Document:

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                                                                   Exhibit 10.12

          Confidential Materials omitted and filed separately with the
         Securities and Exchange Commission. Asterisks denote omissions.

                               LICENSING AGREEMENT

     This Licensing Agreement (hereinafter, "Agreement"), dated as of October
12, 2007 ("Effective Date"), between XenoPort, Inc., a Delaware corporation
having a place of business at 3410 Central Expressway, Santa Clara, CA 95051
("XenoPort"), and Xanodyne Pharmaceuticals, Inc., a Delaware corporation having
a place of business at One Riverfront Place, Suite 900, Newport, KY 41071
("Xanodyne").

                                   BACKGROUND

     A. XenoPort has developed a Transported Prodrug(TM) of tranexamic acid (as
further defined below, the "Compound"), for the treatment of excessive bleeding,
including menorrhagia and potentially other indications. XenoPort owns or
controls certain patents, know-how and other intellectual property relating to
the Compound and the Intermediate (as defined below) used to manufacture the
Compound.

     B. Xanodyne is currently developing a formulation of tranexamic acid (as
further defined below, the "Xanodyne Product"), for the treatment of
menorrhagia. Xanodyne owns or controls certain patents, know-how and other
intellectual property relating to such Xanodyne Product.

     C. Xanodyne desires to further develop and commercialize the Compound and
products containing the Compound (as further defined below, "XenoPort Products")
in the Territory (as defined below), and XenoPort desires to have the Compound
and XenoPort Products developed and commercialized in the Territory by Xanodyne,
in accordance with this Agreement.

     D. Xanodyne desires to obtain from XenoPort certain distribution and
license rights for the Compound and XenoPort Products in the Territory, and
XenoPort is willing to grant to Xanodyne such rights on the terms and conditions
set forth in this Agreement.

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

                                   ARTICLE 1
                                   DEFINITIONS

     1.1 "Adverse Drug Experience" or "ADE" shall mean any adverse experience as
defined in 21 C.F.R. Section 312.32(a) for investigational drugs or 21 C.F.R.
Section 314.80(a) for approved drugs, as applicable.

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     1.2 "Affiliate" of a Party shall mean any person, corporation or other
entity that, directly or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with such Party, as the
case may be, for so long as such control exists. As used in this Section 1.2,
"control" shall mean: (a) to possess, directly or indirectly, the power to
direct the management and policies of such person, corporation or other entity,
whether through ownership of voting securities or by contract relating to voting
rights or corporate governance; or (b) direct or indirect beneficial ownership
of at least fifty percent (50%) (or such lesser percentage that is the maximum
allowed to be owned by a foreign corporation in a particular jurisdiction) of
the voting share capital in such person, corporation or other entity.

     1.3 "Annual Net Sales" shall mean the total Net Sales of the applicable
Product(s) sold in the Territory by or under the authority of Xanodyne or its
Affiliate in a particular calendar year. For such purposes, units of Product
shall be considered sold when such Product is shipped to the customer, or the
revenue from such sale is recognized by the Selling Party (as defined in Section
1.20 below) for financial purposes, whichever occurs first.

     1.4 "Commercially Reasonable Efforts" shall mean the level of efforts and
resources required to carry out a particular task or obligation, consistent with
the efforts generally used by pharmaceutical companies with respect to their own
high priority pharmaceutical products of similar commercial potential and at a
similar stage in development or product life for which Marketing Approval is
being sought, or for which Marketing Approval has been obtained, as the case may
be. Without limiting the foregoing, "Commercially Reasonable Efforts" with
respect to the Menorrhagia Indication shall mean such level of efforts and
resources required to carry out a particular task or obligation, and consistent
with the preceding sentence, as if the XenoPort Products were the only high
priority pharmaceutical products at the same stage of development or product
life, as the case may be, being developed and commercialized by or under the
authority of Xanodyne for the Menorrhagia Indication.

     1.5 "Compound" shall mean that certain compound referred to internally at
XenoPort as XP21510 ("XP21510") and/or any other compound within the genus of
[**], the structures of which are set forth in Exhibit 1.5.

     1.6 "Control" (including any variations such as "Controlled" or
"Controlling"), in the context of intellectual property rights, shall mean that
a Party owns or possesses rights to intellectual property sufficient to grant
the applicable license under this Agreement, without violating the terms of any
agreement with any Third Party.

     1.7 "Cost of Goods" shall mean the fully burdened costs incurred and
substantiated by XenoPort to manufacture or have manufactured the Compound
calculated in accordance with GAAP and XenoPort's then prevailing standard
procedures for calculating cost of goods. Cost of Goods shall not include any
margins or other markup. As used in this Section 1.7, "manufacture" includes all
of the activities required to manufacture or have manufactured the Compound
pursuant to good manufacturing practices and to deliver the same to the [**]
specified in Section 9.2.5 below, and shall include the net cost or credit of
any value-added taxes or duties actually paid or utilized on account of the
Compound and the costs of quantities of Compound destroyed in quality control
testing (as such costs are calculated above).

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     1.8 "Data" shall mean both the XenoPort Data and Xanodyne Data defined as
follows:

          1.8.1 "XenoPort Data" shall mean: (a) all research data (including,
but not limited to, the synthetic process, physical properties and like
information), pharmacology data, preclinical data and/or clinical data for the
Compound, and/or XenoPort Products; and/or (b) all regulatory documentation,
information and submissions pertaining to, or made in association with, an IND,
Marketing Approval Application, Marketing Approval or the like for the Compound
or any XenoPort Product; in each case, that are Controlled by XenoPort or its
Affiliates as of the Effective Date and/or during the term of this Agreement.

          1.8.2 "Xanodyne Data" shall mean: (a) all research data, pharmacology
data, preclinical data and/or clinical data for the Compound and/or XenoPort
Products; and/or (b) all regulatory documentation, information and submissions
pertaining to, or made in association with, an IND, Marketing Approval
Application, Marketing Approval or the like for the Compound or any XenoPort
Product; in each case, that are Controlled by Xanodyne as of the Effective Date
and/or during the term of this Agreement. As used herein, "Xanodyne Data" shall
also include (i) all research data, pharmacology data, preclinical data and/or
clinical data for a Xanodyne Product generated by, or on behalf of, Xanodyne or
its Affiliates; and (ii) all regulatory documentation, information and
submissions pertaining to, or made in association with, an IND, MAA, Marketing
Approval or the like for a Xanodyne Product; in each case that are Controlled by
Xanodyne or its Affiliates as of the Effective Date and/or during the term of
this Agreement and which are relied upon by Xanodyne in association with any
IND, MAA or other approval for the Compound or a XenoPort Product in the
Territory. Notwithstanding the foregoing, Xanodyne Data shall exclude the Tools.

     1.9 "Excessive Bleeding Indications" shall mean any indication related to
the prevention or treatment of excessive bleeding, including, but not limited
to, [**], but specifically excluding [**].

     1.10 "FDA" shall mean the United States Food and Drug Administration, or
any successor entity thereto performing similar functions.

     1.11 "Filing" of an NDA shall be deemed to occur upon the earlier of: (a)
receipt of written notice of acceptance from the FDA of such NDA for substantive
review; or (b) once sixty (60) days has passed from the date of written notice
of receipt of the NDA by the FDA, provided that no notice of "refusal to file"
is received within such sixty (60) day period.

     1.12 "GAAP" shall mean United States generally accepted accounting
principles as in effect from time to time, consistently applied by a Party
across its entire business.

     1.13 "IND" shall mean any Investigational New Drug Application (including
any amendments thereto) filed with the FDA pursuant to 21 C.F.R. Section 312
before the commencement of clinical trials involving a Product, or any
comparable filing with any Regulatory Authority in any other jurisdiction.

                                       3

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     1.14 "Indications" shall mean the Menorrhagia Indication, Excessive
Bleeding Indications, and any and all Other Indications.

     1.15 "Intermediate" shall mean that certain compound employed by XenoPort
as of the Effective Date in the manufacture of XP21510 and/or any other compound
within the genus of compounds, the structures of which are set forth on Exhibit
1.15.

     1.16 "Marketing Approval" shall mean all final approvals, licenses,
registrations or authorizations of a Regulatory Authority in a country,
necessary for the manufacture, use, storage, import, marketing and sale of a
Product in such country. For countries where governmental approval of pricing
and/or reimbursement is required for marketing in such country, Marketing
Approval shall not be deemed to occur until such pricing or reimbursement
approval is obtained. For clarity, an "Approvable" designation granted by FDA
does not constitute Marketing Approval for a Product in the Territory.

     1.17 "Marketing Approval Application" (or "MAA") shall mean an NDA in the
United States, or a comparable application that has been submitted to a
Regulatory Authority in another jurisdiction.

     1.18 "Menorrhagia Indication" shall mean an indication involving the
management, prevention or treatment of menorrhagia, hyper-menorrhea or
excessive, abnormally heavy or prolonged menstrual bleeding, or any similar such
indication as may be approved by a Regulatory Authority in the Territory.

     1.19 "New Drug Application" (or "NDA") shall mean a New Drug Application
(or its equivalent) submitted to the FDA.

     1.20 "Net Sales" shall mean the gross invoice price for the applicable
Product sold by or under the authority of Xanodyne or its Affiliates (each, a
"Selling Party"), less reasonable and customary deductions allowed to a Third
Party customer by the Selling Party, to the extent actually taken by such Third
Party customer, on such sales for:

               (a) trade, quantity and cash discounts and allowances;

               (b) credits, rebates (including those rebates under the Medical
Prescription Drug Rebate and Improved Access to Medicines requirements of the
Omnibus Budget Reconciliation Act of 1990 and comparable federal and state
requirements, as of the Effective Date or hereafter in effect) and charge backs
or equivalents thereof (including those to managed care entities and national,
state, and local government agencies) and allowances to the customer on account
of rejection or returns of such Product (including wholesaler and retailer
returns), or on account of retroactive price reductions affecting such Product
or errors related to incorrect billing;

               (c) freight, postage and duties, and any other transportation
expenses related to the Product, including handling and insurance thereon,
separately identified on the invoice or other documentation maintained in the
ordinary course of business;

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               (d) sales and excise taxes, other consumption taxes, customs
duties and compulsory payments to governmental authorities and any other
governmental charges imposed upon the importation, use or sale of such Product
to the customer and separately identified on the invoice or other documentation
maintained in the ordinary course of business; and

               (e) commissions paid to Third Party wholesalers, or other similar
Third Party distributors, in each case, who do not engage in the marketing or
promotion of such Product.

     Sales between Xanodyne and its Affiliates for resale shall be excluded from
the computation of Net Sales, but the subsequent resale of Products shall be
included within the computation of Net Sales. If a Product is sold or
transferred for consideration other than cash, or in a transaction not at arm's
length, the Net Sales from such sale or transfer shall be deemed the then fair
market value of such Product.

     In the event that [**], the Net Sales [**] shall be [**] during the
applicable reporting period by [**]. If sales [**] during the applicable
reporting period, the [**] in which sales [**] shall be used. In the event that
[**], then Net Sales for purposes of determining royalty payments shall be [**]
shall not be unreasonably withheld or delayed.

     1.21 "Other Indication" shall mean any indication other than the
Menorrhagia Indication and Excessive Bleeding Indications.

     1.22 "Party" shall mean XenoPort or Xanodyne, individually, and "Parties"
shall mean XenoPort and Xanodyne, collectively.

     1.23 "Patent(s)" shall mean any patents and patent applications, together
with all additions, divisions, continuations, continuations-in-part,
substitutions, reissues, re-examinations, extensions, registrations, patent term
extensions, supplemental protection certificates and renewals of any of the
foregoing.

     1.24 "Phase 2" shall mean a human clinical trial conducted on patients with
the disease being studied for the principal purpose of achieving a preliminary
determination of efficacy and establishing appropriate dosage ranges for use in
Phase 3 trials of a Product, as further described in 21 C.F.R. Section
312.21(b).

     1.25 "Phase 3" shall mean a human clinical trial, the principal purpose of
which is to establish safety and efficacy in patients with the disease or
condition being studied, as further described in 21 C.F.R. Section 312.21(c),
which is designed and intended to be of a size and statistical power sufficient
to serve as a pivotal study to support the filing of an NDA for the indication
being studied.

     1.26 "Product" shall mean, individually, either the Xanodyne Product or any
XenoPort Product, and, collectively, the Xanodyne Product and the XenoPort
Products.

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     1.27 "Product Trademark(s)" shall mean the product specific trademark(s),
symbol(s), logo(s) and/or trade dress identified for use with the XenoPort
Product(s) in accordance with Section 11.1.

     1.28 "Regulatory Authority" shall mean the FDA, or a regulatory body with
similar regulatory authority in any other jurisdiction outside the Territory.

     1.29 "Territory" shall mean the United States of America, its territories
and possessions and the District of Columbia.

     1.30 "Third Party" shall mean any person, corporation, joint venture or
other entity, other than Xanodyne, XenoPort and their respective Affiliates.

     1.31 "Tools" shall mean: (a) physician and/or patient tools, [**] used to
identify patients with menorrhagia and assess patient's response to therapy for
menorrhagia owned or controlled by Xanodyne; and/or (b) sales and marketing
information, materials and like items for use in the promotion of a Product
owned or controlled by Xanodyne.

     1.32 "Valid Claim" means a claim of an issued Patent owned or Controlled by
a Party, including the XenoPort Patents and the Xanodyne Patents, that: (a) has
not been revoked or held unenforceable or invalid by a decision of a court or
governmental agency of competent jurisdiction from which no appeal can be, or
has been, taken; and (b) has not been admitted to be invalid or unenforceable
through reissue, re-examination, disclaimer or otherwise.

     1.33 "Xanodyne Know-How" shall mean any and all scientific, medical,
technical, regulatory and other information (excluding any Tools) relating to
the Compound, any Xanodyne Product and/or any XenoPort Products and Xanodyne
Data, that are Controlled by Xanodyne as of the Effective Date and/or during the
term of this Agreement, that are needed by, or reasonably useful to, XenoPort in
order to develop and/or commercialize the Compound and/or XenoPort Products for
marketing, promotion and/or sale outside the Territory and that are relied upon
or utilized by Xanodyne or its Affiliates in order to develop and/or
commercialize the Compound or any XenoPort Product.

     1.34 "Xanodyne Patents" shall mean the Patents owned or Controlled by
Xanodyne or its Affiliates that are listed on Exhibit 1.34, together with all
additions, divisions, continuations, substitutions, re-issues, re-examinations,
extensions, registrations, patent term extensions, supplemental protection
certificates and renewals of any such Patents.

     1.35 "Xanodyne Product" shall mean the formulation of tranexamic acid
developed by, or under the authority of, Xanodyne, as further described on
Exhibit 1.35, and/or any modified form of such formulation developed by, or
under the authority of, Xanodyne during the term of this Agreement, including
any such formulation where the manufacture, use, sale or import is covered by
any Xanodyne Patents.

     1.36 "XenoPort Know-How" shall mean: (a) all scientific, medical,
technical, regulatory and/or other information relating to: (i) the
Intermediate, but only to the extent necessary or

                                       6

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reasonably useful to make the Compound; and (ii) the Compound and/or XenoPort
Products; in each case, that were generated or utilized by XenoPort or its
Affiliates in developing or producing the Intermediate and/or the Compound; (b)
XenoPort Data; and (c) Compound Improvements; and with respect to each of
paragraphs (a), (b) and (c), that are Controlled by XenoPort as of the Effective
Date and/or during the term of this Agreement, and that are needed by or
otherwise reasonably useful to Xanodyne in order to exercise its rights and
perform its obligations with respect to the Compound and/or XenoPort Products
under this Agreement.

     1.37 "XenoPort Patents" shall mean the XenoPort Compound Patents and the
XenoPort Intermediate Patents.

          1.37.1 "XenoPort Compound Patent(s)" shall mean the Patents owned or
Controlled by XenoPort or its Affiliates as listed on Exhibit 1.37.1, together
with all additions, divisions, continuations, substitutions, re-issues,
re-examinations, extensions, registrations, patent term extensions, supplemental
protection certificates and renewals of any such Patents.

          1.37.2 "XenoPort Intermediate Patent(s)" shall mean the Patents owned
or Controlled by XenoPort or its Affiliates as listed on Exhibit 1.37.2,
together with all additions, divisions, continuations, substitutions, re-issues,
re-examinations, extensions, registrations, patent term extensions, supplemental
protection certificates and renewals of any such Patents.

     1.38 "XenoPort Product" shall mean any pharmaceutical product containing
the Compound, alone or in combination with one or more other active
pharmaceutical ingredients, in any dosage form or formulation.

     1.39 "XenoPort Product Approval Date" shall mean the date on which
Marketing Approval for the First XenoPort Product in the Territory is obtained.

     1.40 Additional Definitions. Each of the following terms shall have the
meaning described in the corresponding section of this Agreement below.

<TABLE>
<CAPTION>
TERM                             SECTION DEFINED               TERM               SECTION DEFINED
----                             ---------------   ----------------------------   ---------------
<S>                              <C>               <C>                            <C>
Agreement                        Introduction      [**]                           9.2.4
Commercial Milestones            6.2.2(b)          Joint Commercialization
                                                   Committee / JCC                3.2.1
Commercialization Plan           5.1.2             Joint Development Committee
                                                   / JDC                          3.1.1
Committee                        3.3.1             Joint Patent                   10.1.1
Compound Improvements            10.1.2(b)         Liabilities                    16.1
Compound Improvement Patents     10.2.1            Loss of Exclusivity            6.2.2(a)(ii)
Confidential Information         12.1              Negotiation Period             5.4.2
Cooperating Party                12.5              Option Notice                  5.4.1
Co-Promotion Agreement           5.4.2             Pharmaco-Vigilance Agreement   4.7.1
Co-Promotion Field               5.4               Product Infringement Actions   10.4.1
Co-Promotion Partner             5.4.1(b)(ii)      Product Materials              14.2.6
</TABLE>

                                       7

<PAGE>

<TABLE>
<CAPTION>
TERM                             SECTION DEFINED               TERM               SECTION DEFINED
----                             ---------------   ----------------------------   ---------------
<S>                              <C>               <C>                            <C>
Damages                          10.4.4(c)         Prosecution and Maintenance    10.2.1
Development Plan                 4.1.1             Requesting Party               12.5
Dispute                          17.1              Royalty Transition Date        6.3.1(a)(ii)
Effective Date                   Introduction      Selling Party                  1.20
Election Notice                  5.4.2             [**]                           3.5
[**]                             3.5               [**]                           10.4.4(a)
First Xanodyne Product           6.2.2(a)(i)       Supply Transition Date         9.1
First XenoPort Product           6.2.2(a)(i)       Supply Transition Plan         9.1
Generic Product                  6.4.2(c)          Third Party Claim              16.1
ICH                              4.7.1             Third Party Royalties          6.4.1
[**]                             6.4.2(a)          Wind-down Period               14.2.1(b)
Improvements                     10.1.2(d)         Withdrawal Notice              3.3.2
Improvement Patents              10.1.2(d)         Xanodyne                       Introduction
Increased Royalty Commencement   6.3.1(a)(ii)      Xanodyne Indemnitees           16.2
Date
Indemnitee                       16.3              Xanodyne Product Approval      6.3.1(a)(i)
                                                   Date
Indemnitor                       16.3              Xanodyne Product               4.1.1
                                                   Development Plan
Infringement                     10.3.1            XenoPort                       Introduction
Infringement Actions             10.4.1            XenoPort Indemnitees           16.1
Intermediate Infringement        10.4.1            XenoPort Product               4.1.1
Actions                                            Development Plan
JAMS                             17.3.1            XenoPort Supply Costs          9.2.2(b)
[**]                             9.2.4             XP21510                        1.5
</TABLE>

                                    ARTICLE 2
                                GRANT OF LICENSE

     2.1 License. Subject to the terms and conditions of this Agreement,
XenoPort hereby grants to Xanodyne during the term of this Agreement:

          2.1.1 an exclusive license under the XenoPort Compound Patents,
XenoPort Know-How and Compound Improvement Patents to develop, use, import,
offer for sale, sell, market, distribute and promote the Compound, alone or as
incorporated into a XenoPort Product, for all Indications in the Territory; and

          2.1.2 a non-exclusive license under the XenoPort Compound Patents, the
XenoPort Know-How and Compound Improvement Patents: (a) to develop or have
developed the Compound, alone or as incorporated into a XenoPort Product,
outside the Territory; and/or (b) to manufacture or have manufactured the
Compound and/or the XenoPort Products within or outside the Territory solely:
(i) for development of the Compound, alone or as incorporated into a XenoPort
Product, in or outside the Territory; and (ii) for use, import, offer for sale,
and sale of the Compound, alone or as incorporated into a XenoPort Product, in
the Territory; provided however that, in each case, the grant of such license to
develop or have developed the Compound, alone or as incorporated into a XenoPort
Product, outside the Territory shall exclude the right to conduct any clinical
trials; and

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          2.1.3 a non-exclusive license under the XenoPort Intermediate Patents:
(a) to make, have made or use the Intermediate; and (b) to practice any method,
process or procedure to make, have made or use the Intermediate, within or
outside the Territory (i.e., worldwide), in each case solely for the purpose of
manufacturing or having manufactured the Compound for use, import, offer for
sale and sale of the Compound, alone or as incorporated into a XenoPort Product,
in the Territory.

          2.1.4 The rights and licenses in Section 2.1.1 shall be exclusive even
as to XenoPort, except with respect to: (a) the development (excluding
performing and having performed clinical trials), manufacture, import, and use
as necessary for such development, manufacture and import, of the Compound
and/or XenoPort Products; (b) all scientific, medical, technical, regulatory
and/or other information relating to the Intermediate comprising XenoPort
Know-How; and (c) XenoPort's rights to co-promote the XenoPort Products in
accordance with any Co-Promotion Agreement executed by the Parties pursuant to
Section 5.4. The rights and licenses in Sections 2.1.2 and 2.1.3 shall be
non-exclusive and Xanodyne's exercise of such right and license shall be subject
to the Parties' agreement with respect to supply by XenoPort to Xanodyne of the
Compound prior to the Supply Transition Date pursuant to Article 9 below.

