Exhibit 4.5

DEVELOPMENT AND MARKETING  STRATEGIC ALLIANCE AGREEMENT  AMONG  ENDO PHARMACEUTICALS INC.  SKYEPHARMA, INC.  AND  SKYEPHARMA CANADA INC.

DATED AS OF
December 31, 2002

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TABLE OF CONTENTS

|   |  |                                                   |  |                                                                                                      |  | Page
|-- |  | ------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------- |  | ----
|1. |  | DEFINITIONS                                       |  | 1                                                                                                   
|2. |  | THE DEVELOPMENT AND COMMERCIALIZATION PROGRAMS    |  | 6                                                                                                   
|   |  | 2.1                                               |  | Overview of the Development Programs and Annual Development Plans                                    |  | 6   
|   |  | 2.2                                               |  | SkyePharma Responsibilities under each Development Program                                           |  | 7   
|   |  | 2.3                                               |  | Endo Responsibilities under each Development Program                                                 |  | 8   
|   |  | 2.4                                               |  | Overview of the Commercialization Programs                                                           |  | 8   
|   |  | 2.5                                               |  | Endo Responsibilities under each Commercialization Program                                           |  | 9   
|   |  | 2.6                                               |  | SkyePharma Responsibilities under each Commercialization Program                                     |  | 12  
|   |  | 2.7                                               |  | Conduct of Development Program and Commercialization Activities                                      |  | 13  
|   |  | 2.8                                               |  | Recall                                                                                               |  | 13  
|   |  | 2.9                                               |  | Allocation of Payment Responsibilities under the Development Programs and Commercialization Programs |  | 13  
|   |  | 2.10                                              |  | DepoBupivacaine Option                                                                               |  | 15  
|   |  | 2.11                                              |  | DepoFoam-Pain Right of First Negotiation                                                             |  | 16  
|   |  | 2.12                                              |  | Mutual Expansion of Indications                                                                      |  | 17  
|   |  | 2.13                                              |  | Supply Agreements and Quality Agreements                                                             |  | 17  
|3. |  | GOVERNANCE                                        |  | 17                                                                                                  
|   |  | 3.1                                               |  | Joint Executive Committee                                                                            |  | 17  
|   |  | 3.2                                               |  | Responsibilities of the Joint Executive Committee                                                    |  | 17  
|   |  | 3.3                                               |  | Meetings                                                                                             |  | 19  
|   |  | 3.4                                               |  | Decision-making                                                                                      |  | 19  
|   |  | 3.5                                               |  | Product Development Committee                                                                        |  | 20  
|   |  | 3.6                                               |  | Joint Manufacturing Committee                                                                        |  | 21  
|   |  | 3.7                                               |  | Committee Terms                                                                                      |  | 22  
|   |  | 3.8                                               |  | Expenses                                                                                             |  | 22  
|   |  | 3.9                                               |  | Alliance Managers                                                                                    |  | 22  
|4. |  | FEES, MILESTONES, AND FUNDING                     |  | 23                                                                                                  
|   |  | 4.1                                               |  | Up-front Payment                                                                                     |  | 23  
|   |  | 4.2                                               |  | Milestone Payments                                                                                   |  | 24  
|   |  | 4.3                                               |  | Sales Split                                                                                          |  | 25  
|   |  | 4.4                                               |  | Bartering Prohibited                                                                                 |  | 26  
|   |  | 4.5                                               |  | Bundling                                                                                             |  | 26  
|5. |  | PAYMENTS AND REPORTS                              |  | 26                                                                                                  
|   |  | 5.1                                               |  | Payments                                                                                             |  | 26  
|   |  | 5.2                                               |  | Sales Split Payments                                                                                 |  | 26  
|   |  | 5.3                                               |  | Mode of Payment                                                                                      |  | 27  
|   |  | 5.4                                               |  | Records Retention                                                                                    |  | 27  
|   |  | 5.5                                               |  | Payment and Other Audits                                                                             |  | 28  
|   |  | 5.6                                               |  | Taxes                                                                                                |  | 29  
|6. |  | GRANT OF RIGHTS; RESTRICTIONS; OWNERSHIP; PATENTS |  | 29                                                                                                  
|   |  | 6.1                                               |  | License Grant to Endo                                                                                |  | 29  
|   |  | 6.2                                               |  | License Grant to SkyePharma                                                                          |  | 30  
|   |  | 6.3                                               |  | Retained Rights of SkyePharma                                                                        |  | 30  
|   |  | 6.4                                               |  | Sublicensing; Subcontracting                                                                         |  | 30  
|   |  | 6.5                                               |  | Restriction on Activities                                                                            |  | 31  
|   |  | 6.6                                               |  | Ownership                                                                                            |  | 31  
|   |  | 6.7                                               |  | Patent Prosecution and Maintenance                                                                   |  | 32  
|   |  | 6.8                                               |  | Patent and Trademark Enforcement                                                                     |  | 32  
|   |  |                                                   |  |                                                                                                      |  |     

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|    |  | 6.9                                           |  | Infringement Actions by Third Parties                       |  | 34
|--- |  | --------------------------------------------- |  | ----------------------------------------------------------- |  | --
|    |  | 6.10                                          |  | Federal Food, Drug and Cosmetic Act                         |  | 34
|7.  |  | ADVERSE REACTION REPORTING                    |  | 35                                                         
|    |  | 7.1                                           |  | Adverse Reaction Reporting                                  |  | 35
|8.  |  | REPRESENTATIONS AND WARRANTIES AND CONVENANTS |  | 36                                                         
|    |  | 8.1                                           |  | Representations and Warranties of Both Parties              |  | 36
|    |  | 8.2                                           |  | Representations and Warranties of SkyePharma                |  | 37
|    |  | 8.3                                           |  | Disclaimer                                                  |  | 37
|    |  | 8.4                                           |  | Freedom to Operate                                          |  | 38
|    |  | 8.5                                           |  | Negative Pledge                                             |  | 38
|9.  |  | PUBLICATION; CONFIDENTIALITY                  |  | 39                                                         
|    |  | 9.1                                           |  | Notification and Review with Respect to SkyePharma and Endo |  | 39
|    |  | 9.2                                           |  | Confidentiality; Exceptions                                 |  | 40
|    |  | 9.3                                           |  | Exceptions to Obligation                                    |  | 40
|    |  | 9.4                                           |  | Remedies                                                    |  | 40
|10. |  | INDEMNIFICATION; INSURANCE                    |  | 41                                                         
|    |  | 10.1                                          |  | By SkyePharma                                               |  | 41
|    |  | 10.2                                          |  | By Endo                                                     |  | 41
|    |  | 10.3                                          |  | Notice                                                      |  | 42
|    |  | 10.4                                          |  | Complete Indemnification                                    |  | 42
|    |  | 10.5                                          |  | Insurance                                                   |  | 42
|11. |  | TERM; TERMINATION                             |  | 43                                                         
|    |  | 11.1                                          |  | Term                                                        |  | 43
|    |  | 11.2                                          |  | Termination for Cause                                       |  | 43
|    |  | 11.3                                          |  | Termination in Connection with Bankruptcy                   |  | 43
|    |  | 11.4                                          |  | Termination For Delay                                       |  | 43
|    |  | 11.5                                          |  | Termination For Failure to Achieve the Target Labeling      |  | 44
|    |  | 11.6                                          |  | Long-Term Inability to Supply                               |  | 44
|    |  | 11.7                                          |  | Safety                                                      |  | 44
|    |  | 11.8                                          |  | Other Termination                                           |  | 45
|    |  | 11.9                                          |  | Effect of Expiration or Termination                         |  | 45
|    |  | 11.10                                         |  | Accrued Rights; Surviving Obligations                       |  | 53
|12. |  | FORCE MAJEURE                                 |  | 54                                                         
|13. |  | MISCELLANEOUS                                 |  | 54                                                         
|    |  | 13.1                                          |  | Relationship of Parties                                     |  | 54
|    |  | 13.2                                          |  | Assignment                                                  |  | 54
|    |  | 13.3                                          |  | Books and Records                                           |  | 54
|    |  | 13.4                                          |  | Further Actions                                             |  | 54
|    |  | 13.5                                          |  | Notice                                                      |  | 55
|    |  | 13.6                                          |  | Use of Name                                                 |  | 55
|    |  | 13.7                                          |  | Public Announcements                                        |  | 55
|    |  | 13.8                                          |  | Waiver                                                      |  | 56
|    |  | 13.9                                          |  | Compliance with Law                                         |  | 56
|    |  | 13.10                                         |  | Severability                                                |  | 56
|    |  | 13.11                                         |  | Amendment                                                   |  | 56
|    |  | 13.12                                         |  | Governing Law                                               |  | 56
|    |  | 13.13                                         |  | Arbitration                                                 |  | 56
|    |  | 13.14                                         |  | Endo Right to Cure SkyePharma Breach                        |  | 58
|    |  | 13.15                                         |  | Nature of Licenses                                          |  | 58
|    |  | 13.16                                         |  | Entire Agreement                                            |  | 58
|    |  |                                               |  |                                                             |  |   

