<PAGE>
                                                                    EXHIBIT 10.1




         Portions of this Exhibit have been redacted and are the subject of a
confidential treatment request filed with the Secretary of the Securities and
Exchange Commission.



                                     Page 1


<PAGE>








                                SUPPLY AGREEMENT


         This Supply Agreement ("Agreement") is entered into on this 2nd day of
February, 2005 (the "Effective Date"), by and between Schwarz Pharma
Manufacturing, Inc., an Indiana corporation, doing business at 1101 "C" Avenue
West, Seymour, Indiana 47274 ("Schwarz"), and OSI Pharmaceuticals, Inc., a
Delaware corporation with executive offices at 58 South Service Road, Melville,
New York 11747 ("OSI").


                                    RECITALS


         WHEREAS, OSI is a developer and marketer of pharmaceutical products,
including the Product (as hereinafter defined);

         WHEREAS, OSI would like to engage Schwarz to manufacture and supply its
commercial and clinical requirements of the Product for OSI pursuant to the
terms hereof; and

         WHEREAS, Schwarz has the capability and capacity to manufacture and
supply the Product pursuant to the terms hereof.

         NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants contained herein, and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged by the parties, the
parties agree as follows:

                     ARTICLE 1. DEFINITIONS; INTERPRETATION

1.1      "Act" shall mean the United States Food, Drug and Cosmetic Act (21
         U.S.C. 301, et seq.) and regulations promulgated thereunder, as each
         may be amended from time to time.

1.2      "Affiliate" shall mean, with respect to a party, any person or entity
         controlling, controlled by or under common control with such party,
         with the term "control" (and its derivatives) meaning the direct or
         indirect ownership of fifty percent (50%) or more of the voting common
         stock or similar equity ownership interest or any other arrangement
         whereby a party controls or has the right to control the Board of
         Directors or equivalent governing body of a corporation or entity.

1.3      "API" shall mean the active pharmaceutical ingredient known as
         erlotinib hydrochloride (formerly OSI-774-01).

1.4      "API Specifications" shall mean the specifications for the API as set
         forth in Schedule 1.4 attached hereto, with such modifications as
         Schwarz and OSI may agree upon from time to time or as may be requested
         by OSI from time to time and consented to in writing by Schwarz, which
         consent shall not be unreasonably withheld. Any such modification


                                     Page 2
<PAGE>

         shall become effective upon being reduced to a writing signed by the
         appropriate representatives of each party, whereupon Schedule 1.4 shall
         be amended or replaced in accordance with such signed writing.

1.5      "cGMP" shall mean current good manufacturing practices required by the
         Act and all applicable regulations thereunder.

1.6      "Failure to Supply" shall mean that, during any ** period during the
         Term (which period shall be measured as set forth below), (i) multiple
         instances of Inability to Supply have occurred and (ii) as a result of
         such instances of Inability to Supply, the aggregate quantity of
         Product that Schwarz has supplied during such ** period, either on time
         or within the ** cure period applicable to any Inability to Supply,
         represents less than ** of the aggregate quantity of Product specified
         in Valid Purchase Orders submitted to Schwarz in accordance with this
         Agreement for shipment during such ** . The ** period applicable to any
         determination of whether a Failure to Supply has occurred shall
         commence upon the required delivery date specified in the Valid
         Purchase Order to which the first applicable instance of Inability to
         Supply relates. Notwithstanding the foregoing, in the event that the
         amount of Product specified in any Valid Purchase Order to which an
         Inability to Supply relates constitutes more than ** of the aggregate
         amount of all Product specified in Valid Purchase Orders submitted to
         Schwarz in accordance with this Agreement for shipment during any **
         period as measured in accordance with this Article 1.6, then the total
         amount that Schwarz shall be deemed to have failed to timely supply as
         a result of such Inability to Supply shall be limited to such amount
         that is ** of such aggregate amount.

1.7      "FDA" shall mean the United States Food and Drug Administration.

1.8      "Inability to Supply" shall mean, with respect to any Valid Purchase
         Order submitted to Schwarz in accordance with the terms of this
         Agreement, that (i) subject to the last sentence of Article 2.3.5,
         Schwarz has failed to supply at least the aggregate quantity of Product
         specified in such Valid Purchase Order on or prior to the delivery date
         specified in such Valid Purchase Order and (ii) Schwarz has failed to
         cure such failure within ** following Schwarz's receipt of written
         notice from OSI of such failure by supplying, prior to the expiration
         of such ** period, the quantity of Product which, together with the
         quantity theretofore supplied in respect of such Valid Purchase Order,
         equals at least the aggregate quantity of Product specified in such
         Valid Purchase Order. Schwarz shall give written notice to OSI prior to
         the expiration of such ** period, specifically referencing this Article
         1.8, in the event Schwarz, in its sole discretion, determines that it
         is incapable of curing such failure within ** , in which event an
         Inability to Supply shall be deemed to have arisen as of the date of
         such notification; provided that under no circumstances shall Schwarz
         have any liability to OSI hereunder in the event no such notification
         is given.


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                                     Page 3


<PAGE>

1.9      "NDA" shall mean the New Drug Application filed with the FDA in respect
         of the Product, including any sNDA and all subsequent submissions in
         respect of such New Drug Application or any such sNDA.


1.10     "Product" shall mean the pharmaceutical drug product containing
         erlotinib HCl for human use currently known as Tarceva(TM) as intended
         for either clinical or commercial use; provided that the intravenous
         (IV) and oral solution/suspension formulations of Tarceva(TM) developed
         by OSI shall not be included within this definition.

1.11     "Product Specifications" shall mean the specifications for the Product
         as set forth in Schedule 1.11 attached hereto, with such modifications
         as Schwarz and OSI may agree upon from time to time or as may be
         requested by OSI from time to time and consented to in writing by
         Schwarz, which consent shall not be unreasonably withheld. Any such
         modification shall become effective upon being reduced to a writing
         signed by the appropriate representatives of each party, whereupon
         Schedule 1.11 shall be amended or replaced in accordance with such
         signed writing.

1.12     "Proprietary Information" shall mean all confidential information
         disclosed by either party to the other hereunder and designated in
         writing by the disclosing party as "Confidential" (or equivalent), and
         all material disclosed orally which is declared to be confidential by
         the disclosing party, and shall include trade secrets, methods of
         manufacture and operation, and any other technical data, provided by a
         party or used in connection with the development, manufacture or sale
         of a Product, including without limitation, the API Specifications, the
         Product Specifications, Product formula, know-how, experimental data,
         inventions, discoveries, improvements, processes, methods,
         developments, ideas, suggestions, devices, Master Batch Records,
         production batch records, clinical and pre-clinical data; documents,
         memoranda, customer reports, customer data, marketing strategy, Product
         costs and other financial information; licenses, and other intellectual
         property rights, and any other information about the general business
         operations as presently conducted by a party, or its Affiliate.

1.13     [RESERVED]

1.14     "Territory" shall mean the United States of America, its territories
         and possessions and the Commonwealth of Puerto Rico.

1.15     "Trademark(s)" shall mean the trade name(s) used by OSI for the sale
         and promotion of the Product as listed in Schedule 1.15 attached
         hereto, as may be amended from time to time.

1.16     "Valid Purchase Order" shall mean a purchase order which meets the
         requirements of Article 2.

1.17     Other Defined Terms. The following terms are defined in the Articles or
         other sections of the Agreement indicated below.


                                     Page 4
<PAGE>



           **  Fee......................................................2.1.2
           **  Notice...................................................2.1.2
           **  Right....................................................2.1.2
         Agreement...................................................preamble
         Article 2.1.3 Fee..............................................2.1.3
         Article 2.1.3 Right............................................2.1.3
         Claim...........................................................13.1
         Detailed Product Forecast......................................2.3.2
         Effective Date..............................................preamble
         Long-Term Product Forecast.....................................2.3.1
         Manufacturing Documentation....................................8.6.2
         Manufacturing Process..........................................8.6.1
         OSI.........................................................preamble
         OSI Indemnitees.................................................13.1
         Purchase Order Agreement........................................17.9
         Quality Assurance Agreement......................................2.8
         Requirements...................................................2.1.1
         Schwarz.....................................................preamble
         Schwarz Indemnitees.............................................13.2
         Term.............................................................8.1

1.18     Interpretation. Unless otherwise indicated to the contrary herein by
         the context or use thereof: (a) the words, "herein," "hereto,"
         "hereof," and words of similar import refer to this Agreement as a
         whole and not to any particular Section or paragraph hereof; (b) the
         word "including" means "including, but not limited to"; (c) words
         importing the singular will also include the plural, and vice versa;
         and (d) any reference to any federal, state, local, or foreign statute
         or law will be deemed also to refer to all rules and regulations
         promulgated thereunder. References to "$" or "Dollars" will be
         references to United States Dollars.



                           ARTICLE 2. TERMS OF SUPPLY

2.1      Exclusivity.

         2.1.1    Subject to the terms and conditions of this Agreement,
                  including Articles 2.1.2 and 2.1.3, (i) OSI agrees to purchase
                  exclusively from Schwarz pursuant to the terms of this
                  Agreement OSI's entire commercial and clinical requirements of
                  the Product for use, distribution, sale or resale in the
                  Territory (hereinafter referred to as OSI's "Requirements")
                  and (ii) OSI shall not manufacture itself or purchase or
                  procure from any other manufacturer or source, including any
                  of its Affiliates, partners or any other parties with which
                  any of them has entered into any

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                                     Page 5



<PAGE>

                  collaboration arrangement regarding the Product, any of its
                  Requirements of the Product. For the avoidance of doubt,
                  except as expressly provided in this Agreement, OSI shall not
                  obtain any of its Requirements of the Product manufactured by
                  Schwarz from any third party (including, but not limited to,
                  F. Hoffman-LaRoche Ltd. or any of its Affiliates).

