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                                                                   Exhibit 10.20

                       MANUFACTURING AND SUPPLY AGREEMENT

                                  By and among

                  LEK PHARMACEUTICAL AND CHEMICAL COMPANY, D.D.

                                       And

                            LEK PHARMACEUTICALS INC.

                                       And

                                   POZEN INC.

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<TABLE>
<CAPTION>
                                TABLE OF CONTENTS
                                                                            PAGE
<S>                                                                         <C>
SECTION 1.    Term .....................................................      1

SECTION 2.    Development of Manufacturing Process and DMFs for
              Product ..................................................      1

SECTION 3.    Manufacture and Purchase of Product ......................      2

SECTION 4.    Exclusivity Obligations ..................................      3

SECTION 5.    Purchase Price; Additional Consideration .................      3

SECTION 6.    Warranties ...............................................      4

SECTION 7.    Delivery .................................................      5

SECTION 8.    Acceptance Testing; Rejection ............................      5

SECTION 9.    Confidential Information .................................      7

SECTION 10.   Process Implementation; Quality Control ..................      9

SECTION 11.   Drug Master File; Regulatory Matters .....................     10

SECTION 12.   Indemnification; Insurance ...............................     11

SECTION 13.   Cancellation .............................................     13

SECTION 14.   Termination ..............................................     14

SECTION 15.   Effects of Cancellation or Termination ...................     15

SECTION 16.   Waiver ...................................................     15

SECTION 17.   Assignment ...............................................     15

SECTION 18.   Relationship of the Parties ..............................     16

SECTION 19.   Further Assurances .......................................     16

SECTION 20.   Use of Party's Name ......................................     16

SECTION 21.   Applicable Law ...........................................     16

SECTION 22.   Dispute Resolution .......................................     16

SECTION 23.   Entire Agreement .........................................     16
</TABLE>

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                       MANUFACTURING AND SUPPLY AGREEMENT

         This Agreement (the "Agreement") is made this _____ day of October,
2001 (the "Effective Date") by and among Lek Pharmaceutical And Chemical
Company, d.d., a corporation organized under the laws of Slovenia with its
principal offices located at Verovskova 57, 1526 Ljubljana, Slovenia ("Lek"),
Lek Pharmaceuticals Inc., a Delaware corporation with its principal offices
located at 115 North Third St., Suite 301, in Wilmington, North Carolina 28401,
USA ("LPI"), and POZEN INC., a Delaware corporation with its principal offices
at 6330 Quadrangle Drive, Suite 240, in Chapel Hill, North Carolina 27517, USA
("POZEN") (each individually a "Party" and collectively the "Parties").

         Definitions:

         When used in this Agreement, the terms listed in Exhibit A will have
the meaning as defined therein.

         SECTION 1.  Term. Subject to earlier termination according to the
provisions of Sections 13 and 14 hereunder, the initial term of this Agreement
will commence on the Effective Date and will continue until the fifteenth (15th)
anniversary of the Date of First Commercial Sale of the Finished Product (the
"Initial Term"). Thereafter, the term will extend and be automatically renewed
for ******** (each an "Extension Term") unless canceled or terminated according
to the provisions in Sections 13 and 14 hereunder.

         SECTION 2.  Development of Manufacturing Process and DMFs for Product.

             (a) Lek will use commercially reasonable efforts to develop a
Manufacturing Process for X Product that satisfies the ******** parameters of
the Specifications in Exhibit B-2 in accordance with the project plan attached
hereto as Exhibit D, and POZEN will fund the cost of development of such
Manufacturing Process according to the development budget set forth in Exhibit
D. Lek will file the DMFs for such X Product with the U.S. and European
regulatory authorities, and upon request of POZEN or its Licensees, with other
regulatory authorities where required for the marketing and sale of the Finished
Product.

             (b) Lek will manufacture and deliver to POZEN and its Licensees
quantities of X Product ("Development Quantities") required to support the
filing of the X Product DMFs for the US, Europe and other portions of the
Territory where the Finished Product containing X Product will be marketed, in
accordance with the project plan attached hereto as Exhibit D. The price for the
Development Quantities of X Product manufactured by Lek under this Agreement
will be ******** per kilogram, less the amount of the development funding
provided by POZEN to Lek pursuant to Section 2(a) above, and will be paid to Lek
in United States dollars not later than thirty (30) days from the date of
receipt of the invoice which will be submitted at the time of delivery.

             (c) Lek will provide POZEN with monthly written status reports
describing the progress made in the development of the manufacturing process for
the X Product compared against the project plan attached as Exhibit D.

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          (d)    Lek will use commercially reasonable efforts to perform the
project plan as attached hereto as Exhibit G, and will provide POZEN with data
and documentation on Y Product required to support the filing by POZEN or its
Licensees for Regulatory Approvals of Finished Product containing Y Product for
the US, Europe and other portions of the Territory where the Finished Product
containing Y Product will be marketed. Lek will provide monthly written status
reports describing the progress made compared against the project plan in
Exhibit G.

          (e)    Lek will provide POZEN with reasonable assistance in response
to requests for technical or scientific information and documentation, including
information and documentation to support the filing in the US, Europe and other
portions of the Territory where the Finished Product will be marketed, for
Regulatory Approvals of Finished Product, and making available personnel to meet
with representatives of POZEN, its Licensees or Regulatory Authorities, as may
be required by POZEN in connection with this Agreement.

      SECTION 3. Manufacture and Purchase of Product.

          (a)    Subject to the terms and conditions set forth herein, Lek will
use commercially reasonable efforts to manufacture and deliver quantities of
Product ordered by POZEN and its Licensees on the delivery dates specified in
the purchase orders, as set forth in this Agreement.

          (b)    ********

          (c)    The manufacture of Product will be conducted at the Lek
Facility using the Manufacturing Process. LPI will coordinate shipments of
Products to POZEN and its Licensees and will be responsible for invoicing POZEN
and/or its Licensees.

          (d)    In performing its obligations regarding the manufacture of
Product, Lek will strictly adhere to all Applicable Laws (including cGMPs),
Regulatory Approvals, and the CMCs and DMFs contained or referenced therein.

          (e)    No later than one hundred and eighty (180) days prior to the
estimated Date of First Commercial Sale of each Finished Product, POZEN is
obliged to provide Lek, in a format similar to the example outlined in Exhibit
C, with a non-binding ******** forecast prepared in good faith of the quantities
of Product to be manufactured by Lek and a delivery schedule for the shipments
of Product under this Agreement. Thereafter, as needed, but at least thirty (30)
days prior to the beginning of each calendar quarter, POZEN will provide Lek
with an updated ******** forecast of Product quantity requirements and delivery
schedule.

          (f)    Product will be ordered by POZEN pursuant to written purchase
orders, which will be sent to LPI with not less than one hundred (100) days'
lead time prior to the delivery date specified in such purchase order. Lek and
LPI will be obligated to fill orders of quantities that do not exceed the most
recent forecast for the scheduled delivery period by more than ********.