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| |  | 13.17 |  | Liability Limitation |  | 58
| |  | ----- |  | -------------------- |  | --
| |  | 13.18 |  | Parties in Interest  |  | 58
| |  | 13.19 |  | Descriptive Headings |  | 59
| |  | 13.20 |  | Counterparts         |  | 59

|                |  |                                              |  |     
|--------------- |  | -------------------------------------------- |  | ----
|EXHIBIT A       |  | FINANCIAL APPENDIX                           |  | A-1 
|EXHIBIT B       |  | TARGET LABELING                              |  | A-7 
|EXHIBIT C       |  | FORM OF PROPOFOL SUPPLY AGREEMENT            |  | A-10
|SCHEDULE 3      |  | INITIAL MEMBERS OF JOINT EXECUTIVE COMMITTEE |  | A-28
|SCHEDULE 8.1(e) |  | SCHEDULE OF EXCEPTIONS                       |  | A-29

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DEVELOPMENT, MARKETING AND STRATEGIC ALLIANCE AGREEMENT  December 31, 2002 (the "Effective Date")

THIS DEVELOPMENT, MARKETING AND STRATEGIC ALLIANCE AGREEMENT (this "Agreement"), dated as of the date first
written above, is entered into by and among Endo Pharmaceuticals Inc., a corporation organized and existing under the laws of Delaware, having offices located at 100 Painters Drive, Chadds
Ford, PA 19317 ("Endo"), SkyePharma, Inc., a corporation organized and existing under the laws of the State of California, having offices located
at 10450 Science Center Drive, San Diego, CA 92121, for itself and on behalf of its subsidiaries, if any, and SkyePharma Canada Inc., a corporation organized and existing under the laws of
Canada, having offices located at 1000 chemin du Golf, Verdun, Quebec, H3E 1H4 Canada, for itself and on behalf of its subsidiaries (collectively, SkyePharma, Inc., SkyePharma
Canada Inc. and the subsidiaries of SkyePharma, Inc. and SkyePharma Canada Inc., "SkyePharma").

PRELIMINARY STATEMENTS

A.    SkyePharma
owns and has all right, title and interest in, or has acquired the exclusive rights to, the SkyePharma Product IP and SkyePharma Product Patents.

B.    SkyePharma
and Endo collectively possess specialized skills, knowledge, and expertise in the development, marketing and sale of products used in the treatment of pain and
desire to enter into a strategic alliance regarding the further development and the marketing of certain such products.

C.    SkyePharma
desires to continue its development of the Products and to apply its skills, knowledge and expertise toward obtaining the regulatory approval of such Products
under the terms and conditions set forth in this Agreement.

D.    Endo
desires to apply its skills, knowledge, and expertise in the marketing and sale of such Products under the terms and conditions set forth in this Agreement.

E.    Endo
desires to obtain an exclusive license to sell, offer to sell, import, and distribute such Products in the Territory, and SkyePharma desires to grant such exclusive
license to Endo, pursuant to the terms and conditions of this Agreement.

F.    Endo
desires to obtain from SkyePharma, and SkyePharma desires to provide to Endo, such Products in finished form to meet Endo's commercial requirements for such
Products, pursuant to the terms and subject to the conditions of (i) supply agreements by and between Endo and SkyePharma, Inc. (each such agreement, a "Supply
Agreement") and (ii) quality agreements governing the quality control procedures to be employed during the manufacture of the Products (each such agreement, a
"Quality Agreement").

NOW,
THEREFORE, in consideration of the foregoing Preliminary Statements and the mutual agreements and covenants set forth herein, intending to be legally bound hereby, the Parties
hereby agree as follows:

1.     DEFINITIONS.

As used in this Agreement and unless otherwise defined herein, the following terms shall have the meanings set forth in this Section 1:

"Adjusted $40 Million Milestone" shall have the meaning assigned to such term in Section 4.2.

"Agreement" shall have the meaning assigned to such term in the introductory paragraph of this Agreement.

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"Affiliate," with respect to any Party, shall mean any entity controlling, controlled by, or under common control with, such Party, for
only so long as such control exists. For these purposes, "control" shall refer to: (i) the possession, directly or indirectly, of the power to direct the management or policies of an entity,
whether through the ownership of voting securities, by contract or otherwise, or (ii) the beneficial ownership, directly or indirectly, of more than 50% of the voting securities or other
ownership interest of an entity.

"Alliance Manager" shall have the meaning assigned to such term in Section 3.9.

"Allocable Overhead" shall have the meaning assigned to such term in the Financial Appendix.

"Annual Commercialization Plan" shall mean, as applicable, each plan and budget defined in Section 2.4(d) and, when used in the
plural, shall mean all such plans and budgets.

"Annual Development Plan" shall mean, as applicable, each plan defined in Section 2.1(b) and, when used in the plural, shall mean
all such plans.

"Audited Party" shall have the meaning assigned to such term in Section 5.5(a).

"Auditing Party" shall have the meaning assigned to such term in Section 5.5(a).

"Bankruptcy Case" shall mean a bankruptcy case (whether for liquidation or reorganization) under the Bankruptcy Laws with respect to
SkyePharma, Inc., SkyePharma Canada, Inc. or any of their respective Affiliates, successors or assignees.

"Bankruptcy Laws" shall mean Title 11 of the United Stated Code, 11 U.S.C. §§ 101-1330, as it may be
amended from time to time, any successor statute or any applicable state or foreign laws relating to bankruptcy, dissolution, liquidation, winding up or reorganization.

"Bankruptcy Rejection" shall mean the entry of an order in a Bankruptcy Case authorizing the rejection of this Agreement, a Supply
Agreement, a Quality Agreement or a Third Party Manufacturing Agreement, or any material portion of any such agreement, by SkyePharma, Inc., SkyePharma Canada, Inc. or any of their
respective Affiliates, successors or assignees, as debtor-in-possession or by such entity's bankruptcy trustee or any other person or entity authorized to exercise rejection
rights under 11 U.S.C. §365 or any other successor statute;provided,however, that nothing
in this Agreement shall be deemed an acknowledgement by any Party hereto that this Agreement, a Supply Agreement, a Quality Agreement or a Third Party Manufacturing Agreement may be rejected under the
Bankruptcy Laws.

"Breaching Party" shall have the meaning assigned to such term in Section 11.2.

"Canada" shall mean Canada, including its possessions and territories.

"cGMP" shall mean current Good Manufacturing Practice as defined in Parts 210 and 211 of Title 21 of the Code of Federal Regulations, as
may be amended from time to time, or any successor thereto.

"Commercialization Program" shall mean, as applicable, each Commercialization Program defined in Section 2.4(a) and, when used in
the plural, shall mean all Commercialization Programs for all Products.

"Confidential Information" shall have the meaning assigned to such term in Section 9.2.

"Cure Product" shall have the meaning assigned to such term in Section 2.5(b)(iii).

"Cure Sales Activities" shall have the meaning assigned to such term in Section 2.5(b)(iii).

"Cure Time Period" shall have the meaning assigned to such term in Section 2.5(b)(iii).

"Damages" shall have the meaning assigned to such term in Section 10.1.

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"DepoBupivacaine" shall mean SkyePharma's pharmaceutical composition having bupivacaine as its sole active ingredient encapsulated with
SkyePharma's DepoFoam® multivesicular liposomes technology to provide sustained release.

