<PAGE>

                                                                 EXHIBIT 10.4

           CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
                       SECURITIES AND EXCHANGE COMMISSION.
                        ASTERISKS DENOTE SUCH OMISSIONS.

                       LICENSE AND MANUFACTURING AGREEMENT

     This LICENSE AND MANUFACTURING AGREEMENT (this "Agreement"), dated as of
April 12, 2005 (the "Effective Date"), is made by and between Barr Laboratories,
Inc., a corporation organized and existing under the laws of Delaware ("Barr"),
Kos Life Sciences, Inc., a corporation organized and existing under the laws of
Delaware ("Kos") and Kos Pharmaceuticals, Inc., a corporation organized and
existing under the laws of Florida. Barr and Kos are each sometimes referred to
individually as a "Party" and together as the "Parties."

                                    RECITALS

     WHEREAS, Barr and Kos are pharmaceutical companies and are, either
themselves or through one or more of their respective Affiliates, engaged in the
marketing and sale of pharmaceutical products; and

     WHEREAS, Barr owns or controls certain know-how related to the Licensed
Products (as defined below) and Barr owns or controls, or will soon own or
control, certain product registrations (or applications therefor); and

     WHEREAS, Kos desires to obtain from Barr, and Barr desires to grant to Kos
a license to certain exclusive and non-exclusive rights under the Approved ANDAs
(as defined below) and related Know-How (as defined below) to commercialize the
Licensed Products (as defined below), in accordance with the terms and subject
to the conditions of this Agreement; and

     WHEREAS, in order to ensure and expand overall output of Niaspan and
Advicor, Kos has been seeking additional production capabilities from a company
such as Barr that has experience manufacturing pharmaceutical products; and

     WHEREAS, Barr has the capability to manufacture the Licensed Products
following FDA approval of the Approved ANDAs;

     WHEREAS, Barr desires to supply to Kos, and Kos desires to obtain from
Barr, the right for Kos to obtain up to all of Kos' requirements of one or more
Licensed Products, upon the terms and subject to the conditions set forth below;
and

     WHEREAS, this Agreement provides Kos with additional back-up production
capabilities in the event of any internal production issues, such as general
capacity issues or cGMP problems, at Kos' facilities.

     NOW, THEREFORE, in consideration of the foregoing premises and the
representations, covenants and agreements contained herein, together with other
good and valuable consideration,
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the receipt and sufficiency of which are hereby acknowledged, the Parties,
intending to be legally bound, hereby agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

     When used in this Agreement, whether in the singular or plural, each of the
following capitalized terms shall have the meanings set forth in this Article 1:

     1.1 "Affiliates" means, with respect to a Party, any Person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such Party at any time during the period for
which the determination of affiliation is being made. For the purposes of this
definition, "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management, policies or affairs of a
Person, whether through ownership of voting securities or general partnership or
managing member interests, by contract or otherwise, including the ownership,
directly or indirectly, of securities having the power to elect a majority of
the board of directors or similar body governing the affairs of such Person.
Without limiting the generality of the foregoing, a Person shall be deemed to
control any other Person in which it owns, directly or indirectly, a majority of
the voting interests.

     1.2 "ANDAs" means collectively or either, as the case may be, Barr's Niacin
ANDAs and Barr's Niacin-Lovastatin ANDAs.

     1.3 "Applicable Law" means all applicable laws, statutes, ordinances,
rules, regulations (including cGMPs (defined below)), writs, judgments, decrees,
injunctions (whether preliminary or final), orders and other requirements
(including Abbreviated New Drug Applications, permits, certificates and other
product authorizations and approvals) of any Governmental Authority (including
the FTC and FDA or any self-regulatory organization or stock exchange).

     1.4 "Approved ANDA" means any of the ANDAs that has been finally approved
by the FDA.

     1.5 "Business Day" means any day other than a Saturday, Sunday or day on
which banks in New York, New York are authorized or obligated by Applicable Law
to close. Any reference in this Agreement to "day" whether or not capitalized
shall refer to a calendar day, not a Business Day.

     1.6 "Certificate of Analysis" means a written certification, substantially
in the form attached as Schedule 1.6, delivered by Barr to Kos with each
shipment of Finished Products.

     1.7 "CMC Section" means the Chemistry, Manufacturing and Controls Section
of a regulatory submission document included in an ANDA as set forth in 21
C.F.R. Section 314.94(a)(9).

     1.8 "Commercially Reasonable Efforts" means, with respect to a Party, the
efforts and resources which would be used by that Party consistent with its
normal business practices with respect to a product at a similar stage in its
development or product life and of similar


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market potential taking into account efficacy, safety, the anticipated approved
labeling, the competitiveness of alternative products in the market place or
under development, the patent and other proprietary position of the product, the
likelihood of regulatory approval, the commercial value of the product and other
relevant factors.

     1.9 "Current Good Manufacturing Practices" or "cGMPs" means the current
good manufacturing practices and standards as set forth in 21 C.F.R. Parts 210
and 211 and as otherwise established or required by applicable Governmental
Authorities in effect at the time and place for the manufacture of Licensed
Product, and subject to any arrangements, additions or clarifications agreed
from time to time between the Parties in the Quality Agreement (as defined in
Section 4.8).

     1.10 "Damages" means any and all costs, losses, claims, liabilities, fines,
penalties, awards, verdicts, settlements, judgments, interests and expenses,
including reasonable attorney's fees and costs of suit.

     1.11 "FDA" means the United States Food and Drug Administration, or any
successor agency thereof.

     1.12 "Final Packaging" means the labeling and packaging of Processed
Product in accordance with Applicable Law and the ANDAs, including the package
inserts and other components reasonably necessary for the sale or distribution
of the Finished Product to the ultimate consumer.

     1.13 "Finished Product" shall mean a Licensed Product in its finished form
in Final Packaging, ready for sale to the market or distribution as professional
samples.

     1.14 "First License Term" shall mean the period commencing on the Effective
Date and ending at 11:59 p.m., Eastern Time, on September 19, 2013.

     1.15 "FTC" means the United States Federal Trade Commission, or any
successor agency thereof.

     1.16 "Fully Loaded Manufacturing Cost" means, with respect to Finished
Product, Barr's internal and external costs, determined in accordance with
United States generally accepted accounting principles, as consistently applied
by Barr in accordance with its past practice and in the ordinary course of its
business for products other than Licensed Products manufactured for Third
Parties, incurred in manufacturing, acquiring, packaging, transporting and/or
storing such Finished Product (including product testing activities relating to
quality assurance, quality control and regulatory compliance), in each case to
the extent related and allocable to the Finished Product supplied to Kos
hereunder; provided, however, that in no event will Fully Loaded Manufacturing
Cost include: (i) the cost of any royalties or other amounts due to Third
Parties for any intellectual property rights required for the manufacture and
supply of any Licensed Product hereunder; or (ii) the cost of freight, shipping
or insurance for the delivery of any Licensed Product to Kos' designated
facility pursuant to Section 5.3.


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     1.17 "Force Majeure" means any occurrence beyond the reasonable control of
a Party that prevents or substantially interferes with the performance by the
Party of any of its obligations hereunder, if such occurs by reason of any act
of God, flood, fire, explosion, earthquake, strike, lockout, labor dispute,
casualty, accident, war, revolution, civil disorder, terrorist attack, embargo,
any restriction of any Governmental Authority (to the extent such Governmental
Authority has ruling authority over such Party), or other similar event beyond
the reasonable control of such Party, if and only if the Party affected shall
have used Commercially Reasonable Efforts to avoid such occurrence.

     1.18 "Governmental Authority" means any governmental, regulatory or
administrative authority, court, tribunal, arbitrator, agency, commission,
official or other instrumentality of any supranational authority or any federal,
state, provincial, municipal, county, city or other political subdivisions
thereof.

     1.19 "Know-How" means any technical information (whether patented,
patentable or otherwise), including all product specifications, processes,
product designs, plans, trade secrets, ideas, concepts, manufacturing,
engineering and other manuals and drawings, standard operating procedures, flow
diagrams, chemical, pharmacological, toxicological, pharmaceutical, physical and
analytical, safety, efficacy, stability, quality assurance, quality control and
clinical data, data, research records, compositions, annual product reviews,
process validation reports, analytical method validation reports, specifications
for stability trending and process controls, testing and reference standards for
impurities in and degradation of products, technical data packages, chemical and
physical characterizations, dissolution test methods and results, formulations
for administration, clinical trial reports, regulatory communications and
labeling and all other confidential or proprietary technical and business
information, relating to the Licensed Products, whether written or oral and in
whatever format kept.

     1.20 "Licensed Products" means the Niacin Licensed Products and the
Niacin-Lovastatin Licensed Products.

     1.21 "Marketing License Effective Date" means, on a Licensed
Product-by-Licensed Product and dose-by-dose basis, the "Marketing License
Effective Date" as defined in Section 5 of the Settlement and License Agreement.

     1.22 "Niacin ANDAs" means:

     (a) Abbreviated New Drug Applications Nos. 76-250 (1000 mg tablets) and
     76-378 (500 and 750 mg tablets), which reference the products approved
     under New Drug Application 20-381, filed with the FDA by Barr or any of its
     Affiliates in order to obtain approval to manufacture and/or sell 1 gm, 750
     mg and/or 500 mg extended release oral niacin tablets (and any supplement
     or amendment filed pursuant to FDA requirements); and

     (b) any other Abbreviated New Drug Application filed with the FDA by Barr
     or any of its Affiliates in order to obtain approval to manufacture and/or
     sell any oral dosage form containing niacin (empirical formula of
     C(6)H(5)NO(2)) as the single active ingredient (and any supplement or
     amendment filed pursuant to FDA requirements).


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     1.23 "Niacin-Lovastatin ANDA" means:

     (a) the Abbreviated New Drug Applications, which reference the product
     approved under New Drug Application 21-249, to be filed with the FDA by
     Barr or any of its Affiliates in order to obtain approval to manufacture
     and/or sell lovastatin 20 mg/niacin 1 gm, lovastatin 20 mg/niacin 750 mg,
     and/or lovastatin 20 mg/ niacin 500 mg extended release oral tablets (and
     any supplement or amendment filed pursuant to FDA requirements); and

     (b) any other Abbreviated New Drug Application filed with the FDA by Barr
     or any of its Affiliates in order to obtain approval to manufacture and/or
     sell any oral dosage form containing niacin (empirical formula of
     C(6)H(5)NO(2)) and lovastatin (empirical formula of C(24)H(36)O(5)) as the
     only active ingredients (and any supplement or amendment filed pursuant to
     FDA requirements).

     1.24 "Niacin Licensed Products" means any oral dosage form containing
niacin (empirical formula of C(6)H(5)NO(2)) as the single active ingredient
which is manufactured pursuant to any Niacin ANDA.