     2.2 Affiliates; Sublicenses. Xanodyne shall have the right to exercise the
license granted under Section 2.1 through its Affiliates solely for so long as
such entity remains an Affiliate of Xanodyne, and Xanodyne shall remain
responsible for the compliance of such Affiliate with the applicable terms of
this Agreement. Xanodyne shall not otherwise have the right to grant sublicenses
under its rights under Section 2.1 without the prior written consent of
XenoPort, [**] provided that, notwithstanding the foregoing, [**] in accordance
with [**] provided further that, it is understood [**], to the extent
applicable. For the purposes of this Agreement, a "sublicense" shall mean an
agreement or arrangement between Xanodyne and an Affiliate or a Third Party to
whom Xanodyne grants a right to market, distribute and/or promote the Compound
or any XenoPort Product in the Territory.

     2.3 Activities Outside the Territory. Xanodyne agrees that neither it, nor
any of its Affiliates, will: (a) file for Marketing Approval with respect to,
market, distribute, promote or sell the Compound or any XenoPort Product
anywhere in the world, except in the Territory, and, within the Territory, only
in accordance with and under this Agreement; and (b) import to, or export from,
the Territory the Compound and/or XenoPort Products except for the purposes of
conducting development activities and/or manufacturing Compound and/or XenoPort
Products, in each case, only in accordance with this Agreement. Xanodyne agrees
that neither it, nor any of its Affiliates, will use or otherwise exploit
XenoPort Patents and/or XenoPort Know-How, except as licensed in this Agreement.

     2.4 No Other Rights. Except for the rights and licenses expressly granted
in this Agreement, XenoPort retains all rights under its intellectual property,
and no additional rights shall be deemed granted to Xanodyne by implication,
estoppel or otherwise. For clarity, the licenses and rights granted in this
Agreement shall not be construed to convey any licenses or rights under the
XenoPort Patents with respect to any active pharmaceutical ingredient other than
Compound(s).

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                                    ARTICLE 3
                                   GOVERNANCE

     3.1 Joint Development Committee.

          3.1.1 Establishment. [**] XenoPort and Xanodyne shall establish a
development committee ("Joint Development Committee" or "JDC") to monitor the
progress of the development activities against the Development Plan for the
Products for all Indications in the Territory and, to the extent Xanodyne is
permitted to conduct development activities outside the Territory in accordance
with Section 2.1, outside the Territory.

          3.1.2 Duties. The JDC shall:

               (a) Review and approve the Development Plan in accordance with
Section 4.1;

               (b) Subject to, and within the parameters of, the Development
Plan;

                    (i) Monitor the progress of the development activities
against the Development Plan (including, review of the conduct of clinical
trials conducted pursuant to the Development Plan); and

                    (ii) Approve certain regulatory matters as provided in
Section 4.4.2 below;

               (c) Facilitate the exchange of Data and other information and/or
materials between the Parties to the extent relating to the XenoPort Products;
and

               (d) Perform such other duties as are specifically assigned to the
JDC in this Agreement or otherwise agreed in writing by the Parties.

     3.2 Joint Commercialization Committee.

          3.2.1 Establishment. [**] XenoPort and Xanodyne shall establish a
joint commercialization committee ("Joint Commercialization Committee" or "JCC")
to monitor the progress of the commercialization, marketing and promotion
activities against the Commercialization Plan.

          3.2.2 Duties. The JCC shall:

               (a) Review the Commercialization Plan developed in accordance
with Section 5.1.2;

               (b) Subject to, and within the parameters of, the
Commercialization Plan, monitor the commercialization, marketing and promotion
activities against the Commercialization Plan; and

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               (c) Perform such other duties as are specifically assigned to the
JCC in this Agreement or otherwise agreed in writing by the Parties.

     3.3 Committee Membership.

          3.3.1 Committee Membership. The JDC and JCC (each, a "Committee")
shall each be composed of an equal number of representatives from each of
Xanodyne and XenoPort, selected by such Party. Unless the Parties otherwise
agree, the exact number of representatives for each of Xanodyne and XenoPort
shall be three (3) representatives, and at least one (1) from each Party shall
be [**]. Either Party may replace its respective Committee representatives at
any time with prior written notice to the other Party; provided that the
criteria for composition of each Committee set forth in the preceding sentence
continues to be satisfied following any such replacement of a Party's
representative on any such Committee. Each Committee will be chaired by a
Xanodyne representative [**] and Xanodyne may, from time to time and in its sole
discretion, change the representative who serves as the chairperson of any
Committee with prior written notice to XenoPort.

          3.3.2 Withdrawal from Committees. Notwithstanding Sections 3.1, 3.2
and 3.3.1 above, it is understood that XenoPort's participation in any Committee
is not an obligation of, or a deliverable to be provided by, XenoPort under this
Agreement and that such participation is a right of XenoPort that XenoPort may
exercise or waive, in its discretion. At any time during the term of the
Agreement and for any reason, XenoPort shall have the right to withdraw from
participation in one (1) or more Committees upon written notice to Xanodyne,
which notice shall be effective immediately upon receipt ("Withdrawal Notice").
Following the issuance of a Withdrawal Notice and subject to this Section 3.3.2,
XenoPort's representatives to the applicable Committee(s) shall not participate
in any meetings of such Committee(s), nor shall XenoPort have any right to vote
on decisions within the authority of such Committee(s). If, at any time,
following the issuance of a Withdrawal Notice, XenoPort wishes to resume
participation in such Committee(s), XenoPort shall notify Xanodyne in writing
and, thereafter, XenoPort's representatives to such Committee(s) shall be
entitled to attend any subsequent meeting of such Committee(s) and to
participate in the activities of, and decision-making by, such Committee(s) as
provided in this Article 3 as if a Withdrawal Notice had not been issued by
XenoPort pursuant to this Section 3.3.2. Following XenoPort's issuance of a
Withdrawal Notice pursuant to this Section 3.3.2, unless and until XenoPort
resumes participation in the applicable Committee(s) in accordance with this
Section 3.3.2: (a) all meetings of such Committee(s) shall be held at Xanodyne's
facilities; (b) Xanodyne shall have the right to make the final decision on all
matters within the scope of authority of such Committee(s); and (c) XenoPort
shall have the right to continue to receive the minutes of such Committee
meetings, but shall not have the right to approve the minutes for any such
Committee meeting held after XenoPort's issuance of a Withdrawal Notice. For
clarity, XenoPort's election to withdraw from participation in any or all
Committees shall not constitute a breach of this Agreement by XenoPort.

     3.4 Committee Meetings. The JDC and, from and after such time as is
appropriate, the JCC, shall meet at least twice each calendar year, or more or
less often as otherwise agreed to by the Parties. All Committee meetings may be
conducted by telephone, video-conference or in person (subject to the
requirement below) as reasonably determined by the chairperson of the applicable

                                       11

<PAGE>

Committee; provided, however, that each Committee shall meet in person at least
once each calendar year, unless the Parties mutually agree to meet by
alternative means. Unless otherwise agreed by the Parties, all in-person
Committee meetings shall be held on an alternating basis between XenoPort's
facilities and Xanodyne's facilities. Each Party shall bear its own personnel
and travel costs and expenses relating to Committee meetings. With the consent
of the Parties (not to be unreasonably withheld or delayed), other employee
representatives of the Parties may attend any Committee meeting as non-voting
observers. Minutes of each Committee meeting will be prepared by the chairperson
and distributed to the members of the applicable Committee for review and
comment within twenty (20) days after each meeting of the applicable Committee,
and will be approved as the first order of business at the immediately
succeeding meeting of such Committee.

     3.5 Decision-Making. Decisions of each Committee shall be made by [**].
Subject to Section 3.3.2, in the event the JDC or the JCC fails to reach [**]
with respect to a particular matter within its authority, then the [**] shall
have the right to [**] on any such matter before the JDC or JCC, except that the
[**] with respect to the following matters: [**]. If the JDC fails to reach [**]
with respect to any of the matters described [**] above, [**] have such matter
[**]. [**] shall meet [**] to resolve such matter. If, [**] to resolve such
matter [**], the Parties shall resolve the matter in accordance with the
provisions of Section 17.3.

     3.6 Scope of Governance. Notwithstanding the creation of the JDC and JCC,
each Party shall retain the rights, powers and discretion granted to it
hereunder, and no Committee shall be delegated or vested with rights, powers or
discretion unless such delegation or vesting is expressly provided herein, or
the Parties expressly so agree in writing. No Committee shall have the power to
amend or modify this Agreement, and no decision of any Committee shall be in
contravention of any terms and conditions of this Agreement. It is understood
and agreed that issues to be formally decided by the JDC and, if applicable, the
JCC are only those specific issues that are expressly provided in this Agreement
to be decided by the JDC and JCC, as applicable.

                                       12

<PAGE>

                                    ARTICLE 4
                                   DEVELOPMENT

     4.1 Development Plan.

          4.1.1 Initial Development Plans. An initial development plan for the
Compound and XenoPort Products is attached to this Agreement as Exhibit 4.1
("XenoPort Product Development Plan") and sets forth the development activities
to be conducted in the Territory and, to the extent permitted in accordance with
Section 2.1, the development activities to be conducted outside the Territory
for the Compound and XenoPort Products. Within [**] following the Effective
Date, Xanodyne shall provide to XenoPort an initial development plan for the
Xanodyne Product, which shall set forth the development activities to be
conducted for the Xanodyne Product ("Xanodyne Product Development Plan"). Upon
receipt by XenoPort, the Xanodyne Product Development Plan shall be deemed to be
incorporated into this Agreement and, upon request by either party, Exhibit 4.1
shall be updated to include the initial Xanodyne Product Development Plan. For
the purposes of this Agreement, the XenoPort Product Development Plan and the
Xanodyne Product Development Plan shall be referred to collectively as the
"Development Plan".

          4.1.2 JDC Approval of Development Plan. Within [**] following the
Effective Date, Xanodyne will prepare and provide to the JDC an expanded
Development Plan, which shall be consistent with the initial XenoPort Product
Development Plan and Xanodyne Product Development Plan and shall include details
relating to those items described in sub-paragraphs (i) to (viii) of the last
sentence of this Section 4.1.2 to the extent such information is applicable and
available to Xanodyne as of such date. Within [**] following the Effective Date,
the JDC shall review the details of such expanded Development Plan and approve
the details of such Development Plan to the extent applicable to the Compound
and/or XenoPort Products only. For the purpose of clarity, Xanodyne agrees that
the scope of the Development Plan shall include, or shall be updated promptly to
include, the following details, as and when such information becomes applicable
and available to Xanodyne during the development of the Compound and Products:
[**].

          4.1.3 Changes to the Development Plan. The JDC shall review the
Development Plan on an ongoing basis, and in no event less frequently than [**]
each calendar year. The JDC may propose revisions to the then-current
Development Plan to the extent related to the development activities for
XenoPort Products; provided, however, the aspects of the Development Plan
relating to [**]. Any changes to the Development Plan related to the development
activities for the [**]; provided, however, that, [**] on such proposed changes,
[**]. For the sake of clarity, [**].

                                       13

<PAGE>

     4.2 Development Activities in the Territory.

          4.2.1 Responsibility. Xanodyne shall, at its expense, be responsible
for all preclinical, clinical and other development activities required to
obtain Marketing Approval for the Products in the Territory. Xanodyne shall
carry out all activities in accordance with the provisions of this Agreement,
and Xanodyne shall use Commercially Reasonable Efforts (i) to carry out all such
activities in accordance with the then-current Development Plan and (ii) to
achieve the goals of the then-current Development Plan with respect to the
Compound and the XenoPort Products in accordance with the timelines specified
therein. Xanodyne shall keep XenoPort reasonably informed as to the progress of
its development and regulatory activities relating to the Compound and each
XenoPort Product in the Territory, by way of updates to the JDC at its meetings,
and as otherwise reasonably requested by XenoPort.

          4.2.2 Conduct of Activities. Xanodyne shall conduct the activities
under the Development Plan in compliance in all material respects with all
applicable laws, rules and regulations and in accordance with good scientific
and clinical practices, applicable under the laws and regulations within the
portion of the Territory in which such activities are conducted.

     4.3 Development Activities Outside the Territory. Except for those
development activities conducted by Xanodyne or its Affiliates outside the
Territory in accordance with this Agreement, XenoPort, or its Affiliates and/or
other licensee(s), shall be responsible for all development and regulatory
activities for the Compound and XenoPort Products outside the Territory.
XenoPort agrees to keep Xanodyne reasonably informed as to the progress of its
and/or (to the extent it is able to do so) its other licensees' clinical
development and regulatory activities relating to the Compound and XenoPort
Products outside the Territory by way of updates to the JDC at its meetings and
as otherwise reasonably requested by Xanodyne. Except to the extent development
activities are permitted to be conducted by Xanodyne or its Affiliates outside
the Territory in accordance with this Agreement, it is understood and agreed
that all development efforts for the Compound and XenoPort Products outside the
Territory shall be at the sole cost and expense of XenoPort, its Affiliates or
its other licensee(s).

     4.4 Regulatory Matters.

          4.4.1 Responsibility for Regulatory Filings. Xanodyne shall be
responsible, at its expense, for filing, obtaining and maintaining approvals for
the development and commercialization of the Products for all Indications in the
Territory, including any such IND, NDA or Marketing Approval by the FDA, as well
as pricing or reimbursement approvals in the Territory. All such activity shall
be reviewed by the JDC, [**]. All such filings will be in the name of Xanodyne.

          4.4.2 Role of the JDC. The JDC shall review the overall strategy and
positioning of all material submissions and filings for the Compound and
XenoPort Products with the FDA prior to their submission or filing. In
connection with such review, Xanodyne shall promptly provide to the JDC all such
submissions or filings, and such other information regarding a proposed filing
as XenoPort may reasonably request.

                                       14

<PAGE>

          4.4.3 Regulatory Cooperation. The Parties shall cooperate with respect
to regulatory matters as set forth in this Section 4.4.3. Xanodyne shall be
responsible for liaising with and managing all interactions with Regulatory
Authorities in the Territory with respect to the Compound and Products. Xanodyne
shall provide XenoPort with: (a) reasonable advanced notice of substantive
meetings with the FDA that are either scheduled with, or initiated by or under
the authority of, Xanodyne with respect to the Compound or any XenoPort Product;
and (b) an opportunity to have up to [**] XenoPort representatives participate
in all substantive meetings with the FDA with respect to the Compound or any
XenoPort Product; it being understood that XenoPort's participation in any FDA
meeting is subject to the acceptance by the FDA. In any case, Xanodyne shall
keep XenoPort informed as to all material interactions with the FDA with respect
to the Compound and Products. Xanodyne will promptly provide XenoPort, upon
reasonable request, copies of any documents, reports and communications from or
to the FDA relating to the Compound or any Product or any activities under this
Agreement.

     4.5 Exchange of Data and Know-How.

          4.5.1 By XenoPort. [**] the Effective Date, XenoPort will make
available or provide, as applicable, to Xanodyne, all XenoPort Know-How relating
to the Compound in the Territory that is necessary or reasonably useful for
Xanodyne to develop and/or commercialize the Compound and XenoPort Products in
the Territory, including all Data from any preclinical studies of the Compound,
any pre-formulation Data, any formulation Data, and any synthetic process
development Data that have been generated or obtained by XenoPort as of the
Effective Date.

          4.5.2 By Either Party. During the term of this Agreement, each Party
shall make available or provide, as applicable, to the other Party all such
Party's Know-How (i.e., in case of XenoPort, all XenoPort Know-How, and in the
case of Xanodyne, all Xanodyne Know-How) that: (a) such Party considers to be
necessary or reasonably useful for the other Party to develop and/or
commercialize the Compound and XenoPort Products in accordance with this
Agreement (in the case of Xanodyne) or for marketing, promotion and/or sale
outside of the Territory (in the case of XenoPort); or (b) is reasonably
requested by the other Party; in each case, as promptly as possible. The Party
providing such Know-How shall provide the same in electronic form to the extent
the same exists in electronic form, and shall provide copies as reasonably
requested and an opportunity for the other Party or its designee to inspect (and
copy) all other materials comprising such Know-How (including for example,
original patient report forms and other original source data). The Parties will
cooperate and reasonably agree upon formats and procedures to facilitate the
orderly and efficient exchange of the XenoPort Know-How and the Xanodyne
Know-How pursuant to this Section 4.5.

          4.5.3 Use of Data and Know-How. Xanodyne may not use any XenoPort Data
or other XenoPort Know-How: (i) outside the Territory except as may be
necessary, as permitted by and in accordance with Sections 2.1 and 9.3, to
manufacture the Intermediate, Compound or any XenoPort Product or develop
(excluding performing or having performed clinical trials) the Compound or any
XenoPort Product; nor (ii) for any products other than the XenoPort Product.

          4.5.4 Other Licensees. XenoPort shall [**] to the extent that [**]. It
is understood that [**] by XenoPort. However, XenoPort agrees that it [**]. For
the purposes of this

                                       15

<PAGE>

Section 4.5.4, "data" shall be deemed to refer to data of the type described in
paragraphs (a) and (b) of the definition of "Xanodyne Data" in Section 1.8.2
above, and "know-how" shall be deemed to refer to information of the type
described in the definition of "Xanodyne Know-How" in Section 1.33 above.

     4.6 Sharing of Regulatory Filings. Without limiting Section 4.5 above, each
Party shall permit the other Party to access, and shall provide the other Party
with sufficient rights to reference and use in association with exercising its
rights and performing its obligations with respect to the Compound and/or
XenoPort Products under this Agreement (including the right of XenoPort to
commercialize, alone or through its Affiliates and/or licensees, the Compound
and XenoPort Products outside the Territory) all of such Party's and its
Affiliates' Data, regulatory filings and regulatory communications associated
with the submissions of INDs, MAAs or other approvals for the Compound and/or
XenoPort Products in the Territory. XenoPort shall permit Xanodyne to access,
and shall provide Xanodyne with sufficient rights to reference and use in
association with Xanodyne's exercise of its rights and performance of its
obligations with respect to the Compound and/or XenoPort Products in the
Territory, Data, regulatory filings and regulatory communications, associated
with the submissions of INDs, MAAs or approvals for the Compound and/or XenoPort
Products outside the Territory to the extent XenoPort has the right to do so.
Each Party shall pay the costs and expenses associated with its exercise of the
rights granted in this Section 4.6.

     4.7 Reporting; Adverse Drug Reactions.

          4.7.1 Pharmaco-Vigilance Agreement. [**] the Parties shall enter into
a pharmaco-vigilance agreement on terms no less stringent than those required by
the applicable guidelines of the International Conference on Harmonisation of
Technical Requirements for Registration of Pharmaceuticals for Human Use (or, to
the extent such organization ceases to exist, any successor or equivalent
organization performing similar functions) ("ICH"), including: (i) providing
detailed procedures regarding the maintenance of core safety information and the
exchange of safety data relating to the Compound and XenoPort Products within
appropriate timeframes and in an appropriate format to enable Xanodyne and
XenoPort (or its designee) to meet both expedited and periodic regulatory
reporting requirements; and (ii) allowing Xanodyne and XenoPort (or its
designee) to comply with the reporting requirements of all applicable Regulatory
Authorities on a worldwide basis for the reporting of safety data in accordance
with standards stipulated in the applicable ICH guidelines, and all applicable
regulatory and legal requirements regarding the management of safety data (the
"Pharmaco-Vigilance Agreement").

          4.7.2 Adverse Event Reporting. As between the Parties: (i) Xanodyne
shall be responsible for the timely reporting of all ADEs, product quality,
product complaints and safety data relating to the Compound and Products to the
appropriate Regulatory Authorities in the Territory; and (ii) XenoPort (or its
designee) shall be responsible for reporting all ADEs, product quality, product
complaints and safety data relating to the Compound and XenoPort Products to the
appropriate Regulatory Authorities outside the Territory; all in accordance with
the appropriate laws and regulations of the relevant countries and Regulatory
Authorities. Until the execution of the Pharmaco-Vigilance Agreement, each Party
shall keep the other Party informed on a regular basis with listings about any
ADEs and/or any pregnancies of which such Party is aware or is informed

                                       16

<PAGE>

regarding the use of the Compound or XenoPort Products. Xanodyne shall ensure
that its Affiliates comply with such reporting obligations in the Territory, and
XenoPort shall ensure that either it or its Affiliates and/or other licensees
comply with such reporting obligations outside the Territory.

                                    ARTICLE 5
                                COMMERCIALIZATION

     5.1 Commercialization of Products in the Territory.

          5.1.1 Xanodyne's Responsibility. Subject to the terms and conditions
set forth in this Agreement, Xanodyne shall be responsible, at its expense, for
commercialization, distribution, marketing and promotion of Products in the
Territory.

          5.1.2 Commercialization Plan. Following the first Filing of an MAA for
the first Xanodyne Product in the Territory, and in any event at least [**]
prior to the anticipated first commercial sale of such Xanodyne Product in the
Territory, and thereafter not less frequently than [**], Xanodyne shall prepare
a plan setting forth the strategic plan for the marketing, promotion,
distribution and commercialization of the Products for the Menorrhagia
Indication and, to the extent Xanodyne has elected to pursue in the Territory,
any Excessive Bleeding Indication and/or any Other Indications in the Territory
("Commercialization Plan"); provided that each Commercialization Plan shall be
in reasonable scope and detail and shall include sales forecasts for each
Product in the Territory. The Commercialization Plan shall be presented by
Xanodyne to the JCC[**]. The JCC shall review the Commercialization Plan
periodically and in no event less frequently than [**]. [**] Xanodyne shall keep
XenoPort reasonably informed as to the progress of its launch and
commercialization activities relating to each Product in the Territory, by way
of updates to the JCC at its meeting and as otherwise reasonably requested by
XenoPort, but no more often than [**] other than at JCC meetings.