"DepoBupivacaine Notice" shall have the meaning assigned to such term in Section 2.10.

"DepoMorphine" shall mean SkyePharma's pharmaceutical composition having morphine sulfate as its sole active ingredient encapsulated with
SkyePharma's DepoFoam® multivesicular liposomes technology to provide sustained release.

"Development Costs" shall have the meaning assigned to such term in the Financial Appendix.

"Development Field" shall mean (a) with respect to DepoMorphine, [Confidential Information Has Been Omitted And
Furnished Separately To The Securities And Exchange Commission] (b) with respect to Propofol IDD-D, [Confidential Information Has Been Omitted And Furnished
Separately To The Securities And Exchange Commission] and (c) any other uses of DepoMorphine or Propofol IDD-D that are agreed upon by the Parties pursuant to
Section 2.12.

"Development Program" shall mean, as applicable, each Development Program defined in Section 2.1 and, when used in the plural,
shall mean all Development Programs for all Products.

"Distribution Costs" shall have the meaning assigned to such term in the Financial Appendix.

"Endo" shall have the meaning assigned to such term in the introductory paragraph of this Agreement.

"Effective Date" shall mean the date first written above.

"Exclusivity Field" shall mean [Confidential Information Has Been Omitted And Furnished Separately To The Securities And
Exchange Commission].

"Executive Officers" shall have the meaning assigned to such term in Section 3.4(b).

"Expert" shall have the meaning set forth in Section 13.13(b)(i).

"FDA" shall mean the United States Food and Drug Administration or any successor agency.

"Financial Appendix" shall mean Exhibit A hereto.

"First Commercial Sale" shall have the meaning assigned to such term in the Financial Appendix.

"Freedom to Operate Opinions" shall mean those legal opinions delivered by SkyePharma to Endo prior to the Effective Date rendered by
SkyePharma's outside intellectual property counsel relating to whether the Parties are free to make, have made, use, sell, offer for sale and import the Products as contemplated by this Agreement
without infringing on any Third Party's intellectual property rights.

"Fully Loaded Costs" shall have the meaning assigned to such term in the Financial Appendix.

"GAAP" shall mean, with respect to Endo and SkyePharma, Inc., generally accepted accounting principles in the United States,
consistently applied, and, with respect to SkyePharma Canada Inc. and its consolidated Canadian subsidiaries, generally accepted accounting principles in Canada, consistently applied.

"HSR"shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

"IND" shall mean, with respect to the U.S., an effective Notice of a Claimed Investigational New Drug Exemption as defined in Title 21 of
the Code of Federal Regulations, and, with respect to every other country in the Territory, the equivalent of such notice for such country, in each case required to be on file with the applicable
Regulatory Authority in such country prior to the commencement of clinical trials of a product in humans in such country.

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"Indemnitee" shall have the meaning assigned to such term in Section 10.3.

"Infringement" shall have the meaning assigned to such term in Section 6.8(a).

"Invention" shall mean any new or useful process, compound, composition of matter, method of use or Know-how, whether or not
patentable, related to the Products, and any improvement, enhancement, modification or derivative work to any SkyePharma IP; in each case, conceived or first reduced to practice or first demonstrated
to have utility during the term of this Agreement by either Party or either Party's Affiliates, Sublicensees or Subcontractors in connection with the development or commercialization activities
contemplated in this Agreement.

"Inventory Write-offs" shall have the meaning assigned to such term in the Financial Appendix.

"Joint Executive Committee" or "JEC" shall have the meaning assigned to such term in
Section 3.1.

"Joint Manufacturing Committee" or "JMC" shall have the meaning assigned to such term in
Section 3.6(a).

"Know-how" shall mean any and all unpatented formulae, processes, trade secrets, technologies and know-how,
whether or not patentable, including, without limitation, synthesis, preparation, recovery and purification processes and techniques, control methods and assays, chemical data, toxicological and
pharmacological data and techniques, clinical data, medical uses, product forms and product formulations and specifications.

"Long-Term Inability to Supply" shall, with respect to a Product, have the meaning assigned to such term in the applicable
Supply Agreement.

"Manufacturing Standards" shall mean, with respect to a Product, cGMP and such additional manufacturing specifications or standards as may
be established by the JMC from time to time.

"Marketing Costs" shall have the meaning assigned to such term in the Financial Appendix.

"Marketing Trials" shall have the meaning assigned to such term in the Financial Appendix.

"Net Purchases" shall have the meaning assigned to such term in the Financial Appendix.

"Net Sales" shall have the meaning assigned to such term in the Financial Appendix.

"New Indication" shall have the meaning assigned to such term in Section 2.12.

"New Indication Development" shall have the meaning assigned to such term in Section 2.12.

"Non-breaching Party" shall have the meaning assigned to such term in Section 11.2.

"Original $40 Million Milestone" shall have the meaning assigned to such term in Section 4.2.

"Party" shall mean, as applicable, SkyePharma or Endo and, when used in the plural, shall mean SkyePharma and Endo.

"Patents" shall mean the patents and patent applications in any country in the Territory, together with any patents that may issue
therefor in any country in the Territory, including any and all extensions, renewals, continuations, continuations-in-part, divisions,
patents-of-additions, reissues, supplementary protection certificates or foreign counterparts of any of the foregoing and any patents based on applications that claim priority
from any of the foregoing; and a "Patent" shall be any one of the foregoing.

"Payment Period" shall have the meaning assigned to such term in Section 5.2.

"Person" shall mean an individual or a corporation, partnership, association, trust, or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.

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"Product" shall mean, as applicable, DepoMorphine or Propofol IDD-D, and, when used in the plural, shall mean DepoMorphine and
Propofol IDD-D; in each case for application only in their respective Target Indications.

"Product Development Committee" or "PDC" shall have the meaning given to such term in
Section 3.5(a).

"Product Price" shall have the meaning assigned to such term in the Financial Appendix.

"Propofol" shall mean the nonbarbiturate sedative/anesthetic propofol.

"Propofol IDD-D" shall mean SkyePharma's pharmaceutical composition having Propofol in a 2% concentration as its sole active
ingredient formulated with SkyePharma's Insoluble Drug Delivery (IDD-D) technology.

"Quality Agreement" shall have the meaning assigned to such term in the Preliminary Statements and Section 2.13.

"Registration" shall mean, with respect to each country in the Territory, final approval of the Registration Application for a Product in
such country, which approval would allow the immediate marketing and sale of such Product in such country.

"Registration Application" shall mean any filing(s) made with the Regulatory Authority in any country in the Territory for regulatory
approval of the manufacture and sale, and pricing when applicable, of a Product in such country.

"Regulatory Authority" shall mean any United States or Canadian domestic (federal or state) or foreign court, commission or governmental,
regulatory or administrative body, board, bureau, agency, instrumentality, authority or tribunal or any subdivision thereof, including, but not limited to, the FDA and the authority(ies) in each
country in the Territory that are comparable to the FDA and have responsibility for granting regulatory approval for the manufacture, use and sale of a Product in such country, including but not
limited to pricing and reimbursement approvals.

"Regulatory Documentation" shall mean all submissions to Regulatory Authorities, including clinical studies, tests, and biostudies,
relating to the Products, including all INDs and NDAs, as well as all correspondence with Regulatory Authorities (registration and licenses, regulatory drug lists, advertising and promotion
documents), adverse event files, complaint files, manufacturing records and inspection reports.

"Sales Costs" shall have the meaning assigned to such term in the Financial Appendix.

"Serious Adverse Drug Experience" shall have the meaning assigned to such term in Section 7.1(b).

"Shortfall" shall have the meaning assigned to such term in Section 2.5(b)(iii).

"SkyePharma" shall have the meaning assigned to such term in the introductory paragraph of this Agreement.

"SkyePharma IP" shall mean all Know-how, trademarks and Patents owned or licensed by SkyePharma.

"SkyePharma Product IP" shall, with respect to a Product, mean all Know-how and trademarks owned or licensed by SkyePharma, to
the extent related to such Product.

"SkyePharma Product Patents" shall, with respect to a Product, mean all claims set forth in the Patents owned or licensed by SkyePharma
which are infringed by the making, having made, using, selling, offering for sale or importing of such Product.