         2.1.2    Notwithstanding Article 2.1.1, subject to the terms of this
                  Article 2.1.2, commencing after the second anniversary of the
                  Effective Date, OSI shall have the right (the " ** Right") to
                  manufacture for itself or purchase or procure from any of its
                  Affiliates or any third party up to ** of its Requirements of
                  the Product during any one or more calendar years, as
                  determined on the basis of the aggregate quantities of the
                  Product actually purchased from Schwarz, manufactured by OSI
                  and purchased or procured by OSI from any Affiliate of OSI or
                  any third party. The ** Right shall be exercisable on a
                  calendar year-by-calendar year basis and OSI shall have no
                  right to manufacture itself or procure from any party other
                  than Schwarz any of OSI's Requirements for the Product during
                  any calendar year in respect of which the ** Right has not
                  been exercised in accordance herewith. In order to exercise
                  the ** Right, OSI shall deliver written notice (a " **
                  Notice") to Schwarz not less than thirty (30) days prior to
                  placing an order for any portion of its Requirements of the
                  Product with an Affiliate of OSI or a third party or
                  commencing manufacture of any portion of its Requirements of
                  the Product itself. Not later than two (2) weeks after the
                  date on which OSI places any such order for any portion of its
                  Requirements of Product with an Affiliate or third party,
                  commences manufacture of any portion of its Requirements of
                  the Product itself or otherwise initiates supply of any
                  portion of its Requirements of the Product pursuant to its
                  exercise of the ** Right in a given calendar year, OSI shall
                  pay Schwarz ** (the " ** Fee") by wire transfer of immediately
                  available funds to an account designated by Schwarz. In no
                  event shall the ** Fee be pro rated, including on the basis of
                  when during the applicable calendar year the ** Notice is
                  given or in the event that less than ** of OSI's Requirements
                  of the Product for such calendar year are actually purchased
                  or procured from parties other than Schwarz. For the avoidance
                  of doubt, the ** Fee will be payable in respect of each
                  calendar year for which the ** Right is exercised. After
                  delivering a ** Notice, OSI shall provide to Schwarz quarterly
                  written reports specifying the amount of Product manufactured
                  by OSI or purchased or procured from a party other than
                  Schwarz during the preceding quarter, which reports shall be
                  certified by an officer of OSI and shall be delivered to
                  Schwarz within thirty (30) days following the end of each
                  calendar quarter during each year in respect of which a **
                  Notice has been given. Once per year during the Term, OSI
                  shall permit Schwarz and its authorized representatives to
                  review its books and records to the extent reasonably required


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                                     Page 6
<PAGE>

                  to verify compliance with this Article 2.1.2 upon prior notice
                  and during normal business hours.

         2.1.3    Notwithstanding Article 2.1.1, subject to the terms of this
                  Article 2.1.3, at any time following the fifth anniversary of
                  the Effective Date, OSI or an Affiliate of OSI shall have the
                  right (the "Article 2.1.3 Right") to manufacture, in its own
                  capacity, all or a portion of OSI's Requirements of the
                  Product during the remainder of the Term. OSI may exercise the
                  Article 2.1.3 Right by delivering written notice to Schwarz
                  not less than ninety (90) days prior to commencing manufacture
                  of all or a portion of OSI's Requirements of the Product.
                  Concurrently with delivery of such notice, OSI shall pay
                  Schwarz ** (the "Article 2.1.3 Fee") by wire transfer of
                  immediately available funds to an account designated by
                  Schwarz.

         2.1.4    Anything to the contrary notwithstanding, for purposes of this
                  Agreement, OSI's Requirements shall be deemed to include all
                  of the following parties' requirements of the Product for use,
                  distribution, sale and resale in the Territory: OSI and its
                  Affiliates and partners and any other party with whom any of
                  them has entered into any collaboration arrangement involving
                  the Product. OSI shall not avoid its purchase obligations
                  under this Agreement by purchasing or selling Product
                  indirectly through distributors, co-promotion partners,
                  licensees or similar purchasing or selling arrangements.

         2.1.5    For the avoidance of doubt, (i) in no event shall OSI's
                  exercise of the ** Right diminish OSI's obligations pursuant
                  to Article 2.1.1 in respect of the remaining ** of OSI's
                  Requirements for any year during which the ** Right has been
                  exercised or OSI's obligations pursuant to Article 2.1.1 in
                  respect of any year during which the ** Right has not been
                  exercised and (ii) in no event shall any exercise by OSI of
                  the ** Right or the Article 2.1.3 Right affect, diminish or
                  otherwise modify any provision of this Agreement other than
                  Article 2.1.1.

         2.1.6    Subject to the terms and conditions of this Agreement, OSI
                  shall be permitted to resell Product purchased from Schwarz
                  hereunder to F. Hoffman-LaRoche Ltd. corresponding solely to
                  special license sales to be made by F. Hoffman-LaRoche Ltd.
                  within Europe prior to such time as F. Hoffman-LaRoche Ltd.
                  receives marketing approval to sell its own erlotinib
                  hydrochloride product within the country in question; provided
                  that OSI shall bear all responsibility and expense regarding
                  legal and regulatory compliance associated with such sales.
                  OSI hereby represents and warrants that such sales shall only
                  be made in full compliance with all applicable legal and
                  regulatory requirements.

2.2      Supply of Product, API and Raw Materials. Subject to the terms and
         conditions of this Agreement, Schwarz agrees to supply the Product to
         OSI in accordance with the Product Specifications, cGMP, any applicable
         laws and regulations, and the Quality Assurance



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                                     Page 7
<PAGE>


         Agreement and in the quantities ordered and at the delivery times
         agreed upon by the parties pursuant to this Article 2. OSI shall supply
         to Schwarz without charge (unless otherwise required herein) all API,
         conforming to the API Specifications, which is required to manufacture
         Product hereunder. OSI shall supply API which meets the API
         Specifications on dates and in amounts necessary to allow Schwarz to
         supply Product to OSI consistent with the forecasts set forth in this
         Article 2 and shall ensure that Schwarz is at all times in possession
         of sufficient API which meets API Specifications to meet such
         forecasts. Schwarz shall supply all other necessary raw materials for
         the manufacture and packaging of the Product in accordance with the
         terms of this Agreement. Notwithstanding any other provision of this
         Agreement, Schwarz shall not be liable for any failure or delay to meet
         its obligations hereunder, to the extent such failure or delay is
         attributable to OSI's failure or delay to supply API which meets the
         API Specifications on a timely basis. Schwarz shall promptly notify OSI
         in writing if it becomes apparent to Schwarz that any API does not meet
         the API Specifications. Each party acknowledges that OSI shall be
         responsible for all aspects of securing and maintaining API supply,
         including, without limitation, obtaining FDA approval for any and all
         API suppliers and complying with all relevant legal and regulatory
         requirements regarding API supply. Schwarz will provide monthly
         inventory reports of the API held by Schwarz. Schwarz and OSI agree and
         acknowledge that a true and correct report of Schwarz's inventory of
         the API as of the Effective Date is set forth in Schedule 2.2. These
         reports should be delivered no later than the close of business on the
         nineteenth (19th) day of each calendar month for the preceding month.
         Schwarz will exercise reasonable commercial efforts to ensure the
         accuracy of these inventory reports through proper internal controls.
         OSI or its designee shall have the right to inspect Schwarz's inventory
         reports and may at its own expense conduct a physical inventory of any
         OSI assets being held by Schwarz not more frequently than once each
         calendar year upon reasonable notice to Schwarz.

2.3      Forecasts.

         2.3.1    Long-Term Forecasts for Required Product. No later than
                  January 15th of each calendar year during the Term, OSI shall
                  provide Schwarz with a forecast (a "Long-Term Product
                  Forecast") setting forth OSI's estimate of its Requirements of
                  Product for each of the three (3) years following the date of
                  such forecast, which shall in all cases represent a good faith
                  estimate of its actual demand for the Product based on market
                  conditions and OSI's need for a reasonable safety stock. The
                  initial Long-Term Product Forecast is attached hereto as
                  Schedule 2.3.1.

         2.3.2    Detailed Forecast for Required Product. OSI shall also provide
                  Schwarz with a detailed rolling forecast setting forth OSI's
                  Requirements for the Product for each calendar quarter during
                  the succeeding twelve (12) month period (each, a "Detailed
                  Product Forecast") which shall in all cases represent a good
                  faith estimate of actual demand for the Product based on
                  market conditions and OSI's need for a reasonable safety
                  stock, the first quarter of which shall constitute a single
                  firm purchase order from OSI for all purposes hereunder. The
                  initial


                                     Page 8
<PAGE>
                  Detailed Product Forecast for the period ** is attached hereto
                  as Schedule 2.3.2 and shall be updated quarterly for the
                  subsequent twelve (12) months no later than ** preceding the
                  first month of the first calendar quarter in question, so that
                  each quarter Schwarz shall have been provided with a rolling
                  Detailed Product Forecast for each calendar quarter during the
                  twelve (12) month period commencing ** after the date on which
                  such Detailed Product Forecast is due. The Detailed Product
                  Forecast shall be accompanied by a purchase order for the
                  first quarter of each such Detailed Product Forecast, which
                  purchase order shall contain quantities and delivery dates
                  consistent with this Article 2 and any other necessary detail.
                  The remaining portion of the Detailed Product Forecast shall
                  be firm, subject to the permissible variances set forth below
                  in Article 2.3.4. If OSI fails to provide any updated Detailed
                  Product Forecast, the Detailed Product Forecast last provided
                  by OSI shall be deemed to be OSI's Detailed Product Forecast
                  for the next succeeding twelve (12) month period.