          (g)    If POZEN requires and orders Product in excess of the amounts
permitted to be ordered pursuant to subsection (f) above, such excess Product
will be supplied by Lek at

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a mutually agreeable delivery date taking into consideration Lek's manufacturing
resources, lead time for additional raw materials required, and commitments to
other customers.

          (h)    Lek will advise POZEN of the smallest batch size that Lek can
manufacture of the X Product. Unless otherwise agreed by the Parties, POZEN will
place all orders for X Product in quantities corresponding to full batch sizes.
Upon request of POZEN, Lek will submit a project proposal for reducing the batch
size to quantities specified by POZEN in its request. ********.

          (i)    If Lek fails to supply the quantities of Product ordered by
POZEN as provided herein, POZEN will have the right to engage a third party to
manufacture the Product, ********.

    SECTION 4.   Exclusivity Obligations.

          (a)    Exclusive Relationship. During the term of this Agreement, Lek
will manufacture X Product solely and exclusively for POZEN and/ or its
Licensees, and POZEN will purchase exclusively, and will use commercially
reasonable efforts to include in any license agreement with its Licensees an
obligation of each Licensee to purchase directly or through POZEN, X Product
exclusively from Lek through LPI for the Licensee's portion of the Territory,
except as expressly set forth in this Agreement or otherwise may be agreed
between the Parties in writing.

          (b)    ********.

          (c)    ********.

    SECTION 5.   Purchase Price; Additional Consideration.

          (a)    The initial price for the Product manufactured by Lek under
this Agreement will be ******** per kilogram of X Product supplied after the
Development Quantities and ********* per kilogram of Y Product and will be paid
to Lek in United States dollars not later than thirty (30) days from the date of
receipt of the invoice. The price may be adjusted between October 1 and October
31 of each year and such adjustment will be made effective January 1 for the
following calendar year by the lesser of (i) ******** or (ii) the increase or
decrease in the Producer Price Index, Pharmaceutical Preparations, Ethical
(Prescription), series code PCU-2834 #1, published by the United States
Department of Labor, Bureau of Labor Statistics, or comparable successor index
(or some other index agreed to in writing by the Parties) during the most recent
******** period preceding each ******** for which such data are available,
provided that POZEN is notified of such adjustment in writing (including the
calculation and data period on which such adjustment is based) by ********
preceding the year in which the price adjustment is effective. The first price
adjustment may be made effective ********. Lek will use commercially reasonable
efforts to keep prices in line with actual increases in cost,********.

          (b)    ********, POZEN will pay to LPI an additional consideration of
******** on Net Sales by POZEN, its affiliates or Licensees ******** ("Additonal
Consideration"); ********.

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          (c)    Payments of Additional Consideration for the sale of Finished
Product containing X Product supplied by Lek through LPI will be made to LPI
within ten (10) days of receipt of each royalty payment by POZEN from its
Licensees. Within thirty (30) days of entering into any license agreement with a
Licensee, POZEN will notify LPI in writing of such Licensee's royalty payment
schedule under such license agreement. Each payment of Additional Consideration
will be accompanied by a report of Net Sales of Finished Product containing X
Product supplied by LPI in sufficient detail to permit confirmation of the
accuracy of the payment of Additional Consideration made. LPI will have the
right to cause an independent, certified public accountant reasonably acceptable
to POZEN to audit those of POZEN's records required for the purpose of verifying
any amounts payable under this Agreement for the previous year. ********. Such
audits by LPI may be exercised ********, within ninety (90) days of the close of
the previous calendar year, during normal business hours upon reasonable prior
written notice to POZEN. Further, POZEN will secure from its Licensees the right
to audit or have audited such Licensees' records, and to make the findings of
such audits available to LPI in connection with LPI's exercise of its audit
rights under this subsection (c) subject to an agreement on confidentiality
between LPI and such Licensee. Adjustments will be made by the Parties to
reflect the results of such audits within thirty (30) days of the date on which
audit results are made available to the Parties.

          (d)    If during any payment period during which Additional
Consideration is owed and for ******** after the termination or expiration of
this Agreement, the adjustments to gross sales result in a Net Sales amount that
is a negative number, LPI will repay to POZEN within ten (10) days after receipt
of such Net Sales report an amount corresponding to the amount of Additional
Consideration that POZEN would have had to pay to LPI if such negative Net Sales
number had been positive. ********.

       SECTION 6. Warranties.

          (a)    Lek and LPI warrant that (i) Product manufactured hereunder
will (A) conform to the Specifications, the applicable DMF and Applicable Laws,
including, without limitation, U.S. cGMP regulations and equivalent foreign
country requirements as applicable, (B) be accompanied by a certificate of
analysis ("Certificate of Analysis") prepared by Lek stating the ********
delivered Product to be in compliance, until the applicable Product expiration
date, with the Specifications, (C) comply with current USP and EP monographs and
ICH guidelines, (D) not be adulterated or misbranded within the meaning of the
United States Food, Drug and Cosmetic Act, as amended ("FD&C Act") and (E) not
be an article that may not be introduced into interstate commerce under the
provisions of Sections 404 or 505 of the FD&C Act (the "Product Warranty"); and
(ii) as of the Effective Date, the manufacturing process used in the manufacture
of Product by Lek or LPI hereunder, does not infringe the intellectual property
rights of any person or entity or constitute a misappropriation of the trade
secrets or other intellectual property rights of any person or entity ********
(the "IP Warranty"), and that (iii) during the term of this Agreement, the
Manufacturing Process and associated data and information in the DMFs (or such
corresponding portions of regulatory filings as may be required in a given
country, ********) for the Y Product and the X Product conform to the
requirements of the Regulatory Authorities in the ******** and other portions of
the Territory where the Finished Product will be marketed (parts (i), (ii),
(iii) above comprise the "Limited Warranty").

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          (b)  POZEN will advise Lek of any other country in the Territory in
which it intends to effect a commercial launch of the Finished Product. Lek and
LPI will thereafter advise POZEN whether they are willing to make the
representation contained in clause (ii) of sub-paragraph (a) with respect to
such country in the Territory. In the event Lek has satisfied itself that the
Manufacturing Process used in the manufacture of Product by Lek hereunder, does
not infringe upon the intellectual property rights of any person or entity or
constitute a misappropriation of the trade secrets or other intellectual
property rights of any person or entity in any country in addition to those set
forth in clause (ii) of subparagraph (a), Lek will promptly notify POZEN thereof
and the country list in clause (ii) of this sub-paragraph will thereafter be
deemed to be amended to include such country.

          (c)  OTHER THAN THE LIMITED WARRANTY ABOVE, LEK MAKES NO WARRANTIES,
EXPRESS OR IMPLIED, WITH RESPECT TO THE PRODUCTS, INCLUDING, WITHOUT LIMITATION,
ANY WARRANTY OF MERCHANTABILITY OR WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.