"Special Arbitration Provisions" shall have the meaning assigned to such term in Section 13.13(b).

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"Subcontractor" shall mean a Third Party with which a Party has entered into a contractual arrangement through which certain activities
for which such Party is responsible under this Agreement shall be carried out on behalf of such Party in accordance with Section 6.4.

"Sublicensee" shall mean a Third Party to which a Party has granted a sublicense under a license granted under this Agreement.

"Sufficient Supply" shall mean, with respect to a Product, at least [Confidential Information Has Been Omitted And Furnished
Separately To The Securities And Exchange Commission] of the commercial launch supplies of such Product as ordered by Endo in accordance with the applicable Supply Agreement.

"Supply Agreement" shall have the meaning assigned to such term in the Preliminary Statements and Section 2.13.

"Target Indications" shall have the meaning assigned to such term in Section 2.1(c).

"Target Labeling" shall have the meaning assigned to such term in Section 2.1(c).

"Territory" shall mean the U.S. and Canada.

"Third Party" shall mean any person who or which is neither a Party nor an Affiliate of a Party.

"United States" or "U.S." shall mean the United States of America, including its
possessions and territories.

"Units" shall have the meaning assigned to such term in the Financial Appendix.

"Valid Claim" shall mean any claim of any Patent issued or pending in a country in the Territory, which claim has not been held invalid or
unenforceable by decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which is not admitted to be invalid in a
legally binding manner (through disclaimer or otherwise).

2.     THE DEVELOPMENT AND COMMERCIALIZATION PROGRAMS.

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3.     GOVERNANCE

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The
Alliance Managers shall be entitled to attend meetings of any of the Committees, but shall not have, or be deemed to have, any rights or responsibilities of a member of any
Committee. Each Alliance Manager may bring any matter to the attention of any Committee where such Alliance Manager reasonably believes that such matter requires such attention.

4.     FEES, MILESTONES, AND FUNDING.

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|Milestone Event                                                                                                                                                                                                                                                                   |  | Payment Due Date                                                        |  | Milestone Payment
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------- |  | -----------------
|Endo's receipt of written notice from SkyePharma of the FDA's written acceptance of the Registration Application for DepoMorphine in the United States.                                                                                                                           |  | 30th day following the occurrence of Milestone Event                    |  | $5,000,000       
|Endo's receipt of written notice from SkyePharma of the FDA's final approval of the Registration of DepoMorphine in the United States, provided SkyePharma has provided Endo with Sufficient Supply of such Product.                                                              |  | 30th day following the occurrence of Milestone Event                    |  | $5,000,000       
|The first calendar year that Net Sales of DepoMorphine in the Territory exceed $125,000,000.                                                                                                                                                                                      |  | 45th day following the end of a quarter in which Milestone Event occurs |  | $15,000,000      
|The first calendar year that Net Sales of DepoMorphine in the Territory exceed $175,000,000.                                                                                                                                                                                      |  | 45th day following the end of a quarter in which Milestone Event occurs |  | $20,000,000      
|Endo's receipt of written notice from SkyePharma of the FDA's written approval and acceptance of the protocol of the first of the Phase III clinical trials for Propofol IDD-D in the United States.                                                                              |  | 30th day following occurrence of Milestone Event                        |  | $5,000,000       
|Endo's receipt of written notice from SkyePharma of the FDA's written acceptance of the Registration Application for Propofol IDD-D in the United States.                                                                                                                         |  | 30th day following the occurrence of Milestone Event                    |  | $5,000,000       
|Endo's receipt of written notice from SkyePharma of the FDA's final approval of the Registration of Propofol IDD-D in the United States for the Target Labeling, ("Original $40 Million Milestone")
provided SkyePharma has provided Endo with Sufficient Supply of such Product. |  | 30th day following the occurrence of Milestone Event                    |  | $40,000,000      

24

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If
Endo receives written notice from SkyePharma of the FDA's final approval of the Registration for Propofol IDD-D in the United States but the approved labeling materially
fails to meet the Target Labeling of Propofol IDD-D such that the expected sales of Propofol IDD-D are significantly adversely affected ("Adjusted $40
Million Milestone"), then provided SkyePharma has provided Endo with Sufficient Supply of such Product, Endo shall pay to SkyePharma the $40,000,000 Milestone Payment
referenced in the chart above as follows:



The
unpaid amounts referenced in clauses (i), (ii), (iii) and/or (iv) above shall be earlier paid (on the 30th day following the occurrence of the Original
$40 million Milestone provided SkyePharma has provided Endo with Sufficient Supply of such Product) if the Original $40 Million Milestone is achieved prior to the satisfaction of the conditions
in clauses (i) through (iv) above.

As
a matter of clarification, in no event shall more than $40,000,000 in the aggregate be paid by Endo to SkyePharma in respect to the FDA's final approval of the Registration of
Propofol IDD-D in the United States whether for the Target Labeling or otherwise.

25

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5.     PAYMENTS AND REPORTS.

26

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27

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6.     GRANT OF RIGHTS; RESTRICTIONS; OWNERSHIP; PATENTS.

29

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30

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31

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33

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34

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7.     ADVERSE REACTION REPORTING.



35

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or
to such other address for such Party as it shall have specified by like notice to the other Party;provided, that, notices of a change of address shall be
effective only upon receipt thereof. If delivered personally or by facsimile transmission, the date of
delivery shall be deemed to be the date on which such notice or request was given. If sent by overnight express courier service, the date of delivery shall be deemed to be the next business day after
such notice or request was deposited with such service. If sent by certified mail, the date of delivery shall be deemed to be the third business day after such notice or request was deposited with the
U.S. Postal Service.

8.     REPRESENTATIONS AND WARRANTIES AND CONVENANTS.

36

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37

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38

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9.     PUBLICATION; CONFIDENTIALITY.

39

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40

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10.   INDEMNIFICATION; INSURANCE.



41

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42

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11.   TERM; TERMINATION.

43

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44

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45

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46

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47

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48

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49

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50

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51

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52

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53

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12.   FORCE MAJEURE.

Neither Party shall be held liable or responsible to the other Party nor be deemed to be in default under, or in breach of any provision of, this Agreement for
failure or delay in fulfilling or performing any obligation of this Agreement when such failure or delay is due toforce majeure,and without the fault
or negligence of the Party so failing or delaying. For purposes of this Agreement,force majeureis defined as causes beyond the control of the Party,
including, without limitation, acts of God; acts, regulations, or laws of any government adopted after the date of this Agreement or subject to a new interpretation after the date of this Agreement
that render impossible or illegal performance by a Party of its obligations under this Agreement; war; civil commotion; destruction of production facilities or materials by fire, flood, earthquake,
explosion or storm; labor disturbances; epidemic; and failure of public utilities or common carriers. In such event SkyePharma or Endo, as the case may be, shall immediately notify the other Party,
with written notice to follow, of such inability and of the period for which such inability is expected to continue. The Party giving such notice shall thereupon be excused from such of its
obligations under this Agreement as it is thereby disabled from performing for so long as it is so disabled. To the extent possible, each Party shall use reasonable efforts to minimize the duration of
anyforce majeure.

13.   MISCELLANEOUS.

54

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55

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56

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57

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58

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* * *

59

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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed by its duly authorized representative as of the date first above written.

| |  | ENDO PHARMACEUTICALS INC.
| |  | -------------------------
| |  | By:                      
| |  | SKYEPHARMA, INC.         
| |  | By:                      
| |  | SKYEPHARMA CANADA INC.   
| |  | By:                      

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In
order to induce Endo to enter into this Agreement, the undersigned hereby guarantees, as surety, the full and timely payment and performance by SkyePharma, Inc. and SkyePharma
Canada Inc., both Affiliates of the undersigned, of their respective payment obligations under the foregoing Agreement, including for all purposes, indemnification obligations and obligations
of the foregoing parties upon a termination of this Agreement.

| |  | SKYEPHARMA PLC
| |  | --------------
| |  | By:           

61

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EXHIBIT A    FINANCIAL APPENDIX

This provides the definitions of certain financial terms applicable to the Parties for purposes of the Agreement. All capitalized terms used herein without
definition shall have the meanings ascribed thereto in the Agreement, unless otherwise expressly provided herein.

