<PAGE>
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.

                                                                   EXHIBIT 10.35

                        SUPPLY AND DISTRIBUTION AGREEMENT

THIS SUPPLY, DISTRIBUTION AND MARKETING AGREEMENT (the "Agreement") is hereby
entered into and effective as of September 4, 2003 (the "Effective Date") by and
between Advancis Pharmaceutical Corporation ("Advancis"), a Delaware
corporation, having an address at 20425 Seneca Meadows Parkway, Germantown, MD
20876, and Par Pharmaceutical, Inc. ("Par"), a Delaware corporation with offices
located at One Ram Ridge Road, Spring Valley, New York 10977.

WHEREAS, Advancis is engaged in the development of pharmaceutical products and
wishes to provide Par with rights to promote, sell and distribute certain of its
products in the Territory;

WHEREAS, Par desires to market and sell certain of Advancis's products in the
Territory

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Parties hereby agree as follows:

                             ARTICLE 1. DEFINITIONS

      1.1.  "ACQUISITION PRICE" means Par's actual out of pocket expense for API
            and fully packaged Product as paid to Advancis or to a Third Party
            manufacturer.

      1.2.  "ADVANCIS APPLICABLE PERCENTAGE" means [***] or the percentage set
            forth in Section 6.6 in the event that Advancis reduces the Advancis
            Applicable Percentage pursuant to Section 6.6.

      1.3.  "AFFILIATE(S)" means any Person (defined below) which directly or
            indirectly controls, is controlled by, or under common control with
            a Party. For purposes of the foregoing definition, the term
            "control" (including with correlative meaning, the terms
            "controlling", "controlled by", and "under common control with") as
            used with respect to any Person, shall mean the possession, directly
            or indirectly, of the power to direct or cause the direction of the
            management and policies of such Person, whether through ownership of
            voting securities, by contract, or otherwise.

      1.4.  "ANDA" means an Abbreviated New Drug Application filed with the FDA
            with respect to Product.

      1.5.  "API" means the active pharmaceutical ingredient clarithromycin.

      1.6.  "APPLICABLE LAWS" means all applicable laws, rules, regulations and
            guidelines that may apply to the development, marketing or sale of
            the Product in the Territory or the
<PAGE>
            performance of either Party's obligations under this Agreement
            including laws, regulations and guidelines governing the import,
            export, development, marketing, distribution and sale of the
            Product, to the extent applicable and relevant, and including all
            current Good Manufacturing Practices or current Good Clinical
            Practices or similar standards or guidelines promulgated by the FDA
            and including trade association guidelines, where applicable, as
            well as U.S. export control laws and the U.S. Foreign Corrupt
            Practices Act.

      1.7.  "APPROVED MANUFACTURING CONTRACT(S)" means the manufacturing
            contracts with respect to API and Product between Advancis and a
            Third Party(ies) pursuant to Section 5.1 that has been approved by
            Par.

      1.8.  "COMMERCIAL EXPENSES" means commercially reasonable costs and
            expenses related solely to marketing (including promotional
            activities, symposia, and the like), selling and distributing the
            Product that are incurred by Par. Commercial Expenses shall not
            exceed five (5) percent of Net Sales.

      1.9.  "COMMERCIAL LAUNCH" or "COMMERCIALLY LAUNCH" means the first
            introduction in the United States of Product by Par, or a Par
            Affiliate to each of a major retail chain and a major distributor
            (as those terms are commonly understood in the industry) after the
            FDA has approved the ANDA for the Product.

      1.10."Competing Product" means any pharmaceutical product that is either
            A/B rated to Biaxin(R) XL Filmtab(R) or which posses substantially
            the same pharmacokinetic profile as Biaxin(R) XL Filmtab(R)

      1.11."CONFIDENTIAL INFORMATION" means with respect to a Party, all
            information of any kind whatsoever (including without limitation,
            data, compilations, formulae, models, patent disclosures,
            procedures, processes, projections, protocols, results of
            experimentation and testing, specifications, strategies, techniques
            and all non-public Intellectual Property Rights (defined below)),
            and all tangible and intangible embodiments thereof of any kind
            whatsoever (including without limitation, apparatus, compositions,
            documents, drawings, machinery, patent applications, records and
            reports), which is disclosed by such Party to the other Party and is
            marked, identified or otherwise acknowledged to be confidential at
            the time of disclosure to the other Party. Notwithstanding the
            foregoing, Confidential Information of a Party shall not include

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<PAGE>
            information which the other Party can establish by written
            documentation (a) to have been publicly known prior to disclosure of
            such information by the disclosing Party to the other Party, (b) to
            have become publicly known, without fault on the part of the other
            Party, subsequent to disclosure of such information by the
            disclosing Party to the other Party, (c) to have been received by
            the other Party free of an obligation of confidentiality at any time
            from a source, other than the disclosing Party, rightfully having
            possession of and the right to disclose such information free of an
            obligation of confidentiality, (d) as demonstrated by written
            records, to have been otherwise known by the other Party prior to
            disclosure of such information by the disclosing Party to the other
            Party, or (e) to have been independently developed by employees or
            agents of the other Party without the use of such information
            disclosed by the disclosing Party to the other Party.

      1.12."GMP" means current Good Manufacturing Practices promulgated by the
            FDA.

      1.13."FDA" means the United States Food and Drug Administration or any
            successor agency thereto.

      1.14."IMPROVEMENTS" means any and all improvements, enhancements, or
            modifications of the Product, including any different dosage
            strengths or delivery forms (e.g. capsules vs. tablets etc.) of the
            Product.

