shall cooperate fully with the
                  indemnifying party throughout the pendency of the claim,
                  lawsuit or liability, and the indemnifying party shall have
                  complete control over the conduct and disposition of the
                  claim, lawsuit, or liability including the retention of legal
                  counsel engaged to handle such matter. The indemnifying party
                  hereunder will be liable for any costs associated with the
                  settlement of any claim or action brought against it or the
                  other party unless it has received prior notice of the
                  settlement negotiations and has agreed to the settlement.

XXI.     LIMITATION OF LIABILITY

         In no event shall CEPHALON or CATALYTICA be liable to the other for
incidental, special, consequential or punitive damages, including, but not
limited to, any claim for damages based upon lost profits. Except as set forth
in Section 20.1, in no event shall CATALYTICA's aggregate liability pursuant to
this Agreement exceed the amount of consideration received by CATALYTICA from
CEPHALON under this Agreement.

XXII.    FURTHER ENGAGEMENTS/DEVELOPMENTS

         22.1     If CEPHALON develops a revised formulation of the Product, or
                  otherwise desires to engage CATALYTICA to formulate or package
                  pharmaceutical products other than the Product, then the
                  parties will negotiate in good faith to reach agreement on
                  mutually acceptable terms and conditions under which this
                  Agreement shall be expanded to cover such additional
                  engagement(s).

                                      -23-

<PAGE>

         22.2     It is the Parties' intent to negotiate in good faith to reach
                  agreement on future activities related to Product, including,
                  but not limited to, larger-scale manufacturing operations
                  (i.e., larger batch sizes and lower prices per unit as set
                  forth in Schedule E) for current and/or new formulations of
                  Product, evaluation of alternate drying method(s) (e.g., fluid
                  bed and/or microwave), and transfer and validation of new
                  Product formulations, as well as the preparation and
                  submission of scale-up and post-approval changes filings
                  related to such future products or developments. Such future
                  activities may be negotiated and based on, among other things,
                  the full-time equivalent employee/contractor hours and
                  materials involved in conducting such activities, and any
                  corresponding Agreement will include an estimate of
                  CATALYTICA's costs, and CATALYTICA will agree not to incur
                  costs in excess of this estimate without CEPHALON's approval.

XXIII.   TERMINATION

         23.1     Without Cause. Either party may terminate this Agreement,
                  effective on the fifth anniversary of the date hereof or on
                  subsequent anniversary date(s), if applicable, by giving
                  one-hundred-eighty (180) days written notice to the other
                  party.

         23.2     Breach. If either party hereto commits a material breach of
                  any of its obligations hereunder, the non-breaching party may,
                  at its option, terminate this Agreement by giving the other
                  party at least ninety (90) days prior written notice (twenty
                  (20) days with respect to a payment default) of its intent to
                  terminate this Agreement, which notice shall specify the
                  breach and the termination date, unless the breaching party
                  cures said breach prior to the specified termination date (or
                  prior to the expiration of a longer period as may be
                  reasonably necessary to cure a non-payment breach, provided
                  that the breaching party is making diligent efforts to cure
                  such breach, and provided further that such longer period
                  shall not in any event exceed one hundred twenty (120) days
                  from the date of notice).

         23.3     Insolvency. Either party may terminate this Agreement
                  immediately in its entirety if the other Party files a
                  petition of bankruptcy, is adjudged bankrupt, takes advantage
                  of any insolvency act, or executes a bill of sale, deed of
                  trust, or assignment for the benefit of creditors.

         23.4     Survival. The rights and obligations contained in sections
                  covering representations and warranties, indemnification and
                  confidentiality will survive termination of this Agreement, as
                  will any rights to payment or other rights or obligations that
                  have accrued under this Agreement prior to termination.
                  Termination will not affect the liability of either party by
                  reason of any act, default, or occurrence prior to said
                  termination.

         23.5     Transfer. If either party terminates this Agreement,
                  CATALYTICA will upon request and at CEPHALON's expense provide
                  reasonable assistance in

                                      -24-

<PAGE>

                  transferring production of Product to a facility owned by
                  CEPHALON or a third party selected by CEPHALON.

         23.6     Return of Product and Components. Upon termination under this
                  Article, CATALYTICA shall, at CEPHALON's expense, return
                  promptly to CEPHALON all Product, Active Drug Substance, in
                  process materials and packaging components in its possession
                  on the effective date of termination. CEPHALON shall promptly
                  pay for all such Product, in-process materials and packaging
                  components.

XXIV.    ALTERNATE DISPUTE RESOLUTION

         Any dispute concerning or arising out of this Agreement or concerning
the existence or validity hereof, shall be determined by the following
procedure.

         24.1     Both parties understand and appreciate that their long term
                  mutual interest will be best served by effecting a rapid and
                  fair resolution of any claims or disputes which may arise out
                  of services performed under this contract or from any dispute
                  concerning contract terms. Therefore, both parties agree to
                  use their best efforts to resolve all such disputes as rapidly
                  as possible on a fair and equitable basis. Toward this end
                  both parties agree to develop and follow a process for
                  presenting, rapidly assessing, and settling claims on a fair
                  and equitable basis.

         24.2     If any dispute or claim arising under this contract cannot be
                  readily resolved by the parties pursuant to the process
                  described in Section 24.1, the parties agree to refer the
                  matter to a panel consisting of one (1) senior executive
                  employed by each party who is not directly involved in the
                  claim or dispute for review and resolution. A copy of the
                  contract terms, agreed upon facts (and areas of disagreement),
                  and concise summary of the basis for each side's contentions
                  will be provided to both such senior executives who shall
                  review the same, confer, and attempt to reach a mutual
                  resolution of the issue.

         24.3     If the matter has not been resolved utilizing the process set
                  forth in this Article XXV, and the parties are unwilling to
                  accept the non-binding decision of the panel, either or both
                  parties may elect to pursue resolution through litigation, or
                  other legal remedies available to the parties.

XXV.     MISCELLANEOUS

         25.1     Headings. The headings and captions used herein are for the
                  convenience of the parties only and are not to be construed to
                  define, limit or affect the construction or interpretation
                  hereof.