          (d)  During the term of the Agreement, if and when a third party is
granted or asserts intellectual property rights related to the Manufacturing
Process, Lek will evaluate such intellectual property and will either (i)
confirm to POZEN and its Licensees that such process does not infringe any such
third party intellectual property, or (ii) use commercially reasonable efforts
to (1) develop an alternative noninfringing process in a timely fashion and
according to the terms provided in Section 10(b) and/or 10(c), as applicable, or
(2) take such other action as may be necessary to make such process
non-infringing.

    SECTION 7. Delivery. LPI will deliver Product DDU (Incoterms 2000) at the
U.S. or European facility designated by POZEN, according to the schedule and in
the amounts specified in the purchase orders provided by POZEN and under the
provisions set out in Section 2 or 3, as applicable. Lek will test each batch of
Product and supply POZEN with a Certificate of Analysis confirming that such
batch meets the Specifications.

    SECTION 8. Acceptance Testing; Rejection. If a shipment of a lot of Product
or any portion thereof fails to conform to the Product Warranty, then POZEN will
have the right to reject such nonconforming shipment of the Product or the
nonconforming portion thereof, as the case may be, in accordance with the
following:

          (a)  Patent Defect.

               (i) POZEN will give written notice to Lek and LPI of its
rejection (or its Licensee's or customer's rejection) hereunder, within sixty
(60) days after delivery by LPI to POZEN's or its Licensee's or customer's
designated facilities of any shipment of any Product containing a Patent Defect,
specifying the grounds for such rejection and, if such rejection is made for
failure of the Product to conform to Specifications, deliver to Lek samples of
the rejected Product.

               (ii) After receipt of such notice and samples from POZEN, Lek
will be permitted, for a period of fourteen (14) business days, to analyze the
Product rejected by POZEN

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for nonconformity to the Specifications, and to present its findings with
respect to such Product to POZEN. If the parties cannot agree on whether the
Product in question conforms to such Specifications within fourteen (14)
business days of Lek's receipt of POZEN's written notice of rejection, an
independent laboratory or independent consultant selected by POZEN from the list
attached hereto as Exhibit F (as amended from time to time by the parties in
writing) ********, will analyze both POZEN's and Lek's samples of the Product in
question. Each Party may have representatives present during the independent
analysis. The definitive results of such analysis by the independent laboratory
or independent consultant will be binding on the parties.

              (iii) If the shipment of Product in question is determined to be
nonconforming with respect to the Specifications or otherwise fails to conform
to the Product Warranties, such nonconforming Product will be held for Lek's
disposition, or will be returned to Lek (unless prohibited by Regulatory
Authorities), ********, as directed by Lek, ********. Lek will then use its
commercially reasonable efforts to replace each nonconforming shipment of
Product, or the nonconforming portion thereof on a batch-by-batch basis, with
conforming Product as soon as reasonably practicable after receipt of notice of
rejection thereof or will promptly provide POZEN with a credit therefor, at
POZEN's election. If the Product was improperly rejected, POZEN will be required
to accept ******** such Product and ********.

          (b) Latent Defect.

              (i)   If Lek becomes aware of a Latent Defect in any shipment of
Product, Lek will immediately notify POZEN as to the shipment involved, and, at
POZEN's election, such Product will be deemed rejected as of the date of such
notice, and Lek will use commercially reasonable efforts to replace each
nonconforming shipment, or the nonconforming portion thereof, with conforming
Product as soon as reasonably practicable after receipt of notice of rejection
thereof, or will promptly provide POZEN with a credit therefor, at POZEN's
election.

              (ii)  POZEN will give written notice to Lek of its rejection (or
its customer's or Licensee's rejection) hereunder, within thirty (30) days after
POZEN's (or its customer's or Licensee's) discovery that a shipment of any
Product contains a Latent Defect, specifying the grounds for such rejection, and
if such rejection is made for failure of the Product to conform to
Specifications, deliver to Lek samples of the rejected Product.

              (iii) After receipt of such notice and samples from POZEN, Lek
will be permitted, for a period of fourteen (14) business days, to analyze the
Product rejected by POZEN for nonconformity to the Specifications, and to
present its findings with respect to such Product to POZEN. If the parties
cannot agree on whether the Product in question conforms to such Specifications
within fourteen (14) business days of Lek's receipt of POZEN's written notice of
rejection, an independent laboratory or independent consultant selected by POZEN
from the list attached hereto as Exhibit F (as amended from time to time by the
parties in writing) ********, will analyze both POZEN's and Lek's samples of the
Product in question. Each Party may have representatives present during the
independent analysis. The definitive results of such analysis by the independent
laboratory or independent consultant will be binding on the parties.

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               (iv) If the shipment of Product in question is determined to be
nonconforming with respect to the Specifications or otherwise fails to conform
to the Product Warranties, such nonconforming Product will be held for Lek's
disposition, or will be returned to Lek, ********, as directed by Lek, ********.
Lek will then use its commercially reasonable efforts to replace each
nonconforming shipment of Product, or the nonconforming portion thereof on a
batch-by-batch basis, with conforming Product as soon as reasonably practicable
after receipt of notice of rejection thereof or will promptly provide POZEN with
a credit therefor, at POZEN's election. If the Product was improperly rejected,
POZEN will be required to accept ******** such Product ********.

          (c)  Recalls. In the event a Party believes it may be necessary to
conduct a recall, field correction, market withdrawal, stock recovery, or other
similar action with respect to any Product that was sold by LPI to POZEN under
this Agreement or thereafter by POZEN and/or its Licensees to their customers (a
"Recall"), Lek and POZEN will consult with each other as to how best to proceed,
it being understood and agreed that the final decision as to any such Recall
with respect to Finished Product will be made by POZEN or its Licensees, and the
final decision as to any such Recall with respect to Product that has not yet
been processed into Finished Product will be made by Lek. The Party whose
actions resulted in the Recall, if attributable to a Party, will bear any and
all associated costs and expenses in connection with any such Recall. If the
Recall is attributable to a breach of warranty by Lek or LPI or the failure of
Product supplied by Lek or LPI to meet Specifications, any and all associated
costs and expenses incurred as a result of such Recall will be borne by Lek. If
the Recall is attributable to a determination by the FDA that the Finished
Product is no longer safe and effective or due to adverse drug events which are
not attributable to a breach of warranty by Lek or LPI or the failure of Product
supplied by Lek or LPI to meet Specifications, any and all associated costs and
expenses incurred as a result of such Recall will be borne by POZEN. In the
event neither Party's actions are attributable, directly or indirectly, to the
Recall, and the Recall is not attributed to adverse drug events or a
determination by the FDA that the Finished Product is no longer safe and
effective any and all associated costs and expenses incurred as a result of such
Recall will be borne by the parties in proportion to their respective revenues
from Net Sales in that country of the Territory.