     1.25 "Niacin-Lovastatin Licensed Products" means any oral dosage form
containing niacin (empirical formula of C(6)H(5)NO(2)) and lovastatin (empirical
formula of C(24)H(36)O(5)) as the only active ingredients which is manufactured
pursuant to any Niacin-Lovastatin ANDA.

     1.26 "NDC" means the "National Drug Code" identifying number for a Licensed
Product maintained by the FDA, which is a 10-digit number comprised of the
labeler code (which is assigned by the FDA and identifies the
distributor/manufacturer), product code (which identifies the drug or
formulation), and package size code (which identifies the trade package size and
type).

     1.27 "Patents" means the "Kos Patents", as defined in the Settlement and
License Agreement.

     1.28 "Person" or "person" means any individual, firm, corporation,
partnership, limited liability company, trust, joint venture, Governmental
Authority, or other entity or organization.

     1.29 "Printed Materials" means printed packaging materials relating to any
Processed Product and product labels, printed packaging materials or packaging
inserts relating to any Finished Product.

     1.30 "Processed Product" means a Licensed Product prior to being in, and as
released for, Final Packaging.

     1.31 "Processing Activities" means activities relating to production of the
Licensed Products, spanning from purchasing raw materials to packaging of the
Licensed Products including purchasing raw materials, manufacturing, processing,
quality control, labeling, packaging, release and storage and other activities
required to be undertaken by Barr or its suppliers and its permitted
subcontractors in order to produce Finished Product, and the tests and analyses
conducted in connection therewith.


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     1.32 "Product Quality Complaint" means any complaint that questions the
purity, identity, potency or quality of any Licensed Product, its packaging, or
labeling, or any complaint that concerns any incident that causes the drug
product or its labeling to be mistaken for, or applied to, another article or
any bacteriological contamination, or any significant chemical, physical, or
other change or deterioration in the distributed drug product..

     1.33 "Promotional Materials" means Kos' promotional and advertising
materials and programs relating to Finished Product sold under the Niaspan(R) or
Advicor(R) trademarks.

     1.34 "Settlement and License Agreement" means that certain Settlement and
License Agreement between Kos and Barr of even date herewith.

     1.35 "Specifications" means, for each Licensed Product, such specifications
as set forth in Schedule 1.35, as such specifications may be supplemented or
modified from time to time hereafter in accordance with the provisions of this
Agreement.

     1.36 "Term" means the License Term, as the same may be earlier terminated
in accordance with this Agreement.

     1.37 "Territory" means the United States and its states, territories and
possessions, including the Commonwealth of Puerto Rico and the District of
Columbia.

     1.38 "Third Party" means any Person other than Barr, Kos and their
respective Affiliates.

                                    ARTICLE 2
                                    LICENSES

2.1 License Grant.

     (a) Subject to the full payment of the license fee pursuant to Section 7.1
and the other terms and conditions herein, Barr hereby grants to Kos a fully
paid (pursuant to Section 7.1) license under each Approved ANDA, and all related
Know-How owned or controlled by Barr or any of its Affiliates, solely for the
purposes of marketing, having marketed, using, having used, commercializing,
have commercialized, distributing, having distributed, offering for sale,
selling and having sold the Licensed Products in the Territory during the First
License Term (subject to extension as set forth in Section 2.1(b) below). Such
license will initially be exclusive, but, on a Licensed Product by Licensed
Product and dose by dose basis, will become semi-exclusive with Barr and its
Affiliates only on the Marketing License Effective Date with respect to the
applicable Product and dose, or as needed by Barr at any time to supply Licensed
Product only to Kos hereunder or to manufacture Licensed Product in anticipation
of the future sale by Barr and its Affiliates to Third Parties commencing only
on or after, the Marketing License Effective Date.

     (b) At Kos' election, the license granted under Section 2.1(a) may be
renewed on a non-exclusive basis, for a period commencing on the day immediately
following the expiration of the First License Term and ending on the third (3rd)
anniversary of the date such period began (the "Second License Term" and
together with the First License Term, the "License


                                       -6-
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Term"), by written notice given to Barr at least six (6) months prior to the
expiration of the First License Term.

     (c) For purposes of clarity, the foregoing license does not grant to Kos or
its sublicensees any right (i) to market, have marketed, use, have used,
commercialize, have commercialized, distribute, have distributed, offer for
sale, sell or have sold a Licensed Product outside of the Territory; or (ii) to
make or have made a Licensed Product anywhere in the world, except through Barr.
For the avoidance of doubt, nothing in the Agreement shall limit in anyway Kos'
rights to market, have marketed, use, have used, commercialize, have
commercialized, distribute, have distributed, offer for sale, sell, have sold,
make or have made, either itself or through an Affiliate or Third Party, any
pharmaceutical formulation other than a Niacin Licensed Product under any Niacin
ANDA or a Niacin-Lovastatin Licensed Product under any Niacin-Lovastatin ANDA.

     (d) The Parties shall negotiate in good faith to establish the terms and
conditions upon which Barr would supply Kos with Licensed Product for sale
outside the Territory.

     2.2 Sublicenses and Subcontracting. Notwithstanding anything herein to the
contrary, including Section 12.5, Kos may grant sublicenses in order to exercise
the rights granted to it and perform the obligations undertaken by it under this
Agreement: (a) to its current and future Affiliates, distributors (including,
without, limitation, Merck KGaA and ORYX Pharmaceuticals, Inc.), and
co-promotion partners (including, without limitation, Takeda Pharmaceuticals
North America, Inc. and Takeda Pharmaceuticals America, Inc.) without the prior
written consent of Barr; and (b) to other Third Parties, with Barr's prior
written consent, which consent shall not be unreasonably withheld, conditioned
or delayed. Kos acknowledges that the grant of a sublicense or use of a
subcontractor shall not relieve Kos from, and Kos shall remain responsible for,
all of its obligations under this Agreement. Kos shall be responsible for the
compliance of its Affiliates, sublicensees and subcontractors (other than Barr)
with this Agreement.

     2.3 Exclusivity. During the First License Term, neither Barr nor its
Affiliates shall, either itself or with or through a Third Party, (a)
manufacture any Licensed Product whose manufacture, use, sale or offer for sale
is covered by the Patents for any Person (including, without limitation, Barr
and its Affiliates) other than (i) Kos and Kos' sublicensees or (ii) Barr and
its Affiliates, in anticipation of the future sale to Third Parties commencing
only on or after the Marketing License Effective Date, (b) market,
commercialize, distribute or sell a Licensed Product whose manufacture, use,
sale or offer for sale is covered by the Patents, or (c) import or export a
Licensed Product whose manufacture, use, sale or offer for sale is covered by
the Patents for the purposes of clause (b), except that Barr and its Affiliates
may engage in any of the activities prohibited by (a) - (c) pursuant to the
Settlement and License Agreement after the Marketing License Effective Date, on
a Licensed Product by Licensed Product and dose by dose basis.

     2.4 Sale or License of Approved ANDAs. Barr shall not sell, transfer or
license the Approved ANDAs during the License Term without Kos' prior written
consent; provided, that Barr may sell, transfer or license the Approved ANDAs
during the License Term without such consent (a) to any Affiliate of Barr,
provided, no such assignment shall relieve Barr of its


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obligations hereunder, or (b) in connection with a merger, reorganization,
change of control, or sale of all or substantially all of Barr's business to
which this Agreement relates; provided, further, that, in each case and
notwithstanding anything in this Section 2.4 to the contrary, any permitted
sale, transfer or license of the Approved ANDAs hereunder shall be expressly
subject to Kos' rights hereunder and any such transferee shall expressly agree
to assume Barr's obligations hereunder.

     2.5 No Implied Licenses. Only the licenses expressly granted herein shall
be of legal force and effect. No license rights shall be created hereunder by
implication, estoppel or otherwise.

     2.6 Reservation of Rights.

     (a) All rights not expressly granted to Kos hereunder are expressly
reserved to Barr.

     (b) As between the Parties, Barr shall retain ownership of all rights,
title and interest in and to the ANDAs, subject to the licenses granted
hereunder. Kos shall not contest such ownership or the validity of any Barr ANDA
with respect to any Licensed Product during the Term of this Agreement with
respect to such Licensed Product, including in any Proceeding (as defined in
Section 8.2(g)).

     (c) Nothing in this Agreement shall be construed to prohibit Barr or its
Affiliates, at any time, from manufacturing and commercializing any products
other than Licensed Products whose manufacture, use, sale or offer for sale are
covered by the Patents.

     2.7 Inventions. As between the Parties, each Party shall be the sole and
exclusive owner of any Know-How that it (or an Affiliate or Third Party on its
behalf) invents, develops, discovers or creates after the Effective Date
("Inventions"). Nothing herein shall obligate either Party to invent, develop,
discover or create any Inventions or to file, prosecute, defend or maintain any
applications, registrations or patents relating to any of its Inventions. Except
as set forth herein or otherwise agreed by the Parties, no Inventions of a Party
will be made available to the other Party or deemed licensed to the other Party
hereunder.

                                    ARTICLE 3
                                 SUPPLY BY BARR

     3.1 Commitment to Supply. During the Term of this Agreement, upon the terms
and subject to the conditions of this Agreement, commencing as of the Effective
Date: (a) Kos shall have the right to elect, in its sole discretion, to purchase
Finished Product from Barr; and (b) Barr shall use Commercially Reasonable
Efforts to supply to Kos or its designee all Finished Product ordered by Kos
pursuant to purchase orders delivered from time to time by Kos to Barr in
accordance with Section 5.2. During the First License Term, neither Barr nor any
of its Affiliates shall have the right to manufacture or supply any Licensed
Product for or to any Person (including, without limitation, Barr and its
Affiliates) other than to Kos or its designee, prior to the Marketing License
Effective Date for that Licensed Product on a dose-by-dose basis


                                       -8-
<PAGE>
or in anticipation of the future sale by Barr and its Affiliates to Third
Parties commencing only on or after the Marketing License Effective Date. It is
expressly understood and agreed by Barr that nothing in this Agreement creates
any obligation, by implication or otherwise, on the part of Kos or any of its
Affiliates or sublicensees to purchase any Licensed Product hereunder, other
than through a purchase order delivered by Kos to Barr in accordance with the
terms of this Agreement. It is expressly understood and agreed by Kos that Barr
shall not be required and have no obligation to supply either the Niacin
Licensed Product or the Niacin-Lovastatin Licensed Product until such time as
Barr receives the Approved ANDA for the applicable Licensed Product.

     3.2 Responsibility. Unless otherwise specified herein or expressly
consented to in writing by Kos and Barr, as between the Parties, Barr shall have
control of and discretion over performance of all activities necessary to supply
Kos with Finished Product as contemplated hereunder, in each case which shall be
exercised in Barr's reasonable judgment in the ordinary course of business;
provided, however, that Barr shall not perform any of its obligations to
manufacture and supply any Licensed Product hereunder with or through a Third
Party, without the prior written consent of Kos, which shall not be unreasonably
withheld, conditioned or delayed. Unless provided otherwise and only as and if
permitted herein, a Party's sublicensing, subcontracting or designating
activities to be performed under this Agreement to an Affiliate or Third Party
shall not release such Party from the performance of any of its responsibilities
hereunder. Barr and Kos shall be responsible for the compliance of their
Affiliates, sublicensees and subcontractors with this Agreement.