      1.15."INTELLECTUAL PROPERTY RIGHTS" means without limitation all of the
            following which relates to or underlies or arises out of the
            Product: (i) patent applications, continuation applications,
            continuation in part applications, divisional applications, any
            corresponding foreign patent applications to any of the foregoing,
            and any patents that may grant or may have been granted on any of
            the foregoing, including reissues, re-examinations and extensions;
            (ii) all know-how, trade secrets, inventions (whether patentable or
            otherwise), data, processes, techniques, procedures, compositions,
            devices, methods, formulas, protocols and information, whether
            patentable or not; (iii) copyrightable works, copyrights and
            applications, registrations and renewals in connections with the
            Product; (iv) other proprietary rights; and (v) copies and tangible
            embodiments of any one or more of the foregoing.

      1.16."LABEL," "LABELED" or "LABELING" means all labels and other written
            printed or graphic matter upon (i) the Product or any container or
            wrapper utilized with the


                                       3
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            Product, or (ii) any written material accompanying the Product,
            including without limitation, package inserts.

      1.17."NET PROFIT" means the difference between Net Sales and Par's Total
            Cost of Product.

      1.18."NET SALES" means the dollar amount determined by deducting from the
            gross invoiced sales price billed for the Product sold by Par, or by
            an Affiliate of Par, or by a permitted sub-licensee, as the case may
            be, in the Territory to Third Parties in arms length transactions,
            the following: (i) all applicable sales credits accrued in
            accordance with accounting principles generally accepted in the
            United States, (ii) payments or rebates incurred pursuant to
            federal, state and local government assistance programs, whether in
            existence now or enacted at any time hereafter, (iii) costs for
            transit insurance, freight, handling or other transportation, (iv)
            customs duty, sales, use or excise taxes and (v) the write-off of
            bad debt not to exceed one percent (1%) of Net SALES. Sales credits
            accrued in accordance with accounting principles generally accepted
            in the United States can include credits or discounts related to the
            following: (i) customer returns, returned goods allowances including
            those made as part of a recall, billing and shipping errors,
            rejected goods and damaged goods (ii) cash or terms discounts (iii)
            customer rebate programs (iv) chargebacks and administration fees or
            similar credits or payments granted to customers pursuant to
            contract or other purchases (v) sales promotions, trade show
            discounts and stocking allowances and (vi) price adjustments,
            including those on customer inventories following price changes.

      1.19."PACKAGING" means all primary containers, including bottles, cartons,
            shipping cases or any other like matter used in packaging or
            accompanying the Product.

      1.20."PAR AGREEMENTS" means any and all agreements between Par and a Third
            Party with respect to manufacture, sale, distribution and marketing
            of Product. The Par Agreements include the Approved Manufacturing
            Agreements assigned to Par.

      1.21."PAR APPLICABLE PERCENTAGE" means 100% minus the Advancis Applicable
            Percentage.

      1.22."PERSON" means an individual, corporation, partnership, limited
            liability company, firm, association, joint venture, estate, trust,
            governmental or administrative body or agency, or any other entity.


                                       4
<PAGE>
      1.23."PRODUCT" means clarithromycin extended-release 500 mg tablets which
            are A/B rated to Biaxin(R) XL Filmtab(R).

      1.24."REGULATORY APPROVALS" shall mean any approvals, product and/or
            establishment licenses, registrations or authorizations, including
            without limitation approvals under ANDAs which are necessary for the
            commercial manufacture, use, storage, importation, transport,
            promotion, pricing or sale of the Product in the Territory.

      1.25."TERRITORY" means Canada and the United States its territories,
            possessions and the Commonwealth of Puerto Rico.

      1.26."THIRD PARTY(IES)" means a person other than a Party or its
            Affiliate.

      1.27."TOTAL COST" means the sum of Commercial Expenses and Acquisition
            Price for the Product.

      1.28."TRADEMARK" means any and all trademarks, trademark applications and
            trademark registrations with respect to Product in the Territory.

                             ARTICLE 2. DEVELOPMENT

      2.1.  GENERAL DEVELOPMENT RESPONSIBILITIES. Subject to Advancis' rights
            and obligations under this Agreement, Advancis shall have the sole
            control and responsibility for developing the Product, except that
            Par shall have sole control of and responsibility for preparing any
            patent certifications and related notice letters in connection with
            the ANDA for the Product. Advancis responsibilities shall include,
            without limitation, the following:

            2.1.1.Developing a formulation for the Product A/B rated by the FDA
                  to Biaxin(R) XL clarithromycin extended release tablets.

            2.1.2.Advancis shall keep Par reasonably informed of the progress of
                  the development of the Product.

            2.1.3.Conducting, without limitation, all necessary testing,
                  analytical studies, and human bioequivalence studies necessary
                  to support an ANDA for the Product.

      2.2.  COMPLIANCE. Advancis shall comply with, and shall require compliance
            with by its Third Party contractors, all Applicable Laws in the
            conduct of all activities associated with the development of the
            Product.

      2.3.  DEVELOPMENT EXPENSES. Advancis shall be responsible for all costs
            and expenses associated with the development of the Product,
            including, without limitation, internal


                                       5
<PAGE>
            and third party costs and expenses related to materials (e.g. API),
            facilities, personnel, analytical testing (e.g., outside laboratory
            expenses) and human bioequivalence studies (e.g., pilot and pivotal
            biostudies).

                         ARTICLE 3. REGULATORY APPROVAL

      3.1.  INITIAL ANDA OWNERSHIP. Until such time as the ANDA is transferred
            to Par pursuant to Section 6.5, the ANDA for the Product shall be
            owned exclusively by Advancis.

      3.2.  PROSECUTION. Advancis shall use commercially reasonable efforts to
            perform a first pivotal biostudy with respect to the bioequivalency
            of the existing formulation of Product with respect to Biaxin(R)
            XL Filmtab(R), and if successful to thereafter use commercially
            reasonable efforts to prepare, file, and prosecute the ANDA for the
            Product.

      3.3.  EXPENSES. Advancis shall have sole responsibility for all expenses
            associated with preparing, filing and prosecuting the ANDA for the
            Product.