          5.1.3 Conduct of Activities. Unless the Parties execute a Co-Promotion
Agreement pursuant to Section 5.4 below, Xanodyne shall carry out, at its
expense, all marketing, promotion and commercialization of the XenoPort Products
in the Territory consistent with the then-current Commercialization Plan and the
provisions of this Agreement.

     5.2 Commercialization Activities Outside the Territory. XenoPort, or its
Affiliates and/or other licensee(s), shall be responsible for launching and
commercializing the XenoPort Products outside the Territory. XenoPort shall keep
Xanodyne reasonably informed as to the progress of its, and/or (to the extent it
is able to do so) its other licensees', launch and commercialization activities
relating to the XenoPort Products outside the Territory, by way of updates to
the JCC at its meeting and as otherwise reasonably requested by Xanodyne, but no
more often than [**] other than at JCC meetings. It is understood and agreed
that any and all commercialization efforts for the Compound and XenoPort
Products outside the Territory shall be at the sole discretion and expense of
XenoPort, its Affiliates or its other licensees.

     5.3 Re-importation. Subject to XenoPort's obligations under Article 9,
XenoPort agrees that it shall not, itself or through its Affiliates or Third
Parties, develop, commercialize, offer for

                                       17

<PAGE>

sale, sell, market, distribute, or promote for use in the Territory a product
that contains the Compound. Subject to XenoPort's obligations under Article 9,
XenoPort and/or its Affiliates shall not sell any XenoPort Products to a
purchaser outside the Territory if it has knowledge that such purchaser or its
transferees are reasonably likely to import such XenoPort Products into the
Territory. Similarly, Xanodyne and/or its Affiliates shall not sell any Compound
or XenoPort Products to a purchaser if it has knowledge that such purchaser or
its transferees are reasonably likely to import such Compound or XenoPort
Products outside the Territory. It is understood, however, that the foregoing
shall not be deemed to prevent or restrict either Party and its Affiliates (and,
if applicable, its licensees) from importing Compound and/or XenoPort Products
for use for development activities (excluding clinical trials) in the other
Party's territory and/or for the purpose of manufacturing or having manufactured
the Compound and/or XenoPort Products in the other Party's territory, in each
case, in accordance with this Agreement.

     5.4 Co-Promotion Option. This Section 5.4 sets out the terms and conditions
of XenoPort's option to co-promote the Products in the Territory: (a) for each
Indication other than the Menorrhagia Indication; and/or (b) to primary care
physicians (each, a "Co-Promotion Field").

          5.4.1 Option Notice.

               (a) Notice of MAA Filing for an Indication other than the
Menorrhagia Indication. Xanodyne shall notify XenoPort within [**], and no less
than [**], prior to the first Filing of an MAA for a XenoPort Product for each
Indication other than the Menorrhagia Indication in the Territory. Together with
such notice, Xanodyne shall provide to XenoPort: (i) a copy of the Data package
with respect to such Indication to be provided by Xanodyne to the FDA in support
of such MAA; and (ii) [**] in the Territory.

               (b) Primary Care Physicians.

                    (i) Without limiting Xanodyne's obligations under Section
5.4.1(a) above, if at any time during the term of this Agreement, Xanodyne
desires to enter into a co-marketing or co-promotion arrangement with respect to
the marketing and promotion of any XenoPort Product to primary care physicians
in the Territory [**], Xanodyne shall so notify XenoPort in writing [**] with
any Third Party with respect thereto. Together with such notice, Xanodyne shall
provide to XenoPort [**] in the Territory.

                    (ii) Notwithstanding Section 5.4.1(b)(i) above, Xanodyne
shall not be obligated to deliver notice to XenoPort under Section 5.4.1(b)(i)
in the circumstances described in this Section 5.4.1(b)(ii). If, prior to [**],
Xanodyne has entered into a co-marketing or co-promotion arrangement with a
Third Party with respect to the co-marketing and co-promotion to primary care
physicians of any Xanodyne Product approved for the Menorrhagia Indication
("Co-Promotion Partner"), Xanodyne may initiate discussions, negotiate and/or
offer to such Co-Promotion Partner the right to co-market and co-promote any
XenoPort Product approved for the Menorrhagia Indication on terms [**]. If such
Co-Promotion Partner agrees in writing with Xanodyne to co-market and co-promote
such XenoPort Product on such terms, Xanodyne shall not be obligated to issue to
XenoPort any notice under Section 5.4.1(b)(i) with respect to such XenoPort
Product and XenoPort shall not have an option to co-market and co-promote such
XenoPort Product to primary

                                       18

<PAGE>

care physicians for so long as the agreement (or any renewal thereof) between
Xanodyne and its Co-Promotion Partner is in effect with respect to such XenoPort
Product.

     Any notice issued by Xanodyne under Sections 5.4.1(a) or 5.4.1(b)(i) shall
be an "Option Notice" for the purposes of this Agreement.

          5.4.2 Election to Negotiate. XenoPort shall have [**] after receiving
an Option Notice pursuant to Sections 5.4.1(a) or 5.4.1(b)(i) above, as
applicable, to notify Xanodyne in writing that XenoPort is interested in
co-promoting the applicable XenoPort Product(s) and Xanodyne Products in the
Territory for the applicable Co-Promotion Field (an "Election Notice"). Together
with any such Election Notice, XenoPort shall provide to Xanodyne a report of
XenoPort's co-promotion capabilities in the Territory with respect to the
applicable Co-Promotion Field in reasonably sufficient detail to demonstrate
that XenoPort has, or will have, reasonably sufficient commercialization
capabilities to co-promote such XenoPort Product(s) and, if applicable, Xanodyne
Products in the Territory in the applicable Co-Promotion Field. Promptly upon
receipt of an Election Notice, and in no event more than [**] following the date
of such Election Notice, [**], Xanodyne shall provide XenoPort with a term sheet
outlining the economic and other relevant terms of such co-promotion, and the
Parties shall negotiate in good faith towards mutually acceptable terms and
conditions on which XenoPort may co-promote such XenoPort Product(s) and, if
applicable, Xanodyne Products in the Territory in the applicable Co-Promotion
Field. During such negotiations, Xanodyne shall promptly provide to XenoPort
such additional information regarding the commercialization of such XenoPort
Product(s) and, if applicable, Xanodyne Products in the Territory in the
applicable Co-Promotion Field as is reasonable and customary in due diligence
reviews for prospective co-marketing and/or co-promotion arrangements. If the
Parties agree on such terms, the Parties shall prepare and execute a definitive
agreement setting forth the agreed terms (a "Co-Promotion Agreement"). If
XenoPort fails to issue an Election Notice within [**] after receiving an Option
Notice for a particular Co-Promotion Field or, if Xanodyne provided to XenoPort
a term sheet within the [**] period specified above and the Parties have not
entered into a Co-Promotion Agreement within [**] after the date of such
Election Notice ("Negotiation Period"), then Xanodyne shall be free to
commercialize such XenoPort Product(s) in the Territory in the applicable
Co-Promotion Field alone, or to initiate negotiations with a Third Party with
respect to rights to co-market and co-promote such XenoPort Product(s) in the
Territory in such Co-Promotion Field.

          5.4.3 Additional Matters.

               (a) It is understood that XenoPort's rights under this Section
5.4 to elect to co-promote the XenoPort Products and, if applicable, Xanodyne
Products in the Territory in each Co-Promotion Field are cumulative and that the
obligations imposed on Xanodyne in this Section 5.4 shall continue to apply for
a particular Co-Promotion Field, even if XenoPort has exercised its option
hereunder with respect to any other Co-Promotion Field.

               (b) Notwithstanding Section 5.4.3(a) above, if prior to the
issuance of any Election Notice with respect to a particular Co-Promotion Field
pursuant to Section 5.4.2 above, the Parties have already executed a
Co-Promotion Agreement with respect to any other Co-Promotion

                                       19

<PAGE>

Field, the Parties may mutually agree not to execute an additional Co-Promotion
Agreement but rather to amend such existing Co-Promotion Agreement to include
economic and other appropriate terms with respect to the co-promotion of the
XenoPort Products and, if applicable, Xanodyne Products in the Territory for
such additional Co-Promotion Field.

               (c) It is further understood that nothing in this Section 5.4
shall be deemed to modify, amend or extend the license and other rights granted
to Xanodyne under Article 2 to develop or commercialize the Compound and
XenoPort Products.

                                    ARTICLE 6
                             PAYMENTS AND ROYALTIES

     6.1 Initial License Fee. Xanodyne shall pay to XenoPort an initial license
fee of Twelve Million Dollars ($12,000,000) in two installments, as follows:

          6.1.1 Six Million Dollars ($6,000,000) within ten (10) days following
the Effective Date; and

          6.1.2 Six Million Dollars ($6,000,000) on or before the twelve (12)
month anniversary of the Effective Date.

     The initial license fee set forth in this Section 6.1 shall be paid in
accordance with the payment provisions of Article 7 and shall not be refundable
or creditable against any future milestone payments, royalties or other payments
by Xanodyne to XenoPort under this Agreement.

     6.2 Milestones.

          6.2.1 Milestone Payments. In addition, Xanodyne shall pay to XenoPort
the milestone payments set forth below following the first achievement by
Xanodyne or any of its Affiliates in the Territory of the corresponding
milestone below, in accordance with this Section 6.2 and the payment provisions
in Article 7:

<TABLE>
<CAPTION>
MILESTONE EVENT                                                                    MILESTONE PAYMENT
---------------                                                                    -----------------
<S>                                                                                <C>
1.   [**] by [**] the [**] in the Territory:                                             $[**]

2.   [**] with [**]:                                                                     $[**]

3.   [**] in the Territory for the [**]:                                                 $[**]

4.   [**] in the Territory for the [**]:                                                 $[**]

5.   [**] in the Territory:                                                              $[**]

6.   [**] for the [**] in the Territory:                                                 $[**]
</TABLE>

                                       20

<PAGE>

<TABLE>
<CAPTION>
MILESTONE EVENT                                                                    MILESTONE PAYMENT
---------------                                                                    -----------------
<S>                                                                                <C>
7.   [**] in the Territory:                                                              $[**]

8.   Additional Milestones for [**] in the Territory [**] in the Territory:              $[**]

     (a)  [**] in the Territory [**] in the Territory:                                   $[**]

     (b)  The [**] in the Territory provided that [**] in the Territory as of            $[**]
          such date:

9.   A one time payment for the first time Annual Net Sales of the XenoPort              $[**]
     Products or Products, as applicable and as further described in Section
     6.2.2(b) below, exceed [**] Dollars [**] after receipt of Marketing
     Approval for the First XenoPort Product in the Territory:

10.  A one time payment for the first time Annual Net Sales of the XenoPort              $[**]
     Products or Products, as applicable and as further described in Section
     6.2.2(b) below, exceed [**]Dollars[**] after receipt of Marketing Approval
     for the First XenoPort Product in the Territory:

11.  A one time payment for the first time Annual Net Sales of the XenoPort              $[**]
     Products or Products, as applicable and as further described in Section
     6.2.2(b) below, exceed [**]Dollars[**] after receipt of Marketing Approval
     for the First XenoPort Product in the Territory:

12.  A one time payment for the first time Annual Net Sales of the XenoPort              $[**]
     Products or Products, as applicable and as further described in Section
     6.2.2(b) below, exceed [**]Dollars [**] after receipt of Marketing Approval
     for the First XenoPort Product in the Territory:
</TABLE>

          6.2.2 Certain Terms.

               (a) Definitions. For the purposes of this Article 6:

                    (i) The "First XenoPort Product" and "First Xanodyne
Product" shall mean the first XenoPort Product or first Xanodyne Product, as
applicable, to achieve such milestone; and

                    (ii) "Loss of Exclusivity" shall mean expiration of the
period for which the applicable Product has marketing exclusivity pursuant to 21
C.F.R Section 314.108.

                                       21

<PAGE>

               (b) Calculation of Commercial Milestones. The Milestones
specified as 9 through 12 in Section 6.2.1 above are referred to in this
Agreement as the "Commercial Milestones". For the purposes of determining
whether any of the Commercial Milestones are achieved in the calendar year in
which the XenoPort Product Approval Date occurs or the first full calendar year
thereafter, only the Annual Net Sales of the XenoPort Products shall be used to
determine whether any of the Commercial Milestones are achieved. In the second
full calendar year after the XenoPort Product Approval Date and each calendar
year thereafter, Annual Net Sales of both the Xanodyne Products and the XenoPort
Products shall be used to determine whether any of the Commercial Milestones are
achieved.

          6.2.3 Skipped Milestone Payment. If, upon the first achievement of
[**], the amounts corresponding to [**], then such milestone(s) [**]. Similarly,
if, upon the first achievement of [**], the amounts corresponding to [**], then
such previous milestone(s) [**].

          6.2.4 Reports and Payments. Except [**], Xanodyne shall notify
XenoPort in writing [**] after the achievement of each milestone set forth in
Section 6.2.1 by Xanodyne or any of its Affiliates, and each such notice shall
be accompanied by the appropriate milestone payment. With respect to [**],
XenoPort shall [**] and the corresponding milestone payment [**] that such
milestone has been achieved. Any milestone payable by Xanodyne pursuant to this
Section 6.2 shall be made no more than once with respect to the achievement of
each milestone set forth in Section 6.2.1 and in no event shall the aggregate
amount to be paid by Xanodyne under this Section 6.2 exceed One Hundred Thirty
Five Million Dollars ($135,000,000). For the avoidance of doubt, each milestone
payment set forth in this Section 6.2 shall not be refundable and shall not be
creditable against future milestone payments, royalties or other payments to
XenoPort under this Agreement.

     6.3 Royalty Payments. Subject to the terms and conditions of this
Agreement, in further consideration of the license and rights granted by
XenoPort to Xanodyne under this Agreement, Xanodyne shall pay to XenoPort
royalties on the Net Sales of Products in the Territory as set forth in this
Section 6.3.

          6.3.1 Prior to [**] of the Increased Royalty Commencement Date.

               (a) Royalty Rates for Xanodyne Products.

                    (i) Upon receipt of Marketing Approval for the First
Xanodyne Product in the Territory (the "Xanodyne Product Approval Date") and
prior to the Increased Royalty Commencement Date (as defined in Section
6.3.1(a)(ii) below), Xanodyne shall pay to XenoPort royalties at the rates set
out below on Net Sales of Xanodyne Products in the Territory:

                                       22

<PAGE>

<TABLE>
<CAPTION>
                         ANNUAL NET SALES OF XANODYNE PRODUCTS                            ROYALTY RATE
                         -------------------------------------                            ------------
<S>                                                                                       <C>
Portion of Annual Net Sales of Xanodyne Products up to and including [**] Dollars [**]        [**]%
Portion of Annual Net Sales of Xanodyne Products in excess of [**] Dollars [**] up to         [**]%
and including [**] Dollars [**]
Portion of Annual Net Sales of Xanodyne Products in excess of [**] Dollars [**]               [**]%
</TABLE>

               Example: If Xanodyne has Annual Net Sales of Xanodyne Products in
               the Territory equal to

               [**], the royalty due to XenoPort would be calculated as follows

               [**]% of [**]

               [**]% of [**] = [**]

               [**]% of [**] = [**]

               The total royalty due XenoPort would be [**] (which is the sum of
               [**] and [**] and [**]

                    (ii) Commencing on [**] (the "Royalty Transition Date"; the
date which is the earlier of the XenoPort Product Approval Date or the Royalty
Transition Date shall be referred to as the "Increased Royalty Commencement
Date"), Xanodyne shall pay to XenoPort royalties on the Net Sales of Xanodyne
Products in the Territory as follows:

                         (A) Beginning on the Increased Royalty Commencement
Date and [**], the royalty rates set forth in the table in Section 6.3.1(a)(i)
above shall each be increased by [**] from the original rate; i.e., the
applicable rates during such [**] period shall be [**], respectively, for the
corresponding tiers of Annual Net Sales of Xanodyne Products; and

                         (B) Beginning on [**] of the Increased Royalty
Commencement Date, the royalty rates set forth in the table in Section
6.3.1(a)(i) above shall each be increased by [**] from the original rate; i.e.,
the applicable rates during such [**] period shall be [**], respectively, for
the corresponding tiers of Annual Net Sales of Xanodyne Products.

                    (b) Royalty Rates for XenoPort Products. To the extent
applicable, commencing on the XenoPort Product Approval Date, and ending on [**]
of the Increased Royalty Commencement Date, Xanodyne shall pay to XenoPort
royalties at the rates set out below on Net Sales of XenoPort Products in the
Territory:

                                       23

<PAGE>

<TABLE>
<CAPTION>
                         ANNUAL NET SALES OF XENOPORT PRODUCTS                            ROYALTY RATE
                         -------------------------------------                            ------------
<S>                                                                                       <C>
Portion of Annual Net Sales of XenoPort Products up to and including [**] Dollars [**]        [**]%
Portion of Annual Net Sales of XenoPort Products in excess of [**] Dollars [**] up to         [**]%
and including [**] Dollars [**]
Portion of Annual Net Sales of XenoPort Products in excess of [**] Dollars [**] up to         [**]%
and including [**] Dollars [**]
Portion of Annual Net Sales of XenoPort Products in excess of [**] Dollars [**] up to         [**]%
and including [**] Dollars [**]
Portion of Annual Net Sales of XenoPort Products in excess of [**] Dollars [**]               [**]%
</TABLE>

                    (c) Royalty Term.

                         (i) Subject to Section 6.3.1(c)(iii) below, Xanodyne's
obligation to pay royalties under Section 6.3.1(a) shall continue on a Xanodyne
Product-by-Xanodyne Product basis until [**].

                         (ii) To the extent applicable and subject to Section
6.3.1(c)(iii) below, Xanodyne's obligation to pay royalties under Section
6.3.1(b) shall continue on a XenoPort Product-by-XenoPort Product basis until
[**].

                         (iii) Xanodyne's obligations to pay royalties under
this Section 6.3.1 shall terminate on [**] of the Increased Royalty Commencement
Date, and thereafter no royalty payments shall be due with respect to Products
in the Territory under this Section 6.3.1; it being understood that royalties on
such Products may continue to be payable in accordance with Section 6.3.2 on and
from [**] of the Increased Royalty Commencement Date.

          6.3.2 On and From [**] of the Increased Royalty Commencement Date.

               (a) Royalty Rates. On and from [**][**] of the Increased Royalty
Commencement Date, Xanodyne shall pay to XenoPort royalties at the rates set
forth below on Net Sales of Xanodyne Products or Products (i.e., Xanodyne
Products and XenoPort Products), as applicable, in the Territory:

                                       24

<PAGE>

<TABLE>
<CAPTION>
                             ANNUAL NET SALES OF PRODUCTS                                 ROYALTY RATE
                             ----------------------------                                 ------------
<S>                                                                                       <C>
Portion of Annual Net Sales of Products up to and including [**] Dollars [**]                 [**]%
Portion of Annual Net Sales of Products in excess of [**] Dollars [**] up to and              [**]%
including [**] Dollars [**]
Portion of Annual Net Sales of Products in excess of [**] Dollars [**] up to and              [**]%
including [**] Dollars [**]
Portion of Annual Net Sales of Products in excess of [**] Dollars [**] up to and              [**]%
including [**] Dollars [**]
Portion of Annual Net Sales of Products in excess of [**] Dollars [**]                        [**]%
</TABLE>

               Example: If Xanodyne has Annual Net Sale of Products in the
               Territory equal to [**], the royalty due to XenoPort would be
               calculated as follows:

               [**] of [**] = [**]

               [**]% of [**] = [**]

               [**]% of [**] = [**]

               [**]% of [**] = [**]

               [**]% of [**] = [**]

               The total royalty due XenoPort would be [**](which is the sum of
               [**] and [**] and [**] and [**] and [**]

               (b) Royalty Term. Xanodyne's obligation to pay royalties under
Section 6.3.2(a) shall commence on [**] of the Increased Royalty Commencement
Date, and shall continue on a Product-by-Product basis until [**].

          6.3.3 Reports and Payments. Commencing upon the first commercial sale
of the first Product by or under the authority of Xanodyne or its Affiliates in
the Territory, within [**] after the end of each calendar quarter, Xanodyne
shall deliver to XenoPort a report setting out in reasonable detail the
information necessary to calculate the royalty payments due under this Section
6.3 with respect to Net Sales of the applicable Products made during such
calendar quarter, including:

               (a) units of the Products sold by or under the authority of
Xanodyne or its Affiliates in the Territory during the relevant calendar
quarter;

                                       25

<PAGE>

               (b) gross sales of the Products by or under the authority of
Xanodyne or its Affiliates in the Territory in the relevant calendar quarter;

               (c) Net Sales of the Products in the Territory in the relevant
calendar quarter;

               (d) all relevant deductions or credits due to Xanodyne in
accordance with the terms of this Agreement; and

               (e) the applicable royalty rates used to calculate the royalties
payable to XenoPort for such calendar quarter.

     Any amounts due under Section 6.3.1 or Section 6.3.2, as applicable, for
such calendar quarter shall accompany such statement.

     6.4 Certain Reductions to Royalties.

          6.4.1 Third Party Royalties. In the event Xanodyne or any of its
Affiliates is required to pay to a Third Party royalties or any other amounts
under agreements for Patents not licensed under this Agreement or other
intellectual property rights not licensed under this Agreement that cover the
composition of matter or therapeutic use of the Compound, or that cover all
feasible methods to manufacture the Compound ("Third Party Royalties"), then
Xanodyne may deduct [**] of the Third Party Royalties from the amounts owed to
XenoPort pursuant to Section 6.3.1(b) or 6.3.2 above, as applicable, with
respect to Net Sales of XenoPort Products; provided the amounts paid to XenoPort
will not be so reduced to less than [**] of the royalties otherwise due pursuant
to Section 6.3.1(b) or 6.3.2, as applicable, with respect to Net Sales of
XenoPort Products.