                                    ARTICLE 4
                               REGULATORY MATTERS

     4.1 Responsibility for ANDAs.

          (a) As of the Effective Date Barr has obtained or anticipates
immediate issuance of Approved ANDAs for 1000 mg, 750 mg and 500 mg extended
release oral niacin tablets. Barr, at its sole cost and expense, shall use
Commercially Reasonable Efforts to obtain Approved ANDAs for lovastatin 20
mg/niacin 1 gm, lovastatin 20 mg/niacin 750 mg, and lovastatin 20 mg/niacin 500
mg extended release oral tablets as promptly as reasonably practicable after the
Effective Date. In addition, as promptly as reasonably practicable following the
launch by Kos or any of its Affiliates of any additional or modified extended
release oral tablets containing niacin (empirical formula of C(6)H(5)NO(2)) as
the single active ingredient or containing lovastatin (empirical formula of
C(24)H(36)O(5)) and niacin (empirical formula of C(6)H(5)NO(2)) as the only
active ingredients, Barr shall file for and use Commercially Reasonable Efforts
to obtain approval of an ANDA for such additional or modified tablets. Barr
shall maintain the ANDAs in compliance with all material requirements under
Applicable Law. Upon the reasonable request of Barr during the Term, Kos shall
as promptly as reasonably practicable provide to Barr all such information in
its possession or control relating to any Licensed Product supplied by Barr
hereunder as may be reasonably required for the foregoing regulatory activities,
and otherwise shall provide reasonable assistance to Barr in complying with all
Applicable Laws and other regulatory obligations in the Territory, with respect
to any Licensed Products supplied by Barr hereunder, including safety updates,
amendments, annual reports, pharmacovigilance


                                       -9-
<PAGE>
filings and investigator notifications. Neither Party or its respective
Affiliates shall at any time knowingly do, cause to be done, or omit or permit
any act inconsistent with any such ANDAs.

          (b) (i) Except as otherwise expressly provided in this Section 4.1,
Barr shall be solely responsible for paying all costs and expenses in connection
with managing and maintaining the ANDAs; (ii) Barr shall keep Kos informed on a
timely basis as to any developments in respect of the ANDAs that would
materially and adversely affect Kos, including all notices received from any
Governmental Authority in connection with the ANDAs that would materially and
adversely affect Kos; and (iii) Barr shall have the final decision-making
authority in every matter in connection with the ANDAs and on whether and how to
communicate with Governmental Authorities within the Territory in connection
therewith; provided that (x) Barr will not, except where required by Applicable
Law or Governmental Authority, as required or permitted under this Agreement, or
as consented to in writing by Kos from time to time, which consent shall not be
unreasonably withheld, conditioned or delayed, supplement, amend or otherwise
alter any of the ANDAs so as to materially and adversely affect the rights
granted to Kos hereunder, (y) Barr will consult with Kos before taking any
action in connection with either of the ANDAs that would materially and
adversely affect Kos (including any Recall of Licensed Products as contemplated
by Section 6.5) and consider in good faith Kos' position, and (z) Kos shall have
the right to communicate with Governmental Authorities within the Territory if
required by Applicable Law with respect to the promotion, distribution and sale
of Licensed Products by Kos, its Affiliates and sublicensees and with respect to
any adverse events or safety issues regarding Licensed Products sold by Kos, its
Affiliates or sublicensees, with prior notification provided to Barr where such
communications would materially and adversely affect Barr.

          (c) Except: (i) with respect to the promotion, distribution and sale
of Licensed Products by Kos, its Affiliates and sublicensees or with respect to
any adverse events or safety issues regarding Licensed Products sold by Kos, its
Affiliates or sublicensees, and (ii) as may be required by Applicable Law during
the Term, Kos shall not communicate directly with the FDA or any other
Governmental Authority in the Territory relating to the ANDAs without the prior
written consent of Barr, such consent not to be unreasonably withheld,
conditioned or delayed. In furtherance thereof, Kos shall as promptly as
practicable refer all FDA communications received by Kos during the Term
relating to any Licensed Product to Barr.

          (d) Barr shall not be liable to Kos for Losses incurred by Kos as a
direct or indirect result of Kos' failure to provide information pursuant to the
last sentence of Section 4.1(c).

     4.2 Tooling. As promptly as reasonably practicable following the Effective
Date, and at Barr's sole cost and expense, Barr shall make such changes to its
tooling and manufacturing as are necessary to be in a position to supply the
Licensed Product to Kos in Kos' trade dress. While Barr shall have no obligation
to supply any Licensed Product to Kos prior to the satisfaction of all
regulatory requirements associated with such changes, Barr shall use
Commercially Reasonable Efforts to satisfy all such regulatory requirements as
quickly as is practicable.


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<PAGE>
     4.3 Packaging.

          (a) Use of Trademarks and Names. Barr shall package the Licensed
Products supplied hereunder with Kos' (or its Affiliate's or distributor's)
trademarks, trade names and/or trade dress in accordance with the applicable
Approved ANDA or any amendment or modification thereto, which Barr will endeavor
to obtain as soon as reasonably possible, if necessary to allow Barr or its
Affiliates to use the Kos trademarks, trade names and/or trade dress, and any
applicable FDA regulations and, only if required by Applicable Law, such
packaging shall indicate that Barr, or its applicable Affiliate, is the
manufacturer thereof.

          (b) Packaging Layout. As promptly as reasonably practicable after the
Effective Date, Barr shall provide Kos with information regarding the dimensions
and parameters of the Printed Materials. At least 120 days prior to the first
production of a particular Licensed Product to be supplied hereunder or any new
"put-up" of a particular Licensed Product supplied hereunder, Kos shall provide
Barr with all artwork, copy or other material developed or produced by Kos for
the Printed Materials for such Licensed Product. Barr will promptly review such
suggested layout and make any reasonable objections or comments that it may have
to such layout in writing no more than ten (10) Business Days after receipt. The
Parties will then discuss the merits of such objections or comments and use
their respective Commercially Reasonable Efforts to mutually agree upon any
disputed items with respect to the final layout and content of the Printed
Materials. Unless Kos agrees to provide Barr with authorized film or equivalent
master copy within twenty (20) days of receiving such materials, Barr shall, at
Kos' sole cost and expense, provide Kos with proofs or samples of the Printed
Materials to be used with respect to such Licensed Product for Kos' prior review
and written approval and shall prepare or arrange for the production of
camera-ready artwork for the agreed Printed Materials for such Licensed Product.
Kos hereby grants Barr a non-exclusive, royalty-free, right and license to use
Kos' trademarks, trade names and/or trade dress and all artwork, copy or other
material developed or produced by Kos for the Printed Materials solely for
purposes of fulfilling Barr's obligations to Kos under this Agreement.

          (c) Changes to Packaging. No change to any Printed Materials for any
Licensed Product to be supplied to Kos hereunder may be made without the prior
written approval of Kos, which, in the case of changes required by Applicable
Law, will not be unreasonably withheld, conditioned or delayed. Kos may from
time to time request changes to the trademark, trade name or trade dress of the
Printed Materials, which request shall be handled in accordance with Section
4.3(a). In addition, Kos may from time to time request that Barr submit for FDA
approval changes to the FDA-approved labeling (including tablet color, tablet
embossing, package inserts and primary packages) for one or more Licensed
Products. Barr agrees to use its Commercially Reasonable Efforts to make such
submission, obtain FDA approval for and implement such changes, at Kos' sole
cost and expense, including any cost and expense Barr may incur relating to
changing the tooling or equipment to accommodate such request by Kos.

          (d) Obsolete Packaging. Barr shall promptly implement any agreed
change or approved change, as the case may be, to the Printed Materials pursuant
to Section 4.3(c), or on such other specific timeframe as agreed by the Parties
in writing on a case-by-case basis. In the event that Kos requests or is
required by an applicable Governmental Authority to make changes


                                      -11-
<PAGE>
in the Printed Materials for a Licensed Product supplied hereunder, and Barr has
components for such materials in stock at the time of such request by Kos that
it has purchased specifically for such Licensed Product and is unable to
reasonably use for other purposes, Kos shall have the unconditional obligation
to purchase all of the Barr stock of such components at Barr's original cost.

     4.4 Promotional Materials. Kos shall, at its own cost and expense, be
solely responsible for ensuring that all Promotional Materials for any given
Licensed Product supplied hereunder comply with the applicable labeling and
ANDAs for such Licensed Product and with Applicable Law. Notwithstanding Section
4.1(a), Kos shall be solely responsible for submitting all Promotional Materials
to the FDA for review and for negotiating with the FDA for approvals of such
Promotional Materials. As soon as practicable upon receipt of an Approved ANDA,
Barr shall submit to the FDA such authorization as may be required by Applicable
Law for Kos to submit such Promotional Materials and until such time as such
authorizations have been effected, Barr shall use its Commercially Reasonable
Efforts to submit, on behalf of Kos, all Promotional Materials regarding any
Licensed Product supplied hereunder as may be required by Kos from time to time.

     4.5 Materials Suppliers. In order to fulfill its obligations under this
Agreement, Barr may enter into supply agreements with suppliers of the materials
necessary to manufacture the Finished Product, consistent with the Forecasts
submitted by Kos pursuant to Section 5.1. In the event that Barr has purchased
such materials specifically for Licensed Product and is unable to reasonably use
such materials for other purposes, Kos shall have the unconditional obligation
to purchase all of the Barr stock of such components, including converted
finished product manufactured in a commercially reasonable response to the
initial six (6) months' of the applicable Forecast, at Barr's original cost, if
Kos does not submit purchase orders consistent with the Forecast for all periods
reflected in the Forecast.

     4.6 Manufacturing and Regulatory Changes. Barr will promptly inform Kos,
with sufficient notice so that the required actions can be taken in due time, of
all significant changes to suppliers of materials, formulations, processes,
equipment, facilities, specifications, tests or any item that would affect the
supply of Finished Product. Barr will not make any such changes that would have
a material adverse effect on Kos without the prior written consent of Kos (which
consent shall not be unreasonably withheld), except to the extent that such
changes are required by Applicable Law. Barr shall bear the costs related to any
such changes under this Section 4.6, except such changes as are made at Kos'
written request.

     4.7 Compliance, Documentation, Monitoring and Recordkeeping.

          (a) Barr shall adhere in all material respect to cGMPs as they apply
to the Processing Activities. Barr shall maintain complete and accurate
documentation of all material validation data, stability testing data, batch
records, quality control and laboratory testing and any other data required
under cGMPs and other requirements of any relevant Governmental Authority in
connection with the performance of any Processing Activities hereunder.
Throughout the Term, and for so long thereafter as is required by Applicable
Law, Barr shall monitor and maintain reasonable records respecting its
compliance with cGMPs, including


                                      -12-
<PAGE>
through the establishment and implementation of such operating procedures as are
reasonably necessary to assure such compliance.

