Document:

<PAGE>

                                                                    EXHIBIT 10.2

                                                                  EXECUTION COPY

CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

================================================================================

                                SUPPLY AGREEMENT

                                     Between

                          BRISTOL-MYERS SQUIBB COMPANY

                                       and

                          WOMEN FIRST HEALTHCARE, INC.

                                       for

                                    VANIQA(R)

                            Dated as of June 25, 2002

================================================================================

<PAGE>

                                TABLE OF CONTENTS
                                -----------------
<TABLE>
<S>                                                                                            <C>
SECTION 1.   DEFINITIONS ...................................................................    1

     Section 1.01.   Definitions ...........................................................    1
     Section 1.02.   Other Definitions .....................................................    4
     Section 1.03.   Interpretations. ......................................................    5

SECTION 2.   GENERAL TERMS OF SUPPLY .......................................................    5

     Section 2.01.   Sale and Purchase of Product ..........................................    5
     Section 2.02.   Forecasts .............................................................    6
     Section 2.03.   Ordering ..............................................................    6
     Section 2.04.   Shipments .............................................................    7
     Section 2.05.   Receipt of Product ....................................................    8
     Section 2.06.   Quality Control; Change in Specifications or Supplier .................    9
     Section 2.07.   Material Safety Data Sheets ...........................................   11
     Section 2.08.   BMS Supply Contracts ..................................................   11
     Section 2.09.   Line Extension Product and New Product ................................   11
     Section 2.10.   Maintenance of Manufacturing Facility Registrations ...................   12
     Section 2.11.   Maintenance of Product Registrations ..................................   12
     Section 2.12.   Promotional and Advertising Materials .................................   13
     Section 2.13.   Intellectual Property; License Grant. .................................   13

SECTION 3.   PURCHASE PRICE FOR PRODUCT ....................................................   14

    Section 3.01.    Purchase Price ........................................................   14

SECTION 4.   PAYMENTS AND REPORTS ..........................................................   15

     Section 4.01.   Payment; Books and Records ............................................   15
     Section 4.02.   Mode of Payment .......................................................   15
     Section 4.03.   Taxes .................................................................   16
     Section 4.04.   Late Payments .........................................................   16

SECTION 5.   COMPLIANCE WITH LAWS; REPRESENTATIONS AND WARRANTIES ..........................   16

     Section 5.01.   Compliance with Law; Cooperation ......................................   16
     Section 5.02.   BMS Representations, Warranties and Covenants .........................   17
     Section 5.03.   The Company Representations, Warranties and Covenants .................   18
     Section 5.04.   Representations and Warranties of Each Party ..........................   18
     Section 5.05.   Disclaimer of Warranties ..............................................   19
     Section 5.06.   No Reliance by Third Parties ..........................................   19

SECTION 6.   INDEMNIFICATION; REMEDIES FOR BREACH ..........................................   19

     Section 6.01.   BMS Indemnity .........................................................   19
     Section 6.02.   The Company Indemnity .................................................   19
     Section 6.03.   Limitations on Liability and Remedies .................................   20
     Section 6.04.   Control of Proceedings ................................................   20
</TABLE>

                                      (i)

<PAGE>

                         TABLE OF CONTENTS (continued)
                         ----------------------------

<TABLE>
<S>                                                                                            <C>
    Section 6.05.     Insurance ............................................................    21
    Section 6.06.     Other Limitations on Liability .......................................    21
    Section 6.07.     Calculation of Losses ................................................    21

SECTION 7.   COMPLIANCE WITH GOVERNMENT REGULATIONS ........................................    22

    Section 7.01.     Government Communications ............................................    22
    Section 7.02.     Access to Records ....................................................    22
    Section 7.03.     Governmental and Regulatory Inspections ..............................    22
    Section 7.04.     The Company Inspections ..............................................    22
    Section 7.05.     Regulatory Matters. ..................................................    23

SECTION 8.   STABILITY; PRODUCT RECALLS; ADVERSE EXPERIENCES;
             PRODUCT QUALITY COMPLAINTS; AND MEDICAL INQUIRIES .............................    24

    Section 8.01.     Stability ............................................................    24
    Section 8.02.     Product Recalls ......................................................    24
    Section 8.03.     Adverse Experience ...................................................    25
    Section 8.04.     Product Quality Complaints ...........................................    26
    Section 8.05.     Medical Inquiries ....................................................    27
    Section 8.06.     Disclosure Information ...............................................    28

SECTION 9.   CONFIDENTIALITY ...............................................................    28

    Section 9.01.     Confidentiality Requirement ..........................................    28
    Section 9.02.     Use of Information ...................................................    29
    Section 9.03.     Acquired Assets ......................................................    29
    Section 9.04.     Relief ...............................................................    29

SECTION 10.  TERMINATION ...................................................................    30
    Section 10.01.    Term .................................................................    30
    Section 10.02.    Breach ...............................................................    30
    Section 10.03.    Bankruptcy ...........................................................    30
    Section 10.04.    Effect of Termination ................................................    30
    Section 10.05.    Accrued Rights, Surviving Obligations ................................    31

SECTION 11.  FORCE MAJEURE .................................................................    31

SECTION 12.  TECHNICAL ASSISTANCE ..........................................................    32

    Section 12.01.    Technical Assistance .................................................    32

SECTION 13.  NOTICES .......................................................................    33

SECTION 14.  MISCELLANEOUS PROVISIONS ......................................................    34

    Section 14.01.    Assignment ...........................................................    34
    Section 14.02.    Non-Waiver ...........................................................    34
    Section 14.03.    Dispute Resolution ...................................................    34
</TABLE>

                                      (ii)

<PAGE>

<TABLE>
<S>                                                                                             <C>
     Section 14.04.   Entire Agreement .....................................................     35
     Section 14.05.   Public Announcements .................................................     35
     Section 14.06.   Governing Law ........................................................     35
     Section 14.07.   Relationship of the Parties ..........................................     35
     Section 14.08.   Counterparts .........................................................     36
     Section 14.09.   Severability .........................................................     36
     Section 14.10.   Expenses .............................................................     36
     Section 14.11.   Descriptive Headings .................................................     36
     Section 14.12.   Amendments and Waivers ...............................................     36
     Section 14.13.   Specific Performance .................................................     36
     Section 14.14.   Successors and Assigns ...............................................     37
     Section 14.15.   Waiver of Jury Trial .................................................     37
</TABLE>

SCHEDULES
---------

     Schedule 1.01     Product Information

     Schedule 2.03(a)  Initial Firm Order for Months 1 to 6 after Effective Date

     Schedule 2.04     Form of Certificate of Analysis

     Schedule 3.01(a)  Initial Purchase Price and Batch Size

     Schedule 3.01(b)  Variable Product Costs

                                     (iii)

<PAGE>

     THIS SUPPLY AGREEMENT (this "Agreement") dated as of June 25, 2002 (the
"Effective Date"), is between Bristol-Myers Squibb Company, a Delaware
corporation ("BMS"), and Women First HealthCare, Inc., a Delaware corporation
(the "Company").

                                    RECITALS

     WHEREAS, BMS and The Gillette Company ("Gillette"), through their
respective wholly-owned subsidiaries, entered into a Delaware general
partnership on October 7, 1996 to form Westwood-Squibb Colton Holdings
Partnership (the "Partnership") for purposes of manufacturing, distributing,
marketing and selling the Product (as defined below);

     WHEREAS, the Company, the Partnership, BMS and Gillette entered into an
Asset Purchase Agreement, dated as of June 25, 2002 (the "Asset Purchase
Agreement"), pursuant to which the Partnership will sell to the Company, and the
Company will purchase from the Partnership, on the Effective Date, certain
rights, title and interest in and to the Product; and

     WHEREAS, the Company wishes to purchase from BMS, and BMS wishes to supply
to the Company, the Company's entire worldwide requirements of the Product,
pursuant to the terms and conditions set forth in this Agreement.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
and promises contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties (as
defined below) hereby agree as follows:

                                   SECTION 1.
                                  DEFINITIONS

     Section 1.01. Definitions.

     For purposes of this Agreement:

     "Acquired Assets" shall have the meaning set forth in the Asset Purchase
Agreement.

     "Affiliate" means, with respect to any Person, any Person which, directly
or indirectly, controls, is controlled by, or is under common control with, the
specified Person. For the purposes of this definition, the term "control", as
applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management of that Person, whether
through ownership of voting securities or otherwise.

     "Agreement" means this agreement, together with all appendices, exhibits
and schedules hereto, and as the same may be amended or supplemented from time
to time.

     "BMS Know-How" shall have the meaning set forth in the License Agreement.

     "BMS Manufacturing Know-How" means the percentages and specification of
ingredients, the manufacturing processes, specifications, technology,
inventions, assays, quality control and testing procedures, Know-How and trade
secrets Controlled by BMS and used to manufacture, formulate, test, label or
package the Product as of the Effective Date but not used exclusively for the
Product.

<PAGE>

     "C.F.R." means the U.S. Code of Federal Regulations.

     "Controlled by" shall have the meaning set forth in the License Agreement.

     "EXW" means Ex Works as defined in the International Chamber of Commerce
Incoterms 2000.

     "Facility" means any manufacturing facility(ies), whether located
within or outside the United States, that manufacture, finish, label or package
the Product pursuant to this Agreement.

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

     "FD&C Act" means the United States Food, Drug and Cosmetics Act, as
amended.

     "Firm Order" means a written irrevocable firm purchase order for the
Product, which order shall include a delivery schedule specifying the requested
delivery date and quantity of the Product ordered, and the location to which
shipment of the Product is to be delivered.

     "Fully-Burdened Cost" means: (a) in connection with the manufacture,
labeling and packaging of the Product, the cost of materials, labor and variable
overhead incurred in manufacturing plus the fully absorbed allocation of fixed
overhead (including without limitation a reasonable allocation of idle plant
charges), in each case with respect to the Facility at which such Product is
manufactured; and (b) in connection with the performance or provision of a
service, the direct and indirect costs incurred by a Party to perform or provide
the service (including without limitation reasonable overhead charges),
determined in accordance with GAAP; in each case as evidenced by reasonably
detailed supporting documentation and prepared consistently from period to
period.

     "GAAP" means United States generally accepted accounting principles
consistently applied.

     "Gillette Know-How" shall have the meaning set forth in the License
Agreement.

     "Good Manufacturing Practices" or "cGMP" means current good manufacturing
practices, as established by the FDA and all other applicable Laws, as may be
amended from time to time.

     "Governmental Entity" means any court of competent jurisdiction,
legislature, governmental agency, administrative agency, regulatory agency or
commission or other governmental authority or other instrumentality of the
United States or any other country, any state, county, city or other political
subdivision (including the FDA and the corresponding authorities in the
jurisdictions where the Product is marketed, distributed or sold).

     "Improvement" means any modification by the Purchaser or its Affiliates to
the Product, including, without limitation, any modification in its manufacture,
composition, preparation, means of delivery or dosage but shall specifically
exclude (a) any such modification by Gillette, BMS or any of their respective
Affiliates and (b) any modification to the Product that alters or substitutes
the Product's active ingredient.

     "Inventory" shall have the meaning set forth in the Asset Purchase
Agreement.

     "Laws" means all laws, rules, regulations, ordinances and other
requirements of any Governmental Entity.

                                       -2-

<PAGE>

     "License Agreement" means the License Agreement, dated as of the Effective
Date, among the Company, BMS and Gillette.

     "Losses" means losses, liabilities, claims, damages and expenses
(including, until such time as the indemnifying Party has notified the
indemnified Party in writing that it will assume control of a given claim,
reasonable attorneys fees and costs of litigation pertaining to such claim), and
expenses paid or payable by an indemnified party to a Third Party.

     "MAA" or "Marketing Approval Application" means a NDA or a Premarket
Approval Application, as required under the FD&C Act and the regulations
promulgated thereunder, or a comparable filing for marketing approval in a
country.

     "Manufacturing Facility Registrations" means the approvals, permits,
applications, licenses or registrations granted by the relevant Governmental
Entity to a Facility for the manufacture of the Product or any other products at
such Facility. For sake of clarity, Manufacturing Facility Registrations do not
include Product Registrations.

     "Material Safety Data Sheet" means the material safety data sheet used to
comply with the Occupational Safety and Health Administration's Hazard
Communication Standard, 29 C.F.R. 1910.1200.

     "NDA" means any new drug application filed pursuant to the requirements of
the FDA, as more fully defined in 21 C.F.R. Part 314.5 et seq., and any
equivalent application filed with any Governmental Entity.

     "NDC" means the unique, identifying number assigned to a drug product,
including the labeler code, product code and package code, in connection with
the drug listing requirements of Section 510(j) of the FD&C Act and applicable
FDA rules and regulations.

     "Partnership Manufacturing Know-How" means the percentages and
specifications of ingredients, the manufacturing processes, specifications,
technology, inventions, assays, quality control and testing procedures, Know-How
and trade secrets Controlled by the Partnership and used exclusively to
manufacture, formulate, test, label or package the Product as of the Effective
Date.

     "Party" means BMS or the Company and, when used in the plural, means BMS
and the Company.

     "Person" means any individual, group, corporation, partnership or other
organization or entity (including any Government Entity).

     "Prime Rate" means the rate of interest from time to time announced as the
prime commercial lending rate to the most creditworthy customers by a bank of
national standing agreed to by the Parties.

     "Product" means the prescription form of VANIQA(R) (eflornithine
hydrochloride) Cream, 13.9% and further listed and described on Schedule 1.01,
as the same is manufactured, packaged and labeled in accordance with applicable
Laws and the applicable Product Registration and Specifications, including all
strengths and packaging configurations of the final finished dosage form
presentation existing on the Effective Date.

                                       -3-

<PAGE>

     "Product Registrations" means the approvals, permits, applications,
licenses or registrations (including but not limited to the NDA) and any
amendments or supplements thereto for the Product which have been received in
order to market or sell same (and related submissions to and correspondence with
the relevant Governmental Entity). For the avoidance of doubt, the Parties agree
that Product Registrations do not include any Manufacturing Facility
Registration, any NDC number or any drug listing required by 21 C.F.R. Part 207.

     "Related Instruments" means the Asset Purchase Agreement, the License
Agreement and any other written agreements contemplated thereunder to which the
Parties are parties.

     "Specifications" for the Product means the written specifications set forth
in the applicable NDA as of the Closing Date (as defined in the Asset Purchase
Agreement), as the same may be amended or supplemented from time to time
hereafter by the Company in accordance with Section 2.06(b).

     "Third Party" means any Person who or which is neither a Party nor an
Affiliate of a Party.

     "United States" and "U.S." means the fifty (50) states of the United States
of America and the District of Columbia, Puerto Rico and any other territory or
possession of the United States.

     Section 1.02. Other Definitions.

     The following terms have the meanings set forth in the Sections set forth
below:

     Term                                                          Section
     ----                                                          -------
     Asset Purchase Agreement                                      Recitals
     Audit                                                         7.04
     BMS                                                           Preamble
     BMS Party                                                     6.02
     Company                                                       Preamble
     Company Party                                                 6.01
     Confidential Information                                      9.01(a)
     Effective Date                                                Preamble
     Facility Audit                                                5.01(c)
     Facility Technical Information                                2.10(b)
     Force Majeure Event                                           11
     Forecast                                                      2.02
     Gillette                                                      Recitals
     Non-Serious Adverse Event                                     8.03(b)
     Partnership                                                   Recitals
     PDMA                                                          2.12
     Product Quality Complaint                                     8.04(a)
     Purchase Price                                                3.01(a)
     Recall                                                        8.02
     Retained Rights                                               2.14
     Serious Adverse Event                                         8.03(b)
     SKU                                                           2.02
     Stability Study                                               8.01(b)
     Technical Information                                         2.11(b)
     Term                                                          10.01

                                       -4-

<PAGE>

Any other terms capitalized in this Agreement and not defined in Section 1.01 or
referenced in this Section 1.02 shall have the meaning ascribed to such term in
the Asset Purchase Agreement for the Product.

     Section 1.03. Interpretations.

          (a)  In the event an ambiguity or a question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any provisions of this
Agreement.

          (b)  The definitions of the terms herein shall apply equally to the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation". The word "will" shall be
construed to have the same meaning and effect as the word "shall". Unless the
context requires otherwise; (A) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document or any addenda, schedules, exhibits or
amendments thereto, and as from time to time amended, supplemented or otherwise
modified (subject to any restrictions on such amendments, supplements or
modifications set forth herein or therein); (B) any reference to any Laws herein
shall be construed as referring to such Laws as from time to time enacted,
repealed or amended; (C) any reference herein to any Person shall be construed
to include the Person's successors and assigns; (D) the words "herein", "hereof"
and "hereunder", and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof; (E)
all references herein to Sections, Exhibits or Schedules shall be construed to
refer to Sections, Exhibits and Schedules of this Agreement; and (F) the
singular number includes the plural number and vice versa.

                                   SECTION 2.

                             GENERAL TERMS OF SUPPLY

     Section 2.01. Sale and Purchase of Product.

          (a)  BMS (either itself or through its Affiliates) shall supply to the
Company, and the Company shall, subject to the terms and conditions of this
Agreement, purchase from BMS, one hundred percent (100%) of the Company's
requirements for the Product for marketing, distribution, sale and use during
the Term, pursuant to Firm Orders submitted by the Company to BMS from time to
time in accordance with Section 2.03, at the Purchase Price, and subject to
Section 5.02.

          (b)  All quantities of the Product shall be supplied hereunder by BMS
in finished dosage form, filled, labeled, branded and packaged for commercial
sale or distribution, or as samples, as the case may be, in accordance with the
terms and conditions of this Agreement, the Specifications and applicable Laws.
BMS shall solely and exclusively supply the Product to the Company, its
Affiliates and their respective designees. BMS shall be responsible for the
purchase of all raw materials for the manufacture of the Product in accordance
with the Product Registrations as necessary to supply the finished Product to
the Company under this Agreement.

          (c)  BMS and the Company shall take any and all actions necessary to
change, as expeditiously as possible, the NDC numbers for the Product and to
apply new NDC numbers to the

                                       -5-

<PAGE>

Product. For no more than six (6) months following the Effective Date, the
Product manufactured hereunder may continue to be labeled and packaged with the
same labels and packaging that are used by BMS in connection with its
manufacture of the Product for the Partnership as of the Effective Date;
provided, however, that the Parties shall use their commercially reasonable
efforts to complete the revision of all Product labeling and packaging sooner.
After such time, the Product shall be manufactured with labeling, branding,
trade dress and packaging identifying BMS or any Affiliate thereof as the
manufacturer of the Product and the Company (or the Company's designee) as the
distributor thereof and the labeling shall reflect the Company's NDC number.
Promptly after the Effective Date, BMS shall provide to the Company samples and
copies of all labeling, branding, trade dress and packaging for the Product as
of the Effective Date. Within sixty (60) calendar days following the delivery by
BMS to the Company of the current labeling and packaging, the Company shall
provide to BMS final specifications for the revised labeling, branding, trade
dress and packaging of the Product, including all necessary photo-ready art (or
its substantial equivalent) reflecting such revisions.

          (d)  Subject to the provisions of Section 2.01(c), the Company shall
control and shall have sole responsibility for, the content and type of all
labeling and packaging (and any changes or supplements thereto) for the Product.
Except as otherwise provided in the Asset Purchase Agreement, all such
activities related to any changes or supplements to the labeling and packaging
shall be conducted at the Company's sole cost and expense, including any
Fully-Burdened Costs incurred by BMS plus 15% in securing any approvals required
by the FDA or other applicable regulatory authorities for any such changes or
supplements, excluding the cost of any printed materials or label inventory that
cannot be used following the change. BMS shall be responsible for obtaining such
labels in accordance with the content specified by the Company. Any changes to
the labeling and packaging shall be communicated to BMS in writing at least one
hundred twenty (120) calendar days (or, if shorter, the period required by
applicable Laws or Government Entities) prior to the desired implementation date
together with the documentation specifying the content to be included in the
labeling and packaging, including all necessary photo-ready art (or its
substantial equivalent). BMS shall not be required to implement such changes
until its first batch run after the expiration of such one hundred twenty (120)
day (or shorter) period. However, BMS shall endeavor to implement the changes as
early as practicable.

          (e)  No terms and conditions contained in any Firm Order,
acknowledgment, invoice, bill of lading, acceptance or other preprinted form
issued by either Party shall be effective to the extent they are inconsistent
with or modify the terms and conditions contained herein.

     Section 2.02. Forecasts.

          The Company shall submit to BMS upon execution of this Agreement and
thereafter no later than thirty (30) days before the first day of every calendar
quarter (i.e., January 1, April 1, July 1, and October 1) during the Term
hereof, a twenty-four (24) month rolling forecast ("Forecast") organized by
months and Product stock keeping units ("SKUs") setting forth orders the Company
expects to place for the Product during such period commencing with the
beginning of said calendar quarter. The Company shall make all Forecasts in good
faith given market and other information available to the Company. All Forecasts
are non-binding except as set forth in Section 2.03 below.

     Section 2.03. Ordering.

          (a)  Upon the execution of this Agreement, the Company will provide
BMS with its initial Firm Order of Product for its requirements through December
31, 2002, the quantities and delivery dates for such initial Firm Order shall be
attached as Schedule 2.03(a), and is in addition to the Inventory to be
delivered to the Company pursuant to the Asset Purchase Agreement. BMS will
supply the

                                       -6-

<PAGE>

quantities set forth in Schedule 2.03(a) for the Product in accordance with the
delivery schedule set forth therein (it being understood that BMS shall be under
no obligation to deliver in excess of [***] units of the Product ordered
pursuant to this Section 2.03(a) sooner than sixty (60) days after the Effective
Date of this Agreement), and to the extent such initial Firm Order is not
sufficient to meet the Company's actual requirements for the Product for such
period, BMS will use its commercially reasonable efforts to supply the Company
with its requirements beyond the amounts specified in Schedule 2.03(a). The
Company agrees to purchase such quantities of the Product as supplied by BMS in
accordance with Schedule 2.03(a).

          (b)  Except as provided in Section 2.03(a), and subject to the terms
and conditions of this Agreement, the Company shall purchase the Product solely
by Firm Orders for the Product. The terms and conditions of this Agreement shall
be controlling over any conflicting terms and conditions in such Firm Order. The
Company shall submit each such written Firm Order to BMS at least one hundred
twenty (120) days in advance of the date specified in each Firm Order on which
delivery of the Product is required. Each such Firm Order shall be binding on
the Company and on BMS once such Firm Order is accepted by BMS (it being
understood that such Firm Order shall be deemed to be accepted by BMS if it
meets the requirements as set forth in this Agreement). Prior to the placement
of Firm Orders, the Parties shall communicate regarding BMS' production
schedules for the Product and the Company's anticipated delivery requirements
for the Product so that the Parties can coordinate BMS's production schedules
and the Company's delivery requirements to enable BMS to supply Product to the
Company with the maximum practicable shelf life at the time of shipment.
Notwithstanding the foregoing, BMS shall attempt to accommodate any request of
the Company for delivery of the Product in less than one hundred twenty (120)
days, and further, BMS will attempt to accommodate any changes requested by the
Company in delivery schedules for the Product following BMS' receipt of Firm
Orders from the Company; provided, however, BMS shall not be liable for any
failure or inability to do so. Subject to the foregoing, upon receipt of each
Firm Order by BMS hereunder, BMS shall supply the Product in such quantities
(with any variances permitted hereunder) and deliver the Product to the Company
on the requested delivery dates specified in such Firm Order, unless otherwise
mutually agreed in writing by the Parties. To the extent that such Firm Order is
not sufficient to meet the Company's actual requirements, BMS shall use
commercially reasonable efforts to supply the Company with its requirements
beyond the amounts specified in its Firm Order; provided, however, BMS shall not
be liable for any failure or inability to do so. BMS is not entitled to accept
verbal orders of any kind for the production of the Product hereunder.

          (c)  Quantities of the Product actually shipped by BMS may vary from
the quantities specified in any Firm Order by plus or minus ten percent (10%),
or as mutually agreed upon by the Parties, and still be deemed to be in
compliance with such Firm Order; provided, however, the Company only shall be
invoiced and required to pay for the quantities that BMS actually ships to the
Company.

          (d)  Any Product ordered by the Company for delivery on each specified
delivery date shall be consistent with BMS' current minimum batch sizes for the
Product, or multiples thereof, as set forth in Schedule 3.01(a). BMS may change
the batch size at any time; provided that BMS gives the Company no less than six
months prior notice; and provided further that such changes in batch size
conform with Product Registrations and applicable Laws.

     Section 2.04. Shipments.

          BMS shall ship each Firm Order, EXW Facility for the Product (whether
manufactured by BMS, an Affiliate of BMS or a Third Party) to the Company or its
designee to the destinations specified by the Company on the applicable Firm
Order using the Company's designated common carrier.

***Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

                                      -7-

<PAGE>

Freight (including customs clearance costs) and insurance shall be for the
account of the Company. Title shall pass to the Company and the risk of loss,
delay or damage in transit shall be with the Company, from and after the
Company's designated common carrier takes custody of the Product from BMS at the
Facility (including, without limitation any loss from an environmental impact
arising from the release or consumption of the Product); provided, however, that
such transfer of title and risk of loss, delay and damage shall not in any way
otherwise obviate or limit the representations and warranties or indemnification
obligations of BMS hereunder. BMS shall package the Product for shipment in
accordance with appropriate packaging and shipping containers agreed upon by the
Parties, unless otherwise specified in writing by the Company sixty (60)
business days prior to such shipment, in which event any extra costs incurred by
BMS on account of the packaging changes requested by the Company shall be
promptly reimbursed by the Company. In the event that BMS receives less than
sixty (60) business days notice of a request for alternate packaging, BMS shall
not be required to repackage any shipments that have already been packed for
shipment. BMS shall include the following with each shipment of the Product: (a)
the Company purchase order number; (b) the BMS lot and batch numbers for the
Product included; (c) the quantity of the Product; and (d) the Certificate of
Analysis (the form of which is attached hereto as Schedule 2.04).

     Section 2.05. Receipt of Product.

          (a)  The Company shall be entitled to reject any portion or all of any
shipment of the Product that does not conform to the Specifications or otherwise
fails to comply in any material respect with Section 5.02(a) (unless such
non-conformity was attributable to an act or omission of the Company or the
common carrier once such Product, packaged for shipment in accordance with
Section 2.04, was accepted by such common carrier from BMS), provided, that, (i)
the Company shall notify BMS within thirty (30) calendar days after receipt of
such shipment if it is rejecting a shipment due to obvious physical damage or
quantity discrepancies that are evident upon visual inspection of the packaged
Product as shipped by BMS (unless caused by the common carrier or the Company),
(ii) except as otherwise provided in Section 2.05(a)(iii), the Company shall
notify BMS within ninety (90) calendar days after receipt of such shipment if it
is rejecting a shipment due to any defects other than those obvious visual
defects, and (iii) the Company shall notify BMS within ninety (90) calendar days
after the Company becomes aware of any defects in the case of Product having
defects that are attributable solely to BMS's manufacture of such Product.
Notwithstanding anything contained herein, the Company shall have no obligation
to inspect the Product beyond a visual inspection of each shipment for obvious
physical damage or quantity discrepancies that are evident upon visual
inspection of the packaged Product as shipped by BMS. Without in any way
limiting BMS' indemnity obligations as set forth in Section 6.01, if no notice
is provided by the Company within the relevant time periods set forth above,
then the Company shall be deemed to have accepted the shipment. Any notice of
rejection by the Company shall be accompanied by a reasonably detailed statement
of its reasons for rejection and a report of any pertinent analysis performed by
the Company on the allegedly non-conforming Product, together with the methods
and procedures used. BMS shall notify the Company as promptly and as reasonably
possible, but in any event within thirty (30) calendar days after receipt of
such notice of rejection, whether or not it accepts the Company's assertions of
non-conformity.

          (b) Whether or not BMS accepts the Company's assertion of non-
conformity, promptly upon receipt of a notice of rejection, unless otherwise
specified by the Company, BMS shall use commercially reasonable efforts to
provide replacement Product for the Product that was rejected by the Company in
the original shipment within ninety (90) calendar days of receipt of the
Company's notice of non-conformity. If any such Product rejected by the Company
from such original shipment ultimately is found to be non-conforming (whether
pursuant to Section 2.05(c) or if BMS so acknowledges in writing), BMS shall
bear all expenses for such replacement Product (including all transportation
and/or disposal

                                       -8-

<PAGE>

charges and cost of manufacture for such non-conforming Product), to the extent
the Company previously paid for any corresponding non-conforming Product. If it
is determined subsequently that such non-conforming Product was in fact
conforming (whether pursuant to Section 2.05(c) or if the Company so
acknowledges in writing), then the Company shall be responsible not only for the
purchase price of the allegedly nonconforming Product (including all
transportation charges), but also, upon receipt and acceptance by the Company in
accordance with the procedures (and at the same price charged in the original
shipment) set forth above, the replacement Product. Replacement shipments shall
also be subject to the procedures contained in Section 2.05(a). BMS shall be
under no obligation to accept a return of Product except as provided in this
Section 2.05(b).

          (c)  If BMS disagrees with any alleged non-conformity with respect to
any Product it shall so notify the Company in writing with thirty (30) calendar
days of the Company's notice of non-conformity and BMS and the Company shall
promptly (and in no event longer than an additional thirty (30) calendar days)
cooperate with one another to retain an independent laboratory of recognized
repute, reasonably acceptable to both Parties, which shall analyze an aliquot
sample or such other portion of a shipment of such Product, furnished by the
Company from the shipment received by the Company, as may be necessary to
substantiate whether the shipment rejected by the Company conformed to the
Specifications or otherwise failed to comply in any material respect with
Section 5.02(a) at the time of delivery to the Company or its designee. The
laboratory shall use such procedures and tests as the laboratory may consider
necessary or appropriate to reach a conclusion. 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
laboratory's results of analysis, which, absent manifest error, shall be deemed
final as to any dispute over compliance of the Product with the Specifications
and/or compliance in any material respect with Section 5.02(a) at the time of
delivery to the Company or its designee. If the laboratory analysis shows that
the Product does not conform to the Specifications and/or that it does not
comply in all material respects with Section 5.02(a), the costs of such analysis
shall be paid by BMS. If the laboratory analysis shows that the Product does
conform to the Specifications and/or that it does comply in all material
respects with Section 5.02(a), the costs of such analysis shall be paid by the
Company.

          (d) If BMS acknowledges an alleged non-conformity (or if the
laboratory concludes that the Product was non-conforming), BMS shall promptly
(and in any case within thirty (30) calendar days thereafter) make arrangements
for the return and disposal of the non-conforming Product. BMS shall pay, or
reimburse the Company, for the Fully-Burdened Costs incurred by the Company for
such return shipment of such non-conforming Product in accordance with BMS'
instructions.

     Section 2.06. Quality Control; Change in Specifications or Supplier.

          (a) BMS shall conduct all quality control testing of the Product prior
to shipment in accordance with the Product Registration and applicable Laws. BMS
shall retain records and samples of the Product relating to such testing as
required by applicable Law and shall provide the Company with reasonable access
during normal business hours to such records during any Audit in accordance with
the procedures set forth in Section 7.04; provided, however, that such access
does not unreasonably disrupt the normal operations of BMS. If the Company
conducts quality control testing of the Product after delivery thereof to the
Company, the Company shall use a laboratory qualified by BMS to ensure
consistency of testing with the BMS results. BMS shall promptly after the
Effective Date (and in no event later than thirty (30) days) provide all
analytical methodology used by BMS for quality control testing of the Product.

                                       -9-

<PAGE>

          (b) The Company shall have the right: (i) subject to BMS' prior
written consent not to be unreasonably withheld, to change the Specifications
with respect to the Product from time to time; (ii) to change the Specifications
with respect to the Product without prior written consent, from time to time, as
may be required by any Governmental Entity having jurisdiction over the Product;
or (iii) to change the Specifications with respect to the Product by mutual
agreement of the Parties and in each case, on not less than one hundred twenty
(120) calendar days prior written notice to BMS (or such shorter period as
required by any Governmental Entity or mutually agreed by the Parties). In such
event, upon the reasonable request of the Company and at the Company's sole
expense, BMS shall assist with all analytical or experimental work to be
performed in connection with making such change, but the Company shall be
responsible, at the Company's expense, for filing all changes proposed by the
Company to any Product Registration, and for seeking approval of any such change
required by each applicable Governmental Entity. The Company shall reimburse BMS
or its Affiliates for its Fully-Burdened Costs incurred plus 15% in implementing
any changes to the Specifications in accordance with this Section 2.06(b)
requested by the Company in BMS' or its Affiliates' Facility, and for filing,
amending or supplementing any Manufacturing Facility Registration required
thereby and shall not hold BMS responsible for any reasonable disruption of
supply resulting from any such change in the Specifications.

          (c) At any time and from time to time, BMS may, (i) in its sole
discretion, without the consent of the Company (but with sixty (60) days' prior
written notice) change the manufacturer or source of manufacturing used in the
manufacturing of the Product to an Affiliate of BMS, or to another BMS owned and
operated facility, provided that BMS shall remain responsible for all of its
obligations set forth herein, and provided further that any such change which
will result in a delay in BMS' or such other party's ability to meet the
Company's delivery requirements for Products pursuant to Firm Orders made
pursuant to Section 2.03 shall require the prior written consent of the Company
(not to be unreasonably withheld or delayed), (ii) with the Company's prior
written consent (not to be unreasonably withheld) change the manufacturer or
source of manufacturing used in the manufacturing of the Product to a Third
Party; provided that BMS shall be responsible for the acts or omissions of such
Third Party or (iii) without the consent of the Company (but with sixty (60)
days' prior written notice) change the manufacturer or manufacturing source used
in the manufacturing of the Product to a successor (whether by merger,
consolidation, reorganization or other similar event) or purchaser of the
Facility and/or substantially all of its business assets relating to the
Product, provided, that, such successor or purchaser has agreed in writing to
assume all of BMS' rights and obligations hereunder and a copy of such
assumption is provided to the Company, and provided further that any such change
which will result in a delay in BMS' or such other party's ability to meet the
Company's delivery requirements for Products pursuant to Firm Orders made
pursuant to Section 2.03 shall require the prior written consent of the Company
(not to be unreasonably withheld or delayed). The Company shall cooperate with
BMS (and such other manufacturer, if applicable) in any reasonable manner to
effect such transfer to an Affiliate of BMS, Third Party or successor. BMS shall
be responsible for making any required Manufacturing Facility Registration with
respect to such change in manufacturer and seeking approval from each applicable
Governmental Entity. The Company shall be responsible for making any required
filing with respect to any Product Registration in connection with such change
in manufacturer or source of manufacturing. BMS shall bear all costs incurred by
either Party with respect to such change in manufacturer or source of
manufacturing including without limitation any Product Registration filings, and
shall compensate the Company for its Fully-Burdened Costs incurred pursuant to
any such change.