         2.3.3    Initial Purchase Orders. An initial binding purchase order is
                  attached hereto as Exhibit A-1, which binding purchase order
                  covers the period from the ** . In addition, Schwarz and OSI
                  hereby agree that the outstanding purchase order attached
                  hereto as Exhibit A-2 (the "Prior Purchase Order") shall be
                  subject to and governed in accordance with the terms of this
                  Agreement as though such purchase order was made during the
                  term of and expressly subject to this Agreement; provided,
                  however, that (i) the price applicable to the Product to be
                  supplied pursuant to such Prior Purchase Order shall be as set
                  forth in that certain Purchase Order Agreement, dated October
                  21, 2004, between Schwarz and OSI, as amended (the "Purchase
                  Order Agreement"), (ii) the quantities of Product specified in
                  the Prior Purchase Order shall not be counted as Product
                  purchased pursuant to this Agreement for purposes of Schedule
                  5.1 hereto, (iii) OSI hereby acknowledges that the Product
                  specified in the Prior Purchase Order has heretofore been
                  supplied by Schwarz in full satisfaction of Schwarz's
                  obligations in respect of the Prior Purchase Order and under
                  the Purchase Order Agreement and this Agreement with respect
                  to the Prior Purchase Order, and (iv) OSI shall pay the entire
                  remaining unpaid balance owing to Schwarz in respect of the
                  Prior Purchase Order, equal to ** , within ** after the
                  Effective Date, by wire transfer of immediately available
                  funds to an account specified by Schwarz.

         2.3.4    Detailed Product Forecast Variances. Each updated Detailed
                  Product Forecast may modify the amounts estimated in the
                  previous Detailed Product Forecast for the periods of time in
                  question in accordance with the following limitations:

                  (a)      For the first calendar quarter covered by such
                           updated Detailed Product Forecast, no change in
                           excess of ** volume increase or decrease from the
                           prior Detailed Product Forecast for the period of
                           time in question may be made unless Schwarz consents;



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                  (b)      For the second calendar quarter covered by such
                           updated Detailed Product Forecast, no change in
                           excess of a ** volume increase or decrease from the
                           prior Detailed Product Forecast for the period of
                           time in question may be made unless Schwarz consents;
                           and

                  (c)      For the third calendar quarter covered by such
                           updated Detailed Product Forecast, no change in
                           excess of an ** volume increase or decrease from the
                           prior Detailed Product Forecast for the period of
                           time in question may be made unless Schwarz consents.

         2.3.5    Each of the Long-Term Product Forecasts and the Detailed
                  Product Forecasts shall contain a detailed forecast for each
                  period for each dosage strength of the Product. The Long-Term
                  Product Forecasts, the Detailed Product Forecasts and all
                  purchase orders submitted by OSI (including without limitation
                  those purchase orders submitted pursuant to Article 2.3.2
                  above) shall be limited to whole batch quantities and shall
                  under no circumstances contain partial batch quantities. To
                  the extent actual batch sizes manufactured by Schwarz differ
                  from the batch sizes set forth in the Quality Assurance
                  Agreement based on variations in yield or other factors, the
                  quantities of actual Product units contemplated by the
                  applicable purchase orders will be automatically adjusted to
                  reflect the actual batch sizes manufactured by Schwarz.

         If OSI desires to exceed the limitations set forth in this Article 2,
         Schwarz shall make reasonable efforts to accommodate such changes, but
         shall not be required to exceed such limitations.

2.4      Purchase Orders. OSI agrees to initiate purchases of the Product by
         issuing to Schwarz a purchase order not less than ** prior to the
         required delivery date set forth in such purchase order. Schwarz agrees
         to accept any order issued in accordance with this Article 2 which
         specifies quantities consistent with those set forth in the Detailed
         Product Forecast and allowable variances in this Article 2 for such
         quarter and to meet the delivery dates specified thereon. All purchase
         orders hereunder shall be on OSI's standard purchase order form
         attached hereto as Schedule 2.4, shall include a delivery date that is
         consistent with the requirements of this Article 2 and shall be
         directed to Schwarz Manufacturing, Inc. ** . All purchase orders shall
         be governed exclusively by the terms of this Agreement. Any term or
         condition in any purchase order, confirmation, invoice or other
         document furnished by Schwarz or OSI that is in any way inconsistent
         with these terms and conditions is hereby expressly rejected, unless
         mutually agreed upon in writing by both parties. Schwarz will provide
         written confirmation and acceptance within ** after receipt of purchase
         orders submitted by OSI, provided they meet the requirements of this
         Article 2. In the event any purchase order is not accepted, a
         substitute delivery date and/or other terms which would make the
         purchase order acceptable must be submitted in writing to OSI within **
         after receipt of the purchase



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                                     Page 10
<PAGE>


         order. OSI may then re-submit the modified purchase order for
         acceptance by Schwarz, or Schwarz will consider that purchase order
         null and void.

2.5      Schwarz shall notify OSI as soon as practicable if Schwarz is unable to
         supply the quantity of Product ordered by OSI in accordance with this
         Article 2; provided, however, that such notice shall in no way limit
         any right Schwarz may have to cure any supply failure as contemplated
         by the definition of Inability to Supply or otherwise limit Schwarz's
         rights hereunder. In the event that an Inability to Supply has
         occurred, OSI shall have the right, upon written notice to Schwarz, to
         manufacture itself or procure from any Affiliate of OSI or any third
         party (including F. Hoffman-LaRoche Ltd. solely with regard to Product
         not manufactured by Schwarz) ** . Anything to the contrary herein
         notwithstanding, any Product manufactured or procured in accordance
         with this Article 2.5 may be manufactured or procured in full batch
         quantities; provided that under no circumstances shall such full batch
         quantities exceed the minimum batch sizes for the Product as then
         currently or as previously approved by the FDA.

2.6      OSI may, at any time during the Term, identify, qualify with the FDA
         and add to its NDA one or more alternate suppliers (the identity and
         number of which shall be determined in OSI's sole discretion) for OSI's
         Requirements of Product. Schwarz shall use commercially reasonable
         efforts to cooperate with OSI in connection with OSI's efforts to
         qualify one such alternate supplier. Schwarz acknowledges and agrees
         that OSI and its alternate suppliers, at all times during the Term,
         shall have the right to do all things, including filing documents with
         the FDA, reasonably necessary to ensure that such alternate suppliers
         are ready at all times to supply Product to OSI. OSI shall not be
         prohibited from retaining and storing Product which has been
         manufactured by an alternate supplier in connection with the steps
         taken in accordance with this Article 2.6 to qualify (and maintain as
         qualified) such alternate supplier with the FDA and add such alternate
         supplier to OSI's NDA. Schwarz agrees and acknowledges that the
         activities contemplated by this Article 2.6 shall not violate OSI's
         obligations pursuant to Article 2.1 hereof and OSI shall be free to use
         Product manufactured by an alternative supplier contemplated by this
         Article 2.6 to supply any amount of the Product which OSI has a right
         to procure pursuant to Articles 2.1.2, 2.1.3 or 2.5; provided, however,
         that OSI shall not otherwise use any of such Product manufactured by
         any such alternative supplier to supply any of its Requirements of the
         Product.


2.7      OSI agrees to and hereby does grant and execute, at no cost to Schwarz,
         all licenses and sub-licenses under any patents, regulatory approvals,
         Trademarks and permits held by OSI, including but not limited to the
         licenses and sub-licenses set forth on Schedule 2.7 attached hereto,
         for the sole purpose of allowing Schwarz to meet its obligations
         hereunder.

2.8      After the Effective Date, the parties shall meet to negotiate in good
         faith an agreement (the "Quality Assurance Agreement") that sets forth
         the quality assurance and quality control responsibilities of the
         parties, including documentation, raw material testing,


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                                     Page 11
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         CMC work and maintenance, batch release, batch deviations, batch
         rejection, change control, stability program, annual reporting, audits,
         retained samples, Product complaints, adverse drug event reporting,
         complaints, recalls, contacts with FDA, FDA deficiency letters, and
         notifying OSI of FDA inspections and visits. The parties shall use
         commercially reasonable efforts to complete the Quality Assurance
         Agreement on or before sixty (60) days from the Effective Date.

2.9      Schwarz and OSI shall comply in all material respects with all
         applicable United States federal, state, and local laws and regulations
         applicable to each of the parties' activities related to the Product
         and pursuant to this Agreement.

                                   ARTICLE 3.

[RESERVED]


                    ARTICLE 4. RELEASE, STORAGE AND SHIPMENT

4.1      Release of Product shall be in accordance with the Quality Assurance
         Agreement.

4.2      Schwarz shall store the API and the Product in accordance with cGMP,
         the Quality Assurance Agreement and the API Specifications or Product
         Specifications, as the case may be.

4.3      Schwarz shall package all Product in accordance with the Quality
         Assurance Agreement and the Product Specifications.

4.4      Schwarz shall use a common carrier as instructed by OSI, or as selected
         by Schwarz and approved by OSI.

4.5      The Product will be supplied to OSI Ex-Works (Incoterms 2000) Seymour,
         Indiana, and risk of loss of the Product shall pass from Schwarz to OSI
         upon delivery of the Product to a common carrier approved by OSI. OSI
         shall at all times bear the risk of loss of API, except to the extent
         that any loss is directly attributable to Schwarz not storing or
         otherwise handling the API in accordance with this Agreement, the API
         Specifications, the Quality Assurance Agreement and cGMP.

4.6      Schwarz shall be responsible for and agrees to assume any excess
         shipping charges related to express shipments, partial shipments, or
         both, as necessary to meet the required delivery date in accordance
         with Article 2.

4.7      To the extent Schwarz maintains any inventory of Product, Schwarz shall
         maintain reasonable Product segregation and inventory rotation.


                                     Page 12
<PAGE>


                          ARTICLE 5. PRICE AND PAYMENT

5.1      Schwarz shall supply the Product at the prices set forth on Schedule
         5.1 attached hereto, subject to Article 5.2 of this Agreement. Such
         price will be adjusted on ** of each calendar year during the term of
         this Agreement subject to the terms of this Article 5.