                                      -25-

<PAGE>

         25.2     Severability. In the event that any provision of this
                  Agreement is found to be invalid or unenforceable, then the
                  offending provision shall not render any other provision of
                  this Agreement invalid or unenforceable, and all other
                  provisions shall remain in full force and effect and shall be
                  enforceable, unless the provisions which have been found to be
                  invalid or unenforceable shall substantially affect the
                  remaining rights or obligations granted or undertaken by
                  either party.

         25.3     Entire Agreement. This Agreement, including all those
                  Schedules appended hereto, contains the entire agreement of
                  the Parties regarding the subject matter hereof and supersedes
                  all prior agreements, understandings or conditions (whether
                  oral or written) regarding the same. Further, this Agreement
                  may not be changed, modified, amended or supplemented except
                  by a written instrument signed by both parties.

         25.4     Assignability. This Agreement and the rights hereunder may not
                  be assigned or transferred by either party without the prior
                  written consent of the other party (other than for rights to
                  payment), provided however, that either party may assign this
                  Agreement to an Affiliate, and provided further that in the
                  event of a merger, acquisition or sale of substantially all of
                  the assets of either party, the rights and obligations of such
                  party under this Agreement may be assigned to the survivor or
                  purchaser in that transaction. In the event that this
                  Agreement is assigned, it shall be binding upon and inure to
                  the benefit of the parties and their respective successors and
                  assigns.

         25.5     Subcontractors. With CEPHALON'S prior approval which shall not
                  be unreasonably withheld or delayed, CATALYTICA may use
                  qualified subcontractors to perform parts of the work under
                  this Agreement so long as such subcontractors are bound by a
                  confidentiality agreement with CATALYTICA and meet such other
                  quality standards as are imposed on CATALYTICA under this
                  agreement; e.g., cGMP compliant. For example, with CEPHALON'S
                  prior approval (which shall not be unreasonably withheld or
                  delayed), CATALYTICA may have cleaning verification/methods
                  validation performed by a cGMP compliant laboratory.
                  CEPHALON's prior approval shall not be required with respect
                  to subcontractors performing services on CATALYTICA's premises
                  relating to CATALYTICA's business generally and not
                  specifically related to the Product.

         25.6     Further Assurances. Each party hereto agrees to execute,
                  acknowledge and deliver such further instruments, and to take
                  such other actions, as may be necessary or appropriate in
                  order to carry out the purposes and intent of this Agreement.

         25.7     Waiver. The waiver by either party of a breach of any
                  provisions contained herein shall be effective only if made in
                  writing and shall in no way be

                                      -26-

<PAGE>

                  construed as a waiver of any succeeding breach of such
                  provision or the waiver of the provision itself.

         25.8     Force Majeure. A party shall not be liable for nonperformance
                  or delay in performance (other than of obligations regarding
                  any payments or of confidentiality) caused by any event
                  reasonably beyond the control of such party including, without
                  limitation, wars, hostilities, revolutions, riots, civil
                  disturbances, national emergencies, strikes, lockouts,
                  unavailability of supplies, epidemics, fires, floods,
                  earthquakes, other forces of nature, explosions, embargoes, or
                  any other Acts of God, or any laws, proclamations,
                  regulations, ordinances, or other acts or orders of any court,
                  government or governmental agency. Any occurrence of Force
                  Majeure shall be reported promptly to the other party. A party
                  whose performance has been excused will perform such
                  obligation as soon as is reasonably practicable after the
                  termination or cessation of such event or circumstance.

         25.9     Remedies. Each party agrees and acknowledges that its
                  disclosure of Confidential Information in breach of this
                  Agreement may cause irreparable harm to other party, and
                  therefore that any such breach or threatened breach will
                  entitle such party to injunctive relief, in addition to any
                  other legal remedies available in a court of competent
                  jurisdiction.

         25.10    Governing Law. This Agreement shall in all respects be
                  construed and enforced in accordance with the law of the State
                  of North Carolina.

         25.11    Independent Contractors. The parties are independent
                  contractors under this Agreement. Nothing contained in this
                  Agreement is to be construed so as to constitute CEPHALON and
                  CATALYTICA as partners, agents or employees of the other,
                  including with respect to this Agreement. Neither party hereto
                  shall have any express or implied right or authority to assume
                  or create any obligations on behalf of, or in the name of, the
                  other party or to bind the other party to any contract,
                  agreement or undertaking with any third party unless expressly
                  so authorized in writing by the other party.

         25.12    Counterparts. This Agreement may be executed in multiple
                  counterparts, each of which shall be considered and shall have
                  the force and effect of an original.

         25.13    Notices. Except as set forth in Section 14.1 above, or as
                  otherwise stated herein, all notices, consents or approvals
                  required by this Agreement shall be in writing and sent by
                  certified or registered air mail, postage prepaid or by
                  facsimile or cable (confirmed by such certified or registered
                  mail) to the parties at the following addresses or such other
                  addresses as may be designated in writing by the respective
                  parties. Notices shall be deemed effective on the date of
                  mailing.

                                      -27-

<PAGE>

                  Sr. Director, Technical Operations
                  CEPHALON, Inc.
                  145 Brandywine Parkway
                  West Chester, PA 19380-4245
                  Facsimile: (610) 344-7563

                  Dr. Gabriel R. Cipau
                  CATALYTICA Pharmaceuticals, Inc.
                  P.O. Box 1887
                  Greenville, NC 27835-1887
                  Facsimile: (252) 707-2450

         All invoices and/or charges in billing should be directed to the
Accounting Department at:

                  CEPHALON, Inc.
                  145 Brandywine Parkway
                  West Chester, PA  19380-4245
                  Attention: Accounts Payable

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

                                       CEPHALON, INC.

                                       By: \s\ J. Kevin Buchi
                                           -------------------------------------

                                       CATALYTICA PHARMACEUTICALS, INC.

                                       By: \s\ Gabriel R. Cipau
                                           -------------------------------------

                                      -28-

<PAGE>

                                   Schedule A
                                   ----------

           Active Drug Substance and Starting Material Specifications
           ----------------------------------------------------------

The parties have agreed upon all those applicable specifications for the Active
Drug Substance and Starting Material as set forth in the following documents.
The parties shall agree upon any modifications to any such specifications.