          6.4.2 Generic Competition.

               (a) XenoPort Products. On a XenoPort Product-by-XenoPort Product
basis if: (i) [**]; (ii) one or more Generic Product(s) is/are being marketed
for an approved Indication of such XenoPort Product in the Territory; and (iii)
[**] in the aggregate, in the Territory in any calendar quarter determined by
[**] and Xanodyne reasonably determines that it is not likely to recover such
lost market share; then the royalties payable pursuant to Section 6.3.1(b) or
6.3.2, as applicable, with respect to such XenoPort Product sold in the
Territory for such quarter shall thereafter be reduced by [**]. In addition, if
(1) the [**] period specified in Section 6.3.2(b)(iii) has expired; (2)
paragraphs (i) and (ii) in the preceding sentence are satisfied and (3) [**], in
the aggregate, in the Territory in any calendar quarter determined by [**], and
Xanodyne reasonably determines that it is not likely to recover such lost market
share; then [**] with respect to such XenoPort Product sold in the Territory for
such quarter.

               (b) Xanodyne Products. On a Xanodyne Product-by- Xanodyne Product
basis if: (i) [**]; (ii) one or more Generic Product(s) is/are being marketed
for an approved Indication of such Xanodyne Product in the Territory; and (iii)
[**] in the aggregate, in the Territory in any calendar quarter determined by
[**] and Xanodyne reasonably determines that it is not likely

                                       26

<PAGE>

to recover such lost market share; then [**] with respect to such Xanodyne
Product sold in the Territory for such quarter.

               (c) "Generic Product" shall mean a [**] in all respects [**];
(ii) that [**]; (iii) [**] in the Territory by an entity other than Xanodyne or
its Affiliates; and (iv) [**].

          6.4.3 Royalty Floor. Except as expressly provided in paragraphs (a)
and (b) below, in no event shall the royalties payable by Xanodyne with respect
to Net Sales of XenoPort Products after receipt of Marketing Approval for the
First XenoPort Product in the Territory be reduced to [**] of the royalty rates
set forth in Section 6.3.1(b) or 6.3.2 above, as applicable; provided that: (a)
solely for the purposes of any deductions that Xanodyne is entitled to make in
accordance with Section 10.3.3(b) below, in no event shall the royalties payable
by Xanodyne with respect to Net Sales of XenoPort Products be reduced to [**] of
the royalty rates set forth in Section 6.3.1(b) or 6.3.2 above, as applicable;
and (b) this Section 6.4.3 shall not limit the application of the last sentence
in Section 6.4.2(a), [**].

     6.5 Conflicts of Interest. Xanodyne and its Affiliates shall set prices and
discounts for the XenoPort Products in the Territory solely in the interest of
the commercial success of such XenoPort Products in the Territory and not for
the interest of its other products and services. However, the foregoing shall
not be construed to dictate to Xanodyne or its Affiliates any resale prices for
the Products in the Territory.

                                   ARTICLE 7
                           PAYMENTS; BOOKS AND RECORDS

     7.1 Payment Method. Unless otherwise expressly stated in this Agreement,
all payments under this Agreement shall be made by bank wire transfer in
immediately available funds to an account designated by the Party to which such
payments are due. All dollar amounts specified in, and all payments made under,
this Agreement shall be in U.S. dollars.

     7.2 Late Payments. Any payments or portions thereof due under this
Agreement that are not paid by the date such payments are due under this
Agreement shall bear interest at a rate equal to: (a) the prime rate as reported
by Citibank N.A. on the date such payment is due, plus [**]; or (b) if lower,
the maximum rate permitted by applicable law; calculated on the number of days
such payment is delinquent, compounded annually and computed on the basis of a
three hundred sixty five (365) day year. This shall in no way limit any other
remedies available to the Parties.

     7.3 Accounting Matters. In the event that XenoPort is, or reasonably
determines that it shall be, unable to recognize any payments hereunder by
reason of the Financial Accounting Standards Board, Emerging Issues Task Force
No. 00-21, Revenue Arrangements with Multiple Deliverables, or any related
accounting principles, the Parties shall cooperate as reasonably necessary and
in good faith to allow XenoPort to recognize any such payments in a manner that
does not have any material adverse effect on either Party, in exercise of
Xanodyne's reasonable discretion.

                                       27

<PAGE>

     7.4 Records; Inspection.

          7.4.1 Xanodyne. Xanodyne shall keep, and require its Affiliates to
keep, complete, true and accurate books of accounts and records for the purpose
of determining the amounts payable to XenoPort pursuant to this Agreement. Such
books and records shall be kept for at least [**] following the end of the
calendar quarter to which they pertain. Such records will be open for inspection
during such [**] period by an independent auditor chosen by XenoPort, and
reasonably acceptable to Xanodyne, for the purpose of verifying the amounts
payable by Xanodyne hereunder. Such inspections may be made no more than once
each calendar year, at reasonable times and on reasonable prior written notice.
Such records for any particular calendar quarter shall be subject to no more
than one inspection. The independent auditor shall be obligated to execute a
reasonable confidentiality agreement prior to commencing any such inspection.
Inspections conducted under this Section 7.4.1 shall be at the expense of
XenoPort, unless a variation or error producing an underpayment in amounts
payable exceeding [**] of the amount paid for any period covered by the
inspection is established, in which case, all reasonable costs relating to the
inspection for such period and any unpaid amounts that are discovered shall be
paid by Xanodyne, together with interest on such unpaid amounts at the rate set
forth in Section 7.2 above. If XenoPort has been overpaid by an amount exceeding
[**] of the amount due for any period covered by the inspection, then such
overpayment less any reasonable expenses related to the inspection shall be a
credit against the next royalties owed to XenoPort by Xanodyne. The Parties will
endeavor in any such inspection to minimize disruption of Xanodyne's normal
business activities to the extent reasonably practicable.

          7.4.2 XenoPort. XenoPort shall keep complete, true and accurate books
of accounts and records for the purpose of determining payments due from
Xanodyne pursuant to this Agreement (e.g., Cost of Goods). Such books and
records shall be kept for at least [**] following the end of the calendar
quarter to which they pertain. Such records will be open for inspection during
such [**] period by an independent auditor chosen by Xanodyne, and reasonably
acceptable to XenoPort, for the purpose of verifying the amounts payable by
Xanodyne hereunder. Such inspections may be made no more than once each calendar
year, at reasonable times and on reasonable prior written notice. Such records
for any particular calendar quarter shall be subject to no more than one
inspection. Xanodyne's independent auditor shall be obligated to execute a
reasonable confidentiality agreement prior to commencing any such inspection.
Inspections conducted under this Section 7.4.2 shall be at the expense of
Xanodyne, unless a variation or error producing an overpayment in amounts
payable to XenoPort exceeding [**] of the amount paid for any period covered by
the inspection is established in the course of any such inspection, in which
case, all reasonable costs relating to the inspection for such period and any
overpaid amounts that are discovered shall be paid to Xanodyne by XenoPort,
together with interest on such overpaid amounts at the rate set forth in Section
7.2 above. If XenoPort has been underpaid, then Xanodyne shall pay such
underpayment to XenoPort. The Parties will endeavor in such inspection to
minimize disruption of XenoPort's normal business activities to the extent
reasonably practicable.

                                       28

<PAGE>

                                    ARTICLE 8
                          DILIGENCE; CERTAIN COVENANTS

     8.1 Commercially Reasonable Efforts of Xanodyne. Xanodyne shall use
Commercially Reasonable Efforts to develop, achieve Marketing Approval for, and
launch a XenoPort Product for a Menorrhagia Indication in the Territory as soon
as practicable, and thereafter to market, promote and sell XenoPort Product(s)
and to maximize the Net Sales of XenoPort Products in the Territory. In
addition, Xanodyne shall use Commercially Reasonable Efforts to identify
Excessive Bleeding Indications for which the Compound and XenoPort Products may
provide a tangible benefit over existing therapies that have received Marketing
Approval for any such Excessive Bleeding Indication(s) in the Territory and for
which a commercially favorable return in the Territory is reasonably possible.
Following Xanodyne's determination in accordance with the preceding sentence
that a commercially favorable return in the Territory is reasonably possible for
any such Excessive Bleeding Indication(s), and subject to the approval of the
JDC (not to be unreasonably withheld), Xanodyne shall use Commercially
Reasonable Efforts to develop, achieve Marketing Approval for, and launch a
XenoPort Product for such Excess Bleeding Indication(s) in the Territory.

                                    ARTICLE 9
                            MANUFACTURING AND SUPPLY

     9.1 Transfer of Manufacturing and Supply Responsibilities. [**] following
the Effective Date, XenoPort and Xanodyne shall develop and reasonably agree
upon a detailed plan ("Supply Transition Plan") to transfer responsibility for
manufacturing and supply of the Intermediate (for the purposes of manufacturing
or having manufactured the Compound and XenoPort Products in accordance with
this Agreement) and the Compound and XenoPort Products for marketing, promotion
and/or sale in the Territory to Xanodyne by [**] after the Effective Date
("Supply Transition Date"); provided however that, upon the reasonable written
request of Xanodyne, prior to the expiration of such [**] period, such period
may be extended for a further [**]; i.e., [**] (in which event, such date shall
be deemed to be the Supply Transition Date). XenoPort shall use commercially
reasonable efforts and cooperate in good faith with Xanodyne to effect, at
Xanodyne's expense, the transfer of responsibility for the manufacturing and
supply of the Intermediate (for the purposes of manufacturing or having
manufactured the Compound and XenoPort Products in accordance with this
Agreement), the Compound and XenoPort Products for marketing, promotion and/or
sale in the Territory to Xanodyne in an orderly manner in accordance with the
Supply Transition Plan and the timelines set forth therein. Without limiting the
foregoing, the Supply Transition Plan shall include the provision to Xanodyne of
all XenoPort Know-How necessary for the manufacture of the Intermediate and/or
Compound in accordance with the licenses granted to Xanodyne under this
Agreement.

     9.2 Activities Prior to the Supply Transition Date.

          9.2.1 Supplies of the Compound. Upon Xanodyne's written request,
XenoPort shall use commercially reasonable efforts to supply to Xanodyne the
Compound for use in connection with the development activities for the Compound
and XenoPort Products under this Agreement

                                       29

<PAGE>

prior to the Supply Transition Date. It is understood that XenoPort shall
provide Xanodyne the Compound in the same form as in use by XenoPort immediately
prior to the Effective Date.

          9.2.2 Reimbursement of XenoPort Supply Costs.

               (a) Xanodyne shall reimburse XenoPort the amount of the XenoPort
Supply Costs (as defined below) incurred in supplying, or obtaining supply of,
the Compound pursuant to Section 9.2.1 above and/or in performing activities
pursuant to the Supply Transition Plan. XenoPort will invoice Xanodyne for the
XenoPort Supply Costs on a monthly basis, and Xanodyne shall pay XenoPort the
applicable amounts within thirty (30) days following the date of each such
invoice.

               (b) "XenoPort Supply Costs" shall mean the following costs
incurred by XenoPort: (i) the Cost of Goods for quantities of the Compound
supplied to Xanodyne pursuant to Section 9.2.1 above; and (ii) [**] Dollars [**]
per year per XenoPort FTE on a pro rata basis for each XenoPort FTE performing
activities pursuant to the Supply Transition Plan (including, those activities
specified in Section 9.2.4 below). For such purposes, "FTE" shall mean a full
time equivalent employee (i.e., one fully-committed employee or
multiple-partially committed employees aggregating one full-time employee)
employed by XenoPort and assigned to perform specified work.

          9.2.3 Forecast. The Development Plan shall include a reasonable
forecast, prepared and provided by Xanodyne in good faith, of the quantities of
the Compound that will be required by Xanodyne and its Affiliates prior to the
Supply Transition Date for use in the development of the Compound and XenoPort
Products in accordance with this Agreement. The Development Plan shall specify
mutually agreed delivery dates for delivery of the Compound to Xanodyne.
Notwithstanding the foregoing, XenoPort shall not have any obligation to supply
any quantities of the Compound in excess of the forecasted amounts unless
otherwise agreed by XenoPort in writing.

          9.2.4 Further Assistance. Xanodyne acknowledges that, as of the
Effective Date, XenoPort is a party to that certain [**] Agreement between
XenoPort and [**], effective as of [**], pursuant to which XenoPort may obtain
from [**] supplies of the Compound and/or the Intermediate. Until the Supply
Transition Date, XenoPort shall have responsibility for the direct management of
the arrangements with [**]. XenoPort agrees to [**] (for the purposes of
manufacturing or having manufactured the Compound and XenoPort Products in
accordance with this Agreement) and/or the Compound. During the term of this
Agreement, XenoPort shall provide Xanodyne the ability to reference any Drug
Master Files of XenoPort, its Affiliates, or its suppliers regarding the
Compound. For the purposes of this Section 9.2.4, "Drug Master File" shall mean
a submission to the FDA that may be used to provide confidential detailed
information about facilities, processes or articles used in the manufacturing,
processing, packaging and storing of a pharmaceutical product.

          9.2.5 Delivery. Compound supplied by XenoPort under this Section 9.2
shall be delivered to Xanodyne [**], or at such other location as the Parties
may mutually agree in writing. The title to such Compound shall pass [**].

                                       30

<PAGE>

          9.2.6 Other Matters. XenoPort represents to Xanodyne that the [**]
obligates [**] to [**]. XenoPort agrees that it shall not execute any amendment
to the [**] that would result in [**].

     9.3 Activities After the Transition of Supply and Manufacturing
Responsibilities. On and from the date supply of the Compound for use by, or on
behalf of, Xanodyne in the Territory is transferred to Xanodyne (and in any
event no later than the Supply Transition Date), Xanodyne shall have the right,
subject to the terms and conditions of this Agreement, to manufacture, or have
manufactured, the Compound and XenoPort Products and, to practice any method,
process or procedure in connection with the manufacture of the Intermediate for
the purposes of manufacturing or having manufactured the Compound and the
XenoPort Products for use and commercialization in the Territory.

                                   ARTICLE 10
                              INTELLECTUAL PROPERTY

     10.1 Ownership of Inventions.

          10.1.1 General. As between the Parties: (a) XenoPort shall have sole
and exclusive ownership of all right, title and interest in and to all XenoPort
Patents and XenoPort Know-How, subject to the rights and licenses granted to
Xanodyne under this Agreement; and (b) Xanodyne shall have the sole and
exclusive ownership of all right, title and interest in and to all Xanodyne
Patents and Xanodyne Know-How, subject to the rights and licenses granted to
XenoPort under this Agreement. Title to all inventions and other intellectual
property made: (i) solely by Xanodyne personnel in connection with this
Agreement shall be owned by Xanodyne; (ii) solely by XenoPort personnel in
connection with this Agreement shall be owned by XenoPort; and (iii) made
jointly by personnel of XenoPort and Xanodyne in connection with this Agreement
shall be jointly owned by Xanodyne and XenoPort (any Patent with respect to such
jointly-owned inventions or other intellectual property, a "Joint Patent").
Except as expressly provided in this Agreement, it is understood that neither
Party shall have any obligation to obtain any approval of, nor pay a share of
the proceeds to, the other Party to practice, enforce, license, assign or
otherwise exploit such jointly-owned inventions or intellectual property and
each Party hereby waives any right it may have under the laws of any
jurisdiction to require such approval or accounting.

          10.1.2 Improvements. Notwithstanding Section 10.1.1 above:

               (a) Disclosure. Xanodyne agrees to disclose to XenoPort all
Improvements made by, or under the authority of, Xanodyne in connection with the
development and/or commercialization of the Compound and/or any XenoPort Product
under this Agreement.

               (b) Ownership. Title to all Improvements, excluding any
Improvement directed to any Tools, that relate directly to any Compound,
XenoPort Product, Intermediate, and/or any other [**], and/or the formulation,
manufacture and/or use of any of the foregoing (collectively, "Compound
Improvements") shall be owned by XenoPort, and Xanodyne hereby assigns to
XenoPort all of its right, title and interest in and to any Compound
Improvements made by, or under

                                       31

<PAGE>

the authority of, Xanodyne, alone or jointly with XenoPort. Xanodyne shall
promptly take, or cause to be taken, any and all actions necessary to confirm
and/or perfect XenoPort's rights in and to Compound Improvements.

               (c) License. Xanodyne hereby grants to XenoPort a non-exclusive,
worldwide, irrevocable, fully paid-up license, with the right to grant and
authorize sublicenses, under any Improvements (other than Compound Improvements
or any Improvements directed to any Tools) and Improvement Patents to make, have
made, use, offer for sale, sell, import, practice and otherwise exploit the
same, subject to the exclusive rights granted to Xanodyne under this Agreement
with respect to the Compound and XenoPort Products in the Territory.

               (d) Certain Terms. As used in this Agreement, "Improvements"
means any inventions or other intellectual property [**] in connection with
development and/or commercialization of the Compound and/or any XenoPort Product
under this Agreement that is: (i) applicable to the Compound, any XenoPort
Product, [**] and/or (ii) using [**]; and "Improvement Patents" means any Patent
claiming or disclosing an Improvement, other than a Compound Improvement.

     10.2 Prosecution and Maintenance of XenoPort Patents and Joint Patents.

          10.2.1 Patents Directed to the Compound, any XenoPort Product and/or
Compound Improvements. XenoPort shall control, at its expense, the Prosecution
and Maintenance of: (a) the XenoPort Patents as of the Effective Date, or which
may be filed after the Effective Date; and (b) any Joint Patents pursuant to
Section 10.1 above; and (c) any Patents directed to a Compound Improvement
("Compound Improvement Patents"). XenoPort shall: (i) diligently Prosecute and
Maintain the XenoPort Patents and Compound Improvement Patents in the Territory
and any Joint Patents; (ii) [**]; and (iii) shall [**] described in the
preceding subparagraph (ii). If XenoPort determines not to file any Patent, or
to abandon any Patent, within the XenoPort Compound Patents or Compound
Improvement Patents in the Territory or any Joint Patent, as applicable,
XenoPort shall provide Xanodyne with at least [**] written notice of such
decision, prior to the deadline for filing any such XenoPort Compound Patent,
Compound Improvement Patent or Joint Patent, as applicable, or prior to the date
on which such abandonment would become effective. In such event, Xanodyne shall
have the right, at its option, to control the Prosecution and Maintenance of
such XenoPort Compound Patent, Compound Improvement Patent or such Joint Patent.
For the purposes of this Section 10.2, "Prosecution and Maintenance" (including
variations such as "Prosecute and Maintain") shall mean, with respect to a
Patent, the preparing, filing, prosecuting and maintenance of such Patent, as
well as continuations, divisionals, re-examinations, reissues and requests for
patent term extensions and the like with respect to such Patent, together with
the conduct of interferences, the defense of oppositions and other similar
proceedings with respect to a Patent.

          10.2.2 Xanodyne Patents. Xanodyne shall control, at its expense, the
Prosecution and Maintenance of Patents included in the Xanodyne Patents as of
the Effective Date, or that may be filed after the Effective Date.

          10.2.3 Cooperation. Each Party shall cooperate with the other Party in
connection with all activities relating to the Prosecution and Maintenance of
the XenoPort Patents and, if

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applicable, any Joint Patents and Compound Improvement Patents undertaken by
such other Party pursuant to this Section 10.2, including: (a) making available
in a timely manner any documents or information such other Party reasonably
requests to facilitate such other Party's Prosecution and Maintenance of the
applicable XenoPort Patents, Joint Patents and/or Compound Improvement Patents
pursuant to this Section 10.2; and (b) if and as appropriate, signing (or
causing to have signed) all documents relating to the Prosecution and
Maintenance of any applicable XenoPort Patents, Joint Patents and/or Compound
Improvement Patents by such other Party. Each Party shall also promptly provide
to the other Party all information reasonably requested by such other Party with
regard to such Party's activities pursuant to this Section 10.2. The Parties
shall treat all information of the other Party disclosed to it under this
Section 10.2 as Confidential Information of such other Party.

     10.3 Enforcement.

          10.3.1 Notice. In the event that XenoPort or Xanodyne becomes aware
of: (a) actual or threatened infringement or misappropriation of any XenoPort
Compound Patent or Compound Improvement Patent by the manufacture, sale or use
in the Territory of a product comprising a pro-drug of tranexamic acid (an
"Infringement") or (b) actual or threatened infringement or misappropriation of
any XenoPort Intermediate Patent, that Party shall promptly notify the other
Party in writing.

          10.3.2 Actions with Respect to Infringement. Xanodyne shall have the
first right, but not the obligation, to bring an enforcement action with respect
to an Infringement, at its own expense and using the counsel of its own choice.
XenoPort shall have the right, at its own expense, to participate in any such
action with counsel of its own choice, subject to Xanodyne's control. If
Xanodyne does not initiate any action against such an Infringement, within [**]
of receipt of a request by XenoPort to do so, then XenoPort shall be entitled to
initiate infringement proceedings or take other appropriate action against an
Infringement at its own expense. The Party conducting such action under this
Section 10.3.2 shall have full control over the conduct of such action,
including settlement thereof; provided, however, that the Party [**] (including,
any [**] within or outside the Territory), [**]. In any event, the Parties shall
assist one another and cooperate in any such action, at their own expense, at
the other's reasonable request.

          10.3.3 Recovery.

               (a) Xanodyne and XenoPort agree that any monetary recovery
realized from a litigation or settlement thereof by either Party pursuant to
Section 10.3.2 shall first [**]. Any excess amount of such a recovery shall [**]
in the Territory.

               (b) In the event that: (i) Xanodyne conducts and controls an
action with respect to an Infringement pursuant to Section 10.3.2; (ii) [**]
from the settlement of such action; and (iii) [**] in accordance with Section
10.3.2 above; then, Xanodyne shall be entitled to [**] associated with such
action from the [**] of the XenoPort Products; provided that, upon XenoPort's
reasonable request, Xanodyne shall promptly provide to XenoPort [**]; provided,
further, that Xanodyne shall make [**] after the date that a final judgment is
awarded or a settlement is executed which is covered by paragraph (ii) above.