      3.4.  PROGRESS UPDATES. Advancis shall keep Par informed of the progress
            of the prosecution of the ANDA for the Product, including providing
            Par with good faith projections of the approximate time at which
            approval of the ANDA may be expected and providing Par with notice
            of any negative communications from the FDA which could affect
            approval timing.

      3.5.  COOPERATION. Each Party agrees to provide the other Party with all
            information in its possession or control that is necessary for the
            other Party to comply with any applicable reporting requirements.
            Par shall use commercially reasonable efforts to make its regulatory
            personnel available to consult with Advancis regarding the
            prosecution of the ANDA for the Product.

      3.6.  In the event that a first pivotal biostudy of the existing
            formulation of Product fails to demonstrate that such formulation is
            bioequivalent to Biaxin(R) Filmtab(R), then the parties shall
            negotiate in good faith an amendment to the terms and conditions of
            this Agreement with respect to further development of Product and
            the financial terms thereof and if the parties fail to reach
            agreement as to such an amendment within sixty (60) days after
            Advancis provides to Par the final report of the results of such
            study furnished by the contract research organization that conducted
            the study, then this Agreement shall terminate.


                                       6
<PAGE>
                          ARTICLE 4. COMMERCIALIZATION

      4.1.  LICENSE GRANT. Advancis hereby grants to Par an exclusive license
            under its rights in and to the Regulatory Approvals for the Product
            and under its Intellectual Property rights associated with the
            Product, to import, market, use, manufacture, have manufactured,
            promote, distribute and sell the Product in the Territory. The
            foregoing license shall include the right for Par to appoint
            sub-contractors to market, distribute and sell the Product within
            the Territory. The license granted under this Section 4.1 is subject
            to a license retained by Advancis to develop Product pursuant to
            this Agreement.

      4.2.  MARKETING AND DISTRIBUTION OBLIGATIONS.

            4.2.1.The Parties agree to work together in good faith to develop a
                  marketing and/or branding strategy for the Product. Ultimate
                  responsibility and decision making control with regard to
                  marketing and pricing of the Product shall belong solely to
                  Par.

            4.2.2.Subject to Section 15.12, Par agrees to use commercially
                  reasonable efforts to market, promote, distribute and sell the
                  Product in the Territory consistent with Par's efforts in
                  regard to its other premier generic or branded products, as
                  applicable. Par agrees to comply and shall require all of its
                  Third Party contractors to comply with all Applicable Laws in
                  the conduct of activities with respect to marketing, promotion
                  distribution and sale of Product in the Territory.

            4.2.3.Par will not use the Product as a loss leader or bundle the
                  Product in any fashion which decreases the revenue directly
                  attributable to the Product.

      4.3.  COMMERCIAL LAUNCH. Par's management, and its board of directors,
            shall have the ultimate decision-making authority with respect to
            the scale and timing of the Commercial Launch of the Product.

            (a) Subject to Section 4.3(b), Par agrees to Commercially Launch the
            Product before the later of June 1, 2005 or six (6) months after
            Regulatory Approval.

            (b) Par's obligations to Commercially Launch the Product shall be
            suspended during the existence of any one or more of the following:

                  (i)   Par is engaged in litigation with respect to
                        Intellectual Property Rights of a Third Party that
                        concern Product or Par is in good faith negotiations
                        with a


                                       7
<PAGE>
                        Third Party to obtain a license to Intellectual Property
                        Rights that affect the ability to market Product; or

                  (ii)  there is a court order that, in the United States,
                        Product infringes a valid claim of a patent of a Third
                        Party or Advancis is prohibited from marketing the
                        product by any judgment, order, injunction, decree or
                        award of any court, administrative agency, or arbitrator
                        or government body; or

                  (iii) Subject to 4.3(c), Par is acting in a commercially
                        reasonable fashion in consideration of reasonable
                        threats of patent infringement. Par agrees to keep
                        Advancis informed regarding such potential patent
                        issues.

            (c) In the event that Par has not yet launched the product pursuant
            to Section 4.3(b)(iii) above and Advancis desires to nevertheless
            launch the Product Advancis will so notify Par. Following such
            notice, Advancis may if it so chooses seek in good faith an opinion
            of counsel, which counsel is reasonably acceptable to Par, that such
            patents that Par is considering pursuant to Section 4.3(b)(iii) are
            not infringed and/or invalid and/or unenforceable. If Advancis
            receives such an opinion, Advancis will notify Par and provide a
            copy of the opinion to Par for its review. If after 45 days ("Par's
            review period") Par has not notified Advancis that it intends to
            launch the Product and otherwise comply with the requirements of
            this Section 4.3 Advancis shall have the right to seek to have a
            Third Party launch and market the Product or launch and market the
            Product itself and this Agreement shall automatically terminate as
            of either (1) the date that Advancis has entered into such an
            agreement with the Third Party or (2) the date that Advancis
            launches the Product. With respect to the foregoing item (2), Par
            hereby agrees that following Par's forty-five (45) day review period
            Advancis shall be free to enter into such arrangements as necessary
            to launch and market the Product on its own in reliance upon the
            ultimate termination of this Agreement and to the extent required
            Par grants a license under its rights under this Agreement in order
            to implement such launch.

            (d) In the event that this Agreement is terminated under Section
            4.3(c), Advancis agrees to refund to Par any amounts paid to
            Advancis under Section 6.2 of this Agreement. Advancis agrees to
            make such payments at the rate of 50% of its revenue in connection
            with the Product.


                                       8
<PAGE>
      4.4.  COMPETITIVE ACTIVITIES. Subject to Section 4.3(c), during the term
            of this Agreement, Advancis shall not develop, make, have made,
            sell, offer for sale, distribute or otherwise make available (nor
            contract with a third Party to do any of the foregoing) the Product
            or any Competing Product to any Person in the Territory other than
            Par. During the term of this Agreement Par shall not market,
            promote, sell, offer for sale, distribute or otherwise make
            available (nor contract with a third Party to do any of the
            foregoing) the Product or any Competing Product, except as supplied
            to Par by Advancis or a mutually agreed third party manufacturer, to
            any Person in the Territory.