[**]

                                      -29-

<PAGE>

The following packaging components apply to this Agreement:

                  [**]

TRADEMARKS
----------

[GRAPHIC OMITTED]

Provigil(R)

Cephalon(R)

                                      -30-

<PAGE>

                                   Schedule B
                                   ----------

                             Product Specifications
                             ----------------------

The parties have agreed upon all those applicable specifications for the Product
as set forth in the following documents. The parties shall agree upon any
modifications to any such specifications.

[**]

                                      -31-

<PAGE>

                                   Schedule C
                                   ----------

                                Quality Agreement
                                -----------------

                         INTERCOMPANY QUALITY AGREEMENT

                                 CEPHALON, Inc.
                             145 Brandywine Parkway
                             West Chester, PA 19380
                           (hereafter called "CLIENT")

Approved by: \s\ J. Kevin Buchi                                    Date: 7/21/99

Representative, CLIENT

                                       AND

                        Catalytica Pharmaceuticals, Inc.
                           Greenville, North Carolina
                            (hereafter called "C*P")

Approved by: \s\ Joyce Aydlett                                     Date: 8/24/99

Vice President, Quality Operations, C*P

                        The Products Listed in Appendix I
                        (hereafter called "the PRODUCTS")
                    are subject to the following conditions:

                                      -32-

<PAGE>

   Section        TABLE OF CONTENTS                                         Page
   -------        -----------------                                         ----

         1        QUALITY AGREEMENT......................................     4
                  -----------------
       1.1        Purpose................................................     4
       1.2        Relationship to Definitive Agreement                        4

         2        PRODUCTS..............................................      4
                  --------

         3        ADMINISTRATIVE INFORMATION............................      4
                  --------------------------

         4        DURATION OF AGREEMENT.................................      5
                  ---------------------

         5        MANUFACTURING GMP COMPLIANCE..........................      5
                  ----------------------------
       5.1        General...............................................      5
       5.2        Premises..............................................      5
       5.3        GMP Guidelines........................................      5
       5.4        Materials.............................................      5
       5.5        Master Production Records ............................      6
       5.6        Standard Operating Procedures.........................      6
       5.7        Batch Numbers.........................................      6
       5.8        Dates of Manufacture and Expiration...................      7
       5.9        Manufacturing and Equipment Data......................      7
      5.10        Storage and Shipment..................................      7

         6        QUALITY CONTROL.......................................      8
                  ---------------
       6.1        General...............................................      8
       6.2        Materials Supplied by C*P.............................      8
       6.3        In-Process and Product Testing........................      8
       6.4        Retain Samples........................................      8
       6.5        Routine Stability Program.............................      9
       6.6        Out-of-Specification (OOS) Investigations.............      9

         7        QUALITY ASSURANCE.....................................      9
                  -----------------
       7.1        Deviations and Investigations.........................      9
       7.2        Batch Disposition.....................................     10
       7.3        Product Release.......................................     10
       7.4        Product Complaints and Recall.........................     10
       7.5        Records Retention.....................................     11
       7.6        QA Presence in the Manufacturing Facility.............     11

         8        REGULATORY COMPLIANCE.................................     11
                  ---------------------
       8.1        Regulatory Inspections................................     11
       8.2        Regulatory Audit .....................................     12
       8.3        Audit Closeout........................................     12
   Section        TABLE OF CONTENTS (Cont'd)                                Page
   -------        --------------------------                                ----

                                      -33-

<PAGE>

         9        DISPUTE RESOLUTION....................................     12
                  ------------------
       9.1        Non-Conformity Dispute................................     12
       9.2        Test Result Dispute...................................     12

        10        CHANGE MANAGEMENT.....................................     13
                  -----------------
      10.1        Controlled Documentation..............................     13
      10.2        Change Control........................................     13

        11        PRODUCT AND PROCESS VALIDATION........................     13
                  ------------------------------
      11.1        Process...............................................     13
      11.2        Cleaning Validation...................................     13
      11.3        Equipment, Computer, Facility and Utilities
                  Qualification.........................................     13
      11.4        Laboratory Qualification..............................     13

        12        ANNUAL PRODUCT REVIEW, ANNUAL REPORT AND DRUG
                  ---------------------------------------------
                  LISTING...............................................     14
                  -------
      12.1        Annual Product Review.................................     14
      12.2        Annual Manufacturing Process Change Report............     14
      12.3        Drug Listing..........................................     14

                  APPENDIX I   - The PRODUCTS...........................     15
                  APPENDIX II  - List of Quality Contracts..............     16
                  APPENDIX III - Release Documentation..................     17

                                      -34-

<PAGE>

1.       QUALITY AGREEMENT
         -----------------

         1.1      Purpose

                  1.1.1    This agreement defines the roles and responsibilities
                           for the C*P Quality Operations in carrying out the
                           services for the PRODUCTS.

                  1.1.2    This agreement also defines how the C*P Quality
                           Operations and the CLIENT Quality Department will
                           interact with each other.

         1.2      Relationship to Definitive Agreement

                  1.2.1    This agreement shall be incorporated within and
                           constitute a part of the Definitive Agreement between
                           the two companies.

                  1.2.2    In the event of a conflict between any of the
                           provisions of the Quality Agreement and the
                           Definitive Agreement, the provisions of the
                           Definitive Agreement shall govern.

2.       PRODUCTS
         --------

         2.1      The PRODUCTS prepared for CLIENT by C*P are described in
                  Appendix I.

3.       ADMINISTRATIVE INFORMATION
         --------------------------

         3.1      CLIENT contact names: See Appendix II

         3.2      C*P contact names: See Appendix II

         3.3      Emergency contact names and numbers, during and outside
                  working hours:

                  Robert J. Urban
                  Sr. Director, Technical Operations

                  Work:   (610) 738-6119
                  Home:   (610) 644-3760
                  Beeper: (888) 346-2141

                  Joyce Aydlett
                  Vice President, Quality Operations

                  Work:   (252) 707-7104
                  Home:   (252) 756-1759
                  Beeper: (252) 757-7504

                                      -35-

<PAGE>

4.       DURATION OF AGREEMENT
         ---------------------

         The agreement will expire with termination of the Definitive Agreement.
         The agreement can be modified as needed with the written approval of
         both parties.