          (d)  Adverse Drug Events. Any adverse drug event or reaction complaint
reports or any other reports or information indicating that the Product within
any Finished Product has any toxicity, sensitivity reactions, or is otherwise
alleged to cause illness or injury of any kind or is adulterated or misbranded
will be reported promptly by POZEN to Lek, or as otherwise may be required under
any applicable laws, rules or regulations, with copies of any such written
reports, and Lek will thereafter expeditiously investigate the information
contained in such reports and communicate such results promptly to POZEN upon
conclusion of such investigation.

    SECTION 9. Confidential Information.

          (a) During the term of this Agreement and seven (7) years after
termination of the Agreement, all Confidential Information furnished by POZEN to
Lek or LPI, or by Lek or LPI to POZEN, relating to the subject matter hereof,
will be kept confidential by the party receiving said confidential information
and the party receiving said Confidential Information will

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not make use of said Confidential Information, except for purposes authorized by
the Agreement, nor disclose the same to any person or firm unless previously
authorized in writing to do so; provided, however, that the party receiving said
Confidential Information may disclose same to its responsible officers,
employees, consultants and Licensees who require said information for the
purposes contemplated by this Agreement, provided that said officers, employees
and consultants and Licensees have assumed obligations of confidentiality not
less stringent than those contained herein.

          (b) Any other provision hereof to the contrary notwithstanding, it is
expressly understood and agreed by the parties hereto that the obligations of
confidence and non-use herein assumed will not apply to any information which:

              (i)   is lawfully, at the time of disclosure or thereafter so
becomes, a part of the public domain;

              (ii)  was otherwise in the receiving party's lawful possession
prior to disclosure, as shown by its written record;

              (iii) is hereafter lawfully disclosed to the receiving party by a
third party who is not in violation of an obligation of confidentiality to the
disclosing party relative to said information;

              (iv)  is, by mutual agreement of the parties hereto, released from
a confidential status; or

              (v)   results from research and development by the receiving Party
without use and by persons without access to Confidential Information of the
other Party as shown by competent evidence including, but not limited to,
records contemporaneously maintained with such research and development.

          (c) Either Party may disclose Confidential Information of the other
if required by legal process; provided, in each case the receiving Party timely
informs the disclosing Party and uses its best efforts to limit the content of
the disclosure, limit the disclosure to those specific legal parties requesting
such information, maintain confidentiality to the extent possible and permit the
disclosing Party to attempt by appropriate legal means to limit such disclosure
in terms of content and recipient.

          (d) POZEN or its Licensees may disclose Lek Confidential Information,
including, without limitation, the DMFs, to government or other regulatory
authorities to the extent that such disclosure is reasonably necessary to obtain
marketing authorization for products containing DHE. POZEN or its Licensees may
disclose Lek Confidential Information (other than the DMFs) to other
manufacturers in the supply chain of the Finished Product for the sole purpose
of the manufacture of the Finished Product, provided that such third party
manufacturers are bound by confidentiality obligations not less stringent than
those contained herein, and that Lek is made a third party beneficiary of such
confidentiality agreements. POZEN and its Licensees will have the right to
access and reference the X Product DMF and the Y Product DMF solely for the
purpose of developing and commercializing products containing DHE.

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          (e) Additionally, POZEN may disclose this Agreement (i) to
prospective licensees provided such prospective licensees have a legal
obligation to protect the confidentiality of said disclosure and (ii) as may be
required by applicable law in connection with securities or other public
filings.

SECTION 10. Process Implementation; Quality Control.

          (a) With respect to each Finished Product, Lek will permit
representatives of POZEN or its designees, upon sixty (60) days prior notice,
(i) two (2) times per year prior to and for two (2) years after final Regulatory
Approval to market such Finished Product and (ii) one (1) time per year
thereafter during the term of this Agreement, to inspect the Lek Facility, batch
records, standard operating procedures and all other records reasonably relating
to the Product manufacturing process. Such inspections will take place during
regular business hours and with the least possible disruption of Lek's
operations. POZEN will discuss the results of any inspection with Lek. Any
inspection by POZEN, if it occurs, does not relieve Lek of its sole obligation
to comply with all Applicable Laws and does not constitute a waiver of any right
otherwise available to POZEN. In the event that Lek's Quality Control is
preparing for another previously confirmed audit with the FDA or other
Regulatory Authority, POZEN's audit pursuant to this subsection (a) may be
postponed for a reasonable period. POZEN will have the right to request copies
of and/or examine all batch records generated in the manufacture, storage and
shipment of Product under this Agreement.

          (b) Lek will provide POZEN with written notice of any planned change
that is pertinent to the manufacture, testing, or storage of Product, including
but not limited to changes in the Manufacturing Process, Specifications, or
analytical methods. Within thirty (30) days from the date of receipt of such
written notice from Lek, POZEN will notify Lek if such planned change in POZEN's
reasonable judgment requires notification of a Regulatory Authority or
additional testing of Product or Finished Product. If POZEN so notifies Lek, the
Parties will develop a change implementation plan (including, without
limitation, a regulatory strategy related thereto) within sixty (60) days from
the date of POZEN's notice to Lek, and Lek will implement such planned change
only after the completion of such change implementation plan. Any such change
implementation plan will take into account the time required for any actions or
filings required to comply with applicable regulatory requirements. In the event
POZEN does not provide Lek with such written notice within the designated thirty
(30) day period, Lek is free to proceed with its planned change.

          (c) When required or requested to do so by a Regulatory Authority,
POZEN may in writing modify the Specifications in Exhibit B, or request a change
in the Manufacturing Process, and the Parties will agree to a specific written
procedure and the costs necessary to implement any such changes related to the
Specifications or Manufacturing Process. Additionally, POZEN may, from time to
time, in writing suggest other modifications of the Specifications in Exhibit B
or the Manufacturing Process, and in the case of Lek's approval (which will not
be unreasonably withheld), the Parties will agree to a specific written
procedure and the costs necessary to implement such other changes to the
Specifications.

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           (d) Lek will submit to POZEN the DMF annual reports, including
information on changes within any DMF, within thirty (30) days of any such
reports and/or filing any such changes with any Regulatory Authority.

   SECTION 11.  Drug Master File; Regulatory Matters.

           (a) Lek will develop a Manufacturing Process and file a X Product DMF
that satisfies the ******** parameters of the Specifications in Exhibit B-2 in
those countries where POZEN or its Licensees intend to file a Finished Product
containing the X Product for Regulatory Approval. POZEN and/or its Licensees
will advise Lek in writing of the countries in which it intends to file for
Regulatory Approval of a Finished Product containing the X Product at least
twelve months prior to filing. In the event that significant deviations from the
Specifications in Exhibit B-2 are necessary to meet regulatory requirements in a
specific country, the Parties will agree to a specific written procedure to
modify the Specifications in Exhibit B-2 and the costs necessary to implement
any such changes.