      4.5.  RECALL. In the event that either Party believes it may be necessary
            to conduct a recall, field correction, market withdrawal, stock
            recovery, or other similar action with respect to any Product sold
            under this Agreement (a "Recall"), Advancis and Par shall promptly
            consult with each other as to how best to proceed, it being
            understood and agreed that the final decision as to any Recall of
            any Product shall be made by Par; provided however, that neither Par
            nor Advancis shall be prohibited hereunder from taking any action
            that it is required to take by Applicable Law. The cost of any
            Recall of Product shall be paid for by the Parties in accordance
            with the Par Applicable Percentage and the Advancis Applicable
            Percentage. Any Recall required because of a negligent or illegal
            act or omission in the handling, storage or distribution of Product
            by Par shall be at Par's sole expense.

                         ARTICLE 5. SUPPLY AND PURCHASE

      5.1.  Advancis agrees to enter into a contract with one or more Third
            Parties to manufacture API and to produce Product containing API.
            Advancis shall not sign any such contract(s) until Par in writing
            approves the terms and conditions thereof, which approval shall not
            be withheld or delayed unreasonably.

      5.2.  Until assignment of the Approved Manufacturing Contract, Advancis
            agrees to supply Product to Par and Par agrees to order, accept and
            pay for Product and API in accordance with the terms and conditions
            of the Approved Manufacturing Contracts.

      5.3.  The only warranties with respect to API and Product shall be those
            provided by the Third Party manufacturer in the Approved
            Manufacturing Contracts and Advancis shall have no liability with
            respect to any breach of any such warranties. At the request of Par,
            to the extent that there is any breach of any warranty under an
            Approved


                                       9
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            Manufacturing Contract that has not been assigned to Par, Advancis
            shall bring an action to enforce such warranties and each Party
            shall bear the cost and expense thereof in accordance with its
            Applicable Percentage.

      5.4.  PRODUCT REPRESENTATIONS AND WARRANTIES.

            5.4.1.Par warrants that it will use reasonable commercial efforts to
                  market, promote and sell the Product and will comply with all
                  Applicable Laws in the conduct of activities with respect to
                  handling, storage, distribution, marketing, promoting and
                  selling of Product.

      5.5.  ADVANCIS shall have no liability to Par with respect to manufacture
            and supply of Product and the only remedies available to Par with
            respect to any API or Product supplied under an Approved
            Manufacturing Contract are those available thereunder.

                         ARTICLE 6. FINANCIAL PROVISIONS

      6.1.  PRODUCT SUPPLY PRICE. To the extent that Advancis supplies Product
            to Par under the Approved Manufacturing Contracts, Par shall pay for
            Product and API under the terms and conditions of the Approved
            Manufacturing Contracts.

      6.2.  MILESTONE PAYMENTS. Provided that executed Approved Manufacturing
            Contracts are in place for the supply of API and for the
            manufacturing and supply of finished Product, Par shall make the
            following milestone payments to Advancis which may in the aggregate
            amount to up to Six Million U.S. dollars ($6,000,000):

            6.2.1.Upon demonstration by Advancis that the Product meets the
                  FDA's statistical criteria for bioequivalence to Biaxin(R) XL
                  clarithromycin extended release tablets Par shall pay to
                  Advancis [***].

            6.2.2.Upon the later of January 7, 2004 or the receipt of written
                  notice from the FDA that the ANDA for the Product has been
                  accepted, Par shall pay to Advancis [***].

            6.2.3.Upon Commercial Launch of the Product by Par, Par shall pay to
                  Advancis [***].

            6.2.4.If after one hundred and eighty (180) days following
                  Commercial Launch of the Product by Par there is no more than
                  one other ANDA (in addition to the Advancis/Par ANDA) approved
                  for a product bioequivalent to Biaxin(R) XL


                                       10
<PAGE>
                  clarithromycin extended release tablets, Par shall pay to
                  Advancis [***].

In the event that executed Approved Manufacturing Agreements for both API and
finished and packaged Product are not in place for the supply of API and for the
manufacturing and supply of Product at the time of achieving the foregoing
milestones, such Milestone Payments shall only become due and payable upon the
execution of such agreements for the supply of clarithromycin API and for the
manufacturing and supply of finished Product to Par.

      6.3.  NET PROFITS. Net profits shall be determined on a calendar quarter
            by calendar quarter basis. Par shall pay to Advancis the Advancis
            Applicable Percentage of Net Profits for a calendar quarter within
            thirty (30) days of the end of each calendar quarter in which sales
            of Product have been made by Par. Each Net Profit payment shall be
            accompanied by a copy of a calculation of the amount due and
            payable, including a statement as to Net Sales, Acquisition Price
            and Commercial Expenses.

      6.4.  RECORDS AND AUDITS. Advancis shall have the right once each calendar
            year, at its own expense, for any period during which Product is
            sold by Par hereunder and for one (1) year thereafter, to have an
            independent public accountant, reasonably acceptable to Par, audit
            the relevant financial books and records of account of Par at normal
            business hours, upon reasonable demand, to determine or verify the
            amounts due and payable to Advancis hereunder. If errors of five
            percent (5%) or more in Advancis's favor are discovered as a result
            of such audit, Par shall reimburse Advancis for the expense of such
            audit and pay the deficiency with interest immediately at the prime
            rate set forth in the Wall Street Journal, Eastern Edition plus two
            percent (2%). As a condition to such examination, the independent
            public accountant selected by Advancis shall execute a written
            agreement, reasonably satisfactory in form and substance to Par, to
            maintain in confidence all information obtained during the course of
            any such examination except for disclosure to Advancis as necessary
            for the above purpose.

      6.5.  Six months after Commercial Launch of Product in the United States,
            Advancis agrees to assign to Par the Regulatory Approvals and the
            Approved Manufacturing Contracts in each case for no additional
            consideration.