          (b) Within ten (10) days of receipt by Barr of notice from Kos
pursuant to Section 5.1 that Kos intends purchasing any Licensed Product from
Barr, Barr shall provide Kos with the opportunity to inspect, but not to copy,
Barr's Approved ANDA and Annual Product Review for the previous calendar year
for such Licensed Product. All information provided by Barr to Kos pursuant to
this Section 4.7(b) shall be treated as confidential information of Barr in
accordance with Section 9.1 of this Agreement.

     4.8 Quality Agreement. As promptly as reasonably practicable after the
Effective Date, but in any event prior to the first order by Kos of any Licensed
Product hereunder, the Parties shall use Commercially Reasonable Efforts to
negotiate in good faith and execute a quality agreement (the "Quality
Agreement"), which shall (a) be on terms consistent with those standard in the
industry for transactions similar to this Agreement and (b) become effective as
of the Effective Date. Each Party agrees to comply with the procedures set forth
in the Quality Agreement regarding quality and cGMP related responsibilities,
complaints and Adverse Event Monitoring and Reporting. To the extent there are
any inconsistencies or conflicts between this Agreement and the Quality
Agreement, the terms and conditions of this Agreement shall control unless
otherwise agreed to in writing by the Parties in the form of an amendment to
this Agreement. In the event that the Quality Agreement contains material
provisions that differ from Applicable Law, the Applicable Law shall control.

     4.9 Inspection and Audit. Throughout the Term of this Agreement, Barr shall
permit Kos or its representatives to inspect, review and audit: (i) those
portions of each facility at which any Processing Activities are performed, or
are proposed to be performed, by Barr (or its Affiliates, or permitted
sublicensees or subcontractors) and (ii) any of Barr's manufacturing and quality
control records and other documentation relating to the Processing Activities
(including the opportunity to meet with Barr personnel). Such inspections,
reviews and audits shall be for the purpose of ascertaining compliance with
Barr's obligations under the Quality Agreement and this Agreement and with the
ANDAs and cGMPs, and reviewing correspondence, reports, filings and other
documents from or to Governmental Authorities to the extent related to the
Processing Activities. Any information obtained by Kos through such inspections,
reviews and audits shall be treated as confidential information of Barr. Such
audits, reviews and inspections shall be conducted at Kos' sole cost and expense
during normal business hours, upon reasonable notice, and no more than once per
year (other than in an emergency situation), and in a manner that does not
unreasonably interfere with ongoing operations. Kos' exercise of its inspection
rights hereunder shall not discharge any obligation of Barr under this
Agreement, other than its obligation to permit inspection and audit under this
Section 4.9.

     4.10 Governmental and Regulatory Inspections. Barr shall promptly notify
Kos of any inspections by any Governmental Authorities of the premises where any
Processing Activities are taking place, to the extent such inspection relates to
the Processing Activities for the Licensed Products in the Territory, and shall
provide Kos copies of all correspondence, reports, notices, findings and other
material pertinent to such inspections (including all Form 483s) promptly after
they are received or produced by or on behalf of Barr from or to the FDA or any
other Governmental Authority.


                                      -13-
<PAGE>
     4.11 Adverse Experience. For so long as there is unexpired Licensed Product
manufactured under an Approved ANDA in Kos' inventory, at its wholesalers or
their retailers, each Party shall promptly notify the other Party of any
significant event(s) that materially and adversely affects the marketing of the
Licensed Products, including adverse drug experiences and inquiries by
Governmental Authorities. Kos shall be responsible for reporting to Barr any
such events with respect to any Licensed Product supplied to Kos hereunder, and
Barr shall be responsible for reporting to applicable Governmental Authorities
any such events for all Licensed Products. Each of Barr and Kos shall cooperate
with the other Party in connection therewith as reasonably requested by the
other Party and as follows:

     (a) Serious Adverse Events (as defined in Section 4.11(b) below) for the
Licensed Products of which one Party becomes aware, shall be submitted
expeditiously to the other Party and to the FDA in accordance with applicable
laws and regulations and consistent with the provisions agreed upon in the final
Pharmacovigilance Agreement, but in any event reports of which one Party becomes
aware shall be submitted to the other Party within three (3) Business Days but
no more than five (5) calendar days from the date the first-mentioned Party
first became aware of such Serious Adverse Event. Non-Serious Adverse Events (as
defined in Section 4.11(b) below) for the Licensed Products that are reported to
one Party shall be submitted to the other Party no more than (1) month from the
date received by the first-mentioned Party; provided, however, that medical and
scientific judgment should be exercised in deciding whether expedited reporting
is appropriate in other situations, such as important medical events that may
not be immediately life-threatening or result in death or hospitalization but
may jeopardize the patient or may require intervention to prevent a Serious
Adverse Event outcome.

     (b) Until the reporting procedures referenced in Section 4.11(d) herein
have been instituted by the Parties, a "Serious Adverse Event" for the Licensed
Products shall have the meaning set forth in 21 CFR Section 314.80(a), as
amended from time to time, and a "Non-Serious Adverse Event" for the Licensed
Products means an untoward medical occurrence at any dose for any of the
Licensed Products that is not a Serious Adverse Event.

     (c) Kos shall report all such Serious and Non-Serious Adverse Events
involving the Licensed Products learned by it to:

          Barr Laboratories, Inc.
          400 Chestnut Ridge Road
          Woodcliff Lake, NJ 07677
          Attention: Drug Safety
          Facsimile No: 201-930-3331
          Telephone No: 201-930-3302
          Email: DrugSafety@Barrlabs.com

Barr shall report all such Non-Serious Adverse events involving the Licensed
Products learned by it to:

          Kos Life Sciences, Inc.
          2200 North Commerce Parkway
          Suite 300


                                      -14-
<PAGE>
          Weston, Florida 33326
          Attention: Senior Manager, Kos Safety and Surveillance
          Fax No: 954-331-3897
          Tel: No: 1-888-5642772 (Niacin Licensed Products)
                   1-866-9238426 (Niacin-Lovastatin Licensed Products)

A Party shall use its Commercially Reasonable Efforts to provide a MedWatch form
or a form that contains the data elements of a MedWatch form.

     (d) As promptly as reasonably practicable after the Effective Date, and in
any event prior to the first order of License Product by Kos hereunder, each
Party shall use its Commercially Reasonable Efforts to negotiate in good faith
and agree to mutually acceptable procedures for reporting Serious Adverse Events
and Non-Serious Adverse Events, as applicable, to the other Party. The Parties
shall pay their respective costs and expenses incurred in reporting to the other
Party Serious Adverse Events and Non-Serious Adverse Events, as applicable.

     4.12 Product Quality Complaints. All Product Quality Complaints shall be
dealt with in accordance with the Quality Agreement and the procedures agreed
pursuant to Section 4.11(d). Barr will consult with Kos, but Barr shall have
responsibility, at its sole cost and expense, for handling all Product Quality
Complaints concerning Licensed Products, except to the extent such Product
Quality Complaint is attributable to Kos' (or its designees', subcontractors' or
Affiliates') breach of their respective obligations or representations or
warranties under this Agreement, in which case, Kos shall reimburse Barr for the
reasonable cost and expense of handling such Product Quality Complaint. At
Barr's cost and expense, Kos will provide reasonable cooperation and assistance
to Barr upon request in connection therewith. Kos shall inform Barr's Drug
Safety Department of any Product Quality Complaint received by Kos within two
(2) Business Days from the date received by Kos. Such information shall be sent
to Barr as set forth in Section 4.11 above, and, upon receipt, Barr will
initiate a complaint investigation. For Product Quality Complaints received by
Barr relating to the Licensed Products, Barr will notify Kos within two (2)
Business Days from the receipt date by Barr and will initiate a complaint
investigation. Barr shall conduct such investigation and report its findings to
Kos' Regulatory Affairs Department.

     4.13 Medical Inquiries. Kos shall have sole responsibility, at its cost and
expense, for handling all medical inquiries concerning Licensed Products sold by
Kos or its sublicensees. Barr shall refer all routine medical information
requests concerning Licensed Products sold by Kos or its sublicensees to Kos in
writing as set forth in Section 4.11. Urgent medical information requests
concerning Licensed Products sold by Kos or its sublicensees shall be referred
by Barr to Kos by telephone. Notwithstanding anything herein to the contrary,
including Article 9, but subject to Applicable Law, all information reported to
a Party by the other Party under these Sections 4.11, 4.12 and 4.13 may be
disclosed by such Party in its reasonable discretion to any Third Party who
manufactured a pertinent component of the applicable Licensed Product for such
Party; provided that such Party shall include the other Party in all such
communications and disclosures with such manufacturer.


                                      -15-
<PAGE>
     4.14 NDC Number. Kos will utilize an NDC number in the form of XXXX-YYYY-ZZ
that contains Kos' or its Affiliate's own labeler code (i.e., the XXXX portion
of the NDC) as assigned by FDA, for Kos' or its Affiliate's sales and
distribution of Licensed Product. Kos may change the product code (the YYYY
portion of the NDC) or the package size code (the ZZ of the NDC) of its NDC
number with the consent of Barr, which consent shall not be unreasonably
withheld.

                                   ARTICLE 5
                       FORECASTING, ORDERING AND SHIPPING

     5.1 Rolling Forecasts. In the event that Kos elects, in its sole
discretion, to purchase any Licensed Product hereunder, it shall provide Barr
not less than one (1) month's (or such shorter time as may be agreed between the
Parties in any instance) written notice of such requirement, together with a
forecast projecting Kos' requirements of such Licensed Product, on a dose by
dose basis, for the twelve (12) month period commencing on the expiration of
such notice period, specifically indicating such projected requirements for each
month during such twelve (12) month period. The aggregate forecast for all doses
of all Licensed Products combined for the first six months following the
expiration of such one-month notice period shall not exceed the amounts set
forth for each month on Schedule 5.1 Thereafter, throughout the Term of this
Agreement, Kos shall provide Barr, at least sixty (60) days prior to the first
day of each calendar subsequent quarter, with a rolling forecast ("Forecast")
prepared in good faith by Kos projecting Kos' requirements of Finished Product,
on a Licensed Product by Licensed Product and dose by dose basis, for the twelve
(12) month period commencing on the first day of the aforementioned calendar
quarter, specifically indicating such projected requirements for each month
during such twelve (12) month period. The first three (3) months of each such
Forecast shall be binding on Kos, and Barr may, therefore, require Kos to pay
for, the amounts of such Licensed Product specified therein, whether or not Kos
submits a purchase order therefor in accordance with Section 5.2. Moreover, the
quantity (on a Licensed Product by Licensed Product and dose by dose basis) set
forth in such first three (3) months binding portion of each such Forecast ****
of the quantity therefor set forth in the immediately preceding Forecast
relating to such calendar quarter.