           (b) Lek will at all times during the term of this Agreement maintain
the DMFs in current and active status, and will regularly provide the Regulatory
Authorities with all reports and information necessary to keep such DMFs current
and in force.

           (c) Lek will inform POZEN of the results of any inspection of the Lek
Facility by a Regulatory Authority that is pertinent to the manufacture,
testing, or storage of Product or which could affect the manufacture and supply
of the Product by Lek or LPI, regardless of whether such inspection was
conducted in connection with the Product manufacture, at the conclusion of each
calendar year. If such an inspection is in connection with the Product
manufacture, Lek will additionally provide POZEN with a copy of the Regulatory
Authority final report within three (3) days of Lek's receipt of such report.
Notwithstanding the foregoing, Lek will within three (3) days of receipt provide
POZEN with copies of any Form No. 483 notification, Enforcement Inspection
Reports, Notice of Adverse Finding, or their analogous forms from any Regulatory
Authorities ("Warning Letters") and any subsequent responses by Lek or the
Regulatory Authorities relating to the manufacture of Product or the Lek
Facility. Lek will have the right to redact from any documentation provided to
POZEN under this subsection (c) any information that is specific to products
other than the Products. In addition to the audit as provided in Section 10(a),
in the event that (i) Lek receives any Warning Letters relating to the Lek
Facility or (ii) POZEN has properly rejected a shipment of Product in accordance
with the rejection procedures of Section 8(a) or (b) (including, if necessary,
after following the independent laboratory testing procedures set forth therein)
for failure to meet Specifications or otherwise to conform with the Product
Warranties, POZEN will have the right to conduct an additional audit according
to the terms specified in Section 10(a).

           (d) Lek will notify POZEN of any production issues or other
information of which Lek becomes aware which may cause the Product to no longer
conform with Regulatory Approvals or Applicable Laws or materially affect the
ability of Lek or LPI to supply Product in accordance with this Agreement. Lek
agrees to inform POZEN within three (3) days of receipt of notice of inquiry or
inspection activity by any Regulatory Authority from a country in which POZEN or
its Licensees plan to submit or have submitted dossiers for Regulatory Approval
in regard to Product, and will provide POZEN with copies of any written
communications received

                                       10

<PAGE>

from Regulatory Authorities related to the manufacture of Product. Lek will
furnish to POZEN any proposed response to inquiries from Regulatory Authorities
in sufficient time to give POZEN a reasonable opportunity to review, discuss,
and comment on the inquiry and the proposed response. Lek will consider POZEN's
comments and appropriately address POZEN's concerns in its response.

           (e) Neither Party will use in any capacity, in connection with any
manufacturing or other services to be performed under this Agreement, any
individual who has been debarred pursuant to the U.S. Federal Food, Drug and
Cosmetic Act or who is subject to an action, suit, claim, investigation or legal
or administrative proceeding that could reasonably be expected to lead to a
debarment of Lek, POZEN or any person performing manufacturing or other services
hereunder. Either Party will, if so requested by the other Party, prepare and
submit a certification statement as necessary to satisfy the requirements of the
U.S. Federal Food, Drug and Cosmetic Act. Either Party agrees to immediately
inform the other Party in writing if any person who is performing services
hereunder is debarred or if such person becomes subject to an action, suit,
claim, investigation or legal or administrative proceeding that could lead to a
debarment of such person.

           (f) The Parties agree that a difference of opinion may reasonably
exist as to the interpretation of the regulatory requirements applicable to the
Product and its manufacture. If such difference of opinion exists between the
Parties at any time during the term of this Agreement, the Parties will discuss
in good faith how to reconcile such differences. If the Parties are unable to
come to an agreement thereon after good faith negotiations, POZEN will have the
right to require Lek to make such changes to the Product and its manufacture,
and to provide such data and documentation as it reasonably believes necessary
to comply with regulatory requirements. Lek will use commercially reasonable
efforts to comply with POZEN's request. ********.

   SECTION 12. Indemnification; Insurance.

           (a) Lek's Indemnity Obligations. Except as set forth in Section 12(d)
below, Lek will indemnify, defend and hold harmless POZEN and its affiliates and
Licensees, and their respective successors and permitted assigns (and the
respective officers, directors, stockholders, partners and employees of each),
from and against any and all losses, liabilities, claims, actions, proceedings,
damages and expenses (including without limitation reasonable attorneys' fees
and expenses) (herein "Damages") resulting from any third party claims or suits
arising out of (i) any breach by Lek of any warranty, representation, covenant
or obligation hereunder, (ii) a claim that the manufacturing process used to
manufacture the Product infringes the intellectual property rights of a third
party in the ********, and such other countries as may be included within clause
(ii) of the Limited Warranty in Section 6(a) with agreement between the parties
as provided in Section 6(b), or (iii) product liability claims relating to
Product supplied by Lek hereunder to the extent such claims arise out of a
failure of the Product to conform to the Product Warranties.

           (b) POZEN's Indemnity Obligations. Except as set forth in Section
12(d) below, POZEN will indemnify, defend and hold harmless Lek and its
affiliates, and their respective successors and permitted assigns (and the
respective officers, directors, stockholders,

                                       11

<PAGE>

partners and employees of each) from and against any and all Damages resulting
from any third party claims or suits arising out of (i) any breach by POZEN of
any warranty, representation, covenant or obligation hereunder, (ii) a claim
that the manufacture, marketing, use, distribution or sale of Finished Products
(other than the manufacturing process used to manufacture the Product contained
therein) infringes the intellectual property rights of a third party, or (iii)
product liability claims relating to Finished Product sold or distributed by
POZEN or its Licensees (except to the extent that Lek is obligated to indemnify
POZEN pursuant to Section 12(a)).

           (c) Indemnification Procedures. A Party (the "indemnitee") that
intends to claim indemnification under this Section 12 will notify the other
Party (the "indemnitor") promptly in writing of any action, claim or liability
in respect of which the indemnitee believes it is entitled to claim
indemnification, provided that the failure to give timely notice to the
indemnitor will not release the indemnitor from any liability to the indemnitee
except to the extent the indemnitor is prejudiced thereby. No such claim will be
settled other than by the Party defending the same, and then only with the
consent of the other Party which will not be unreasonably withheld; provided
that the indemnitee will have no obligation to consent to any settlement of any
such action or claim which imposes on the indemnitee any liability or obligation
which cannot be assumed and performed in full by the indemnitor, and the
indemnitee will have no right to withhold its consent to any settlement of any
such action or claim if the settlement involves only the payment of money by the
indemnitor or its insurer.