5.       MANUFACTURING GMP COMPLIANCE
         ----------------------------

         5.1      General

                  5.1.1    The manufacturing operations for the PRODUCTS to be
                           performed by C*P are defined in the Definitive
                           Agreement.

         5.2      Premises

                  5.2.1    C*P will manufacture the PRODUCTS at the Greenville
                           site.

                  5.2.2    The premises and equipment used to manufacture the
                           PRODUCTS will be according to current regulatory
                           requirements and in accordance with the controlled
                           documentation approved by CLIENT.

                  5.2.3    The production of the PRODUCTS will be conducted in a
                           suitably controlled environment and such facilities
                           will be regularly monitored for parameters critical
                           to the process to demonstrate compliance with cGMP
                           guidelines and any conditions registered in the
                           manufacturing authorization.

                  5.2.4    C*P will maintain controlled access to the premise.
                           All visitors must sign-in and are escorted during any
                           visit to the areas of the premise used to
                           manufacture, test, and store the PRODUCTS.

         5.3      GMP Guidelines

                  5.3.1    The principles detailed in the US Current Good
                           Manufacturing Practices (21 CFR 200, 211, and 600)
                           and the "Rules Governing Medicinal Product in The
                           European Community - Volume IV Good Manufacturing
                           Practice for Medicinal Products" and/or World Health
                           Organization's cGMP Guidelines will cover the
                           standards of manufacture of the PRODUCTS, as well as,
                           the product specifications and any applicable product
                           license or pharmacopoeia or formulatory requirements.

         5.4      Materials

                  5.4.1    C*P will use only chemical materials, packaging, and
                           labeling components approved by CLIENT and tested in
                           accordance with the documentation reviewed and
                           approved by CLIENT.

                                      -36-

<PAGE>

                  5.4.2    Materials procured by C*P

                           5.4.2.1  C*P is responsible for ensuring that all
                                    material and components procured by C*P for
                                    use in the product is in full compliance
                                    with the specifications. Raw Materials are
                                    given a repass date upon the satisfactory
                                    completion of all initial testing. Repass
                                    testing will be performed at defined time
                                    intervals to ensure the chemical and
                                    physical stability of the raw materials
                                    unless client provides an official
                                    expiration date.

                           5.4.2.2  C*P is responsible for ensuring that all
                                    materials are used correctly, are
                                    appropriately tested upon receipt, and by
                                    holding the relevant Certificate of Analysis
                                    for the materials.

                  5.4.3    Materials Provided by CLIENT for C*P

                           5.4.3.1  Client is responsible for ensuring that all
                                    materials and components provided by CLIENT
                                    for use in the product is in full compliance
                                    with the specifications registered. CLIENT
                                    will provide C*P a Certificate of
                                    Conformance statement for the vendors that
                                    CLIENT is responsible for qualifying. C*P
                                    will perform ID tests on any materials
                                    provided by CLIENT.

         5.5      Master Production Records

                  5.5.1    C*P may transcribe the manufacturing information
                           (i.e., formulation, filing work order, packaging work
                           order) into its own format and must obtain written
                           approval from CLIENT for each document version before
                           manufacturing. However, agreed upon changes to
                           documentation will be handled as outlined by Change
                           Management (see section 10)

         5.6      Standard Operating Procedures

                  5.6.1    C*P is responsible for maintaining any SOPs required
                           to manufacture, test, and store the PRODUCTS at C*P
                           and to support GMPs.

         5.7      Batch Numbers

                  5.7.1    The convention for the C*P "Batch Identification
                           Number" (BIN) is as follows:

                           o        The first digit of the BIN is the last
                                    number of the year that the working formula
                                    was issued or the labwork was requested.

                                      -37-

<PAGE>

                           o        The second digit of the BIN is the letter
                                    that corresponds to the month that the
                                    working formula was issued or the labwork
                                    was requested. The letter assignment is as
                                    listed for the following years:

                             From 1997 through 2006

                 ----------------------------------------------
                  A = January                    G = July
                 ----------------------------------------------
                  B = February                   H = August
                 ----------------------------------------------
                  C = March                      I = September
                 ----------------------------------------------
                  D = April                      J = October
                 ----------------------------------------------
                  E = May                        K = November
                 ----------------------------------------------
                  F = June                       L= December
                 ----------------------------------------------

                             From 2007 through 2016

                 ----------------------------------------------
                  M = January                    T = July
                 ----------------------------------------------
                  N = February                   U = August
                 ----------------------------------------------
                  O = March                      W = September
                 ----------------------------------------------
                  P = April                      X = October
                 ----------------------------------------------
                  R = May                        Y= November
                 ----------------------------------------------
                  S = June                       Z= December
                 ----------------------------------------------

                           o        The third through the sixth digits are four
                                    sequential numbers that are assigned from
                                    the reserved number series (1200 to 2599)
                                    designated for routine pharmaceutical
                                    production.

         5.8      Dates of Manufacture and Expiration

                  5.8.1    Date of Manufacture - C*P will allocate the Date of
                           Manufacture based on the first day of compounding the
                           PRODUCT.

                  5.8.2    Expiration Date - C*P will calculate the expiry date
                           from the Date of Manufacture using the currently
                           approved expiry period. The expiration date will be
                           the last day of the month computed above. The current
                           approved expiration date periods can be found in
                           Appendix I.

         5.9      Manufacturing and Equipment Data

                  5.9.1    C*P is responsible for keeping records of equipment
                           usage (previous PRODUCT produced is non-dedicated
                           equipment), cleaning, and any maintenance/calibration
                           performed.

                                      -38-

<PAGE>

         5.10     Storage and Shipment

                  5.10.1   Storage - C*P will store the PRODUCTS (Schedule IV
                           controlled substances) under conditions in compliance
                           with applicable DEA regulations and approved by
                           CLIENT. C*P will ensure that during storage before
                           shipping of the PRODUCTS that there is no possibility
                           of deterioration, interference, theft, product
                           contamination, or admixture with any other materials.
                           CLIENT will provide details of any labeling
                           requirements and container sealing and integrity.