     5.2 Submission of Purchase Orders. Concurrently with the delivery of each
Forecast, Kos shall place a purchase order with Barr for such Finished Product
as Kos may elect, in its sole discretion to purchase hereunder, in a format
agreed upon by the Parties, specifying the quantities of each Finished Product
(on a Licensed Product by Licensed Product and a dose by dose basis) to be
purchased by Kos with respect to the first calendar quarter of such Forecast,
and the place(s) to which and the manner and dates by which delivery is to be
made during such calendar quarter. All purchase orders shall be sent by Kos to
the attention of the employee of Barr as may from time to time be designated in
writing by Barr. Purchase orders made in accordance with this Article 5 shall be
deemed to be accepted by Barr if Barr has not rejected said purchase orders in
writing within seven (7) Business Days of receipt after the same; provided, that
Barr shall not reject any purchase order specifying quantities within the
quantity limitations set forth above and which purchase orders are otherwise in
accordance with the provisions of this Article 5. Notwithstanding the foregoing,
Barr shall promptly notify Kos in writing if at any time Barr has reason to
believe that Barr will not be able to fill a purchase order for any Finished
Product in all material respects pursuant to the terms and conditions of this


                                      -16-
<PAGE>
Agreement. To the extent the terms of any purchase order or acknowledgment
thereof are inconsistent with the terms of this Agreement, the terms of this
Agreement shall control.

     5.3 Terms of Delivery. Barr shall execute all accepted purchase orders
consistent with this Agreement and deliver Finished Product to Kos' designated
facility, to be delivered within **** days of the delivery date specified in
Kos' purchase orders in accordance with Section 5.2. Barr shall be responsible
for arranging all shipping, freight and insurance for all orders of Finished
Product. Title and risk of loss will pass to Kos when each order of Finished
Product is delivered to Kos' designated facility. Barr shall package each order
of Finished Product for shipment in accordance with its customary practices
therefor, unless otherwise specified in writing by Kos.

     5.4 Accompanying Documentation. With each shipment of Finished Product,
Barr shall provide Kos with commercially appropriate shipping documentation
(including Kos' purchase order number and the quantity of the Finished Product)
and with a Certificate of Analysis on the Finished Product identifying the
applicable lot and batch numbers and indicating conformance of the shipment with
the Specifications.

     5.5 Retention of Samples. Barr shall properly store and retain appropriate
samples (identified by lot and batch number) of raw materials and Finished
Product that it supplies to Kos in conditions and for times consistent with all
Applicable Law and to permit appropriate or required internal and regulatory
checks and references (collectively, the "Shipment Samples").

                                   ARTICLE 6
                INSPECTION AND DEFECTIVE PRODUCTS; PRODUCT RECALL

     6.1 Receipt of Finished Product by Kos. Kos shall be entitled to reject any
portion or all of any shipment of Finished Product that does not conform to the
Certificate of Analysis or otherwise fails to comply with the warranties set
forth in Article 8 (unless such non-conformity was attributable to an act or
omission of Kos); provided, that (i) Kos shall notify Barr within thirty (30)
days after receipt of such shipment if it is rejecting a shipment due to obvious
physical damage, obvious packaging defect or quantity discrepancies that are
evident upon visual inspection of the packaged Finished Product as shipped by
Barr and (ii) in the case of Finished Product having defects other than those
obvious defects, Kos shall notify Barr within ninety (90) days after such defect
becomes evident to Kos. Notwithstanding anything contained herein, Kos shall
have no obligation to inspect the Finished Product beyond a visual inspection of
each shipment for obvious physical damage or quantity discrepancies that are
evident upon visual inspection of the packaged Finished Product as shipped by
Barr. Without in any way limiting Barr's indemnity obligation as set forth in
Section 10.2, if no notice is provided by Kos within the relevant time periods,
then Kos shall be deemed to have accepted the shipment. Any notice of rejection
by Kos shall be accompanied by a reasonably detailed statement of its reasons
for rejection and a report of any pertinent analysis performed by Kos on the
allegedly nonconforming Finished Product, together with the methods and
procedures used. Barr shall notify Kos as promptly as reasonably possible, but
in any event within fifteen (15) Business Days after receipt of such notice of
rejection, whether it accepts Kos' assertions of nonconformity.


                                      -17-
<PAGE>
     6.2 Replacement Finished Product. Whether or not Barr accepts Kos'
assertion of nonconformity, promptly upon receipt of a notice of rejection,
unless otherwise specified by Kos, Barr shall use its Commercially Reasonable
Efforts to provide replacement Finished Product for those rejected by Kos in the
original shipment; provided that it shall not be considered a breach of this
Agreement if Barr, upon Commercially Reasonable Efforts, is incapable of
replacing the whole shipment. If the Finished Product rejected by Kos from such
original shipment ultimately is found to be nonconforming (whether pursuant to
Section 6.3 or if Barr so acknowledges in writing), Barr shall bear all expenses
for such replacement Finished Product (including all transportation and/or
disposal charges and cost of manufacture for such nonconforming Finished
Product) to the extent Kos previously paid for any corresponding nonconforming
Finished Product. If it is determined subsequently that such Finished Product
was in fact conforming (whether pursuant to Section 6.3 or if Kos so
acknowledges in writing), then Kos shall be responsible not only for the
purchase price of the allegedly nonconforming Finished Product (including all
transportation charges), but also, upon receipt and acceptance by Kos in
accordance with the procedures (and at the same price charged in the original
shipment) set forth above, the replacement Finished Product. Replacement
shipments shall also be subject to the procedures contained in Section 6.1.

     6.3 Independent Laboratory Analysis. If Barr disagrees (in accordance with
Section 6.1) with any alleged nonconformity timely notified to Barr under
Section 6.1, then an independent laboratory (or other expert) of recognized
repute reasonably acceptable to both Parties (the "Independent Laboratory")
shall analyze (i) a sample from the relevant shipment provided by Kos and (ii) a
Shipment Sample as retained by Barr in accordance with Section 5.5, in order to
substantiate whether the shipment rejected by Kos conformed in all material
respects to the Certificate of Analysis and any other pertinent Specifications
or otherwise failed to comply with the warranties set forth in Article 8 at the
time of delivery to Kos' designated facility. At the same time as a Party
furnishes to the Independent Laboratory its sample, such Party shall also
furnish to the other Party a split sample of such sample. In conducting its
analysis hereunder, the Independent Laboratory shall use the analytical
methodology set forth in the applicable Approved ANDA. Barr shall provide a
reasonably detailed description of such analytical methodology to the
Independent Laboratory. Both Parties agree to cooperate with the Independent
Laboratory's reasonable requests for assistance in connection with its analysis
hereunder. Both Parties shall be bound by the Independent Laboratory's results
of analysis, which, absent manifest error, shall be deemed final as to any
dispute over compliance of the Finished Product in all material respects with
the Certificate of Analysis and/or any other pertinent Specifications and/or the
warranties set forth in Article 8. If the analysis of the Independent Laboratory
shows that the Finished Product does not conform in all material respects to the
Certificate of Analysis or any other pertinent Specifications or the warranties
set forth in Article 8 at the time of delivery to Kos' designated facility, the
costs of such analysis shall be paid by Barr. If the analysis of the Independent
Laboratory shows that the Finished Product does conform in all material respects
to the Certificate of Analysis and any other pertinent Specifications and the
warranties set forth in Article 8 at the time of delivery to Kos' designated
facility, the costs of such analysis shall be paid by Kos.

     6.4 Disposition of Non-Conforming Finished Product. If Barr acknowledges an
alleged nonconformity (or if the Independent Laboratory concludes that the
Finished Product was nonconforming in accordance with Section 6.3), Barr
promptly (and in any case within thirty


                                      -18-
<PAGE>
(30) days thereafter) shall make arrangements for the return, reworking or
disposal, at Barr's option, of the nonconforming Finished Product. If Barr
requests that Kos dispose of such nonconforming Finished Product, Barr shall
give Kos written instructions as to how Kos or its agent shall, at Barr's
expense, lawfully dispose of any non-conforming Finished Product, and Kos shall
provide Barr with written certification of such destruction. Barr shall pay, or
reimburse Kos, for any reasonable return shipping charges or out-of-pocket costs
incurred by Kos for such return shipment or lawful disposal of such
nonconforming Finished Product in accordance with Barr's instructions.

     6.5 Recalls.

          (a) In the event that either Party obtains information that a Licensed
Product or any portion thereof has been alleged or proven not to meet the
Specifications, labeling, or Approved ANDA for such Licensed Product or to be
otherwise defective, such Party shall notify the other Party immediately and, to
the extent that such Licensed Product has been supplied to Kos hereunder, both
Parties shall cooperate fully regarding the investigation and disposition of any
such matter, including with respect to any Licensed Product recall, Licensed
Product withdrawal or field correction, as appropriate (collectively, a
"Recall"). Barr and Kos shall each maintain such traceability records as are
sufficient and as may be necessary to permit a Recall or field correction of any
Licensed Products. In the event (i) any applicable Governmental Authority should
issue a request, directive or order that a Licensed Product be Recalled or (ii)
either Party determines that any Licensed Product already in interstate commerce
presents a risk of injury or gross deception or is otherwise defective and that
a Recall of such Licensed Product is appropriate, each Party shall give
telephonic notice (to be confirmed in writing) to the other within 24 hours of
the occurrence of such event.

          (b) For so long as Kos is the only Person commercializing a Licensed
Product, Kos shall consult with Barr, but Kos shall have sole responsibility, in
its reasonable discretion (but subject to the superseding rights of Barr as the
ANDA holder to have the final say pursuant to Section 4.1) for determining all
corrective action to be taken (including a Recall) with respect to any Licensed
Product sold by Kos, its Affiliates or sublicensees and for carrying out the
Recall, if any, which shall be conducted in Kos' name. Barr will provide
reasonable cooperation and assistance to Kos upon request in connection
therewith. Kos shall be responsible for all costs and expenses of any such
Recall (including any reasonable out-of-pocket costs incurred by Barr in
connection with such cooperation) except to the extent such Recall is
attributable to Barr's (or its designees', subcontractors' or Affiliates')
breach of their respective obligations or representations or warranties under
this Agreement. Commencing on the date, if any, that Kos is not the only Person
commercializing a Licensed Product, the Parties agree to cooperate in good faith
to reach agreement on a joint decision for determining all corrective action to
be taken (including a Recall) with respect to that Licensed Product and for
carrying out the Recall, if any. Notwithstanding the foregoing, should Barr
determine that it is necessary to initiate a Recall, and Kos does not so agree
despite the Parties good faith efforts to reach agreement, Barr's determination
on this matter shall be binding on both Parties. Barr shall be responsible for
all costs and expenses of any such Recall (including any reasonable
out-of-pocket costs incurred by Barr in connection with such cooperation) to the
extent such Recall is attributable to Barr's (or its designees', subcontractors'
or Affiliates') breach of their respective obligations or representations or
warranties under this Agreement.