          (d) At any time and from time to time, BMS in its sole discretion may
change, without the consent of but with sixty (60) days prior written notice to
and consultation with the Company, any manufacturing processes used in
manufacturing the Product, any active pharmaceutical ingredient, intermediates,
excipients, reagents or other compounds used in the manufacture of the Product,
and any

                                       -10-

<PAGE>

suppliers of any components used in making the Product; provided that, any such
change requiring approval of an amendment or supplement to any Product
Registration will not be effected or implemented without the prior written
consent of the Company (not to be unreasonably withheld or delayed); and
provided further that except where such change results from a manufacturing
Improvement made in response to a pronouncement of a Governmental Entity (other
than as a result of non-compliance by BMS), a Force Majeure Event, or a change
in applicable Law, no such change shall be effected in a manner that would
result in or cause an interruption of supply of the Product to the Company. Each
Party will fully cooperate with the other in any reasonable manner to effect
such change in a timely manner. The Company shall be responsible for all Product
Registration filings needed to effect such change, and will use its commercially
reasonable efforts to make all such regulatory filings (subject to receipt of
necessary information from BMS) and take such actions as may be required to
implement and seek regulatory approval for such change on a timely basis. BMS
shall be responsible for making any required filing to any Manufacturing
Facility Registration with respect to such change and seeking approval from each
applicable Governmental Entity, BMS shall reimburse the Company for its
Fully-Burdened Costs in seeking and obtaining or assisting BMS in seeking and
obtaining any qualification or regulatory approval of such change. However, if
such change is required by a change in Law or by a Governmental Entity (other
than as a result of non-compliance by BMS), or is requested by the Company, in
which event the Company shall reimburse BMS for its Fully-Burdened Costs plus
15% to seek and obtain any regulatory approval for such change and to implement
such change.

          (e) With respect to any regulatory filings and approvals made or
sought by either Party under this Section 2.06, each Party shall provide
reasonable cooperation to the other Party in connection therewith. If a change
proposed to be made under this Section 2.06 requires prior approval by any
applicable Governmental Entity before implementation, such change will not be
implemented until such change has been so approved.

     Section 2.07. Material Safety Data Sheets.

          BMS shall provide the Company with all information in the applicable
Material Safety Data Sheets as they exist as of the Effective Date for the
Product provided by BMS and thereafter as reasonably requested by the Company.

     Section 2.08. BMS Supply Contracts.

          BMS shall have the sole right, but not the obligation, at its sole
discretion and expense, to maintain and enforce any contract entered into by BMS
or its Affiliates covering the supply of any active pharmaceutical ingredient,
compounds, intermediates, biomaterials, packaging components, containers and
other materials used in the manufacture of the Product. Upon termination of BMS'
supply obligation under this Agreement, BMS will assign, to the extent
assignable and if requested by the Company, any contracts relating to the supply
of any active pharmaceutical ingredient, compounds, intermediates, biomaterials,
packaging components, containers and other material used exclusively in the
manufacture of the Product, and the Company shall be solely responsible for all
obligations arising under such assigned contracts after the date of assignment.
Except as provided by Section 11, nothing contained in this Section 2.08 shall
excuse BMS from performing its obligations under this Agreement. For the
avoidance of doubt, termination without cause by BMS and/or expiration of a
supply contract by BMS, in itself, does not constitute a Force Majeure event;
provided, however, BMS' inability to obtain bulk supply shall constitute a Force
Majeure event.

     Section 2.09. Line Extension Product and New Product.

                                       -11-

<PAGE>

          BMS shall have no obligation, express or implied, to develop or assist
in the development or manufacture of new formulations, dosages, forms of
administration or preparations for the Product.

     Section 2.10. Maintenance of Manufacturing Facility Registrations.

          For so long as BMS is manufacturing the Product for the Company:

          (a) BMS shall have sole responsibility at its expense for maintaining,
and shall use commercially reasonable efforts to maintain, each Manufacturing
Facility Registration covering the manufacture of the Product.

          (b) The Company agrees to provide to BMS all material manufacturing
and supply information (the "Facility Technical Information") necessary to
enable BMS (i) to make any filings required by applicable Law in connection with
any Manufacturing Facility Registration, (ii) to otherwise maintain each such
Manufacturing Facility Registration, and (iii) to include complete and accurate
information in reports required to be made by BMS to any applicable Governmental
Entity with respect to any Product with respect to such Manufacturing Facility
Registration. BMS shall, to the extent it is not required to be reported to BMS
by the Company under applicable Laws, provide written notice to Company setting
forth in reasonable detail the nature of the Facility Technical Information in
respect of the Product and the date by which such Facility Technical Information
shall be provided to BMS in respect of the Product. Any such written notice
shall allow the Company reasonable time to accumulate such Facility Technical
Information requested. The Company shall use its commercially reasonable efforts
to provide such Facility Technical Information to BMS on or before the date set
forth in any such written request. The Company will use its commercially
reasonable efforts to do all such other acts, as promptly as reasonably
possible, which may be necessary or appropriate to make all necessary reports to
BMS to allow appropriate and timely filings required by Law to the Manufacturing
Facility Registration. BMS shall reimburse the Company its Fully-Burdened Costs
to provide such information and reports.

          (c) Each Party shall keep the other informed on a timely basis as to
any developments that would have a material adverse effect on a Manufacturing
Facility Registration. BMS shall have the final decision-making authority in
every case on how to maintain each Manufacturing Facility Registration and any
other issues in connection therewith; provided, that, BMS will not, except where
required by, or to fulfill its obligations under, applicable Laws or except
where required by a Governmental Entity acting within the scope of its
authority, supplement, amend or otherwise alter a Manufacturing Facility
Registration so as to breach this Agreement or to materially and adversely alter
the rights granted to, or the obligations imposed upon, the Company hereunder or
under the Asset Purchase Agreement that are derived from such Manufacturing
Facility Registration.

     Section 2.11. Maintenance of Product Registrations.

          (a) As between the Parties, the Company shall retain all rights, title
and interests in and to, and all obligations under, the Product Registration.
The Company shall have sole responsibility for maintaining, and shall use
commercially reasonable efforts to maintain, the Product Registration, including
filing NDA annual reports.

          (b) Without limiting any obligations of BMS under the Asset Purchase
Agreement, BMS agrees to provide all material information (the "Technical
Information") necessary to enable the Company (i) to make any filings required
by applicable Law in connection with any Product Registrations anywhere in the
world, (ii) to otherwise maintain any Product Registrations anywhere in the
world (including any Supplemental Registrations), and (iii) to include complete
and accurate information in the

                                       -12-

<PAGE>

annual reports required to be made by the Company to the FDA in relation to the
Product. The Company shall, to the extent it is not required to be reported to
the Company by BMS under applicable Laws and/or as listed on Form FDA 2252,
provide written notice to BMS setting forth in reasonable detail the nature of
the Technical Information in respect of the Product and the date by which such
Technical Information shall be provided to the Company in respect of the
Product. Any such written notice shall allow BMS reasonable time to accumulate
such Technical Information requested. BMS shall use its commercially reasonable
efforts to provide such Technical Information to the Company on or before the
date set forth in any such written request. BMS will use its commercially
reasonable efforts to do all such other acts, as promptly as reasonably
possible, which may be necessary or appropriate to make all necessary reports to
the Company, including reports of Serious and Non-Serious Adverse Events in
accordance with Section 8.03, that are required by Law to allow appropriate and
timely filings to the Product Registration. Except as otherwise provided in the
Asset Purchase Agreement, the Company shall reimburse BMS its Fully-Burdened
Costs plus 15% to provide such information and reports with respect to Product
Registrations outside the U.S.

          (c) Each Party shall keep the other informed on a timely basis as to
any developments that would have a material adverse effect on the Product
Registrations. Where the Company may lawfully do so and subject to any
confidentiality obligations it may have to Third Parties with respect to Third
Party information included therein, the Company shall provide BMS, upon request
after reasonable notice from BMS, with access to copies of all filings submitted
by the Company based on any information submitted by BMS or that relate to any
Facility. The Company shall have the final decision-making authority in every
case on how to maintain each Product Registration and any other issues in
connection therewith, provided, however, Company shall consult with BMS, on
whether and how to communicate with applicable Governmental Entity with respect
to decisions on Recall of the Product. The Company will not, except where
required by, or to fulfill its obligations under, applicable Law or except where
required by a Governmental Entity acting within the scope of its authority,
supplement, amend or otherwise alter any Product Registration so as to breach
this Agreement or to materially and adversely alter the rights granted to, or
the obligations imposed upon, BMS hereunder or under the Asset Purchase
Agreement that are derived from such Product Registration.

          (d) The Company shall pay all fees arising on or after the Effective
Date with respect to the Product Registrations that the Company initiates,
including NDA user and filing fees.

     Section 2.12. Promotional and Advertising Materials.

          The Company shall be solely responsible for designing, preparing and
distributing at its sole expense all promotional materials and advertisements
used by or on its behalf of it in the promotion and marketing of the Product.
The Company shall be solely responsible for submitting, without BMS review, all
promotional and advertising materials prepared by or for it to Governmental
Entity for review and approval (as applicable). Notwithstanding any review or
use of any promotional or advertising materials by BMS prior to the Effective
Date, the Company will be solely responsible and liable for any failure arising
after the Effective Date of such materials to comply with the applicable
labeling and Product Registration and with applicable Law (including the
Prescription Drug Marketing Act of 1987 ("PDMA") and any amendments thereto),
unless the failure to so comply is a result of BMS' or its Affiliate's act or
omission with respect to such promotional and advertising materials, including
packaging errors and omissions, in which case BMS shall be solely responsible
and liable.

     Section 2.13. Intellectual Property; License Grant.

          (a) The Company hereby grants to BMS a non-exclusive, fully paid-up
and royalty-

                                      -13-

<PAGE>

free, irrevocable, worldwide and sublicensable right and license under its
rights, title and interests in and to the Partnership Manufacturing Know-How,
the Gillette Know-How and the BMS Know-How, in each case solely for purposes of
manufacturing and supplying the Product exclusively to the Company during the
Term and under the provisions of this Agreement.

          (b) As between the Parties, the Company shall own all right, title and
interest in and to the Partnership Manufacturing Know-How, including, without
limitation, to any Improvements thereto.

          (c) BMS hereby grants to Company a non-exclusive, fully paid-up and
royalty-free, irrevocable, worldwide and sublicensable right and license under
its rights, title and interests in and to the BMS Manufacturing Know-How solely
for the purpose of manufacturing or having manufactured the Product and any
Improvements thereto for the Company's manufacturing, marketing, sale and
distribution.

                                   SECTION 3.

                           PURCHASE PRICE FOR PRODUCT

     Section 3.01. Purchase Price.

          (a) The purchase price for commercial and sample supplies of the
Product sold to the Company during the Term pursuant to Firm Orders submitted by
Company shall be equal to the price set forth in Schedule 3.01(a) (as adjusted
from time to time pursuant to Section 3.01(b), the "Purchase Price").

          (b) The Purchase Price for the Product shall be fixed at the beginning
of the Term, and thereafter shall be adjusted on January 1, 2003 and on each
January 1 thereafter during the Term (to take effect for orders to be delivered
after January 1) to be equal to [***] for such calendar year as calculated by
BMS in accordance with its standard accounting procedures in or about September
of the preceding calendar year. The Purchase Price may not be increased in any
annual adjustment pursuant to this Section 3.01(b) in excess of five percent
(5.0%) of the Purchase Price in effect for the immediately preceding calendar
year. For the avoidance of doubt, this limitation shall not apply to any
increase to the Purchase Price pursuant to an adjustment under Section 3.01(c).

          (c) In addition to any Purchase Price adjustment pursuant to Section
3.01(b), BMS shall be entitled to increase the Purchase Price for the Product at
any time during the Term (to take effect for orders to be delivered after the
date of such event) by giving thirty (30) days prior written notice to the
Company solely to take into account, to the extent not reimbursed by the
Company: (i) any increase in the Fully-Burdened Costs of manufacturing the
Product occasioned by a change in Specifications requested by the Company
pursuant to Section 2.06(b); (ii) changes in its manufacturing processes in
response to a pronouncement of a Governmental Entity (other than as a result of
non-compliance by BMS), (iii) changes resulting from a Force Majeure Event, or a
change in applicable Law pursuant to Sections 2.06(c) and 2.06(d); or (iv) to
reflect unanticipated, significant, additional costs incurred upon renewal or
replacement of any contract with a Third Party for the supply of any materials
or services used in the manufacture or supply of the finished Product, but
excluding for purposes of this clause (iv) any costs incurred in connection with
the change of the manufacturer or source of manufacturing of the Product. In
connection with any increase of the Purchase Price pursuant to the preceding
sentence, BMS shall provide reasonable documentation to the Company supporting
the basis for the increase and shall use its commercially reasonable efforts to
locate an alternative lower cost supplier for materials or provider of

***Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

                                      -14-

<PAGE>

services utilized to manufacture the Product. Since such increases may not be
immediately known at the effective date of the price increase, the Purchase
Price for any deliveries made after the effective date of such price increase
will be invoiced and initially paid based on the Purchase Price then in effect,
with an adjustment of the Purchase Price and payment of any difference to be
made once the adjustment is finally determined.

                (d)  Not more frequently than once with respect to any year in
which BMS has elected to adjust the Purchase Price under Section 3.01(b) or
Section 3.01(c), the Company shall have the right within twelve (12) months of
such Purchase Price adjustment, to have an independent accounting firm audit
BMS' books and records relating to such price adjustment, for the sole purpose
of verifying BMS' determination of the adjustment. Such audit shall be at
reasonable times during normal business hours and upon reasonable notice to BMS.
Concurrently with the auditing firm's furnishing of its conclusions to the
Company, a copy of such conclusions shall be furnished to BMS to allow BMS an
opportunity to review the accuracy of the auditing firm's conclusions. The
parties shall cooperate with one another in good faith to resolve any disputes
concerning the auditing firm's conclusions in accordance with Section 14.03. The
Company shall bear the full cost of such audit unless such audit discloses a
variance of more than five percent (5%) from the amount due, in which event, BMS
shall bear the full cost of such audit. Any amounts that are determined to be
due and owing by BMS to the Company following such audit shall be paid within
thirty (30) days thereafter, together with any interest due thereon from the
date of overpayment by the Company at the Prime Rate plus one percent (1%) per
annum; provided that in no event shall such rate exceed the maximum legal annual
interest rate. The payment of such interest shall not limit the Company from
exercising any other rights or remedies it may have. If such audit right is not
exercised by the Company within the twelve (12) month time period, then such
price increase shall be deemed accepted.

                                   SECTION 4.

                              PAYMENTS AND REPORTS

         Section 4.01. Payment; Books and Records.

                (a)  BMS shall submit invoices to the Company for the Product
promptly after shipment. The invoices shall reflect the Purchase Price. Payments
shall be made by the Company within thirty (30) calendar days of receipt of the
invoice or shipment, whichever occurs later. In addition, BMS, in its sole
discretion, shall determine, and may from time to time change without the
consent of, but with notice to, the Company, the identity of the party that
shall invoice the Company for any Product supplied hereunder which shall be BMS
or an Affiliate of BMS.

                (b)  BMS shall maintain complete and accurate books, records and
accounts that, in reasonable detail, fairly reflect the calculation of
Fully-Burdened Cost of the Product supplied hereunder, in sufficient detail to
permit (i) BMS to prepare financial statements for the supply of Product to the
Company for each calendar quarter and calendar year in conformity with GAAP and
as required by Section 3.01 and (ii) the Company to confirm the accuracy of the
calculation of any Purchase Price invoiced hereunder. BMS shall retain such
books, records and account for a period of not less than three (3) calendar
years after the calendar year in which they are prepared.

                (c)  Within sixty (60) days after the end of each calendar
quarter, BMS shall provide the Company with the financial statements prepared by
BMS pursuant to Section 4.01(b).

                                      -15-

<PAGE>

         Section 4.02. Mode of Payment.

                The Company shall make all payments required under this
Agreement by electronic transfer of immediately available United States dollars
to a bank account designated by BMS.

         Section 4.03. Taxes.

                Any and all transfer, sales, use, and other taxes imposed upon
or with respect to or measured by the sale or delivery by BMS to the Company of
any Product hereunder shall be the responsibility of and for the account of the
Company. Such amounts shall be included on BMS' invoices to the Company for the
Product. If BMS obtains any credit for the amounts of the tax, such amount shall
be repaid by BMS to the Company when it is received by BMS. Anything to the
contrary notwithstanding, the Company shall have no obligation to pay any income
tax imposed on BMS or any of its Affiliates which may arise from the
transactions contemplated by this Agreement.

         Section 4.04. Late Payments.

                In the event that any payment due hereunder is not made when
due, the payment shall accrue interest from the date due at Prime Rate plus one
percent (1%) per annum, provided, that, in no event shall such rate exceed the
maximum legal annual interest rate. The payment of such interest shall not limit
BMS from exercising any other rights it may have as a consequence of the
lateness of any payment.

                                   SECTION 5.

              COMPLIANCE WITH LAWS; REPRESENTATIONS AND WARRANTIES

         Section 5.01. Compliance with Law; Cooperation.

                (a)  Compliance with Law. Each Party shall maintain in full
force and effect all necessary licenses, permits and other authorizations
required by applicable Law to carry out its duties and obligations under this
Agreement. Each Party shall comply with all Laws applicable to its activities
under this Agreement, including, without limitation, any requirements of any
product license applicable to the Product and all applicable U.S. federal, state
and local environmental health and safety laws then in effect. The Company shall
store, market, promote, advertise and sell the Product sold to it by BMS in
compliance with all applicable Laws, including the PDMA. BMS and the Company
each shall keep all records and reports required to be kept by applicable Laws.
The Parties will reasonably cooperate with one another with the goal of ensuring
full compliance with Laws. Each Party will cooperate with the other to provide
such letters, documentation and other information on a timely basis as the other
Party may reasonably require to fulfill its reporting and other obligations
under applicable Laws to applicable Governmental Entity.

                (b)  Reasonable Cooperation. Without limiting any obligation
expressly imposed on either Party pursuant to the other provisions of this
Agreement, BMS and the Company each hereby agrees to co-operate in good faith
with one another, particularly with respect to unanticipated problems or
contingencies, and shall perform its respective obligations in good faith and in
a commercially reasonable, diligent and workmanlike manner, and use its
commercially reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary or proper to make effective the
transactions contemplated by this Agreement, including such actions as may be
reasonably necessary to

                                      -16-

<PAGE>

obtain approvals and consents of Governmental Entities and other Persons,
provided, that, no Party shall be required to (i) pay money (other than as
expressly required pursuant to the terms and conditions of this Agreement or
Related Instruments), or (ii) assume any other material obligation not otherwise
required to be assumed by this Agreement or any Related Instruments.

                (c)  Right to Audit. Not more frequently than once in any
calendar year, the Company shall afford BMS or BMS' representatives, upon not
less than ten (10) calendar days' prior written notice and during normal
business hours of Company, reasonable access to (i) the premises where the
Product is being handled and stored, and (ii) the personnel dedicated to the
handling and storing of such Product, to the extent necessary to inspect and
conduct a reasonable audit thereof (the "Facility Audit") with respect to the
performance of Company's obligations under all applicable Laws and compliance
with the handling and storing requirements of the Specifications; provided,
that, such access does not unreasonably disrupt the normal operations of
Company. BMS, in its sole discretion, may make recommendations regarding the
handling or storage of the Product which may be implemented by the Company in
its sole discretion. Notwithstanding this provision, all responsibility
regarding the handling and storage of the Product is with the Company once the
Product is shipped from BMS' Facility in accordance with the terms set forth in
Section 2.04.

         Section 5.02. BMS Representations, Warranties and Covenants.

                (a)  BMS represents, warrants and covenants to the Company that
the Product manufactured by or for BMS and sold to the Company under this
Agreement will, at the time it is tendered to the common carrier for delivery to
the Company, except to the extent such non-compliance is attributable to
specific instructions received from the Company:

                     (i)    not be adulterated or misbranded under applicable
                Law;

                     (ii)   meet the Specifications therefor;

                     (iii)  be manufactured, tested, labeled, packaged, stored,
                handled, and shipped, in compliance in all material respects
                with cGMP and with any other applicable Laws, including all
                applicable U.S. federal, state and local environmental health
                and safety laws in effect at the time and place of manufacture
                of the Product;

                     (iv)   will be free from defects in material, manufacturing
                and workmanship when delivered to the common carrier, provided
                that BMS makes no representation or warranty in this clause (iv)
                with respect to any defects or non-conformity that can not be
                readily tested or seen;

                     (v)    have a shelf life of not less than eighty-two
                percent (82%) of the shelf life set forth in Schedule 1.01. In
                the event that the shelf life of any Product is approved to be
                extended, then the Parties will discuss in good faith an
                adjustment to this representation to fairly reflect such
                extension.

                                      -17-

<PAGE>

                (b)  BMS represents and warrants to the Company that, as of the
Effective Date, there is no claim, suit or proceeding, or other investigation
pending, or to the actual knowledge of BMS, threatened in writing against BMS
which is likely to prevent or materially interfere with BMS' performance under
this Agreement or materially adversely affect the rights and interests of the
Company hereunder.

                (c)  BMS represents, warrants and covenants to the Company that
BMS, its Affiliates, licensees and contractors shall adhere in all material
respects to all applicable Laws relating to the manufacture, handling, storage,
and disposal by any of them of the Product.

                (d)  BMS represents and warrants to the Company that the prices
set forth on Schedule 3.01(a) do not exceed [***] for calendar year 2002 as
calculated by BMS in accordance with its standard accounting procedures in or
about September of 2001.

         Section 5.03. The Company Representations, Warranties and Covenants.

                The Company represents, warrants and covenants to BMS that the
Company, its Affiliates, licensees and contractors shall adhere in all material
respects to all applicable Laws relating to the handling, storage, sale,
distribution and disposal by any of them of the Product except to the extent
such non-compliance is attributable to specific instruction received from BMS.

         Section 5.04. Representations and Warranties of Each Party.

                (a)  Each Party hereby represents and warrants to the other
Party as of the Effective Date as follows:

                     (i)    such Party (A) has the power and authority and the
                legal right to enter into this Agreement and perform its
                obligations hereunder, and (B) has taken all necessary action on
                its part required to authorize the execution and delivery of
                this Agreement and the performance of its obligations hereunder.
                This Agreement has been duly executed and delivered on behalf of
                such Party and constitutes a legal, valid, binding obligation of
                such Party and is enforceable against it in accordance with its
                terms subject to the effects of bankruptcy, insolvency, or other
                laws of general application affecting the enforcement of
                creditor rights and judicial principles affecting the
                availability of specific performance and general principles of
                equity, whether enforceability is considered a proceeding at law
                or equity.

                     (ii)   such Party is not aware of any pending or threatened
                litigation (and has not received any communication) that alleges
                that such Party's activities related to this Agreement have
                violated, or that by conducting the activities as contemplated
                herein such Party would violate, any of the intellectual
                property rights of any other Person.

                     (iii)  all necessary consents, approvals and authorizations
                of all governmental authorities and other Persons required to be
                obtained by such Party in connection with this Agreement have
                been obtained.

                     (iv)   the execution and delivery of this Agreement and the
                performance of such Party's obligations hereunder (A) do not
                conflict with or violate any requirement of applicable law or
                regulation or any provision of articles of incorporation, bylaws
                or

***Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

                                      -18-

<PAGE>

                limited partnership agreement of such Party, as applicable, in
                any material way, and (B) do not conflict with, violate, or
                breach or constitute a default or require any consent under, any
                contractual obligation or court or administrative order by which
                such Party is bound.

         Section 5.05. Disclaimer of Warranties.

                EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, THE ASSET
PURCHASE AGREEMENT OR ANY RELATED AGREEMENT, THERE ARE NO OTHER REPRESENTATIONS
OR WARRANTIES, EXPRESS OR IMPLIED, MADE OR GIVEN BY EITHER PARTY HEREUNDER,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OF QUALITY, PERFORMANCE,
MERCHANTABILITY AND FITNESS FOR A PARTICULAR USE OR PURPOSE OF A PRODUCT OR
ABSENCE OF INFRINGEMENT OF THIRD PARTY RIGHTS WITH RESPECT TO THE MANUFACTURE,
USE OR SALE OF A PRODUCT.

         Section 5.06. No Reliance by Third Parties.

                The representations and warranties of a Party set forth in this
Agreement are intended for the sole and exclusive benefit of the other Party
hereto, and may not be relied upon by any Third Party.

                                   SECTION 6.

                      INDEMNIFICATION; REMEDIES FOR BREACH

         Section 6.01. BMS Indemnity.

                Subject to the Company's indemnity obligations under Section
6.02, BMS shall defend, indemnify and hold harmless the Company, its Affiliates,
and its and their employees, agents, officers, and directors (a "Company Party")
from and against any and all Losses that result from or arise in connection with
any claim (including, product liability claims, strict liability or tort
claims), action, suit or other proceeding made or brought by or on behalf of a
Third Party against a Company Party (including claims, actions, suits or
proceedings for bodily injury, death or property damage), in any such case,
based on the breach of any representation or warranty of BMS contained in
Section 5.02 or breach of any material obligation of BMS of this Agreement;
provided, however, that BMS shall not be obligated to indemnify a Company Party
for any Losses incurred by such Company Party to the extent attributable to any
breach of this Agreement by the Company, a Company Party or the Company's
contractors/licensees, or to any act or omission constituting gross negligence
or willful misconduct on the part of the Company, a Company Party or the
Company's contractors/licensees, or any action taken by BMS or its Affiliate
upon the direction of the Company (including pursuant to amendments or
modifications made to the Specifications by the Company) or to any failure of a
Company Party to identify or bring to BMS' attention a Product defect or
non-conformity actually known by such Company Party prior to the use of such
Product by a Third Party.

         Section 6.02. The Company Indemnity.

                Subject to BMS' indemnity obligations under Section 6.01, the
Company shall defend, indemnify and hold harmless BMS, its Affiliates, and its
and their employees, agents, officers, and directors (a "BMS Party") from and
against any and all Losses that result from or arise in connection with (a) any
claim (including product liability claims, strict liability or tort claims),
action or proceeding made or brought against such BMS Party by or on behalf of a
Third Party for bodily injury, death or property

                                      -19-

<PAGE>

damage to the extent such injury, death or damage is based on (i) the Company's
use, promotion, advertising, handling, disposal or supply of the Product after
the Effective Date (regardless of which Party manufactured it) or (ii) the
Company's breach of this Agreement; or (b) any claim, action, suit or other
proceeding made or brought by a Third Party based on (i) the breach by the
Company of any of its representations or warranties contained in Section 5.03 or
breach of any material obligation of Company under this Agreement, including
breach of applicable Law; or (ii) infringement of a Third Party's trademarks or
copyrights by reason of Company's specified labeling of the Products or any
materials used in promoting or advertising the Product, or (iii) in the event
that any changes are made to the Product (including, without limitation, changes
to the Specifications, formulation or manufacturing process used to manufacture
the Product) after the Effective Date, infringement of a Third Party's patent
rights by reason of the manufacture, use, import, export, or sale of the Product
after the effective date of such change; provided, however, that the Company
shall not be obligated to indemnify a BMS Party for any Losses incurred by such
BMS Party to the extent attributable to a breach by BMS of this Agreement, or to
any act or omission constituting gross negligence or willful misconduct on the
part of BMS or a BMS Party.

         Section 6.03. Limitations on Liability and Remedies.

                Notwithstanding any other provision in this Agreement, no Party
shall in any event be liable to the other Party or its Affiliates, officers,
directors, employees, stockholders, agents or representatives on account of any
breach hereof or any indemnity obligation set forth herein for any indirect,
special, consequential or punitive damages (including, but not limited to, lost
profits, loss of use, damage to goodwill or loss of business that maybe incurred
or claimed by such other Party or its Affiliates, officers, directors,
employees, stockholders, agents or representatives or by a Third Party for which
indemnification is sought hereunder.

         Section 6.04. Control of Proceedings.

                (a)  To receive the benefits of the indemnity under Sections
6.01 or 6.02, as applicable, an indemnified Party must (i) give the indemnifying
Party written notice of any claim or potential claim promptly after the
indemnified Party receives written notice of any such claim and (ii) allow the
indemnifying Party to assume exclusive control of the defense and settlement
(including all decisions relating to litigation, defense and appeal) of any such
claim, provided, that, (i) the controlling Party has confirmed its
indemnification obligation to such indemnified Party under this Section 6.04
with respect to a given claim), and (ii) such controlling Party may not settle
such claim or enter into any voluntary consent judgment in any manner that would
(w) require payment by the other Party, (x) materially adversely affect the
rights granted to the other Party hereunder, (y) make any admission of
wrongdoing or fault of any Party without such Party's prior written consent, or
(z) materially conflict with the terms of this Agreement, without first
obtaining the other Party's prior written consent.

                (b)  The indemnified Party shall (so long as such cooperation
does not vitiate any legal privilege to which it is entitled) reasonably
cooperate with the indemnifying Party in its defense of the claim (including
making documents and records available for review and copying and making persons
within its/his/her control available for pertinent testimony). If the
indemnifying Party defends the claim, an indemnified Party may participate in,
but not control, the defense of such claim using attorneys of its/his/her choice
and at its/his/her sole cost and expense. An indemnifying Party shall have no
obligation or liability under this Section 6 as to any claim for which
settlement or compromise of such claim is made by an indemnified Party without
the prior written consent of the indemnifying Party.

                                      -20-

<PAGE>

                (c)  If the indemnifying Party notifies the other in writing
that it will not defend the other Party against such claim asserted against the
other Party, or if the indemnifying Party fails to defend or take other
reasonable, timely action, in response to such claim asserted against the other
Party, the indemnified Party shall have the right, but not the obligation, to
defend or take other reasonable action to defend its interests in such
proceedings, and shall have the right to litigate, settle or otherwise dispose
of any such claim without limiting its rights to indemnification under this
Section 6; provided, however, that the Party shall not have the right to settle
such claim or enter into a consent judgment in a manner that adversely affects
the rights granted to the indemnifying Party hereunder, or would materially
conflict with this Agreement, or would require a payment by the indemnifying
Party without the prior written consent of the Party entitled to control the
defense.

         Section 6.05. Insurance.

                (a)  The Company will maintain comprehensive general liability
insurance on a claims-made basis, with endorsements for contractual liability
and product liability with coverage limits of not less than (i) Fifteen Million
Dollars ($15,000,000) per occurrence or in the aggregate, at all times
commencing on the Effective Date and continuing through the date that is sixty
(60) days following the Effective Date, and (ii) Twenty Million Dollars
($20,000,000) per occurrence or in the aggregate, at all times from and after
the date that is sixty (60) days following the Effective Date and continuing
during the period that any Product is being distributed or sold by or through
the Company hereunder, and for fifteen (15) years thereafter. The minimum level
of insurance set forth herein shall not be construed to create a limit on the
Company's liability hereunder. On each of the Effective Date and the date that
is sixty (60) days following the Effective Date, the Company shall furnish to
BMS a certificate of insurance evidencing such coverage as of such date. Each
such certificate of insurance, as well as any certificates evidencing new or
modified coverages of the Company, shall include a provision whereby sixty (60)
days written notice must be received by BMS prior to coverage modification or
cancellation by either the Company or the insurer. In addition, the Company
shall promptly notify BMS of any cancellation or modification of such insurance
coverage and of any new or modified coverage. In the case of a modification or
cancellation of such coverage, the Company shall promptly provide BMS with a new
certificate of insurance evidencing that the Company's coverage meets the
requirements in the first sentence of this Section.

                (b)  BMS will maintain at all times during the period that any
Product is being supplied to the Company by BMS, and is being manufactured by or
for BMS, and for fifteen (15) years thereafter, a commercially reasonable
program of self-insurance and insurance consistent with, or more comprehensive
than, industry standards on a claims-made basis with respect to its obligations
under this Agreement. BMS further agrees that the Company shall have the benefit
of an additional insured party of not less than the first Twenty Million Dollars
($20,000,000) per occurrence or in the aggregate in any policies of insurance
maintained by BMS with respect to product liability relating to the Product,
including the equivalent of such status as an additional named insured party for
purposes of BMS' self-insurance.

         Section 6.06. Other Limitations on Liability.

                (a)  Any action for breach of this Agreement by a Party arising
during the Term must be commenced within twelve (12) months after the end of the
Term, provided nothing in this Section 6.06(a) shall apply to any claim by
either Party for indemnification under Section 6.01 or 6.02, or to any claim by
either Party for breach of the other Party's indemnity obligation.

                (b)  BMS and the Company shall cooperate with each other in
resolving any claim or

                                      -21-

<PAGE>

liability with respect to which a Party is obligated to indemnify the other
under this Agreement, including without limitation, by making commercially
reasonable efforts to mitigate or resolve any such claim or liability.

         Section 6.07. Calculation of Losses.

                The amount of any Loss for which indemnification is provided
under Section 6.01 or Section 6.02 shall be net of any amounts actually
recovered by the indemnified party under insurance policies (after reduction for
any costs or expenses incurred in connection therewith, including, retrospective
and prospective premium adjustments, experience-based premium adjustments) with
respect to such Loss, and shall be reduced to take account of any net tax
benefit of the indemnified party arising from the occurrence or payment of any
such Loss which is actually recognized via a reduction of income tax liability
that would have otherwise been due in the tax year such Loss is claimed (or, if
applicable, in a prior year as a result of a carryback) on the indemnified
party's federal and state income tax returns or within the four (4) succeeding
tax years of the indemnified party. In computing the amount of such net tax
benefit, the indemnified party shall be deemed to recognize all other items of
income, gain, loss, deduction or credit before recognizing any item arising from
the receipt or accrual of the right to receive any indemnity payment under
Section 6.01 or Section 6.02 or the incurrence or payment of any indemnified
Loss. Further, if a net tax benefit results in a tax year after the tax year the
loss was originally claimed by the indemnified party, the net tax benefit shall
be computed by computing the present value thereof using a discount rate of ten
percent (10%). Any indemnity payment under Section 6.01 or Section 6.02 shall be
treated as an adjustment to the Purchase Price for tax purposes, unless a final
determination with respect to the indemnified party or any of its Affiliates
causes any such payment not to be treated as an adjustment to such price for
federal income tax purposes.