                  5.10.2   Packaging and Labeling for Transit - The PRODUCTS
                           will be suitably packaged for transit, each pallet or
                           outer container being labeled with:

                           o        PRODUCT'S Approved Name
                           o        C*P Batch Number
                           o        Quantity
                           o        CLIENT Name and Address

                  5.10.3   Mixing of PRODUCTS - C*P will maintain proper
                           segregation of the PRODUCTS according to systems
                           reviewed and approved by CLIENT. Different lots of a
                           single PRODUCT or different types of PRODUCTS will
                           not be mixed on a pallet.

                  5.10.4   Shipment of Product to CLIENT - Only approved,
                           finished (unless required by CLIENT), labeled
                           PRODUCTS will be shipped by C*P to CLIENT or CLIENT'S
                           agents. Any shipment of product from C*P which is
                           Unapproved or under Quarantine requires prior written
                           consent by the CLIENT's Quality Unit. This
                           authorization will be on a lot basis.

6.       QUALITY CONTROL
         ---------------

         6.1      General

                  6.1.1    The testing activities for the PRODUCTS are to be
                           performed by C*P are defined in the Definitive
                           Agreement. In general, C*P is responsible for GMP
                           compliance assays and for product release.

         6.2      Materials supplied by C*P

                  6.2.1    Quality control of materials supplied by C*P will be
                           undertaken by C*P.

         6.3      In-Process and Product Testing

                  6.3.1    C*P will perform all in-process and finished product
                           testing using the specifications and methods of
                           analysis listed in Appendix IV and other applicable
                           licenses.

                                      -39-

<PAGE>

                  6.3.2    A C*P Qualified Person/QA Representative will sign a
                           Certificate of Conformity/Analysis confirming that
                           the product has been manufactured, packaged, tested,
                           and meets the requirements of the Master Batch
                           Record. The current release documentation information
                           can be found in Appendix III.

                  6.3.3    CLIENT may perform testing to confirm the C*P data.
                           CLIENT may perform confirmatory testing during the
                           initial term of the agreement to validate the C*P
                           data. Periodically thereafter, CLIENT may test
                           material to confirm the C*P data. Dispute resolutions
                           in conflicting test data will be handled per Section
                           9.

         6.4      Retain Samples

                  6.4.1    Retain Samples

                           6.4.1.1  Active Ingredients - C*P will retain samples
                                    of the active ingredients for at least one
                                    year beyond the expiry period of the
                                    PRODUCTS in which used. The amount of sample
                                    retained will be twice the quantity required
                                    to carry out all of the tests required to
                                    determine if the material meets its
                                    specifications, with the exception of
                                    sterility and pyrogen testing. (CFR 21 1.1
                                    70a)

                           6.4.1.2  Products - C*P will retain samples of the
                                    PRODUCTS for at least one year beyond the
                                    expiry period. The amount of sample retained
                                    will be twice the quantity required to carry
                                    out all of the tests required to determine
                                    if the material meets its specifications,
                                    with the exception of sterility and pyrogen
                                    testing. (CFR 211.170b)

         6.5      Routine Stability Program

                  6.5.1    C*P is responsible for maintaining a routine
                           stability testing program for the PRODUCTS and will
                           provide a stability report to CLIENT annually or on
                           request. The stability program will be in compliance
                           with any license commitments as notified by CLIENT.
                           At a minimum one lot of each product, of each
                           strength and in each package type (largest and
                           smallest) will be placed on stability each year. The
                           stability program will generally follow ICH
                           guidelines. The stability protocol or any changes
                           must be approved by CLIENT.

                  6.5.2    Stability Failures - Any confirmed problems that
                           arise as a result of the stability program will be
                           immediately communicated by C*P to CLIENT.

                                      -40-

<PAGE>

         6.6      Out-of-Specification (OOS) Investigations

                  6.6.1    C*P is responsible for investigating any testing
                           performed by C*P that fails to meet specification.
                           C*P will immediately notify CLIENT in the event of a
                           specification failure. Each investigation will be
                           reviewed by C*P's designated Quality person, and will
                           follow the procedures recommended by regulatory
                           agencies.

7        QUALITY ASSURANCE
         -----------------

         7.1      Deviations and Investigations

                  7.1.1    Deviations - Any deviation from the process during
                           manufacture must be carefully explained and
                           documented in the batch records, justified, and
                           approved by C*P Quality Assurance and Production
                           Managers and included in the document package. Batch
                           records that contain significant process deviations
                           will be highlighted to CLIENT.

                  7.1.2    Failure Investigations - C*P is responsible for
                           investigating any test result or in-process test
                           which fails to meet specification. Each investigation
                           will be reviewed and approved by C*P's designated
                           Quality person and by CLIENT. The investigation must
                           document that any failure has not jeopardized the
                           safety, efficacy, or quality of the PRODUCT.

                  7.1.3    C*P will notify the CLIENT of any batch of PRODUCTS
                           rejected by C*P.

                  7.1.4    C*P will notify the CLIENT if any problems are
                           discovered that may impact PRODUCTS batch(s)
                           previously shipped to CLIENT.

                  7.1.5    Some deviations/failures may require that additional
                           testing, stability, or validation be conducted. This
                           work will be performed by C*P as agreed by both
                           parties.

         7.2      Batch Disposition

                  7.2.1    For each batch, C*P will provide the documentation
                           required in Appendix III.

                  7.2.2    Certificate of Compliance

                           7.2.2.1  C*P is responsible for ensuring and
                                    certifying that the PRODUCTS have been
                                    manufactured according to the
                                    specifications/procedures documented in the
                                    Master Production Records.

                                      -41-

<PAGE>

                           7.2.2.2  C*P Qualified Person/QA Representative will
                                    sign a Certificate of Compliance confirming
                                    that the PRODUCTS have been manufactured,
                                    tested and stored according to the
                                    requirements of the Master Production
                                    Record.

         7.3      Product Release

                  7.3.1    Release of the PRODUCTS is the absolute
                           responsibility of CLIENT Quality and will be
                           undertaken by CLIENT based on CLIENT's internal
                           procedures, the full document package provided by
                           C*P, and completion of any release testing required
                           by CLIENT Quality Control.