      6.6.        (a) At any time up until three (3) months after Commercial
            Launch, by written notice from Advancis to Par, Advancis shall have
            the right to reduce the


                                       11
<PAGE>
            Advancis Applicable Percentage to [***], at which time, if not
            previously assigned, Advancis shall assign to Par the Regulatory
            Approvals and the Approved Manufacturing Contracts.

                  (b) In the event that Advancis reduces or has reduced the
            Advancis Applicable Percentage under Section 6.6(a) and there is an
            accusation and/or court action that Product sold by Par infringes a
            patent of a Third Party and as a result of an unappealed or
            unappealable court decision or as a result of a settlement or
            compromise, Par is able to continue sale of Product in the United
            States, then Par shall pay to Advancis in addition to any other
            amounts paid or to be paid hereunder an amount equal to [***]
            of Net Profits of Product sold after the date of such reduction and
            prior to the date of such decision, settlement or compromise, and
            thereafter the Advancis Applicable Percentage shall be [***].

                     ARTICLE 7. COMMERCIALIZATION COMMITTEE

      7.1.  ESTABLISHMENT OF THE COMMERCIALIZATION COMMITTEE. Promptly after the
            Effective Date, the Parties will form a committee (the
            "Commercialization Committee") to be comprised of two (2)
            representatives of each of Advancis and Par. Each Party shall have
            the right from time to time to substitute new members, on a
            permanent or temporary basis, for any of its previously designated
            members of the Commercialization Committee. Each Party shall bear
            its own costs associated with participation in the Commercialization
            Committee.

      7.2.  PURPOSE AND RESPONSIBILITIES OF THE COMMERCIALIZATION COMMITTEE. The
            Commercialization Committee shall oversee the commercialization of
            the Product, including (i) the timelines for and occurrence of
            milestones, general timelines for commercial launch, following
            launch to monitor marketing and sales of Product, and such other
            matters as are provided to the Commercialization Committee by mutual
            agreement of the Parties. The Commercialization Committee shall not
            have any authority to impose financial, cost or other obligations on
            either party in excess of those expressly set forth in this
            Agreement unless expressly consented to in writing by such party.

      7.3.  COMMERCIALIZATION COMMITTEE MEETINGS. During the term of this
            Agreement, the Commercialization Committee shall meet at least once
            each calendar quarter or at such


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<PAGE>
            other frequency as the Commercialization Committee agrees. The
            Parties shall meet on a date and time and at a location agreed to by
            the Commercialization Committee. Upon written notice by either Party
            to the other that a meeting is required or requested, a meeting will
            be held within thirty (30) calendar days of such notice on a date
            and time and at a location to be agreed upon by the Parties, or
            sooner if warranted by the circumstances. Notice requesting such a
            meeting shall include adequate information describing the activity
            to be reviewed. Any meetings of the Commercialization Committee may
            be held in person at a location to be agreed to by the Parties, or
            by videoconference or teleconference. A reasonable number of
            additional representatives of either Party including outside
            consultants and independent contractors, subject to the other
            party's reasonable consent) may attend meetings of the
            Commercialization Committee in a non-voting capacity. At least one
            week prior to any meeting of the Commercialization Committee, each
            Party shall provide the other with a a proposed agenda of the
            matters to be discussed at such meeting. Within (30) days after each
            meeting, the Commercialization Committee chairperson will provide
            the Parties with a written report describing, in reasonable detail,
            the status of the Product including pricing and marketing data, a
            summary of the results and progress to date, the issues requiring
            resolution and the agreed resolution of previously reported issues.

                        ARTICLE 8. INTELLECTUAL PROPERTY

      8.1.  GENERAL OWNERSHIP. Par understands and agrees that as between the
            Parties, ownership of all intellectual property shall be determined
            in accordance with U.S. patent law.

      8.2.  THIRD PARTY INFRINGEMENT. To the extent that any Third Party asserts
            patent infringement against Par and/or Advancis or any of their
            Affiliates in connection with this Agreement or the Product, Par
            shall have sole control in addressing such assertions and in
            managing and conducting any related litigation using counsel of its
            choice. Par agrees to keep Advancis and its nominated legal counsel
            informed with respect to the progress of such claims and to disclose
            to Advancis' counsel all papers filed or served in the action and
            all material decisions issued by the courts in such matters.
            Following the execution of a mutually agreeable joint privilege
            agreement, Advancis, and its nominated counsel in furtherance of the
            mutual defense shall be allowed full access to Par's designated
            legal counsel in connection with the defense and shall be allowed to


                                       13
<PAGE>
            participate in the development of the litigation strategy. The
            counsel nominated by Par shall represent both Par and Advancis where
            both Par and Advancis are parties to the suit. Neither Party shall
            agree to any settlement of any disputes with a Third Party that
            pertain to the Product without the express written consent of the
            other Party, which consent shall not be unreasonably withheld.
            Advancis and Par shall share equally in all expenses, costs, and
            fees associated with all of the foregoing set forth in this Section
            8.2, except that Par shall be responsible for one hundred percent
            (100%) thereof in the event that Advancis reduces the Advancis
            Applicable Percentage under Section 6.6.

      8.3.  Advancis and Par agree to cooperate with each other with regard to
            assessing, avoiding and defending against threats of infringement of
            Third Party Intellectual Property Rights; provided however, that
            Advancis shall have no obligation to re-formulate the Product. In
            this respect the parties agree to enter into a joint defense
            agreement with respect to infringement, if any, of Third Party
            Intellectual Property Rights. Without limiting the foregoing, Par
            agrees to make available to Advancis the evaluation of Intellectual
            Property Rights of Third Parties made by Par and its counsel with
            respect to Product within three (3) months of filing an ANDA; and
            upon approval of an ANDA; and within thirty (30) days of Commercial
            Launch.