A.1    Principles of Reporting

The presentation of Net Sales and Commercialization Program shall be based on Endo's financial information and shall be presented:

in
the reporting format depicted as follows:

|                                                                                                              
|--------------------------------------------------------------------------------------------------------------
|[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]
|                                                                                                              
|[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]
|                                                                                                              
|[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]
|                                                                                                              
|[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]
|                                                                                                              
|[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]
|                                                                                                              
|[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]
|                                                                                                              
|[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]
|                                                                                                              
|[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]
|                                                                                                              
|                                                                                                              

A-1

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|[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] |  | 
|-------------------------------------------------------------------------------------------------------------- |  | 
|                                                                                                              
|[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] |  | 
|                                                                                                              
|[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] |  | 
|                                                                                                              
|[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] |  | 
|                                                                                                              
|[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] |  | 
|                                                                                                              
|[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] |  | 
|                                                                                                              
|[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] |  | 
|                                                                                                              
|[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] |  | 
|                                                                                                              
|[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] |  | 
|                                                                                                              
|[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] |  | 
|                                                                                                              

The
presentation of the Development Program shall be based on SkyePharma's, or Endo's if applicable) financial information and shall be presented by Product and for all Products on a
consolidated basis:

|                                                                                                              
|--------------------------------------------------------------------------------------------------------------
|[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]
|                                                                                                              
|[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]
|                                                                                                              
|                                                                                                              

A-2

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|[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] |  | 
|-------------------------------------------------------------------------------------------------------------- |  | 
|                                                                                                              

It
is the intention of the Parties that the interpretation of these definitions shall be consistent with GAAP.

If
necessary, a Party shall make the appropriate adjustments to the financial information it supplies under the Agreement to conform to the above format of reporting results of
operation.

A.2    Frequency of Reporting

The fiscal year shall be a calendar year.

Reports
of Sales, Net Purchases, Inventory Write-offs and Commercialization Program Costs shall be made to the Joint Executive Committee and Development Program Costs to the
Product Development Committee on a quarterly basis and on a year-to-date basis compared against the approved budget in the format and containing the information described in
Section A1Principles of Reporting.

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A.3    Definitions

"Allocable Overhead", with respect to a Party's activities, means costs directly related to such activities and
incremental costs actually incurred by such Party or for its account including, but not limited to, those which are attributable to such Party's supervisory services, occupancy costs, and its payroll,
information systems, or purchasing functions and which are allocated to company departments based on space occupied or headcount or other activity-based method consistently applied by such Party, or a
standard rate if agreed to by the Parties, relating to activities of such Party under the Development Program or Commercialization Program, as the case may be. Allocable Overhead shall not include any
costs attributable to general corporate activities including, by way of example, executive management, investor relations, business development, legal affairs, human relations, and finance, related to
activities of such Party under the Development Program or Commercialization Program, as the case may be.

"Development Costs" means the development costs actually incurred by each Party with respect to any Product for the applicable Target
Indications in the applicable Development Field, in each country within the Territory including:



In
determining Development Costs each Party shall use its respective project accounting systems and shall review and approve its respective project accounting systems and methodologies
with the other Party.

In
the event of New Indications being agreed between the Parties pursuant to Section 2.12 of this agreement the cost items included for such New Indication Development costs shall
be the same as those reported for Development Costs and the costs for each New Indication shall be separately identifiable.

"Distribution Costs" means the costs specifically identifiable to the distribution of a Product in the Territory, by a Party including
customer services, order entry, billing, shipping, bad debt, credit and collection and other such activities.

"First Commercial Sale" shall mean, with respect to DepoMorphine and Propofol IDD-D, the first sale for which payment has been
invoiced for use or consumption by the general public of DepoMorphine or Propofol IDD-D, as the case may be, in a country in the Territory after all required Registrations, including
pricing approvals (if applicable), have been granted by the Regulatory Authority in such country in the Territory.

"Fully Loaded Costs", with respect to the activities of a Party, shall mean such Party's direct out-of-pocket
costs and Allocable Overhead incurred due directly to such activities.

A-4

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"Inventory Write-offs" of a Product means the number of units of Product multiplied by the Product Price relating to such
units of Product pursuant to a Supply Agreement which have been purchased by Endo its Affiliates, Sublicensees or Subcontractors (and are not subject to the waiver set forth in
Section 9.4(a)(ii) of the Supply Agreement) and have not been included in Net Sales due to unacceptable remaining shelf-life.

"Marketing Costs" means the costs actually incurred for marketing, promotion, advertising, Product promotional materials, professional
education, Product related public relations, relationships with opinion leaders and professional societies, market research (after the first Registration), collection of data about sales to hospitals
and other end users, healthcare economics studies, and other similar activities, relating to activities of a Party under a Commercialization Program for a Product. Such costs of a Party shall include,
without limitation, (i) both direct internal costs actually incurred by a Party or for its account which are attributable to activities of such Party under a Product's Commercialization Program
(e.g., without limitation, salaries, benefits, supplies and materials, etc.), and (ii) outside services and expenses (e.g., without limitation, consultants, agency fees, meeting costs, etc.),
relating to activities of such Party under a Product's Commercialization Program. Such costs of a Party shall also include, without limitation, the cost of all pre-launch marketing
activities and the cost of activities related to obtaining reimbursement from payers and costs of sales and marketing data.

"Marketing Trials" shall mean all Phase IV studies other than those necessary to maintain the first Registration of a Product and other
similar activities.

"Net Purchases" shall mean the number of units of Product which are delivered pursuant to Purchase Orders submitted by Endo pursuant to
Supply Agreements, and not returned by Endo pursuant to Supply Agreements, multiplied by the Product Price, as defined in the applicable Supply Agreement.

"Net Sales"



A-5

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"Product Price" for DepoMorphine shall mean the then ruling Price as defined pursuant to the Supply Agreement for DepoMorphine. For
Propofol IDD-D the Product Price shall be such Price agreed between the Parties pursuant to the Supply Agreement for Propofol IDD-D.

"Sales Costs" means costs actually incurred by the Parties or for their account and specifically identifiable to activities of a Party
under a Product's Commercialization Program in the Territory in all markets, including without limitation, the managed care market.

"Sales Costs" shall include, without limitation, costs associated with sales representatives for Products, including compensation,
benefits and travel, supervision and training of such sales representatives, sales meetings, and other sales related expenses.

"Sales Costs" shall not include the start-up costs associated with any Party's sales force relating to that Party's sales
efforts, including recruiting, relocation and other similar costs.

"Units" shall mean the number of units of such Product sold or transferred during the period and included in Net Sales.

A-6

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EXHIBIT B
TARGET LABELING

DepoMorphine

Target Indication: [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]

Target
Profile: [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]

Target
Labeling: The Target Indication and Target Profile.

Propofol IDD-D

Target Indication: [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]

Target
Profile: [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]

Target
Labeling: The Target Indication and Target Profile.

A-7

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EXHIBIT C    FORM OF PROPOFOL SUPPLY AGREEMENT

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FORM OF PROPOFOL  SUPPLY AGREEMENT  By and Between  SKYEPHARMA, INC.  and  ENDO PHARMACEUTICALS INC.  Dated as
of                        , 2003

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Exhibit C

FORM OF PROPOFOL SUPPLY AGREEMENT

THIS PROPOFOL SUPPLY AGREEMENT dated as of this    day of            , 2003, is entered into by and
between Endo Pharmaceuticals Inc., a
corporation organized and existing under the laws of Delaware, having offices located at 100 Painters Drive, Chadds Ford, PA 19317 ("Endo") and
SkyePharma, Inc., a corporation organized and existing under the laws of the State of California, having offices located at 10450 Science Center Drive, San Diego, CA 92121
("SkyePharma") (each of Endo and SkyePharma, a "Party" and, collectively, the
"Parties").