5.2      All price increases for the Product shall be effective for purchase
         orders placed after ** of each calendar year, beginning ** . Price
         increases shall be equal to the greater of: (a) ** .

5.3      All invoices from Schwarz for Product shall be payable within thirty
         (30) days from receipt of the invoice by OSI.

5.4      Any amounts not paid by OSI within thirty (30) days shall be subject to
         interest beginning on such date at a rate equal to the lesser of (a) **
         per month or (b) the highest rate permitted by applicable law. In each
         case, applicable interest shall be calculated monthly on the basis of a
         twelve (12) month year. Any amounts that are the subject of a good
         faith dispute shall not be subject to such interest.

5.5      Within five (5) days after the Effective Date, OSI shall pay Schwarz **
         owing to Schwarz pursuant to Schwarz's invoice # 11304 in respect of
         the acquisition of that certain Ackley imprinter purchased by Schwarz
         in connection with the manufacture of the Product. OSI hereby agrees
         and acknowledges that OSI has no interest in such imprinter and Schwarz
         owns such imprinter free and clear of any and all liens or encumbrances
         of OSI.

                        ARTICLE 6. NON-CONFORMING GOODS

6.1      OSI (or its designee) shall examine all shipments of Product from
         Schwarz for damage, shortages or defects, and shall notify Schwarz in
         the manner set forth in this Article 6; provided, however, that OSI
         must be able to show by reasonable proof that any alleged damage,
         defect or shortage to the Product resulted from processing and/or
         packaging of the Product by Schwarz and not from any mishandling during
         the transport to OSI's designated warehouse, or as a result of API
         provided by OSI.

6.2      No later than thirty (30) days from the date of arrival of Product at
         OSI's designated warehouse, OSI shall approve or reject any shipment of
         Product produced by Schwarz hereunder based on whether or not the
         Product meets the Product Specifications. In order for OSI to discharge
         the aforesaid responsibility for each lot of the Product produced
         hereunder, OSI shall receive from Schwarz prior to or simultaneously
         with shipment, a certificate of analysis (which references the
         appropriate lot number). If, within ten (10) business days of being
         informed by OSI that any lot of the Product does not meet Product
         Specifications, Schwarz does not agree with OSI that such lot of the
         Product fails to meet Product Specifications, the parties will promptly
         arrange for the lot in question to be

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                                     Page 13
<PAGE>

         tested by a mutually acceptable independent laboratory for conformity
         with Product Specifications and the determination of such laboratory
         will be final and binding upon the parties. The cost of any such
         testing by an independent laboratory shall be borne by the party whose
         judgment as to the conformity of any lot of the Product with Product
         Specifications proved to be incorrect. Any lots of the Product not
         meeting applicable Product Specifications shall, at the request of
         Schwarz, be destroyed by OSI or returned to Schwarz at the expense of
         Schwarz. OSI shall not be required to pay any invoice with respect to
         any shipment of Product properly rejected pursuant to this Article 6.
         Notwithstanding the foregoing, OSI shall be obligated to pay in full
         for any rejected shipment of Product that is subsequently determined to
         meet the Product Specifications. Except to the extent Schwarz may
         otherwise have an indemnification obligation pursuant to Article 13.1
         in respect of any Claims based upon damages incurred by third parties
         as a result of the use or ingestion of non-conforming Product,
         Schwarz's sole obligation regarding non-conforming Product shall be to
         replace such non-conforming Product with conforming Product or to
         refund the purchase price paid by OSI corresponding to such
         non-conforming Product and such replacement or refund shall be OSI's
         sole remedy in respect of such non-conforming Product and any lost
         profits attributable thereto. Schwarz shall also pay to OSI the cost of
         API used to manufacture any such replacement Product at OSI's
         acquisition price, which API shall be sourced by OSI; provided,
         however, that if the non-conformity of Product is due to OSI's storage
         or handling of the Product or attributable to the API used to
         manufacture such non-conforming Product, then OSI shall provide Schwarz
         at no cost the API to be used to manufacture such replacement Product.

6.3      All claims against Schwarz with respect to any shipment of the Product,
         resulting from patent defects, shall be deemed waived unless made in
         writing and received by Schwarz within thirty (30) days after OSI's
         receipt of such shipment. Nothing in this Article 6.3 shall limit OSI's
         right to reject and return and receive replacement Product or a refund
         pursuant to the terms of Article 6.2 above (including the limitation on
         remedies set forth therein) in respect of Product found not to meet the
         Product Specifications at the time of delivery by virtue of a latent
         defect discovered by OSI more than thirty (30) days after delivery to
         OSI; provided, however, that Schwarz shall have no liability for any
         non-conforming Product that is reported to Schwarz after the expiration
         date of such Product.

6.4      To the extent non-conformity of any Product arises from OSI's storage
         and handling of the Product or the failure of OSI to provide API
         meeting the API Specifications, Schwarz shall have no liability to OSI
         on the basis of this Agreement or otherwise. Without limiting the
         generality of the foregoing, in the situation described in this Article
         6.4, Schwarz shall have no obligation to replace such Product, refund
         or credit any amount paid by OSI for such Product, or reimburse OSI for
         the cost of the API used in such Product. In the situation described in
         this Article 6.4, OSI must replace non-complying API with API meeting
         the API Specifications free of charge upon Schwarz's request. If API
         becomes unusable based on Schwarz's negligence, willful misconduct or
         failure to comply with the terms of this Agreement, Schwarz shall
         purchase replacement API at OSI's acquisition price.


                                     Page 14
<PAGE>


6.5      Stability testing and the on-going stability of Product shall be OSI's
         sole responsibility and Schwarz has no liability or obligation on the
         basis of this Agreement or otherwise regarding Product that fails
         stability or shelf-life requirements unless the failure in stability is
         attributable to Schwarz's negligence or failure to comply with the
         terms of this Agreement.

                       ARTICLE 7. RECORDS AND INSPECTIONS

7.1      Schwarz shall keep and maintain all production, control, laboratory and
         other records in accordance with and for the period required by all
         applicable laws, including but not limited to, cGMP regulations. Upon
         reasonable notice and request, such records shall be made available to
         OSI, or its representatives or designees, and to the representatives of
         any governmental or regulatory authority.

7.2      ** during each twelve (12) month period of this Agreement, OSI shall
         have the right to inspect, or at OSI's designation have its
         representatives or agents (including Genentech and its representatives)
         inspect Schwarz's facility upon thirty (30) days advance notice. Such
         inspections shall be done during regular business hours and shall be
         limited to ** per inspection. Notwithstanding the foregoing, OSI shall
         have the right to conduct additional inspections, or at OSI's
         designation have its representatives or agents (including Genentech and
         its representatives) conduct additional inspections during a twelve
         (12) month period if Schwarz materially deviates from the Quality
         Assurance Agreement or if a regulatory agency has raised any concerns
         that could materially affect the ability of Schwarz to manufacture the
         Product. In addition, OSI (and its representatives) shall have the
         right to be kept reasonably informed during any regulatory inspection
         associated with the Product during the Term. Schwarz shall advise OSI
         within ** business days if an FDA authorized agent or other regulatory
         body authorized agent visits Schwarz's manufacturing facility and makes
         inquiry of Schwarz's manufacturing methods of the Product during the
         Term. Schwarz shall provide OSI with access to any FDA documentation
         resulting therefrom that relates to the Product. Schwarz shall provide
         notice to OSI of any deficiency noted in such inspection which
         deficiency relates to the Product. Furthermore, Schwarz shall notify
         OSI, in writing, within ** business days of becoming aware of any
         deficiency or adverse finding noted by any regulatory agency during any
         such inspection of Schwarz's facilities, whether in relation to the
         Product or otherwise which may materially impact Schwarz's ability to
         supply Product hereunder.

7.3      Schwarz and OSI agree that each will maintain a signed copy of this
         Agreement, including current schedules, until five (5) years after the
         final shipment and delivery of the Product.

7.4      Schwarz shall exercise reasonable commercial efforts to provide OSI
         with Product information in Schwarz's possession needed to fulfill
         OSI's or its designees' obligations to governmental or regulatory
         agencies upon the reasonable request of OSI. Further, Schwarz
         acknowledges that OSI or its designees shall be responsible for the
         management

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                                     Page 15
<PAGE>

         and response of all OSI information requests and complaints, and
         Schwarz agrees to forward any such inquiries to OSI in accordance with
         the Quality Assurance Agreement.

                        ARTICLE 8. TERM AND TERMINATION

8.1      This Agreement shall commence on the Effective Date and expire ten (10)
         years thereafter, unless earlier terminated in accordance with this
         Article 8 (the "Term"). Not less than ** prior to the expiration of the
         Term, OSI shall provide written notice to Schwarz as to whether it
         desires to renew this Agreement for an additional term. Upon receipt of
         such written notice by Schwarz, the parties shall commence good faith
         negotiations with respect to the terms of any such renewal.

8.2      OSI may terminate this Agreement immediately upon written notice to
         Schwarz:

         (a)      if the FDA, or other applicable governmental authority,
                  permanently prohibits the Product from being manufactured,
                  shipped, sold, or marketed, in which event all outstanding or
                  unfinished purchase orders (including any minimum purchase
                  obligations pursuant to any forecasts) shall be canceled. The
                  parties will attempt to affix responsibility for all costs
                  associated with outstanding or unfinished purchase orders
                  between themselves; provided that Schwarz shall be reimbursed
                  for Schwarz's costs associated with work in progress and
                  materials on hand; or

         (b)      upon the occurrence of a Failure to Supply, provided that
                  OSI's right to terminate this Agreement upon the occurrence of
                  a Failure to Supply must be exercised within ** in which such
                  Failure to Supply has occurred pursuant to Article 1.6 hereof.