           (d) Limitations on Indemnification. Notwithstanding any contrary
provision herein:

               (i) Neither Party will be entitled to indemnification with
respect to any claim or suit to the extent such claim or suit results from (A)
its own negligence or willful misconduct, or (B) any action to which it has
consented in writing; and

               (ii) NEITHER PARTY WILL BE LIABLE TO THE OTHER FOR ANY PUNITIVE,
CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES, INCLUDING DAMAGES FOR LOST
PROFITS, LOSS OF OPPORTUNITY OR USE OF ANY KIND, SUFFERED BY THE OTHER PARTY,
WHETHER IN CONTRACT, TORT OR OTHERWISE.

           (e) Product Liability Insurance.

               (i) Lek and POZEN will each maintain comprehensive product
liability insurance to cover its indemnification obligation provided in Section
12 in the annual aggregate amount of ********, combined single limit for bodily
injury and property damage per occurrence and up to ******** immediately prior
to the Date of First Commercial Sale for costs associated with a recall, per
occurrence and in the annual aggregate. Each of Lek and POZEN will maintain such
insurance during the term of this Agreement and thereafter for so long as it
customarily maintains insurance for itself for similar products and activities.
Each of Lek and POZEN will cause the other to be named as an additional insured
under such insurance. Each of Lek and POZEN will provide the other with at least
thirty (30) days notice of any cancellation, termination or change in such
insurance. Each Party shall provide the other Party with

                                       12

<PAGE>

certification from its insurance company indicating its compliance with the
requirements of this Section 12(e) ("Certificate of Insurance") as soon as is
reasonably practicable. Each Party shall provide to the other Party an updated
Certificate of Insurance on an annual basis during the term of this Agreement.

               (ii) ********.

   SECTION 13. Cancellation.

           (a) By Lek or POZEN. Either Lek or POZEN may cancel this Agreement by
providing written notice to the other Party at least ******** prior to the end
of the Initial Term or any Extension Term.

           (b) By Lek.

               (i)   At any time following the ********* anniversary of the Date
of First Commercial Sale, Lek may cancel this Agreement upon ******** written
notice to POZEN if Lek decides to permanently cease the manufacture of DHE.

               (ii)  If Lek provides notice of termination as provided in
subsection (i) above, Lek will have the right to accelerate the delivery of
Product to be supplied prior to the termination date in such quantities as
determined by POZEN's and its Licensees' forecasted requirements for each year
of the notice period, provided that the quantities of Product delivered to cover
such requirements for a particular year of the notice period will have a shelf
life of at least three (3) years as of the year of the notice period for which
such Product is required by POZEN or its Licensee. If a ******** shelf life is
not attainable, Lek will deliver the Product in each remaining year of this
Agreement according to the normal delivery schedule procedure outlined in this
Agreement or to a delivery schedule otherwise agreed upon by the Parties.

               (iii) Promptly upon providing notice of termination as provided
in subsection (i) above, Lek will transfer both the open and closed portion of
the DMF, which uses ergotamine tartrate as the starting material for the
manufacturing process of the Product, to POZEN and/or its Licensees to be used
in accordance with Section 9 hereof. The Parties will agree to a specific
written procedure and the costs necessary to implement such transfer to POZEN.
Lek will make its employees available to POZEN for a period of ******** after
the transfer of the DMF to consult with POZEN or its designated contract
manufacturer on the implementation of the manufacturing process. If such
consulting activity requires travel by Lek employees to the new manufacturing
site, POZEN will reimburse Lek for time and reasonable travel expenses based on
Lek's standard hourly rate.

               (iv)  Upon cancellation of this Agreement by Lek under this
subsection (b), Lek will continue to supply POZEN with ergotamine tartrate under
terms mutually agreed by the parties, and if Lek decides to permanently cease
the manufacture of ergotamine tartrate, Lek will transfer the technical data
package relating to the manufacture of ergotamine tartrate to POZEN and/or its
Licensees to be used subject to Section 9 hereof, in addition to the DMF
transferred by Lek pursuant to subsection (b)(iii) above.

                                       13

<PAGE>

           (c) By POZEN.

               (i)   POZEN may cancel this Agreement upon written notice to Lek
if POZEN or its Licensees decide to abandon the filing of all Regulatory
Approvals or to withdraw the Finished Product in all countries of the Territory.
Such cancellation will be effective immediately without further obligation
except for any Product in process or unshipped Product either of which have been
manufactured by Lek at POZEN's request as substantiated by POZEN's purchase
orders prior to receipt of the notice of cancellation and except as detailed
below in this Section 13(c)(i). In any such case, POZEN will provide Lek with as
much notice as reasonably possible regarding the possibility of cancellation.
*********.

               (ii)  POZEN may cancel this Agreement upon written notice to Lek
in the event that Lek fails to supply ******** the Product ordered by POZEN in
accordance with Section 3(f) ******** after the scheduled delivery ********.

               (iii) POZEN may cancel this Agreement upon written notice to Lek
in the event that (1) Lek is unable (A) to develop a manufacturing process for X
Product meeting the Specifications in Exhibit B-2 by ********, or (B) to modify
such process ******** after a change of such Specifications may be required to
be made or requested by POZEN for regulatory or competitive marketing reasons,
********.

               (iv)  At any time following the ******** anniversary of the Date
of First Commercial Sale, POZEN may cancel this Agreement upon ******** written
notice to Lek.

               (v)   Upon termination by POZEN pursuant to subsection (iii), if
Lek within ******** thereafter develops a manufacturing process for X DHE that
is substantially similar to the X Product as described in the Specifications
provided in Exhibit B-2, Lek will notify POZEN thereof in writing and will offer
POZEN to enter into an exclusive supply agreement for such product on terms not
less favorable to POZEN than those provided for with respect to the X Product in
this Agreement. If POZEN is interested in entering into such agreement, the
Parties will negotiate and execute a substantially similar supply agreement for
such product ******** thereafter. If POZEN declines to enter into such
relationship or does not respond to Lek's offer ******** after receipt thereof,
Lek will be free to sell such product to third parties without further
obligation to POZEN.

   SECTION 14. Termination.

           (a) Default. If either Party materially defaults in the performance
of a material provision of this Agreement, and does not remedy that default to
the other Party's reasonable satisfaction ******** after receipt of a notice of
default, the Party not in default may terminate this Agreement. Termination of
this Agreement pursuant to this Section 14(a) will not affect any other rights
or remedies that may be available to the nondefaulting Party.

           (b) Bankruptcy. Either Party may terminate this Agreement in the
event the other Party is declared bankrupt or insolvent, or makes an assignment
for the benefit of its creditors, or if a receiver is appointed or any
proceedings are commenced, voluntary or involuntary, by or against such bankrupt
or insolvent Party under any bankruptcy or similar law

                                       14

<PAGE>

(other than a reorganization under Chapter 11 of the United States Bankruptcy
Code or any successive provision), and, if instituted by a third party against a
Party, such status is not cured within sixty (60) days from its occurrence.