                                   SECTION 7.

                     COMPLIANCE WITH GOVERNMENT REGULATIONS

         Section 7.01. Government Communications.

                BMS shall be responsible for all communications with any
Governmental Entity relating to BMS' manufacturing activities, including
Facility inspections by Governmental Entities, under this Agreement and the
Company shall be responsible for all communication with any Governmental Entity
concerning the marketing, distribution, or sale of the Product; provided that
the parties agree that the Company and not BMS shall be responsible for and
shall engage in all communications with Governmental Entities with respect to
the Product Registrations, unless BMS is required to participate in any
communications by any Governmental Entity.

         Section 7.02. Access to Records.

                The Company shall have, in connection with any Audit under
Section 7.04, reasonable access to BMS' files, during normal business hours,
from time to time upon reasonable prior notice, to review all such records,
correspondence, notices, documents, and other materials (including warning
letters and letters of adverse findings) relating to the manufacture of the
Product; provided, however, that such access does not unreasonably disrupt the
normal operation of BMS.

         Section 7.03. Governmental and Regulatory Inspections.

                                      -22-

<PAGE>

                BMS shall notify the Company immediately by telephone and in
writing of any inspections conducted by any Governmental Entity of the premises
where the Product is being manufactured, to the extent such inspection relates
to the manufacture of the Product, and shall provide to the Company copies of
all correspondence, reports, notices, findings and other material pertinent to
such inspections and that specifically relate to the Product. BMS may redact
portions that do not specifically relate to the Product.

         Section 7.04. The Company Inspections.

                BMS shall, or if BMS is not manufacturing the Product, BMS shall
use its commercially reasonable efforts to cause the Person manufacturing such
Product to afford the Company or the Company's representatives, upon not less
than thirty (30) calendar days prior written notice and during normal business
hours for BMS or such Person, and not more than once per calendar year (such
Audit to cover all Products and all Facilities), reasonable access to (i) the
premises where the Products are being tested and/or manufactured, and (ii) the
personnel dedicated to the manufacturing, processing, analytical testing,
packaging, labeling and storing of such Product, to the extent necessary to
inspect and conduct a reasonable audit ("Audit") thereof with respect to the
performance of BMS' obligations hereunder; provided, that, such access does not
unreasonably disrupt the normal operations of BMS or such other manufacturer.
Such Audit shall be carried out in a manner that ensures the continued
confidentiality of BMS' business and technical information, including the
execution of such appropriate confidentiality agreements as BMS may reasonably
request in advance of any such Audit. Within thirty (30) calendar days of
completing any such Audit hereunder, the Company shall submit to BMS a written
report outlining its findings and/or observations from any such Audit. If
deficiencies are discovered during an Audit that could, in the Company's
opinion, prevent BMS from satisfying its supply obligations hereunder, and BMS
in good faith disputes the observations or conclusions of the Company, then the
Parties shall promptly enter into good faith discussions to resolve their
differences.

         Section 7.05. Regulatory Matters.

                (a)  General Compliance. BMS will, at its sole expense, comply
with all Laws applicable to production, testing, storage, shipment, and record
keeping by BMS of the Product and its performance of its obligations hereunder,
including all applicable Laws or requirements under any applicable Product
Registrations or Manufacturing Facility Registrations. During any period that
BMS manufactures the Product for the Company, except as otherwise expressly set
forth in this Agreement, (i) BMS will pay any fees necessary to obtain and
maintain Manufacturing Facility Registrations and any other licenses,
registrations, permits, exemptions, allowances, authorizations, or approvals
from a Governmental Entity which are applicable to a Facility used by BMS to
manufacture the Product, and (ii) the Company shall pay all other fees, costs or
expenses necessary to maintain or obtain licenses, registrations, permits,
exemptions, allowances, authorizations, or approvals from a Governmental Entity
which are applicable to the use, promotion, advertising or sale of such Product,
including all NDA user fees (or similar or substitute fees) applicable to the
Product, other than facilities or establishment fees not specific to the
Product. During any period that the Company maintains the Product Registration
and manufactures the Product, the Company will, at its sole expense, comply with
all Laws applicable to it with respect to the production, testing, storage,
shipment, and recordkeeping of the Product, including all applicable Laws or
requirements under any applicable Product Registrations or Manufacturing
Facility Registrations and will, except as otherwise expressly set forth in this
Agreement, pay all filing, user and similar (or substitute) fees required in
connection with obtaining, maintaining, changing or supplementing any applicable
Product Registration or Manufacturing Facility Registration. At the Company's
request, BMS shall cooperate with the Company in (i) maintaining any applicable
Product Registration, including cooperation in the preparation of NDA annual
reports with respect to the Product, and (ii) responding to

                                      -23-

<PAGE>

any Governmental Entity inquiry or request for inspection.

                (b)  Validations and Qualifications. BMS will perform, at its
own costs, process and cleaning validation, analytical methods validation,
installation/operating qualification, and calibration of all equipment and
Facilities utilized in the manufacture, packaging, labeling, testing, storing,
and release of finished Product in accordance with all Laws. The Parties
acknowledge and agree that BMS will include its costs for performing the
foregoing into its calculation of Fully-Burdened Cost of the Product. The
Company will have the right to review the results thereof during an Audit or in
conjunction with a new process or equipment. In general, BMS will, at all times
in the performance of its obligations hereunder, comply with its standard
operating procedures for the Product and will make copies of such standard
operating procedures available to the Company for review during Company Audits
permitted hereunder.

                (c)  Batch Records. Batch records, including information
relating to the manufacturing, packaging, labeling, and quality control testing
and analysis for each lot of finished Product produced hereunder, will be
prepared as and when BMS performs any such tasks, in accordance with applicable
Laws and BMS' then current standard operating procedures. Batch records and all
other records relating to production hereunder shall be retained by BMS for the
period required by applicable Laws. Batch records for any SKU of the Product, as
well as updates to the validation package for the Product, will be made
available during an Audit. Upon request of the Company not more than once every
calendar quarter, BMS will copy and provide to the Company batch records for
each SKU of the Product.

                                   SECTION 8.

                STABILITY; PRODUCT RECALLS; ADVERSE EXPERIENCES;
                PRODUCT QUALITY COMPLAINTS; AND MEDICAL INQUIRIES

         Section 8.01. Stability and Quality Control.

                (a)  Except as otherwise provided in Section 8.01(b), BMS will
be responsible, at its own costs, for taking and maintaining quality control and
stability samples in support of the Product Registrations for the Product, and
for testing stability samples on a timely basis in accordance with applicable
Law, the Product Registrations and BMS' then current standard operating
procedures. The Parties acknowledge and agree that BMS will include its costs
for performing the foregoing into its calculation of Fully-Burdened Cost of the
Product. BMS will make available the stability data (i) for the Product for
review by the Company during any Audit (if the Company gives BMS reasonable
notice to collect and organize same), (ii) in a form suitable for inclusion in
the Company's NDA annual reports with respect to the Product, and as otherwise
reasonably requested by the Company upon the occurrence of an event that may
reasonably be expected to materially and adversely affect the quality or
validity of the stability data. BMS further agrees to maintain all stability
data with respect to the Product in accordance with applicable Laws. BMS will
notify the Company promptly (but at least within at least three (3) business
days of BMS' initiation of an internal investigation of a stability failure with
regard to the Product.

                (b)  The Parties acknowledge that, pursuant to a requirement
made by the FDA, BMS is currently conducting a post-marketing stability study
with respect to the Product referred to in Paragraph 5 of Schedule 3.09(d) of
the Asset Purchase Agreement (the "Stability Study"). Notwithstanding any other
provision in the Agreement, BMS will be responsible, at its own costs, to
complete the Stability Study, to prepare all reports required to be submitted to
the FDA with respect to the Stability Study, and to handle all communications
with the FDA relating to the Stability Study and any

                                      -24-

<PAGE>

changes to the Specifications resulting therefrom (which costs shall not be
included in its Fully-Burdened Cost for the Product); provided that BMS shall
consult with the Company with respect thereto and shall not agree to any changes
to the Specifications without the Company's consent, which shall not be
unreasonably withheld or delayed. In the event that any changes to the
Specifications are required by the FDA, the Company shall reimburse BMS for its
Fully-Burdened Cost plus 15% to implement such change.

         Section 8.02. Product Recalls.

                In the event that the Company obtains information that a Product
or any portion thereof should be alleged or proven not to meet the
Specifications, labeling or Product Registration for such Product, Company shall
notify BMS immediately after the Company obtains such information and both
Parties shall cooperate fully regarding the investigation and disposition of any
such matter. BMS and the Company shall each maintain such traceability records
as are sufficient and as may be necessary to permit a recall, product withdrawal
or field correction of any Product. In the event (a) any applicable regulatory
authority should issue a request, directive or order that a Product be recalled
or withdrawn, (b) a court of competent jurisdiction orders such a recall or
withdrawal or (c) (i) the Company determines that any Product already in
interstate or international commerce presents a risk of injury or deception or
is otherwise defective and that recall or withdrawal of such Product is
appropriate or (ii) BMS determines that any Product already in interstate or
international commerce presents a risk of injury or deception or is otherwise
defective and that recall or withdrawal of such Product is appropriate and such
determination is consented to in writing by the Company (each of the events in
(a), (b) and (c), a "Recall"), each Party shall give telephonic notice (to be
confirmed in writing) to the other within twenty-four (24) hours of the receipt
of notice of any such event. The Company shall have sole responsibility for
carrying out the Recall, and shall consult with BMS in determining, and
thereafter use commercially reasonable efforts in taking, all corrective action
in connection with a Recall. Each Party will provide full cooperation and
assistance to the other Party in connection therewith as may be requested by the
other Party, including, in the case of the Company, providing BMS within two (2)
business days of receipt by the Company of notice of the Recall a list of
customers who received any recalled or withdrawn Product. The Company shall be
responsible for all expenses of effecting any such Recall (including any
out-of-pocket expenses incurred by the Company and BMS in connection with such
cooperation), except to the extent such Recall is attributable to BMS' failure
to manufacture the Product in accordance with Section 5.02(a) in which event BMS
shall reimburse the Company for its reasonable costs and expenses incurred
(including credits to customers for such Recalls or withdrawal) that are so
attributable to such actions by BMS. Otherwise, all Recalls or withdrawals shall
be solely the responsibility of the Company.

         Section 8.03. Adverse Experience.

                During the Term, each Party shall promptly notify the other
Party of any significant adverse events that relate to the Product or are
required in accordance with the regulations of relevant Governmental Entities,
including adverse drug experiences and governmental inquiries, and each Party
shall cooperate with the other Party in connection therewith as reasonably
requested by the other Party and as follows:

                (a)  Serious Adverse Events for the Product of which one (1)
Party becomes aware shall be submitted to the other Party within three (3)
business days but no more than four (4) calendar days from the date the
first-mentioned Party first became aware of such Serious Adverse Event.
Non-Serious Adverse Events for the Product that are reported to one (1) Party
shall be submitted to the other Party no more than one (1) month from the date
received by the first-mentioned Party; provided, however,

                                      -25-

<PAGE>

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. BMS shall timely provide to the Company
any and all data in BMS' possession relating to the Product manufactured for the
Company by BMS or its Affiliate which is necessary for the Company to timely
complete and submit any adverse event report.

                (b)  Until the reporting procedures referenced in
Section 8.03(d) herein have been instituted by the Parties, a "Serious Adverse
Event" for the Product shall have the meaning set forth in 21 C.F.R. ss.
314.80(a), as amended from time to time, and a "Non-Serious Adverse Event" for
the Product is defined as an untoward medical occurrence at any dose of the
Product that is not a Serious Adverse Event.

                (c)  The Company shall have the reporting responsibility for
such events as provided under applicable Laws to applicable regulatory health
authorities. The Company shall report all Serious Adverse Events and all
Non-Serious Adverse Event involving the Product learned by it to:

                     Director of Quality and Compliance Consolidated Services
                     Bristol-Myers Squibb Company
                     P.O. Box 5400
                     Mail Stop HW19-1.01
                     Princeton, New Jersey 08543-5400
                     U.S.A.
                     Email address: worldwide.safety@bms.com
                     Facsimile No.:  (609) 818-3804
                     Telephone No.:  (609) 818-3737

                BMS shall report all Serious Adverse Events and all Non-Serious
Adverse Events involving the Product learned by it to:

                     Women First HealthCare, Inc.

                     12220 El Camino Real, Suite 400

                     San Diego, CA 92130

                     Facsimile:  (858) 509-13851
                     Telephone:  (858) 509-3836
                     Attention:  Doranne Frano

                A CIOMS-I form or a form that contains the data elements of a
CIOMS-I form is recommended.

                (d)  As soon as reasonably practicable after the Effective Date,
the Parties shall discuss and develop mutually acceptable guidelines and
procedures for the receipt, recordation, reporting, communication (as between
the parties) and exchange of Serious Adverse Event and Non-Serious Adverse Event
information, as applicable, to the other Party; provided that the Company shall
have exclusive responsibility for communications with Governmental Entities
concerning Serious Adverse Event and Non-Serious Adverse Event information
related to the Product. The Parties shall bear their

                                      -26-

<PAGE>

respective costs incurred in connection with receiving, recording, reviewing,
reporting, communicating and exchanging with each other regarding and, as
applicable, reporting and responding to Adverse Events.

                (e)  At the request of BMS, the Company shall cease reporting
all Serious Adverse Events and all Non-Serious Adverse Events involving the
Product to BMS. BMS shall continue to make such reports to the Company in
accordance with Section 8.03.

       Section 8.04. Product Quality Complaints.

                (a)  The Company shall have sole responsibility, at its expense,
for responding to all Product Quality Complaints received from Third Parties.
BMS shall reimburse the Company for the Fully-Burdened Costs incurred by the
Company for any Product Quality Complaint solely due to a breach of BMS'
representations and warranties set forth in Section 5.02; otherwise the Company
shall bear its own expense of responding to Product Quality Complaints. BMS
shall cooperate to effect any resolutions with respect to the Product Quality
Complaint. "Product Quality Complaint" is defined as any complaint that
questions the purity, identity, potency or quality of the 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, or
any failure of one or more distributed batches of the drug product to meet the
specifications therefor in the Product Registration.

                (b)  Where the subject matter of the Product Quality Complaint
relates in any way to the responsibilities of a Party under this Agreement or
the duties performed by a Party hereunder, such Party will, within three (3)
business days from receipt of written notice from the other Party or receipt by
such Party of any other information from a Third Party constituting the Product
Quality Complaint, initiate a complaint investigation at such Party's expense.
Such Party will conduct such investigation expeditiously. The investigating
Party will report its findings to the other Party's contact listed in Section
8.04(c) or (d) below, as the case may be, within thirty (30) calendar days.

                (c)  The Company shall inform BMS' contact of any Product
Quality Complaint received by it within three (3) business days from the receipt
date by the Company. Such information shall be sent to BMS as set forth below:

                     Director of Quality and Compliance Consolidated Services
                     Bristol-Myers Squibb Company
                     P.O. Box 5400
                     Mail Stop HW19-1.01
                     Princeton, New Jersey 08543-5400
                     U.S.A.
                     Email address: worldwide.safety@bms.com
                     Facsimile No.:  (609) 818-3804
                     Telephone No.:  (609) 818-3737

                (d)  BMS shall inform the Company's contact of any Product
Quality Complaint received by it within three (3) business days from the receipt
date by BMS. Such information shall be sent to the Company as set forth in
Section 8.03(c) below:

                     Women First HealthCare, Inc.

                                      -27-

<PAGE>

                     12220 El Camino Real, Suite 400

                     San Diego, CA 92130

                     Facsimile:  (858) 509-0853
                     Telephone:  (858) 509-3816
                     Attention:  Patti Consilvio

                (e)  Nothing in this Section 8.04 is intended to limit, alter or
restrict a Party's reporting obligations under applicable Law.

       Section 8.05. Medical Inquiries.

                The Company shall have sole responsibility, at its expense, for
handling all medical inquiries concerning the Product. BMS shall provide to the
Company all medical inquiry files and shall refer all routine medical
information requests in writing to the Company and all urgent medical
information requests to the Company by telephone within three (3) business days
of receipt by BMS. Such information shall be sent to the Company as set forth
below:

                     Women First HealthCare, Inc.
                     12220 El Camino Real

                     San Diego, CA 92130, Suite 400

                     Facsimile:  (858) 509-0853
                     Telephone:  (858) 509-3816
                     Attention:  Patti Consilvio

       Section 8.06. Disclosure Information.

                Both Parties shall be entitled to share information reported to
one another under Sections 8.03, 8.04 and 8.05 with their Affiliates and
licensees to the extent required to meet reporting requirements under applicable
Laws with respect to the marketing, use and sale of any Product. In addition,
such information may be disclosed by one Party upon the prior written consent of
the other Party to any Third Party who manufactured a pertinent component of the
applicable Product for BMS in connection with an investigation of an adverse
event or Product Quality Complaint.

                                   SECTION 9.

                                 CONFIDENTIALITY

       Section 9.01. Confidentiality Requirement.

                (a)  Each Party acknowledges that it may receive confidential or
proprietary information of the other Party in the performance of this Agreement.
Each Party shall use commercially reasonable efforts to safeguard and to hold
such information received by it from the other Party in

                                      -28-

<PAGE>

confidence, and shall limit disclosure of the furnishing Party's information to
those employees and consultants of the receiving Party and its Affiliates who
are bound by a written obligation of confidentiality to the receiving Party that
is consistent with the terms of this Section 9. Each Party shall not, directly
or indirectly, disclose, publish or use for the benefit of any Third Party or
itself, except in carrying out its duties hereunder or as otherwise provided in
Section 9.02, any confidential or proprietary information of the other Party,
without first having obtained the furnishing Party's written consent to such
disclosure or use. "Confidential Information" shall include know-how, scientific
information, clinical data, efficacy and safety data, adverse event information,
formulas, methods and processes, specifications, pricing information (including
discounts, rebates and other price adjustments) and other terms and conditions
of sales, customer information, business plans, and all other intellectual
property. This restriction shall not apply to any information within the
following categories:

                     (i)    subject to Section 9.03, information that is known
                to the receiving Party or its Affiliates prior to the time of
                disclosure to it, to the extent evidenced by written records or
                other competent proof;

                     (ii)   information that is independently developed by
                employees, agents, or independent contractors of the receiving
                Party or its Affiliates without reference to or reliance upon
                the information furnished by the disclosing Party, as evidenced
                by written records or other competent proof;

                     (iii)  information disclosed to the receiving Party or its
                Affiliates by a Third Party that has a right to make such
                disclosure; or

                     (iv)   any other information that becomes part of the
                public domain through no fault or negligence of the receiving
                Party.

                The receiving Party shall also be entitled to disclose the other
Party's Confidential Information (1) that is required to be disclosed in
compliance with applicable Laws (including to comply with SEC, NYSE or stock
exchange disclosure requirements) or by order of any Governmental Entity, (2) as
may be necessary or appropriate in connection with the enforcement of this
Agreement or (3) as may be necessary for the conduct of clinical studies,
provided that the Party disclosing such information shall promptly notify the
other Party and shall use commercially reasonable efforts to obtain confidential
treatment of such information by the agency or court or other disclosee, and
that, in the case of disclosures under (1), shall (i) provide the other Party
with prompt prior notice of the proposed disclosure such that the other Party
may seek a protective order or other appropriate remedy and (ii) provide the
other Party with a copy of the proposed disclosure in sufficient time to allow
reasonable opportunity to comment thereon.

                (b)  The obligations set forth in this Section 9.01 shall
survive the termination or expiration of this Agreement. Nothing in this Section
9 shall be construed to create or imply any right or license under any patent
rights, trademarks, copyrights or other intellectual property rights owned or
controlled by a Party or its Affiliates except as may be expressly set forth in
the other Sections of this Agreement.

                (c)  The confidentiality obligations set forth in this Section 9
shall supercede the confidentiality obligations set forth in the confidentiality
agreement dated as of February 18, 2002 between the Company and BMS, and shall
govern any and all information disclosed by either Party to the other pursuant
thereto and shall be retroactively effective to the date of such confidentiality
agreement.

                                      -29-

<PAGE>

         Section 9.02. Use of Information.

                Each Party shall use, and cause each of its Affiliates to use,
any Confidential Information obtained by it from the other Party or their
respective Affiliates, pursuant to this Agreement or otherwise, solely in
connection with the transactions contemplated hereby. The Company may use any
chemistry, manufacturing and controls information and any information set forth
in any registration dossier held by BMS relating to any Product for the purpose
of enabling and assisting the Company to commence manufacturing any such
Product.

         Section 9.03. Acquired Assets.

                Notwithstanding anything contained herein, except as may
otherwise be provided in the Asset Purchase Agreement, the Acquired Assets shall
be deemed the Company's Confidential Information and accordingly, shall not be
subject to any confidential treatment by the Company, but shall be subject to
confidential treatment by BMS in accordance with the terms hereof.

         Section 9.04. Relief.

                Each Party shall be entitled, in addition to any other right or
remedy it may have, at law or in equity, to an injunction, without the posting
of any bond or other security, enjoining or restraining any other Party from any
violation or threatened violation of this Section 9.

                                   SECTION 10.

                                   TERMINATION

         Section 10.01. Term.

                This Agreement shall become effective as of the Effective Date
and shall expire, if not earlier terminated, on the earlier of (i) the date when
no Party has any further obligations or rights hereunder or (ii) upon the third
anniversary of the Effective Date (the "Term").

         Section 10.02. Breach.

                Failure by either Party to comply in any material respect with
any of its material obligations contained in this Agreement shall entitle the
other Party, if it is not in material default hereunder, to give to the Party in
default written notice specifying the nature of the default and requiring it to
cure such default. If such default is not cured within sixty (60) calendar days
after the receipt of such notice (or, if such default cannot be cured within
such sixty (60) day period, if the Party in default does not commence and
diligently continue substantive actions to cure such default), the notifying
Party shall be entitled, without prejudice to any of its other rights conferred
on it by this Agreement and in addition to any other remedies available to it by
law or in equity (except as provided in Section 6), to terminate this Agreement
by giving written notice to take effect immediately upon delivery of such
notice.

         Section 10.03. Bankruptcy.

                In the event that a Party shall have become insolvent or
bankrupt, or shall have made an assignment for the benefit of its creditors, or
there shall have been appointed a trustee or receiver of such Party for all or a
substantial part of its property, or any case or proceeding shall have been
commenced or other action taken by or against such Party (as to which, if
involuntarily commenced against such Party,

                                      -30-

<PAGE>

such Party would not be able to obtain dismissal within ninety (90) days after
commencement thereof) in bankruptcy or seeking reorganization, liquidation,
dissolution, winding-up, arrangement, composition or readjustment of its debts
or any other relief under any bankruptcy, insolvency, reorganization or other
similar act or Law now or hereafter in effect, then such Party shall not be
relieved in any respect of its obligations hereunder, and, in addition to any
other remedies available to it by law or in equity, the other Party may
terminate this Agreement, in whole or in part as the terminating Party may
determine, by written notice to such Party.

       Section 10.04. Effect of Termination.

                (a)  Upon expiration or termination of the Term, BMS shall
manufacture and ship, and the Company shall purchase from BMS any quantities of
Product which has been Firm Ordered through the effective date termination. In
addition, the Company shall have the right, by giving notice to BMS of its
exercise of such right within thirty (30) days after the effective date of such
expiration or termination, to purchase from BMS (A) any additional quantities of
Product in BMS' inventory that are in finished form within thirty (30) calendar
days after such effective date of termination, at the Purchase Price as of such
date in accordance with Section 3.01; (B) any bulk drug substance inventory at
BMS' acquisition cost therefor; and (C) BMS' inventory of any materials used in
the manufacture of Product in finished form other than bulk drug substance at
BMS' acquisition cost therefor.

                (b)  Without limiting either Party's right to damages for any
breach of this Agreement, neither BMS nor the Company shall incur any liability
to the other by reason of the expiration or termination of the Term or this
Agreement as provided herein, whether for loss of goodwill, anticipated profits
or otherwise, and, subject to Section 10.05, BMS and the Company shall accept
all rights granted and all obligations assumed hereunder, including those in
connection with such expiration or termination in full satisfaction of any claim
resulting from such expiration or termination.

                (c)  Any acceptance by BMS of any Firm Order from the Company or
the sale of the Product by BMS to the Company after the delivery of notice of
termination or after the expiration or termination of the Term for such Product
shall not be construed as a renewal or extension of this Agreement or as a
waiver of termination thereof.

                (d)  The license granted to BMS pursuant to Section 2.13(a)
shall immediately terminate upon termination or expiration of the Term and BMS
and its Affiliates and their agents shall cease any and all use of the Company
Confidential Information relating thereto.

       Section 10.05. Accrued Rights, Surviving Obligations.

                (a)  Termination, relinquishment or expiration of the Term or of
this Agreement for any reason shall be without prejudice to any rights which
shall have accrued to the benefit of either Party prior to such termination,
relinquishment or expiration, and such termination, relinquishment or expiration
shall not relieve either Party from obligations which are expressly indicated to
survive termination or expiration of the Term or of this Agreement.

                                      -31-

<PAGE>

                (b)  Without limiting Section 10.05(a), termination,
relinquishment or expiration of this Agreement, in whole or in part, shall not
terminate the Company's obligation to pay the Purchase Price for, and BMS'
obligation to supply, Product which has been sold to the Company or Product
which has been ordered by Firm Order prior to the effective date of termination.
All the Parties' rights and obligations under Sections 4, 5, 6, 7, 8, 9, 12, 13
and 14, Sections 2.13(b), 3.01(b) and this Section 10.05 (as applicable) shall
survive termination or expiration hereof.

                                   SECTION 11.

                                  FORCE MAJEURE

                Any delays in performance by any Party under this Agreement
shall not be considered a breach of this Agreement if and to the extent caused
by occurrences beyond the reasonable control of the Party affected, including
acts of God, embargoes, governmental restrictions, inability to obtain material,
fire, flood, earthquake, hurricanes, storms, tornadoes, explosion, riots, wars,
civil disorder, failure of public utilities or common carriers, labor
disturbances, rebellion or sabotage (each, a "Force Majeure Event"). The Party
suffering the occurrence of a Force Majeure Event shall immediately notify the
other Party as soon as practicable of such inability and of the period for which
such inability is expected to continue, and any time for performance hereunder
shall be extended by the actual time of delay caused by such Force Majeure
Event, provided, that, the Party suffering such Force Majeure Event uses
commercially reasonable efforts to mitigate any such delay. The Party giving
such notice shall thereupon be excused from such of its obligations under this
Agreement as it is thereby disabled from performing, and shall have no liability
for such non-performance, for so long as it is so disabled and the thirty (30)
calendar days thereafter. Where a Force Majeure Event is reasonably foreseeable,
the Party affected by the event shall use commercially reasonable efforts to
mitigate or prevent the effects of such foreseeable Force Majeure Event in light
of the nature of the Force Majeure Event and the amount of time reasonably
available to it to prepare for same.

                In the event of BMS' inability to supply the Company due to a
Force Majeure Event, the Company shall have the right to obtain its supply of
the Product from an alternate supplier and, in the event a Force Majeure Event
prevents BMS' performance under this Agreement for ninety (90) consecutive
calendar days, the Company may terminate this Agreement immediately upon written
notice to BMS; provided that in such event, the Company: (a) shall purchase from
BMS any additional quantities of Product in BMS' inventory that are in finished
form and meet the minimum shelf life requirements set forth in Section
5.02(a)(v), within thirty (30) calendar days after the effective date of such
termination, at the Purchase Price as of such date in accordance with Section
3.01; (b) shall purchase from BMS BMS' inventory of any materials used in the
manufacture of Product in finished form other than bulk drug substance at BMS'
acquisition cost therefor, as indicated by supporting documentation reasonably
satisfactory to the Company; and (c) shall have the right, by giving notice to
BMS of its exercise of such right within thirty (30) days after the effective
date of such termination, to purchase from BMS any bulk drug substance inventory
at BMS' acquisition cost therefor, as indicated by supporting documentation
reasonably satisfactory to the Company.

                                      -32-

<PAGE>

                                  SECTION 12.

                              TECHNICAL ASSISTANCE

     Section 12.01. Technical Assistance.

          (a) During the Term and the six (6) month period immediately following
the expiration or termination of this Agreement, upon request of the Company,
BMS shall provide the Company (and/or the Company's designee), at Company's
expense, with the assistance of its employees and access to its other internal
resources to provide the Company with a reasonable level of technical assistance
and consultation in connection with the transfer of the Product to, and
regulatory qualification of, a finished goods supplier of the Company's
election.

          (b) Promptly after termination or expiration of the Term, BMS shall
provide the Company (and/or the Company's designee) with copies of all standard
operating procedures, technology, documents, data, or other information that
constitutes BMS Manufacturing Know-How, including (i) all Manufacturing Know-How
that constitutes the Acquired Assets but that was not previously provided to the
Company pursuant to the Asset Purchase Agreement; and (ii) all BMS Manufacturing
Know-How that was not previously provided to the Company pursuant to the License
Agreement. Following termination or expiration of the Term, BMS and its
Affiliates shall not use any Manufacturing Know-How other than BMS Manufacturing
Know-How, for any purpose, and shall keep it confidential to the extent required
by Section 9. With respect to all documents, data and other information provided
in accordance with the preceding sentence; (i) BMS shall be responsible for the
cost of providing a reasonable number of sets of copies only; and (ii) in
addition to paper and other tangible copies, BMS shall, upon the Company's
request, also provide to the Company electronic copies of such documents, data
and other information, provided, that, BMS or its Affiliates have electronic
copies thereof, and provided, further, that BMS shall have no obligation to
reformat or otherwise alter or modify any such materials in order to provide
them to the Company (or the Company's designee).

          (c) Any Third Party manufacturer the Company may designate to
manufacture the Product shall be required to sign a customary and appropriate
confidentiality agreement with BMS with respect to the nondisclosure and use of
any Manufacturing Know-How that constitutes BMS Know-How.

          (d) During the six (6) month period referred to in Section 12.01(a),
BMS shall be obligated to provide up to one hundred twenty (120) man-hours of
on-site consulting advice (including travel time) at the facilities of the
Company or its designees with respect to manufacturing sites and the conduct of
tests, studies and assays required for the transfer of manufacturing of the
Product to the Company or its designee at BMS' Fully-Burdened Cost plus 15%. BMS
and the Company shall negotiate in good faith a separate fee to be paid by the
Company to BMS in the event additional man-hours of such consulting advice is
required by the Company or its designee.

                                  SECTION 13.

                                   NOTICES

          All notices and other communications required or permitted to be given
under this Agreement shall be in writing and shall be delivered personally or
sent by (a) registered or certified mail, return receipt requested; (b) a
nationally recognized courier service guaranteeing next-day delivery, charges
prepaid; or (c) facsimile (with original promptly sent by any of the foregoing
manners). Any

                                      -33-

<PAGE>

such notices shall be addressed to the receiving Party at such Party's address
set forth below, or at such other address as may from time to time be furnished
by similar notice by either Party:

          (a)  if to BMS, to:

               Bristol-Myers Squibb Company
               P.O. Box 4000
               Princeton, NJ 08543-4000
               Telephone: (609) 252-4311
               Facsimile: (609) 252-4232
               Attention:  Vice President and Senior Counsel, Pharmaceutical
                           Research Institute and External Development

               With a copy to:

               Reed Smith LLP
               Princeton Forrestal Village
               136 Main Street, Suite 250
               Princeton, NJ 08540
               Telephone: (609) 514-5990
               Facsimile: (609) 951-0824
               Attention: Diane M. Frenier, Esq.

          (b)  if to the Company, to:

               Women First HealthCare, Inc.

               12220 El Camino Real, Suite 400

               San Diego, CA 92130

               Facsimile: (858) 509-7538
               Telephone: (858) 509-1171
               Attention: Edward F. Calesa, President and CEO

               with a copy to:

               Latham & Watkins
               12636 High Bluff Drive, Suite 300
               San Diego, CA 92130
               Facsimile: (858) 523-5450
               Telephone: (858) 532-5400
               Attention: Scott N. Wolfe, Esq.

     All notices shall be effective upon such personal delivery or delivery to
such courier, upon transmission by facsimile, or three (3) days after it is sent
by such registered or certified mail, as the case may be. Copies shall be sent
in the same manner as originals.

                                      -34-

<PAGE>

                                  SECTION 14.

                            MISCELLANEOUS PROVISIONS

     Section 14.01. Assignment.

          Except as expressly permitted by Section 2.06 of this Agreement,
neither Party shall assign or otherwise transfer this Agreement or any interest
herein or right hereunder without the prior written consent of the other Party,
and any such purported assignment, transfer or attempt to assign or transfer any
interest herein or right hereunder shall be void and of no effect; provided,
however, each Party (i) may assign its rights and obligations hereunder to one
of its Affiliates without the prior consent of the other Party (although, in
such event, the assigning Party shall remain primarily responsible for all of
its obligations and agreements set forth herein, notwithstanding such
assignment); and (ii) may assign its rights and obligations to a successor
(whether by merger, consolidation, reorganization or other similar event) or
purchaser of the Facilities and/or all or substantially all its business assets
relating to the Product, provided, that, such successor or purchaser has agreed
in writing to assume all such Party's rights and obligations hereunder and a
copy of such assumption is provided to the other Party. Notwithstanding the
foregoing, Company may pledge and grant a security interest in any of Company's
rights and interests in the Product, including under this Agreement.

     Section 14.02. Non-Waiver.

          Any failure on the part of a Party to enforce at any time or for any
period of time any of the provisions of this Agreement shall not be deemed or
construed to be a waiver of such provisions or of any right of such Party
thereafter to enforce each and every such provision on any succeeding occasion
or breach thereof.

     Section 14.03. Dispute Resolution.

          The Parties recognize that a bona fide dispute as to certain matters
may from time to time arise during the Term which relates to either Party's
rights and/or obligations hereunder. In the event of the occurrence of such a
dispute, either Party may, by notice to the other Party, have such dispute
referred to their respective officers designated below, or their successors, for
attempted resolution by good faith negotiations within thirty (30) days after
such notice is received. Such designated officers are as follows:

          For the Company: Edward F. Calesa, President and CEO

          For BMS: Charles Linzner, Vice President and Senior Counsel,
                   Pharmaceutical Research Institute and External Development

          In the event the designated officers are not able to resolve such
dispute within such thirty (30) day period, or such other period of time as the
Parties may mutually agree in writing, the Parties agree to have the dispute
finally settled by arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association. The arbitration shall be governed
by the United States Arbitration Act, 9 U.S.C.(S)(S) 1-16, 201-208. The
arbitration shall be held in New York City. The arbitration proceedings shall be
conducted, and the award shall be rendered, in the English language. Each Party
shall select one arbitrator who shall be an experienced lawyer and fluent in
English. The two arbitrators appointed by the Parties shall select a third
arbitrator from among arbitrators designated by the American Arbitration
Association.