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<PAGE>

          10.3.4 Cooperation. The Parties shall keep one another informed of the
status of their respective activities regarding any litigation or settlement
thereof pursuant to Section 10.3 and shall assist one another and cooperate in
any such litigation at the other's reasonable request (including joining as a
party plaintiff to the extent necessary and requested by the other Party).

     10.4 Third Party Infringement Claims.

          10.4.1 Notice. If the manufacture, use, sale, offer for sale or
importation of any Compound or any Product pursuant to this Agreement results in
a claim, suit or proceeding alleging patent infringement against XenoPort or
Xanodyne (or, to the extent applicable, their respective Affiliates or
licensees) (collectively, "Product Infringement Actions"), such Party shall
promptly notify the other Party hereto in writing. Similarly, if the
manufacture, use, sale, offer for sale or importation of the Intermediate
pursuant to this Agreement results in a claim, suit, proceeding alleging patent
infringement against XenoPort or Xanodyne (or, to the extent applicable, their
respective Affiliates or licensees), such Party shall promptly notify the other
Party hereto in writing (collectively, "Intermediate Infringement Actions"). For
the purposes of this Section 10.4, an "Infringement Action" shall mean,
individually, either a Product Infringement Action or an Intermediate
Infringement Action, as applicable, and collectively, Product Infringement
Actions and Intermediate Infringement Actions.

          10.4.2 Control of Defense. With respect to any Product Infringement
Action in the Territory, the Party subject to such Infringement Action shall
have the right to direct and control the defense thereof at its own expense with
counsel of its choice; provided, however, that the other Party may participate
in the defense and/or settlement thereof at its own expense with counsel of its
choice. With respect to (a) any Intermediate Infringement Action in or outside
of the Territory and (b) any Product Infringement Action outside the Territory
related to any Compound or XenoPort Product, XenoPort (or its designee) shall
have the sole right to direct and control the defense and/or settlement thereof
at its own expense with counsel of its choice; provided that, to the extent
Xanodyne is the subject of any such Infringement Action: (i) Xanodyne shall
cooperate fully with XenoPort (or its designee) and its legal representatives in
any such Infringement Action, as reasonably requested by XenoPort; and (ii)
Xanodyne may participate in the defense of any such Infringement Action, at its
own expense, with counsel of its choice. In any event, the Party that is
controlling the defense of an Infringement Action agrees to keep the other Party
hereto reasonably informed of all material developments in connection with any
such Infringement Action.

          10.4.3 Product Infringement Actions Involving Any Compound or XenoPort
Product. With respect to any Product Infringement Action related to any Compound
or XenoPort Product in the Territory, the following provisions shall apply. The
Party who is subject to any Product Infringement Action described in the
foregoing sentence agrees: (a) [**]; and (b) [**] in such Product Infringement
Action, [**]; in each case, [**].

          10.4.4 Damages Reimbursement/Offset.

               (a) With respect to any Intermediate Infringement Action: (i)
XenoPort shall [**]; and (ii) Xanodyne may [**] above; provided that [**] and,
to the extent such [**], XenoPort shall [**].

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<PAGE>

               (b) With respect to any Product Infringement Action involving any
Compound or XenoPort Product, Xanodyne may, at its option: (i) [**]; or (ii)
[**]; provided that the amount of [**].

               (c) As used herein, "Damages" shall mean out-of-pocket costs
incurred by Xanodyne with respect to a Product Infringement Action relating to
any Compound or XenoPort Product or any Intermediate Infringement Action,
including but not limited to: (i) reasonable attorney's fees; (ii) monetary
damages awarded by a court and other liabilities that are part of any final
judgment against Xanodyne, and (iii) any monetary amounts paid by Xanodyne in a
settlement of the action that are: (A) in the case of an Intermediate
Infringement Action, agreed to by XenoPort; or (B) in the case of a Product
Infringement Action, approved by XenoPort, such approval not to be unreasonably
withheld or delayed.

     10.5 Patent Marking. Xanodyne agrees to mark, and have its Affiliates mark,
all patented Products they sell or distribute pursuant to this Agreement in
accordance with the applicable patent statutes or regulations in the Territory.

                                   ARTICLE 11
                                   TRADEMARKS

     11.1 Product Trademarks. It is the intent of the Parties to develop, to the
extent reasonably possible, Product Trademarks that are capable of use on and in
connection with the marketing, sale, advertising and/or promotion of the
XenoPort Products worldwide. Accordingly, the Parties shall cooperate in good
faith to identify, in consultation with the JCC, Product Trademarks for use with
each of the XenoPort Products in the Territory, and shall take into account in
the selection of such trademarks, the ability to register and otherwise use such
trademarks in connection with the XenoPort Products outside the Territory;
provided, however, that [**]. In addition, if following the selection of any
Product Trademark in accordance with this Section 11.1, XenoPort determines that
it is not possible to register or otherwise use such Product Trademark in a
particular country outside the Territory, or that the use of such Product
Trademark would not be beneficial from a commercial perspective, XenoPort (or
its designee) may select an appropriate alternative trademark for adoption in
such country. The Parties shall also cooperate and mutually agree upon
assignment of responsibility between Xanodyne and XenoPort for the registration
of Internet domain names that include or are similar to any Product Trademarks.

     11.2 Ownership. As between the Parties: (a) Xanodyne shall own all right,
title and interest in and to the Product Trademark(s) in the Territory and all
goodwill from the use of the Product Trademark(s) in the Territory shall vest in
and inure to the benefit of Xanodyne; and (b) XenoPort shall own all right,
title and interest in and to the Product Trademarks in each country outside the
Territory and all goodwill from the use of the Product Trademarks outside the
Territory shall vest in and inure to the benefit of XenoPort. Following the
selection of any Product Trademark, Xanodyne shall take, or cause to be taken,
any and all actions necessary to confirm and/or perfect XenoPort's rights in and
to such Product Trademark outside the Territory, as reasonably requested by
XenoPort and at XenoPort's expense.

                                       35

<PAGE>

     11.3 Registration of Product Trademarks. Xanodyne shall file, register and
maintain, for the term of this Agreement, appropriate registrations for the
Product Trademark(s) in the Territory, at Xanodyne's sole expense. XenoPort (or
its designee) shall, at its sole expense, file, prosecute and maintain
appropriate registrations for the Product Trademarks outside the Territory. Upon
XenoPort's reasonable request, and at XenoPort's expense, Xanodyne shall
cooperate with XenoPort (or its designee) and take such actions as may be
reasonably necessary to assist XenoPort (or its designees) in the filing and
registration of Product Trademarks in countries outside the Territory. Xanodyne
shall not, and shall not authorize any Affiliate or Third Party to: (a) use any
Product Trademark in connection with any product other than the XenoPort
Products for use within the Territory; nor (b) register, or attempt to register,
any trademarks, marks or trade names confusingly similar to any Product
Trademark, within or outside of the Territory.

     11.4 Display. Xanodyne shall have the right to determine all packaging
materials, labels and promotional materials for the XenoPort Products in the
Territory as it considers appropriate, provided that such packaging materials,
labels and promotional materials shall display the trade names of both XenoPort
and Xanodyne. The trademarks of Xanodyne, trade dress, style of packaging and
the like with respect to each XenoPort Product in the Territory shall be
determined by Xanodyne in a manner that is consistent with Xanodyne's standard
trade dress and style.

     11.5 Grant of License to XenoPort Trade Name. Subject to the terms and
conditions of this Agreement, XenoPort hereby grants to Xanodyne an exclusive
license to use the XenoPort trade name in the Territory for the packaging,
marketing, distribution, sale and/or promotion of the XenoPort Products in
accordance with Section 11.4 above. As between the Parties, XenoPort shall own
all right, title and interest in and to the XenoPort trade name and all goodwill
from the use of the XenoPort trade name under this Agreement shall vest in and
inure to the benefit of XenoPort.

     11.6 Approval of Packaging and Promotional Materials. To the extent
necessary to preserve XenoPort's legal rights in its trade names, Xanodyne shall
submit representative promotional materials, packaging and XenoPort Product
displaying XenoPort's trade name to XenoPort for XenoPort's review and approval
prior to the first use of such promotional materials, packaging or XenoPort
Product and prior to any subsequent change or addition to such promotional
materials, packaging or XenoPort Product; provided that if XenoPort has not
responded within [**] after the submission of such promotional materials,
packaging or XenoPort Product, XenoPort's approval will be deemed to have been
received.

     11.7 Termination of Trademark License. Xanodyne's right to use the XenoPort
trade name in the Territory shall terminate if Xanodyne's rights to distribute
the XenoPort Products are terminated or expire. Xanodyne shall take all such
steps as XenoPort may reasonably request to transfer to XenoPort of all rights,
registrations, recordations and the like for such trade name.

                                       36

<PAGE>

                                   ARTICLE 12
                                 CONFIDENTIALITY

     12.1 Confidential Information. Except as expressly authorized in this
Agreement, the Parties agree that the receiving Party shall not publish or
otherwise disclose and shall not use for any purpose any information furnished
to it by the other Party hereto pursuant to this Agreement (collectively,
"Confidential Information"). Notwithstanding the foregoing, Confidential
Information shall not include information that, in each case as demonstrated by
written documentation:

               (a) was already known to the receiving Party, other than under an
obligation of confidentiality, at the time of disclosure or was developed by the
receiving Party prior to its disclosure by the disclosing Party;

               (b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving Party;

               (c) became generally available to the public or otherwise part of
the public domain after its disclosure and other than through any act or
omission of the receiving Party in breach of this Agreement;

               (d) was subsequently lawfully disclosed to the receiving Party by
a person other than the disclosing Party, and who did not directly or indirectly
receive such information from disclosing Party; or

               (e) is developed by the receiving Party without use of, or
reference to, any information or materials disclosed by the disclosing Party.

     12.2 Permitted Disclosures. Notwithstanding the provisions of Section 12.1
above and subject to Sections 12.3 and 12.4 below, each Party hereto may use and
disclose the other Party's Confidential Information to its Affiliates,
licensees, contractors and any other Third Parties to the extent such use and/or
disclosure is reasonably necessary to exercise the rights granted to it, or
reserved by it, under this Agreement, in prosecuting or defending litigation,
complying with applicable governmental laws or regulations, submitting
information to applicable Regulatory Authorities, United States Securities
Exchange Commission, tax or other governmental authorities or conducting
clinical trials as permitted hereunder with respect to the Compound or any
XenoPort Product. If a Party is required by law or regulations to make any such
disclosure of the other Party's Confidential Information, to the extent it may
legally do so, it will give reasonable advance notice to the other Party of such
disclosure and, save to the extent inappropriate in the case of patent
applications or otherwise, will use its good faith efforts to secure
confidential treatment of such Confidential Information prior to its disclosure
(whether through protective orders or otherwise). For any other disclosures of
the other Party's Confidential Information, including to Affiliates, licensees,
contractors and other Third Parties, a Party shall ensure that the recipient
thereof is bound by a written confidentiality agreement as materially protective
of such Confidential Information as this Article 12.

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<PAGE>

     12.3 Confidential Terms. Each Party agrees not to disclose to any Third
Party [**], except each Party may disclose [**]: (a) [**] on a need to know
basis, [**]; and (b) [**] provided that in the case of the foregoing paragraph
(b), the disclosing Party shall promptly notify the other Party [**] allow the
other Party [**] to the extent allowable by law, to seek limitations on the
portion of the Agreement that is required to be disclosed. Notwithstanding the
foregoing, the Parties [**]; thereafter, each Party may each disclose to Third
Parties the information [**].

     12.4 Publication of XenoPort Product Information. Prior to its publishing,
publicly presenting and/or submitting for written or oral publication a
manuscript, abstract or the like that includes Data or other information
relating to the Compound or any XenoPort Product that has not previously been
published pursuant to this Section 12.4, a Party shall provide the other Party a
copy thereof for its review for at least [**] (unless such Party is required by
law to publish such information sooner). The publishing Party shall consider in
good faith any comments provided by the other Party during such [**] period. In
addition, the publishing Party shall, at the request of the other Party, remove
any Confidential Information of the other Party therefrom, except each Party
shall have the right to publicly disclose any information, including
Confidential Information, pertaining to safety or efficacy of the Compound
and/or any XenoPort Product that such Party believes in good faith it is
obligated or ethically bound to disclose. The contribution of each Party shall
be noted in all publications or presentations by acknowledgment or
co-authorship, whichever is appropriate.

     12.5 General Publicity. The Parties acknowledge the importance of
supporting each other's efforts to publicly disclose results and significant
developments regarding the Compound and XenoPort Products and other activities
in connection with this Agreement, beyond what is required by law, and each
Party may make such disclosures from time to time with the approval of the other
Party, which approval shall not be unreasonably withheld or delayed. Such
disclosures may include, without limitation, achievement of Milestones under
Section 6.2, significant events in the research, development and regulatory
process with respect to the Compound or a Product, commercialization activities
and the like. When a Party (the "Requesting Party") elects to make any such
public disclosure under this Section 12.5, it will give the other Party (the
"Cooperating Party") at least [**] notice to review and comment on such
statement, it being understood that if the Cooperating Party does not notify the
Requesting Party in writing within such [**] period of any reasonable
objections, as contemplated in this Section 12.5, such disclosure shall be
deemed approved; and in any event, the Cooperating Party shall work diligently
and reasonably to agree on the text of any proposed disclosure in an expeditious
manner. The principles to be observed in such disclosures shall be accuracy,
compliance with applicable law and regulatory guidance documents, reasonable
sensitivity to potential negative reactions of the FDA (and its foreign
counterparts) and the need to keep investors informed regarding the Requesting
Party's business. Accordingly, the Cooperating Party shall not withhold its
approval of a proposed disclosure that complies with such principles.

     12.6 Prior Non-Disclosure Agreements. Upon execution of this Agreement, the
terms of this Article 12 shall supersede any prior non-disclosure, secrecy or
confidentiality agreement between the Parties, including that certain
confidentiality agreement between the Parties dated November 15, 2006. Any
information disclosed under such prior agreements shall be deemed disclosed
under this Agreement.

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<PAGE>

                                   ARTICLE 13
                              TERM AND TERMINATION

     13.1 Term. This Agreement commences on the Effective Date and, unless
terminated earlier as provided in this Article 13, shall continue in full force
and effect on a Product-by-Product basis until Xanodyne has no remaining royalty
obligations with respect to such Product. Upon expiration (but not an earlier
termination) of this Agreement in the Territory with respect to a XenoPort
Product, Xanodyne shall have a perpetual, non-exclusive, fully paid-up,
royalty-free license under the XenoPort Know-How to: (a) develop or have
developed and make or have made, such XenoPort Product in or outside the
Territory (but, outside the Territory, excluding any development constituting
the conduct of clinical trials); and (b) use, import, sell, market, offer for
sale, distribute and promote such XenoPort Product in the Territory.

     13.2 Breach. Either Party to this Agreement may terminate this Agreement in
the event the other Party shall have materially breached or defaulted in the
performance of any of its material obligations hereunder, and such default shall
have continued for [**] after written notice thereof was provided to the
breaching Party by the non-breaching Party. Any such termination shall become
effective at the end of such [**] period unless the breaching Party has cured
any such breach or default prior to the expiration of the [**] period.

     13.3 Termination For Convenience. Xanodyne may terminate this Agreement in
its entirety for any reason upon one hundred twenty (120) days prior written
notice to XenoPort; provided that Xanodyne shall not issue any notice of
termination under this Section 13.3 within the first twelve (12) months after
the Effective Date unless Xanodyne first accelerates and pays to XenoPort the
remaining initial license fee installment as set forth in Section 6.1.2. If at
any time after the first anniversary of the Effective Date there are no XenoPort
Products for which material clinical development activities are being
undertaken, or that are being sold, by Xanodyne in the Territory for a period of
one hundred eighty (180) days, XenoPort may terminate this Agreement on written
notice to Xanodyne.

                                   ARTICLE 14
                              EFFECT OF TERMINATION

     14.1 Accrued Obligations. The expiration or termination of this Agreement
for any reason shall not release either Party from any liability that, at the
time of such expiration or termination, has already accrued to the other Party
or that is attributable to a period prior to such expiration or termination, nor
will any termination of this Agreement preclude either Party from pursuing all
rights and remedies it may have under this Agreement, or at law or in equity,
with respect to any breach of this Agreement.

     14.2 Rights on Termination. This Section 14.2 shall apply upon any
termination of Xanodyne's rights under this Agreement, excluding termination of
this Agreement by Xanodyne pursuant to Section 13.2 above for XenoPort's breach
of this Agreement.

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<PAGE>

          14.2.1 Wind-down Period.

               (a) Development. In the event there are any ongoing clinical
trials of any XenoPort Product in the Territory, at XenoPort's request,
following the date a notice of termination has been issued pursuant to Section
13.2 or 13.3, as applicable, Xanodyne agrees: (i) to take steps to [**]; or (ii)
to the extent so requested by XenoPort, to promptly transition to XenoPort or
its designee such clinical trials or portions thereof; in each case, at
XenoPort's expense. Xanodyne shall continue to [**] in accordance with the terms
and conditions of this Agreement.

               (b) Commercialization. To avoid a disruption in the supply of
XenoPort Products to patients, if this Agreement is terminated after the first
commercial sale of any XenoPort Product in the Territory, Xanodyne and its
Affiliates shall continue to market, promote, distribute and otherwise
commercialize (including with the assistance of any Co-Promotion Partner, to the
extent permitted by any agreement with such Co-Promotion Partner) the XenoPort
Products in the Territory for which Marketing Approval by the FDA has been
obtained (unless the FDA or a court of competent jurisdiction in the Territory
issues a directive or order that a particular XenoPort Product be recalled or
withdrawn in the Territory, or the Parties mutually agree that a particular
XenoPort Product should be recalled or withdrawn in the Territory) and in
accordance with the terms and conditions of this Agreement, until [**], but in
no event [**] after the effective date of any such termination of this Agreement
(the "Wind-down Period"); provided that Xanodyne and its Affiliates shall cease
such activities, or any portion thereof, upon [**] notice by XenoPort requesting
that such activities (or portion thereof) be ceased. Notwithstanding any other
provision of this Agreement, during the Wind-down Period, Xanodyne's rights with
respect to the Compound and XenoPort Products in the Territory shall be
non-exclusive and, without limiting the foregoing, XenoPort shall have the right
to engage one or more other distributor(s) and/or licensee(s) of the Compound
and/or any XenoPort Product in the Territory. Any Products sold or disposed by
Xanodyne in the Territory during the Wind-down Period shall be subject to the
applicable payment obligations under Article 6 above and all relevant deductions
or credits due to Xanodyne in accordance with this Agreement. Within [**] of
expiration of the Wind-down Period, Xanodyne shall notify XenoPort of any
quantity of the Intermediate, Compound and/or XenoPort Products remaining in
Xanodyne's inventory and XenoPort shall have the option, upon notice to
Xanodyne, to repurchase any such quantities of the Intermediate, Compound and/or
XenoPort Products, as applicable, from Xanodyne at a price equal to [**]
calculated in accordance with GAAP and Xanodyne's then-prevailing standard
procedures for calculating costs of good sold. For the sake of clarity, such
[**].

          14.2.2 Assignment of Regulatory Filings and Marketing Approvals. At
XenoPort's option, which shall be exercised by written notice to Xanodyne,
Xanodyne shall assign to XenoPort or its designee (or, to the extent not so
assignable, Xanodyne shall take all reasonable actions to make available to
XenoPort or its designee the benefits of) all regulatory filings and
registrations (including INDs, NDAs and Marketing Approvals by the FDA) for the
Compound and XenoPort Products in the Territory. In each case, unless otherwise
required by any applicable law or regulation, the foregoing assignment (or
availability) shall be effected within [**] after the effective date of any such
termination of this Agreement. In addition, Xanodyne shall promptly provide to
XenoPort a copy of all Data and Xanodyne Know-How pertaining to the Compound and
all XenoPort Products in the Territory, or otherwise relied upon by Xanodyne in
association with any

                                       40

<PAGE>

IND, NDA or other approval for the Compound or any XenoPort Product in the
Territory, to the extent not previously provided to XenoPort, and XenoPort shall
have the right to use and disclose all such Data and Xanodyne Know-How following
termination of this Agreement.

          14.2.3 Supply. To the extent applicable, Xanodyne shall cooperate
fully to transition to XenoPort, upon XenoPort's request, any arrangement with
any contractor from which Xanodyne had arranged to obtain a supply of the
Intermediate, and/or any Compound and/or XenoPort Product, as applicable. In the
event that such materials are manufactured by Xanodyne, then Xanodyne shall sell
to XenoPort such materials pursuant to purchase orders submitted by XenoPort to
Xanodyne, and XenoPort shall purchase from Xanodyne such materials in the
quantities specified in any such purchase orders, for a price calculated in
accordance with this Section 14.2.3 until [**]; provided that [**] and in any
event, Xanodyne's obligations to supply such materials during such transition
time shall not continue for a period of [**]. Xanodyne shall provide the
Intermediate, Compound or XenoPort Products to XenoPort pursuant to this Section
14.2.3 at [**] such Intermediate, Compound and/or XenoPort Products, as
applicable, calculated in accordance with GAAP and Xanodyne's then prevailing
standard procedures for calculating cost of goods. For the sake of clarity,
[**]. In addition, Xanodyne shall promptly provide to XenoPort a copy of all
Data pertaining to the manufacture of the Intermediate, Compound and/or XenoPort
Products, as applicable, to the extent not previously provided to XenoPort,
during the term or pursuant to Section 14.2.2, and XenoPort shall have the right
to use (and authorize the use of), and to disclose, all such Data following
termination of this Agreement.