PRELIMINARY STATEMENTS

A.    Endo
wishes to distribute commercially a certain pharmaceutical product currently known as Propofol in finished dosage form for human use; and

B.    SkyePharma
has the experience and expertise necessary to perform chemical and pharmaceutical development, manufacturing, packaging, analytical testing and quality
assurance services for the manufacturing, labeling and packaging of such product for sale to Endo; and

C.    Endo
desires SkyePharma to perform such services or have such services performed and to supply such product to Endo; and SkyePharma desires to perform such services or
have such services performed and to sell such product to Endo, all on the terms and conditions set forth in this Agreement;

NOW,
THEREFORE, in consideration of the mutual covenants and promises set forth herein, the Parties agree as follows:

1.     DEFINITIONS.

Capitalized terms not otherwise defined herein shall have the meanings set forth in that certain Development and Marketing Strategic Alliance Agreement between
the Parties dated as of the date hereof (the "Alliance Agreement"). The following terms, whether used in the singular or plural, shall have the meanings
assigned to them below for purposes of this Agreement:

"Active Ingredient" shall mean Propofol.

"Active Ingredient Specifications" shall mean the specifications for the Active Ingredients as set forth in a monograph for Propofol
finalized by the U.S. Pharmacopeia ("USP") or in the event a monograph has not been finalized by the USP, such specifications as determined by the JMC prior to submission of the Registration
Application for the Product, as such specifications may be amended from time to time by the JMC.

"Affiliate" shall mean any corporation or non-corporate entity which directly or indirectly controls, is controlled by, or is
under common control with a Party. A corporation or non-corporate entity shall be regarded as in control of another corporation if it owns or directly or indirectly controls at least fifty
percent (50%) of the voting stock of the other corporation; or (a) in the absence of the ownership of at least fifty percent (50%) of the voting stock of a corporation or (b) in the case
of a non-corporate entity, the power to direct or cause the direction of the management and policies of such corporation or non-corporate entity, as applicable.

"Agreement" shall mean this Supply Agreement.

"Breaching Party" shall have the meaning assigned to such term in Section 12.3.

A-10

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"cGMP" means those practices in the manufacture of pharmaceutical products that are recognized as the current good manufacturing practices
by the FDA in accordance with FDA regulations, guidelines, other administrative interpretations, and rulings in connection therewith, including but not limited to those regulations cited in 21 C.F.R.
parts 210 and 211, all as they may be amended from time to time.

"Commencement Date" shall mean the date of Product Approval for commercial manufacturing at SkyePharma or at a Third Party manufacturer
subcontracted by SkyePharma.

"Contract Year" shall mean the period of twelve (12) successive calendar months commencing on the first day of the month in which
the FDA approves the manufacturing of the Product at SkyePharma or at a Third Party manufacturer, and each successive twelve (12) month period thereafter.

"Delivery Date" shall mean a date for which delivery of Product is stated in a purchase order.

"Effective Date" shall have the meaning first written above.

"Excipients" shall mean the raw materials, other than the Active Ingredient, required to manufacture the Product in accordance with the
Product Specifications.

"Excipient Specifications" shall mean the specifications for the Excipients which shall be determined by the JMC prior to submission of
the Registration Application for the Product, as such specifications may be amended from time to time by the JMC.

"FD&C Act" shall mean the United States Federal Food, Drug and Cosmetic Act, as amended.

"FDA" shall mean the United States Food and Drug Administration, or any successor entity.

"First Commercial Sale" shall mean the first commercial sale of the Product by Endo or its Affiliates in the Territory following Product
Approval.

"Forecast" shall have the meaning assigned to such term in Section 8.1.

"Force Majeure Event" shall have the meaning assigned to such term in Section 15.1(a).

"Long-Term Inability to Supply" shall mean, with respect to a Product, SkyePharma's failure to (a) supply Endo with at
least [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] of the quantities of Product ordered by Endo in accordance
with the terms of this Agreement for a period that exceeds (i) [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange
Commission] for any reason other than Force Majeure, or (ii) [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange
Commission] as a result of Force Majeure, or (b) supply any Product ordered by Endo in accordance with the terms of this Agreement for a period that exceeds
[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] for any reason other than Force Majeure, provided that such
failure to supply referred to in this clause (b) has resulted in an inability for Endo to fulfill customer orders in the marketplace.

"Manufacturing Facility Registration" means the approvals, permits, applications, licenses or registrations which have been received for a
manufacturing facility in order to manufacture the Product or any other product at the manufacturing facility.

"NDA" shall mean the Product's New Drug Application as filed, amended and/or supplemented from time to time in accordance with 21 CFR
Part 314 et al.

"Non-breaching Party" shall have the meaning assigned to such term in Section 12.3.

A-11

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"Packaging Specifications" shall mean the packaging and labeling specifications for the Product which shall be determined by the JMC prior
to submission of the Registration Application for the Product, as such specifications may be amended from time to time by the JMC.

"Product" shall mean a pharmaceutical product using Propofol as an active pharmaceutical ingredient in a 2% concentration in finished
dosage form, filled, labeled and packaged for commercial sale or distribution as samples, as the case may be, by SkyePharma or a Third Party Manufacturer in accordance with the Specifications.

"Product Approval" shall mean final FDA approval of the NDA for the Product.

"Product Price" shall mean the Product price set forth in Exhibit 1 attached hereto and made a part hereof, as such price may be
amended from time to time in accordance with this Agreement.

"Product Registration" shall mean the approvals, permits, applications, licenses or registrations (including but not limited to the NDA)
for the Product which have been received in order to market or sell same in the Territory.

"Product Specifications" shall mean the specifications for the Product which shall be determined by the JMC prior to submission of the
Registration Application for the Product, as such specifications may be amended from time to time by the JMC.

"Purchase Order" shall have the meaning assigned to such term in Section 9.1.

"Quality Agreement" shall mean the Quality Agreement, as further defined in Section 7, which shall be substantially in the form of
Exhibit 2 hereto.

"Specifications" shall mean the Active Ingredient Specifications, Excipient Specifications, Product Specifications, and the Packaging
Specifications for the Product.

"Territory" shall mean the United States of America and Canada, and their territories and possessions.

"Third Party" shall mean any party other than Endo, SkyePharma and their respective Affiliates.

"Unit" shall mean a single vial of Product or such other size as may be mutually agreed upon by the Parties from time to time.

2.     SALE AND PURCHASE OF PRODUCT.

During each Contract Year throughout the term of this Agreement, SkyePharma agrees to manufacture, or to have manufactured, and sell to Endo, and Endo agrees to
purchase from SkyePharma, Product for marketing, sale and distribution in the Territory, in accordance with the terms and subject to the conditions of this Agreement, including the Exhibits hereto.

3.     QUALIFICATION OF SECOND SITE.

3.1Second Manufacturing Site.SkyePharma agrees to qualify and obtain final regulatory approval for a second
manufacturing site for the Product, either internally or through a Third Party manufacturer, within [Confidential Information Has Been Omitted And Furnished Separately To The Securities
And Exchange Commission] of the date of First Commercial Sale. The identification of the second manufacturing site will be the responsibility of the JMC.

A-12

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3.2Third Party Manufacturer.In the event that SkyePharma contracts with a Third Party to manufacture, test
and/or package the Product (either as the primary or secondary source of supply), Endo shall be given the opportunity to review and comment on such manufacturing agreement in advance of its execution,
and SkyePharma shall give good faith consideration to Endo's comments. Such Third Party manufacturing agreement(s) shall provide that Endo shall be an intended third party beneficiary of such Third
Party manufacturer's obligations to SkyePharma thereunder, including with rights of direct enforcement by Endo. In addition, each Third Party manufacturing agreement shall provide, in substance, that,
in the event that SkyePharma, or any other Person acting on behalf of SkyePharma or its estate pursuant to any Bankruptcy Laws, shall seek or obtain a Bankruptcy Rejection of such Third Party
manufacturing agreement, then the Third Party manufacturer shall (i) timely exercise its rights to continue any and all licenses (if any) thereunder, pursuant to 11 U.S.C. § 365(n)
of the Bankruptcy Laws, and (ii) to the extent that Bankruptcy Rejection effectively terminated the Third Party manufacturing agreement, immediately enter into an agreement with Endo for the
Product in the Territory, on substantially the same terms and conditions. The Third Party manufacturing agreements may contain such additional terms and conditions as SkyePharma and the Third Party
manufacturer shall agree to, subject to the review (but not the approval) of the JMC prior to the execution of such Third Party manufacturing agreement and provided that such additional terms and
conditions do not prejudice, reduce or limit Endo's rights under this Agreement (including this Section 3.2) or the Alliance Agreement.