                                       -35-

<PAGE>

     Section 14.04. Entire Agreement.

          This Agreement, the Related Instruments and the Schedules and Exhibits
hereto and thereto, contain the entire agreement and understanding between the
Parties hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings relating to such subject matter.

     Section 14.05. Public Announcements.

          The form and content of any public announcement to be made by one (1)
Party regarding this Agreement, or the subject matter contained herein, shall be
subject to the prior written consent of the other Party (which consent may not
be unreasonably withheld), except as may be required by applicable Laws
(including disclosure requirements of the SEC, NYSE, or any stock exchange) in
which event the other Party shall use commercially reasonable efforts to give
the other Party reasonable advance notice and reasonable opportunity to review
any such disclosure.

     Section 14.06. Governing Law.

          THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO
BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE CONFLICTS OF LAW
PRINCIPLES OF SUCH STATE.

     Section 14.07. Relationship of the Parties.

          In making and performing this Agreement, the Parties are acting, and
intend to be treated, as independent entities and nothing contained in this
Agreement shall be construed or implied to create an agency, partnership, joint
venture, or employer and employee relationship between BMS and the Company.
Except as otherwise provided herein, neither Party may make any representation,
warranty or commitment, whether express or implied, on behalf of or incur any
charges or expenses for or in the name of the other Party. No Party shall be
liable for the act of any other Party unless such act is expressly authorized in
writing by both Parties hereto.

     Section 14.08. Counterparts.

          This Agreement may be executed in one (1) or more counterparts, all of
which shall be considered one (1) and the same agreement, and shall become
effective when one (1) or more such counterparts have been signed by each of the
Parties and delivered to the other Party.

     Section 14.09. Severability.

          In the event that any one (1) or more of the provisions contained
herein, or the application thereof in any circumstances, is held invalid,
illegal or unenforceable in any respect for any reason, the Parties shall
negotiate in good faith with a view to the substitution therefor of a suitable
and equitable solution in order to carry out, so far as may be valid and
enforceable, the intent and purpose of such invalid provision; provided,
however, that the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions contained herein shall not
be in any way

                                      -36-

<PAGE>

impaired thereby, it being intended that all of the rights and privileges of the
Parties hereto shall be enforceable to the fullest extent permitted by law.

     Section 14.10. Expenses.

          Each of BMS and the Company shall bear its own direct and indirect
expenses incurred in connection with the negotiation and preparation of this
Agreement and, except as set forth in this Agreement, the performance of the
obligations contemplated hereby and thereby.

     Section 14.11. Descriptive Headings.

          The descriptive headings herein are inserted for convenience only and
are not intended to be part of or to affect the meaning or interpretation of
this Agreement.

     Section 14.12. Amendments and Waivers.

          This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the Parties. By an instrument in writing
either Party may waive compliance by the other Party with any term or provision
of this Agreement that such other Party was or is obligated to comply with or
perform. No delay or failure on the part of any Party hereto in exercising any
right, power, or privilege under this Agreement shall impair such right, power
or privilege or be construed as a waiver of any default or any acquiescence
therein. No single or partial exercise of any such right, power or privilege
shall preclude the further exercise of such right, power or privilege, or the
exercise of any other right, power or privilege.

     Section 14.13. Specific Performance.

          The Parties hereto agree that if any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached, irreparable damage would occur, no adequate remedy at law
would exist and damages would be difficult to determine, and that the Parties
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at law or equity.

     Section 14.14. Successors and Assigns.

          This Agreement shall be binding upon and inure solely to the benefit
of the Parties hereto, their successors and permitted assigns, and nothing in
this Agreement, express or implied, is intended to or shall confer upon any
other Person or Persons any right, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.

     Section 14.15. Waiver of Jury Trial.

          EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY RELATED INSTRUMENT. EACH PARTY HERETO (A) CERTIFIES THAT
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THAT FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER

                                      -37-

<PAGE>

PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE RELATED
INSTRUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 14.15.

         [The remainder of this page has been left blank intentionally.]

                                      -38-

<PAGE>

     IN WITNESS WHEREOF, each of the Parties has caused this Supply Agreement
for the Product to be executed in multiple counterparts by its duly authorized
representative.

                          BRISTOL-MYERS SQUIBB COMPANY

                          By:         /s/ Robert E. Ewers, Jr.
                              -------------------------------------------------
                              Name:   Robert E. Ewers, Jr.
                              Title:  Vice President, Corporate Development

                          WOMEN FIRST HEALTHCARE, INC.

                          By:        /s/ Charles M. Caporale
                              -------------------------------------------------
                              Name:  Charles M. Caporale
                              Title: Chief Financial Officer

<PAGE>

                                 SCHEDULE 1.01
                                 -------------

                              PRODUCT INFORMATION

<TABLE>
<CAPTION>

PRODUCT                           SKU#      ASSOCIATED TRADEMARKS    SHELF LIFE
-------                         --------    ---------------------    ----------
<S>                             <C>         <C>                      <C>

VANIQA(R) 30g                    150030      VANIQA(R)               24 Months
VANIQA(R) 60g dual pack          150060      VANIQA(R)               24 Months
VANIQA(R) 2g sample              150092      VANIQA(R)               12 Months
VANIQA(R) 30g physician sample   150095      VANIQA(R)               24 Months
</TABLE>

<PAGE>

                                SCHEDULE 2.03(a)
                                ----------------

            INITIAL FIRM ORDER FOR MONTHS 1 TO 6 AFTER EFFECTIVE DATE

<TABLE>
<CAPTION>
                                         150060-60g      150092-2g     150095-30g
                         150030-30g      Twin Pack       sample        physician sample
                         ----------      ---------       ---------     ----------------
<S>                      <C>             <C>             <C>           <C>
July
August                     [***]
September
October                    [***]
November
December

Total                      [***]           [***]           [***]            [***]
</TABLE>

*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

<PAGE>

                                 SCHEDULE 2.04
                                 -------------

                        FORM OF CERTIFICATE OF ANALYSIS

<PAGE>

                                SCHEDULE 3.01(a)
                                ----------------

                     INITIAL PURCHASE PRICE AND BATCH SIZE

<TABLE>
<CAPTION>
                          Initial Purchase           Minimum Batch         Minimum Batch
SKU#                  Price (in U.S. Dollars)         Size Tubes           Size Package
----                  -----------------------      -----------------       -------------
<S>                   <C>                          <C>                     <C>
150030-30g                    [***]                64,704                  2,696 cases
                                                                           (1x24)

150060-60g                    [***]                31,800 dual packs       2,650 cases
dual pack                                          (or 63,600 tubes)       (1x12)

150092-                       [***]                917,424                 6,371 cases
2g sample                                                                  (1x144)

150095-30g                    [***]                63,384                  2,641 cases
physician sample                                                           (1x24)
</TABLE>

*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

<PAGE>

                                SCHEDULE 3.01(b)
                                ----------------

                             VARIABLE PRODUCT COSTS

<TABLE>
<CAPTION>
                                             Variable Product Costs
Product                                        (in U.S. Dollars)             SKU#
-------                                      ----------------------        --------
<S>                                          <C>                           <C>
VANIQA(R) 30g (24 units)                             [***]                  150030
VANIQA(R) 60g dual pack (12 units)                   [***]                  150060
VANIQA(R)  2g sample (144 units)                     [***]                  150092
VANIQA(R) 30g physician sample (24 units)            [***]                  150095
</TABLE>

*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.<PAGE>

                                                                    EXHIBIT 10.3
================================================================================

                          WOMEN FIRST HEALTHCARE, INC.

                                   $28,000,000

                              SENIOR SECURED NOTES

                             DUE SEPTEMBER 30, 2005

                                       AND

                        WARRANTS TO PURCHASE COMMON STOCK

                             ----------------------

                       NOTE AND WARRANT PURCHASE AGREEMENT

                             ----------------------

                            Dated as of June 25, 2002

================================================================================

<PAGE>

                                TABLE OF CONTENTS
                                -----------------

<TABLE>
<CAPTION>
                                                                                       Page
                                                                                       ----
<S>                                                                                    <C>
PARAGRAPH 1.    AUTHORIZATION OF ISSUANCE OF THE NOTES AND WARRANTS ..................   1

PARAGRAPH 2.    PURCHASE AND SALE OF NOTES AND WARRANTS ..............................   1

PARAGRAPH 3.    CONDITIONS PRECEDENT .................................................   2
          3A.     Purchasers' Conditions to Closing ..................................   2
          3B.     Conditions Precedent to Obligations of the Company .................   7

PARAGRAPH 4.    REDEMPTION OF THE NOTES ..............................................   8
          4A.     Optional Redemption ................................................   8
          4B.     Mandatory Redemption ...............................................   8
          4C.     Notice of Redemption ...............................................   8
          4D.     Change in Control ..................................................   9
          4E.     Excess Cash Flow Repurchase Offer ..................................  10
          4F.     Partial Redemptions Pro Rata .......................................  11
          4G.     Retirement of the Notes ............................................  11

PARAGRAPH 5.    AFFIRMATIVE COVENANTS ................................................  11
          5A.     Payment and Performance ............................................  12
          5B.     Books, Financial Statements and Reports ............................  12
          5C.     Other Information and Inspections ..................................  13
          5D.     Notice of Material Events ..........................................  14
          5E.     Maintenance of Properties ..........................................  15
          5F.     Maintenance of Existence and Qualifications ........................  15
          5G.     Payment of Taxes ...................................................  15
          5H.     Insurance ..........................................................  16
          5I.     Evidence of Compliance .............................................  16
          5J.     Information Required by Rule 144A ..................................  16
          5K.     Compliance with Agreements and Law .................................  16
          5L.     Indemnity ..........................................................  16
          5M.     Subordination ......................................................  17
          5N.     Maintenance of Perfected Security Interests in the Collateral ......  17
          5O.     Non-Voting Observer ................................................  18
          5P.     Key Man Insurance ..................................................  19
</TABLE>

                                       -i-

<PAGE>

<TABLE>
<CAPTION>
                                                                                       Page
                                                                                       ----
<S>                                                                                    <C>
PARAGRAPH 6.    NEGATIVE COVENANTS ...................................................  20
          6A.     Prohibition on Additional Indebtedness .............................  20
          6B.     Maintenance of EBITDA ..............................................  20
          6C.     Maintenance of Fixed Charge Coverage Ratio .........................  21
          6D.     Maintenance of Minimum Net Worth ...................................  21
          6E.     Capital Expenditures ...............................................  21
          6F.     Limitation on Liens ................................................  22
          6G.     Limitation on Mergers ..............................................  23
          6H.     Limitation on Asset Sales; Application or Other Proceeds ...........  23
          6I.     Limitation on Restricted Payments ..................................  25
          6J.     Limitation on Restrictions on Distributions from Subsidiaries ......  26
          6K.     Limitation on Transactions with Affiliates .........................  26
          6L.     Limitation on Ownership of Subsidiaries ............................  27
          6M.     Modification of Material Agreements ................................  28
          6N.     Limitation on Transfer of Assets to Certain Subsidiaries ...........  28
          6O.     Payments for Consent ...............................................  28
          6P.     Limitations on Preferred Stock of Subsidiaries .....................  28
          6Q.     Use of Proceeds ....................................................  28
          6R.     Business Activities ................................................  28

PARAGRAPH 7.    EVENTS OF DEFAULT ....................................................  28
          7A.     Acceleration .......................................................  28
          7B.     Rescission of Acceleration .........................................  31
          7C.     Notice of Acceleration or Rescission ...............................  32
          7D.     Other Remedies .....................................................  32

PARAGRAPH 8.    REPRESENTATIONS AND WARRANTIES OF THE COMPANY ........................  32

PARAGRAPH 9.    REPRESENTATIONS AND COVENANTS OF THE PURCHASERS ......................  45

PARAGRAPH 10.   DEFINITIONS ..........................................................  47

PARAGRAPH 11.   MISCELLANEOUS ........................................................  63
          11A.    Note Payments ......................................................  63
          11B.    Expenses ...........................................................  63
          11C.    Consent to Amendments ..............................................  64
          11D.    Form, Registration, Transfer and Exchange of Notes; Lost Notes .....  65
          11E.    Persons Deemed Owners; Participations ..............................  66
</TABLE>

                                      -ii-

<PAGE>

<TABLE>
<CAPTION>
                                                                                     Page
                                                                                     ----
         <S>                                                                         <C>
         11F.     Survival of Representations and Warranties; Entire Agreement ....   66
         11G.     Successors and Assigns ..........................................   66
         11H.     Disclosure to Other Persons .....................................   66
         11I.     Notices .........................................................   67
         11J.     Payments Due on Non-Business Days ...............................   67
         11K.     Satisfaction Requirement ........................................   67
         11L.     Governing Law ...................................................   67
         11M.     Severability ....................................................   67
         11N.     Descriptive Headings ............................................   68
         11O.     Counterparts ....................................................   68
</TABLE>

Schedule 8A-1   Capitalization
Schedule 8A-2   Subsidiaries
Schedule 8A-3   Options and Warrants
Schedule 8M     Unaudited Financial Statements
Schedule 8N     Pro Forma Financial Statements
Schedule 8Q     Licenses
Schedule 8V     Liens
Schedule 8X     Clinical Trials

EXHIBIT A       FORM OF SENIOR SECURED NOTE
EXHIBIT B       FORM OF COMMON STOCK PURCHASE WARRANT
EXHIBIT C-1     FORM OF SECURITY AGREEMENT
EXHIBIT C-2     FORM OF INTERCREDITOR AGREEMENT
EXHIBIT D       FORM OF OPINION OF LATHAM & WATKINS
EXHIBIT E       FORM OF OPINION OF CAHILL GORDON & REINDEL
EXHIBIT F       FORM OF REGISTRATION RIGHTS AGREEMENT

                                      -iii-

<PAGE>

                          WOMEN FIRST HEALTHCARE, INC.
                         12220 El Camino Real, Suite 400
                               San Diego, CA 92130

                                                             As of June 25, 2002

Ladies and Gentlemen:

          The undersigned, WOMEN FIRST HEALTHCARE, INC., a Delaware corporation
(the "Company"), hereby agrees with each purchaser (collectively, the
"Purchasers") executing a signature page hereto as follows:

          PARAGRAPH 1. AUTHORIZATION OF ISSUANCE OF THE NOTES AND warrants.

          The Company has authorized issuance of its Senior Secured Notes due
September 30, 2005 (the "Notes") in the initial aggregate principal amount of
$28,000,000, together with warrants to purchase 1,699,437 shares of common stock
of the Company (the "Warrants"). Interest on the Notes shall be payable
quarterly. The initial interest rate shall be 11.0% per annum (payable in cash)
and, following the first 18 months after issuance, shall be increased by 1.5%
per annum (payable in additional Notes of like tenor and maturity, bearing the
same interest rate ("Additional Notes") or, at the option of the Company, in
cash) and then increased by an additional 0.5% per annum six months thereafter
(also payable in Additional Notes or, at the option of the Company, in cash), as
set forth in the form of Note attached as Exhibit A hereto. The initial exercise
price of the Warrants shall be $5.50 per share, subject to adjustment as set
forth in the form of Warrant attached as Exhibit B hereto.

          Certain capitalized terms used herein have the meanings specified in
Paragraph 10. Unless otherwise indicated, all dollar amounts contained in this
Agreement are in U.S. Dollars and all covenants contained herein shall be
calculated in U.S. Dollars.

          PARAGRAPH 2. PURCHASE AND SALE OF NOTES AND WARRANTS.

          Subject to the terms and conditions herein set forth, the Company
hereby agrees to sell to the Purchasers and each Purchaser agrees to purchase
from the Company at the Closing (as defined below), (i) Notes in the amount set
forth on the signature pages hereof below its name at 100% of principal amount;
provided, however, that all such issuances of Notes (exclusive of Additional
Notes which may be issued to satisfy interest payment

<PAGE>

                                       -2-

Obligations) shall not result in originally issued Notes with an aggregate
principal amount exceeding $28,000,000 and (ii) Warrants in the amount set forth
on the signature pages hereof below its name for no additional consideration;
provided, however, that total of all such Warrants shall not exceed 5.75% of the
fully diluted common equity of the Company on the Date of Closing (as defined
below). The Company will deliver to each Purchaser one or more Notes in the form
attached as Exhibit A hereto registered in the name of such Purchaser (or its
nominee), evidencing the aggregate principal amount of Notes to be purchased by
such Purchaser and in the denomination or denominations specified by such
Purchaser and one or more Warrants in the form attached as Exhibit B hereto
registered in the name of such Purchaser (or its nominee), evidencing the number
of shares of common stock of the Company to be issued upon exercise of the
Warrants to be purchased by such Purchaser and in the denomination or
denominations specified by such Purchaser against payment of the purchase price
thereof by transfer of immediately available funds on the date of closing, which
shall be June 25, 2002 (the "Closing"; the "Date of Closing"), to accounts
specified by the Company in a funds flow memorandum to be delivered by the
Company to the Purchasers not later than one Business Day prior to the Date of
Closing. To the extent Additional Notes are issued, the Company will deliver to
each then holder of the Notes the Additional Notes registered in the name of
such holder (or its nominee). The issuance of Additional Notes shall not require
the issuance of additional Warrants.

          PARAGRAPH 3. CONDITIONS PRECEDENT.

          3A. Purchasers' Conditions to Closing. The obligation of each
Purchaser to purchase and pay for the Notes and the Warrants to be purchased by
such Purchaser hereunder is subject to the satisfaction of the following
conditions, on or before the Date of Closing:

           (i) Documents To Be Delivered. Each Purchaser shall have received all
     of the following, duly executed and delivered:

               (a)  The Notes to be purchased by such Purchaser.

               (b)  The Warrants to be purchased by such Purchaser.

               (c)  The Registration Rights Agreement in substantially the form
          set forth as Exhibit F hereto.

               (d)  The Security Documents in substantially the forms set forth
          as Exhibits C-1 and C-2 hereto.

               (e)  Arrangements reasonably satisfactory to the Purchasers shall
          have been made for all recordings and filings of, or with respect to,
          the Security Agreement, including filings with the United States
          Patent and Trademark and Copyright offices, and delivery of such other
          security and other documents

<PAGE>

                                      -3-

         including, without limitation, consents of counterparties, and the
         taking of all actions as may be necessary or, in the reasonable opinion
         of the Collateral Agent, desirable to perfect the Lien created, or
         purported to be created, by the Security Agreement.

                  (f) A certificate of the Secretary of the Company dated the
         Date of Closing, certifying the incumbency and authority of the
         officers or authorized signatories of the Company who executed the
         Documents and the truth, correctness and completeness of the following
         exhibits attached thereto: (i) a copy of resolutions duly adopted by
         the Board of Directors of the Company, in full force and effect at the
         time this Agreement is entered into, authorizing the execution of this
         Agreement and the other Documents delivered or to be delivered in
         connection herewith and the consummation of the transactions
         contemplated herein and therein, as applicable, (ii) a copy of the
         certificate of incorporation of the Company, and all amendments
         thereto, certified by an appropriate official of the Company's
         jurisdiction of incorporation, and (iii) a copy of the By-laws of the
         Company.

                  (g) Certificates, dated as of a recent date, as to the valid
         existence and good standing of the Company and each of its Subsidiaries
         in its jurisdiction of formation, issued by the appropriate authorities
         of such jurisdiction.

                  (h) A certificate executed by the principal executive officer
         of the Company, dated the Date of Closing, in which such officer
         certifies that the conditions set forth in subsections (a), (b), and
         (c) of Paragraph 3A(iii) have been satisfied.

                  (i) The opinion of Latham & Watkins, counsel to the Company,
         dated the Date of Closing and substantially in the form set forth as
         Exhibit D hereto, subject only to such qualifications, limitations or
         exceptions as may be acceptable to each Purchaser.

                  (j) The opinion of Cahill Gordon & Reindel, the Purchasers'
         special counsel, dated the Date of Closing and substantially in the
         form set forth as Exhibit E hereto, subject only to such
         qualifications, limitations or exceptions as may be acceptable to each
         Purchaser.

                  (k) Certificates, dated as of a recent date, of the Company's
         and its Subsidiaries' good standing and qualification to do business,
         issued by appropriate officials in each jurisdiction listed on Schedule
         3A(i)(k).

         (ii)     Fees and Expenses. The payment by the Company, by wire
transfer of immediately available funds, of (i) an upfront fee of 2.0% of the
total amount

<PAGE>

                                      -4-

         committed by the Purchasers (as defined in the commitment letter dated
         June 18, 2002), to be allocated to such Purchasers pro rata on the
         basis of their respective commitments set forth therein, (ii) the
         travel and other reasonable out-of-pocket expenses of the Purchasers
         related to the Vaniqa Acquisition or this Transaction and (iii) the
         reasonable fees and disbursements of the Purchasers' counsel (including
         without limitation Cahill Gordon & Reindel) and consultants related to
         the Vaniqa Acquisition or this Transaction.

                  (iii) Representations; No Default. (a) All representations and
         warranties made by the Company in any Document shall be true and
         correct on and as of the Date of Closing (except to the extent that the
         facts upon which such representations are based have been changed by
         the transactions herein contemplated and such changes are set forth to
         the satisfaction of each Purchaser) as if such representations and
         warranties had been made as of the Date of Closing.

                  (b)   No Default under this Agreement or the other Documents
         shall exist at the Date of Closing.

                  (c)   The Company shall have performed and complied with all
         agreements and conditions required in the Documents to be performed or
         complied with by the Company on or prior to the Date of Closing.

                  (iv)  Purchase Permitted by Applicable Laws. The offer by the
         Company of, and the purchase of and payment for, the Notes and the
         Warrants on the terms and conditions herein provided (including the use
         of the proceeds of the sale of such Notes and the Warrants by the
         Company) shall not violate any applicable law or governmental
         regulation (including, without limitation, Section 5 of the Securities
         Act), shall not be enjoined under the laws of any jurisdiction to which
         the Company or either Purchaser is subject (temporarily or permanently)
         and shall not subject any Purchaser or any then holders of the Notes or
         the Warrants to any tax, penalty, liability or other materially adverse
         condition under or pursuant to any applicable law or governmental
         regulation.

                  (v)   Concurrent Consummation of Acquisition. Concurrently
         with the issuance of the Notes, the Company shall consummate the Vaniqa
         Acquisition on terms and in form and substance reasonably satisfactory
         to the Purchasers.

                  (vi)  Concurrent Consummation of Preferred Stock Financing.
         Concurrently with the issuance of the Notes, the Company shall
         consummate the issuance and sale of the Preferred Stock on terms and in
         form and substance reasonably satisfactory to the Purchasers.

<PAGE>

                                      -5-

                  (vii)  Proceedings. All corporate and other proceedings taken
         or to be taken in connection with the transactions contemplated hereby
         and all documents incident thereto shall be reasonably satisfactory in
         form and substance to each Purchaser, and each Purchaser shall have
         received all such counterpart originals or certified or other copies of
         such documents as they or their counsel may reasonably request.

                  (viii) Reliance on Related Documents. Each Purchaser shall be
         entitled to rely on all written representations, warranties, covenants
         and opinions rendered by buyer in connection with the consummation of
         the transactions contemplated by the Transaction Documents.

                  (ix)   No Adverse Change or Development, Etc. (I) There shall
         not have occurred or become known to the Purchasers any events or
         changes (A) since December 31, 2001 that, individually or in the
         aggregate, have had or could reasonably be expected to have a Material
         Adverse Effect, after giving effect to the Transaction, or (B) that
         have had or could reasonably be expected to have an adverse effect on
         the rights or remedies of any Purchaser, or on the ability of the
         Company to perform its obligations to any Purchaser; (II) trading in
         any securities of the Company shall not have been suspended or
         materially limited by the Securities and Exchange Commission or Nasdaq
         and trading in securities generally on the New York Stock Exchange,
         American Stock Exchange, Ontario Stock Exchange or the Nasdaq National
         Market shall not have been suspended or limited and minimum or maximum
         prices or maximum ranges for prices shall not have been established on
         any such exchange; (III) a banking moratorium shall not have been
         declared by New York, Canadian or United States authorities; and (IV)
         there shall not have been (A) an outbreak or escalation of material
         hostilities between the United States and any foreign power, or (B) an
         outbreak or escalation of any other material insurrection or armed
         conflict involving the United States or any other national or
         international calamity or emergency or (C) any material change or
         disruption in the general financial, banking or capital markets of the
         United States which, in each case, in the judgment of the Purchasers
         could reasonably be expected to materially and adversely affect or
         impair the ability to syndicate, sell or place the Notes or the
         Warrants.

                  (x)    Capital Structure. The pro forma consolidated capital
         structure of the Company, after giving effect to the Transaction
         (including only those adjustments approved by the Purchasers), shall be
         consistent in all material respects with the Projections and capital
         structure contemplated herein, and other than any Notes and other
         indebtedness satisfactory to the Purchasers, after giving effect to,
         and upon consummation of, the Transaction, the Company and its
         subsidiary shall have no outstanding indebtedness for money borrowed
         other than currently outstanding Indebtedness of the Company and its
         subsidiaries in an aggregate principal amount outstanding not to exceed
         $21.6 million.

<PAGE>

                                      -6-

                  (xi)   Approvals. All governmental and third party approvals
         required by the Transaction and any other material governmental and
         third party approvals required in connection with the financing
         contemplated hereby shall have been obtained on reasonably satisfactory
         terms and shall be in full force and effect, and all applicable waiting
         periods shall have expired without any action being taken or threatened
         by any competent authority that would materially restrain, prevent or
         otherwise impose material adverse conditions on the financing thereof.

                  (xii)  Financial Statements. The Purchasers shall have
         received (I) satisfactory audited financial statements of the Company
         for the three most recent Fiscal Years for which such financial
         statements are available, (II) satisfactory unaudited interim
         consolidated financial statements of the Company for each fiscal month
         and quarterly period ended after the latest Fiscal Year referred to in
         clause (I) above as to which such financial statements are available
         and for the corresponding period in the preceding Fiscal Year, (III) a
         satisfactory pro forma (a) balance sheet of the Company as of the date
         of the most recent financial statements provided pursuant to clause
         (II) above and (b) income statement for the most recent of the Fiscal
         Years provided pursuant to clause (I) above and for the quarterly
         period provided pursuant to clause (II) above, in each case, which
         shall give pro forma effect (including only those adjustments approved
         by the Purchasers) to the Transaction and (IV) the Projections; and
         such financial statements and Projections shall not reflect any
         material adverse change in the consolidated financial condition of the
         Company and its subsidiaries from what was reflected in the financial
         statements or projections previously furnished to the Purchasers.

                  (xiii) Minimum EBITDA. The Purchasers shall be satisfied that
         consolidated EBITDA (as adjusted on a pro forma basis for the
         Transaction in accordance with customary investment banking practice
         and including only those adjustments approved by the Purchasers) of the
         Company, after giving effect to the Transaction, for the latest three
         month period annualized for which the relevant financial information is
         available shall equal at least $15.4 million, and the Company shall
         provide support for such calculation of a nature that is satisfactory
         to the Purchasers.

                  (xiv)  Minimum Cash Balance. The Purchasers shall be satisfied
         that, as of the Date of Closing and after giving effect to the
         Transaction, the Company shall have a minimum cash balance of at least
         $14.0 million.

                  (xv)   Solvency. Each Purchaser shall have received a
         certificate satisfactory in form and substance to the Purchasers and
         executed by the Chief Executive Officer and the Chief Financial Officer
         of the Company that shall certify to the solvency of the Company and
         its subsidiaries after giving effect to the Transaction and the other
         transactions contemplated hereby.

<PAGE>

                                      -7-

                  3B. Conditions Precedent to Obligations of the Company. The
obligation of the Company to issue and sell the Notes and the Warrants is
subject to the satisfaction, on or before the Date of Closing, of the following
conditions:

                  (i)  Purchaser Deliveries. (a) The Company shall have received
         the following from each Purchaser, duly executed and delivered: (A) the
         Registration Rights Agreement in substantially the form set forth as
         Exhibit F hereto and (B) the Security Documents in substantially the
         forms set forth as Exhibits C-1 and C-2 hereto.

                  (b)  The Purchasers shall have tendered payment pursuant to
         Paragraph 2 above.

                  (ii) Expenses. The Purchasers shall have provided to the
         Company a statement of, and at the request of the Company reasonable
         documentation for, (a) the travel and other reasonable out-of-pocket
         expenses of the Purchasers related to the Vaniqa Acquisition or the
         Transaction and (b) the reasonable fees and disbursements of the
         Purchasers' counsel (including without limitation Cahill Gordon &
         Reindel) and consultants related to the Vaniqa Acquisition or the
         Transaction.

                 (iii) Representations and Warranties. The representations and
         warranties made by each Purchaser herein shall be true and correct on
         and as of the Date of Closing with the same effect as though such
         representations and warranties had been made on and as of the Date of
         Closing.

                  (iv) Purchase Permitted by Applicable Laws. The offer by the
         Company of, and the purchase of and payment for, the Notes and the
         Warrants on the terms and conditions herein provided (including the use
         of the proceeds of the sale of such Notes and the Warrants by the
         Company) shall not violate any applicable law or governmental
         regulation (including, without limitation, Section 5 of the Securities
         Act) and shall not be enjoined under the laws of any jurisdiction to
         which the Company or any Purchaser is subject (temporarily or
         permanently).

                  (v)  Vaniqa Closing. All conditions to consummation of the
         Vaniqa Acquisition shall have been performed or waived by the
         appropriate parties thereto at the Date of Closing.

                  (vi) Concurrent Consummation of Preferred Stock Financing.
         Concurrently with the issuance of the Notes, the Company shall
         consummate the issuance and sale of the Preferred Stock.

                 (vii) Approvals.  All governmental and third party approvals
         required by the Transaction and any other material governmental and
         third party approvals required in connection with the financing
         contemplated hereby shall have been obtained on

<PAGE>

                                   -8-

         reasonably satisfactory terms and shall be in full force and effect,
         and all applicable waiting periods shall have expired without any
         action being taken or threatened by any competent authority that would
         materially restrain, prevent or otherwise impose material adverse
         conditions on the financing thereof.

                  PARAGRAPH 4.  REDEMPTION OF THE NOTES.

                  4A. Optional Redemption. On or after the Date of Closing, the
Notes may be redeemed at the option of the Company at any time as a whole, or
from time to time in part, without premium or penalty except as set forth below,
in amounts not less than $1,000,000 and in increments of $500,000, at a
redemption price of 108% of the aggregate principal amount of Notes outstanding
(the "Optional Redemption Price"), plus accrued and unpaid interest (if any) to
the date of redemption.

                  4B. Mandatory Redemption. Net Proceeds of loans or sales of
other debt securities (to include, but not limited to, loans or debt securities
related to currently unencumbered assets) other than Net Proceeds of the
Permitted Debt incurred after the Date of Closing, to the full extent of the Net
Proceeds so received, and 75% of the Net Proceeds of an offering of equity
securities, whether in a public offering or private placement and whether by the
Company or any of its Subsidiaries, shall be used to redeem the Notes at the
Optional Redemption Price, plus accrued and unpaid interest (if any) to the date
of redemption within 30 days of receipt of such proceeds. Excluded from the
foregoing mandatory redemption requirement shall be (a) proceeds from any equity
offering to the extent used (i) to acquire substantially all of the rights to
Esclim under license as of the Date of Closing, (ii) to refinance the senior
secured note of the Company held by American Home Products Corporation or (iii)
to make a Permitted Acquisition. Also excluded from the foregoing mandatory
redemption requirement for a period of six months following receipt thereof by
the Company shall be up to $7.5 million of proceeds from one or more equity
offerings yielding proceeds of less than $7.5 million, which proceeds shall
promptly be deposited in a revolving escrow account to be used solely to either
(a) before the six-month anniversary of the receipt of such proceeds by the
Company, make a Permitted Acquisition, or (b) on or after such six-month
anniversary, commence a mandatory redemption of the Notes in accordance with
this Paragraph 4B; provided, that the Purchasers shall have a perfected first
priority security interest in all amounts held in such escrow account at all
times while any amount is on deposit therein. The Company shall not be required
to redeem Notes pursuant to this Paragraph 4B if the Net Proceeds available to
redeem Notes pursuant to this Paragraph 4B are less than $500,000 (which lesser
amount shall be carried forward for purposes of determining whether such a
redemption is required with respect to the Net Proceeds from any subsequent
loans or offerings of debt or equity securities).

                  4C. Notice of Redemption. The Company shall give the holder of
each Note irrevocable written notice of any redemption pursuant to Paragraph 4A
or 4B not less than 15

<PAGE>

                                      -9-

Business Days nor more than 30 Business Days prior to the date specified for
such redemption, specifying such date and the principal amount of the Notes held
by such holder to be redeemed on such date and stating that such redemption is
to be made pursuant to Paragraph 4A or 4B. Notice of redemption having been
given as aforesaid, the principal amount of the Notes specified in such notice,
together with any premium and accrued and unpaid interest (if any) thereon to
the redemption date with respect thereto, shall become due and payable on such
redemption date.

          4D.  Change in Control. (a) In the event of any Change in Control,
holders of Notes shall have the right, at their option, to require the Company
to purchase all or any portion of the Notes on the date (the "Change in Control
Payment Date") which is 20 Business Days after the date the Change in Control
Notice (as defined below) is required to be mailed (or such later date as is
required by applicable law) at the Optional Redemption Price, plus accrued and
unpaid interest (if any) to the Change in Control Payment Date.

          (b)  The Company shall send all holders of the Notes, within five
Business Days after the occurrence of any Change in Control, a notice of the
occurrence of such Change in Control (the "Change in Control Notice"); provided
that the foregoing five Business Day period will be extended by 120 days in the
event of Mr. Calesa's death prior to the earlier of (i) 60 days after the Date
of Closing or (ii) the date on which the Company is first in compliance with
Paragraph 5P.