8.3      In addition to any other remedies Schwarz may possess pursuant to this
         Agreement or otherwise, Schwarz may terminate this Agreement if, after
         ** written notice from Schwarz, OSI (i) fails to make payment of an
         invoice of over ** Dollars ** which is more than ** past due, or (ii)
         fails to cease and desist activities which are in violation of the
         FDA's regulations.

8.4      Except with respect to (i) payment defaults by OSI, which shall be
         governed by Article 8.3 and (ii) any failure or delay by Schwarz in
         supplying Product or Schwarz's supply of non-conforming Product, which
         shall be governed by Articles 2.5, 6.2, 8.2(b) and 13.5, each of
         Schwarz and OSI shall have the right to terminate this Agreement upon
         the other party's uncured failure to comply in any material respect
         with the terms and conditions of this Agreement. If a party seeks to so
         terminate this Agreement pursuant to this Article 8.4, such party shall
         give the other party written notice setting forth in reasonable detail
         the breach or breaches which would form the basis of such termination.
         If the breaching party fails to correct such breach or breaches within
         forty-five (45) days after receipt of such notice, then, at the
         breaching party's option, the asserted breach shall be submitted to
         arbitration in accordance with Article 17.2. If the asserted breach is
         confirmed by such arbitration panel or if the breaching party notifies
         the other party in writing of its election



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                                     Page 16
<PAGE>


         not to proceed with arbitration, then the other party shall have the
         right to terminate this Agreement immediately upon notice to the
         breaching party, and any reimbursements that accrued prior to the
         effective date of such termination and that are owed to a party shall
         be promptly paid by the other party. This Article 8.4 shall not be
         exclusive and shall not be in lieu of any other remedies available to a
         party hereto for any breach hereunder on the part of the other party.

8.5      If either Schwarz or OSI (i) makes a general assignment for the benefit
         of creditors, (ii) files an insolvency petition in bankruptcy, (iii)
         petitions for or acquiesces in the appointment of any receiver, trustee
         or similar officer to liquidate or conserve its business or any
         substantial part of its assets, (iv) commences under the laws of any
         jurisdiction any proceeding involving its insolvency, bankruptcy,
         reorganization, adjustment of debt, dissolution, liquidation or any
         other similar proceeding for the release of financially distressed
         debtors, or (v) becomes the subject of any proceeding or action of the
         type described above in (iii) or (iv) and such proceeding or action
         remains undismissed or unstayed for a period of more than ninety (90)
         days, then the other party may by written notice terminate this
         Agreement in its entirety with immediate effect.

8.6      If OSI terminates this Agreement pursuant to Article 8.2(b), 8.4 or
         8.5, or if OSI terminates this Agreement pursuant to Article 8.2(a) and
         the governmental authority prohibition in question was caused by
         Schwarz's negligence or breach of this Agreement, OSI shall, subject to
         Article 17.6, have the right to procure some or all of the Product that
         was to be manufactured by Schwarz pursuant to this Agreement from a
         third-party manufacturer.

         8.6.1    Upon any termination by OSI of the nature described in the
                  first sentence of Article 8.6, Schwarz shall, within a
                  reasonable time period, but in no event less than thirty (30)
                  days following written request from OSI: (a) use commercially
                  reasonable efforts to physically transfer to OSI or its
                  designee all API then in Schwarz's possession that was
                  provided to Schwarz by OSI pursuant to Article 2.2 hereof, (b)
                  use commercially reasonable efforts to physically transfer to
                  OSI or its designee any inventory of Product then in its
                  possession that was manufactured by Schwarz for OSI for which
                  OSI shall pay Schwarz the full price due hereunder, (c) use
                  commercially reasonable efforts to physically transfer to OSI
                  or its designee all work in process for Product to be
                  manufactured by Schwarz for OSI then in Schwarz's possession,
                  for which OSI shall pay Schwarz a pro-rata portion of the full
                  price due hereunder corresponding to the amount of work
                  performed by Schwarz, (d) physically transfer any and all
                  Manufacturing Documentation (as defined in Article 8.6.2) to
                  OSI or its designee and (e) if neither OSI nor any third party
                  has theretofore been qualified with the FDA to manufacture the
                  Product, (i) disclose to OSI or its designee Schwarz's
                  production process for the manufacture of the Product (the
                  "Manufacturing Process"); (ii) provide a license to OSI (with
                  the right to sublicense to Genentech, Inc.) for any
                  Proprietary Information that is required to make the Product;
                  and (iii) provide all cooperation and assistance reasonably
                  requested by OSI to the extent that such cooperation and
                  assistance is reasonably necessary to enable OSI (or its
                  designee) to assume the continued manufacture of the Product,
                  provided, that under no



                                     Page 17
<PAGE>


                  circumstances shall such obligation to provide assistance
                  extend beyond ** after such termination, result in
                  out-of-pocket expenses to Schwarz in excess of ** or result in
                  man hours expended by Schwarz exceeding ** hours in the
                  aggregate. All information transferred pursuant to this
                  Article 8.6.1 shall be deemed to be confidential and shall be
                  treated as such in accordance with Article 11, provided that
                  the transferee shall be permitted to use all such information
                  in connection with the manufacture of the Product, to the
                  extent reasonably required.

         8.6.2    For the purposes of this Agreement, "Manufacturing
                  Documentation" shall mean all documents and records describing
                  or directly related to the Manufacturing Process or any part
                  of the Manufacturing Process which is in Schwarz's possession
                  and is reasonably necessary for proper equipment validation
                  and transfer of Product manufacture to OSI or its designee.

8.7      Upon any termination or expiration of this Agreement, Schwarz shall
         have the right to purchase that certain ** purchased pursuant to that
         certain Cross-Purchase Agreement, dated as of March 9, 2001, between
         OSI and Schwarz, for a price equal to the book value thereof, as
         reflected on OSI's books on the date of termination or expiration;
         provided that such price shall reflect depreciation of such equipment
         calculated in accordance with GAAP, consistently applied.

                ARTICLE 9. OWNERSHIP AND PRODUCT SPECIFICATIONS

9.1      Schwarz acknowledges and agrees that the Product Specifications, the
         API Specifications, any and all formulae and processes related to the
         Product (including, without limitation, master batch formulations and
         procedures, production batch formulations and procedures), and all
         related Proprietary Information provided by OSI to Schwarz is, and
         shall remain, the exclusive property of OSI and Schwarz expressly
         acknowledges and agrees that it has no rights pursuant to this
         Agreement, and, except as expressly set forth herein, this Agreement in
         no way confers upon it any rights, to make, use or sell Product for
         itself (including any of its Affiliates, successors or assigns) or for
         any third parties, except ** , its Affiliates, successors and assigns.

9.2      As applicable based on each party's obligations under this Agreement,
         each party shall provide to the other, or its designated agent, the
         certificate of analysis with each shipment of the Product or API made
         hereunder. Such certificate of analysis shall certify with respect to
         each shipment and lot identified by batch or lot number: (1) the
         quantity of the shipment, (2) assay, release rate and content
         uniformity, (3) other certification of conformance to Product
         Specifications or API Specifications as appropriate, and (4) other such
         certifications or information as set forth in the Quality Assurance
         Agreement.

9.3      It is hereby agreed and acknowledged by the parties that Schwarz may
         enter into an agreement with ** whereby Schwarz will manufacture and
         supply pharmaceutical


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                                     Page 18
<PAGE>

         product containing erlotinib to ** and, pursuant to the terms of that
         agreement, ** designees and assignees. Notwithstanding any other
         provision hereof, OSI hereby agrees that Schwarz has full right and
         authority to enter into such agreement and perform its obligations
         thereunder and hereby authorizes Schwarz to make use of the OSI
         Proprietary Information to perform Schwarz's obligations pursuant to
         such agreement.

             ARTICLE 10. REPRESENTATIONS, WARRANTIES AND COVENANTS

10.1     Schwarz warrants, represents, and covenants to OSI as follows:

         10.1.1   Schwarz is a corporation duly organized, validly existing and
                  in good standing under the laws of the State of Indiana.

         10.1.2   Schwarz has the power, authority and all other rights
                  necessary and sufficient to enter into and be bound by the
                  terms and conditions of this Agreement and to perform its
                  obligations hereunder.

         10.1.3   Schwarz has taken all necessary action on its part to
                  authorize the execution and delivery of this Agreement and
                  this Agreement has been duly executed and delivered on behalf
                  of Schwarz and constitutes a legal, valid, binding obligation,
                  enforceable against Schwarz in accordance with its terms.

         10.1.4   Neither the execution and delivery of this Agreement, or any
                  other agreement or instrument contemplated hereby by Schwarz,
                  nor the performance of the obligations contemplated hereby or
                  thereby will: (a) result in any violation of or constitute a
                  breach of any of the terms or provisions of, result in the
                  acceleration of any obligation under, or constitute a default
                  under (i) the certificate of incorporation or by-laws of
                  Schwarz or (ii) any contract or any other obligation to which
                  Schwarz or any of its Affiliates is a party or to which any of
                  them are subject or bound; (b) violate any judgment, order,
                  injunction, decree or award of any court, administrative
                  agency, arbitrator or governmental body against, or affecting
                  or binding upon, Schwarz or any of its Affiliates; or (c)
                  constitute a violation by Schwarz or any of its Affiliates of
                  any applicable law or regulation of any jurisdiction as such
                  law or regulation relates to Schwarz or any of its Affiliates.

         10.1.5   Each Product shall be manufactured by Schwarz, and not by any
                  Affiliates, subcontractors or other persons or entities, and
                  shall be manufactured at the site specified in the Quality
                  Assurance Agreement.

         10.1.6   Each Product shall be manufactured, processed, packaged and
                  shipped in conformance with the Quality Assurance Agreement
                  and cGMP and any applicable laws and regulations.