                                      -19-
<PAGE>
          (c) Barr shall have sole responsibility, in its reasonable discretion,
for determining all corrective action to be taken (including a Recall) with
respect to any Licensed Product not sold by Kos, its Affiliates or sublicensees
and for carrying out the Recall, if any, which shall be conducted in its own
name. Kos will provide reasonable cooperation and assistance to Barr upon
request in connection therewith. Barr shall be responsible for all costs and
expenses of any such Recall (including any reasonable out-of-pocket costs
incurred by Kos in connection with such cooperation).

                                    ARTICLE 7
                              FINANCIAL PROVISIONS

     7.1 License Fee. In consideration of Barr's investment in the development
of robust and efficient manufacturing processes for the Licensed Products, Kos
shall pay to Barr on the Effective Date the non-refundable sum of **** in
immediately available funds by wire transfer to the credit of such bank account
as designated by Barr in Schedule 7.1.

     7.2 Reservation Fee. To compensate Barr for maintaining a cGMP facility for
the manufacture of Licensed Products and standing ready to manufacture Licensed
Products, Kos shall pay to Barr a "Reservation Fee" of:

          (a) ****

provided, in each case, that Barr has provided to Kos written certification as
to Barr's continued compliance with cGMP throughout the applicable calendar
quarter and provided, further, that: (I) in the event that Barr does not obtain
an Approved ANDA to manufacture and/or sell 1000 mg niacin/20 mg lovastatin, 750
mg niacin/20 mg lovastatin, and 500 mg niacin/20 mg lovastatin extended release
oral tablets by ****, with effect from such date, the amount payable by Kos
pursuant to paragraph (c) above shall be reduced to **** until such time as Barr
does obtain an Approved ANDA to manufacture and/or sell lovastatin 20 mg/niacin
1gm, lovastatin 20 mg/niacin 500 lovastatin extended release oral tablets; and
(II) on a Licensed Product-by-Licensed Product and dose-by-dose basis, with
effect from the Marketing License Effective Date for such Licensed Product and
dose(s), the amount payable by Kos pursuant to paragraph (c) above shall be
reduced, in percentage terms, by the percentage that Kos' sales of the affected
dose(s) of the Licensed Product (including any sales by Kos of the equivalent
dose(s) of Kos' reference listed drug for the Licensed Product) bears to Kos'
sale of all Licensed Products (including any sales by Kos of the equivalent
dose(s) of Kos' reference listed drug for the Licensed Products).

     7.3 Supply Price. Barr shall submit invoices to Kos for Finished Product
promptly after shipment. The invoices shall reflect:

          (a) the supply of Finished Product to Kos at a price per unit equal
to: (i) **** Barr's Fully Loaded Manufacturing Cost for the applicable Finished
Product on a Licensed Product by Licensed Product and dose by dose basis for
Licensed Product supplied in the period from the Effective Date until the
Marketing License Effective Date with respect to the applicable Licensed Product
and dose; and (ii) thereafter, **** of Barr's Fully Loaded Manufacturing Cost


                                      -20-
<PAGE>
for the applicable Finished Product on a Licensed Product by Licensed Product
and dose by dose basis;

          (b) ****

     7.4 Manner of Payments. All sums due to Barr under this Agreement shall be
payable in United States Dollars by bank wire transfer in immediately available
funds to such bank account(s) as Barr shall from time to time designate in
writing, unless otherwise agreed by the Parties in writing.

     7.5 Invoices; Timing of Payments. Each invoice shall specify the purchase
order number to which it corresponds and shall reflect the price set forth in
Section 7.3. Unless otherwise specified in this Agreement, all amounts due to
Barr hereunder shall be paid by Kos within thirty (30) days following the date
of invoice, which invoice date shall not be earlier than the date of shipping of
the applicable Licensed Product.

     7.6 Interest on Late Payments. If Kos shall fail to make a timely payment
hereunder, any such payment that is not paid on or before the date such payment
is due shall bear interest, to the extent permitted by Applicable Law, at the
average one-month London Inter-Bank Offering Rate for the United States Dollar
as reported from time to time in The Wall Street Journal (or, if such rate is
not regularly published, as published in such source as the Parties agree)
("LIBOR"), effective for the first date on which payment was delinquent and
calculated on the number of days such payment is overdue, ****.

     7.7 Audit Right. Kos shall have the right to have a nationally recognized
independent public accounting firm audit, no more than once per calendar year
during the Term and for one (1) year thereafter, Barr's books and records
relating to the Processing Activities, for the sole purpose of verifying Barr's
calculation of its Fully Loaded Manufacturing Cost. Such audit shall be carried
out at reasonable times during normal business hours, upon reasonable notice to
Barr, and in a manner that does not unreasonably interfere with Barr's ongoing
operations. A copy of such auditing firm's conclusions of its audit shall be
furnished to both Parties at the same time. Except for the conclusion of such
audit, which may be shared with Kos, all information obtained from such audit
shall be kept confidential and may not be disclosed to Kos. The conclusions of
such audit firm shall be final and binding on the Parties absent manifest error.
Kos shall bear the full cost of such audit, unless such audit discloses ****
from Barr's calculation of its Fully Loaded Manufacturing Cost (based on the
aggregate Fully Loaded Manufacturing Cost for all Finished Product hereunder,
and not one Finished Product individually), in which event, Barr shall bear the
full cost of such audit.

                                   ARTICLE 8
                    REPRESENTATIONS, WARRANTIES AND COVENANTS

     8.1 Representations of Barr for the Finished Product. Barr warrants that
all Finished Product supplied hereunder (i) will conform to the Specifications
in effect at the time of manufacture and at the time the same is delivered to
Kos' designated facility, (ii) will be


                                      -21-
<PAGE>
manufactured, labeled and packaged in accordance with cGMPs and other Applicable
Laws in effect at the time of manufacture (except to the extent such
non-compliance was caused by the Printed Materials or other materials, in each
case solely to the extent provided by Kos to Barr for use in the manufacture of
the Finished Product), (iii) will not be altered, adulterated or misbranded
under Applicable Law in effect at the time of manufacture (except to the extent
such non-compliance was caused by the Printed Materials or other materials, in
each case solely to the extent provided by Kos for use in the manufacture of the
Finished Product) and (iv) will be free and clear of liens and encumbrances
except for liens and encumbrances created by Kos and that may be attached to
such Finished Product at the time such Finished Product is provided to Kos.

     8.2 Mutual Representations and Warranties. Each Party hereby represents and
warrants to the other Party as of the Effective Date that:

          (a) such Party is a corporation or entity duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority to enter into
this Agreement and to carry out the provisions hereof;

          (b) the execution and delivery of this Agreement by such Party and the
performance of its obligations hereunder does not require any shareholder action
or approval, and the Person executing this Agreement on behalf of such Party is
duly authorized to do so by all requisite corporate action;

          (c) except for FDA approval of the ANDAs, no consent or approval of
any Governmental Authority is required in connection with the valid execution,
delivery and performance of this Agreement by such Party, except where the
failure to obtain any of the foregoing would not have a material adverse impact
on the ability of such Party to meet its obligations hereunder;

          (d) assuming the due authorization, execution and delivery of this
Agreement by the other Party, this Agreement is a valid obligation binding upon
such Party and enforceable in accordance with its terms except as enforceability
may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally or (ii)
equitable principles of general applicability;

          (e) the execution, delivery and performance by such Party of this
Agreement do not and will not, and its compliance with the terms and provisions
hereof does not and will not, conflict with, result in a breach of, constitute a
default under or result in the termination, cancellation or acceleration
(whether after the giving of notice or the lapse of time or both) of any of the
terms, rights, obligations or provisions of (i) any other contractual or other
obligations of such Party, or to which such Party's assets are subject, (ii) the
provisions of its certificate of incorporation, operating documents or bylaws or
(iii) assuming compliance with the matters set forth in subsection (c) above,
any order, writ, injunction or decree of any Governmental Authority entered
against it or by which it or any of its property is bound except where such
breach or conflict would not materially impact the Party's ability to meet its
obligations hereunder;


                                      -22-
<PAGE>
          (f) no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of such Party; and

          (g) no action, audit, litigation, investigation, suit or proceeding
("Proceeding") by or before any Governmental Authority relating to the Licensed
Products or the transactions contemplated hereby is pending against or
threatened in writing or, to the knowledge of such Party, threatened orally
against such Party, in each case which has had, or would have a material adverse
impact on such Party's ability to meet its obligations hereunder.

     8.3 Mutual Covenants. Each Party covenants to the other that it shall
comply in all material respects with all Applicable Laws in its performance
under this Agreement.

     8.4 Disclaimer of Warranties. EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, EITHER IN FACT OR BY OPERATION OF APPLICABLE LAW IN CONNECTION WITH THE
SUBJECT MATTER OF THIS AGREEMENT.

                                   ARTICLE 9
                                 CONFIDENTIALITY

     9.1 Confidential Information. During the Term of this Agreement and
thereafter, Kos and Barr shall not use or disclose to Third Parties any
information received from the other Party or otherwise developed or obtained
(including prior to the Term, during the Term, or during any period in which the
Parties have audit rights pursuant to Section 7.7) by either Party in the
performance of activities in furtherance of this Agreement without first
obtaining the written consent of the disclosing Party, except as may be
otherwise provided in, or required in order for a Party to exercise its rights
or fulfill its obligations under, this Agreement. During and following the Term
of this Agreement, this confidentiality obligation shall not apply to such
information that (i) is or becomes a matter of public knowledge (other than by
breach of this Agreement by the receiving Party), (ii) is required by Applicable
Law to be disclosed, (iii) the receiving Party can establish was already known
to it or was in its possession at the time of disclosure, (iv) the receiving
Party can establish was independently developed by persons in its employ who had
no contact with and were not aware of the content of the confidential
information, or (v) is disclosed to the receiving Party by a Third Party having
the right to do so. The Parties shall take reasonable measures to assure that no
unauthorized use or disclosure is made by others to whom access to such
information is granted.

     9.2 Public Announcements.

          (a) Except as consistent with a press release mutually agreed by the
Parties, or other publicly disclosed information concerning this Agreement, no
public announcement or other disclosure to Third Parties concerning the
existence of or terms of this Agreement shall be made, either directly or
indirectly, by either Party, without first obtaining the written approval of the
other Party and agreement upon the nature, text and timing of such announcement
or disclosure; provided, however, either Party shall have the right to make any
such public announcement or other disclosure required by Applicable Law after
such Party has provided to


                                      -23-
<PAGE>
the other Party a copy of such announcement or disclosure and an opportunity to
comment thereon. Each Party agrees that it shall cooperate fully with the other
with respect to all disclosures regarding this Agreement to the Securities
Exchange Commission and any other Governmental Authority, including requests for
confidential treatment of proprietary information of either Party included in
any such disclosure. Neither Party shall be required to provide the other Party
with any advance notice of any public announcements or other disclosures related
to periodic, routine financial reporting unless such announcement or other
disclosure will include non-routine information relating to the Products or this
Agreement.