                  7.3.2    Any problem discovered by CLIENT likely to cause
                           rejection of the PRODUCTS will be communicated to C*P
                           within 30 days from receipt of the full release
                           documentation package (see Appendix III).

         7.4      Product Complaints and Recalls

                  7.4.1    Product Complaints - CLIENT is responsible for
                           receiving and initially investigating any PRODUCTS
                           complaints. CLIENT will notify C*P of any problems
                           thought to be due to manufacture, which are found
                           during the distribution of the product. When
                           requested by CLIENT, C*P will promptly perform
                           investigations for these problems. Investigation
                           reports will be forwarded to CLIENT within 30 days.

                  7.4.2    Product Recall - CLIENT is responsible for
                           instituting a PRODUCTS recall due to any defect
                           considered sufficiently serious. CLIENT will notify
                           C*P of any recall which may be due to the
                           manufacturing of PRODUCTS. C*P will provide a rapid
                           initial response and a full report within ten working
                           days.

         7.5      Records Retention

                  7.5.1    C*P will retain, at a minimum, batch production
                           records for the PRODUCTS and materials for the expiry
                           date of the PRODUCTS plus one year.

         7.6      QA Presence in the Manufacturing Facility

                  7.6.1    C*P will maintain adequate QA presence in the
                           manufacturing facility during the manufacture of the
                           PRODUCTS to ensure compliance with GMPs.

                  7.6.2    C*P will permit CLIENT presence in the manufacturing
                           facility during the manufacture of the PRODUCTS, if
                           requested by CLIENT.

                                      -42-

<PAGE>

8        REGULATORY COMPLIANCE
         ---------------------

         8.1      Regulatory Inspections

                  8.1.1    C*P will immediately inform CLIENT of any regulatory
                           inspections that may involve the PRODUCTS and permit
                           a representative from CLIENT Quality to be present,
                           if required by CLIENT.

                  8.1.2    C*P will secure CLIENT's agreement prior to making
                           any commitment to a regulatory agency regarding
                           CLIENT's PRODUCTS.

                  8.1.3    Additionally, C*P will immediately forward any
                           regulatory correspondence on the PRODUCTS to CLIENT.

                  8.1.4    CLIENT will inform C*P in writing of any regulatory
                           issue that impacts C*P's ability to manufacture the
                           PRODUCTS.

         8.2      Regulatory Actions

                  8.2.1    CLIENT will notify C*P of any regulatory actions on
                           the PRODUCTS that may impact C*P.

                  8.2.2    C*P is responsible for supporting all batch record
                           investigations associated with regulatory actions.

                  8.2.3    C*P agrees to supply CLIENT with any manufacturing,
                           testing, or storage data within 48 hours, if
                           requested, as the result of a regulatory inspection,
                           or a potential regulatory exposure such as a recall
                           or significant product complaint.

         8.3      Right to Audit

                  8.3.1    C*P will allow representatives from CLIENT Quality to
                           have access to their manufacturing, warehousing,
                           laboratory premises, and records for audit purposes
                           listed below in 8.3.2 through 8.3.4. CLIENT
                           representatives will be escorted at all times by C*P
                           personnel.

                  8.3.2    C*P will permit CLIENT Quality to conduct preparatory
                           audits either for initiation of GMP manufacture of
                           the PRODUCTS or for preapproval inspections (PAI).

                  8.3.3    C*P will permit CLIENT Quality to conduct audits to
                           address significant product quality or safety
                           problems.

                  8.3.4    C*P will permit CLIENT Quality to perform one
                           standard GMP compliance audit per year.

                                      -43-

<PAGE>

         8.4      Audit Closeout

                  8.4.1    An exit meeting will be held with representatives
                           from C*P and CLIENT to discuss significant audit
                           observations.

                  8.4.2    CLIENT will provide a written report of all
                           observations within 30 days to C*P. Within 30 days of
                           the audit report receipt, C*P will provide a written
                           response to all findings that details corrective
                           action to be implemented. C*P will follow up to
                           ensure that all corrective actions are implemented.

9        DISPUTE RESOLUTION
         ------------------

         9.1      Non-Conformity Dispute

                  9.1.1    In the event that a dispute arises between C*P and
                           CLIENT in the nonconformity of a batch of the
                           PRODUCTS, the heads of Quality from both companies
                           shall in good faith promptly attempt to reach an
                           agreement. Whatever the outcome, CLIENT Quality
                           retains the absolute right to determine product
                           release status. Financial liability is determined in
                           the Definitive Agreement.

         9.2      Test Result Dispute

                  9.2.1    In the event that a dispute arises between C*P and
                           CLIENT in the testing performed by C*P for the
                           PRODUCTS, the resolution will proceed in stages. The
                           first stage requires direct communication between
                           analysts from both parties to determine that the
                           methods of analysis are the same and are being
                           executed in the same manner at both sites. Second,
                           carefully controlled and split samples should be sent
                           from one site to another in an attempt to reach
                           agreement. Should there be a failure to achieve
                           resolution, analysts from both parties will be
                           required to meet to work through the analysis of a
                           mutually agreeable sample. If these actions fail to
                           achieve resolution, and only after these avenues have
                           been exhausted, a qualified referee laboratory will
                           be used to achieve resolution. This laboratory must
                           be agreeable to both parties prior to use. The
                           results from this referee laboratory will be used as
                           final authority to determine responsibilities, but
                           whatever the outcome, CLIENT retains the right to
                           determine product release status. Financial liability
                           is determined in the Definitive Agreement.

                                      -44-

<PAGE>

10.      CHANGE MANAGEMENT
         -----------------

         10.1     Controlled Documentation

                  10.1.1   All manufacturing, testing, and storage operations
                           performed by C*P for the PRODUCTS will have CLIENT
                           Quality review and written approval.

                  10.1.2   Any significant changes as described in CLIENT's
                           Change Control Procedure/Form for Contracted
                           Suppliers or to this agreement will be mutually
                           agreed upon prior to implementation. All required
                           regulatory approvals will be obtained prior to
                           implementation.