          Each Change in Control Notice shall state:

          (1)  the Change in Control Payment Date;

          (2)  the date by which the right to have Notes purchased must be
     exercised;

          (3)  that such right is conditioned on receipt of notice from the
     holders;

          (4)  the purchase price, if the right to have Notes purchased is
     exercised;

          (5)  a description of the procedure which the holders of Notes must
     follow to exercise the right to have Notes purchased;

          (6)  that the purchase is being made pursuant to this Paragraph 4D;

          (7)  that any Note not tendered will continue to accrue interest if
     interest is then accruing; and

          (8)  that, unless the Company defaults in making payment therefor, any
     Note accepted for purchase shall cease to accrue interest after the Change
     in Control Payment Date.

<PAGE>

                                      -10-

          No failure of the Company to give the foregoing notice shall limit any
holder's right to exercise a right to have Notes purchased.

          The Company shall not be required to purchase all or any portion of
the Notes under subparagraph (a) of this Paragraph 4D if a third party offers to
purchase the Notes in the manner, at the time and otherwise in compliance with
the requirements set forth in this Paragraph 4D and purchases all Notes or
portions thereof validly tendered and not withdrawn under this Paragraph 4D.

          4E. Excess Cash Flow. (a) If the Company has Excess Cash Flow for the
period commencing on the Date of Closing and ending December 31, 2002 or for any
Fiscal Year thereafter, the Company shall apply an amount equal to 75% of the
Excess Cash Flow for such period or Fiscal Year:

          (1)  first, to make an offer to the holders of the Notes to purchase
     Notes pursuant to and subject to the conditions contained in this Agreement
     (an "Excess Cash Flow Offer");

          (2)  second, to the extent of the balance of such percentage of Excess
     Cash Flow after application in accordance with subsection (1) above, to
     make an offer to the holders of the Preferred Stock to purchase their
     shares of Series A Preferred Stock pursuant to and subject to the
     conditions contained in the certificate of designations relating thereto;
     and

          (3)  third, to the extent of the balance of such percentage of Excess
     Cash Flow after application in accordance with clauses (1) and (2) above,
     to any other application or use not prohibited by this Agreement.

          (b)  In the event of the occurrence of an Excess Cash Flow Offer,
holders of Notes shall have the right, at their option, to require the Company
to purchase such portion of the Notes on the date (the "Excess Cash Flow Payment
Date") which is 20 Business Days after the date the Excess Cash Flow Notice (as
defined below) is required to be mailed (or such later date as is required by
applicable law) at a price equal to 100% of the principal amount thereof plus
accrued and unpaid interest (if any) to the Excess Cash Flow Payment Date. The
Company shall not be required to make an Excess Cash Flow Offer to purchase
Notes pursuant to this Paragraph 4E if the Excess Cash Flow available therefor
is less than $500,000 (which lesser amount shall be carried forward for purposes
of determining whether such an offer is required with respect to the Excess Cash
Flow in any subsequent Fiscal Year).

          (c)  The Company shall send all holders of the Notes, within 90
Business Days after end of the Fiscal Year, a notice of the occurrence of such
Excess Cash Flow (the "Excess Cash Flow Notice").

<PAGE>

                                      -11-

          Each Excess Cash Flow Notice shall state:

          (1)  the Excess Cash Flow Payment Date;

          (2)  the date by which the right to have Notes purchased must be
     exercised;

          (3)  that such right is conditioned on receipt of notice from the
     holders;

          (4)  the purchase price, if the right to have Notes purchased is
     exercised;

          (5)  a description of the procedure which the holders of Notes must
     follow to exercise the right to have Notes purchased;

          (6)  that the purchase is being made pursuant to this Paragraph 4E;

          (7)  that any Note not tendered will continue to accrue interest if
     interest is then accruing; and

          (8)  that, unless the Company defaults in making payment therefor, any
     Note accepted for purchase shall cease to accrue interest after the Excess
     Cash Flow Payment Date.

          No failure of the Company to give the foregoing notice shall limit any
holder's right to exercise a right to have Notes purchased.

          4F. Partial Redemptions Pro Rata. Upon any partial redemption of the
Notes pursuant to Paragraph 4A or 4B, the principal amount so redeemed shall be
allocated to all Notes at the time outstanding in proportion to the respective
outstanding principal amounts thereof.

          4G. Retirement of the Notes. The Company shall not redeem or otherwise
retire in whole or in part prior to their stated final maturity (other than by
redemption pursuant to Paragraph 4A or 4B or upon acceleration of such final
maturity pursuant to Paragraph 7A), or purchase or otherwise acquire, directly
or indirectly, Notes held by any holder unless the Company shall have offered to
redeem or otherwise retire or purchase or otherwise acquire, as the case may be,
the same proportion of the aggregate principal amount of Notes held by each
other holder of Notes at the time outstanding upon the same terms and
conditions. Any Notes so redeemed or otherwise retired or purchased or otherwise
acquired by the Company shall not be deemed to be outstanding for any purpose
under this Agreement.

          PARAGRAPH 5. AFFIRMATIVE COVENANTS.

          To induce each Purchaser to enter into this Agreement and purchase the
Notes and the Warrants, the Company covenants and agrees as follows:

<PAGE>

                                      -12-

          5A. Payment and Performance. The Company shall pay all amounts due by
it under the Documents in accordance with the terms thereof and will observe,
perform and comply with every covenant, term and condition in the Documents
applicable to it.

          5B. Books, Financial Statements and Reports. The Company shall at all
times maintain and shall cause its Subsidiaries to at all times maintain
materially complete and accurate books of accounts and records. The Company
shall maintain and shall cause its Subsidiaries to maintain a standard system of
accounting and will furnish the following statements and reports to each
Purchaser or each then holder of Notes at the Company's expense:

          (i)   (A) No later than 90 days after the end of each Fiscal Year,
     audited consolidated financial statements of the Company, together with all
     notes thereto, prepared in reasonable detail in accordance with GAAP,
     together with an opinion, based on an audit using United States generally
     accepted auditing standards, by independent certified public accountants of
     national reputation selected by the Company, stating that such financial
     statements have been so prepared. The consolidated financial statements of
     the Company shall contain a balance sheet as of the end of such Fiscal Year
     and a statement of operations, cash flows and stockholders' equity for such
     Fiscal Year, each setting forth in comparative form the corresponding
     figures for the preceding Fiscal Year. (B) No later than 90 days following
     the first day of each Fiscal Year of the Company, a budget prepared by the
     Company for each of the four quarters of such Fiscal Year prepared in the
     same level of detail as prepared for and delivered to the Company's Board
     of Directors for the Company and its Subsidiaries, accompanied by a
     statement of the Chief Financial Officer of the Company to the effect that
     the budget is a reasonable estimate for the period covered thereby.

          (ii)  No later than 45 days after the end of each of the first three
     Fiscal Quarters of the Company's Fiscal Year, the Company's unaudited
     consolidated balance sheet as of the end of such Fiscal Quarter and an
     unaudited consolidated statement of operations and cash flows for such
     Fiscal Quarter and for the period from the beginning of the then current
     Fiscal Year to the end of such Fiscal Quarter, setting forth in each case,
     in comparative form, figures for the corresponding periods in the preceding
     Fiscal Year, all in reasonable detail and prepared in accordance with GAAP,
     subject to changes resulting from normal or recurring year-end adjustments.

          (iii) No later than 30 days after the end of each calendar month, the
     Company's unaudited consolidated interim balance sheet as of the end of
     such month and the related unaudited consolidated interim statements of
     operations and cash flows for such one-month period and the portion of the
     Fiscal Year through the end of such month, setting forth in each case, in
     comparative form, figures for the corresponding fiscal periods in the
     preceding Fiscal Year (subject to normal year-end audit adjustments and the
     absence of footnote disclosure).

<PAGE>

                                      -13-

          (iv) The Company will (A) together with each set of financial
     statements furnished under subsection (i) of this Paragraph, furnish a
     certificate signed by the firm auditing such financial statements
     containing a statement to the effect that such firm has examined Paragraphs
     6 and 7 of this Agreement and that in the course of their examination they
     did not become aware of any Event of Default, or any event which upon
     notice or lapse of time or both would constitute an Event of Default, under
     such Paragraph 6 (or, if such an event has occurred, a statement explaining
     its nature and extent); provided, however, that in issuing such statement,
     such firm shall not be required to exceed the scope of normal auditing
     procedures conducted in connection with their opinion referred to above;
     and (B) together with each set of financial statements furnished under
     subsections (i) and (ii) of this Paragraph, furnish a certificate signed by
     the Chief Financial Officer of the Company containing calculations showing
     compliance (or non-compliance) at the end of such Fiscal Year or Fiscal
     Quarter, as the case may be, with the requirements of Paragraphs 4B, 4E,
     6A, 6B, 6C, 6D, 6E, 6H, 6I and 6K and stating that such financial
     statements fairly present the financial condition of the Company and its
     consolidated Subsidiaries, that the signatory has reviewed the Documents
     and that no Event of Default or Default exists at the end of such Fiscal
     Year or Fiscal Quarter, as the case may be, or at the time of such
     certificate or specifying the nature and period of existence of any such
     Event of Default or Default.

          (v)  For so long as the Company is required to make filings with the
     Securities and Exchange Commission pursuant to Sections 13 and 15(d) of the
     Exchange Act, so long as any of the Notes are outstanding, the Company
     shall furnish to each Noteholder the annual reports, quarterly reports,
     current reports, proxy statements and other documents that the Company has
     filed with the Securities and Exchange Commission pursuant to Sections 13
     and 15(d) of the Exchange Act, such documents to be furnished to each
     Noteholder within 15 days of the respective dates by which the Company has
     filed such documents (unless an earlier time is specified herein).

          5C.  Other Information and Inspections. The Company shall, and shall
cause its Subsidiaries to, furnish to each Noteholder any information which such
holder may from time to time reasonably request concerning any covenant,
provision or condition of the Documents or any matter in connection with the
Company's, or any of its Subsidiaries', business and operations. During normal
business hours, upon reasonable notice, and without undue interruption of the
Company's and its Subsidiaries' business, the Company shall, and shall cause its
Subsidiaries to, permit representatives of each holder or group of holders of a
combination of at least $5,000,000 in (i) principal amount of the Notes and (ii)
accreted stated value of the Preferred Stock (each such holder or group
"Significant Noteholders"), including each Significant Noteholder's independent
accountants, agents, attorneys, appraisers and any other representatives, to
visit and inspect any of the Company's, or such Subsidiary's, Property,
including its books of account, other books and records, and any facilities or
other business assets; provided that no individual Noteholder shall be permitted
such inspection rights

<PAGE>

                                      -14-

in the event such Noteholder does not hold a combination of at least $2,500,000
(i) in principal amount of Notes and (ii) accreted stated value of the Preferred
Stock. The inspections in accordance with the preceding sentence shall be
limited to no more than four times each calendar year for each Noteholder. The
out-of-pocket costs and expenses of the first inspection by each Noteholder
shall be borne by the Company, except to the extent such cost and expenses of
all Noteholders and the holders of Preferred Stock exceed $50,000 per year, and
all out-of-pocket costs and expenses of the remaining three inspections per year
shall be borne by the relevant Noteholders; provided, however, that during any
period in which an Event of Default has occurred and is continuing, the number
of inspections shall not be limited, and the reasonable, documented
out-of-pockets costs and expenses of the inspections during the period in which
an Event of Default has occurred and is continuing shall be borne by the
Company. The representatives of the Significant Holders who conduct any
inspections shall execute a confidentiality agreement reasonably acceptable to
the Company. In connection with any such inspections, the Company shall, and
shall cause its Subsidiaries to, permit the Significant Noteholders or
representatives of the Noteholders to investigate and verify the accuracy of the
information furnished to the Significant Noteholders in connection with the
Documents and to discuss all such matters with its officers, employees and
representatives. Each Noteholder agrees that it shall keep confidential any
proprietary information given to it by the Company or any of its Subsidiaries;
provided, however, that this restriction shall not apply to information which
(i) has at the time in question entered the public domain other than by reason
of breach of this provision by any Noteholder, (ii) is required to be disclosed
by law or by any order, rule or regulation of any court or governmental agency,
or authority, (iii) is disclosed to any Affiliates, auditors, attorneys, or
agents of the Noteholders so long as the Noteholders request that such Person or
Persons keep such information confidential in accordance with the terms of the
confidentiality provisions of this Paragraph 5C, or (iv) is furnished to
purchasers or prospective purchasers of the Notes; provided that such purchasers
or prospective purchasers shall be apprised of the confidential nature of such
information and shall agree with the Company to hold such information
confidential in accordance with the terms of the confidentiality provisions of
this Paragraph 5C. With respect to clause (ii) of the preceding sentence, the
Noteholder proposing to disclose such information shall promptly notify the
Company and shall use commercially reasonable efforts to obtain or provide the
Company with the opportunity to obtain confidential treatment of such
information by the court, governmental agency, authority or other disclosee.

          5D. Notice of Material Events. The Company shall, and shall cause its
Subsidiaries to, promptly notify the Noteholders (i) of the existence of any
Lien (other than Liens permitted under Paragraph 6F of this Agreement) on the
Company's or such Subsidiary's property or an event or condition that could
reasonably be expected to result in a Material Adverse Effect, (ii) of the
occurrence of any Default, (iii) of the default in payment on, or the
acceleration of the maturity of, any Debt owed by the Company or any of its
Subsidiaries or of any other default by the Company or any of its Subsidiaries
under any indenture, mortgage, agreement, contract or other instrument to which
any of them is a party or by which any of

<PAGE>

                                      -15-

them or any of their Properties is bound if such other default could reasonably
be expected to have a Material Adverse Effect, (iv) of any claim asserted
against the Company or any of its Subsidiaries or with respect to the Company's
or any of its Subsidiaries' Properties that could reasonably be expected to have
a Material Adverse Effect, (v) of the filing of any suit or proceeding against
the Company or any of its Subsidiaries in which an adverse decision could
reasonably be expected to have a Material Adverse Effect (vi) of the occurrence
of any (a) Termination Event; (b) "prohibited transaction" (within the meaning
of Section 4975 of the IRC or Section 406 of ERISA), other than one to which an
exemption applies; (c) failure to make a timely contribution to any Pension
Plan, if such failure has given rise to a Lien under Section 412(n) of the IRC;
or (d) actual, asserted or alleged violation of ERISA, the IRC or comparable
provision of applicable foreign law that, with respect to any of the events set
forth in the foregoing clauses (a) through (d), could reasonably be expected to
result in a material tax, penalty or other material adverse consequence to the
Company, any of its Subsidiaries or any ERISA Affiliate in connection with any
Pension Plan, and shall provide a written notice specifying the nature thereof,
what action the Company is taking or proposes to take with respect thereto, and,
when known, any action taken by the IRS, the U.S. Department of Labor, the PBGC,
any foreign governmental entity or any other Person with respect thereto and
(vii) of the receipt of any notice of termination or notice that exclusive
rights will become non-exclusive under any material license agreement under
which the Company receives rights to manufacture, distribute or sell a product.
Upon the occurrence of any of the foregoing, the Company shall, and shall cause
its Subsidiaries to, take all reasonably necessary or appropriate steps to
remedy promptly any such material event, Default or default, to protect against
any such adverse claim, to defend any such suit or proceeding, and to resolve
all controversies on account of any of the foregoing.

                  5E. Maintenance of Properties. The Company shall, and shall
cause its Subsidiaries to, maintain, preserve, protect, and keep all Property
necessary to the business of the Company and its Subsidiaries in reasonably good
condition (ordinary wear and tear excepted) and in compliance with all
applicable laws, rules and regulations, except where non-compliance could not
reasonably be expected to have a Material Adverse Effect.

                  5F. Maintenance of Existence and Qualifications. Except as
provided in Paragraph 6G, the Company shall, and shall cause each of its
Subsidiaries to, (a) maintain and preserve its corporate or other existence and
its rights, franchises and privileges in full force and effect; and (b) qualify
to do business as a foreign corporation or limited liability company, as the
case may be, in all states or jurisdictions where required by applicable law
except where the failure to be so qualified would not result, individually or in
the aggregate, in a Material Adverse Effect.

                  5G. Payment of Taxes. The Company shall, and shall cause each
of its Subsidiaries to, (i) timely file all required tax returns; and (ii)
timely pay all Taxes, assessments,

<PAGE>

                                      -16-

and other governmental charges or levies imposed upon it or upon its income,
profits or Property, except to the extent the same are being contested in good
faith and for which adequate reserves under GAAP have been established.

                  5H. Insurance. The Company shall, and shall cause each of its
Subsidiaries to, maintain insurance in such amounts and covering such risks as
are usually and customarily carried with respect to all Property of a character
usually insured by similar Persons engaged in the same or similar businesses.
The Company shall, and shall cause each of its Subsidiaries to, at all times
maintain insurance against its liability for injury to persons or Property,
which insurance shall be by financially sound and reputable insurers.

                  5I. Evidence of Compliance. The Company shall furnish to each
Noteholder at the Company's expense (i) within 45 days after the end of each of
the first three Fiscal Quarters of any Fiscal Year and within 90 days after the
end of each Fiscal Year, a certificate signed by the Chairman of the Board, the
President or the Chief Financial Officer of the Company and (ii) all evidence
that any Noteholder from time to time reasonably requests, in each case, as to
the accuracy and validity of or compliance with all representations, warranties
and covenants made by the Company in the Documents, the satisfaction of all
conditions contained therein and all other matters pertaining thereto, except to
the extent any of the foregoing matters are covered by another compliance
provision contained herein.

                  5J. Information Required by Rule 144A. The Company shall, upon
the request of a Noteholder, provide such holder, and any qualified
institutional buyer designated by such holder, such financial and other
information as such holder may reasonably determine to be necessary in order to
permit compliance with the information requirements of Rule l44A under the
Securities Act in connection with the resale of Notes, except at such times as
the Company is subject to the reporting requirements of Section 13 or 15(d) of
the Exchange Act. For the purpose of this Paragraph 5J, the term "qualified
institutional buyer" shall have the meaning specified in Rule l44A under the
Securities Act.

                  5K. Compliance with Agreements and Law. The Company shall, and
shall cause each of its Subsidiaries to, perform all obligations it is required
to perform under the terms of each indenture, mortgage, deed of trust, security
agreement, lease, franchise, agreement, contract or other instrument or
obligation to which it is a party or by which it or any of its Properties is
bound, except where failure to comply could not reasonably be expected to have a
Material Adverse Effect. The Company shall, and shall cause each of its
Subsidiaries to, conduct its business and affairs in compliance with all laws,
regulations, and orders applicable thereto, except where failure to comply could
not reasonably be expected to have a Material Adverse Effect.

                  5L. Indemnity. The Company agrees to indemnify each holder of
Notes or Warrants, upon demand, from and against any and all liabilities,
obligations, claims, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements (including

<PAGE>

                                      -17-

reasonable fees of attorneys, accountants, experts and advisors) of any kind or
nature whatsoever (in this section collectively called "liabilities and costs")
which to any extent (in whole or in part) may be imposed on, incurred by or
asserted against any holder of a Note or Warrant growing out of, resulting from
or in any other way associated with the Documents and the transactions and
events associated herewith or therewith or contemplated herein or therein. No
holder of Notes or Warrants shall be entitled under this paragraph to receive
indemnification for any liabilities and costs (i) to the extent caused by its
own individual gross negligence, willful misconduct or bad faith, (ii) to the
extent caused by its breach of any law, rule, regulation, order or any contract,
agreement or other instrument to which it is a party or otherwise bound, or
(iii) which arise from actions or proceedings convened by a Noteholder against
another Noteholder or by a holder of Warrants against another holder of
Warrants. The Company shall not, in connection with any one action or proceeding
or separate but substantially similar or related actions or proceedings in the
same jurisdiction arising out of the same general allegations or circumstances,
be responsible hereunder for the reasonable fees and expenses of more than one
law firm, in addition to any local counsel, for all of the holders of Notes or
Warrants, except to the extent any holder of Notes or Warrants shall have been
advised by legal counsel that there is a reasonable likelihood that there may
exist a conflict of interest between any of such holders of Notes or Warrants or
that any such holders of Notes or Warrants may have one or more defenses
available that are different from or additional to any defense or defenses
available to any other holder of Notes or Warrants. None of the Company, any
Noteholder or any holder of Warrants will, without the prior written consent of
the other, settle, compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification by such Noteholder or holder of Warrants may be sought hereunder
(whether or not such Noteholder or holder of Warrants is a party to such claim,
action, suit or proceeding); provided that the Noteholder or holder of Warrants
may so settle such claim without such consent if such settlement includes a full
release of the Company by the Noteholder or holder of Warrants or if the Company
is not then in material compliance with its obligations under this Paragraph 5L.

                  5M. Subordination. All existing and hereafter arising
Indebtedness of the Company (excluding the Existing Secured Debt as of the Date
of Closing and a Permitted Working Capital Facility) shall be subordinated to
the Indebtedness and other obligations of the Company under the Documents
pursuant to subordination agreements reasonably satisfactory in form and
substance to the Required Holders, in their sole and absolute discretion.

                  5N. Maintenance of Perfected Security Interests in the
Collateral. The Company shall, and shall cause its Subsidiaries to, perform any
and all acts and execute any and all documents (including, without limitation,
the execution, amendment or supplementation of any financing statement and
continuation statement) for filing in any appropriate jurisdiction under the
provisions of the UCC, local law or any statute, rule or regulation of any
applicable jurisdiction and for filing with the United States Patent and
Trademark Office and the United States Copyright Office which are necessary or,
in the reasonable opinion of the

<PAGE>

                                      -18-

Collateral Agent, desirable in order to maintain, confirm, grant, preserve,
protect and perfect the validity and first priority in favor of the Collateral
Agent for the ratable benefit of the Purchasers a valid and perfected Lien on
the Collateral, subject to no Liens except for the Liens permitted by the
applicable Security Documents, and shall deliver to the Purchasers an opinion of
outside counsel acceptable to the Purchasers (whose acceptance shall not be
unreasonably withheld) which shall opine as to the perfection of such filings
with United States Patent and Trademark Office and the United States Copyright
Office. The Company shall, as promptly as practicable after receipt of copies of
any financing statements, deliver to the Collateral Agent acknowledgment copies
of, or copies of lien search reports confirming the filing of, financing
statements duly filed under the UCC of all jurisdictions as may be necessary or,
in the reasonable opinion of the Collateral Agent, desirable to perfect the Lien
created, or purported or intended to be created, by each Security Document. The
Company agrees to, from time to time, provide such evidence as the Collateral
Agent shall reasonably request as to the perfection and priority status of each
security interest and Lien contemplated. If the Company has not performed all
such acts, delivered such opinion of counsel and executed all such filings
within the date which is ten days from the Date of Closing, interest on the
Notes shall increase by a rate of 50 basis points, and shall increase by an
additional 50 basis points if such acts have not been performed and filings have
not been executed another ten days thereafter; and if such acts have not been
performed and such filings have not been executed 30 days after the Date of
Closing, such failure to act shall constitute an Event of Default without giving
effect to the grace period referenced in Paragraph 7A(vi). Any rate increase
pursuant to this Paragraph 5N shall be of no further force or effect immediately
upon demonstration to the Purchasers that all such actions and filings have been
taken and made. Notwithstanding the foregoing, the Company shall not be deemed
to have defaulted under this Paragraph 5N for any failure to create, perfect or
maintain a security interest by reason of any invalidity or enforceability of
the Security Documents with respect to the rights, if any, of the holders of the
Preferred Stock (including as a result of the application of the laws and other
principles set forth in the Preferred Security Interest Exceptions (defined in
Paragraph 8E below)).

                  5O. Non-Voting Observer. For so long as shares of the
Preferred Stock or any Notes, with combined accreted stated value and principal
amount thereof in excess of 10% of the combined accreted stated value and
principal amount issued at the Closing, remain outstanding, the holders of
outstanding shares of Preferred Stock and Notes shall be entitled to designate a
non-voting observer (an "Observer") to the Board of Directors of the Company
(which Observer shall be entitled to have expenses reimbursed by the Company as
if such Observer were a director of the Company). The Observer shall be
appointed by the holders of a majority of the aggregate accreted stated value of
Preferred Stock and the aggregate principal amount of Notes, voting together as
a single class. Any person designated as an Observer to the Board of Directors
will, to the extent permissible under Delaware law, have the right (w) to notice
of and to be present at all meetings of the Board of Directors and its
committees and to receive all materials, notices, minutes, consents and forms of
consents in lieu of meetings distributed to the Board of Directors generally or
to members of its committees at or in

<PAGE>

                                      -19-

connection with any such meeting or action by written consent in lieu of such
meeting, (x) to have the same access to which directors are entitled under
Delaware law to the books and records of, and information concerning the
business and operations of, the Company and Board of Directors, (y) to be
provided with copies of all notices, minutes, consents, forms of consents in
lieu of meetings and all other materials provided to one or more of the
directors of the Company (who are not officers or employees of the Company), and
(z) to have the same access to all information and materials, books and records
and employees of the Company and of its Subsidiaries as may be given to any
director of the Company (who is not an officer or employee of the Company);
provided, however, that the rights granted to the Observer under this Agreement
(including the right to receive all materials, notices, minutes, consents and
forms of consents in lieu of meetings) shall be temporarily suspended if and to
the extent, in the reasonable opinion of the Board of Directors, the Observer's
attendance at any such meeting or portion thereof (i) violates any law or
Company policy regarding conflicts of interest with interested members of the
Board of Directors as applied generally to meetings of the Board of Directors or
(ii) otherwise could violate the fiduciary duties of the Board of Directors or
constitute a waiver of any attorney-client privilege that may exist in
connection with such meeting or any portion thereof, as advised by outside
counsel to the Company. The Board of Directors shall not hold informal meetings
of the Board of Directors or any committee thereof (unless the Observer is
invited thereto) as a means designed to circumvent or having the effect of
circumventing the intention that the holders of Notes and Preferred Stock will
have access to the Board of Directors and its committees as provided under this
Agreement.

                  5P. Key Man Insurance. Within 60 days after the Date of
Closing, the Company shall obtain a "key man" life insurance policy on Edward F.
Calesa on terms satisfactory to the Purchasers (including naming the Purchasers
as beneficiaries) and shall keep effective such policy in an amount of at least
$5,000,000. The Purchasers agree to apply any proceeds received by them as
beneficiaries under such policy on a pro rata basis in satisfaction of the
Company's obligations under the Notes.

                  5Q. Reliance on Related Documents. The Company hereby agrees
that each Purchaser shall be entitled to rely on all written representations,
warranties and covenants rendered by the Company in connection with the
consummation of the transactions contemplated by the Transaction Documents.

                  5R. Allocation of Shares of Common Stock. The Company shall,
at all times after the Date of Closing, take instructions from the Required
Holders as relates to the allocation of shares of its Common Stock issuable upon
exercise of the Warrants and conversion of the shares of Preferred Stock. The
Company shall not issue shares of its Common Stock pursuant to any exercise of
the Warrants or conversion of the shares of Preferred Stock, except as in
accordance with instructions from the Required Holders.

<PAGE>

                                      -20-

                  5S. Certain Approval. Not later than the next annual meeting
of the Company's held in accordance with the Company's by-laws, the Company
shall submit to the stockholders for their approval the issuance by the Company
of shares of Common Stock exceeding 20% of the number of shares of Common Stock
outstanding on the Date of Closing as a consequence of the conversion of shares
of Preferred Stock and exercise of the Warrants into shares of Common Stock,
together with the recommendation of its Board of Directors for approval of such
proposal. The Company shall use its best efforts to cause the approval by a
majority of the total votes cast on the proposal, in person or by proxy, of such
proposal, which may include securing a voting agreement from Edward F. Calesa
agreeing to vote in favor of the proposal, hiring a proxy solicitor and direct
solicitation efforts of significant stockholders.

                  PARAGRAPH 6.  NEGATIVE COVENANTS.

                  To induce each Purchaser to enter into this Agreement and
purchase the Notes, the Company warrants, covenants and agrees as follows:

                  6A. Prohibition on Additional Indebtedness. The Company shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly,
create, assume, incur or otherwise be liable for (collectively, "incur") any
Debt (including, without limitation, Acquired Indebtedness and Purchase Money
Indebtedness) other than the Permitted Debt.

                  6B. Maintenance of EBITDA. The Company shall not, and shall
not permit any of its Subsidiaries to, permit Actual EBITDA for the Company (a)
for the three consecutive Fiscal Quarters ending September 30, 2002 to be less
than $6.2 million and (b) for the period of four consecutive Fiscal Quarters
ending on each date specified below to be less than the amount set forth
opposite such period below:

                                                            Actual
                   Date                                 EBITDA Amount
              --------------                            -------------
          December 31, 2002                            $9.0 million
          March 31, 2003                               $11.3 million
          June 30, 2003                                $12.3 million
          September 30, 2003                           $13.3 million
          December 31, 2003                            $14.5 million
          March 31, 2004                               $15.5 million
          June 30, 2004                                $16.5 million
          September 30, 2004                           $17.5 million
          December 31, 2004                            $18.5 million
          March 31, 2005                               $18.5 million
          June 30, 2005                                $18.5 million

<PAGE>

                                      -21-

               6C. Maintenance of Fixed Charge Coverage Ratio. The Company shall
not, and shall not permit any of its Subsidiaries to, permit the Fixed Charge
Coverage Ratio of the Company (a) for the three consecutive Fiscal Quarters
ending September 30, 2002 to be less than 2.0:1 and (b) for the period of four
consecutive Fiscal Quarters ending on each date specified below to be less than
the amount set forth opposite such period below:

               Date                                Fixed Charge Coverage
           --------------                          ---------------------

          December 31, 2002                                2.0:1
          March 31, 2003                                   2.0:1
          June 30, 2003                                    2.0:1
          September 30, 2003                               2.0:1
          December 31, 2003                               1.75:1
          March 31, 2004                                   2.0:1
          June 30, 2004                                    2.0:1
          September 30, 2004                               2.0:1
          December 31, 2004                                2.0:1
          March 31, 2005                                   2.0:1
          June 30, 2005                                    2.0:1

               6D. Maintenance of Minimum Net Worth. The Company shall not, and
shall not permit any of its Subsidiaries to permit Adjusted Net Worth of the
Company, as of the end of any Fiscal Quarter of the Company, to be less than 90%
of the Net Worth of the Company as of June 30, 2002, increasing at the end of
fiscal 2002 by 50% of Consolidated Net Income from July 1, 2002 to the end of
fiscal 2002 and at the end of each Fiscal Year thereafter by 50% of the
Consolidated Net Income; provided that no adjustment shall be made for any
period in which the Company has negative Consolidated Net Income.

               6E. Capital Expenditures. The Company shall not, and shall not
permit any of its Subsidiaries to, make any Capital Expenditures, during the
Fiscal Years ending on each date specified below to exceed the amount set forth
opposite such period below:

           Fiscal Year                                Capital Expenditures
           -----------                                --------------------

              2002                                         $ 2.9 million

              2003                                         $1.75 million

              2004                                         $1.75 million

<PAGE>

                                      -22-

               6F. Limitation on Liens. The Company shall not, and shall not
permit any of its Subsidiaries, to incur or suffer to be incurred or allow to
exist any Lien in respect of any Property of the Company or any of its
Subsidiaries, other than:

               (1)   Liens on the Collateral in favor of the Collateral Agent
          for the benefit of the Noteholders and the holders of the Preferred
          Stock in accordance with the Security Agreement;

               (2)   Liens on inventory and/or receivables of the Company
          securing Indebtedness under a Permitted Working Capital Facility;

               (3)   Liens for taxes or assessments or other governmental
          charges or levies, not yet due or payable or which are being contested
          in good faith by appropriate proceedings; provided that adequate
          reserves with respect thereto are maintained on the books of the
          Company or its Subsidiaries, as the case may be, in conformity with
          GAAP;

               (4)   Liens created by or resulting from any litigation or legal
          proceeding which is being contested in good faith by appropriate
          proceedings; provided that adequate reserves with respect thereto are
          maintained on the books of the Company or its Subsidiaries, as the
          case may be, in conformity with GAAP;

               (5)   other Liens incidental to the normal conduct of the
          business of the Company or its Subsidiaries which do not secure Debt
          and which do not in the aggregate materially impair the use of such
          Property in the operation of the business of the Company and its
          Subsidiaries taken as a whole or the value of such Property for the
          purposes of such business;

               (6)   subject to compliance with or a waiver of Paragraph 6A, (i)
          any Lien on Property existing on such Property at the time of
          acquisition thereof, whether or not the Debt secured thereby is
          assumed by the Company or any Subsidiary thereof, or (ii) any Lien
          existing on the Property of a Person at the time such Person is merged
          into or consolidated with the Company or any Subsidiary thereof or at
          the time of a sale, lease or other disposition of the Properties of a
          Person or firm as an entirety or substantially as an entirety to the
          Company or any Subsidiary thereof; provided that none of such Liens
          shall exceed 100% of the fair market value of the related Property and
          no other Property of the Company or any Subsidiary shall be subject to
          any such Lien;

               (7)   subject to compliance with or a waiver of Paragraph 6A,
          purchase money Liens to finance Property or assets of the Company or
          any Subsidiary acquired in the ordinary course of business; provided,
          however, that (A) the related purchase money Debt shall not exceed the
          cost of such Property or assets and shall not be secured by any
          Property or assets of the Company or its Subsidiaries other than the

<PAGE>

                                      -23-

          Property and assets so acquired and (B) the Lien securing such Debt
          shall be created within 90 days of such acquisition;

               (8)   subject to compliance with or a waiver of Paragraph 6A,
          Liens securing Capitalized Lease Obligations; provided that such Lien
          does not extend to any property other than that subject to the
          underlying lease;

               (9)   Liens existing on the Date of Closing; or

               (10)  Liens in favor of the Company.

               6G. Limitation on Mergers. The Company shall not, nor shall it
permit any of its Subsidiaries to, in a single transaction or through a series
of related transactions, merge or consolidate with or into any other Person;
provided that this Paragraph 6G shall not apply in the event of a Change in
Control where the Company complies with Paragraph 4D; and provided, further,
that this Paragraph 6G shall not apply to a merger or consolidation of one of
the Company's Subsidiaries with or into any other Person if the surviving Person
in such merger or consolidation will be a Subsidiary of the Company following
such transaction.

               Notwithstanding the foregoing, any Subsidiary of the Company may
merge with the Company or any other Subsidiary of the Company; provided that the
Company or a Subsidiary shall be the surviving Person.