                ARTICLE 9. CONFIDENTIALITY AND PUBLIC DISCLOSURE

      9.1.  During the term of this Agreement and for a period of five (5) years
            thereafter, a Party shall not disclose to any Third Party any
            Confidential Information received by it hereunder from the other
            Party or use any such Confidential Information for its own benefit.
            Each Party agrees to protect Confidential Information received from
            the other Party at least as well as it would its own proprietary and
            confidential information

      9.2.  To the extent it is reasonably necessary or appropriate to fulfill
            its obligations or exercise its rights under this Agreement, a Party
            may disclose the other Party's Confidential Information to its
            Affiliates, consultants, outside contractors, collaborators and
            clinical investigators on a need-to-know basis on condition that
            such entities or persons agree to keep Confidential Information
            confidential for the same time periods and to the same extent as
            required by this Agreement.

            9.2.1.The obligation of a Party not to disclose Confidential
                  Information of the other Party shall not apply to any part of
                  such Confidential Information that is disclosed


                                       14
<PAGE>
                  by a Party pursuant to an order or demand issued by a court or
                  governmental agency or pursuant to a legal proceeding or as
                  otherwise required by law; provided, however that such Party
                  notifies the other Party prior to disclosure, giving the other
                  Party sufficient advance notice to permit it to seek a
                  protective order or other similar order with respect to such
                  Confidential Information and provided further that such Party
                  furnishes only that portion of the other Party's Confidential
                  Information which it is advised by counsel is legally
                  required.

      9.3.  Each Party shall bind all persons having access through it to any
            Confidential Information to take no steps inconsistent with or
            preventing such Party from carrying out the terms of this Agreement.
            Each Party hereby represents to the other that the receiving Party
            will be responsible for the acts of any officer and/or employee
            receiving the Confidential Information.

      9.4.  Upon termination of this Agreement, each Party, at the request of
            the other, shall return all Confidential Information disclosed to it
            hereunder, in whatever form contained, including all notes or
            memoranda made by its employees, agents, or representatives obtained
            or derived from any such Confidential Information, including any
            listing which identifies the documents which were provided.

      9.5.  Neither party shall disclose the terms or conditions of this
            Agreement that have not been previously disclosed to the public or
            make any public announcement concerning this Agreement without the
            consent of the other party, which shall not be unreasonably
            withheld, except such consent shall not be required (i) where such
            disclosure is required in accordance with any applicable law, rule
            or regulation (including, without limitation, disclosure
            requirements of the U.S. Securities and Exchange Commission, NASDAQ
            or any other stock exchange on which securities are traded), (ii) in
            connection with an equity investment, loan, financing or similar
            transaction provided that such disclosure is subject to an
            obligation of confidentiality except in the case where after
            reasonable efforts the disclosing party can not obtain such an
            obligation of confidentiality , (iii) in connection with a
            consolidation, merger, change in control or sale of all or a portion
            of the business of a Party or similar transaction subject to an
            obligation of confidentiality by the receiving party , (iv) in
            connection with an order of a court or government agency, (v) where
            such disclosure is made to attorneys, accountants and other advisors
            to


                                       15
<PAGE>
            a party subject to an obligation of confidentiality . In the event
            of a required public announcement, to the extent practicable under
            the circumstances, the party making such announcement shall provide
            the other party with a copy of the proposed text prior to such
            announcement sufficiently in advance of the scheduled release of
            such announcement to afford such other party a reasonable
            opportunity to review and comment upon the proposed text.

      9.6.  The Parties understand and agree that each will be required to make
            a public disclosure regarding this Agreement as a matter of
            compliance with the United States laws and regulations of the
            Securities Exchange commission ("SEC") regarding securities. Without
            limiting either party's obligations under the securities laws and
            regulations, the parties agree to work together in good faith to
            make mutually acceptable public announcements of this Agreement at
            mutually acceptable times. Additionally, if a party is required to
            file a copy of this Agreement with any of its SEC filings, it agrees
            to seek confidential treatment for the Agreement, and to work
            together with the other party in good faith in seeking such
            confidential treatment.

                   ARTICLE 10. REPRESENTATIONS AND WARRANTIES

      10.1.Advancis here hereby represents and warrants that as of the Effective
            Date:

            10.1.1. Advancis is a company duly organized, validly existing and
                  in good standing under the laws of the jurisdiction of its
                  formation;

            10.1.2. Advancis has the power and authority to enter into and be
                  bound by the terms and conditions of this Agreement and to
                  perform its obligations hereunder;

            10.1.3. Advancis 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 Advancis and constitutes a legal, valid, binding
                  obligation, enforceable against Advancis in accordance with
                  its terms; and,

            10.1.4. Advancis is subject to no legal, contractual or other
                  restrictions, limitations or conditions which conflict with
                  its rights and obligations under this Agreement or which might
                  affect adversely its ability to perform hereunder.

      10.2.Par here hereby represents and warrants that as of the Effective
            Date:

            10.2.1. Par is a company duly organized, validly existing and in
                  good standing under the laws of the jurisdiction of its
                  formation;


                                       16

<PAGE>

10.2.2.   Par has the power and authority to enter into and be bound by the
          terms and conditions of this Agreement and to perform its
          obligations hereunder;

10.2.3.   Par 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 Par and constitutes a
          legal, valid, binding obligation, enforceable against Par in
          accordance with its terms; and,

10.2.4.   Par is subject to no legal, contractual or other restrictions,
          limitations or conditions which conflict with its rights and
          obligations under this Agreement or which might affect adversely its
          ability to perform hereunder.

10.3.     Advancis represents and warrants that it has not failed to disclose
          to Par granted United States patents that as of the Effective Date
          to the knowledge of Advancis should be considered by Par with
          respect to the potential infringement risks, if any, as to the
          Product that is being developed by Advancis as of the Effective
          Date. Appendix A is a list of patents disclosed to Par.