          14.2.4 Transition. Without limiting the foregoing, Xanodyne shall use
Commercially Reasonable Efforts to cooperate with XenoPort and/or its designee
to effect a smooth and orderly transition in the development, manufacture, sale
and ongoing marketing, promotion and commercialization of the Compound and
XenoPort Products for the Territory during the Wind-down Period. Xanodyne shall,
upon written request from XenoPort, provide XenoPort copies of customer lists,
customer data and other customer information relating to all XenoPort Products
in the Territory (except as prevented by the applicable laws and regulations
relating to the protection of personal information), which XenoPort shall have
the right to use and disclose. Without limiting the foregoing, Xanodyne shall
conduct in a reasonable manner any activities to be conducted under this Section
14.2.

          14.2.5 Assignment of Product Trademarks. Promptly following the
effective date of any termination of this Agreement pursuant to Section 13.2 or
13.3, Xanodyne shall assign, or cause to be assigned, to XenoPort or its
designee, at XenoPort's expense, all right, title and interest in and to the
Product Trademarks, together with all registrations or applications for
registration of such trademarks, in the Territory. In each case, unless
otherwise required by any applicable law or regulation or requested by XenoPort,
the foregoing assignment shall be made within [**] after the effective date of
any termination of this Agreement. XenoPort hereby grants to Xanodyne a
non-exclusive license to use the Product Trademarks in the Territory for the
packaging, marketing, distributing, sale and promotion of the XenoPort Products
solely for the purposes of permitting Xanodyne to comply with its obligations
under this Section 14.2. Such license shall become effective upon the assignment
to XenoPort of the Product Trademarks, and all registrations and

                                       41

<PAGE>

applications for registration of such Product Trademarks, in the Territory and
shall persist until the expiration of the applicable periods described in
Section 14.2.1 or 14.2.3 above, as applicable.

          14.2.6 Return of Materials. Within [**] after the end of the Wind-down
Period (or, to the extent applicable, within [**] after the termination of
Xanodyne's obligations under Section 14.2.3), Xanodyne shall either return to
XenoPort or destroy, as directed by XenoPort, all tangible items comprising,
bearing or containing any Product Trademarks, the XenoPort trade name, and/or
any Data ("Product Materials") and all Confidential Information of XenoPort,
that is in Xanodyne's possession. Except as necessary to comply with its
obligations in Section 14.2.3, effective upon the end of the Wind-down Period
(or, to the extent applicable, within [**] after the termination of Xanodyne's
obligations under Section 14.2.3): (a) Xanodyne shall cease to use all
trademarks (including the Product Trademarks) and trade names of XenoPort in the
Territory; and (b) all rights granted to Xanodyne hereunder with respect to the
Compound and XenoPort Products in the Territory shall terminate. In addition,
all Data generated by, or on behalf of, Xanodyne hereunder during the term of
the Agreement shall, to the extent it specifically pertains to the Compound
and/or the XenoPort Products, be deemed Confidential Information of XenoPort and
not Confidential Information of Xanodyne (and will not be subject to the
exclusion under Section 12.1(a) and (d) above); it being understood that the
foregoing shall not apply to any Tools.

     14.3 Survival. Upon the expiration or termination of this Agreement, all
rights and obligations of the Parties under this Agreement shall terminate
except those described in the following Articles and Sections: [**]. In
addition: (a) upon termination of this Agreement other than by Xanodyne pursuant
to Section 13.2: (i) [**]; and (ii) [**]; (b) upon termination of this Agreement
for any reason, the following Sections shall also survive: [**]; and (c) upon
expiration (but not an earlier termination of this Agreement), the following
Sections shall also survive: [**].

                                   ARTICLE 15
                         REPRESENTATIONS AND WARRANTIES

     15.1 General Representations. Each Party represents and warrants to the
other as of the Effective Date as follows:

          15.1.1 Duly Organized. Such Party is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, and is qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which the conduct of its business or
the ownership of its properties requires such qualification and failure to have
such would prevent such Party from performing its obligations under this
Agreement.

          15.1.2 Due Execution; Binding Agreement. This Agreement is a legal and
valid obligation binding upon such Party and enforceable in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws of general application affecting the rights and
remedies of creditors and by general equity principles. The execution, delivery
and performance of this Agreement by such Party have been duly authorized by all
necessary corporate action and do not and will not: (a) require any consent or
approval of its stockholders; except, with respect to Xanodyne, the consent of
its preferred stockholders as required

                                       42

<PAGE>

by the certificate of incorporation of Xanodyne, which consent has been obtained
as of the Effective Date; (b) to such Party's knowledge, violate any law, rule,
regulation, order, writ, judgment, decree, determination or award of any court,
governmental body or administrative or other agency having jurisdiction over
such Party; nor (c) conflict with, or constitute a default under, any agreement,
instrument or understanding, oral or written, to which such Party is a party or
by which it is bound.

     15.2 Representations and Warranties of XenoPort. XenoPort represents and
warrants to Xanodyne that, as of the Effective Date:

          15.2.1 it has the full right and authority to grant the rights and
licenses as provided herein;

          15.2.2 it: (i) has not previously granted any right, license or
interest in or to the XenoPort Data, the XenoPort Know-How, the XenoPort
Patents, the Compound or any portion thereof; and (ii) is under no obligation to
grant any such license, right or interest; in each case, that is in conflict
with the rights or licenses granted to Xanodyne under this Agreement;

          15.2.3 the XenoPort Patents listed on Exhibit 1.37.1 and Exhibit
1.37.2 are the only Patents owned or Controlled by XenoPort in the Territory
that are (i) necessary to make, have made, use, import, offer for sale or sell
the Compound or the XenoPort Products in the Territory; and (ii) to make or have
made, use and import the Intermediate for the purposes of making or having made
the Compound, alone or as incorporated into a XenoPort Product, in the
Territory;

          15.2.4 to its knowledge, XenoPort owns or Controls all of the
processes necessary to manufacture the Intermediate in the form and in the
manner in which the Intermediate is being manufactured as of the Effective Date,
specifically, to its knowledge, there are no licenses required from a Third
Party to make or have made the Intermediate in such form and manner;

          15.2.5 there are no actual, pending, alleged, or to its knowledge,
threatened actions, suits, claims, interference or governmental investigations,
or intellectual property right litigation, or, to its best knowledge, threatened
product liability action, in each case, in the Territory, involving the
Intermediate, Compound, the XenoPort Patents or the XenoPort Know-How by or
against XenoPort or any of its Affiliates;

          15.2.6 all necessary consents, approvals and authorizations of all
Regulatory Authorities, other governmental authorities and other persons or
entities required to be obtained by XenoPort in order to enter into this
Agreement have been obtained;

          15.2.7 there is no actual, pending, alleged, or to its knowledge,
threatened infringement by a Third Party of any of the XenoPort Patents in the
Territory, and there is no actual, pending, alleged, or to its knowledge,
threatened misappropriation by a Third Party of any of the XenoPort Know-How in
the Territory, and it is not aware of any facts that would give rise to any
claim of infringement of any Third Party's intellectual property as a result of
the manufacture, use or sale of the Compound in the Territory;

                                       43

<PAGE>

          15.2.8 to its knowledge, none of the issued XenoPort Patents are
invalid or unenforceable in the Territory; and

          15.2.9 XenoPort does not have any knowledge that any of Xanodyne's
representations and warranties set forth in Section 15.1 above and Section 15.3
are inaccurate.

     15.3 Representations and Warranties of Xanodyne. Xanodyne represents and
warrants to XenoPort that, as of the Effective Date:

          15.3.1 it has the full right and authority to grant the rights granted
herein;

          15.3.2 the Xanodyne Patents listed on Exhibit 1.34 are the only
Patents owned or Controlled by Xanodyne that are necessary for the manufacture,
sale, use or importation of Xanodyne Products;

          15.3.3 there are no actual, pending, alleged, or to its knowledge,
threatened actions, suits, claims, interference or governmental investigations
or intellectual property right litigation or, to its best knowledge, threatened
product liability action involving any Xanodyne Product, or the Xanodyne
Patents, by or against Xanodyne or any of its Affiliates;

          15.3.4 to its knowledge, none of the issued Xanodyne Patents are
invalid or unenforceable in the Territory;

          15.3.5 to its knowledge, there are no facts or circumstances that
would prevent, or be reasonably likely to prevent, Xanodyne from obtaining
marketing exclusivity for a Xanodyne Product in the Territory pursuant to 21
C.F.R. Section 314.108.

          15.3.6 all necessary consents, approvals and authorizations of all
Regulatory Authorities, other governmental authorities and other persons or
entities required to be obtained by Xanodyne in order to enter into this
Agreement have been obtained;

          15.3.7 there is no actual, pending, alleged or, to its knowledge,
threatened infringement by a Third Party of any of the Xanodyne Patents, and
there is no actual, pending, alleged, or to its knowledge, threatened
misappropriation by a Third Party of any of the Xanodyne Know-How, and it is not
aware of any facts which would give rise to any claim of infringement of any
Third Party's intellectual property as a result of the manufacture, use or sale
of the Xanodyne Products in the Territory; and

          15.3.8 Xanodyne does not have any knowledge that any of XenoPort's
representations and warranties set forth in Sections 15.1 and 15.2 above are
inaccurate.

     15.4 DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT,
NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTIES OF ANY KIND,
EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT OR VALIDITY
OF ANY PATENTS ISSUED OR PENDING.

                                       44

<PAGE>

     15.5 LIMITATION OF LIABILITY. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT OR
OTHERWISE, NEITHER PARTY SHALL BE LIABLE TO THE OTHER WITH RESPECT TO ANY
SUBJECT MATTER OF THIS AGREEMENT, WHETHER UNDER ANY CONTRACT, NEGLIGENCE, STRICT
LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY, FOR ANY INCIDENTAL, INDIRECT,
SPECIAL, EXEMPLARY, PUNITIVE, MULTIPLE OR CONSEQUENTIAL DAMAGES (INCLUDING,
WITHOUT LIMITATION, LOST PROFITS, LOSS OF USE, DAMAGE TO GOODWILL OR LOSS OF
BUSINESS) EXCEPT IN THE CASE OF (A) BREACH OF ARTICLE 12 OR (B) SUCH DAMAGES
OWED TO THIRD PARTIES PURSUANT TO ARTICLE 16.

                                   ARTICLE 16
                                 INDEMNIFICATION

     16.1 Indemnification of XenoPort. Xanodyne shall indemnify and hold
harmless each of XenoPort and its Affiliates and their respective directors,
officers and employees and the respective successors and assigns of any of the
foregoing (the "XenoPort Indemnitees"), from and against any and all
liabilities, damages, penalties, fines, costs and expenses (including reasonable
attorneys' fees and other expenses of litigation) ("Liabilities") from any
claims, actions, suits or proceedings brought by a Third Party (a "Third Party
Claim") incurred by any XenoPort Indemnitee, arising from, or occurring as a
result of: (a) the manufacture, use, marketing, distribution, sale or promotion
of the Compound and/or any Product by Xanodyne, or its Affiliates or licensees;
or (b) any material breach of any representations, warranties or covenants given
by Xanodyne under this Agreement; except to the extent such Third Party Claim
falls within the scope of XenoPort's indemnification obligations set forth in
Section 16.2 below or resulted from the gross negligence or willful misconduct
of a XenoPort Indemnitee.

     16.2 Indemnification of Xanodyne. XenoPort shall indemnify and hold
harmless each of Xanodyne and its Affiliates and their respective directors,
officers and employees and the respective successors and assigns of any of the
foregoing (the "Xanodyne Indemnitees"), from and against any and all Liabilities
from any Third Party Claims incurred by any Xanodyne Indemnitee, arising from,
or occurring as a result of: (a) the manufacture, use, marketing, distribution,
sale or promotion of the Compound and/or any XenoPort Product by XenoPort, or
its Affiliates or licensees (other than Xanodyne or its Affiliates or
licensees); or (b) any material breach of any representations, warranties or
covenants given by XenoPort under this Agreement; except to the extent any such
Third Party Claim falls within the scope of Xanodyne's indemnification
obligations set forth in Section 16.1 above or resulted from the gross
negligence or willful misconduct of a Xanodyne Indemnitee.

     16.3 Procedure. A Party that intends to claim indemnification under this
Article 16 (the "Indemnitee") shall promptly notify the other Party (the
"Indemnitor") in writing of any Third Party Claim, in respect of which the
Indemnitee intends to claim such indemnification, and the Indemnitor shall have
sole control of the defense and/or settlement thereof. The indemnity arrangement
in this Article 16 shall not apply to amounts paid in settlement of any action
with respect to a Third Party Claim if such settlement is effected without the
consent of the Indemnitor, which consent shall not be withheld or delayed
unreasonably. The failure to deliver written notice to the Indemnitor within a
reasonable time after the commencement of any action with respect to a Third
Party Claim, if

                                       45

<PAGE>

prejudicial to its ability to defend such action, shall relieve such Indemnitor
of any liability to the Indemnitee under this Article 16, but the omission to so
deliver written notice to the Indemnitor shall not relieve the Indemnitor of any
liability that it may have to any Indemnitee otherwise than under this Article
16. The Indemnitee under this Article 16 shall, at its expense, cooperate fully
with the Indemnitor and its legal representatives in the investigation of any
action with respect to a Third Party Claim covered by this indemnification. For
clarity, it is understood that (a) Xanodyne shall not be obligated to indemnify
XenoPort [**]; except, in each case, to the extent Xanodyne is obligated to
indemnify XenoPort for any such amount in accordance with paragraph (b) of
Section 16.1 above; and (b) XenoPort shall not be obligated to indemnify
Xanodyne [**]; except to the extent XenoPort is obligated to indemnify Xanodyne
for any such amount in accordance with paragraph (b) of Section 16.2 above.

     16.4 Insurance. Each Party shall secure and maintain, during the term of
this Agreement and for a period of [**] thereafter, comprehensive general
liability insurance, including products liability insurance and coverage for
clinical trials, underwritten by a reputable and financially secure insurance
carrier, in a form and having liability limits consistent with standards in the
pharmaceutical industry based upon such Party's activities and indemnification
obligations under this Agreement, as applicable. Each Party shall furnish to the
other Party, on request, certificates of insurance setting forth the amount of
liability insurance and a provision that the other Party shall receive [**]
written notice prior to termination or material reduction to the level of
coverage.

                                   ARTICLE 17
                               DISPUTE RESOLUTION

     17.1 Dispute Resolution. The Parties agree that any dispute arising with
respect to the interpretation, enforcement, termination or invalidity of this
Agreement, or the failure of any Committee to reach [**] (each a "Dispute"),
shall be resolved through the procedures set forth in this Article 17.

     17.2 [**] Intervention. Except for any failure of any Committee to reach
[**], which shall be resolved in accordance with the procedures specified in
Section 3.5 above, the Dispute shall first be presented to [**]. If [**] cannot
resolve the Dispute within [**] of the request to do so, either Party may
initiate arbitration proceedings in accordance with Section 17.3 below, with
respect to a Dispute which the Parties have agreed to submit to arbitration, as
provided in Section 17.3, or initiate legal proceedings with respect to any
other Dispute.

     17.3 Arbitration Proceedings. If the [**] do not reach a mutually
acceptable resolution as to a Dispute under Section 3.5 above, upon written
notice by either Party to the other Party, the Dispute shall be submitted for
resolution by final, binding arbitration in the manner described in this Section
17.3.

          17.3.1 Conduct of Arbitration. Any arbitration pursuant to this
Section 17.3 shall be conducted in English, by the Judicial Arbitration and
Mediation Services, Inc. ("JAMS") in New York City, New York, or such other
location as the Parties agree, in accordance with the JAMS Streamlined
Arbitration Rules and Procedures, as modified by this Section 17.3, by a single

                                       46

<PAGE>

arbitrator appointed in accordance with such Rules, or if the Rules do not
provide for such appointment, by the chief executive officer of JAMS. If the
arbitrator determines it appropriate, the arbitrator shall select an expert who
[**] or an individual as nearly meeting such qualifications as is practicable as
determined by the arbitrator, to advise on the proposed resolution of the
dispute. Each Party shall [**]. If so requested by the arbitrator, [**] pursuant
to this Section 17.3.1; provided that [**].

          17.3.2 Completion in [**]. In any arbitration under this Section 17.3,
the arbitrator and the Parties shall use all reasonable efforts to resolve such
dispute within [**] after the selection of the arbitrator, or as soon thereafter
as is practicable.

          17.3.3 Costs. The costs of any arbitration under this Section 17.3
shall be shared equally by the Parties, and each Party shall bear its own costs
and expenses in connection with such arbitration; provided that the arbitrator
may require the non-prevailing Party to bear one hundred percent (100%) of such
costs, and/or the direct expenses of the prevailing Party to the extent the
arbitrator determines that the non-prevailing Party pursued the Dispute in bad
faith. The decision of the arbitrator shall be binding on the Parties, and any
judgment upon such decision of the arbitrator may be entered and enforced in any
court of competent jurisdiction.

     17.4 Interim Relief. Notwithstanding anything in this Article 17 to the
contrary, XenoPort and Xanodyne shall each have the right to apply to any court
of competent jurisdiction for appropriate interim or provisional relief, as
necessary to protect the rights or property of that Party, pending the selection
of the arbitrator or the arbitrator's determination of the merits of any
Dispute.

                                   ARTICLE 18
                                  MISCELLANEOUS

     18.1 Force Majeure. If the performance of any part of this Agreement
(except for any payment obligation for goods already shipped or amounts already
accrued under this Agreement) by either Party is prevented, restricted,
interfered with or delayed by reason of force majeure (including fire,
earthquake, flood, embargo, power shortage or failure, acts of war or terrorism,
insurrection, riot, lockout or other labor disturbance, governmental acts or
orders or restrictions, or acts of God), the Party so affected shall, upon
giving written notice to the other Party, be excused from such performance to
the extent of such prevention, restriction, interference or delay; provided that
the affected Party shall use its reasonable efforts to avoid or remove such
causes of non-performance and shall continue performance with the utmost
dispatch whenever such causes are removed.

     18.2 Governing Law. This Agreement and all questions regarding its validity
or interpretation, or the breach or performance of this Agreement, shall be
governed by, and construed in accordance with, the laws of the State of New
York, without reference to conflicts of laws principles.

     18.3 Waiver of Breach. Except as otherwise expressly provided in this
Agreement, any term of this Agreement may be waived only by a written instrument
executed by a duly authorized representative of the Party waiving compliance.
The delay or failure of either Party at any time to

                                       47

<PAGE>

require performance of any provision of this Agreement shall in no manner affect
such Party's rights at a later time to enforce the same. No waiver by either
Party of any condition or term in any one or more instances shall be construed
as a further or continuing waiver of such condition or term or of another
condition or term.

     18.4 Modification. No amendment or modification of any provision of this
Agreement shall be effective unless in writing signed by a duly authorized
representative of each Party. No provision of this Agreement shall be varied,
contradicted or explained by any oral agreement, course of dealing or
performance or any other matter not set forth in an agreement in writing and
signed by a duly authorized representative of each Party.

     18.5 Severability. If any provision of this Agreement, or the application
of such provision to any Party or circumstance, shall be held invalid, illegal
or unenforceable, the Parties shall negotiate in good faith a valid, legal and
enforceable substitute provision that most nearly reflects the original intent
of the Parties and the remainder of this Agreement shall continue in full force
and effect. In the event a Party seeks to avoid a provision of this Agreement by
asserting that such provision is invalid, illegal or otherwise unenforceable,
the other Party shall have the right to terminate this Agreement upon [**] prior
written notice to the asserting Party, unless such assertion is eliminated and
the effect of such assertion is cured within such [**] period. Any termination
in accordance with the foregoing sentence shall be deemed an election by
Xanodyne to terminate pursuant to Section 13.3 if XenoPort exercises its right
to terminate under this Section 18.5, and a termination for the breach of
XenoPort pursuant to Section 13.2 if Xanodyne exercises its right to terminate
under this Section 18.5.

     18.6 Entire Agreement. This Agreement (including the Exhibits attached
hereto), together with any Pharmaco-Vigilance Agreement executed by the Parties
pursuant to Section 4.7.1 and/or any Co-Promotion Agreement executed by the
Parties pursuant to Section 5.4, constitute the entire agreement between the
Parties relating to its subject matter, and supersede all prior or
contemporaneous agreements, understandings or representations, either written or
oral, between XenoPort and Xanodyne with respect to such subject matter.

     18.7 Notices. Unless otherwise agreed by the Parties or specified in this
Agreement, all communications between the Parties relating to, and all written
documentation to be prepared and provided under, this Agreement shall be in the
English language. Any notice required or permitted under this Agreement shall be
in writing in the English language: (a) delivered personally; (b) sent by
registered or certified mail (return receipt requested and postage prepaid); (c)
sent by express courier service providing evidence of receipt, postage pre-paid
where applicable; or (d) sent by facsimile (receipt verified and a copy promptly
sent by another permissible method of providing notice described in paragraphs
(a), (b) or (c) above), to the following addresses of the Parties or such other
address for a Party as may be specified by like notice:

                                       48

<PAGE>

To XenoPort:                            To Xanodyne:
------------                            ------------
XenoPort, Inc.                          Xanodyne Pharmaceuticals, Inc.
3410 Central Expressway                 One Riverfront Place,
Santa Clara, California 95051,          Newport, Kentucky 41071,
Attention: Secretary                    Attention: General Counsel
Phone: (408) 616-7200                   Telephone: (859) 371-6383
Facsimile: (408) 616-7211               Facsimile: (859) 371-6391

With a copy to:                         With a copy to:
Wilson Sonsini Goodrich & Rosati        Dinsmore & Shohl LLP
650 Page Mill Road                      255 East Fifth Street, Suite 1900
Palo Alto, California 94304-1050        Cincinnati, Ohio 45202-4700
Attention: Kenneth A. Clark, Esq.       Attention: Paul R. Mattingly, Esq.
Telephone: (650) 493-9300               Telephone: (513) 977-8200
Facsimile: (650) 493-6811               Facsimile: (513) 977-8141

     Any notice required or permitted to be given concerning this Agreement
shall be effective upon receipt by the Party to whom it is addressed, or within
seven (7) days of dispatch whichever is earlier.