          (b) Notwithstanding anything to the contrary in this Section 9.2, as
set forth in Title XI of the Medicare Prescription Drug Improvement and
Modernization Act (Subtitle B - Federal Trade Commission Review) signed into law
on December 8, 2003, if applicable to this Agreement, each of the Parties shall
submit this Agreement to the U.S. Federal Trade Commission ("Commission") Bureau
of Competition ("Bureau") and the Assistant Attorney General, and each Party
shall present and (if necessary) discuss or respond to questions regarding this
Agreement, the Settlement and License Agreement and the Co-Promotion Agreement
with the Bureau or the Assistant Attorney General, provided such Party requests
the Bureau and the Assistant Attorney General treat this Agreement, the
Settlement and License Agreement and the Co-Promotion Agreement as confidential
to the extent legally permitted. The Parties shall cooperate with each other in
connection with all such filings and responses, including by notifying each
other of all questions received with respect to this Agreement, the Settlement
and License Agreement and the Co-Promotion Agreement and by providing to the
other Party copies of all responses to such questions prior to filing, and if
requested, by considering in good faith to all reasonable additions, deletions
or changes to any such response which are requested by the other Party.

                                   ARTICLE 10
                          INDEMNIFICATION AND INSURANCE

     10.1 By Kos. Kos agrees to defend, indemnify and hold harmless Barr and its
Affiliates and their respective officers, directors, employees, agents and
representatives ("Related Parties") from and against any and all Damages
incurred or suffered by such Persons to the extent caused by or arising out of
or in connection with:

          (a) any breach of any representation or warranty, covenant or
agreement made by Kos in this Agreement,

          (b) any negligence or willful misconduct of Kos, its Affiliates or
their respective Related Parties in the exercise of any of its rights or the
performance of any of its obligations under this Agreement, or

          (c) subject to Sections 10.2(a) and (b), any liability or other
claims, including any claim by a Third Party (a "Third Party Claim"), relating
to or arising from any activities of Kos or any of its Affiliates or
sublicensees with respect to any Licensed Product sold by Kos or


                                      -24-
<PAGE>
any of its Affiliates or sublicensees, including the labeling, promotion,
marketing, handling, sale or other disposition of any Licensed Product after the
Effective Date.

     10.2 By Barr. Barr agrees to defend, indemnify and hold harmless Kos and
its Affiliates and their Related Parties from and against any and all Damages
incurred or suffered by such Persons to the extent caused by or arising out of
or in connection with:

          (a) any breach of any representation or warranty, covenant or
agreement made by Barr in this Agreement,

          (b) any negligence or willful misconduct of Barr, its Affiliates or
their respective Related Parties in the exercise of any of its rights or the
performance of any of its obligations under this Agreement,

          (c) subject to Sections 10.1(a) and (b), any liability or other
claims, including a Third Party Claim, to the extent that it relates to or
arises from the failure of Barr (or any of its Affiliates or subcontractors and
their Related Parties) to manufacture or have manufactured Licensed Product
under this Agreement in conformity with Applicable Law, the Approved ANDAs, the
Specifications or cGMPs,

          (d) any liability or other claims, including a Third Party Claim,
relating to or arising from the alleged infringement of any intellectual
property (including, without limitation, any patent or Know-How) owned or
controlled by a Third Party by virtue of Barr's manufacture of Licensed Products
hereunder, or

          (e) subject to Sections 10.2(a), (b) and (c), any liability or other
claims, including a Third Party Claim, relating to or arising from any Licensed
Product other than a Licensed Product sold by Barr to Kos or any of its
Affiliates or sublicensees hereunder.

     10.3 Notice of Claims; Third Party Claims.

          (a) Any Person to be indemnified under this Article 10 (the
"Indemnified Party") shall promptly notify in writing the Party from whom
indemnification is sought (the "Indemnifying Party") of any potentially
indemnifiable claim in reasonable detail, provided that any notice failure
hereunder shall not limit the obligation of the Indemnifying Party, except to
the extent the Indemnifying Party is materially prejudiced thereby.

          (b) The Indemnifying Party shall conduct and control the defense of
any indemnifiable claim, but may not compromise or settle any such claim in any
manner that affects the rights or obligations of the Indemnified Party without
the approval of the Indemnified Party, such approval not to be unreasonably
withheld. No Indemnified Party may compromise or settle any indemnifiable claim
hereunder without the consent of the Indemnifying Party. The Indemnifying Party
shall permit the Indemnified Party to participate in, but not control, the
defense of any such claim through counsel of its choice, at its own cost and
expense.

          (c) The Parties shall cooperate in the defense of any indemnifiable
claim and shall inform each other of its progress. The Parties shall cooperate
to mitigate all Damages in connection with an indemnifiable claim.


                                      -25-
<PAGE>
     10.4 Insurance. Each Party will obtain and maintain, during the Term of
this Agreement, at its own cost and expense, with reputable and financially
sound insurance carriers, comprehensive commercial general liability insurance,
including product liability insurance, to cover such Party's indemnification
obligations hereunder, or self-insurance, in amounts consistent with such
Party's normal business practices. Each Party will name the other Party as an
additional insured on each such insurance policy. Each such policy or
self-insurance shall be in types and amount that are reasonable and customary in
the pharmaceutical industry for companies engaged in similar business and
operations and amounts that meet all contractual requirements of each Party's
vendors, distributors or other contractors, including product liability
insurance at **** coverage. Maintenance of such insurance coverage will not
relieve a Party of any responsibility under this Agreement for Damages in excess
of such insurance limits or otherwise. Each Party will provide the other Party,
upon reasonable written request, with a certificate from the insurer(s)
evidencing such insurance coverage.

     10.5 Limitation of Liabilities. EXCEPT WITH RESPECT TO A PARTY'S
INDEMNIFICATION OBLIGATIONS HEREUNDER WITH RESPECT TO THIRD PARTY CLAIMS,
NEITHER PARTY WILL BE LIABLE FOR INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL
(INCLUDING LOST PROFITS) OR PUNITIVE DAMAGES, HOWEVER CAUSED OR UPON ANY THEORY
OF LIABILITY (INCLUDING NEGLIGENCE, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT)
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ITS PERFORMANCE HEREUNDER.

                                   ARTICLE 11
                              TERM AND TERMINATION

          11.1 Term. Unless earlier terminated by the written agreement of the
Parties or pursuant to the provisions of Section 11.2, and subject to Section
11.4, this Agreement shall terminate upon the expiration of the License Term.

          11.2 Rights of Termination.

          (a) Voluntary Termination by Either Party. Notwithstanding any other
provision herein, either Party may terminate this Agreement on a Licensed
Product-by-Licensed Product basis immediately upon written notice to the other
Party in the event that the FDA notifies Barr in writing that it has finally
rejected the ANDA relating to such Licensed Product, and such rejection is not
appealable, and to the extent that this Agreement remains in effect with respect
to one or more other Licensed Products or dose(s), the Reservation Fee set forth
in Section 7.2(c) shall be reduced, in percentage terms, by the percentage that
Kos' sales of the affected dose(s) of the Licensed Product (including any sales
by Kos of the equivalent dose(s) of Kos' reference listed drug for the Licensed
Product) bears to Kos' sale of all Licensed Products (including any sales by Kos
of the equivalent dose(s) of Kos' reference listed drug for the Licensed
Products).

          (b) Material Breach. Either Party may terminate this Agreement by
providing written notice of such termination to the other Party, if (i) such
other Party fails to pay any amount of money due and payable hereunder and not
disputed in good faith, and fails to remedy


                                      -26-
<PAGE>
the same after thirty (30) days written notice or (ii) the other Party has
materially breached any provision of this Agreement, which breach materially
adversely affects the other Party's rights under this Agreement, in the
aggregate, and the breaching Party fails to remedy the same within ninety (90)
days after written notice given after such adjudication from the terminating
Party (a "Breach Notice") (or, if applicable, such longer period (not exceeding
one hundred twenty (120) days) as would be reasonably necessary for a diligent
party to cure such material breach; provided that the breaching Party has
commenced and continues diligent efforts to cure during such ninety (90) day or
applicable longer period following receipt of the Breach Notice), provided that,
in the event of a final adjudication by a court of competent jurisdiction that a
material breach had not occurred, the terminating Party shall compensate the
alleged breaching Party for any amount of money that otherwise would have been
due and payable hereunder plus interest on such amount set at one-year LIBOR
rate plus **** set at the time of entry of such final adjudication.

          (c) Unauthorized Sale. Notwithstanding Section 11.2(b), Kos may
terminate this Agreement in the event Barr sells a Licensed Product whose
manufacture, use, sale or offer for sale is covered by the Patents to a Third
Party prior to the Marketing License Effective Date.

          (d) Bankruptcy. Either Party may, subject to the provisions set forth
herein, terminate this Agreement immediately without further notice to the other
Party if, at any time, the other Party shall: (i) file in any court pursuant to
any statute a petition for bankruptcy or insolvency, or for reorganization in
bankruptcy, or for an arrangement or for the appointment of a receiver, trustee
or administrator of such Party or of its assets; (ii) be served with an
involuntary petition against it, filed in any insolvency proceeding, and such
petition shall not be dismissed within thirty (30) days after the filing
thereof; (iii) propose or be a party to any dissolution; or (iv) make an
assignment for the benefit of its creditors. For avoidance of doubt, all rights
and licenses granted under or pursuant to any section of this Agreement are, and
shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S.
Bankruptcy Code, licenses of "intellectual property" as defined thereunder. The
Parties shall retain and may fully exercise all of their respective rights and
elections under the Bankruptcy Code; provided, however, that should Barr become
a party to a bankruptcy proceeding and such proceeding is not dismissed within
thirty (30) days then, to the extent permitted by law, this Agreement and the
licenses granted by Barr hereunder shall be adopted by any bankruptcy trustee or
relevant third party charged with the disposition of same, and shall not be
rejected by same, it being the Parties' intent that, in such event, Kos and its
Affiliates and sublicensees shall be entitled to retain the rights granted to
them hereunder by Barr.

          (e) Partial Termination by Kos. Kos may unilaterally terminate this
Agreement, on a Licensed Product by Licensed Product and dose by dose basis, at
will at any time after the Marketing License Effective Date for the applicable
Licensed Product and dose, and to the extent that this Agreement remains in
effect with respect to one or more other Licensed Products or dose(s), the
Reservation Fee set forth in Section 7.2 shall be reduced in percentage terms,
by the percentage that Kos' sales of the affected dose(s) of the Licensed
Product (including any sales by Kos of the equivalent dose(s) of Kos' reference
listed drug for the Licensed Product) bears to Kos' sale of all Licensed
Products (including any sales by Kos of the equivalent dose(s) of Kos' reference
listed drug for the Licensed Products).