          (c) Force Majeure. Neither Party will be held liable or responsible
for failure or delay in fulfilling or performing any of its obligations under
this Agreement in case such failure or delay is due to any condition beyond the
reasonable control of the affected Party including, without limitation, Acts of
God, strikes or other labor disputes, war, riot, earthquake, hurricane, fire,
flood, governmental regulations or actions (a "Force Majeure Event"). Such
excuse will continue only as long as the Force Majeure Event continues;
provided, that if the Force Majeure Event continues for a period of more than
one hundred eighty (180) days, the other Party will have the right to terminate
this Agreement with written notice effective upon receipt. The Party affected by
the Force Majeure Event will give immediate notice to the other Party of the
extent and nature thereof and will use its best efforts to mitigate the
consequences of the occurrence of such Force Majeure Event.

     SECTION 15. Effects of Cancellation or Termination.

          (a) Accrued Obligations. The cancellation or termination of this
Agreement will not affect any payment obligation, fulfillment of purchase order
obligation or other obligation that accrued prior thereto with the exception of
the obligations specifically excused in Sections 13 and 14.

          (b) Transfer of Manufacturing Information. If and when Lek gives
notice of termination of this Agreement pursuant to Section 13(b)(i), Lek will
provide POZEN with a complete copy of the DMFs and reference standards necessary
to transfer manufacturing (synthesis) and analytical methods associated with the
Product to another manufacturer, and POZEN, its Licensees, or their respective
contract manufacturers will have the right to practice the manufacturing process
described in such DMFs to manufacture the Finished Product as of the Effective
Date of such termination.

          (c) Survival. The rights and obligations of the Parties under Section
6, 9, 11, 12, 15, 16, 20, 21, 22 and 23 of this Agreement will survive any
termination or expiration of this Agreement.

     SECTION 16. Waiver. Failure of either Party to insist in any instance on
the strict performance of any covenant, term, provision or condition hereunder,
or to exercise any option herein contained, will not be construed as a waiver of
such covenant, term, provision, condition or option in any other instance.

     SECTION 17. Assignment. This Agreement may not be assigned by a Party
without the prior written consent of the other Parties except that a Party may
assign this Agreement without the other Parties' consent to any entity that
acquires substantially all of its stock, assets or business. In addition, POZEN
may assign this Agreement without Lek's or LPI's consent, in whole or in part,
to (i) any affiliate of POZEN, defined as any corporation controlled by, or
under common control with, POZEN, or (ii) any partnership or joint venture or
other entity directly or indirectly controlled by, or under common control with,
POZEN, or (iii) a

                                       15

<PAGE>

Licensee that has the right to commercialize the Finished Product, and that is
not a company listed in Exhibit E. Any permitted assignee will assume all
obligations of its assignor under this Agreement.

     SECTION 18. Relationship of the Parties. The relationship between Lek and
LPI, on the one hand, and POZEN, on the other hand, created by this Agreement is
solely that of independent contractors. This Agreement does not create an
agency, partnership or joint venture and nothing in this Agreement authorizes a
Party to act for, represent or bind any other or any of its affiliates, except
to the extent expressly provided in this Agreement.

     SECTION 19. Further Assurances. Lek, LPI and POZEN agree to execute,
acknowledge and deliver all further documents, and perform all other acts
reasonably necessary and appropriate to fulfill the purposes of this Agreement.

     SECTION 20. Use of Party's Name. Neither Party may use the other Party's
name, trade names or trademarks in any manner without the express written
consent of that Party. Notwithstanding the above, as may be required by
applicable law, the Parties and their affiliates will be permitted to use the
other Party's name and to disclose the existence and terms of this Agreement in
connection with securities or other public filings. POZEN may additionally
disclose this Agreement in connection with its financing and licensing
activities.

     SECTION 21. Applicable Law. This Agreement will be construed and enforced
in accordance with the laws of the United States of America, State of North
Carolina, without regard to its conflict of laws provisions and without regard
to the United Nations Convention on the International Sale of Goods.

     SECTION 22. Dispute Resolution. Any material disputes or disagreements
between the Parties arising hereunder will be referred to the Chief Executive
Officer of POZEN, the President of the Board of Management of Lek and the
President and CEO of LPI or their designees for good faith resolution for a
period of thirty (30) days. If the Parties are not able to settle their dispute
or disagreement during such thirty (30) day period, such dispute or disagreement
will be settled by arbitration in accordance with the then existing Commercial
Arbitration Rules of the American Arbitration Association. Upon request by a
Party, arbitration will be by a panel of three arbitrators within thirty (30)
days of such arbitration request. Lek and LPI will jointly select one
arbitrator, POZEN will select one arbitrator, and the third will be mutually
agreed upon in writing by the Parties. In any such arbitration, the Parties will
select a panel with relevant experience in the pharmaceutical industry. Judgment
upon the award rendered by the panel will be final and nonappealable and may be
entered in any court having jurisdiction thereof. The parties will be entitled
to all discovery in like manner as if the arbitration were a civil suit in the
federal district courts located in Wilmington, North Carolina. Any arbitration
will be held in Wilmington, North Carolina, unless the parties hereto mutually
agree in writing to another place. The prevailing Party in any arbitration
action to enforce or interpret this Agreement will be entitled to recover
reasonable costs and attorneys' fees from the non-prevailing Party.

     SECTION 23. Entire Agreement. This Agreement, with its attached Exhibits,
constitutes the entire agreement between the Parties concerning this subject
matter and

                                       16

<PAGE>

supersedes all previous agreements, whether written or oral. This Agreement may
not be modified orally, and no modification will be effective unless in writing
signed by duly authorized representatives of both Parties. Any preprinted
provision on any forms used by a Party in connection with shipments hereunder
(e.g., purchase orders, acknowledgments, invoices, etc.) will be of no effect
despite any provision to the contrary, unless that provision specifically refers
to and purports to modify this Agreement and that writing is signed by duly
authorized representatives of Lek, LPI and POZEN.

                                       17

<PAGE>

     In Witness Whereof, the Parties have executed this Agreement effective as
of the Effective Date.


Lek Pharmaceutical and Chemical       POZEN INC.
Company, D.D.


By:_____________________________      By:____________________________________

Name:___________________________      Name: John R. Platchetka, Pharm.D.
                                           ----------------------------------
Title:__________________________      Title: Chairman, President and CEO
                                             --------------------------------


Lek Pharmaceuticals Inc.              POZEN INC.

By:_____________________________      By:____________________________________

Name: Paul Kleutghen                  Name: Kristina M. Adomonis
     ---------------------------           ----------------------------------

Title: President & CEO                Title: Senior Vice President, Business
      --------------------------             --------------------------------
                                             Development
                                      ---------------------------------------

             [Signature Page to Manufacturing and Supply Agreement]

<PAGE>

                                    Exhibit A

                                   DEFINITIONS

     "Applicable Laws" means any laws, rules, regulations, guidelines or
guidance documents applicable to the manufacture of Product, including cGMPs of
the U.S. Federal Food and Drug Administration and the European Union, any
applicable environmental, health and safety laws relating to the manufacture of
Product, and any other laws, regulations or guidelines applicable to the
performance of this Agreement.