               6H. Limitation on Asset Sales; Application of Certain Proceeds.
(a) The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, in a single transaction or a series of related
transactions, sell, lease, transfer or otherwise dispose of or suffer to be
sold, leased, transferred, abandoned or otherwise disposed of, all or any part
of its assets except:

               (i)   the Company and its Subsidiaries may sell their inventory
          in the ordinary course of their business and may sell obsolete assets
          having no or immaterial book value;

               (ii)  any Subsidiary may sell, lease or otherwise dispose of any
          or all of its assets to the Company or another Subsidiary of the
          Company;

               (iii) the Company or any Subsidiary thereof may sell, lease or
          otherwise dispose of assets in transactions not otherwise permitted
          under clause (i) of this Paragraph 6H (each such sale, lease or other
          disposition of assets being hereinafter referred to as an "Asset
          Sale"), so long as (A) the Company demonstrates to the satisfaction of
          the Noteholders that, after giving effect to such sale, lease or other
          disposition, the Company and its Subsidiaries remain in compliance
          with the terms of this Agreement and the Notes, including all
          covenants, (B) no part of any asset sold, leased or otherwise disposed
          of consists of any Collateral, (C) the Company receives consideration
          at the time of such sale or other disposition at least equal to the
          fair market value, as determined by the Board of Directors, of the
          assets sold or otherwise

<PAGE>

                                      -24-

          disposed of consists of any Collateral, (C) the Company receives
          consideration at the time of such sale or other disposition at least
          equal to the fair market value, as determined by the Board of
          Directors, of the assets sold or otherwise disposed of, and (D) not
          less than 80% of the consideration received by the Company is in the
          form of cash or Cash Equivalents except to the extent the Company
          receives as consideration for such Asset Sale rights or assets in a
          Permitted Acquisition; and

               (iv)  (a) to the extent that an amount equal to 100% of the Net
          Proceeds from any Asset Sale is applied by the Company

                     (A) first, to make an offer to the holders of the Notes to
               purchase Notes pursuant to and subject to the conditions
               contained in this Agreement (an "Asset Sale Proceeds Offer"); and

                     (B) second, to the extent of the balance of such proceeds
               after application in accordance with clause (A) above, to any
               other application or use not prohibited by this Agreement.

          In the event of an Asset Sale Proceeds Offer, the Company will be
          required to purchase Notes tendered pursuant to an offer by the
          Company for the Notes at a purchase price of 100% of their principal
          amount plus accrued but unpaid interest in accordance with the
          procedures (including prorating in the event of oversubscription) set
          forth in this Agreement. Excluded from the foregoing provisions of
          this subparagraph 6H(iv) will be (i) proceeds from any asset sale
          which, when taken together with all proceeds from asset sales
          occurring within the 12 months preceding such asset sale, do not
          exceed $2.5 million (which amount shall be carried forward for
          purposes of determining whether such an offer is required with respect
          to the asset sale proceeds for any subsequent asset sale), (ii) all
          proceeds from the sale of the Company's Catalog Business (as
          constituted on the Date of Closing) as and (iii) all proceeds used to
          repay Indebtedness secured by the assets sold as required by the terms
          of such Indebtedness.

               (b)   In the event of an Asset Sale Proceeds Offer, holders of
Notes shall have the right, at their option, to require the Company to purchase
all or any portion of the Notes on the date (the "Asset Sale Proceeds Payment
Date") which is 20 Business Days after the date the Asset Sale Proceeds Notice
(as defined below) is required to be mailed (or such later date as is required
by applicable law) at the a price equal to 100% of the principal amount thereof,
plus accrued and unpaid interest (if any) to the Asset Sale Proceeds Payment
Date. The Company shall not be required to make an offer to purchase Notes
pursuant to this subparagraph 6H(a)(iv) if the Net Proceeds available therefor
for are less than $500,000 (which lesser amount shall be carried forward for
purposes of determining whether such an offer is required with respect to the
Net Proceeds from any subsequent assets sales).

<PAGE>

                                      -25-

               (c)   The Company shall send all holders of the Notes, within
five Business Days after the occurrence of such Asset Sale, a notice of the
occurrence of such Asset Sale (the "Asset Sale Proceeds Notice").

               Each  Asset Sale Proceeds Notice shall state:

               (1)   the Asset Sale Proceeds Payment Date;

               (2)   the date by which the right to have Notes purchased must be
          exercised;

               (3)   that such right is conditioned on receipt of notice from
          the holders;

               (4)   the purchase price, if the right to have Notes purchased is
          exercised;

               (5)   a description of the procedure which the holders of Notes
          must follow to exercise the right to have Notes purchased;

               (6)   that the purchase is being made pursuant to this Paragraph
          6H;

               (7)   that any Note not tendered will continue to accrue interest
          if interest is then accruing; and

               (8)   that, unless the Company defaults in making payment
          therefor, any Note accepted for purchase shall cease to accrue
          interest after the Asset Sale Proceeds Payment Date.

               No failure of the Company to give the foregoing notice shall
limit any holder's right to exercise a right to have Notes purchased.

               (d)   In addition to the foregoing, the Company agrees to apply
any proceeds received by it from the Seller, Gillette and/or BMS (as each is
defined in the Transaction Documents) in connection with any claim by the
Company for indemnity or breach or the like under the Vaniqa Acquisition
documents to make an offer to repurchase the Notes in the same manner and
subject to the same limitations as set forth above as if such offer were an
Asset Sale Proceeds Offer.

               6I.   Limitation on Restricted Payments. The Company shall not,
and shall not permit any of its Subsidiaries to, directly or indirectly, (i)
declare or pay any dividend or make any distribution on the Capital Stock of the
Company or any of its Subsidiaries (except dividends or stock splits payable
solely in Qualified Capital Stock, accretion of stated value or dividends
payable on the Preferred Stock or dividends payable solely to the Company or a
Subsidiary), (ii) purchase, redeem or otherwise acquire or retire for value any
of the Capital Stock or rights to acquire Capital Stock of the Company or its
Subsidiaries which are not wholly-owned (including, in each case, any payments
made pursuant to any Company or Subsidiary

<PAGE>

                                      -26-

stock appreciation rights plan or reasonable equivalent thereof) other than (A)
Preferred Stock in accordance with Sections 9E, 9F and 9G of the certificate of
designations relating thereto and (B) restricted shares of Capital Stock issued
to officers, directors or employees pursuant to the terms for repurchase thereof
upon a termination of employment or directorship, (iii) repay, prepay, redeem,
or otherwise acquire or retire for value, make principal payments with respect
to or defease, any Debt of the Company or its Subsidiaries that is subordinate
or junior in right of payment to the Notes or the Existing Senior Debt (except,
with respect to the Existing Senior Debt, for scheduled amortization payments
and payment of principal at maturity) (each of the foregoing actions set forth
in clauses (i) through (iii) hereof being referred to as a "Restricted Payment")
or (iv) make any Investment other than a Permitted Investment.

               6J.   Limitation on Restrictions on Distributions from
Subsidiaries. The Company shall not, and shall not permit any of its
Subsidiaries to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction which by its terms encumbers
or restricts the ability of any Subsidiary to (a) pay dividends or make any
other distributions on its Capital Stock or pay any Debt or other obligation
owed to the Company, (b) make any loans or advances to the Company, (c) transfer
any of its Property or assets to the Company, or (d) guarantee any Debt of the
Company, except for such encumbrances or restrictions existing under or
contemplated by or by reason of (i) applicable law or any applicable rule,
regulation or order, (ii) the Documents, (iii) encumbrances or restrictions
existing on the Date of Closing to the extent and in the manner such
encumbrances and restrictions are in effect on the Date of Closing, (iv) subject
to compliance with or a waiver under Paragraph 6A, any instrument governing
Acquired Indebtedness, which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person, or the
property or assets of the Person (including any Subsidiary of the Person), so
acquired, (v) customary non-assignment provisions in leases or other agreements
entered in the ordinary course of business and consistent with past practices,
(vi) customary restrictions in security agreements or mortgages securing
Indebtedness of the Company or a Subsidiary to the extent such restrictions
restrict the transfer of the property subject to such security agreements and
mortgages, (vii) customary restrictions pursuant to an agreement that has been
entered into for the sale or disposition of all or substantially all of the
Capital Stock or assets of a Subsidiary of the Company, or (viii) subject to
compliance with or a waiver under Paragraph 6A, restrictions contained in
Purchase Money Indebtedness or Capitalized Lease Obligations for property
acquired in the ordinary course of business that impose restrictions of the
nature described in clause (c) above on the property so acquired so long as such
restrictions are limited to such property.

               6K.   Limitation on Transactions with Affiliates. The Company
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, enter into or permit to exist any transaction or series of related
transactions (including, without limitation, the purchase, sale, lease or
exchange of any Property, assets or the rendering of any service) with, or for
the

<PAGE>

                                      -27-

benefit of, any of its Affiliates (each an "Affiliate Transaction") or
extend, renew, waive or otherwise modify in any material respect the terms of
any Affiliate Transaction entered into prior to the Date of Closing other than
Affiliate Transactions on terms that are fair and reasonable to the Company or
the Subsidiary, as the case may be, and the terms are no less favorable than
those that would reasonably have been obtained in a comparable transaction at
such time on an arm's-length basis from a Person that is not an Affiliate of the
Company or such wholly-owned Subsidiary. All Affiliate Transactions (and each
series of related Affiliate Transactions) entered into after the Date of Closing
which involve an aggregate fair market value of more than $500,000 shall be
approved by the Board of Directors of the Company or such Subsidiary, as the
case may be, and approval shall be evidenced by a Board Resolution stating that
such Board of Directors has determined that such transaction complies with the
standard set forth in the immediately preceding sentence. If the Company or any
Subsidiary of the Company enters into an Affiliate Transaction (or a series of
related Affiliate Transactions) after the Date of Closing that involves an
aggregate fair market value of more than $1,000,000, the Company or such
Subsidiary, as the case may be, shall, prior to the consummation thereof, obtain
a favorable opinion as to the fairness of such transaction or series of related
transactions to the Company or the relevant Subsidiary, as the case may be, from
a financial point of view, from an Independent Financial Advisor and provide the
same to each Noteholder.

                  The foregoing provisions shall not apply to:

                  (1)   any Restricted Payment that is not prohibited by the
         provisions described in Paragraph 6I hereof;

                  (2)   any employment agreement entered into by the Company or
         any of its Subsidiaries in the ordinary course of business, consistent
         with the past practice of the Company or such Subsidiary and approved
         by the independent members of the Board of Directors;

                  (3)   transactions between or among the Company and one or
         more wholly owned Subsidiaries or among wholly owned Subsidiaries; and

                  (4)   any transaction pursuant to an agreement, arrangement or
         understanding existing on the Date of Closing and known to the
         Purchasers.

                  6L. Limitation on Ownership of Subsidiaries. The Company shall
at all times own, either directly or through a wholly-owned Subsidiary, 100% of
the Voting Stock of its Subsidiaries existing as of the date hereof.
Notwithstanding the foregoing, any Subsidiary of the Company may issue shares of
its Capital Stock to any Person to the extent but only to the extent that a
requirement of law applicable to such Subsidiary requires the issuance of shares
of Capital Stock to such Person in order for such Person to qualify for service
as a director of such Subsidiary.

<PAGE>

                                      -28-

                  6M. Modification of Material Agreements. Without the consent
of the Required Holders, the Company shall not, and shall not permit any of its
Subsidiaries to, amend any of its Material Agreements.

                  6N. Limitation on Transfer of Assets to Certain Subsidiaries.
The Company shall not, and shall not permit any of its Subsidiaries to, sell,
convey, transfer, lease or other wise dispose of any of its assets or property
to any Subsidiary that is not a wholly-owned Subsidiary of the Company.

                  6O. Payments for Consent. The Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, pay or cause to be
paid any consideration, whether by way of interest, fee or otherwise, to any
holder of any Notes for or as an inducement to any consent, waiver or amendment
of any of the terms or provisions of this Agreement or the Notes unless such
consideration is offered to be paid or agreed to be paid to all holders of the
Notes which so consent, waive or agree to amend in the time frame set forth in
solicitation documents relating to such consent, waiver or agreement.

                  6P. Limitations on Preferred Stock of Subsidiaries. The
Company shall not permit any of its Subsidiaries to issue any preferred stock
(other than to the Company or any of its Subsidiaries) or permit any Person
(other than the Company or one or more Subsidiaries) to hold any such preferred
stock.

                  6Q. Use of Proceeds. (a) The proceeds from the issuance of the
Notes on the Date of Closing shall be used to consummate the Vaniqa Acquisition
and pay related fees and expenses.

                  (b) No portion of the proceeds from the issuance of Notes
shall be used in any manner which would violate Regulation U, T or X of the
Board of Governors of the Federal Reserve System or any other regulation of such
Board or to violate the Exchange Act, as in effect on the date or dates of such
borrowing and such use of proceeds.

                  6R. Business Activities. The Company shall not, nor shall the
Company cause or permit any of its Subsidiaries to, directly or indirectly,
engage in any business other than the marketing, sale or distribution of
pharmaceutical or health care products or (unless and until the Catalog Business
is sold) products of the type currently sold by the Catalog Business.

                  PARAGRAPH 7. EVENTS OF DEFAULT.

                  7A. Acceleration. If any of the following events (each an
"Event of Default") shall occur and be continuing for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or otherwise):

<PAGE>

                                      -29-

                  (i)   there is a default in the payment of any principal of
         any of the Notes when the same shall become due, either by the terms
         thereof or otherwise as herein provided, including, without limitation,
         as a result of the failure by the Company to redeem or purchase the
         Notes as required by the provisions of Paragraph 4;

                  (ii)  there is a default in the payment of any interest on any
         of the Notes, or a default in the payment of other amounts payable
         under this Agreement, in either case for more than 5 Business Days
         after the date due;

                  (iii) the Company or any of its Subsidiaries fails to comply
         with any provision of Paragraph 6 of this Agreement;

                  (iv)  the Company fails to comply with any of its other
         covenants or obligations under the Notes or this Agreement and the
         default continues and is not remedied within 30 days from the date
         notice is required to be given to Noteholders pursuant to Paragraph 5D;

                  (v)   any representation or warranty made in this Agreement,
         the other Documents or in any certificate furnished in connection
         therewith is proven to be false or incorrect in any material respect as
         of the date made;

                  (vi)  the Company or any of the Subsidiaries shall (A) default
         in any payment of principal of or interest of any Indebtedness other
         than the Notes involving payment in respect of obligations in the
         aggregate of $250,000 or more, beyond the period of grace (not to
         exceed 30 days), if any, provided in the instrument or agreement under
         which such Indebtedness was created or (B) default in the observance or
         performance of any other agreement or condition relating to any such
         Indebtedness or contained in any instrument or agreement evidencing,
         securing or relating thereto, or any other event shall occur or
         condition exist the effect of which default or other event or condition
         is to cause, or to permit the holder or holders or other beneficiary or
         beneficiaries of such Indebtedness (or a trustee or agent on behalf of
         such holder or holders or beneficiary or beneficiaries) to cause, with
         the giving of notice, if required, such Indebtedness to become due
         prior to its stated maturity or otherwise payable, which default or
         other condition shall continue and not be cured under the terms of such
         Indebtedness within 30 days of its occurrence;

                  (vii) the Company or any of its Subsidiaries:

                        (a) suffers the entry against it of a judgment, decree
                  or order for relief by a court of competent jurisdiction in an
                  involuntary proceeding commenced under any applicable
                  bankruptcy, insolvency, composition or other similar law of
                  any jurisdiction now or hereafter in effect, including the
                  federal

<PAGE>

                                      -30-

                  Bankruptcy Code, as from time to time amended, or has any such
                  proceeding commenced against it which remains undismissed for
                  a period of 60 days; or

                        (b) commences a voluntary case under any applicable
                  bankruptcy, insolvency, composition or similar law now or
                  hereafter in effect, including the federal Bankruptcy Code, as
                  from time to time amended; or applies for or consents to the
                  entry of an order for relief in an involuntary case under any
                  such law; or makes a conveyance, assignment for the benefit
                  of, or enters into any composition with, its creditors
                  generally; or fails generally to pay (or admits in writing its
                  inability to pay) its debts as such debts become due; or takes
                  corporate or other action to authorize any of the foregoing;
                  or

                        (c) suffers the appointment of or taking possession
                  by any holder of a Lien, receiver, liquidator, assignee,
                  custodian, trustee, sequestrator or similar official of all or
                  a substantial part of its assets in a proceeding brought
                  against or initiated by it, and such appointment or taking
                  possession is neither made ineffective nor discharged within
                  60 days after the making thereof, or such appointment or
                  taking possession is at any time consented to, requested by,
                  or acquiesced to by it; or

                        (d) suffers the entry against it of a final judgment
                  or judgments for the payment of money in excess of $100,000
                  which is not fully covered by insurance (less customary
                  deductibles) unless the same is discharged within 30 days
                  after the date of entry thereof or an appeal or appropriate
                  proceeding for review thereof is taken within such period and
                  a stay of execution pending such appeal is obtained; or

                (viii)  any of the Security Documents shall cease to be in full
         force and effect, or shall cease to give the Collateral Agent the
         Liens, rights, powers and privileges for the benefit of the Noteholders
         purported to be created thereby (other than any such cessation due to
         an act or failure to act on the part of the Lenders), in favor of the
         Collateral Agent, superior to and prior to the rights of all third
         Persons and subject to no Liens other than the Liens permitted by the
         applicable Security Document; or

                  (ix)  the Company receives a notice of termination or notice
         that exclusive rights will become non-exclusive under any material
         license agreement under which the Company receives rights to
         manufacture, distribute or sell a product and fails to cure such
         termination or change in license rights on or before a date that falls
         two thirds of the way through the period between the notice date and
         the first date on which the other party may terminate such rights or
         may elect to make an exclusive license non-exclusive; provided that it
         shall not be an Event of Default hereunder if on or before the date
         that falls two thirds of the way through such period the Company
         demonstrates to the reasonable satisfaction of the Purchasers that, on
         a pro forma basis

<PAGE>

                                      -31-

         after taking into account the termination of such license rights or the
         conversion of such rights from exclusive to non-exclusive rights, the
         Company continues to satisfy the covenants set forth in Section 6B
         (calculated for the most recent four consecutive Fiscal Quarters and
         compared to the required minimum Actual EBITDA amount for such Fiscal
         Quarters) and Sections 6C and 6D (determined as of such date); provided
         further that the Purchasers agree to negotiate with the Company in good
         faith to determine the effects for purposes of the preceding proviso of
         a change from exclusive to non-exclusive rights to a product for a
         period of one week;

then (a) if such event is an Event of Default specified in clause (i) or (ii) of
this Paragraph 7A, any Noteholder (other than the Company or any of its
Subsidiaries or Affiliates) may at its option, by notice in writing to the
Company, declare such Note to be, and such Note shall thereupon be and become,
immediately due and payable together with interest accrued thereon, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Company, (b) if such event is an Event of Default specified
in clause (vii)(a), (vii)(b) or (vii)(c) of this Paragraph 7A, all of the Notes
at the time outstanding shall automatically become immediately due and payable
at par together with interest accrued thereon, without presentment, demand,
protest or notice of any kind (including, without limitation, notice of intent
to accelerate and notice of acceleration of maturity), all of which are hereby
waived by the Company, and (c) if such event is any other Event of Default, the
holders of at least 25% of the aggregate principal amount of the Notes then
outstanding may at their option, by notice in writing to the Company, declare
all of the Notes to be, and all of the Notes shall thereupon be and become,
immediately due and payable together with interest accrued thereon with respect
to each Note, without presentment, demand, protest or other notice of any kind
(including, without limitation, notice of intent to accelerate), all of which
are hereby waived by the Company.

                  7B. Rescission of Acceleration. At any time after any or all
of the Notes shall have been declared immediately due and payable pursuant to
Paragraph 7A, the Required Holders may, by notice in writing to the Company,
rescind and annul such declaration and its consequences if (i) the Company shall
have paid all overdue interest on the Notes, the principal of any Notes which
have become due otherwise than by reason of such declaration, and interest on
such overdue interest and overdue principal at the rate specified in the Notes,
(ii) the Company shall not have paid any amounts which have become due solely by
reason of such declaration, (iii) all Events of Default and Defaults, other than
non-payment of amounts which have become due solely by reason of such
declaration, shall have been cured or waived pursuant to Paragraph 11C, and (iv)
no judgment or decree shall have been entered for the payment of any amounts due
pursuant to the Notes or this Agreement. No such rescission or annulment shall
extend to or affect any subsequent Event of Default or Default or impair any
right arising therefrom.

<PAGE>

                                      -32-

                  7C. Notice of Acceleration or Rescission. Whenever any Note
shall be declared immediately due and payable pursuant to Paragraph 7A or any
such declaration shall be rescinded and annulled pursuant to Paragraph 7B, the
Company shall forthwith give written notice thereof to the holder of each Note
at the time outstanding.

                  7D. Other Remedies. If any Event of Default or Default shall
occur and be continuing, the holder of any Note may proceed to protect and
enforce its rights under this Agreement and such Note by exercising such
remedies as are available to such holder in respect thereof under applicable
law, either by suit in equity or by action at law, or both, whether for specific
performance of any covenant or other agreement contained in this Agreement or in
aid of the exercise of any power granted in this Agreement. No remedy conferred
in this Agreement upon the holder of any Note is intended to be exclusive of any
other remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy conferred herein or now or hereafter existing at
law or in equity or by statute or otherwise.

                  PARAGRAPH 8.  REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

                  To induce each Purchaser to enter into this Agreement and to
purchase the Notes and the Warrants, the Company represents and warrants to and
agrees with each Purchaser, as of the date hereof and as of the Date of Closing,
that:

                  (a)   The Company and its Subsidiaries have been duly
         incorporated, formed or organized, as the case may be, and each of the
         Company and its Subsidiaries is validly existing in good standing as a
         corporation, limited liability company or a limited partnership, as the
         case may be, under the laws of its jurisdiction of incorporation,
         formation or organization, with all requisite power and authority as a
         corporation, limited liability company or limited partnership, as the
         case may be, to own its properties and conduct its business as now
         conducted (as described in the Exchange Act Documents) and is duly
         qualified to do business as a corporation or foreign limited liability
         company in good standing in all other jurisdictions where the ownership
         or leasing of its properties or the conduct of its business requires
         such qualification, except where the failure to be so qualified could
         not, individually or in the aggregate, reasonably be expected to have a
         Material Adverse Effect; as of the Date of Closing and after giving pro
         forma effect to the closing of the Transaction, the Company will have
         the authorized, issued and outstanding capitalization set forth in
         Schedule 8A-1; except as set forth in Schedule 8A-2 hereto, the Company
         does not have any subsidiaries or own directly or indirectly any of the
         capital stock or other equity or long-term debt securities of or have
         any equity interest in any other person; all of the outstanding shares
         of capital stock or membership interests, as the case may be, of the
         Company and its Subsidiaries have been duly authorized and validly
         issued, are fully paid and nonassessable

<PAGE>

                                      -33-

         and were not issued in violation of any preemptive or similar rights;
         all of the outstanding shares of capital stock or membership interests,
         as the case may be, of the Subsidiaries are owned free and clear of all
         liens, encumbrances, equities and restrictions on transferability or
         voting; all of the outstanding shares of capital stock or membership
         interests, as the case may be, of the Subsidiaries are owned, directly
         or indirectly, by the Company; except as set forth in this Agreement
         and in Schedule 8A-3, no options, warrants or other rights to purchase
         from the Company or any Subsidiary, or agreements or other obligations
         of the Company or any Subsidiary to issue or other rights to convert
         any obligation into, or exchange any securities for, shares of capital
         stock of or ownership interests (including the Warrants) in the Company
         or any Subsidiary are outstanding and no holder of securities of the
         Company or any Subsidiary is entitled to have such securities
         registered under the Securities Act; there is no agreement,
         understanding or arrangement among the Company or any Subsidiary and
         each of their respective members or stockholders, as the case may be,
         or any other person relating to the ownership or disposition of any
         capital stock or membership interest (including any Warrant), as the
         case may be, of the Company or any Subsidiary or the election of
         directors or other governing persons of the Company or any Subsidiary
         or the governance of the Company's or any Subsidiary's affairs, and, if
         any, such agreements, understandings and arrangements will not be
         breached or violated as a result of the execution and delivery of, or
         the consummation of the transactions contemplated by, this Agreement,
         the other Documents and the Transaction Documents.

                (b)  The Company has all requisite power and authority as a
         corporation to execute, deliver and perform its obligations under the
         Notes. The Notes have each been duly and validly authorized by the
         Company for issuance and, when executed by the Company in accordance
         with the provisions of this Agreement, and delivered to and paid for by
         the Purchasers in accordance with the terms hereof, will have been duly
         executed, issued and delivered and will constitute valid and legally
         binding obligations of the Company, entitled to the benefits of this
         Agreement and enforceable against the Company in accordance with their
         terms except that the enforcement thereof may be limited by (i)
         bankruptcy, insolvency, reorganization, moratorium or other similar
         laws now or hereafter in effect relating to or affecting creditors'
         rights generally or (ii) general principles of equity and the
         discretion of the court before which any proceeding therefor may be
         brought (regardless of whether such enforcement is considered in a
         proceeding at law or in equity) (collectively, the "Enforceability
         Exceptions"); the Notes are in the form contemplated by this Agreement.

                (c)  The Company has all requisite power and authority as a
         corporation to execute, deliver and perform its obligations under the
         Warrants. The Warrants have each been duly and validly authorized by
         the Company for issuance and, when executed by the Company in
         accordance with the provisions of this Agreement, and delivered to and
         paid for by the Purchasers in accordance with the terms hereof, will

<PAGE>

                                      -34-

         have been duly executed, issued and delivered and will constitute valid
         and legally binding obligations of the Company, enforceable against the
         Company in accordance with their terms except that the enforcement
         thereof may be limited by the Enforceability Exceptions; the Warrants
         are in the form contemplated by this Agreement.

                (d)  The Company has all requisite power and authority as a
         corporation to execute, deliver and perform its obligations under this
         Agreement (including without limitation the issuance of the Notes and
         the Warrants). This Agreement has been duly and validly authorized by
         the Company, and, when executed and delivered by the Company, will
         constitute a valid and legally binding agreement of the Company,
         enforceable against the Company in accordance with its terms except
         that (i) the enforcement thereof may be limited by the Enforceability
         Exceptions and (ii) any rights to indemnity or contribution hereunder
         may be limited by federal and state securities laws and public policy
         considerations.

                (e)  The Company has all requisite power and authority as a
         corporation to execute, deliver and perform its obligations under each
         of the Security Documents. Each Security Document has been duly and
         validly authorized by the Company and, when executed by the Company and
         delivered to the Purchasers in accordance with the terms hereof, will
         have been duly executed and delivered and will constitute a valid and
         legally binding obligation of the Company, enforceable against the
         Company in accordance with its terms except that the enforcement
         thereof may be limited by the Enforceability Exceptions and no
         representation or warranty is made by the Company hereunder or in the
         Security Documents with respect to the validity or enforceability of
         the Security Documents with respect to the rights, if any, of the
         holders of the Preferred Stock thereunder, including with respect the
         creation or perfection of a security interest, and the relative
         priority of any such security interest, or the effect of the federal
         Bankruptcy Code and comparable provisions of state law, and other
         applicable antifraud laws, securities laws, usury laws or public policy
         considerations on the rights, if any, of such holders under the
         Security Documents (collectively, the "Preferred Security Interest
         Exceptions").

                (f)  The Security Agreement is effective to create in favor of
         the Collateral Agent, for the benefit of the Purchasers with respect to
         the Notes, a legal, valid and enforceable security interest in the
         Collateral and, when (i) the Security Agreement is filed in the United
         States Patent and Trademark Office and the United States Copyright
         Office and (ii) such other filings which are necessary to be made to
         create the security interest pursuant to the Security Agreement, the
         Security Agreement shall constitute a fully perfected Lien on, and
         security interest in, all right, title and interest of the grantors
         thereunder in such Collateral (other than as defined in the Security
         Agreement), in each case prior and superior in right to any other
         person, subject to no other Liens except for Liens expressly permitted
         to exist on such Collateral by the

<PAGE>

                                      -39-

         terms of the Security Agreement; provided, however, that the foregoing
         representation and warranty is expressly subject to the Preferred
         Security Interest Exceptions.

                (g)  The Company has all requisite power and authority as a
         corporation to execute, deliver and perform its obligations under the
         Registration Rights Agreement. The Registration Rights Agreement has
         been duly and validly authorized by the Company and, when executed by
         the Company and delivered to the Purchasers in accordance with the
         terms hereof, will have been duly executed and delivered and will
         constitute a valid and legally binding obligation of the Company,
         enforceable against the Company in accordance with its terms except
         that (i) the enforcement thereof may be limited by the Enforceability
         Exceptions and (ii) any rights to indemnity or contribution hereunder
         may be limited by federal and state securities laws and public policy
         considerations.

                (h)  The Company has all requisite power and authority as a
         corporation to issue the shares of common stock issuable upon exercise
         of the Warrants (the "Warrant Shares"). The Warrant Shares have been
         duly and validly authorized by the Company and, when issued by the
         Company in accordance with the provisions of the Warrants, will be
         fully paid and nonassessable and will not be issued in violation of any
         preemptive or similar rights and will be issued free and clear of all
         liens, encumbrances, equities and restrictions on transferability or
         voting other than those imposed under applicable federal and state
         securities laws or otherwise granted by the Purchasers.

                (i)  (i) The Company has delivered to the Purchasers a true and
         correct copy of each of the Transaction Documents that have been
         executed and delivered prior to the date of this Agreement and each
         other Transaction Document in the form substantially as it will be
         executed and delivered on or prior to the Date of Closing, together
         with all related agreements and all schedules and exhibits thereto, and
         there have been no amendments, alterations, modifications or waivers of
         any of the provisions of any of the Transaction Documents since their
         date of execution or from the form in which any such Transaction
         Document has been delivered to the Purchasers; and (ii) to the
         Company's knowledge, there exists no event or condition that would
         constitute a default or an event of default (in each case as defined in
         each of the Transaction Documents) under any of the Transaction
         Documents that could reasonably be expected to result, individually or
         in the aggregate, in a Material Adverse Effect or affect the ability of
         the Company or its Subsidiaries to consummate the Vaniqa Acquisition.

                (j)  No consent, approval, authorization, license,
         qualification, exemption or order of any court or governmental agency
         or body (including, without limitation, the Food and Drug
         Administration (the "FDA")) or third party is required for the

<PAGE>

                                      -36-

         performance of this Agreement or the Notes or the Warrants by the
         Company, or for the consummation by the Company of the Transaction or
         any transaction contemplated hereby, or the application of the proceeds
         of the issuance of the Notes as described in this Agreement, except as
         has already been acquired or as may be required under state securities
         or "Blue Sky" laws in connection with the purchase of the Notes by the
         Purchasers; all such consents, approvals, authorizations, licenses,
         qualifications, exemptions and orders which are required to be obtained
         by the Date of Closing have been obtained or made, as the case may be,
         and are in full force and effect and not the subject of any pending or,
         to the knowledge of the Company, threatened attack by appeal or direct
         proceeding or otherwise.

                (k)  None of the Company or its Subsidiaries is (i) in
         violation of its certificate of incorporation or bylaws (or similar
         organizational document, including any certificate of formation and
         operating agreement), (ii) in breach or violation of any statute,
         judgment, decree, order, rule or regulation (including, without
         limitation, those relating to the development, commercialization and
         sale of pharmaceutical and biotechnology products) applicable to any of
         them or any of their properties or assets (including, without
         limitation, any order, rule or regulation of the FDA, the Securities
         and Exchange Commission and the National Association of Securities
         Dealers, Inc.), which breach or violation could, individually or in the
         aggregate, have a Material Adverse Effect, or (iii) except as set forth
         in Schedule 8J, in default (nor has any event occurred which with
         notice or passage of time, or both, would constitute a default) in the
         performance or observance of any obligation, agreement, covenant or
         condition contained in this Agreement or the Notes or any Transaction
         Document or any other contract, indenture, mortgage, deed of trust,
         loan agreement, note, lease, license, permit, certificate or agreement
         or instrument to which it is a party or to which it is subject, which
         default could, individually or in the aggregate, have a Material
         Adverse Effect.

                (l)  The execution, delivery and performance by the Company of
         this Agreement (including without limitation, the issuance of the Notes
         and the Warrants), the other Documents and the Transaction Documents
         and the consummation by the Company of the transactions contemplated
         hereby and thereby and the fulfillment of the terms hereof and thereof
         will not (a) violate, conflict with or constitute or result in a breach
         of or a default under (or an event that, with notice or lapse of time,
         or both, would constitute a breach of or a default under) any of (i)
         the terms or provisions of any contract, indenture, mortgage, deed of
         trust, loan agreement, note, lease, license, permit, certificate or
         agreement or instrument to which any of the Company or its Subsidiaries
         is a party or to which any of their respective properties or assets are
         subject, (ii) the certificate of incorporation or bylaws of any of the
         Company or its Subsidiaries (or similar organizational document,
         including any certificate of formation and operating agreement) or
         (iii) (assuming compliance with all applicable state securities or

<PAGE>

                                      -37-

         "Blue Sky" laws and the accuracy of the representations and warranties
         of the Purchasers in Paragraph 9 hereof) any statute, judgment, decree,
         order, rule or regulation of any court or governmental agency or other
         body applicable to the Company or its Subsidiaries or any of their
         respective properties or assets (including, without limitation, the
         rules and regulations of the FDA), that, in each case described in this
         clause (a), could reasonably be expected to result, individually or in
         the aggregate, in a Material Adverse Effect, or (b) result in the
         imposition of any lien upon or with respect to any of the properties or
         assets now owned or hereafter acquired by the Company or any of their
         Subsidiaries, other than as contemplated by the Security Agreements.

                (m)  The audited consolidated financial statements contained in
         the Exchange Act Documents present fairly in all material respects the
         consolidated financial position, results of operations and cash flows
         of such entities at the dates and for the periods to which they relate
         and have been prepared in accordance with GAAP applied on a consistent
         basis except as otherwise stated therein; the interim unaudited
         consolidated financial statements contained in the Exchange Act
         Documents and delivered to the Purchasers as a closing condition and
         attached hereto as Schedule 8M present fairly in all material respects
         the consolidated financial position, results of operations and cash
         flows of such entities at the dates and for the periods to which they
         relate subject to year-end audit adjustments and have been prepared in
         accordance with GAAP applied on a basis substantially consistent with
         the audited consolidated financial statements included therein; and
         Ernst & Young LLP, which has examined certain of such financial
         statements, is an independent certified public accounting firm within
         the meaning of the Securities Act.