10.4.     NEITHER PARTY MAKES ANY OTHER REPRESENTATION OR WARRANTY HEREUNDER
          AND DISCLAIMS ALL OTHER REPRESENTATIONS AND WARRANTIES, INCLUDING,
          BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR USE
          OR WITH RESPECT TO THE VALIDITY, ENFORCEABILITY, OR PATENTABILITY OF
          ANY PATENTS OR THAT PRODUCTS WILL NOT INFRINGE PATENT RIGHTS OF A
          THIRD PARTY OR THAT AN ANDA WILL APPROVED.

                          ARTICLE 11. INDEMNIFICATION

      11.1 Par shall defend, indemnify and hold Advancis and its directors,
officers, employees, shareholders and agents, harmless from and against any and
all Third Party claims, suits or demands for liabilities, damages, losses, costs
and expenses (including the reasonable fees of attorneys and other
professionals) arising out of or resulting from Product that was manufactured
and/or distributed and/or marketed and/or sold by or on behalf of Par or by any
of its Affiliates, distributors, co-marketers or sublicensees, each a "Par
Indemnified Loss" except for a Par Indemnified Loss which arises solely out of
the intentional misconduct of Advancis.



                                       17
<PAGE>
The foregoing notwithstanding, the indemnity under this Section 11.1 is limited
to [***] of Par Indemnified Loss, except that such limitation shall not apply,
and Par shall be responsible for [***] of each Par Indemified loss where (i)
Advancis has reduced the Advancis Applicable Percentage under Section 6.6(a)
and/or (ii) the Par Indemnified Loss results from the intentional misconduct of
Par and/or the negligence of Par and/or (iii) the Par Indemnified Loss results
from a failure by Par to comply with Applicable Laws.

      11.2 Advancis shall indemnify and hold Par and its directors, officers,
employees, shareholders and agents, harmless from and against any and all Third
Party claims, suits or demands for liabilities, damages, losses, costs and
expenses (including the reasonable fees of attorneys and other professionals)
resulting from development activities with respect to Product prior to
Commercial Launch performed by or on behalf of Advancis, each an "Advancis
Indemnified Loss," except for an Advancis Indemnified Loss which solely arises
out of the intentional misconduct of Par. The Indemnity under this Section 11.2
is limited to the Advancis Applicable Percentage of Advancis Indemnified Loss.

      11.3 A Party or any of its Affiliates or their respective directors,
officers, employees or agents (the "Indemnitee") that intends to claim
indemnification under this Article 11 shall promptly notify the other Party (the
"Indemnitor") of any claim or action in respect of which the Indemnitee intends
to claim such indemnification, and the Indemnitor shall assume the defense
thereof with counsel mutually satisfactory to the Parties; provided, however,
that an Indemnitee shall have the right to retain its own counsel, with the fees
and expenses to be paid by the Indemnitor, if representation of such Indemnitee
by the counsel retained by the Indemnitor would be inappropriate due to actual
or potential conflicting interests between such Indemnitee



                                       18
<PAGE>
and any other Party represented by such counsel in such proceedings. The
indemnity agreement in this Article 11 shall not apply to amounts paid in
settlement of any claim or action if such settlement is effected without the
prior consent of the Indemnitor, which consent shall not be withheld or delayed
unreasonably. The failure to deliver notice to the Indemnitor within a
reasonable time after the commencement of any such claim or action, if
materially prejudicial to its ability to defend such action, shall relieve such
Indemnitor of any liability to the Indemnitee under this Article 11 with respect
to such action. The Indemnitee under this Article 11, its employees and agents,
shall cooperate fully with the Indemnitor and its legal representatives in the
investigation and defense of any claim or action covered by this
indemnification. The Indemnitee shall not settle any such claim or action
without the consent of the Indemnitor .

      11.4 The indemnity of Section 11.1 does not apply to a Par Indemnified
Loss arising out of infringement of a patent of a Third Party, and any such Par
Indemnified Loss is covered by Section 8.2, except that in the event that
Advancis reduces or has reduced the Advancis Applicable Percentage under Section
6.6 (a), then the indemnity of Section 11.1 shall extend to each Par Indemnified
Loss arising out of patent infringement and Par shall be responsible for one
hundred percent (100%) of each such Par Indemnified Loss

                      ARTICLE 12. LIMITATION OF LIABILITY

NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, EXCEPT WITH RESPECT
TO THIRD PARTY CLAIMS PURSUANT TO THE INDEMNIFICATION OBLIGATIONS SET FORTH IN
THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY
CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES OR LOSS OF OPPORTUNITY OR USE OF
ANY



                                       19
<PAGE>
KIND SUFFERED BY THE OTHER PARTY, WHETHER IN CONTRACT, TORT OR OTHERWISE.

                        ARTICLE 13. TERM AND TERMINATION
13.1. TERM. Unless earlier terminated pursuant to this Article 13, this
      Agreement shall continue in force and effect from the Effective Date for
      so long as Par continues to market Product.

13.2. TERMINATION FOR BREACH. Either Party may terminate this Agreement upon
      written notice to the other Party at any time during the term of this
      Agreement if the other Party is in breach of any material term of this
      Agreement and has not cured such breach within thirty (30) days after
      notice requesting cure of the breach.

13.3. TERMINATION BY PAR. If at any time Par determines in good faith that it
      does not want to launch the Product or no longer wishes to sell the
      Product. Par may terminate this Agreement upon ninety (90) days prior
      written notice to Advancis.

13.4. SURVIVAL. Sections 13.4, 13.5 and 13.6 and Articles 1, 9, 11, 12 and 15
      shall survive any expiration or termination of this Agreement. In
      addition, unless otherwise expressly set forth herein, no expiration or
      termination of this Agreement shall have any affect on any payment,
      obligation, representation or warranty under this Agreement accruing or
      arising prior to such expiration or termination.