         10.1.7   At the time of shipment each Product will meet the Product
                  Specifications, will not be adulterated or misbranded within
                  the meaning of the Act, nor an article

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                                     Page 19
<PAGE>

                  which may not be introduced into interstate commerce under the
                  provisions of Section 4.04 or 5.05 of the Act.

         10.1.8   Each Product shall be manufactured in conformance with the
                  Product's master batch records.

         10.1.9   All raw materials, ingredients, supplies actually supplied or
                  obtained by Schwarz in accordance with Article 2.2 and all
                  equipment utilized in the manufacture of the Product shall
                  comply with all applicable laws and regulations.

         10.1.10  The Product delivered pursuant to this Agreement shall be
                  delivered to OSI free and clear of any liens or encumbrances
                  of any kind that arise from any act or omission of Schwarz or
                  any of its employees or agents.

         10.1.11  Any premises used by Schwarz to meet its obligations under
                  this Agreement currently are and shall be maintained in
                  accordance with cGMP and in such condition as will allow
                  Schwarz to manufacture the Product in compliance with and
                  conformance to cGMP and the Product Specifications.

         10.1.12  There are no pending or, to Schwarz's knowledge, threatened,
                  judicial, administrative or arbitral actions, claims, suits or
                  proceedings against Schwarz relating to the activities
                  contemplated by this Agreement or the Product, or that
                  otherwise could reasonably be expected to have a material
                  adverse effect on Schwarz in performing its obligations under
                  this Agreement.


         10.1.13  ALL REPRESENTATIONS, WARRANTIES AND COVENANTS IN THIS
                  AGREEMENT ARE MADE BY SCHWARZ EXPRESSLY IN LIEU OF ANY OTHER
                  EXPRESS OR IMPLIED WARRANTIES INCLUDING, BUT NOT BY WAY OF
                  LIMITATION, IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS
                  FOR A PARTICULAR PURPOSE.

10.2     OSI warrants, represents and covenants to Schwarz as follows:

         10.2.1   OSI is a corporation duly organized, validly existing and in
                  good standing under the laws of the State of Delaware.

         10.2.2   OSI has the power, authority, rights to the Product and all
                  other rights necessary and sufficient to enter into and be
                  bound by the terms and conditions of this Agreement, to
                  license the intellectual property rights to Schwarz pursuant
                  to Article 2.7 and to perform its obligations hereunder.

         10.2.3   OSI has taken all necessary action on its part to authorize
                  the execution and delivery of this Agreement and this
                  Agreement has been duly executed and delivered on behalf of
                  OSI and constitutes a legal, valid, binding obligation,
                  enforceable against OSI in accordance with its terms.


                                     Page 20
<PAGE>


         10.2.4   Neither the execution and delivery of this Agreement, or any
                  other agreement or instrument contemplated hereby by OSI, nor
                  the performance of the obligations contemplated hereby or
                  thereby will: (a) result in any violation of or constitute a
                  breach of any of the terms or provisions of, result in the
                  acceleration of any obligation under, or constitute a default
                  under (i) the certificate of incorporation or by-laws of OSI
                  or (ii) any contract or any other obligation to which OSI or
                  any of its Affiliates is a party or to which any of them are
                  subject or bound; (b) violate any judgment, order, injunction,
                  decree or award of any court, administrative agency,
                  arbitrator or governmental body against, or affecting or
                  binding upon, OSI or any of its Affiliates; or (c) constitute
                  a violation by OSI or any of its Affiliates of any applicable
                  law or regulation of any jurisdiction as such law or
                  regulation relates to OSI or any of its Affiliates.

         10.2.5   The API Specifications and the Product Specifications provided
                  by OSI to Schwarz are and will be those included in the NDA.

         10.2.6   The intellectual property rights which OSI has granted Schwarz
                  the right to use pursuant to Article 2.7 hereof constitute, to
                  the best of OSI's knowledge, all of the proprietary rights
                  necessary to enable Schwarz to manufacture each dosage
                  strength of the Product and engage in all other activities as
                  contemplated by this Agreement. There are no demands,
                  proceedings, claims or other actions instituted, pending or,
                  to OSI's knowledge, threatened alleging that the use by OSI or
                  Schwarz of any intellectual property or other proprietary
                  right pertaining to the Product, or that the use, manufacture,
                  sale or licensing of the Product or any material, design,
                  formula or process related to or comprising the Product,
                  infringes any patent or other intellectual property right of
                  any third party, or otherwise challenging the right of OSI,
                  with respect to the Product, to maintain or use any patent,
                  trademark or service mark, or any application or registration
                  therefore. OSI is not aware of and has not received any
                  communications challenging the validity or enforceability of
                  any such intellectual property rights. The exercise of
                  Schwarz's manufacturing and other activities as contemplated
                  in this Agreement will not, to the best of OSI's knowledge,
                  infringe, misappropriate or misuse any intellectual property
                  right of any third party. Without limiting the generality of
                  the foregoing, there are no pending or, to OSI's knowledge,
                  threatened judicial, administrative or arbitral actions,
                  claims, suits or proceedings against OSI relating to OSI's
                  filing of an NDA for the Product or obtaining FDA approval for
                  such NDA.

         10.2.7   There are no pending or, to OSI's knowledge, threatened
                  judicial, administrative or arbitral actions, claims, suits or
                  proceedings against OSI relating to the activities
                  contemplated by this Agreement or the Product, or that
                  otherwise could reasonably be expected to have a material
                  adverse effect on OSI in performing its obligations under this
                  Agreement.

         10.2.8   All API provided by OSI to Schwarz and all methods of delivery
                  of such API shall conform to all applicable laws and
                  regulations and API Specifications.



                                     Page 21
<PAGE>

         10.2.9   API delivered pursuant to this Agreement shall be delivered to
                  Schwarz free and clear of any liens or encumbrances of any
                  kind that arise from the actions of OSI or any of its
                  employees or agents.

                          ARTICLE 11. CONFIDENTIALITY

11.1     Each party shall keep strictly confidential and not use, except for
         purposes of conducting the activities permitted in this Agreement, any
         Proprietary Information obtained from the other, and the terms and
         conditions of the Agreement, except Proprietary Information which:

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

         (b)      after disclosure becomes part of the public domain through no
                  act or omission of the receiving party;

         (c)      as shown by written records was in the possession of the
                  receiving party prior to disclosure by the disclosing party;

         (d)      is independently developed by employees of the receiving party
                  who did not have access to the disclosing party's confidential
                  information; or

         (e)      is subsequently obtained by the receiving party from a third
                  party not under an obligation to the disclosing party
                  requiring the third party to maintain the information in
                  confidence.

11.2     Each party agrees that they will disclose the other's Proprietary
         Information to their own Affiliates, officers, employees, consultants
         and agents only if and to the extent necessary to carry out their
         respective responsibilities under this Agreement or in accordance with
         the exercise of their respective rights under this Agreement, and such
         disclosure shall be limited to the minimum extent possible consistent
         with such responsibilities and rights. Neither party shall disclose
         Proprietary Information of the other to any third party without the
         other's prior written consent; provided, however, that (i) OSI may
         disclose Schwarz Proprietary Information to Genentech, Inc., or to any
         third party supplier in accordance with Article 2.6; provided that
         Genentech, Inc. or any such third party supplier shall be subject to
         obligations of confidentiality no less restrictive than this Article 11
         and (ii) Schwarz may disclose OSI Proprietary Information to ** and its
         Affiliates, successors and assigns; provided that ** and its
         Affiliates, successors and assigns shall be subject to obligations of
         confidentiality no less restrictive than this Article 11. Each party
         shall take such action to preserve the confidentiality of each other's
         Proprietary Information as it would customarily take to preserve the
         confidentiality of its own Proprietary Information (but in no event
         less than a reasonable standard of care). Each party, upon the other's
         request, will return all the Proprietary Information disclosed by the
         other party pursuant to this Agreement, including all copies and
         extracts of documents promptly following the expiration or termination
         of this



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                                     Page 22
<PAGE>

         Agreement except for one copy maintained in its legal department files
         solely for the purpose of ensuring compliance with the terms hereof.
         Notwithstanding the foregoing, either party may disclose information
         which is required to be disclosed by law, by a valid order of a court
         or by order or regulation of a governmental agency including but not
         limited to, regulations of the United States Securities and Exchange
         Commission, or pursuant to a mandatory disclosure obligation in the
         course of litigation, provided that in all cases the receiving party
         shall give the other party prompt notice of the pending disclosure and
         shall use commercially reasonable efforts to maintain the
         confidentiality of the information.

11.3     Each party agrees that should it breach or threaten to breach any
         provisions of this Article 11, the disclosing party will suffer
         irreparable damages and its remedy at law will be inadequate. Upon any
         breach or threatened breach by the receiving party of this Article 11,
         the disclosing party shall be entitled to seek injunctive relief in
         addition to any other remedy which it may have, without need to post
         any bond or security.

11.4     The confidentiality provisions of this Article 11 shall survive any
         termination or expiration of this Agreement for whatever reason for a
         period of seven (7) years following the date of such termination or
         expiration.

                             ARTICLE 12. INSURANCE

12.1     Schwarz shall maintain in full force and effect during the Term and all
         renewals or extensions thereof, and for a period thereafter equal to
         the shelf life of the final Product batch manufactured pursuant to this
         Agreement, product liability and comprehensive and general business
         liability insurance coverage, with minimum limits of ** Dollars ** per
         occurrence and ** Dollars ** annual aggregate of all claims. All
         insurance shall be maintained with an independent, reputable insurance
         carrier. Schwarz will notify OSI of any cancellation at the earliest
         possible time. Upon request at any time during the term hereof, Schwarz
         shall furnish OSI with a certificate of insurance evidencing such
         insurance coverage.