                (n)  The pro forma financial statements and other pro forma
         financial information (including the notes thereto) attached hereto as
         Schedule 8N have been properly computed on the bases described therein;
         and the assumptions used in the preparation of the pro forma financial
         statements and other pro forma financial information are reasonable and
         the adjustments used therein are appropriate to give effect to the
         transactions or circumstances referred to therein.

                (o)  The Projections have been prepared by the Company and are
         based on the reasonable and good faith estimates and assumptions of the
         Company and the Company has no reason to believe that such estimates
         and assumptions are not fair and reasonable.

                (p)  There is not pending or, to the best knowledge of the
         Company, threatened any action, suit, proceeding, inquiry or
         investigation, governmental or otherwise, to which any of the Company
         or its Subsidiaries is a party, or to which their respective properties
         or assets are subject, before or brought by any court, arbitrator or
         governmental agency or body, that, if determined adversely to the
         Company or any such

<PAGE>

                                      -38-

         Subsidiary could, individually or in the aggregate, have a Material
         Adverse Effect or that seeks to restrain, enjoin, prevent the
         consummation of or otherwise challenge the Vaniqa Acquisition or the
         issuance or sale of the Notes or the Warrants hereunder or the
         application of the proceeds therefrom or the other transactions
         consummated as of the date of this Agreement.

                (q)  Except as set forth on Schedule 8Q, the Company and its
         Subsidiaries possess, and upon consummation of the Vaniqa Acquisition
         will possess, all licenses, permits, certificates, consents, orders,
         approvals and other authorizations from, and have made all declarations
         and filings with, all federal, state, local and other governmental
         authorities (including, without limitation, the FDA), all
         self-regulatory organizations and all courts and other tribunals,
         presently required or necessary to own or lease, as the case may be,
         and to operate its respective properties and to carry on its respective
         businesses as now or proposed to be conducted, except where the failure
         to obtain such licenses, permits, certificates, consents, orders,
         approvals and other authorizations, or to make all such declarations
         and filings, could not, individually or in the aggregate, have a
         Material Adverse Effect, and the Company and its Subsidiaries have not
         received any notice of any proceeding relating to revocation or
         modification of any such license, permit, certificate, consent, order,
         approval or other authorization.

                (r)  To the best knowledge of the Company, none of the Company
         or its Subsidiaries has, and, after giving effect to the Vaniqa
         Acquisition and the issuance and sale of the Notes, will not have, any
         liability for any prohibited transaction or funding deficiency or any
         complete or partial withdrawal liability, or other liability under
         Title IV of ERISA, with respect to any pension, profit sharing or other
         plan which is subject to ERISA, to which any of the Company or its
         Subsidiaries makes or ever has made a contribution and in which any
         employee of any of the Company or its Subsidiaries is or has ever been
         a participant. With respect to such plans, the Company and its
         Subsidiaries are, and, after giving effect to the Vaniqa Acquisition
         and the issuance and sale of the Notes, will be, in compliance in all
         material respects with all provisions of ERISA.

                (s)  The Exchange Act Documents, as of the date such filings
         were made, did not contain any untrue statement of a material fact or
         omit to state a material fact necessary to make such information or
         statements not misleading. All information provided to the Purchasers
         about the Company, its Subsidiaries and its existing business,
         financial conditions and results of operations, and all statements made
         to the Purchasers about the Company, did not when made and do not as of
         the date hereof contain or include any untrue statement of a material
         fact or omit to state a material fact necessary to make such
         information or statements, in the light of the circumstances under
         which they were made or given, not misleading. To the knowledge of the
         Company, all information provided to the Purchasers, and all statements
         made to

<PAGE>

                                      -39-

     the Purchasers, about the Seller, Gillette, BMS and Vaniqa (as such terms
     are defined in the Vaniqa Acquisition Agreements), did not when made and do
     not as of the date hereof contain or include any untrue statement of a
     material fact or omit to state a material fact necessary to make such
     information or statements, in the light of the circumstances under which
     they were made or given, not misleading. The statistical and market and
     industry-related data included therein are based on or derived from sources
     which the Company believes to be reliable and accurate or represent the
     Company's good faith estimates that are made on the basis of data derived
     from such sources. The operating data included therein are based on or
     derived from internal records of the Company or the sellers of Vaniqa, as
     the case may be, which the Company has no reason to believe are not
     reliable and accurate.

          (t) Since March 31, 2002, except as contemplated by the Documents and
     the Transaction Documents, (A) the Company has not (i) made, paid or
     declared any dividend or distribution to any equity holder (in such
     capacity) or redeemed any of its capital stock, (ii) varied its business
     plan or practices, in any material respect, from past practices, (iii)
     entered into any financing, joint venture, license or similar arrangement
     that would limit or restrict its ability to perform its obligations
     hereunder and under each of the other Documents or (iv) suffered or
     permitted to be incurred any liability or obligation or any encumbrance
     against any of its properties or assets that would limit or restrict its
     ability to perform its obligations hereunder and under each of the other
     Documents; and (B) there has not been any change or development which has
     had, or could reasonably be expected to have, a Material Adverse Effect.
     Without limiting the generality of the foregoing, since March 31, 2002,
     there has not been (1) any lapse of any of the Company's trade secrets,
     inventions, patents, patent applications or continuations (in whole or in
     part), trademarks, trademark registrations, service marks, service mark
     registrations, copyrights, copyright registrations, or any application
     therefor or filing in respect thereof (collectively, and together with any
     and all know-how, trade secrets and proprietary business or technology
     information, the "Intellectual Property"); (2) any loss of the services of
     any of the key officers or key employees of the Company; (3) any incurrence
     of or entry into any liability, mortgage, encumbrance, commitment or
     transaction, including without limitation, any borrowing (or assumption or
     guarantee thereof) or guarantee of a third party's obligations, or capital
     expenditure (or lease in the nature of a conditional purchase of capital
     equipment) in excess of $100,000, other than in the ordinary course of
     business; (4) any material change by the Company in accounting methods or
     principles; or (5) any change in the assets, liabilities, condition
     (financial or otherwise), results or operations or prospects of the Company
     from those reflected on the Exchange Act Documents, except changes in the
     ordinary course of business and changes that have not had or could not
     reasonably be expected to have, individually or in the aggregate, a
     Material Adverse Effect.

<PAGE>

                                      -40-

          (u) Since March 31, 2002, the Company has not incurred or suffered any
     liability or obligation, matured or unmatured, contingent or otherwise,
     except in the ordinary course of business and except any such liability or
     obligation that has not had and could not reasonably be expected to have,
     individually or in the aggregate, a Material Adverse Effect.

          (v) The Company owns or possesses sufficient legal rights to use
     pursuant to license, sublicense, agreement or permission all Intellectual
     Property used in the operation of its business as presently or proposed to
     be conducted, in each case, subject to no encumbrances except as set forth
     in the Exchange Act Documents. All of the Intellectual Property which is
     owned by the Company is owned free and clear of all encumbrances, except
     for the liens set forth on Schedule 8V, none of the Company's rights in or
     use of the Intellectual Property has been or, to the Company's knowledge,
     is currently threatened to be challenged; no current or currently planned
     product based upon the Company's Intellectual Property would infringe or
     otherwise conflict with any patent, trademark, service mark, trade name or
     copyright of any other person or entity issued or pending on the Date of
     Closing if the Company were to distribute, sell, market or manufacture such
     products, there are no actions, suits or judicial proceedings pending
     relating to patents or proprietary information to which the Company is a
     party or of which any property of the Company is subject, and the Company
     is not aware of any actual or threatened claim by any person or entity
     alleging any infringement or other conflict with the Company of a patent,
     trademark, service mark, trade name or copyright possessed by such person
     or entity, or of any facts or circumstances which could render any
     Intellectual Property invalid or inadequate to protect the interest of the
     Company therein. None of such Intellectual Property, whether foreign or
     domestic, has been canceled, abandoned, or otherwise terminated in a manner
     which has had, or could reasonably be expected to have, a Material Adverse
     Effect.

          (w) The patent applications, if any, filed by or on behalf of the
     Company (the "Patent Applications") have been properly prepared and filed
     on behalf of the Company; each of the Patent Applications and each of the
     patents that constitute Intellectual Property (the "Patents") is assigned
     or licensed to the Company; except as set forth in the Exchange Act
     Documents, no other entity or individual has any right or claim in any
     Patent, Patent Application or any patent to be issued therefrom; and, to
     the knowledge of the Company, each of the Patent Applications discloses
     potentially patentable subject matter.

          (x) The Phase IV human clinical trials conducted by or on behalf of
     the Company or in which the Company has participated relating to Esclim are
     the only human clinical trials currently being conducted by or on behalf of
     the Company, and, to the best of the Company's knowledge, such trials were,
     and, if still pending, are

<PAGE>

                                      -41-

     being, conducted in accordance with experimental protocols, procedures and
     controls pursuant to accepted professional scientific standards. Other than
     as set forth on Schedule 8X, the Company has no knowledge of any studies or
     tests, the results of which call into question the results of the clinical
     trials providing the basis for approval of any of its products or Vaniqa.
     Other than as set forth on Schedule 8X, the Company has not received any
     notices or correspondence from the FDA or any other governmental agency
     requiring the termination, suspension or modification of any clinical
     trials conducted by, or on behalf of, the Company or in which the Company
     has participated or that otherwise relate to its products or Vaniqa. All
     human clinical trials previously conducted by or on behalf of the Company,
     while conducted by or on behalf of the Company, were conducted in
     accordance with experimental protocols, procedures and controls pursuant to
     accepted professional scientific standards.

          (y) There are no legal or governmental proceedings (including, without
     limitation, proceedings before the FDA), nor are there any contracts or
     other documents that would be required to be disclosed pursuant to the
     Exchange Act that are not so disclosed.

          (z) The relationships of the Company and its Subsidiaries with
     suppliers, sales representatives, customers and others having business
     relationships with them are generally satisfactory, and there is no
     indication of any intention by any party thereto to terminate or modify the
     terms of any such relationship. Without limiting the generality of the
     foregoing, no supplier has notified or otherwise indicated to the Company
     or any of its Subsidiaries that it intends to stop, or decrease the rate
     of, or, other than publicly announced generally applicable price increases,
     materially increase the cost of, its supply of materials, products or
     services used by the Company and its Subsidiaries, and no supplier has,
     since January 1, 2002, ceased, materially decreased the rate of, or
     materially raised the cost of, any such materials, products or services.

          (aa) All contracts that are material to the conduct of the Company's
     business (including without limitation all supply contracts) constitute
     legal, valid and binding obligations of the Company and, to the best
     knowledge of the Company, each of the other parties thereto and are
     enforceable against the Company and, to the best knowledge of the Company,
     each of the other parties thereto in accordance with their terms, subject
     to the Enforceability Exceptions and, to the extent any such contracts
     contain indemnification or contribution provisions, subject to limitations
     under federal and state securities laws and public policy considerations,
     and no act, omission or course of conduct has occurred that would impair
     the enforceability of any such material contract against the other party or
     parties thereto. As regards such material contracts, the Company (A) is not
     in default (nor is there any event which with notice or lapse of time or
     both would constitute a default), and (B) has not received notification (i)
     that any such material contract is about to be terminated or otherwise
     modified

<PAGE>

                                      -42-

     (ii) alleging that the Company or any employee thereof has breached any
     obligation under, or violated any term of, any such material contract.

          (bb) The Company and its Subsidiaries have good and marketable title
     to all real property described in the Company's filings under the Exchange
     Act as being owned by them and good and marketable title to the leasehold
     estate in the real property described therein as being leased by them, free
     and clear of all liens, charges, encumbrances or restrictions, except, in
     each case, such as could not, individually or in the aggregate, have a
     Material Adverse Effect. All leases, contracts and agreements, including
     those referred to in the Exchange Act Documents, to which the Company or
     any of its Subsidiaries is a party or by which any of them is bound are
     valid and enforceable against the Company or any such Subsidiary, are, to
     the knowledge of the Company, valid and enforceable against the other party
     or parties thereto and are in full force and effect subject, in each case,
     to the Enforceability Exceptions except as could not, individually or in
     the aggregate, have a Material Adverse Effect.

          (cc) The Company and its Subsidiaries have filed all necessary
     federal, state and foreign income and franchise tax returns, except where
     the failure to so file such returns could not, individually or in the
     aggregate, have a Material Adverse Effect, and have paid all taxes shown as
     due thereon; and other than tax deficiencies which the Company or any
     Subsidiary is contesting in good faith and for which adequate reserves have
     been provided in accordance with GAAP, there is no tax deficiency that has
     been asserted against the Company or any Subsidiary that could,
     individually or in the aggregate, have a Material Adverse Effect.

          (dd) (i) Immediately after the consummation of the Vaniqa Acquisition
     and the other transactions contemplated by this Agreement, the other
     Documents and the Transaction Documents, the fair value and present fair
     saleable value of the assets of each of the Company and its Subsidiaries
     will exceed the sum of their stated liabilities and identified contingent
     liabilities; and (ii) the Company and its Subsidiaries are not, nor will
     they be, after giving effect to the execution, delivery and performance of
     this Agreement, the other Documents and the Transaction Documents, and the
     consummation of the Vaniqa Acquisition and the other transactions
     contemplated hereby and thereby, (a) left with unreasonably small capital
     with which to carry on their business as it is proposed to be conducted,
     (b) unable to pay their debts (contingent or otherwise) as they mature or
     (c) otherwise insolvent.

          (ee) Except as could not, individually or in the aggregate, have a
     Material Adverse Effect, (A) each of the Company and its Subsidiaries is in
     compliance with all applicable Environmental Laws (as defined below), (B)
     each of the Company and its Subsidiaries has made all filings and provided
     all notices required under any applicable Environmental Law, and has all
     permits, authorizations and approvals required

<PAGE>

                                      -43-

     under any applicable Environmental Laws and is in compliance with their
     requirements, (C) there is no civil, criminal or administrative action,
     suit, demand, claim, hearing, notice of violation, investigation,
     proceeding, notice or demand letter or request for information pending or,
     to the knowledge of the Company, threatened against the Company or any of
     its Subsidiaries under any Environmental Law, (D) no lien, charge,
     encumbrance or restriction has been recorded under any Environmental Law
     with respect to any assets, facility or property owned, operated, leased or
     controlled by the Company or any of its Subsidiaries, (E) neither the
     Company nor any of its Subsidiaries have received notice that they have
     been identified as a potentially responsible party under the Comprehensive
     Environmental Response, Compensation and Liability Act of 1980, as amended
     ("CERCLA"), or any comparable state law, and (F) no property or facility of
     the Company or any of its Subsidiaries is (i) listed or proposed for
     listing on the National Priorities List under CERCLA or (ii) listed in the
     Comprehensive Environmental Response, Compensation and Liability
     Information System List promulgated pursuant to CERCLA, or on any
     comparable list maintained by any state or local governmental authority.

          For purposes of this Agreement, the following terms shall have the
     following meanings: "Environmental Law" means any federal, state, local or
     municipal statute, law, rule, regulation, ordinance, code, policy or rule
     of common law and any judicial or administrative interpretation thereof,
     including any judicial or administrative order, consent decree or judgment
     binding on the Company or its Subsidiaries, relating to pollution or
     protection of the environment or health or safety or any chemical, material
     or substance, that is subject to regulation thereunder. "Environmental
     Claims" means any and all administrative, regulatory or judicial actions,
     suits, demands, demand letters, claims, notices of responsibility,
     information requests, liens, notices of noncompliance or violation,
     investigations or proceedings relating in any way to any Environmental Law.

          (ff) Neither the Company nor its Subsidiaries are, or immediately
     after the Date of Closing will be, required to register as an "investment
     company" or a company "controlled by" an "investment company" within the
     meaning of the Investment Company Act of 1940, as amended.

          (gg) Neither the Company nor its Subsidiaries nor any of such
     entities' directors, officers, employees, agents or controlling persons
     have taken, directly or indirectly, any action designed, or that might
     reasonably be expected, to cause or result, under the Securities Act or
     otherwise, in, or that has constituted, stabilization or manipulation of
     the price of the Notes or the Warrants; provided that no representation or
     warranty is made as to the activities of any purchaser of the Notes or any
     person acting on such purchaser's behalf.

<PAGE>

                                      -44-

          (hh) Neither the Company, its Subsidiaries nor any of their respective
     Affiliates (as defined in Rule 501(b) of Regulation D under the Securities
     Act) directly, or through any agent, (i) sold, offered for sale, solicited
     offers to buy or otherwise negotiated in respect of any "security" (as
     defined in the Securities Act) which is or could be integrated with the
     sale of the Notes and the Warrants in a manner that would require the
     registration under the Securities Act of the Notes or the Warrants or (ii)
     engaged in any form of general solicitation or general advertising (as
     those terms are used in Regulation D under the Securities Act) in
     connection with the offering of the Notes and the Warrants or in any manner
     involving a public offering within the meaning of Section 4(2) of the
     Securities Act; provided that no representation or warranty is made as to
     the activities of any purchaser of the Notes and the Warrants or any person
     acting on such purchaser's behalf. Assuming the accuracy of the
     representations and warranties of the Purchasers in Paragraph 9 hereof, the
     offer and sale of the Notes and Warrants pursuant to this Agreement are
     exempt from the registration and prospectus delivery requirements of the
     Securities Act.

          (ii) No securities of the Company are of the same class (within the
     meaning of Rule 144A under the Securities Act) as the Notes and listed on a
     national securities exchange registered under Section 6 of the Exchange
     Act, or quoted in a U.S. automated inter-dealer quotation system.

          (jj) There is no strike, labor dispute, slowdown or work stoppage with
     the employees of the Company or any of its Subsidiaries which is pending
     or, to the knowledge of the Company or any of its Subsidiaries, threatened.

          (kk) Each of the Company and its Subsidiaries carries insurance in
     such amounts and covering such risks as in its reasonable determination is
     adequate for the conduct of its business and the value of its properties.

          (ll) Each of the Company and its Subsidiaries (i) makes and keeps
     accurate books and records and (ii) maintains internal accounting controls
     which provide reasonable assurance that (A) transactions are executed in
     accordance with management's authorization, (B) transactions are recorded
     as necessary to permit preparation of its financial statements in
     conformity with GAAP and to maintain accountability for its assets, (C)
     access to its assets is permitted only in accordance with management's
     authorization and (D) the reported accountability for its assets is
     compared with existing assets at reasonable intervals.

          (mm) None of the Company, its Subsidiaries, any of their respective
     Affiliates or any person acting on its or their behalf (other than any
     purchaser of the Notes or any other person acting on such purchaser's
     behalf) has engaged in any directed selling efforts (as that term is
     defined in Regulation S under the Securities Act ("Regulation S")) with
     respect to the Notes and the Warrants and each of the Company, its

<PAGE>

                                      -45-

     Subsidiaries and their respective Affiliates and any person acting on its
     or their behalf (other than the Purchasers and any other person acting on
     their behalf) has acted in accordance with the offering restrictions
     requirement of Regulation S.

          PARAGRAPH 9. REPRESENTATIONS AND COVENANTS OF THE PURCHASERS.

          (a)   Each Purchaser, severally but not jointly, hereby represents and
warrants as to itself as follows:

          (i)   Such Purchaser has all requisite power and authority to execute,
     deliver and perform its obligations under this Agreement. This Agreement
     has been duly and validly authorized by such Purchaser, and, when executed
     and delivered by such Purchaser, will constitute a valid and legally
     binding agreement of such Purchaser, enforceable against such Purchaser in
     accordance with its terms, except as may be limited by the Enforceability
     Exceptions.

          (ii)  The Notes and Warrants to be acquired by such Purchaser pursuant
     to this Agreement are being or will be acquired for its own account and
     with no intention of distributing or reselling such securities or any part
     thereof in any transaction that would be in violation of the securities
     laws of the United States of America, or any state, without prejudice,
     however, to its right at all times to sell or otherwise dispose of all or
     any part of the Securities, under an effective registration statement under
     the Securities Act, or under an exemption from such registration available
     under the Securities Act, and subject, nevertheless, to the disposition of
     its property being at all times within its control. If such Purchaser
     should in the future decide to dispose of any of the Notes and Warrants,
     such Purchaser understands and agrees that it may do so only in compliance
     with the Securities Act and applicable state securities laws, as then in
     effect.

          (iii) Such Purchaser acknowledges that investment in the Notes and
     Warrants involves a high degree of risk, and represents that it is able to
     hold the Notes and Warrants, and securities which may underlie them, for an
     indefinite period of time and to suffer a complete loss of its investment.

          (iv)  Such Purchaser is an "accredited investor" as such term is
     defined in Rule 501 under the Securities Act.

          (b)   Each Purchaser understands and acknowledges to the Company that:

          (i)   the offering and sale of the Notes and the Warrants is
     intended to be exempt from registration under the Securities Act by virtue
     of the provisions of Section 4(2) of the Securities Act;

<PAGE>

                                      -46-

          (ii)  there is no existing public or other market for the Notes or
     the Warrants and there can be no assurance that such Purchaser will be able
     to sell or dispose of its Notes or Warrants;

          (iii) it is aware that federal and state securities laws prohibit
     any person who has material non-public information about an issuer from
     purchasing or selling securities of such issuer or from communicating such
     information to any other person under circumstances in which it is
     reasonably foreseeable that such person is likely to purchase or sell such
     securities; provided, however, that an affiliate of any Purchaser may buy
     or sell securities of the Company so long as such affiliate has not had
     access to any material non-public information; and

          (iv)  the Projections are not to be viewed as facts, actual results
     may differ from such statements, and the differences may be material.

          (c)   Each Purchaser covenants to the Company that if it offers, sells
or otherwise transfers, pledges or hypothecates all or any part of the Notes or
the Warrants (other than pursuant to an effective registration statement under
the Securities Act or pursuant to Rule 144 or, in the case of the Notes only,
Rule 144A), it shall deliver to the Company a written opinion of counsel
reasonably satisfactory to the Company (who may be in-house or special counsel),
reasonably satisfactory in form and substance to the Company, that an exemption
from the registration requirements of the Securities Act and applicable state
securities laws is available; provided, however, that such an opinion is not
required in the event that any holder of Notes or Warrants pledges Notes or
Warrants held by it, in whole or in part, to its lenders or securityholders, or
any trustee or agent therefor, or transfers Notes or Warrants held by it to any
entity formed for the purpose of holding the Notes or Warrants and/or other
securities held by such holder. Upon original issuance thereof, and until such
time as the same is no longer a Restricted Security, each certificate evidencing
the Notes (and all securities issued in exchange therefor or substitution
thereof) shall bear a legend in substantially the following form:

          THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
     ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED
     STATES SECURITIES ACT OF 1933 (THE "ACT"), AND THE NOTE EVIDENCED
     HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
     ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
     EACH PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED
     THAT THE SELLER MAY BE RELYING ON THE EXEMPTION PROVIDED BY RULE
     144A UNDER THE ACT. THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES
     FOR THE BENEFIT OF THE ISSUER THAT (A)

<PAGE>
                                      -47-

     SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
     (1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
     QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
     UNDER THE ACT IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
     144A, OR IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR PURSUANT
     TO ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
     ACT (AND BASED UPON AN OPINION OF COUNSEL), (b) TO THE ISSUER OR
     ANY OF ITS SUBSIDIARIES, (c) OUTSIDE THE UNITED STATES IN A
     TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE ACT
     OR (d) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
     ACT AND (2) IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE
     SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
     APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
     SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE
     NOTE EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN
     (A) ABOVE.

          PARAGRAPH 10.  DEFINITIONS.

          For the purpose of this Agreement, the following terms shall have the
meanings specified with respect thereto below (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

          "Acquired Indebtedness" means Indebtedness of a Person (including a
Subsidiary) existing at the time such Person becomes a Subsidiary of such
specified Person or is merged into or consolidated with any other Person or
which is assumed in connection with the acquisition of assets from such Person
and, in each case, incurred in compliance with or pursuant to a waiver under
Paragraph 6A and not incurred by such Person in connection with, or in
anticipation or contemplation of, such Person becoming a Subsidiary or such
merger, consolidation or acquisition.

          "Actual EBITDA" means, with respect to any Person and its
Subsidiaries, for any period, an amount equal to (a) the sum of (1) Consolidated
Net Income for such period; plus (2) the provision for taxes for such period
based on income or profits to the extent such income or profits were included in
computing Consolidated Net Income and any provision for taxes utilized in
computing net loss under clause (1) hereof; plus (3) Consolidated Interest
Expense; provided, however, for purposes of this definition only, that dividends
or distributions paid on Disqualified Capital Stock shall not be included in the
definition of Consolidated Interest Expense to the extent such dividends or
distributions have not been included in

<PAGE>
                                      -48-

the computation of Consolidated Net Income for such period; plus (4)
depreciation for such period on a consolidated basis; plus (5) amortization of
intangibles for such period on a consolidated basis; plus (6) the accretion of
stated value and dividends, if any, on the Preferred Stock and dividends on any
other class or series of preferred stock; plus (7) any other non- cash items
reducing Consolidated Net Income for such period; minus (b) the sum of (1)
interest income for such period, and (2) all non-cash items increasing
Consolidated Net Income for such period.

          "Additional Notes" shall have the meaning specified in Paragraph 1.

          "Adjusted Net Worth" means, with respect to any Person, the Net Worth
of such Person, at any time, plus the sum of (i) cumulative charges associated
with any write-downs or write-offs of impaired assets or assets previously used
in discontinued operations made in accordance with FASB 142 under GAAP incurred
by such Person since July 1, 2002 and (ii) cumulative charges associated with
the early extinguishment of debt incurred by such Person since July 1, 2002.

          "Affiliate" shall mean, with respect to any specified Person, any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person, including, but not
limited to, any holder of 10% or more of the voting securities of any Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

          "Affiliate Transaction" shall have the meaning specified in Paragraph
6K.

          "Asset Sale" shall have the meaning specified in Paragraph 6H(iii).

          "Asset Sale Proceeds Notice" shall have the meaning specified in
Paragraph 6H(iv).

          "Asset Sale Proceeds Offer" shall have the meaning specified in
Paragraph 6H(iv).

          "Asset Sale Proceeds Payment Date" shall have the meaning specified in
Paragraph 6H.

          "Attributable Indebtedness" means, with respect to any Sale and
Leaseback Transaction, as at the time of determination, the greater of (1) the
fair market value of the property subject to such arrangement and (2) the
present value of the total obligations of the lessee for rental payments during
the remaining term of the lease included in such Sale and

<PAGE>
                                      -49-

Leaseback Transaction (including any period for which such lease has been
extended). Such present value shall be calculated using a discount rate equal to
the rate of interest implicit in such transaction, determined in accordance with
GAAP.

          "Bankruptcy Code" shall mean Title 11 of the United States Code,
entitled "Bankruptcy," as amended from time to time, or any successor statute.

          "Board of Directors" means, with respect to any Person, the Board of
Directors, management committee, or reasonable equivalent thereof, as the case
may be, of such Person or any committee of the Board of Directors, management
committee, or reasonable equivalent thereof, as the case may be, of such Person
duly authorized, with respect to any particular matter, to exercise the power of
the Board of Directors, management committee, or reasonable equivalent thereof,
as the case may be, of such Person.

          "Board Resolution" shall mean, with respect to any Person, a copy of a
resolution certified by the secretary, an assistant secretary or authorized
signatory of such Person to have been duly adopted by the Board of Directors of
such Person and to be in full force and effect on the date of such
certification, and delivered to the Noteholders.

          "Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which commercial banks in New York, New York are required or authorized
to be closed.

          "Capital Expenditure" means any amount paid or incurred in connection
with the purchase of real estate, plant, machinery, equipment or the
expenditures in connection with moving the manufacturing of a product from the
former owner of the product to a contract manufacturer or other similar
expenditure (including all renewals, improvements and replacements thereto, and
all obligations under any lease of any of the foregoing) which would be required
to be capitalized and shown on the consolidated balance sheet of the Company in
accordance with GAAP.

          "Capital Lease" shall mean any lease of Property which in accordance
with GAAP would be capitalized on the lessee's balance sheet.

          "Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of corporate
stock or membership interests, as the case may be, including each class of
common stock and preferred stock of such Person.

          "Capitalized Lease Obligations" means with respect to any Person,
Indebtedness represented by obligations under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP, and the
amount of such Indebtedness shall be the capitalized amount of such obligations
determined in accordance with GAAP.

<PAGE>

                                      -50-

          "Cash Equivalents" means:

          (1) marketable direct obligations issued by, or unconditionally
     guaranteed by, the United States Government or issued by any agency or
     instrumentality thereof and backed by the full faith and credit of the
     United States, in each case maturing within one year from the date of
     acquisition thereof;

          (2) marketable direct obligations issued by any state of the United
     States of America or any political subdivision of any such state or any
     public instrumentality thereof maturing within one year from the date of
     acquisition thereof and, at the time of acquisition, having one of the two
     highest ratings obtainable from either S&P or Moody's;

          (3) commercial paper maturing no more than one year from the date of
     creation thereof and, at the time of acquisition, having a rating of at
     least A-1 from S&P or at least P-1 from Moody's;

          (4) certificates of deposit or bankers' acceptances maturing within
     one year from the date of acquisition thereof issued by any bank organized
     under the laws of the United States of America or any state thereof or the
     District of Columbia or any U.S. branch of a foreign bank having at the
     date of acquisition thereof combined capital and surplus of not less than
     $500.0 million;

          (5) repurchase obligations with a term of not more than seven days for
     underlying securities of the types described in clause (1) above entered
     into with any bank meeting the qualifications specified in clause (4)
     above; and

          (6) investments in money market funds which invest substantially all
     their assets in securities of the types described in clauses (1) through
     (5) above.

          "Cash Interest Expense" shall mean, for any Person for any period,
interest expense for such period, determined on a consolidated basis in
accordance with GAAP, excluding (a) interest paid in kind or by accretion or
addition to principal, (b) amortization of commissions, discounts, fees, costs
and other charges paid in connection with the incurrence of Indebtedness and (c)
other interest costs not paid in cash.

          "Catalog Business" shall mean the As We Change(R) national mail order
catalog and related business activities, as described in the Exchange Act
Documents.

          A "Change in Control" shall be deemed to have occurred at such time
as:

          (1) Edward F. Calesa ceases to beneficially own, directly or
     indirectly, at least 4,500,000 shares of the Company's Common Stock;

<PAGE>

                                      -51-

          (2)  Edward F. Calesa ceases to serve as the Chief Executive Officer
     of the Company;

          (3)  any Person or related group of Persons for purposes of Section
     13(d) of the Exchange Act (other than Edward F. Calesa) shall at any time
     be, directly or indirectly, the beneficial owner of 25% of the Voting Stock
     of the Company;

          (4)  there shall be consummated (A) any consolidation or merger of the
     Company in which the Company is not the continuing or surviving entity or
     pursuant to which the Capital Stock of the Company would be converted into
     cash, securities or other property, other than a merger or consolidation of
     the Company in which the holders of the Capital Stock of the Company
     outstanding immediately prior to the consolidation or merger hold, directly
     or indirectly, at least a majority of the voting power of the surviving
     entity's Capital Stock immediately after such consolidation or merger, or
     (B) any sale of 50% or more of the Company's assets;

          (5)  the Company or the Company's shareholders approve any plan or
     proposal for the liquidation or dissolution of the Company; or

          (6)  any person shall cause, as a result of any proxy solicitation
     made otherwise than by or on behalf of management, Continuing Directors to
     cease to be a majority of the Board of Directors of the Company (where
     "Continuing Directors" are (x) members of the original Board of Directors
     or (y) members appointed or whose nomination is approved by a majority of
     the Continuing Directors or nominated at a time that the Continuing
     Directors form a majority of the Board of Directors);

provided that if the Company maintains "key man" insurance on Edward F. Calesa
as provided for in Paragraph 5P hereof in an amount of at least $10,000,000 (the
"Key Man Threshold"), clauses (1), (2) and (3) above shall not be deemed a
Change in Control if the events contemplated by such clauses are caused by the
death of Mr. Calesa; provided, further, that the Key Man Threshold shall be
decreased proportionately as the aggregate principal amount of Notes outstanding
decreases, but in no event shall the Key Man Threshold be less than $5,000,000.

          "Change in Control Notice" shall have the meaning specified in
Paragraph 4D(b).

          "Change in Control Payment Date" shall have the meaning specified in
Paragraph 4D(a).

          "Closing" and "Date of Closing" shall have the meaning specified in
Paragraph 2.

<PAGE>

                                      -52-

          "Collateral" shall mean all the rights and interests related to Vaniqa
acquired by the Company in connection with the Transaction.

          "Consolidated Interest Expense" means, with respect to any Person, for
any period, the aggregate amount of interest which, in conformity with GAAP,
would be set forth opposite the caption "interest expense" or any like caption
on an income statement for such Person and its Subsidiaries on a consolidated
basis (including, but not limited to:

          (1)  imputed interest included in Capitalized Lease Obligations;

          (2)  all commissions, discounts and other fees and charges owed with
     respect to letters of credit and bankers' acceptance financing;

          (3)  the net costs associated with Interest Rate Agreements and other
     hedging obligations;

          (4)  amortization of debt issuance costs fees and expenses;

          (5)  the interest portion of any deferred payment obligation;

          (6)  amortization of discount or premium, if any; and

          (7)  all other non-cash interest expense (other than interest
     allocated to cost of sales));

plus, without duplication, all net capitalized interest for such period and all
interest incurred or paid under any guarantee of Indebtedness (including a
guarantee of principal, interest or any combination thereof) of any Person, plus
the amount of all dividends or distributions paid on Disqualified Capital Stock
(other than dividends paid or payable in shares of Capital Stock of the
Company).