         10.2     Change Control

                  10.2.1   Changes to the controlled documents or to validated
                           equipment and systems specific to the PRODUCTS must
                           have CLIENT Quality written approval, prior to
                           implementation.

                  10.2.2   Administrative changes to the controlled documents
                           (e.g., typo corrections, formatting) do not require
                           CLIENT Quality written approval prior to
                           implementation, but these changes must be submitted
                           to CLIENT Quality in a timely way for review and
                           approval.

11.      PRODUCT AND PROCESS VALIDATION
         ------------------------------

         11.1     Process - C*P is responsible for ensuring that the
                  manufacturing process is validated. The validation should
                  ensure that the process is capable of consistently achieving
                  the PRODUCTS acceptance specification.

         11.2     Cleaning Validation - C*P is responsible for ensuring that
                  adequate cleaning is carried out between batches of different
                  products to prevent contamination. CLIENT will provide
                  information (i.e. LD50, toxicity, solubility, batch size, fill
                  volume, product min dose/70Kg patient) to establish cleaning
                  limits. The cleaning procedure and analytical methodology will
                  be reviewed before the first product batches are made.

         11.3     Equipment, Computer, Facility, and Utilities Qualification -
                  C*P is responsible for all equipment, computer, facility, and
                  utility qualification activities associated with the PRODUCTS.

         11.4     Laboratory Qualification - C*P is responsible for ensuring
                  that all laboratories are compliance with cGMP's and are
                  qualified in all of the methodology associated with the
                  PRODUCTS. If analytical work is performed at C*P then the
                  client will also provide any existing analytical documentation
                  to assist in methods transfer or methods validation. In
                  addition, if analytical work is not performed at the
                  Greenville site, C*P may elect to perform an audit on vendors
                  to be used for analytical testing.

                                      -45-

<PAGE>

12.      ANNUAL PRODUCT REVIEW, ANNUAL REPORT AND DRUG LISTING
         -----------------------------------------------------

         12.1     Annual Product Review

                  12.1.1   C*P will perform an Annual Product Review for the
                           PRODUCTS and will issue a report to CLIENT. This
                           report will cover all manufacturing, testing, and
                           storage activities performed by C*P. It will be a
                           review of stability data, investigations, and any
                           changes at C*P in the manufacturing, testing, storage
                           or validation of the PRODUCTS in the previous
                           calendar year and a summary of lots made, released,
                           and rejected. Also, control charting or trend
                           analysis of key product parameters will be performed.
                           Any abnormalities will be explained in the annual
                           review.

                  12.1.2   Client is responsible for preparing any Annual Report
                           as required by applicable regulations, including 21
                           CFR 314.7(g)(3), 314.81(b)(2), and/or 601.12(d),
                           (f)(3). At least 90 calendar days before the Annual
                           Report due date, CLIENT shall request in writing from
                           C*P the chemistry, manufacturing, and controls data
                           required for submission of the Annual Report. C*P
                           will provide the requested information to CLIENT
                           within 30 days.

         12.2     Annual Manufacturing Process Change Report

                  12.2.1   CLIENT is responsible for preparing the Annual
                           Manufacturing Process Change Report as required by 21
                           CFR 601.12(d). At least 90 calendar days before the
                           Annual Report due date, CLIENT shall request in
                           writing from C*P the chemistry, manufacturing, and
                           controls data required for submission of the Annual
                           Report. C*P will provide the requested information to
                           CLIENT within 30 days.

         12.3     Drug Listing

                  12.3.1   C*P is responsible for drug listing as the
                           manufacturer of the PRODUCTS, while CLIENT is
                           responsible for drug listing as the distributor of
                           the PRODUCTS. CLIENT will provide C*P with all
                           required information needed by them for their
                           listing. CLIENT will notify C*P of the scheduled
                           product launch.

                                      -46-

<PAGE>

                                   APPENDIX I
                                  The PRODUCTS

                        Provigil 100 mg, bulk tablets

                        Provigil 100 mg, 30 count blister

                        Provigil 100 mg, 100 count bottle

                        Provigil 200 mg, bulk tablets

                        Provigil 200 mg, 6 count bottle

                        Carton x 2 bottles

                        Provigil 200 mg x 100 count

                                      -47-

<PAGE>

<TABLE>
<CAPTION>
                                     APPENDIX II

                              List of Quality Contacts
                             (name, phone, fax, e-mail)

-------------------------------------------------------------------------------------
ISSUE                     CLIENT                       C*P
-------------------------------------------------------------------------------------
<S>                       <C>                          <C>
Product Release           Timothy Sheehan              Jason Williams
                          Ph: (610) 738-6574           Ph: (252) 707-2182
                          Fax: (610) 738-6642          Fax: (252) 707-7306
                          tsheehan@cephalon.com        jwilliams@catalytica-pharm.com
                          ---------------------
-------------------------------------------------------------------------------------
QC Testing                Matthew Hulbert
                          Ph: (610) 738-6513
                          Fax: (610) 738-6315
                          mhulbert@cephalon.com
                          ---------------------
-------------------------------------------------------------------------------------
Investigations            Timothy Sheehan              Kathleen Bussell
                          Ph: (610) 738-6574           Ph: (252) 707-2128
                          Fax: (610) 738-6642          Fax: (252) 707-2207
                          tsheehan@cephalon.com        kbussell@catalytica-pharm.com
                          ---------------------
-------------------------------------------------------------------------------------
Stability                 Joseph Johnson               Kirit Amin
                          Ph: (610) 738-6462           Ph: (252) 707-2372
                          Fax: (610) 738-6640          Fax: (252) 707-7027
                          jjohnson@cephalon.com        kamin@catalytica-pharm.com
                          ---------------------
-------------------------------------------------------------------------------------
Validation                Robert Urban
                          Ph: (610) 738-6119
                          Fax: (610) 738-6315
                          rurban@cephalon.com
                          -------------------
-------------------------------------------------------------------------------------
Compliance Audits         Timothy Sheehan              Kathleen Bussell
                          Ph: (610) 738-6574           Ph: (252) 707-2128
                          Fax: (610) 738-6642          Fax: (252) 707-2207
                          tsheehan@cephalon.com        kbussell@catalytica-pharm.com
                          ---------------------
-------------------------------------------------------------------------------------
Product Complaints        Timothy Sheehan              Kathleen Bussell
                          Ph: (610) 738-6574           Ph: (252) 707-2128
                          Fax: (610) 738-6642          Fax: (252) 707-2207
                          tsheehan@cephalon.com        kbussell@catalytica-pharm.com
                          ---------------------
-------------------------------------------------------------------------------------
Change Management         Robert Urban                 Maduhkar Mehta
                          Ph: (610) 738-6119           Ph: (252) 707-2004
                          Fax: (610) 738-6315          Fax: (252) 707-2134
                          rurban@cephalon.com          mmehta@catalytica-pharm.com
                          -------------------
-------------------------------------------------------------------------------------
</TABLE>