4.     ACTIVE INGREDIENTS; EXCIPIENTS.

The costs of procuring Active Ingredients and Excipients for the Product as well as all other materials required to manufacture, test, package, label and release
the Product are included as part of the Product Price.

5.     REPRESENTATIONS AND WARRANTIES; COVENANTS

5.1By Both Parties.Each Party represents and warrants to the other Party, as of the Effective Date, that:



A-13

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5.2By SkyePharma.SkyePharma represents and warrants to Endo that the Product, at the time of delivery to Endo,
(a) will conform to the Specifications, as then in effect, (b) will have been manufactured in compliance with all applicable laws and regulations and in accordance with cGMPs;
(c) will not be (i) adulterated or misbranded by SkyePharma within the meaning of the FD&C Act or (ii) an article that may not be introduced into interstate commerce under the
provisions of Sections 404 or 505 of the FD&C Act; and (d) other than the first three commercial lots which require prior authorization from Endo before release by SkyePharma, shall have a
minimum of [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] of the Product shelf life as per the applicable
Product registrations still available.

5.3By Endo.Endo represents and warrants to SkyePharma that Endo will adhere to Specifications and all
applicable laws relating to the handling, storage and disposal of the Products.

5.4Disclaimer of Warranties.EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT OR THE ALLIANCE AGREEMENT, THERE
ARE NO OTHER REPRESENTATIONS OR WARRANTIES, EXPRESSED OR IMPLIED, MADE OR GIVEN BY EITHER PARTY HEREUNDER, INCLUDING WITHOUT LIMITATION, ANY WARRANTIES OF QUALITY, PERFORMANCE, MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE OF ANY PRODUCT DELIVERED HEREUNDER, WHETHER USED ALONE OR IN COMBINATION WITH OTHER SUBSTANCES.

5.5Legal Compliance.Each Party shall comply in all material respects with all federal and state laws and
regulations applicable to the conduct of its business pursuant to this Agreement, including, but not limited to, the FD&C Act.

6.     CHANGES TO SPECIFICATIONS; VALIDATION.

6.1Optional Changes to Specifications.



A-14

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6.2Required Changes to Specifications.If any proposed change in Specifications is in response to a
pronouncement of the FDA, a change in controlling compendial monograph, a Force Majeure Event, or a change in applicable law, each Party will cooperate with the other in any reasonable manner to
effect such change in a timely manner. SkyePharma shall be responsible for making or shall cause the making of any required filing to any Product Registration or Manufacturing Facility Registration
with respect to such change and seeking approval from each applicable regulatory authority. Payment for the cost and expense of implementing such changes to Specification shall be the responsibility
of SkyePharma.

6.3Cooperation.In the event that any change to Specifications is implemented, the Parties agree to cooperate
with each other in good faith to enable each Party to comply with the terms of this Agreement.

6.4Validation.SkyePharma shall prepare or shall have prepared equipment qualification and manufacturing
validation procedures, and shall perform or have performed qualification of utilities as well as validation of the manufacturing, packaging and cleaning processes in accordance with such procedures.

7.     QUALITY AGREEMENT.

The Quality Agreement attached hereto as Exhibit 2 ("Quality Agreement") further details the quality
assurance obligations and responsibilities of the Parties with respect to the Product. Notwithstanding anything to the contrary in this Agreement or in any other document or agreement, in the event of
a conflict between this Agreement and the Quality Agreement, the Quality Agreement shall govern and control.

8.     FORECASTS AND ORDERS.

8.1Forecast.Within [Confidential Information Has Been Omitted And Furnished Separately To The
Securities And Exchange Commission] of the Effective Date or [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange
Commission] before the anticipated Product launch, whichever is later, Endo shall submit to SkyePharma a written estimate of its [Confidential Information Has Been Omitted And
Furnished Separately To The Securities And Exchange Commission] requirements for Product for each of the next succeeding [Confidential Information Has Been Omitted And
Furnished Separately To The Securities And Exchange Commission] (this forecast and each succeeding forecast, a "Forecast"). Each Forecast
shall be updated [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] on the [Confidential Information Has
Been Omitted And Furnished Separately To The Securities And Exchange Commission] of the [Confidential Information Has Been Omitted And Furnished Separately To The Securities
And Exchange Commission] on a [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] rolling basis. Each
Forecast shall include, during the relevant periods, the quantities necessary for commercial launch, ramp-up and pipeline fill. Endo shall make all Forecasts in good faith given market
conditions and other information available to Endo.

8.2Firm Purchase Requirement.The forecast of the most current [Confidential Information Has Been
Omitted And Furnished Separately To The Securities And Exchange Commission] period shall be binding on the Parties and shall be deemed a firm purchase order for which Endo shall provide a
written purchase order stating in detail the required quantities of Products and the required delivery dates in accordance with Section 9.1 below. The forecast for the remaining
[Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] period of each rolling forecast is for planning purposes only and
shall not constitute a commitment to purchase or supply Product.

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8.3Quantity Limits.



9.     PURCHASE OF PRODUCT; DELIVERIES.

9.1Purchase Orders.



9.2Purchase Quantities.All Product shall be ordered in lot sizes or whole multiples thereof. Each Purchase
Order shall specify the quantity of Units of Product being ordered. Quantities actually shipped pursuant to a given Purchase Order may vary from the quantities reflected in such Purchase Order by up
to [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] percent and still be deemed to be in compliance with such
Purchase Order;provided,however, that Endo shall only be invoiced and required to pay for the
quantities of Product which SkyePharma actually ships or have shipped to Endo. Endo will manage its inventory of Product in a manner reasonably consistent with its ordinary business practices.

9.3Delivery Terms.



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9.4Late Dated Product.



9.5Technical Assistance.In the event of a Long-Term Inability to Supply with respect to a Product
or termination of this Agreement by Endo pursuant to Section 12.4, SkyePharma agrees to provide Endo with all reasonable technical assistance and support to qualify a Third Party Manufacturer
to supply the Product.

10.   PRICE.

10.1Price.For all Product which is the subject of Purchase Orders submitted by Endo prior to or during the
first Contract Year, Endo shall pay to SkyePharma the Product Price set forth in Exhibit 1 hereto, subject to adjustment as set forth in Section 10.2 hereof.

10.2Price Changes.The Product Price shall be firm until the [Confidential Information Has Been
Omitted And Furnished Separately To The Securities And Exchange Commission] anniversary of the Commencement Date. After the [Confidential Information Has Been Omitted And
Furnished Separately To The Securities And Exchange Commission], the Parties shall adjust the Product Price [Confidential Information Has Been Omitted And Furnished Separately
To The Securities And Exchange Commission]. The adjusted Purchase Price shall be effective as of [Confidential Information Has Been Omitted And Furnished Separately To The
Securities And Exchange Commission] of the following calendar year.

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10.3Taxes.The Product Price set forth in Exhibit 1 does not include sales, use, consumption, or excise
taxes of any taxing authority. The amount of such taxes, if any, will be added to the Product Price in effect at the time of shipment thereof and shall be reflected in the invoices submitted to Endo
by SkyePharma pursuant to this Agreement. Endo shall pay the amount of such taxes to SkyePharma in accordance with the payment provisions of this Agreement.

10.4Method of Payment.At the time of each shipment of Product hereunder, SkyePharma shall invoice Endo, and
Endo shall pay all undisputed invoices within [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] days of the release
of the Product by Endo's Quality Assurance Department in accordance with Section 13 hereto. All payments due hereunder to SkyePharma shall be payable in United States dollars by check or by
wire transfer to such accounts as SkyePharma may designate to Endo in writing from time to time.

11.   RECALLS; ADVERSE EVENT REPORTING; CONFIDENTIALITY.

The
procedures for recalls, adverse event reporting and maintenance of Confidential Information shall be in accordance with the terms set forth in the Alliance Agreement.

12.   TERM AND TERMINATION.

12.1Term.Unless sooner terminated pursuant to the terms hereof, the term of this Agreement shall commence on
the Effective Date and shall continue until the expiration or termination of the Product under the Alliance Agreement.

12.2Termination by Mutual Agreement.This Agreement may be terminated at any time upon mutual written agreement
between the Parties.