          "Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided, however, that (a) (1) the equity of the Person in question in the Net
Income of any other Person (the "other Person") in which the Person in question
or any of its Subsidiaries has less than a 100% interest (which interest is not
sufficient to cause the Net Income of such other Person to be consolidated into
the Net Income of the Person in question in accordance with GAAP) for such
period shall be included in such Person's Consolidated Net Income only to the
extent of the amount of dividends or distributions actually paid to the Person
in question or the Subsidiary (subject, in the case of a dividend or
distribution to a Subsidiary, to the limitations contained in clause (b) of this
definition of "Consolidated Net Income"), and (2) such Person's equity in a net
loss of any such Person for such period shall be included in determining such
Person's Consolidated

<PAGE>

                                      -53-

Net Income; (b) the Net Income of any Subsidiary of the Person in question that
is subject to any restriction or limitation on the payment of dividends or the
making of other distributions shall be excluded to the extent of such
restriction or limitation, except that (1) subject to the limitations contained
in subclause (b)(2) of this definition of "Consolidated Net Income", the equity
of such Person in the Net Income of any such Subsidiary for such period shall be
included in such Person's Consolidated Net Income to the extent of dividends or
distributions that could have been paid by such Subsidiary during such period to
such Person or another Subsidiary (subject, in the case of a dividend or
distribution to another Subsidiary, to the limitations contained in this
clause), and (2) such Person's equity in a net loss of any such Subsidiary for
such period shall be included in determining such Consolidated Net Income; (c)
any net gain or loss resulting from an asset sale by the Person in question or
any of its Subsidiaries other than in the ordinary course of business shall be
excluded; (d) extraordinary gains and losses shall be excluded; (e) charges
associated with any write-downs or write-offs of impaired assets or assets
previously used in discontinued operations made in accordance with GAAP shall be
excluded; (f) income or loss attributable to discontinued operations (including,
without limitation, operations disposed of during such period whether or not
such operations were classified as discontinued) shall be excluded; (g) charges
associated with the early extinguishment of debt shall be excluded; and (h) in
the case of a successor to the referent Person by consolidation or merger or as
a transferee of the referent Person's assets, any earnings of the successor
entity prior to such consolidation, merger or transfer of assets shall be
excluded.

          "Debt" or "Indebtedness" means (without duplication), with respect to
any Person, any indebtedness at any time outstanding, secured or unsecured,
contingent or otherwise, which is for borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof), or evidenced by bonds, notes, debentures or similar
instruments or representing the balance deferred and unpaid of the purchase
price of any property (excluding, without limitation, any balances that
constitute subscriber advance payments and deposits, accounts payable or trade
payables, and other accrued liabilities arising in the ordinary course of
business) if and to the extent any of the foregoing indebtedness would appear as
a liability upon a balance sheet of such Person prepared in accordance with
GAAP, and shall also include, to the extent not otherwise included:

          (1)  any Capitalized Lease Obligations of such Person;

          (2)  obligations secured by a Lien to which the property or assets
     owned or held by such Person are subject, whether or not the obligation or
     obligations secured thereby shall have been assumed;

          (3)  guarantees of Indebtedness of other Persons which would be
     included within this definition for such other Persons (whether or not such
     items would appear upon the balance sheet of the guarantor);

<PAGE>

                                      -54-

          (4)  all obligations (including contingent obligations) for the
     reimbursement of any obligor on any letter of credit, banker's acceptance
     or similar credit transaction;

          (5)  Disqualified Capital Stock of such Person or any Subsidiary
     thereof;

          (6)  Attributable Indebtedness with respect to any Sale and Leaseback
     Transaction; and

          (7)  obligations of any such Person under any currency agreement or
     any Interest Rate Agreement applicable to any of the foregoing (if and to
     the extent such currency agreement or Interest Rate Agreement obligations
     would appear as a liability upon a balance sheet of such Person prepared in
     accordance with GAAP).

          The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and, with respect to contingent obligations, the maximum liability upon
the occurrence of the contingency giving rise to the obligation; provided that
Indebtedness shall not include any liability for federal, state, local or other
taxes. Notwithstanding any other provision of the foregoing definition, any
trade payable arising from the purchase of goods or materials or for services
obtained in the ordinary course of business shall not be deemed to be
Indebtedness of the Company or any of its Subsidiaries for purposes of this
definition. Furthermore, guarantees of (or obligations with respect to letters
of credit supporting) Indebtedness otherwise included in the determination of
such amount shall also not be included.

          "Default" shall mean any Event of Default and any default, event or
condition which would, with the giving of any requisite notices and the passage
of any requisite periods of time, constitute an Event of Default.

          "Disqualified Capital Stock" shall mean any Capital Stock which, by
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable at the option of the holders), or upon the happening of
any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the sole option of the holder
thereof, in whole or in part, on or prior to the final maturity date of the
Notes for cash or securities constituting Debt.

          "Documents" shall mean this Agreement, the Notes, the Warrants, the
Security Documents and the Registration Rights Agreement.

          "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, together with all rules and regulations
promulgated with respect thereto.

<PAGE>

                                      -55-

          "ERISA Affiliate" shall mean any Person which (a) is a member of the
same controlled group (within the meaning of Section 414(b) of the IRC) of
corporations as the Company, or (b) is under common control (within the meaning
of Section 414(c) of the IRC) with the Company, or (c) is a member of an
affiliated service group (within the meaning of Section 414(m) of the IRC) with
the Company, or (d) is treated, pursuant to Section 414(o) of the IRC or the
regulations promulgated thereunder, together with the Company as a single
employer.

          "Esclim" shall mean the estrogen patch system for which the Company
acquired rights to market, use, distribute and sell in the United States and
Puerto Rico from Laboratoires Fournier S.A., as described in the Exchange Act
Documents.

          "Event of Default" has the meaning specified in Paragraph 7A.

          "Excess Cash Flow" shall mean, for any period of the Company, the
difference of (a) Actual EBITDA for such period minus (b) the sum, without
duplication, of (i) the amount of any cash income taxes payable by the Company
and its Subsidiaries with respect to such period, (ii) scheduled cash interest
paid (net of cash interest received) by the Company and its Subsidiaries during
such period, (iii) Capital Expenditures made in cash by the Company and its
Subsidiaries during such period, except to the extent financed with net
insurance proceeds or net condemnation awards and (iv) scheduled permanent
repayments of Indebtedness made by the Company and its Subsidiaries during such
period.

          "Excess Cash Flow Notice" shall have the meaning specified in
Paragraph 4E(c).

          "Excess Cash Flow Offer" shall have the meaning specified in Paragraph
4E(a).

          "Excess Cash Flow Payment Date" shall have the meaning specified in
Paragraph 4E(b).

          "Exchange Act" means the Securities Exchange Act of 1934, as amended.

          "Exchange Act Documents" means the Company's Annual Report on Form
10-K for the Fiscal Year ended December 31, 2001 and its Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 2002.

          "Existing Secured Debt" means any Indebtedness outstanding on the Date
of Closing pursuant to the Securities Purchase Agreement dated June 29, 2001
between the Company and Elan Pharma International Limited and the Senior Secured
Promissory Note dated November 15, 2001 issued by the Company to American Home
Products Corporation.

<PAGE>

                                      -56-

          "Fiscal Quarter" means each quarterly accounting period of each Fiscal
Year of the Company.

          "Fiscal Year" means each annual accounting period of the Company
ending on December 31 of each calendar year.

          "Fixed Charge Coverage Ratio" means for any Person for any period, a
fraction, the numerator of which is Actual EBITDA of such Person for such period
plus the aggregate amount of rental expenses actually incurred by such Person
and its Subsidiaries during such period, and the denominator of which is Fixed
Charges for such period.

          "Fixed Charges" means for any Person for any period, the sum of (a)
regularly scheduled mandatory principal payments on Indebtedness of such Person
and its Subsidiaries for such period, excluding the regularly scheduled
mandatory principal payment of $3.25 million due in November 2002 to American
Home Products Corporation under the Existing Secured Debt held by American Home
Products Corporation, (b) the aggregate amount of any optional prepayments of
Indebtedness of such Person and its Subsidiaries made during such period, (c)
the amount of taxes actually paid in cash by such Person or any Subsidiary
during such period, (d) Cash Interest Expense for such period, (e) Capital
Expenditures actually made by such Person and its Subsidiaries during such
period and (f) rental expenses actually incurred by such Person and its
Subsidiaries during such period, in each case determined on a consolidated basis
in accordance with GAAP.

          "GAAP" shall mean United States generally accepted accounting
principles as they may be amended as of the Date of Closing.

          "Independent Financial Advisor" means an independent investment
banking firm of national standing.

          "Interest Rate Agreement" means, with respect to any Person, any
interest rate swap agreement, interest rate cap agreement, interest rate collar
agreement or other similar agreement designed to protect the party indicated
therein against fluctuations in interest rates.

          "Investment" means, with respect of any Person, directly or
indirectly, any advance, account receivable (other than an account receivable
arising in the ordinary course of business of such Person), loan or capital
contribution to (by means of transfers of property to others, payments for
property or services for the account or use of others or otherwise), the
purchase of any Capital Stock, bonds, notes, debentures, partnership or joint
venture interests or other securities (other than the purchase of the Notes
pursuant to Paragraph 4B, 4D, 4E or 6H and other than the purchase of Preferred
Stock pursuant to Sections 9E, 9F and 9H of the certificate of designations
relating thereto) of, the acquisition, by purchase or otherwise, of all or
substantially all of the business or assets or stock or other evidence of
beneficial ownership

<PAGE>

                                      -57-

of, or any division, line of business or product of, any Person or the making of
any investment in any Person. Investments shall exclude (a) extensions of trade
credit on commercially reasonable terms in accordance with normal trade
practices of such Person and (b) the repurchase of securities of any Person by
such Person. For the purposes of Paragraph 6I, the amount of any Investment
shall be the original cost of such Investment plus the cost of all additional
Investments by the Company or any of its Subsidiaries, without any adjustments
for increases or decreases in value, or write-ups, write-downs or write-offs
with respect to such Investment, reduced by the payment of cash distributions
which constitute a return of capital in connection with such Investment;
provided that the aggregate of all such reductions shall not exceed the amount
of such initial Investment plus the cost of all additional Investments;
provided, further, that no such payment of distributions or receipt of any such
other amounts shall reduce the amount of any Investment if such payment of
distributions or receipt of any such amounts would be included in Consolidated
Net Income. If the Company or any Subsidiary of the Company sells or otherwise
disposes of any common stock of any direct or indirect Subsidiary of the Company
such that, after giving effect to any such sale or disposition, the Company no
longer owns, directly or indirectly, greater than 50% of the outstanding common
stock of such Subsidiary, the Company shall be deemed to have made an Investment
on the date of any such sale or disposition equal to the fair market value of
the common stock of such Subsidiary not sold or disposed of.

          "IRC" shall mean the Internal Revenue Code of 1986, as amended.

          "IRS" shall mean the Internal Revenue Service.

          "Lien" shall mean, as to any Person, any mortgage, lien, pledge,
adverse claim, charge, security interest or other encumbrance in or on, or
interest of title of any vendor, lessor, lender or other secured party to or of
the Person under a conditional sale or other title retention agreement or
Capital Lease with respect to, any Property or asset of such Person, or the
signing or filing of a financing statement which names such Person as debtor, or
the signing of any security agreement authorizing any other party as the secured
party thereunder to file any financing statement.

          "Material Adverse Effect" shall mean, with respect to the Company and
its Subsidiaries, a material adverse effect on (a) the business, condition
(financial or otherwise), properties, results of operations or prospects of the
Company and its Subsidiaries, taken as a whole, or (b) the validity or
enforceability of, or the ability of the Company to perform its obligations
under, this Agreement or any of the other Documents, or the rights or remedies
of a Purchaser or the Collateral Agent hereunder or thereunder.

          "Material Agreements" shall mean Documents, the Transaction Documents,
the governing instruments of the Company and its Subsidiaries and all agreements
relating to its investment in or relationship with its Subsidiaries.

<PAGE>

                                      -58-

          "Moody's" means Moody's Investors Service, Inc. or any successor to
the rating agency business thereof.

          "Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 3(37) or Section 4001(a)(3) of ERISA or Section 414(f) of the IRC to
which the Company or any of its ERISA Affiliates is or has been making, or is or
has been obligated to make, contributions or as to which the Company or any of
its ERISA Affiliates may have liability.

          "Net Income" means, with respect to any Person, for any period, the
net income (loss) available to common stockholders of such Person determined in
accordance with GAAP.

          "Net Proceeds" means

          (i)   in the case of any incurrence of a loan or sale of debt
     securities or Capital Stock or other equity securities of any Person, the
     aggregate net proceeds received by such Person, after payment of expenses,
     commissions and the like incurred in connection therewith, whether such
     proceeds are in cash or in property (valued at the fair market value
     thereof, as determined in good faith by the Board of Directors of such
     Person, at the time of receipt), and

          (ii)  in the case of any asset sale (including, without limitation,
     any cash received upon the sale or other disposition of any non-cash
     consideration received in any asset sale), net of the direct costs relating
     to such asset sale, including, without limitation, legal, accounting and
     investment banking fees, sales commissions, and any relocation expenses
     incurred as a result thereof, and taxes paid or payable as a result
     thereof, in each case, after taking into account any available tax credits
     or deductions and any tax sharing arrangements, and any reserve for
     adjustment in respect of the sale price of such asset or assets established
     in accordance with GAAP.

          "Net Worth" means, with respect to any Person, at any time, the
consolidated stockholders' equity of such Person at such time, determined in
accordance with GAAP, except that there shall be deducted any amount of treasury
stock reflected as an asset at such time.

          "Noteholder" shall mean the holder of any Note.

          "Notes" shall have the meaning specified in Paragraph 1.

          "PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereof.

<PAGE>

                                      -59-

          "Pension Plan" means any "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA.

          "Permitted Acquisition" means an acquisition by the Company of either
(a) rights to (i) pharmaceutical products or (ii) similar products sold into the
OB/GYN, dermatological or dental markets or (b) assets of a business reasonably
similar to the business of the Company and its Subsidiaries on the Date of
Closing, in the case of either clause (a) or (b) to the extent the Company
demonstrates to the reasonable satisfaction of the holders of the Notes that (A)
such acquisition is accretive to the earnings of the Company for the first 12
calendar month period beginning after the closing date and (B) that, after
giving effect to such acquisition, the Company and its Subsidiaries remain in
compliance with the terms of this Agreement and the Notes, including all
covenants.

          "Permitted Asset Sale" means any asset sale permitted by paragraph 6H
hereof.

          "Permitted Debt" means (i) the Notes; (ii) Debt existing and
outstanding on the Date of Closing; (iii) a Permitted Working Capital Facility;
(iv) the incurrence by the Company or any of its Subsidiaries of intercompany
Indebtedness between or among the Company and any of its Subsidiaries; (v) the
accrual of interest, the accretion or amortization of original issue discount,
the payment of interest on any Indebtedness in the form of additional
Indebtedness with the same terms (including any Additional Notes), and the
payment of dividends on Disqualified Stock in the form of additional shares of
the same class of Disqualified Stock will not be deemed to be an incurrence of
Indebtedness or an issuance of Disqualified Stock for purposes of the definition
thereof; provided in each such case, that the amount thereof is included in
Fixed Charges of the Company as accrued; (vi) Indebtedness issued to or borrowed
from Elan Pharma International or an Affiliate thereof by the Company in
consideration of the elimination of the royalty provisions of the Midrin Asset
and Inventory Purchase Agreement dated as of June 29, 2001 by and among the
Company, Elan Pharma International Limited and Elan Pharmaceuticals, Inc. in an
aggregate principal amount not to exceed $1.5 million, so long as the Company
fulfills its obligations under that certain letter agreement dated the date
hereof between the Company and the Purchasers; and (vii) the incurrence by the
Company or any of its Subsidiaries of additional Indebtedness in an aggregate
principal amount (or accreted value, as applicable) at any one time outstanding
not to exceed $500,000.

          "Permitted Investments" means Investments made on or after the Date of
Closing consisting of:

          (a)  Investments in cash and Cash Equivalents;

          (b)  any Investment in a wholly-owned Subsidiary;

<PAGE>

                                      -60-

          (c)  an Investment that is made by the Company or a Subsidiary thereof
     in the form of any Capital Stock, bonds, notes, debentures, partnership or
     joint venture interests or other securities that are issued by a third
     party to the Company or such Subsidiary solely as partial consideration for
     the consummation of a Permitted Asset Sale;

          (d)  any Permitted Acquisition (i) solely in exchange for the issuance
     of Capital Stock (other than Disqualified Capital Stock) of the Company or
     (ii) for cash if after giving effect to the transaction the Company will
     have a minimum cash balance of $14,000,000;

          (e)  Capital Stock, obligations or securities received in settlement
     of debts created in the ordinary course of business and owing to the
     Company or any Subsidiary or in satisfaction of judgments;

          (f)  any Investment existing on the Date of Closing;

          (g)  any Investment by the Company or any of its Subsidiaries in a
     Person, if as a result of such Investment: (i) such Person becomes a
     Subsidiary of the Company or (ii) such Person is merged, consolidated or
     amalgamated with or into, or transfers or conveys substantially all of its
     assets to, or is liquidated into, the Company or a Subsidiary of the
     Company; and

          (h)  other Investments in any Person having an aggregate fair market
     value (measured on the date each such Investment was made and without
     giving effect to subsequent changes in value), when taken together with all
     other Investments made pursuant to this clause (i), not to exceed $500,000.

          "Permitted Working Capital Facility" means a revolving credit facility
of the Company secured by inventory and receivables of the Company with an
aggregate amount of Indebtedness permitted thereunder not to exceed $5,000,000
at any one time outstanding, including any amendment, extension or refinancing
thereof secured by the same assets and not in excess of the same amount.

          "Person" shall mean and include an individual, corporation,
partnership, trust or trustee thereof, estate or executor thereof,
unincorporated organization or joint venture, court or governmental unit or any
agency or subdivision thereof, or any other legally recognizable entity.

          "Preferred Stock" means the Senior Convertible Redeemable Preferred
Stock, Series A of the Company to be issued on the Date of Closing as part of
the financing of the Vaniqa Acquisition.

<PAGE>

                                      -61-

          "Projections" shall mean the financial projections concerning the
Company delivered to the Purchasers by the Company pursuant to Paragraph
3A(xii).

          "Property" shall mean any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.

          "Purchase Money Indebtedness" means any Indebtedness incurred in the
ordinary course of business by a Person to finance the cost (including the cost
of construction) of an item of property, the principal amount of which
Indebtedness does not exceed the sum of (1) 100% of such cost and (2) reasonable
fees and expenses of such Person incurred in connection therewith.

          "Purchasers" shall have the meaning set forth in the introductory
paragraph of this Agreement and shall include its successors and assigns.

          "Qualified Capital Stock" shall mean any Capital Stock that is not
Disqualified Capital Stock.

          "Registration Rights Agreement" shall mean the Registration Rights
Agreement relating to the Warrants dated as of the date hereof by and between
the Company and the Purchasers.

          "Required Holders" shall mean the holders of at least 66 2/3% of the
aggregate principal amount of the Notes from time to time outstanding.

          "Restricted Payment" shall have the meaning specified in Paragraph 6I.

          "Restricted Security" shall mean any Note or Warrant upon original
issuance thereof, and at all times subsequent thereto until, in the case of any
such Note or Warrant, (A) it has been effectively registered under the
Securities Act and disposed of in accordance with the registration statement
covering it, or (B) it is sold pursuant to Rule 144 or becomes eligible for
resale under Rule 144(k).

          "S&P" means Standard & Poor's Ratings Service, a division of
McGraw-Hill Companies, Inc. or any successor to the rating agency business
thereof.

          "Sale and Leaseback Transaction" means any arrangement with any Person
providing for the leasing by the Company or any Subsidiary of the Company of any
real or tangible personal property, which property has been or is to be sold or
transferred by the Company or such Subsidiary to such Person in contemplation of
such leasing.

          "Securities Act" shall mean the Securities Act of 1933, as amended.

<PAGE>

                                      -62-

          "Securities and Exchange Commission" shall mean the Securities and
Exchange Commission of the United States.

          "Security Documents" means the Security Agreement and the
Intercreditor Agreement in substantially the form as set forth as Exhibits C-1
and C-2 hereto.

          "Subsidiary" shall mean any corporation or other entity of which a
Person owns, directly or indirectly, that number of shares of Voting Stock which
has the power to elect a majority of the Board of Directors or other governing
body.

          "Taxes" shall mean all taxes, assessments, fees and other charges
including, without limitation, withholding taxes, penalties, and interest.

          "Termination Event" shall mean (a) a "reportable event" (within the
meaning of Section 4043(b) of ERISA) with respect to a Pension Plan (other than
a "reportable event" as to which the PBGC has by regulation waived the thirty
(30) day notice requirement under Section 4043(a) of ERISA); provided, however,
that a failure to meet the minimum funding standards of Section 412 of the IRC
shall be a Termination Event regardless of the issuance of any waiver under
Section 412(d) of the IRC; (b) the withdrawal of the Company, any of its
Subsidiaries or any ERISA Affiliate from a Pension Plan during a plan year in
which it was a "substantial employer" (within the meaning of Section 4001(a)(2)
of ERISA); (c) the complete or partial withdrawal of the Company, any of its
Subsidiaries or any ERISA Affiliate from a Multiemployer Plan under Section 4201
or 4204 of ERISA; (d) the receipt by the Company, any of its Subsidiaries or any
ERISA Affiliate of notice from a Multiemployer Plan that is in reorganization or
insolvent under Section 4241 or 4245 of ERISA or that it intends to terminate or
has terminated under Section 4041A of ERISA; (e) the providing of a notice of
intent to terminate a Pension Plan pursuant to Section 4041(a)(2) of ERISA or
the treatment of a Pension Plan amendment as a termination under Section 4041(e)
of ERISA; (f) the institution of proceedings by the PBGC to terminate a Pension
Plan or the appointment of a trustee to administer any Pension Plan under
Section 4042 of ERISA; (g) the receipt by the Company, any of its Subsidiaries
or any ERISA Affiliate of a notice from any Multiemployer Plan that any action
described in clause (f) has been taken with respect to that Multiemployer Plan;
or (h) any other event or condition which might constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan.

          "Total Indebtedness" means, of any Person, as of the date of
determination, all Indebtedness of such Person which, in accordance with GAAP,
would be included as indebtedness on a consolidated balance sheet of such Person
at such date. For the avoidance of doubt, the Preferred Stock shall not be
considered part of Total Indebtedness.

          "Transaction" shall mean the Vaniqa Acquisition and the financing
thereof.

<PAGE>

                                      -63-

          "Transaction Documents" shall mean each agreement entered into in
connection with the Transaction.

          "Transferee" shall mean any direct or indirect transferee of all or
any part of any Note or Warrant purchased under this Agreement.

          "UCC" means the Uniform Commercial Code as in effect in any applicable
jurisdiction.

          "Vaniqa" shall mean VANIQA(R) (eflornithine hydrochloride) Cream,
13.9%.

          "Vaniqa Acquisition" shall mean the acquisition by the Company of
Vaniqa and related assets from Westwood-Squibb Colton Holdings Partnership, the
Gillette Company and Bristol-Myers Squibb Company, for approximately $38.3
million.

          "Voting Stock" shall mean, with respect to any corporation or other
Person, as the case may be, any shares of Capital Stock of any class or classes
of such corporation or other Person, as the case may be, whose holders are
entitled under ordinary circumstances to vote for the election of directors of
such corporation or other Person, as the case may be, or persons performing
similar functions (irrespective of whether or not at the time Capital Stock of
the class or any other class or classes shall have or might have special voting
power or rights by reason of the happening of any contingency).

          Unless otherwise specified or the context otherwise requires, all
phrases used herein that have a specific meaning under GAAP shall have their
meaning under GAAP.

          PARAGRAPH 11. MISCELLANEOUS.

          11A. Note Payments. So long as each Purchaser shall hold any Note, the
Company will make payments of principal of and interest on such Note which
comply with the terms of this Agreement, by wire transfer of immediately
available funds for credit (not later than 1:00 p.m., New York time, on the date
due) to the account or accounts as specified in the signature pages hereto, or
such other account or accounts in the United States as such Purchaser may
designate in writing, notwithstanding any contrary provision herein or in any
Note with respect to the place of payment. Each Purchaser agrees that, before
disposing of any Note, such Purchaser will make a notation thereon (or on a
schedule attached thereto) of all principal payments previously made thereon, if
any, and of the date to which interest thereon has been paid. The Company agrees
to afford the benefits of this Paragraph 11A to any Transferee which shall have
made the same agreement as each Purchaser has made in this Paragraph 11A.

          11B. Expenses. The Company agrees, whether or not the transactions
contemplated hereby shall be consummated, to pay, and save each Purchaser and
any Transferee

<PAGE>

                                      -64-

harmless against liability for the payment of, all reasonable out-of-pocket
expenses arising in connection with such transactions, including (i) all fees
and expenses of the Purchasers' counsel in connection with this Agreement and
the transactions contemplated hereby, (ii) all document production and
duplication charges and the reasonable fees and expenses of any counsel engaged
by such Purchaser or such Transferee in connection with any subsequent proposed
modification of, or proposed consent under, this Agreement, whether or not such
proposed modification shall be effected or proposed consent granted, and (iii)
the costs and expenses, including reasonable attorneys' fees, incurred by such
Purchaser or such Transferee in enforcing (or determining whether or how to
enforce) any rights under this Agreement, the Notes or the Warrants or in
responding to any subpoena or other legal process or informal investigative
demand issued in connection with this Agreement or the transactions contemplated
hereby or by reason of such Purchaser's or such Transferee's having acquired any
Note or Warrant, including without limitation costs and expenses incurred in any
bankruptcy case. The obligations of the Company under this Paragraph l1B shall
survive the transfer of any Note or Warrant or portion thereof or interest
therein by each Purchaser or any Transferee and the payment of any Note or the
exercise of any Warrant.

          11C. Consent to Amendments. This Agreement may be amended, and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by them, if the Company shall obtain the written
consent to such amendment, action or omission to act, of the Required Holders
except that, without the written consent of each holder, no amendment to this
Agreement shall

          (a)  reduce the amount of Notes whose holders must consent to an
     amendment, supplement or waiver to this Agreement or the Notes;

          (b)  reduce the rate of or change the time for payment of interest,
     including defaulted interest, on any Note;

          (c)  reduce the principal of or premium on or change the stated
     maturity of any Note or change the date on which any Notes may be subject
     to redemption or repurchase or reduce the redemption or repurchase price
     thereof;

          (d)  make any Note payable in money other than that stated in the Note
     or change the place of payment from New York, New York;

          (e)  waive a default on the payment of the principal of, interest on,
     or redemption payment with respect to any Note;

          (f)  make any change in the provisions of this Agreement or the Notes
     protecting the right of each holder of Notes to receive payment of the
     principal of and interest on such Note on or after the due date thereof or
     to bring suit to enforce such

<PAGE>

                                      -65-

     payment, or permitting holders of a majority in principal amount at
     maturity of Notes to waive Defaults or Events of Default;

          (g)  amend, change or modify in any material respect the obligation of
     the Company to purchase all or a portion of the Notes upon an Asset Sale or
     with Excess Cash Flow or redeem the Notes in accordance with Paragraphs 4B,
     4D, 4E and Paragraph 6H in the event of an issuance of Capital Stock or
     asset sale that has been consummated or modify any provisions or
     definitions with respect thereto; or

          (h)  modify or change any provision of this Agreement or the related
     definitions affecting the ranking of the Notes in a manner which adversely
     affects the holders of Notes.

          Subject to Paragraph 6O, each holder of any Note at the time or
thereafter outstanding shall be bound by any consent authorized by this
Paragraph 11C, whether or not such Note shall have been marked to indicate such
consent, but any Notes issued thereafter may bear a notation referring to any
such consent. No course of dealing between the Company and the holder of any
Note nor any delay in exercising any rights hereunder or under any Note shall
operate as a waiver of any rights of any holder of such Note. As used herein and
in the Notes, the term "this Agreement" and references thereto shall mean this
Agreement as it may from time to time be amended or supplemented.

          11D. Form, Registration, Transfer and Exchange of Notes; Lost Notes.
The Notes are issuable as registered Notes without coupons in denominations of
at least $1,000, except as may be necessary to reflect any principal amount not
evenly divisible by $1,000. The Company shall keep at its principal office a
register in which the Company shall provide for the registration of Notes and of
transfers of Notes. Upon surrender for registration of transfer of any Note at
the principal office of the Company, the Company shall, at its expense, execute
and deliver one or more new Notes of the like tenor and of a like aggregate
principal amount or number, registered in the name of such transferee or
transferees; provided that in no event will the Company be required to register
for transfer or execute and deliver new Notes in connection with any transfer of
less than $2,000,000 aggregate principal amount of the Notes unless the
transferee thereof is a registered holder of Notes at the time of such transfer
or the amount to be transferred represents the entire principal amount of Notes
registered in the name of the transferor. At the option of the holder of any
Note, such Note may be exchanged for other Notes of like tenor and of any
authorized denominations, of a like aggregate principal amount or number, upon
surrender of the Note to be exchanged at the principal office of the Company.
Whenever any Notes are so surrendered for exchange, the Company shall, at its
expense, execute and deliver the Notes which the holder making the exchange is
entitled to receive. Every Note surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer duly executed by the holder of such Note or such holder's attorney duly
authorized in writing. Any Note or Notes

<PAGE>

                                      -66-

issued in exchange for any Note or upon transfer thereof shall carry the rights
to unpaid interest and interest to accrue which were carried by the Note so
exchanged or transferred, so that neither gain nor loss of interest shall result
from any such transfer or exchange. Upon receipt of written notice from the
holder of any Note of the loss, theft, destruction or mutilation of such Note
and, in the case of any such loss, theft or destruction, upon receipt of such
holder's unsecured indemnity agreement, or in the case of any such mutilation
upon surrender and cancellation of such Note, the Company will make and deliver
a new Note, of like tenor, in lieu of the lost, stolen, destroyed or mutilated
Note.

          11E. Persons Deemed Owners; Participations. Prior to due presentment
for registration of transfer, the Company may treat the Person in whose name any
Note is registered as the owner and holder of such Note for the purpose of
receiving payment of principal of, interest on such Note and for all other
purposes whatsoever, whether or not such Note shall be overdue, and the Company
shall not be affected by notice to the contrary.

          11F. Survival of Representations and Warranties; Entire Agreement. All
representations and warranties contained herein or made in writing by or on
behalf of the Company or any Purchaser in connection herewith shall survive the
execution and delivery of this Agreement, the Notes and the Warrants and the
transfer by any Purchaser of any Note or Warrant or portion thereof or interest
therein, and may be relied upon by any Transferee, regardless of any
investigation made at any time by or on behalf of any Purchaser or any
Transferee. Subject to the preceding sentence, this Agreement and the other
Documents embody the entire agreement and understanding between the Purchasers
and the Company and supersede all prior agreements and understandings relating
to the subject matter hereof.

          11G. Successors and Assigns. All covenants and other agreements in
this Agreement contained by or on behalf of any of the parties hereto shall bind
and inure to the benefit of the respective successors and assigns of the parties
hereto (including, without limitation, any Transferee) whether so expressed or
not.

          11H. Disclosure to Other Persons. The Company acknowledges that the
holder of any Note may deliver copies of any financial statements and other
documents delivered to such holder, and disclose any other information disclosed
to such holder, by or on behalf of the Company or any of its Subsidiaries in
connection with or pursuant to this Agreement to (i) such holder's directors,
officers, employees, agents and professional consultants, (ii) any other holder
of any Note, (iii) any Person to which such holder offers to sell such Note or
any part thereof, (iv) any Person from which such holder offers to purchase any
security of the Company, (v) any federal or state regulatory authority having
jurisdiction over such holder or proposed purchase of a Note or interest
therein, (vi) the National Association of Insurance Commissioners or any similar
organization or (vii) any other Person to which such delivery or disclosure may
be necessary or appropriate (a) in compliance with any law, rule, regulation or
order applicable to such holder, (b) in response to any subpoena or other legal

<PAGE>

                                      -67-

process or informal investigative demand or (c) in connection with any
litigation to which such holder is a party; provided that, in respect of (i)
through (vii), there shall be no violation of applicable securities laws and, in
respect of (i), (iii), (iv) and (vii)(c), the Person to whom such information is
disclosed shall be apprised of the confidential nature of such information and
shall agree with the Company to keep such information confidential.

          11I. Notices. All notices or other communications provided for
hereunder shall be in writing and sent by first class mail or overnight delivery
service (with charges prepaid) and (i) if to a Purchaser, addressed to such
Purchaser at the address specified for such communications on the signature
pages hereof, or at such other address as such Purchaser shall have specified to
the Company in writing, (ii) if to any other holder of any Note or Warrant,
addressed to such other holder at such address as such other holder shall have
specified to the Company in writing or, if any such other holder shall not have
so specified an address to the Company, then addressed to such other holder in
care of the last holder of such Note which shall have so specified an address to
the Company and (iii) if to the Company, addressed to it at 12220 El Camino
Real, Suite 400, San Diego, CA 92130, Attention: Chief Financial Officer, or at
such other address as the Company shall have specified to the holder of each
Note and Warrant.

          11J. Payments Due on Non-Business Days. Anything in this Agreement or
the Notes to the contrary notwithstanding, any payment of principal of or
interest on any Note that is due on a date other than a Business Day shall be
made on the next succeeding Business Day. If the date for any payment is
extended to the next succeeding Business Day by reason of the preceding
sentence, the period of such extension shall be included in the computation of
the interest payable on such Business Day.

          11K. Satisfaction Requirement. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to the Required Holders, the determination of such
satisfaction shall be made by the Required Holders in the sole and exclusive
judgment (exercised in good faith) of the Person or Persons making such
determination.

          11L. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. This
Agreement may be changed only by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification or discharge is
sought.

          11M. Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and

<PAGE>

                                      -68-

and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.

     11N. Descriptive Headings. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.

     11O. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument.

<PAGE>

          If you are in agreement with the foregoing, please sign the form of
acceptance below or on the enclosed counterpart of this letter and return the
same to the Company, whereupon this letter shall become a binding agreement
between the Company and you.

                                     Very truly yours,

                                     WOMEN FIRST HEALTHCARE, INC.

                                     By:        /s/ Charles M. Caporale
                                         ---------------------------------------
                                         Name:  Charles M. Caporale
                                         Title: Chief Financial Officer

<PAGE>

                      SIGNATURE PAGE TO PURCHASE AGREEMENT

Accepted and Agreed as of the
date first above written:

CIBC WMC INC.

By: /s/ T. Worsley
    ----------------------------
    Name:  Todd Worsley
    Title: Managing Director

<PAGE>

                                      -2-

Accepted and Agreed as of the
date first above written:

WHITNEY PRIVATE DEBT FUND

By:  Whitney Private Debt GP, LLC
     its General Partner

By:     /s/ Kevin J. Curley
    ----------------------------------------
    Name:  Kevin J. Curley
    Title: Attorney-in-Fact

J.H. WHITNEY MEZZANINE FUND, L.P.
By:  Whitney GP, L.L.C.
     its General Partner

By:     /s/ Kevin J. Curley
    -----------------------------------------------
    Name:  Kevin J. Curley
    Title: Attorney-in-Fact

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