     "cGMP" or "cGMPs" means the current good manufacturing practices and
quality systems regulations promulgated by Regulatory Authorities, as amended
from time to time.

     "CMC" means the chemistry, manufacturing and controls section(s) and data
in a Regulatory Approval which specifies part or all of the following: the
chemical composition of Product, its components and the control and
manufacturing process for Product, including any references to DMFs.

     "Confidential Information" means all information, including but not limited
to data, know-how, formulations, product concepts, sample materials, business
and technical information, financial data, and deal terms, whether in written
form or disclosed orally, visually and/or in another tangible form, identified
as "Confidential" at the time of such disclosure.

     "Date of First Commercial Sale" means the date after the grant of
Regulatory Approval on which the Finished Product is first sold to an
independent third party.

     "DDU (Incoterms 2000)" means the delivery term "Delivered Duty Unpaid"
devised and published by the International Chamber of Commerce and attached
hereto as Exhibit H.

     "DHE" means the active ingredient dihydroergotamine mesylate U.S.P., E.P
and conforming to ICH guidelines, all as amended from time to time.

     "DMF" means the Y Product DMF or the X Product DMF, as applicable, and
"DMFs" means the Y Product DMF and the X Product DMF.

     "Europe" means Albania, Andorra, Austria, Belgium, Belarus,
Bosnia-Herzegovina, Bulgaria, Croatia, Czech Republic, Denmark, Estonia,
Finland, France, Georgia, Germany, Greece, Hungary, Iceland, Ireland, Italy,
Latvia, Liechtenstein, Lithuania, Luxembourg, Macedonia, Malta, Moldova, Monaco,
Netherlands, Norway, Poland, Portugal, Romania, Russian Federation, San Marino,
Serbia/Montenegro, Kosovo, Slovakia, Slovenia, Spain, Sweden, Switzerland,
Turkey, Ukraine, United Kingdom, and Vatican City, and any successor states on
their respective territories.

     "Finished Product" means a finished product which incorporates Product
manufactured and supplied to POZEN by Lek, formulated and packaged for sale to
the trade.

                                      A-1.

<PAGE>

     "Latent Defect" means any instance where a shipment of a Product fails to
conform to the applicable Specifications or fails to conform to the warranties
given by Lek herein, and such failure would not be discoverable upon reasonable
physical inspection or standard testing of such Product upon receipt by POZEN or
its licensee or customer in accordance with standard operating procedures for
the pharmaceutical industry.

     "Lek Facility" means the facility of LEK Pharmaceutical and Chemical
Company d.d., Pharmaceutical Active Substance Production Division, in 61234
Menges, Kolodvorska 27, Slovenia.

     "Licensee" means a third party licensed by POZEN to develop, manufacture
and/or commercialize the Finished Products.

     "Manufacturing Process" means the manufacturing process for X Product or Y
Product as described in the applicable DMF.

     "Manufacturing Approvals" means all applications, licenses, permits, and
other authorizations, other than Regulatory Approvals, which are required for
the manufacture of Product in compliance with Applicable Laws.

     "Net Sales" means the actual amount invoiced for sale of Finished Product
after deducting the following: (i) discounts, rebates (including
government-mandated rebates), retroactive price reductions, samples and/or
allowances actually allowed or granted from the billed amount, (ii) credits or
allowances actually granted upon claims, rejections or returns, including
recalls, and (iii) taxes, duties or other governmental charges levied on or
measured by the billing amount; provided that if POZEN licenses the right to
commercialize the Finished Product to a third party, Net Sales will have the
meaning as defined in the license agreement with such third party, which
definition will be comparable to the term as defined above.

     "Y Product" means DHE conforming to the specifications in Exhibit B-1.

     "Y Product DMF" means the set of documents referred to in Applicable Laws
as "Drug Master File", filed with the U.S. Food and Drug Administration as DMF
No. 3022, and any applicable European equivalent, as updated from time to time,
which is required for some portion of the manufacture and testing of Y Product
for clinical use and commercial sale.

     "North America" means the USA, Canada, Mexico, Guatemala, Belize, El
Salvador, Honduras, Nicaragua, Costa Rica, Panama, and the island countries and
dependencies of the Caribbean.

     "Patent Defect" means any instance where a lot of a Product fails to
conform to the applicable Specifications or fails to conform to the warranties
given by Lek herein, and such failure is discoverable upon reasonable physical
inspection or standard testing of such Product upon receipt by POZEN or its
licensee or customer in accordance with standard operating procedures for the
pharmaceutical industry.

     "Product" means X Product or Y Product in bulk form.

                                      A-2.

<PAGE>

     "Purchase Price" means the price for Product payable by POZEN to Lek
pursuant to Section 5(a).

     "X Product" means X form of DHE, conforming to the specifications for X DHE
in Exhibit B-2 attached hereto.

     "X Product DMF" means the set of documents referred to in Applicable Laws
as "Drug Master File", to be filed with the U.S. Food and Drug Administration,
and any applicable European equivalent, as updated from time to time, which is
required for some portion of the manufacture and testing of X Product for
clinical use and commercial sale.

     "Regulatory Approvals" means all Investigational New Drugs (INDs), new drug
approvals, marketing approvals, and all other permits required for conducting
clinical trials with, and for selling, the Finished Product in a particular
country.

     "Regulatory Authority" means the competent government regulatory authority
responsible for granting the Regulatory Approvals or the Manufacturing Approval
in the applicable country or jurisdiction.

     "Specifications" means the specifications for the Y Product and the X
Product as defined in Exhibits B-1 and B-2, respectively, and the applicable
DMF, including (as applicable) statements of pharmaceutical manufacturing,
filling, storage and quality control procedures, and labeling and packaging
specifications, and other written instructions of POZEN notified to Lek from
time to time. The parties acknowledge that there may be more than one form of a
Product and that each such form will have its own Specifications.

     "Territory" means all countries of the world.

                                      A-3.

<PAGE>

                                    Exhibit B

                                 SPECIFICATIONS

<PAGE>

                                   Exhibit B-1

                                    ********

<PAGE>

                                   Exhibit B-2

                                    ********

<PAGE>

                                    Exhibit C

                      ******** Forecast & Delivery Schedule

                      ********

<PAGE>

                                    Exhibit D

                                    X PRODUCT

           MANUFACTURING PROCESS DEVELOPMENT MILESTONES AND MILESTONE
                                    PAYMENTS

                                    ********

<PAGE>


                                    Exhibit E

                                 Lek Competitors

                                    ********

<PAGE>

                                    Exhibit F

                          Approved Testing Laboratories

                                    *********

<PAGE>

                                    Exhibit G

                 Development Plan relating to DMF for Y Product

                                    *********

<PAGE>


                                    Exhibit H

                              DDU (Incoterms 2000)

                                    ********