12.2     OSI shall maintain in full force and effect during the Term and all
         renewals or extensions thereof, and for a period thereafter equal to
         the shelf life of the final Product batch manufactured pursuant to this
         Agreement, product liability and comprehensive and general business
         liability insurance coverage, with minimum limits of ** Dollars ** per
         occurrence and ** Dollars ** annual aggregate of all claims. All
         insurance shall be maintained with an independent, reputable insurance
         carrier. OSI will notify Schwarz of any cancellation at the earliest
         possible time. Upon request at any time during the term hereof, OSI
         shall furnish Schwarz with a certificate of insurance evidencing such
         insurance coverage.



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                                     Page 23
<PAGE>


   ARTICLE 13. INDEMNIFICATION; LIMITATION OF REMEDIES; CONTROL OF LITIGATION

13.1     Schwarz shall indemnify, defend and hold harmless OSI, its Affiliates
         and their respective officers, directors, employees and agents (the
         "OSI Indemnitees") from and against any and all liability, damage,
         loss, costs or expenses, including, but not limited to, any costs or
         expenses (including reasonable legal fees and expenses) (collectively,
         "Claims") incurred or payable by an OSI Indemnitee, relating to (a)
         Schwarz's material breach of its representations, warranties, covenants
         or other obligations under this Agreement or (b) gross negligence or
         willful misconduct of a Schwarz Indemnitee (as hereinafter defined),
         except to the extent such Claims arise out of the material breach or
         default, gross negligence or willful misconduct of a OSI Indemnitee.

13.2     OSI will indemnify, defend and hold harmless Schwarz, its Affiliates
         and their respective officers, directors, employees and agents (the
         "Schwarz Indemnitees") from and against any and all Claims incurred or
         payable by a Schwarz Indemnitee, relating to (a) the packaging,
         storage, distribution, promotion, sale or use of any Product by OSI or
         any of OSI's sublicensees, distributors, agents or other parties with
         which OSI has entered into any collaboration regarding the Product
         (including, but not limited to, Genentech, Inc.) or the use of the
         Product by any patient or other third party, (b) any recall of the
         Product, (c) infringement or contributory infringement of any patent,
         trademark or copyright of any third party by virtue of Schwarz's
         activities regarding the Product or pursuant to the terms of this
         Agreement, (d) OSI's breach of its representations, warranties,
         covenants or other obligations under this Agreement, or (e) gross
         negligence or willful misconduct of an OSI Indemnitee, except to the
         extent such Claims arise out of the material breach or default, gross
         negligence or willful misconduct of a Schwarz Indemnitee.

13.3     THE FOREGOING INDEMNIFICATION PROVISIONS SHALL APPLY TO CLAIMS OF THE
         PARTIES HERETO, AS WELL AS THIRD PARTY CLAIMS.

13.4     With respect to third party Claims, the indemnifying party shall have
         sole control over, and shall assume all expense with respect to, the
         defense, settlement, adjustment or compromise of any Claim as to which
         this Article 13 requires it to indemnify the other, provided that (a)
         the indemnifying party shall use counsel reasonably satisfactory to the
         other party, (b) the other party may, if it so desires, employ counsel
         at its own expense to assist in the handling of such claim, (c) the
         parties shall reasonably cooperate in the sharing of pertinent
         information related to the claim, and (d) the indemnifying party shall
         obtain prior written approval of the other party, which shall not be
         unreasonably withheld, before entering into any settlement, adjustment
         or compromise of such Claim, or ceasing to defend against such claim,
         if pursuant thereto, or as a result thereof, injunctive or other
         non-monetary relief would be imposed upon the other party or monetary
         relief would be imposed upon the other party for which such other party
         is not indemnified hereunder.

13.5     SCHWARZ'S AND OSI'S LIABILITY IN CONNECTION WITH THIS AGREEMENT AND THE
         SUBJECT MATTER HEREOF IS SUBJECT TO THE FOLLOWING LIMITATIONS: (A)
         EXCEPT WITH RESPECT TO THE FRAUD, GROSS NEGLIGENCE OR WILLFUL
         MISCONDUCT OF OSI OR SCHWARZ, THEIR



                                     Page 24
<PAGE>

         RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS AND
         EXCEPT TO THE EXTENT ATTRIBUTABLE TO A THIRD PARTY CLAIM IN RESPECT OF
         WHICH A PARTY MAY OTHERWISE HAVE AN INDEMNIFICATION OBLIGATION PURSUANT
         TO ARTICLE 13.1 OR 13.2, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO
         THE OTHER PARTY FOR ANY INDIRECT OR INCIDENTAL DAMAGES OF ANY NATURE;
         (B) IN NO EVENT SHALL SCHWARZ'S AGGREGATE LIABILITY FOR ALL CLAIMS
         ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE SUBJECT MATTER
         HEREOF EXCEED THE AMOUNTS PAID BY OSI TO SCHWARZ PURSUANT TO THIS
         AGREEMENT PRIOR TO THE APPLICABLE DATE OF DETERMINATION; (C) EXCEPT TO
         THE EXTENT SCHWARZ MAY OTHERWISE HAVE AN INDEMNIFICATION OBLIGATION
         PURSUANT TO ARTICLE 13.1 IN RESPECT OF ANY CLAIMS BASED UPON DAMAGES
         INCURRED BY INDIVIDUALS AS A RESULT OF THE USE OR INGESTION OF
         NON-CONFORMING PRODUCT, OSI'S SOLE REMEDY FOR CLAIMS ATTRIBUTABLE TO
         SCHWARZ'S SUPPLY OF NON-CONFORMING PRODUCT, INCLUDING ANY LOST PROFITS
         ATTRIBUTABLE THERETO, SHALL BE AS SET FORTH IN ARTICLE 6.2; AND (D)
         OSI'S SOLE REMEDY IN CONNECTION WITH SCHWARZ'S FAILURE TO TIMELY SUPPLY
         ANY QUANTITY OF PRODUCT IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT
         SHALL BE AS SET FORTH IN ARTICLES 2.5 AND 8.2(b).

                              ARTICLE 14. NOTICES

         Any notices, requests, estimates or other communications hereunder
shall be deemed to have been properly given three (3) days after being deposited
in the United States mail, first class postage prepaid, or if sent via facsimile
with a written acknowledgment from the recipient, or sent via nationally
recognized next business day courier addressed as follows:

                     If to OSI:

                              OSI Pharmaceuticals, Inc.
                              58 South Service Road
                              Melville, New York  11747
                              Attn: Vice President, Global Regulatory and CMC
                              Fax:  **

                     With a copy to:

                              OSI Pharmaceuticals, Inc.
                              58 South Service Road
                              Melville, New York 11747
                              Attn: Vice President and General Counsel
                              Fax: **



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                                     Page 25
<PAGE>


                     If to Schwarz:

                              Schwarz Pharma Manufacturing, Inc.
                              1101 "C" Avenue West
                              Seymour, Indiana   47274
                              Attn: Vice President, Manufacturing
                              Fax: **

                     With a copy to:

                              Schwarz Pharma, Inc.
                              6140 West Executive Drive
                              Mequon, Wisconsin  53092
                              Attn:  General Counsel
                              Fax:  **




                               ARTICLE 15. TAXES

15.1     OSI shall pay all national, state, municipal or other sales, use,
         excise, property or other similar taxes, tariffs or assessments,
         assessed upon or levied against the sale of the Product hereunder
         (other than taxes or charge imposed on Schwarz's income).

                           ARTICLE 16. FORCE MAJEURE

16.1     The performance by either party of any covenant or obligation on its
         part to be performed hereunder, other than the obligation of either
         party to pay money to the other and OSI's exclusive purchase
         obligations pursuant to Article 2.1 hereof, will be excused by reason
         of strikes or other labor disturbances, riots, fires, accidents, wars,
         embargoes, delays of carriers, inability to obtain raw materials,
         failure of power or natural resources of supply, acts, injunctions, or
         restraints of government, or any other cause preventing such
         performance whether similar, or dissimilar, to the foregoing, provided
         that such excuse will only be valid to the extent that such
         nonperformance are beyond the reasonable control of the party bound by
         such covenant or obligation, and provided that the party affected will
         exert its reasonable best efforts to eliminate any such causes, and
         resume performance of its covenant with all reasonably possible speed.
         Notwithstanding the above, OSI shall retain its rights pursuant to
         Article 2.5 hereof corresponding to an Inability to Supply caused by a
         force majeure event as described in this Article 16 directly affecting
         Schwarz's performance of its obligations under this Agreement.

                      ARTICLE 17. MISCELLANEOUS PROVISIONS

17.1     Governing Law. This Agreement shall be governed by and construed in
         accordance with the laws of the State of New York.



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                                     Page 26
<PAGE>

17.2     Arbitration. The parties hereto agree that any dispute, controversy or
         claim arising out of or relating to this Agreement, or the breach,
         termination, or invalidity thereof, shall be resolved through binding
         arbitration, the result of which shall not be subject to appeal or
         judicial consideration in any manner other than the entry of an
         arbitration decision as contemplated below. If the dispute arises
         between the parties, and if such dispute cannot be resolved after good
         faith negotiations by the parties, any unresolved controversy or claim
         between the parties shall be resolved by binding arbitration in
         accordance with the Commercial Arbitration Rules of the American
         Arbitration Association as presently in effect, except as modified
         herein. Each such arbitration shall be conducted by a panel of three
         (3) arbitrators appointed in accordance with the Commercial Arbitration
         Rules as presently in effect; provided that at least one (1) such
         arbitrator shall have had, by the time of the actual arbitration, at
         least ten (10) years of experience as an attorney and experience in the
         pharmaceuticals manufacturing industry so as to better understand the
         legal, business and scientific issues addressed in the arbitral
         proceeding. A reasoned arbitration decision shall be rendered in
         writing within thirty (30) days of the conclusion of the arbitration
         hearing and shall be binding and not be appealable to any court in any
         jurisdiction. The prevailing party may enter such decision in any court
         having competent jurisdiction. Unless otherwise mutually agreed upon by
         the parties, the arbitration proceedings shall be conducted at the
         location of the party not originally requesting the resolution of the
         dispute. Each party must bear its own attorneys' fees and associated
         costs and expenses. The arbitrators shall have the authority to grant
         specific performance and allocate costs between the parties (excluding
         attorney's fees). Notwithstanding the foregoing, any dispute relating
         to the determination of validity of claims, infringement or claim
         interpretation relating to a party's patents shall be submitted
         exclusively to federal court.