     18.8 Assignment. This Agreement shall not be assignable by either Party to
any Third Party without the written consent of the other Party hereto; except
either Party may assign this Agreement without the other Party's consent to an
entity that acquires substantially all of the business or assets of the
assigning Party which relate to the line of business to which this Agreement
relates, whether by merger, acquisition or otherwise; provided that the entity
to whom this Agreement is assigned assumes this Agreement in writing or by
operation of law. In addition, either Party shall have the right to assign this
Agreement to an Affiliate upon written notice to the non-assigning Party;
provided that the assigning Party guarantees the performance of this Agreement
by such Affiliate; and further provided that if the non-assigning Party
reasonably believes such assignment could result in material adverse tax
consequences to the non-assigning Party, such assignment shall not be made
without the non-assigning Party's consent. Subject to the foregoing, this
Agreement shall inure to the benefit of each Party, its successors and permitted
assigns. Any assignment of this Agreement in contravention of this Section 18.8
shall be null and void.

     18.9 Independent Contractors. Nothing contained in this Agreement is
intended, or shall be deemed or construed, to establish a joint venture or
partnership between XenoPort or Xanodyne. No Party to this Agreement shall have
any express or implied right or authority to assume or create any obligations on
behalf of, or in the name of, the other Party, or to bind the other Party to any
contract, agreement or undertaking with any Third Party.

     18.10 Interpretation. The captions to the several Articles and Sections of
this Agreement are not a part of this Agreement, but are included for
convenience of reference and shall not affect its meaning or interpretation. In
this Agreement: (a) the word "including" shall be deemed to be followed by the
phrase "without limitation" or like expression; (b) the singular shall include
the plural and vice versa; and (c) masculine, feminine and neuter pronouns and
expressions shall be

                                       49

<PAGE>

interchangeable. Each accounting term used herein that is not specifically
defined herein shall have the meaning given to it under GAAP, or other generally
accepted cost accounting principles in the United States, but only to the extent
consistent with its usage and the other definitions in this Agreement.

     18.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.

      [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]

                                       50

<PAGE>

     IN WITNESS WHEREOF, the Parties hereto have caused this Licensing Agreement
to be duly executed as of the date first above written.

XENOPORT, INC.                          XANODYNE PHARMACEUTICALS, INC.

By: /s/ Ronald W. Barrett               By: /s/ Gregory D. Flexter
    ---------------------------------       ------------------------------------
Name: Ronald W. Barrett                 Name: Gregory D. Flexter
Title: Chief Executive Officer          Title: President and Chief Executive
                                               Officer
<PAGE>

                                   EXHIBIT 1.5

                                    COMPOUND

[**]
<PAGE>

                                  EXHIBIT 1.15

                                  INTERMEDIATE

[**]
<PAGE>

                                  EXHIBIT 1.34

                                XANODYNE PATENTS

[**]
<PAGE>

                                  EXHIBIT 1.35

                                XANODYNE PRODUCT

Provided to Gia Bosko, General Counsel, XenoPort, Inc. by Tom Jennings, General
Counsel, Xanodyne Pharmaceuticals, Inc. by email dated October 1, 2007.

<PAGE>

                                 EXHIBIT 1.37.1

                            XENOPORT COMPOUND PATENTS

[**]
<PAGE>

                                 EXHIBIT 1.37.2

                          XENOPORT INTERMEDIATE PATENTS

[**]

<PAGE>

                                   EXHIBIT 4.1

                                DEVELOPMENT PLAN

                                 (See attached.)

<PAGE>

[**]

<PAGE>

                                  EXHIBIT 12.3

                                  PRESS RELEASE

                                 (See attached.)

<PAGE>

(XENOPORT(R) LOGO)                     (XANODYNE(TM) PHARMACEUTICALS, INC. LOGO)

NEWS RELEASE                                            Company Contacts:
For Immediate Distribution                              XenoPort: Jackie Cossmon
                                                        408-616-7220
                                                        ir@XenoPort.com

                                                        Xanodyne: Tom Jennings
                                                        859-371-6383
                                                        pr@xanodyne.com

             XENOPORT AND XANODYNE ANNOUNCE EXCLUSIVE U.S. LICENSING
                              AGREEMENT FOR XP21510

Novel Product Candidate Represents Potential Treatment for Women with
Menorrhagia

SANTA CLARA, CA, AND NEWPORT, KY, OCTOBER __, 2007 -- XenoPort, Inc. (Nasdaq:
XNPT) and Xanodyne Pharmaceuticals, Inc. announced today that they have entered
into an exclusive license agreement for the development and commercialization by
Xanodyne in the United States of a preclinical, non-hormonal, oral product
candidate known as XP21510, discovered by XenoPort, for the potential treatment
of women diagnosed with menorrhagia, or heavy menstrual bleeding. It is
estimated that 9 to 14 percent of healthy women suffer from menorrhagia.

Greg Flexter, chief executive officer of Xanodyne, stated, "Women suffering from
menorrhagia and their healthcare providers need improved treatments for this
potentially life-altering disorder. Our collaboration with XenoPort to develop
XP21510 may provide a non-hormonal, non-surgical option for addressing the
biological processes resulting in menorrhagia. We plan to develop XP21510, which
is covered by an allowed U.S. composition of matter patent, as a follow on
product to Xanodyne's Phase 3 tranexamic acid product candidate, XP12B, for the
treatment of menorrhagia. We believe that XP12B and XP21510 may provide for a
sustainable product life cycle opportunity in this treatment area."

Ronald W. Barrett, Ph.D., chief executive officer of XenoPort, stated, "We
believe that Xanodyne, which focuses on developing and commercializing products
addressing women's health issues, will be an excellent partner for XP21510. This
agreement with Xanodyne is an excellent example of our strategy to maximize the
value of XenoPort's discovery engine by licensing compounds that fall outside
our therapeutic focus while we concentrate our internal resources on the
development and commercialization of our pipeline of central nervous system
product candidates."

                                   -- more --

<PAGE>

XENOPORT AND XANODYNE ANNOUNCE EXCLUSIVE U.S. LICENSING                   PAGE 2
AGREEMENT FOR XP21510

Under the terms of the agreement, Xanodyne receives exclusive rights to develop
and commercialize XP21510 in the United States. In exchange for these rights,
XenoPort is entitled to receive up-front cash payments totaling $12 million, of
which $6 million is payable upon execution of the agreement and the remaining $6
million is due on the 12-month anniversary of the execution date. XenoPort also
will be eligible to receive aggregate cash payments of up to $130 million and $5
million for XP21510 and XP12B, respectively, upon the achievement of certain
development, regulatory and commercial milestones. In addition, XenoPort is
entitled to receive tiered double-digit royalty payments on potential future
sales of XP21510, as well as escalating single-digit royalties on potential
future sales of XP12B.

ABOUT XP21510

XP21510 is a new chemical entity that is a Transported Prodrug of tranexamic
acid. A prodrug is a chemical precursor to an active drug that is metabolized in
the body to form the active drug and provide its medical benefits. XP21510 is
designed to use the body's natural mechanisms for actively transporting
nutrients through the gastrointestinal tract to enhance the delivery of
tranexamic acid into the bloodstream after oral administration. Tranexamic acid
is approved in many countries in Europe and Asia for the treatment of women with
menorrhagia. Tranexamic acid is a man-made derivative of the naturally occurring
amino acid lysine and works to inhibit, on a molecular basis, the break down of
blood clots.

XP21510 was discovered at XenoPort. A United States patent application with
composition-of-matter claims relating to XP21510, publication number US
2007/0027210, has been allowed by the United States Patent and Trademark Office.

ABOUT XP12B

XP12B is a sustained-release formulation of tranexamic acid developed by
Xanodyne that received Fast Track status from the FDA for the potential
treatment of women with menorrhagia. Xanodyne is conducting Phase 3 clinical
trials with XP12B in the United States.

ABOUT MENORRHAGIA

Women with menorrhagia experience abnormally heavy and prolonged menstrual
periods at regular intervals. While a normal menses cycle lasts 21 to 35 days
with an average of five days of bleeding and total blood flow between 25 and 80
milliliters (mL), women with menorrhagia can have seven or more days of bleeding
and lose more than 80 mL of blood per menses. It is estimated that 9 to 14
percent of healthy women suffer from menorrhagia. Because quantitative means of
diagnosing menorrhagia are generally impractical, healthcare professionals often
diagnose menorrhagia symptomatically by considering frequency of tampon or
sanitary napkin change, spotting and staining events, presence of constant pain
in the lower abdomen, interference with regular work and social routines and
measurements of anemia.

                                   -- more --

<PAGE>

XENOPORT AND XANODYNE ANNOUNCE EXCLUSIVE U.S. LICENSING                   PAGE 3
AGREEMENT FOR XP21510

ABOUT XENOPORT

XenoPort, Inc. is a biopharmaceutical company focused on developing a portfolio
of internally discovered product candidates that utilize the body's natural
nutrient transport mechanisms to improve the therapeutic benefits of existing
drugs. XenoPort's most advanced product candidate, XP13512, has successfully
completed a pivotal trial in its Phase 3 clinical program for the treatment of
restless legs syndrome and has successfully completed a Phase 2a clinical trial
for the management of post-herpetic neuralgia. XenoPort has also reported
positive results from a Phase 2a clinical trial of its second product candidate,
XP19986, in patients with gastroesophageal reflux disease.

To learn more about XenoPort, please visit the web site at www.XenoPort.com.

ABOUT XANODYNE

Xanodyne Pharmaceuticals, Inc. is a privately held pharmaceutical company
focused on applying proprietary drug delivery technologies to known drug
compounds. Xanodyne develops and commercializes new products for significant
markets in the therapeutic areas of women's healthcare and pain management. The
company, located in the greater Cincinnati area, has a nationwide sales force
and currently markets numerous pharmaceutical products. More information
regarding Xanodyne can be accessed at www.xanodyne.com.

FORWARD-LOOKING STATEMENTS

This press release contains "forward-looking" statements, including, without
limitation, all statements related to Xanodyne's future development of XP21510
and XP12B; the therapeutic and commercial potential of XP21510 and XP12B; and
potential receipt by XenoPort of future development, regulatory and commercial
milestone and royalty payments with respect to XP21510 and XP12B. Any statements
contained in this press release that are not statements of historical fact may
be deemed to be forward-looking statements. Words such as "believes,"
"anticipates," "plans," "expects," "will," "intends," "potential" and similar
expressions are intended to identify forward-looking statements. These
forward-looking statements are based upon XenoPort's current expectations.
Forward-looking statements involve risks and uncertainties. XenoPort's actual
results and the timing of events could differ materially from those anticipated
in such forward-looking statements as a result of these risks and uncertainties,
which include, without limitation, the uncertainty of the timing and results of
clinical trials of our product candidates; the uncertainty of the FDA approval
process and other regulatory requirements; our dependence on our current and
additional collaborative partners; and the therapeutic and commercial value of
the company's compounds. These and other risk factors are discussed under the
heading "Risk Factors" in our Quarterly Report on Form 10-Q for the quarter
ended June 30, 2007, filed with the Securities and Exchange Commission on August
9, 2007. XenoPort expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any forward-looking

                                   -- more --

<PAGE>

XENOPORT AND XANODYNE ANNOUNCE EXCLUSIVE U.S. LICENSING                   PAGE 4
AGREEMENT FOR XP21510

statements contained herein to reflect any change in the company's expectations
with regard thereto or any change in events, conditions or circumstances on
which any such statements are based.

XenoPort and Transported Prodrug are U.S. trademarks of XenoPort, Inc. Xanodyne
is a U.S. trademark of Xanodyne Pharmaceuticals, Inc.

XNPT2G

                                      #####<PAGE>

                                                                   Exhibit 10.14

          Confidential Materials omitted and filed separately with the
         Securities and Exchange Commission. Asterisks denote omissions.

                                MANUFACTURING AND

                                SUPPLY AGREEMENT

                                 BY AND BETWEEN

                            DSM PHARMACEUTICALS, INC.

                                       AND

                                  AAIPHARMA LLC

<PAGE>

                       MANUFACTURING AND SUPPLY AGREEMENT
                    DSM PHARMACEUTICALS, INC./AAI PHARMA LLC

                                TABLE OF CONTENTS

<TABLE>
<S>           <C>                                                             <C>
ARTICLE 1:    DEFINITIONS.................................................     1
ARTICLE 2:    PRODUCT DEVELOPMENT.........................................     3
ARTICLE 3:    VALIDATION AND.TESTING......................................     3
ARTICLE 4:    MANUFACTURE.................................................     4
ARTICLE 5:    REPRESENTATIONS AND WARRANTIES..............................     6
ARTICLE 6:    QUALITY ASSURANCE...........................................     9
ARTICLE 7:    FORECASTS, ORDER AND SALES..................................    10
ARTICLE 8:    PRICES TERMS OF PAYMENT.....................................    12
ARTICLE 9:    SHIPPING DEFECTS, RETURNS...................................    13
ARTICLE 10:   INTELLECTUAL PROPERTY AND CONFIDENTIALITY...................    14
ARTICLE 11:   TERM AND TERMINATION........................................    15
ARTICLE 12:   INDEMNIFICATION AND INSURANCE...............................    18
ARTICLE 13:   REGULATORY MATTERS; RECORDS.................................    21
ARTICLE 14:   ARBITRATION OF DISPUTES.....................................    23
ARTICLE 15:   NOTICES.....................................................    23
ARTICLE 16:   EQUIPMENT PURCHASES.........................................    24
ARTICLE 17:   MISCELLANEOUS...............................................    25
</TABLE>

<PAGE>

                        MANUFACTURING AND SUPPLY AGREEMENT
                    DSM PHARMACEUTICALS, INC./AAI PHARMA LLC

THIS MANUFACTURING AND SUPPLY AGREEMENT (this "Supply Agreement") is made and
entered into as of JANUARY 26, 2004 (the "Effective Date"), by and between
AAIPHARMA LLC, a limited liability company with its principal place of business
at 2330 Scientific Park, Wilmington, North Carolina 28405 ("AAI"); and DSM
PHARMACEUTICALS, INC., a Delaware corporation with its principal place of
business at located at 5900 NW Greenville Blvd., Greenville, NC 27834 ("DSM")
(each individually referred to as a "Party" and collectively as the "Parties").

BACKGROUND:

AAI desires to engage DSM to become qualified to Manufacture, and to
Manufacture, certain Products (as each term is defined below) for subsequent
commercial distribution by AAI on the terms and conditions set forth herein and
in the related Product Schedules; and

DSM wishes to Manufacture the Produces for AAI on the terms and conditions set
forth herein;

NOW THEREFORE, for and in consideration of the premises and mutual covenants
contained herein, the Parties agree as follows:

                             ARTICLE 1: DEFINITIONS

The following words, terms and phrases, when used herein, shall have the
following respective meanings:

1.1  "AAI Intellectual Property" shall have the meaning set forth in Section
     10.1 hereinafter.

1.2  "API" shall mean the active pharmaceutical ingredient with respect to each
     Product, and shall be as identified in the applicable Product schedule.

1.3  "Affiliate" shall mean any entity that is directly or indirectly controlled
     by a Party; directly or indirectly controls a Party; or is under common
     control with a Party.

1.4  "Batch" shall mean a specific quantity of material produced in a contiguous
     process or series of processes that is expected to be homogenous within
     specified limits. The batch size will be defined as a fixed quantity and
     set forth in the applicable Product Schedule.

1.5  "Contract Year" shall mean a twelve (12) consecutive month period after the
     Effective Date and during the term of this Supply Agreement. The first
     Contract Year shall commence as of the Effective Date, and subsequent
     Contract Years shall commence on each anniversary of the Effective Date.

1.6  "CGMP requirements" means the requirements of the US CGMP.

<PAGE>

1.7  "Drug Application" shall mean the NDA or ANDA issued by the FDA with
     respect to each Product and any other governmental or regulatory consents,
     registrations, approvals or permits necessary to sell or Manufacture the
     Products in the Territory.

1.8  "DSM Intellectual Property" shall have the meaning set forth in Section
     10.1 hereinafter.

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

1.10 "FFDCA" means the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. Sections
     301 et seq., as amended.

1.11 "Law" means any federal, state or local law, statute or ordinance, or any
     rule, regulation, or published guidelines promulgated by any governmental
     or regulatory authority.

1.12 "Manufacture" and "Manufacturing" means the manufacturing, processing,
     formulating, packaging, labeling, holding and quality control and other
     testing of the Products to be performed prior to their delivery to AAI by
     DSM.

1.13 "Product" or "Products" means those pharmaceutical products identified in a
     Product Schedule executed by the Parties and attached hereto.

1.14 "Product Schedule" shall refer to each product schedule for each Product
     which DSM agrees to produce and AAI agrees to purchase hereunder, as
     attached hereto and incorporated herein as part of EXHIBIT A. Each Product
     Schedule shall contain (i) the Product Specifications; (ii) the APIs and
     specifications thereof; (iii) the Raw Materials and specifications thereof;
     (iv) the packaging specifications; (v) the Product price; (vi) API bulk
     yield requirements; (vii) percentage of guaranteed shelf life; (viii) any
     special equipment required to be purchased to manufacture the Product; (ix)
     unusual or special lead times or forecasting requirements; and (ix) any
     other provisions specific to the Product.

1.15 "Qualification Date" with respect to each Product, shall mean the date on
     which DSM satisfactorily completes its validation and testing of the
     Product pursuant to Article 3 of this Supply Agreement such that it becomes
     authorized to begin Manufacturing the Product under the Drug Application in
     accordance with the terms of this Supply Agreement.

1.16 "Quality Agreement" shall mean the quality agreement attached hereto as
     EXHIBIT C, or such other quality agreement as shall be referenced in the
     respective Product Schedule for each Product to be supplied and purchased
     hereunder.

1.17 "Raw Materials" means any excipients, component materials, and packaging
     used to Manufacture the Product, but excluding the API.

1.18 "Specifications" with respect to each Product shall be provided to DSM by
     AAI and shall include the standards to which the API, Raw Materials,
     components, work-in-process materials and finished products should conform
     to be considered acceptable for their

<PAGE>

     intended use as well as the tests, references to analytical procedures, and
     acceptance criteria that are used to measure achievement against the
     standards. Copies of Specifications will be generated by AAI and may be
     amended or supplemented by AAI to reflect the needs of the Product.

1.19 "Term" shall mean the Initial Term plus any Renewal Terms, as such terms
     are defined in Section 11.1 hereof.

1.20 "Territory" shall mean the United States of America and its territories and
     such other locations as may be agreed between the Parties hereof.

1.21 "US CGMP" means the FDA's current Good Manufacturing Practice requirements
     as promulgated under the FFDCA at 21 CFR (parts 210 and 211), and as
     further defined by FDA guidance documents and rules and regulations
     administered by the FDA, as such may be amended from time to time.

1.22 "Work Product" shall have the meaning set forth in Section 10.4.1
     hereinafter.

                         ARTICLE 2: PRODUCT DEVELOPMENT

2.1  Each Product which, the Parties agree to develop hereunder, they shall
     agree on appropriate project execution plans ("PEPs") and Milestone and
     Activity Based Project Planning System plans ("MAPPS"); and the Parties
     shall further agree on the costs of DSM's services (the "Development
     Services") to develop each Product hereunder. The agreed PEPs and MAAPS
     will be included as part of the Product Schedule included in EXHIBIT A.

2.2  AAI shall provide DSM with formulations and specifications for each
     Product, and the Parties shall agree, on the extent of testing and other
     support activities to be included in the Development Services.

2.3  DSM shall provide AAI with data generated by the Development Services as
     may be necessary for AAI to apply to the FDA for approval of DSM as
     manufacturer pursuant to the Drug Applications.

                        ARTICLE 3: VALIDATION AND TESTING

3.1  Validation and Quota. To the extent that DSM is not already authorized, it
     shall cooperate with AAI to become authorized to Manufacture the Products
     under the Drug Applications for the Products to be supplied hereunder. For
     certain controlled substances, DSM shall secure any required approvals from
     governmental authorities to register and to receive a quota for Schedule 2
     narcotic substances. For this purpose, DSM shall successfully conduct
     validation on three (3) Batches of the relevant Product; and thereafter AAI
     shall be obligated to purchase such Batches in accordance with the terms of
     this Supply Agreement. DSM will utilize its best efforts to become
     qualified to Manufacture each of the Products as soon as reasonably
     practicable after the applicable effective date of each Product Schedule.
     If due to DSM negligence or willful misconduct, DSM is denied authorization
     or approval from governmental authorities to

<PAGE>

     register and receive any necessary quota for Schedule 2 narcotic
     substances, then DSM shall be deemed in breach of this Agreement.

3.2  Drug Application. With respect to each Product and subject to the terms of
     this Supply Agreement, AAI shall maintain the Drug Application in full
     force and effect at all times from and after the applicable Qualification
     Date: provided, however, upon the reasonable request of AAI, DSM shall
     assist AAI in connection therewith. DBM hereby acknowledges and agrees that
     the Drug Applications are owned by, in the name of and for the benefit of
     AAI and that DSM has no rights in or to the Drug Applications.

3.3  Distribution outside the United States. In the event that AAI desires to
     market, distribute or sell Products manufactured by DSM in any location
     outside the U.S. and its territories, then AAI shall provide reasonable
     notice to DSM, the parties shall agree to the terms of such arrangement,
     and DSM shall, at AAI's request, cooperate in good faith with AAI to obtain
     any necessary or appropriate Drug Applications.