12.3Termination for Default.Either Party (the "Non-breaching
Party") may, without prejudice to any other remedies available to it at law or in equity, terminate this Agreement in its entirety, in the event the other Party (the
"Breaching Party") shall have materially breached or defaulted in the performance of any of its material obligations hereunder and such default shall
have continued for [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] after written notice thereof was provided to
the Breaching Party by the Non-breaching Party (or, if such default cannot be cured within such [Confidential Information Has Been Omitted And Furnished Separately To The
Securities And Exchange Commission] period, if the Breaching Party does not commence and diligently continue actions to cure such default during such [Confidential Information
Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] period). Any such termination shall become effective at the end of such [Confidential
Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] period unless the Breaching Party has cured any such breach or default prior to the
expiration of such [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] period (or, if such default cannot be cured
within such [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] period, if the Breaching Party has commenced and
diligently continued actions to cure such default). The right of either party to terminate this Agreement as provided in this Section 12.3 shall not be affected in any way by its waiver or
failure to take action with respect to any previous default.

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12.4Bankruptcy; Insolvency.Either Party may terminate this Agreement effective immediately in the event that
the other Party (i) has become insolvent or has been dissolved or liquidated, filed or has filed against it, a petition, case or other proceeding under any Bankruptcy Laws, and such petition,
case or proceeding if filed against it is not dismissed within [Confidential Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission] of
the filing; (ii) makes a general assignment for the benefit of creditors; or (iii) has a receiver, custodian, trustee or other Person exercising similar functions appointed for all or
substantially all of its assets. The effects of such termination shall be as set forth herein and in the Alliance Agreement.

12.5Consequences of Termination.In addition to the consequences set forth in the Alliance Agreement, upon
expiration or termination of this Agreement, whichever is sooner (but in the case of termination, only if directed by the terminating Party in the notice of termination), SkyePharma shall manufacture
and ship, and Endo shall purchase in accordance with the provisions hereof any and all amounts of Product ordered by Endo hereunder prior to the date on which such notice is given.

12.6Accrued Rights; Surviving Obligations.



13.   NON-CONFORMING PRODUCTS.

13.1Non-conforming Products.



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13.2    Endo
may reject Products at any time for defects that were not detected during the inspection undertaken by Endo pursuant to Section 13.1 so long as Endo
notifies SkyePharma of such rejection promptly after its discovery of such defect.

13.3Disposition of Non-Conforming Product.Endo shall not dispose of any non-conforming
Product without authorization and instructions from SkyePharma either to dispose of the non-conforming Product or to return the non-conforming Product to SkyePharma.

13.4Product Holds or Rejections.SkyePharma agrees to notify Endo of any Product hold or Product rejection that
may have a material impact on the manufacturing process or that may reasonably lead to a delay in supply of Product to Endo.

14.   LONG-TERM INABILITY TO SUPPLY

14.1    In
the event that a Long-Term Inability to Supply has occurred, Endo shall have the right, at its sole discretion, to:



14.2    In
the event that a Long-Term Inability to Supply has occurred, SkyePharma shall have the obligation, upon request by Endo, to:



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15.   FORCE MAJEURE.

15.1Effects of Force Majeure.



16.   MISCELLANEOUS.

16.1Independent Contractors.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, except to the extent, if at all,
specifically provided herein.

16.2Assignment; Subcontractors.



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16.3Books and Records.Any books and records to be maintained under this Agreement shall be maintained in
accordance with GAAP.

16.4Further Actions.Each Party shall execute, acknowledge and deliver such further instruments, and do all
such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.

16.5Inconsistency.



16.6Waiver.A waiver by either Party of any of the terms and conditions of this Agreement in any instance shall
not be deemed or construed to be a waiver of such term or condition for the future, or of any subsequent breach hereof. All rights, remedies, undertakings, obligations and agreements contained in this
Agreement shall be cumulative and none of them shall be in limitation of any other remedy, right, undertaking, obligation or agreement of either Party.

16.7Compliance with Law.Nothing in this Agreement shall be deemed to permit a Party to export,
re-export or otherwise transfer any Products sold under this Agreement without compliance with applicable laws.

16.8Severability.When possible, each provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this Agreement.

16.9Amendment.No amendment, modification or supplement of any provisions of this Agreement shall be valid or
effective unless made in writing and signed by a duly authorized officer of each Party.

16.10Governing Law.This Agreement shall be governed by and interpreted in accordance with the laws of the
State of New York without regard to conflict of law principles.

16.11Arbitration.Except as expressly otherwise provided in this Agreement, any dispute arising out of or
relating to the interpretation of any provisions of this Agreement, or the failure of any Party to perform or comply with any obligations or conditions applicable to such Party pursuant to this
Agreement, shall be first attempted to be settled by referring the dispute to the Parties' senior management and, failing resolution, finally settled by arbitration under the then current commercial
arbitration rules of the American Arbitration Association in accordance with the terms set forth in Section 13.13 (a) of the Alliance Agreement.

16.12Descriptive Headings.The descriptive headings of this Agreement are for convenience only, and shall be of
no force or effect in construing or interpreting any of the provisions of this Agreement.

16.13Construction.This Agreement has been jointly prepared on the basis of the mutual understanding of the
Parties and shall not be construed against either Party by reason of such Party's being the drafter hereof or thereof.

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16.14Entire Agreement.This Agreement, together with the Exhibits hereto, and the Quality Agreement, together
with its Exhibits thereto, and the Alliance Agreement, together with its Exhibits thereto, sets forth the entire agreement and understanding between the Parties as to the subject matter hereof and
merges all prior discussions and negotiations between them, and neither of the Parties shall be bound by any conditions, definitions, warranties, understandings or representations with respect to such
subject matter other than as expressly provided herein or as duly set forth on or subsequent to the date hereof in writing and signed by a proper and duly authorized officer or representative of the
Party to be bound thereby.

16.15Notices.All notices and other communications required or permitted to be given under this Agreement shall
be in writing and shall be delivered personally or sent by (a) registered or certified mail, return receipt requested, (b) a nationally-recognized courier service guaranteeing
next-day delivery, charges prepaid or (c) facsimile (with the original promptly sent by any of the foregoing manners), and shall be deemed to have been given upon mailing or upon
transmission by facsimile, as the case may be. Any such notices shall be addressed to the receiving Party at such Party's address set forth below, or at such other address as may from time to time be
furnished by similar notice by either Party:

| |  | (a) | If to SkyePharma:
10450 Science Center Dr.
San Diego, CA 92121
Attn: Steve Thornton
Phone No.: 858-625-2424
Facsimile No.: 858-623-0376                      
| |  | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | (b) | If to Endo:
Endo Pharmaceuticals, Inc.
100 Painters Drive
Chadds Ford, PA 19317
Attn: General Counsel
Phone No.: (610) 558-9800
Facsimile No.: (610) 558-9682

16.16Counterparts.This Agreement may be executed simultaneously in any number of identical counterparts, any
one of which need not contain the signature of more than one Party, but all such counterparts taken together shall constitute one and the same agreement.

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their respective duly authorized representatives as of the
day and year first above written.

|      |  | ENDO PHARMACEUTICALS INC.
|----- |  | -------------------------
|      |  | By:                      
|      |  |                          
|      |  |                          
|      |  | SKYEPHARMA, INC.         
|Date: |  | By:                      
|      |  |                          

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SCHEDULE 3    INITIAL MEMBERS OF JOINT EXECUTIVE COMMITTEE

Endo
Representatives                                      
                                          SkyePharma Representatives

[Confidential
Information Has Been Omitted And Furnished Separately To The Securities And Exchange Commission]

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SCHEDULE 8.1(e)    SCHEDULE OF EXCEPTIONS

Pursuant to a Security Agreement dated as of December 29, 2000, SkyePharma, Inc. has granted to Paul Capital Royalty Acquisition Fund, L.P. a
security interest in certain amounts payable by Endo to SkyePharma, Inc. under this Agreement.

Pursuant
to a Security Agreement dated as of March 7, 2002, SkyePharma Canada Inc. has granted to Paul Capital Royalty Acquisition Fund, L.P. a security interest in certain
amounts payable by Endo to SkyePharma Canada Inc. under this Agreement.

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