13.5. Upon any termination of this Agreement, Par shall assign to Advancis all
      right, title and interest in and to all Regulatory Approvals, the Approved
      Manufacturing Contracts, the Par Agreements, the Trademark, and
      Intellectual Property Rights of Par, provided however that to the extent
      that such Intellectual Property Rights of Par pertain to products other
      than Product, instead of assigning such Intellectual Property Rights of
      Par, Par agrees to grant and hereby grants to Advancis in the Territory an
      exclusive license with the right to sublicense under such Intellectual
      Property Rights of Par to make, have made, use, sell, offer to sell and
      import Product.

13.6. Upon termination of this Agreement, Par shall terminate marketing and sale
      of Product.

                             ARTICLE 14. INSURANCE


                                       20
<PAGE>
      Each party shall obtain and maintain at all times during the term of this
Agreement, prudent comprehensive general liability coverage appropriate to its
activities with reputable and financially secure insurance carriers to cover its
activities related to this Agreement. Additionally such insurance coverage shall
include, without limitation, product liability coverage in an amount of no less
than Ten Million dollars per occurrence to be in place prior to the Commercial
Launch and for so long as Product is being sold pursuant to this Agreement.

                           ARTICLE 15. MISCELLANEOUS

15.1. INTERPRETATION. Unless the context of this Agreement otherwise requires,
      (i) the terms "include," "includes," or "including" shall be deemed to be
      followed by the words "without limitation" unless otherwise indicated;
      (ii) words using the singular or plural number also include the other;
      (ii) the terms "hereof," "herein," "hereby," and derivative or similar
      words refer to this entire Agreement; (iii) the terms "Article," "Section"
      and "Exhibit" refer to the specified Article, Section and Exhibit of this
      Agreement, and (iv) words of any gender include each other gender .
      Whenever this Agreement refers to a number of days, unless otherwise
      specified, such number shall refer to calendar days. The headings in this
      Agreement are for reference purposes only and shall not affect the meaning
      or interpretation of this Agreement.

15.2. INDEPENDENT CONTRACTOR STATUS. . It is understood and agreed that the
      Parties hereto are independent contractors and are engaged in the
      operation of their own respective businesses, and neither Party hereto is
      to be considered the agent of the other Party for any purpose whatsoever,
      and neither Party shall have any authority to enter into any contracts or
      assume any obligations for the other Party nor make any warranties or
      representations on behalf of that other Party.

15.3. WAIVER. The waiver by either Party of a breach of any provisions contained
      herein shall be in writing and shall in no way be construed as a waiver of
      any succeeding breach of such provision or the waiver of the provision
      itself.

15.4. ASSIGNMENT. This Agreement may not be assigned by either Party without the
      prior consent of the other Party; provided, however, without consent
      either Party may assign this Agreement (a) to any entity which acquires
      substantially all of its assets or business or (b) in connection with a
      merger, consolidation or similar transaction.


                                       21
<PAGE>
15.5. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
      Parties regarding the subject matter hereof and supersedes all prior
      agreements, understandings and negotiations regarding the same. This
      Agreement may not be changed, modified, amended or supplemented except by
      a written instrument signed by both Parties. Furthermore, it is the
      intention of the Parties that this Agreement be controlling over
      additional or different terms of any order, confirmation, invoice or
      similar document, even if accepted in writing by both Parties, and that
      waivers and amendments shall be effective only if made by non-pre-printed
      agreements clearly understood by both Parties to be an amendment or
      waiver.

15.6. SEVERABILITY. If any provision of this Agreement shall be held illegal or
      unenforceable, that provision shall be limited or eliminated to the
      minimum extent necessary so that this Agreement shall otherwise remain in
      full force and effect and enforceable.

15.7. FURTHER ASSURANCES. Each Party hereto agrees to execute, acknowledge and
      deliver such further instruments, and to do all such other acts, as may be
      necessary or appropriate in order to carry out the purposes and intent of
      this Agreement.

15.8. USE OF PARTY'S NAME. No right, express or implied, is granted by this
      Agreement to either Party to use in any manner the name of the other or
      any other trade name or trademark of the other in connection with the
      performance of this Agreement

15.9. NOTICE AND REPORTS. All notices, consents or approvals required by this
      Agreement shall be in writing sent by certified or registered air mail,
      postage prepaid or by facsimile or cable (confirmed by such certified or
      registered mail) to the Parties at the following addresses or such other
      addresses as may be designated in writing by the respective Parties:

     TO ADVANCIS:
     20425 Seneca Meadows Parkway
     Germantown, MD 20876
     Attn: CEO

     TO PAR:
     One Ram Ridge Road


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<PAGE>
     Spring Valley, New York 10977

Attn: CEO

Notices shall be deemed effective on the date of mailing.

15.10.      APPLICABLE LAW. This Agreement shall be governed by and construed in
            accordance with the laws of the Delaware without regard to the
            conflicts of laws provisions thereof. The exclusive jurisdiction and
            venue of any action with respect to this Agreement shall be the
            state and federal courts of Delaware.

15.11.      CAPTIONS. Paragraph captions are inserted for convenience only and
            in no way are to construed to define, limit or affect the
            construction or interpretation hereof.

15.12.      FORCE MAJEURE. A Party shall not be liable for nonperformance or
            delay in performance [(other than of obligations regarding payment
            of money or confidentiality)] caused by any event reasonably beyond
            the control of such Party including, but not limited to wars,
            hostilities, revolutions, riots, civil commotion, national
            emergency, strikes, lockouts, unavailability of supplies, epidemics,
            fire, flood, earthquake, force of nature, explosion, embargo, or any
            other Act of God, or any law, proclamation, regulation, ordinance,
            or other act or order of any court, government or governmental
            agency.


                                       23
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Supply and
Distribution Agreement to be effective as of the Effective Date.

ADVANCIS PHARMACEUTICAL CORPORATION

By: /s/ Edward M. Rudnic
    -------------------------------

Title: President & CEO
       ----------------------------



PAR PHARMACEUTICAL, INC.

By: /s/ Scott L. Tarriff
    -------------------------------

Title: President & CEO
       ----------------------------


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