17.3     Waiver. The failure of either party to enforce at any time and for any
         period the provisions hereof in accordance with its terms shall not be
         construed as a waiver of such provisions or of the right of either
         party thereafter to enforce each and every such provision, unless such
         waiver is in writing, and signed by the party to be charged.

17.4     Relationship of the Parties. Each of the parties hereto are independent
         contractors and nothing in this Agreement is intended or shall be
         deemed to constitute a partnership, agency, employer-employee, or joint
         venture relationship between the parties. No party shall incur any
         debts or make any commitments for the other party.

17.5     Severability. The provisions of this Agreement are separate and
         independent covenants, and it is agreed that the invalidity or
         unenforceability of one or more of the provisions hereof shall not
         invalidate any other provision hereof, and this Agreement shall
         thereafter continue in full force and effect. In the event that any
         provision of this Agreement is found to be too broad, invalid or
         unenforceable by any court having jurisdiction, then such court shall
         have the authority to reform any such provisions as shall be necessary
         to make the provisions valid and enforceable; however, if the provision
         is not capable of being reformed, then that invalid or unenforceable
         provision shall be deemed deleted to the same extent as if it had never
         existed.



                                     Page 27
<PAGE>

17.6     Survival; Continuing Obligations. All representations, warranties and
         covenants made in this Agreement shall survive the execution of this
         Agreement, and consummation of the transactions contemplated herein;
         provided, however, that unless explicitly specified to the contrary,
         the representations and warranties set forth in Articles 10.1.1 through
         10.1.4 and Article 10.1.12 and Articles 10.2.1 through 10.2.4 and
         Article 10.2.7 shall be made solely as of the execution date of this
         Agreement. Termination of this Agreement for any reason shall not
         relieve or release the parties of any obligations accruing before
         termination occurred. Further, the obligations of the parties under
         Articles 6.2 through 6.4 (Non-Conforming Goods), 7 (Records and
         Inspections), 8 (Term and Termination), 9 (Ownership and Product
         Specifications), 11 (Confidentiality), 12 (Insurance), 13
         (Indemnification), 14 (Notices), 15 (Taxes) and 17 (Miscellaneous),
         shall survive the expiration or termination of this Agreement in
         accordance with their respective terms.

17.7     Assignment. Neither this Agreement, nor any right or obligation of
         either party hereunder, shall be assignable except with the other
         party's prior written consent, except that without such consent and,
         upon prior written notice to the other party, (i) either party may
         assign this Agreement to any successor in interest to substantially all
         of the party's business and assets to which this Agreement relates,
         (ii) OSI or Schwarz may assign this Agreement to one or more of its
         Affiliates and (iii) only upon the occurrence of a Triggering Event, as
         defined in that certain Manufacturing and Supply Agreement, dated as of
         June 4, 2004, between Genentech, Inc. and OSI (the "Genentech
         Agreement"), as in effect on the date hereof, OSI may assign this
         Agreement in its entirety, but not in part, to Genentech, Inc., any
         successor of Genentech, Inc. or any party to whom Genentech, Inc. or
         its successor has assigned the Genentech Agreement. This Agreement
         shall be binding upon and shall inure to the benefit of any successor
         or permitted assign of either party.

17.8     Third-Party Beneficiaries. Nothing in this Agreement shall be construed
         to create any rights or obligations except among the parties hereto.

17.9     Entire Agreement. This Agreement, including all Exhibits and Schedules
         attached hereto, together with the Quality Assurance Agreement, that
         certain Cross-Purchase Agreement, dated as of March 9, 2001, between
         Schwarz and OSI, constitute the entire understanding of the parties
         with respect to the subject matter hereof, and supersedes all prior
         contracts, agreements and understandings between the parties related to
         the same subject matter, including (i) the Purchase Order Agreement,
         and (ii) that certain Manufacturing and Development Agreement, dated as
         of April 15, 2001, between OSI and Schwarz.

17.10    Amendments. Except as expressly contemplated elsewhere herein, this
         Agreement may not be amended, supplemented or modified except by an
         agreement in writing signed by both parties.

17.11    Counterparts. This Agreement may be signed in two or more counterparts,
         each of which shall be deemed an original and all of which taken
         together shall constitute one instrument.

                            [SIGNATURE PAGE FOLLOWS]



                                     Page 28
<PAGE>



         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.


                            SCHWARZ PHARMA MANUFACTURING, INC.







                            By: /s/ Jeffrey W. Siefert
                                -----------------------------------------------
                                Name: Jeffrey Siefert
                                Title: Vice President, Manufacturing




                            OSI PHARMACEUTICALS, INC.







                            By: /s/ Robert L. Simon
                                -----------------------------------------------
                                Name: Robert Simon
                                Title: Vice President, Regulatory Affairs & CMC




                                     Page 29
<PAGE>


                                  SCHEDULE 1.4
                               API SPECIFICATIONS

                           [Please see attached] **



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                                     Page 30
<PAGE>



                                  SCHEDULE 1.11
                             PRODUCT SPECIFICATIONS

                            [Please see attached] **





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                                     Page 31
<PAGE>



                                  SCHEDULE 1.15
                                   TRADEMARKS

Tarceva(TM)



                                     Page 32
<PAGE>



                                  SCHEDULE 2.2
                       API INVENTORY AS OF EFFECTIVE DATE

                            [Please see attached] **




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                                     Page 33
<PAGE>



                                 SCHEDULE 2.3.1
                       INITIAL LONG-TERM PRODUCT FORECAST

                            [Please see attached] **


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                                     Page 34
<PAGE>



                                 SCHEDULE 2.3.2
                        INITIAL DETAILED PRODUCT FORECAST

                            [Please see attached] **




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                                     Page 35
<PAGE>



                                  SCHEDULE 2.4
                             FORM OF PURCHASE ORDER

                              [Please see attached]




                                     Page 36
<PAGE>
(OSI) pharmaceuticals                           PURCHASE ORDER
                                       PURCHASE ORDER NO    REVISION   PAGE
58 South Service Road                                          0
Suite 110                             THIS PURCHASE ORDER NUMBER MUST APPEAR
Melville, NY 11747                    ON ALL INVOICES, PACKING LISTS, CARTONS
(631) 962-2000                        AND CORRESPONDENCE RELATED TO THIS ORDER.


VENDOR:  SCHWARZ PHARMA
          **

                                      BILL TO:

                                        58 South Service Road
                                        Atten: Accounts Payable
                                        Melville, NY 11747
                                        United States


CUSTOMER ACCOUNT NO.   VENDOR NO.     DATE OF ORDER/BUYER     REVISED DATE/BUYER
                           1925
--------------------------------------------------------------------------------
PAYMENT TERMS                         SHIP VIA              F.O.B.
30 Net                                                        EXWORKS, SEYMOUR
--------------------------------------------------------------------------------
FREIGHT TERMS                         REQUESTOR/DELIVER TO  CONFIRM TO/TELEPHONE
Paid                                                        (812) 523.5490
--------------------------------------------------------------------------------



<TABLE>
<CAPTION>
ITEM      PART NUMBER/DESCRIPTION       DELIVERY DATE       QUANTITY       UNIT      UNIT PRICE       EXTENSION  TAX
<S>       <C>                           <C>                 <C>            <C>       <C>               <C>       <C>

          Your #: n/a                                                                                             N
</TABLE>

Seller to supply the Product to OSI in accordance with the Supply Agreement
between Schwarz Pharma Manufacturing, Inc. and OSI Pharmaceuticals, Inc.




                                                       TOTAL

                                                       AUTHORIZED SIGNATURE
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                                    Page 37
<PAGE>

                                  SCHEDULE 2.7
                                    LICENSES



U.S. Patent No. 5,747,498

Tarceva(TM) Trademark




                                     Page 38

<PAGE>




                                  SCHEDULE 5.1
                                 PRICE SCHEDULE



<Table>
<S>                                                                              <C>
FOR QUANTITIES OF PRODUCT PURCHASED UP TO  **  TABLETS EACH  **                  **  /tablet

FOR QUANTITIES OF PRODUCT PURCHASED IN EXCESS OF  **  TABLETS EACH  **           **  /tablet

FOR QUANTITIES OF PRODUCT PURCHASED IN EXCESS OF  **  TABLETS EACH  **           **  /tablet
</Table>

For the avoidance of doubt, the ** per tablet and the ** per tablet prices set
forth above shall only apply to quantities of Product above each of the
thresholds set forth above ( ** tablets each ** and ** tablets each **
respectively).

Quantities of Product purchased pursuant to the Purchase Order Agreement shall
not be taken into account in the calculation of prices pursuant to this Supply
Agreement.

For the purposes of the above schedule, the first year shall be the twelve month
period beginning on the day of the execution of this Supply Agreement and ending
twelve months thereafter, and subsequent years shall fall within each such
subsequent twelve month period. The quantities of Product purchased in any such
year shall be calculated based on the quantities delivered during such year
based on the delivery dates specified in the relevant purchase orders; provided
such delivery dates are consistent with Article 2 hereof.

The above prices shall be subject to annual increases based upon the Producer
Price Index (PPI), pursuant to Article 5.2 hereof.



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                                     Page 39
<PAGE>




                                   EXHIBIT A-1
                             INITIAL PURCHASE ORDER

                            [Please see attached] **



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                                     Page 40
<PAGE>



                                   EXHIBIT A-2
                              PRIOR PURCHASE ORDER

                            [Please see attached] **




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                                     Page 41