                                      -48-

<PAGE>

                                  APPENDIX III

                              Release Documentation

The Batch/Lot Release Document Package will include a Certificate of Analysis
         and a Certificate of Compliance.

A Certificate of Analysis (CofA)
-------------------------

This document will include the name of the PRODUCT, the batch number and the
date of manufacture. The COA will list the In-Process QC tests performed by C*P
and actual test results. The COA will also list the product release QC tests
performed by C*P and actual test results.

A Certificate of Compliance (CofC)
---------------------------

This document will attest to the fact that the batch of PRODUCTS was made in
accordance with all applicable regulations, product licenses, and company
policies. This annulment will include the batch quantity approved, the batch
yield, and the expiration date. It will also include a listing of all
manufacturing variances and/or incidents for the batch that have been
adjudicated

                                      -49-

<PAGE>

                                   Schedule D
                                   ----------

               Product Validation and Stability Testing Procedures
               ---------------------------------------------------

The parties have agreed upon all those applicable specifications for Product
validation and stability testing as set forth in the following documents. The
parties shall agree upon any modifications to any such specifications.

[**]

                                      -50-

<PAGE>

                                   Schedule E
                                   ----------

                                  Tolling Fees
                                  ------------

         CEPHALON shall pay CATALYTICA the following amounts in consideration of
the formulation and packaging services rendered hereunder:

[**]

         Beginning on the first anniversary of the effective date of this
Agreement and on each anniversary thereafter, the above tolling fees shall be
increased by the percentage change from the immediately preceding anniversary
date in the Producer Price Index (PPI), Pharmaceutical Preparations, Ethical
(Prescription), series code PCU-2834 #1, as published by the Bureau of Labor
Statistics of the U.S. Department of Labor for the region in which the
production facility is located, or comparable successor index. The tolling fees
shall be renegotiated and agreed upon by the parties prior to any renewal term.

                                      -51-

<PAGE>

                                   Schedule F
                                   ----------

                               Minimum Quantities
                               ------------------

The minimum annual quantities to be purchased by CEPHALON and capacity to be
reserved by CATALYTICA, are as follows for the initial term of this agreement:

                        Year*   Quantity
                        ----    --------
                        2000    [**]
                        2001    [**]
                        2002    [**]
                        2003    [**]
                        2004    [**]

Pursuant to Section 3.1, if the actual annual quantity exceeds the minimum
annual quantity in any year by twenty-five percent (25%) or less, this excess
will reduce the minimum annual quantity in the following year.

                                      -52-

<PAGE>

                                   Schedule G
                                   ----------

                                    Equipment
                                    ---------

The following Product-specific equipment will be [**], and [**] shall have no
[**] with respect thereto:

                      [**]

The following equipment will be [**] and [**] (such equipment shall be [**]
therefor):

                      [**]

The following equipment (make, model, size) will be utilized by CATALYTICA to
manufacture the Product:

                      [**]

                                      -53-<PAGE>

                                                                Exhibit 10.16(b)

                                       July 2, 2001

Ms. Trudy Briley
DSM Catalytica Pharmaceuticals
P.O. Box 1887
Greenville, NC 27835-1887

         Re:      Amendment No. 1 to Toll Manufacturing and Packaging Agreement
                  -------------------------------------------------------------

Dear Ms. Briley:

         This letter is to confirm our understanding concerning an amendment to
be made with respect to the Toll Manufacturing and Packaging Agreement dated as
of August 24, 1999 (the "Agreement"), between Cephalon, Inc. ("Cephalon") and
DSM Catalytica Pharmaceuticals, Inc. ("Catalytica"). All terms not otherwise
defined herein are used as defined in the Agreement.

         The purpose of this Amendment is to increase the minimum annual
quantities of Product to be purchased by Cephalon and to increase the
manufacturing capacity reserved by Catalytica for the remainder of the Initial
Term of the Agreement.

         The Agreement is hereby amended as follows:

         1.       Existing Schedule F of the Agreement relating to Minimum
Quantities shall be deleted in its entirety and replaced with the attached
revised Schedule F.

         2.       Except as amended hereby, the Agreement remains in full force
and effect.

         If the foregoing accurately reflects your understanding as to these
matters, please indicate your agreement in the space provided below, and return
one fully-executed original to me.

                                       Very truly yours,

                                       \s\ Robert Urban
                                       Vice President, Technical Operations

Acknowledged and agreed to by:

DSM CATALYTICA PHARMACEUTICALS, INC.

By: \s\ Michael H. Thomas
    --------------------------------
Name: Michael H. Thomas
Title: President & CEO

      **Certain portions of this document have been omitted based upon a
request for confidential treatment that has been filed with the Commission.
The omitted portions have been filed separately with the Commission.0

<PAGE>

                                  Schedule F
                                  ----------

                              Minimum Quantities
                              ------------------

The minimum annual quantities to be purchased by CEPHALON and capacity to be
reserved by CATALYTICA, are as follows for the remainder of the Initial Term of
this Agreement:

              Year    Quantity
              ----    --------
              2001    [**]

              2002    [**]

              2003    [**]

              2004    [**]

Pursuant to Section 3.1, if the actual annual quantity exceeds the minimum
annual quantity in any year by twenty-five percent (25%) or less, this excess
will reduce the minimum annual quantity in the following year

                                      A-1

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