                                      -27-
<PAGE>
     11.3 Effect of Expiration or Termination. Expiration or termination of this
Agreement pursuant to this Article 11 by either Party shall not (a) relieve a
Party of any obligation accruing to such Party prior to such expiration or
termination, or (b) result in the waiver of any right or remedy by a Party
accruing to such Party prior to such expiration or termination.

     11.4 Pending Purchase Orders. The termination of this Agreement shall not
affect purchase orders placed by Kos and accepted by Barr at the time notice of
termination is given or until the time any such termination becomes effective.

     11.5 Accrued Rights; Surviving Obligations. Unless explicitly provided
otherwise in this Agreement, termination, relinquishment or expiration of this
Agreement for any reason shall be without prejudice to any rights which have
accrued to the benefit to any Party prior to such termination, relinquishment or
expiration, including damages arising from any breach hereunder. Such
termination, relinquishment or expiration shall not relieve any Party from
obligations which are expressly indicated to survive termination or expiration
of the Agreement, including those obligations set forth in Articles 4, 6, 8, 9,
10,11and 12 and Sections 13.8 and 13.9.

                                   ARTICLE 12
                                    GUARANTEE

     12.1 Kos Guarantee. Kos Pharmaceuticals, Inc. ("Kos Pharmaceuticals")
hereby absolutely, unconditionally and irrevocably guarantees the due and
punctual fulfillment of all of the obligations required to be performed by Kos
and/or its Affiliates under this Agreement after giving effect to any applicable
cure periods (the "Kos Obligations"). For the avoidance of doubt and without
limiting the foregoing, Kos Pharmaceuticals hereby absolutely, unconditionally
and irrevocably guarantees that in the event that Kos does not or is unable to
perform any of the Kos Obligations for any reason whatsoever, Kos
Pharmaceuticals will itself perform such Kos Obligations. This guarantee shall
be continuing until all Kos Obligations now existing or hereafter arising have
been discharged in full, and shall be and continue to be fully effective
notwithstanding any amendment to any of the Kos Obligations (but subject to any
changes to the Kos Obligations resulting therefrom) or any extensions of time
for performance of any Kos Obligations (but subject to any changes to the Kos
Obligations resulting therefrom). To the extent that Barr grants to Kos (i) any
waiver of any default by Kos under this Agreement, (ii) any extension of time of
performance by Kos under this Agreement, (iii) any release from the performance
of its obligations under this Agreement, or (iv) any other indulgences
whatsoever, Barr shall have and shall be deemed to have also granted such to Kos
Pharmaceuticals under this Section 12.1. Kos Pharmaceuticals acknowledges and
agrees that Barr has relied upon the covenants and guarantees set forth in this
Section 12.1 in entering into this Agreement.

                                   ARTICLE 13
                                  MISCELLANEOUS

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


                                      -28-
<PAGE>
     13.2 Expenses. Unless otherwise provided herein, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the Party which shall have incurred the same and the
other Party shall have no liability relating thereto.

     13.3 Force Majeure. Neither Party shall be liable to the other Party for
loss or damages, or shall have any right to terminate this Agreement for any
default or delay attributable to any Force Majeure; provided, that the Party
affected gives prompt notice of any such cause to the other Party and of the
period for which such Force Majeure is expected to continue. The Party giving
such notice shall thereupon be excused from such of its obligations hereunder
for such actual time as it is thereby disabled from performing such obligations
solely due to the continuance of the Force Majeure event; provided, that such
affected Party promptly commences and continues to use its Commercially
Reasonable Efforts to (a) cure such disablement and (b) mitigate its effects.
For the avoidance of doubt, for the duration of any such Force Majeure event
which prevents Barr from maintaining a cGMP facility for the manufacture of
Licensed Products and standing ready to manufacture Licensed Products, no
Reservation Fee shall be payable by Kos pursuant to Section 7.2.

     13.4 Notices. Except as to the notices required under Section 4.10, all
notices to Barr shall be addressed to:

                    Barr Laboratories, Inc.
                    400 Chestnut Ridge Road
                    Woodcliff Lake, NJ 07677-7668, USA
                    Attention: President
                    Facsimile No.: +1 (201) 930-3335

                    and to:

                    Barr Laboratories, Inc.
                    400 Chestnut Ridge Road
                    Woodcliff Lake, NJ 07677-7668, USA
                    Attention: General Counsel
                    Facsimile No.: +1 (888) 843-0563


                                      -29-
<PAGE>
               Except as to the notices required under Section 4.10, all notices
               to Kos shall be addressed to:

                    Kos Life Sciences, Inc.
                    c/o Kos Pharmaceuticals, Inc.
                    1 Cedar Brook Drive
                    Cranbury, NJ 08512-3618
                    Facsimile: 954-331-3884
                    Attention: Adrian Adams, President and Chief Executive
                               Officer

               with a copy to

                    1 Cedar Brook Drive
                    Cranbury, NJ 08512-3618
                    Facsimile: 609-495-0907
                    Attention: Andrew I. Koven, Executive Vice President,
                               General Counsel & Corporate Secretary

               and

                    2200 N. Commerce Parkway
                    Suite 300
                    Weston FL 33326
                    Facsimile: 954-331-3877
                    Attention: Juan Rodriguez, Senior Vice President,
                               Controller and Corporate Administration

Either Party may change the address to which notices shall be sent by giving
notice to the other Party in the manner herein provided. Such notices will be
deemed to have been given on the date delivered in the case of hand delivery or
delivery by overnight courier, on the date set forth in the confirmation sheet
in the case of facsimile delivery, and on the fifth (5th) Business Day following
the date of post mark in the case of delivery by mail.

     13.5 Assignment. Neither Party hereto may assign any of its rights or
obligations under this Agreement without the prior written consent of the other
Party; except to an Affiliate, or in connection with a merger, reorganization,
change of control or sale of all or substantially all of the applicable
business. Any purported assignment in violation of the foregoing shall be null
and void ab initio and of no force or effect. No assignment of this Agreement
will relieve the assigning Party from any of its obligations hereunder. In the
event of a permitted assignment, this Agreement shall be binding upon and inure
solely to the benefit of the Parties and their respective successors and
permitted assigns.

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

     13.7 Waiver. No provision of this Agreement shall be waived by any act,
omission or knowledge of a Party or its agents or employees except by an
instrument in writing expressly waiving such provision and signed by a duly
authorized officer of the waiving Party. The failure


                                      -30-
<PAGE>
of any Party to assert its rights under this Agreement or otherwise shall not
constitute a waiver of such rights

     13.8 Governing Law. This Agreement and any dispute arising out of or
related to this Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York, without giving effect to conflicts
of law principles. With respect to any Proceeding relating to this Agreement,
but subject to the provisions of Section 12.9, each Party irrevocably agrees and
consents to the exclusive jurisdiction of the federal and state courts in New
York, New York and waives any objection to venue of any such proceeding brought
in any such court.

     13.9 Dispute Resolution.

          (a) Any dispute, controversy or claim arising out of or relating to
this Agreement (collectively referred to as "Dispute") shall be attempted to be
settled by the Parties, in good faith, by submitting each such Dispute to the
Chief Executive Officers of each Party by written notice from either Party to
the other Party specifying the terms of such Dispute in reasonable detail.
Within seven (7) Business Days of receipt of such notice, the Chief Executive
Officers of each Party, or a member of management designated by the respective
Chief Executive Officer, shall meet in person (at a mutually agreed upon time
and location) or by telephone for the purpose of resolving such Dispute. They
will discuss the problems and/or negotiate for a period of up to twenty (20)
Business Days in an effort to resolve the Dispute or negotiate an acceptable
interpretation or revision of the applicable portion of this Agreement mutually
agreeable to both Parties, without the necessity of formal procedures relating
thereto.

          (b) If the Parties have been unable to resolve a Dispute through the
above-described procedures, the Party initiating such procedures may, in its
discretion, within fourteen (14) Business Days after the above-described
procedures have been exhausted, propose non-binding arbitration in accordance
with the CPR Non-Administered Arbitration Rules in effect on the date of this
Agreement and subject to the terms of this Agreement. Any such non-binding
arbitration shall be concluded within ninety (90) days of the initiation of such
proceeding, the location of any such non-binding arbitration shall be New York,
New York, and it shall be conducted by a sole arbitrator reasonably acceptable
to both Parties. The Parties may not pursue any other legal or equitable rights
or remedies relating to any dispute until the conclusion of the non-binding
arbitration, unless their rights would be irreparably prejudiced by such delay.
In the event such non-binding arbitration is not commenced within an additional
fourteen (14) Business Day period, the Parties may pursue any available legal or
equitable rights or remedies.

     13.10 Severability. If any provision hereof should be held invalid, illegal
or unenforceable in any respect in any jurisdiction, the Parties hereto shall
negotiate in good faith for a substitute provision for such invalid, illegal, or
unenforceable provisions which valid provision shall continue the intent and
purpose of such invalid provisions, and the validity, legality and
enforceability of the remaining provisions shall not in any way be impaired
thereby.

     13.11 Descriptive 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.


                                      -31-
<PAGE>
     13.12 Certain Conventions. As used in this Agreement, the masculine shall
include the feminine and neuter, and the singular shall include the plural and
the plural shall include the singular, in each case as the context may require.
The word "including" shall be deemed followed by "without limitation", "but not
limited to" or words of similar meaning. Any reference to an Article, Section,
subsection or clause is a reference to an Article, Section, subsection or clause
of this Agreement unless otherwise expressly indicated.

     13.13 No Strict Construction. This Agreement has been prepared jointly and
shall not be strictly construed against either Party.

     13.14 Entire Agreement of the Parties. This Agreement, together with the
Schedules and Exhibits hereto, constitutes and contains the complete, final and
exclusive understanding and agreement of the Parties respecting the subject
matter hereof and cancels and supersedes any and all prior negotiations,
correspondence, understandings and agreements whether oral or written, between
the Parties respecting the subject matter hereof.

     13.15 Independent Contractors. The relationship between the Parties created
by this Agreement is one of independent contractors and neither Party shall have
the power or authority to bind or obligate the other except as expressly set
forth in this Agreement.

     13.16 No Third Party Beneficiaries. No Person other than the Parties hereto
and their respective Affiliates, successors and permitted assigns shall be
deemed an intended beneficiary hereunder or have any legal or equitable rights
or benefits to enforce any provision of this Agreement.

     13.17 Counterparts; Facsimile Signatures. This Agreement may be executed in
counterparts and such counterparts taken together shall constitute one and the
same agreement. This Agreement may be executed by facsimile signatures, which
signatures shall have the same force and effect as original signatures.


                                      -32-
<PAGE>
     IN WITNESS WHEREOF, duly authorized representatives of the Parties have
duly executed this Agreement as of the Effective Date.

                                        BARR LABORATORIES, INC.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        KOS LIFE SCIENCES, INC.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        KOS PHARMACEUTICALS, INC.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------