                             ARTICLE 4: MANUFACTURE

4.1  Manufacture. Subject to the terms and conditions contained herein, and from
     and after the applicable Qualification Date, DSM shall Manufacture, hold,
     handle and ship all Products (a) in accordance with their respective
     Specifications, the Quality Agreement attached hereto as EXHIBIT C and
     incorporated herein by reference, and this Supply Agreement; and (b) in
     material compliance with the CGMP Requirements and all other legal
     requirements applicable to the Manufacturing of Products to be marketed and
     sold in the Territory.

4.2  Non-Manufacturing Services. Notwithstanding the foregoing, there may be
     certain Products that have already been Manufactured by AAI or a third
     party and will be delivered in bulk by AAI to DSM solely for packaging or
     for other non-Manufacturing services. In such event the services to be
     provided will be described in the applicable Product Schedule; and the
     terms of this Agreement, as amended by the applicable Product Schedule,
     will apply solely to the extent related to the described services.

4.3  Exclusivity. DSM shall Manufacture, hold, handle, ship and sell the
     Products exclusively for and to AAI during the Term. Additional exclusivity
     commitments may be agreed to between the Parties in the Product Schedules.

4.4  Manufacturing Changes. DSM may not materially change the Manufacturing
     process of a Product or the source(s) of API or Raw Materials without the
     prior written consent of the AAI.

4.5  AAI Requested Changes. DSM shall make changes as promptly as practicable to
     the Manufacturing process, if requested in writing by AAI, including, but
     not limited to, changes to the existing Products, Specifications, API or
     Raw Materials related to the Products; provided, however, that such changes
     comply with applicable Law.

4.6  Notification and Cost of Changes. DSM shall identify for AAI, in writing
     prior to delivery, the first manufactured Batch of any Product for which
     changes have been

<PAGE>

     implemented and will expressly identify the changes. Unless otherwise
     agreed by the Parties, any and all costs associated with changes required
     or requested by DSM pursuant to Section 4.4 shall be borne by DSM, unless
     such changes are required in order to comply with a change in the CGMP
     Requirements or any applicable Law, in which case they will be borne by
     AAI. Unless otherwise agreed by the Parties, any and all costs associated
     with all other changes, including changes requested by AAI pursuant to
     Section 4.5, shall be borne by AAI.

4.7  Amendment of Specifications. If a change is made to the Specifications or
     Products, AAI shall be responsible for amending the Drug Application for
     such Products; if required, to reflect such change, and for obtaining
     required Government and Regulatory Authority approval of such amendment, if
     any. DSM shall use commercially reasonable efforts to assist AAI in
     obtaining any such approvals. AAI shall also promptly advise DSM in writing
     if AAI files any amendments to a Drug Application, which amendments could
     affect DSM's obligations hereunder.

4.8  Labeling. AAI shall specify all labeling to be used on each Product and the
     packaging thereof, including any changes or modifications to such labels.
     DSM agrees to use the specified labeling (and only such labeling) on the
     Products, and not to use such labeling on any other product. Any AAI
     directed change or modification to a Product label shall be implemented by
     DSM (i) as soon as possible if required by Law, or (ii) as soon is
     reasonably practicable, but no later than [**] weeks following DSM's
     receipt of notification from AAI of such label changes. Except where the
     labeling change results from a change acquired or requested by DSM, AAI
     shall reimburse DSM for costs incurred in connection with any such label
     change, including without limitation, the costs of obsolescence of
     goods-in-process, packaging materials and supplies, and finished goods not
     suitable for marketing in the Territory, but only to the extent that such
     items relate to or were acquired to satisfy any Firm Commitments or Firm
     Forecasts or special lead times agreed to between the parties in the
     applicable Product Schedule.

4.9  Raw Materials and API. DSM shall purchase at its own expense and for its
     own account all Raw Materials, API, packaging components and other items of
     any nature whatsoever that DSM may use to Manufacture the Products.

     4.9.1 Except as otherwise agreed to between the Parties, all right, title
          and interest in and to these items, and in and to all work-in-progress
          incorporating these items, shall remain the sole property of DSM;
          provided that AAI shall reimburse DSM for out-of-pocket-costs
          associated with write-offs, obsolescence and/or destruction of
          finished inventory resulting from any change or modification to any
          Product Manufacturing process, Specifications, Registration or
          labeling requested by AAI or required by a change in applicable Law,
          but only to the extent such Raw Materials, API and other items related
          to or were acquired to satisfy a Firm Commitment, Firm Forecast or
          special lead times agreed to between the parties in the applicable
          Product Schedule.

<PAGE>

     4.9.2 AAI-Approved and AAI-Designated Suppliers. DSM shall utilize only
          those suppliers of API, Raw Materials, or other items for the
          Manufacture of Product hereunder approved by AAI. Any Product price
          quotations shall be based upon the acquisition of materials only
          through such AAI-approved suppliers. In the event that AAI requires
          DSM's use of a supplier with which AAI (and not DSM) has a contractual
          relationship (an "AAI-Designated Supplier"), then, provided that DSM
          promptly notifies AAI of any delays or failures to deliver by such
          AAI-Designated Supplier, DSM shall not be held responsible for delays
          or failures.

                    ARTICLE 5: REPRESENTATIONS AND WARRANTIES

5.1  Representatives and Warranties of DSM. DSM hereby represents and warrants
     to AAI as follows:

     5.1.1 Authority. DSM has full power and authority to execute, deliver and
          perform this Supply Agreement and to consummate the transactions
          contemplated hereby; and this Agreement has been duly executed and
          delivered by DSM and constitutes the valid and binding obligation of
          DSM, enforceable against DSM in accordance with its terms, except as
          enforceability may be limited by bankruptcy, fraudulent conveyance,
          insolvency, reorganization, moratorium and other Laws relating to
          creditors' rights generally and by general equitable principles.

     5.1.2 Absence of Conflicts. The execution, delivery and performance of this
          Supply Agreement by DSM docs not conflict with or constitute a default
          under any agreement, instrument or understanding, oral or written to
          which it is a party or by which it may be bound, does not conflict
          with any provision of any organizational document of DSM, and does not
          conflict with or violate any applicable Law.

     5.1.3 Organization and Standing. DSM is duly organized, validly existing
          and in good standing under the Laws of the state of Delaware, and duly
          authorized to conduct business in the State of North Carolina.

     5.1.4 Actions. There are no pending or uncorrected citations or adverse
          conditions noted in any inspection of the production facilities to be
          employed for the Manufacture of the Products.

     5.1.5 Debarment. Neither DSM nor any of its directors, officers, employees
          or representatives (including subcontractors, if any) have been
          disqualified, suspended, debarred or proposed for debarment by the FDA
          or any other federal or state governmental or regulatory authority for
          any purpose or otherwise determined to be ineligible to participate in
          federal health care programs.

     5.1.6 Compliance With Laws. DSM shall comply with federal, state and local
          Laws and regulations applicable to its operations; and any and all
          hazardous and toxic waste, if any, will be manifested and discarded as
          required by state, federal and local Laws and regulations.

<PAGE>

     5.1.7 Charges. Neither DSM nor any of its directors, officers, employees or
          representatives (including subcontractors, if any) have been charged
          with or convicted for conduct relating to the development or approval,
          or otherwise relating to the regulation, of any drug product under the
          Generic Drug Enforcement Act of 1992 or any other relevant Law. In the
          event that DSM, or any of its principals, is debarred, suspended,
          proposed for debarment or otherwise determined to be ineligible to
          participate in federal health care programs or convicted of a criminal
          offense related to the provision of health care items or services, DSM
          shall notify AAI immediately.

     5.1.8 Products. All Products delivered by DSM (or any subcontractor
          thereof) to the F.O.B. point will, at the time of such delivery, (i)
          comply with this Supply Agreement, including any applicable Product
          Schedules, the Quality Agreement, the applicable Drug Application and
          the Specifications; (ii) comply with all applicable Laws and the CGMP
          Requirements; and (iii) not be adulterated within the meaning of the
          FFDCA or within the meaning of any other applicable Law.

     5.1.9 Equipment. During the term of this Supply Agreement, AAI may purchase
          certain Equipment for use by DSM for the production of the Products.
          Any such sale of Equipment by DSM to AAI shall be deemed subject to
          the representations, warranties and covenants more fully described in
          Article 16 of this Agreement.

     5.1.10 Suitability of API. Any Active Pharmaceutical Ingredient obtained by
          DSM from any party other than AAI will meet the required
          specifications, will be suitable for use in the further processing of
          the Product(s), and with respect to sterile products, will not contain
          any adventitious viruses or other active deleterious substances which
          could contaminate the production processes or other operations of DSM.

5.2  Warranties of AAI. AAI hereby warrants and represents to DSM as follows:

     5.2.1 Authorization. AAI has full company power and authority to execute,
          deliver and perform this Supply Agreement and to consummate the
          transactions contemplated hereby; and this Agreement has been duly
          executed and delivered by AAI and constitutes the valid and binding
          obligation of AAI, enforceable against AAI in accordance with its
          terms except as enforceability may be limited by bankruptcy,
          fraudulent conveyance, insolvency, reorganization, moratorium and
          other Laws relating to or affecting creditors' rights generally and by
          general equitable principles.

     5.2.2 Absence of Conflict. The execution, delivery and performance of this
          Supply Agreement by AAI does not conflict with or constitute a default
          under any agreement, instrument or understanding, oral or written, to
          which it is a party or by which it may be bound, does not conflict
          with any provision or any organizational document of AAI, and does not
          conflict with or violate any applicable Law.

<PAGE>

     5.2.3 Organization and Standing. AAI is a limited liability company, duly
          organized, validly existing and in good standing under the Laws of
          Delaware and duly authorized to conduct business in the State of North
          Carolina.

     5.2.4 Compliance with Laws. The formulation, composition, use,
          distribution, marketing, and/or sale of the Product by AAI shall
          comply with regulatory requirements and applicable Law; and AAI will
          maintain all obligations with respect thereto.

     5.2.5 Infringement. With respect to those Products for which the Drug
          Application is held by AAI and AAI is the creator of the
          Specifications, the manufacture of Product(s) in accordance with the
          Specifications will not infringe any patent or other intellectual
          property right of any third party.

     5.2.6 Suitability of API. Any Active Pharmaceutical Ingredient supplied to
          DSM by AAI will meet the required specifications, be suitable for use
          in the further processing of the Product(s), and with respect to
          sterile products, will not contain any adventitious viruses or other
          active deleterious substances which could contaminate the production
          processes or other operations of DSM.

5.3  Limitation of Liability. NEITHER DSM NOR AAI NOR THEIR RESPECTIVE
     AFFILIATES SHALL BE LIABLE TO THE OTHER UNDER ANY THEORY (INCLUDING
     NEGLIGENCE) FOR SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL, OR PUNITIVE
     DAMAGES, INCLUDING WITHOUT LIMITATION LOST PROFITS AND/OR LOST BUSINESS
     OPPORTUNITY, ARISING OUT OF OR RELATING TO THIS SUPPLY AGREEMENT, WHETHER
     OR NOT ADVISED OF THE POSSIBLITY OF SUCH DAMAGES. OTHER THAN WITH RESPECT
     TO INDEMNIFICATION PURSUANT TO ARTICLE 12 FOR THIRD PARTY CLAIMS RELATING
     TO ILLNESS, INJURY OR DEATH RESULTING FROM USE OF A PRODUCT MANUFACTURED
     AND PURCHASED HEREUNDER, THE LIABILITY OF EACH PARTY SHALL BE LIMITED AS
     FOLLOWS: (I) WITH RESPECT TO LIABILITY INCURRED IN CONNECTION WITH THIS
     AGREEMENT DURING THE PERIOD ENDING TWELVE (12) MONTHS FOLLOWING THE
     START-UP OF COMMERCIAL PRODUCTION HEREUNDER (THE "INITIAL TWELVE-MONTH
     PERIOD"), THE LIABILITY OF EACH PARTY SHALL BE LIMITED TO FIVE MILLION
     DOLLARS ($5,000,000); (II) THE LIABILITY OF EACH PARTY WITH RESPECT TO
     LIABILITIES INCURRED IN CONNECTION WITH THIS AGREEMENT AFTER THE INITIAL
     TWELVE-MONTH PERIOD AND PRIOR TO THE TERMINATION OR EXPIRATION OF THIS
     AGREEMENT SHALL BE LIMITED TO TWO (2) TIMES THE AGGREGATE PURCHASE PRICE
     FOR PRODUCT SUPPLIED DURING THE PREVIOUS TWELVE (12) MONTHS; AND (III) THE
     LIABILITY OF EACH PARTY WITH RESPECT TO LIABILITIES INCURRED IN CONNECTION
     WITH THIS AGREEMENT AFTER THE EXPIRATION OR TERMINATION OF THIS AGREEMENT
     SHALL BE LIMITED TO TWO (2) TIMES THE AGGREGATE PURCHASE PRICE FOR PRODUCT
     SUPPLIED DURING THE LAST TWELVE (12) MONTHS OF THIS AGREEMENT.

<PAGE>

                          ARTICLE 6: QUALITY ASSURANCE

6.1  Quality Agreement. The respective quality assurance obligations of DSM and
     AAI are more fully set forth in the Quality Agreement.

6.2  DSM's Obligations. DSM hereby covenants that during the Term that it shall
     (and shall cause its subcontractors to):

     6.2.1 have and maintain the necessary expertise, personnel, facilities,
          permits and equipment to Manufacture the Products in accordance with,
          and to perform its other obligations arising under or out of, this
          Supply Agreement;

     6.2.2 operate and maintain its premises, plant and machinery, equipment and
          procedures related to the Products in compliance with applicable CGMP
          Requirements;

     6.2.3 perform its obligations arising under this Supply Agreement (i) in
          compliance with applicable Laws and CGMP Requirements; and (ii) in
          compliance with the Quality Agreement, the applicable Drug Application
          and the Specifications.

6.3  Testing Requirements, Retained Samples. With respect to each Product
     Schedule attached hereto, the Parties shall agree as to the extent of
     testing to be conducted by DSM in the Manufacture and release of such
     Product. Unless otherwise agreed, however, DSM shall provide no more than
     [**] stability test per sku per year. AAI shall perform bulk and finished
     product testing and will provide a certificate of analysis ("COA") to DSM
     within [**] days of AAI's receipt of Product samples from DSM. DSM shall
     not disposition Manufactured Product for further release by AAI until DSM
     receives AAI's COA. AAI shall be responsible for any increased costs
     resulting from delays in issuing the COA to DSM. DSM shall have the right
     to dispute any testing conducted by AAI in accordance with Section 9.3.2
     hereinafter.

     6.3.1 Following receipt of AAI's COA, DSM shall execute certificate of
          compliance ("COC"), confirming that each Batch delivered hereunder has
          been Manufactured in accordance with the Specifications, CGMP
          Requirements, and the provisions of this Supply Agreement and the
          Quality Agreement. The COC shall be supplied with the delivery of each
          Batch of Products.

     6.3.2 Notwithstanding any termination or expiration of this Supply
          Agreement, DSM shall keep manufacturing and quality control
          documentation as well as sufficient and representative retained
          samples of the relevant Product ("Retained Samples") in compliance
          with CGMP Requirements and other applicable law. DSM and AAI shall
          agree upon the amount of retained Samples to be maintained for this
          purpose. DSM's obligations under this Section 6.3.2 shall be in effect
          for a period of one (1) year following the expiry of the sampled
          Product, or such longer period as may be required by applicable Law
          (the "Retention Period"). DSM shall not destroy the manufacturing and
          quality control documentation nor any Retained Samples without first
          providing AAI sixty (60) days prior written notice. DSM shall follow
          AAI's reasonable instructions with respect to such

<PAGE>

          documentation and Retained Samples and will not destroy such items
          without prior approval from AAI. AAI shall reimburse DSM for its
          out-of-pocket costs in retaining any Samples beyond the Retention
          Period.

     6.3.3 DSM shall make available for review by AAI, at any reasonable time
          upon reasonable notice, all records relevant to DSM's performance
          hereunder, including written investigations of any deviations that may
          have occurred during the Manufacturing, inspection, or testing
          processes. DSM is solely responsible for the safety of its employees.

6.4  AAI Option. AAI shall have the option, in its sole discretion, to assume on
     behalf of DSM any of the testing, recording or other processes required to
     be undertaken by DSM under this Supply Agreement, the Quality Agreement,
     the CGMP Requirements or any applicable Law. To the extent reasonably
     practicable, DSM will assist AAI in assuming such obligations. To the
     extent the assumption of such obligation reduces the costs to DSM
     associated with the Manufacture of the Products, the Parties will
     reasonably agree to a reduction in the prices of the Products taking into
     account such assumption in obligations. To the extent AAI assumes any
     obligation of DSM herein, DSM shall be relieved of such obligation under
     this Supply Agreement and the Quality Agreement.

6.5  Non-Conforming Product. DSM shall not deliver to AAI any product which
     would constitute a breach of the covenant set forth in Section 4.1 of this
     Supply Agreement. In the event that any Product shall fail to pass the
     quality control testing conducted by DSM, if any, then DSM shall provide
     the test results of AAI and DSM shall not release the Product Batch.

                      ARTICLE 7: FORECASTS, ORDER AND SALES

7.1  Forecasting. Except as provided in this Article 7, AAI shall not make, and
     this Agreement does not impose upon AAI, any minimum purchase or volume
     requirements. Prior to the Qualification Date, AAI shall provide DSM with a
     written good faith forecast estimating AAI's quarterly requirements (broken
     out on a month-to-month basis) of each Product for each of the twelve (12)
     calendar quarters during the Initial Term. Thereafter, not later than
     ninety (90) days prior to the commencement of each subsequent calendar
     quarter during the Term, AAI shall provide DSM with rolling six (6) quarter
     forecasts (broken out on a month-to-month basis) that shall cover the
     succeeding six (6) quarter period beginning with such subsequent calendar
     quarter (or the period until the expiration of the Term, if shorter) (such
     forecast shall hereinafter be referred to as, the "Long-Term Forecast").
     Except as set forth in Sections 7.2, the Long-Term Forecast shall not be
     binding on either Party.

7.2  Firm Commitments and Firm Forecasts.

     7.2.1 The first (lst) quarter of each Long-Term Forecast shall constitute a
          firm purchase commitment (a "Firm Commitment") and the second (2nd)
          quarter of a Long-Term Forecast shall be a "Firm Forecast". The
          forecast for the remaining four (4)

<PAGE>

          calendar quarters of the Long-Term Forecast shall be for planning
          purposes only and shall not constitute a commitment to purchase or
          supply Product.

     7.2.2 The Firm Commitment shall state in detail the quantities of
          Product(s) to be ordered and shall include specific delivery
          destinations and delivery dates (which delivery dates shall not be on
          Saturday, Sunday or holiday unless AAI's prior consent is obtained).
          The Firm Commitment shall be binding on the Parties regarding
          Product(s) to be purchased during the applicable calendar quarter, and
          the quantity of each Product specified in any Firm Commitment shall
          not be less than [**]% nor more than [**]% of the quantity previously
          forecasted for such quarter in the applicable Firm Forecast. If AAI
          requires quantities in excess of the Firm Commitment or in excess of
          the [**]% of the quantity forecasted for such quarter in the
          applicable Firm Forecast, it shall so notify DSM; and DSM shall use
          its commercially reasonable and good faith efforts to deliver
          quantities in excess of the Firm Commitment, but DSM shall not
          otherwise be obligated to supply such excess quantities.

     7.2.3 DSM shall deliver the quantity specified in any Firm Commitment
          within [**] days of the delivery date specified in the Firm
          Commitment. Quantities actually shipped pursuant to a given Firm
          Commitment may vary from the quantities reflected in such Firm
          Commitment by up to plus or minus [**] percent (+/-[**]%) and still be
          deemed to be in compliance with such purchase order provided that AAI
          shall only be obligated to pay for the conforming Product actually
          delivered.

     7.2.4 DSM shall be deemed to have accepted all forms of any Firm Commitment
          submitted in accordance with this Section 7.2, unless, with respect to
          quantities in excess of [**]% of the quantity forecasted by AAI in the
          applicable Firm Forecast, within thirty (30) days of receipt of such
          Firm Commitment, DSM notifies AAI of its objection thereto. The
          Parties shall negotiate in good faith to resolve any differences with
          respect to the Firm Commitment. DSM shall be obligated to Manufacture
          and deliver the specified quantity of Products in accordance with the
          delivery schedule set forth in any accepted Firm Commitment. In the
          event that DSM fails to deliver within the ten-day period described in
          Section 7.2.3, DSM shall pay to AAI (or AAI may set-off against
          amounts slue to DSM) a discount equal to [**] percent ([**]%) of the
          total purchase price of the related Firm Commitment.

7.3  Changes in Orders. DSM shall exercise its commercially reasonable efforts
     to comply with any proposed amendments to accepted Firm Commitments that
     AAI may request, but DSM shall not be liable in any way for its inability
     to do so. Firm Commitments may be amended only by mutual agreement of the
     Parties.

7.4  Notification. If any time during the term of this Supply Agreement DSM
     believes it will be unable to supply AAI on a timely basis with the full
     quantity of each Product forecasted to be or actually ordered by AAI, DSM
     shall promptly notify AAI; provided that such notification shall not
     relieve DSM of its obligations under a Firm Commitment.

<PAGE>

                       ARTICLE 8: PRICES, TERMS OF PAYMENT

8.1  Price. The purchase price to be paid to DSM for each Product supplied
     hereunder shall be as set forth in the applicable Product Schedule. With
     respect to each Product, such price shall remain firm through the remainder
     of the calendar year following the Qualification Date of the related
     Product Schedule and may be increased only upon written agreement between
     the parties or as provided by this Article 8.

8.2  Price Adjustments. DSM and AAI shall meet annually to discuss pricing.
     Subject to the limitations described in this Section 8.2, DSM may increase
     the Product price as of January 1 of each calendar year hereunder in order
     to reflect increases in DSM's costs to Manufacture such Product due to
     increases in labor, overhead, API and/or Raw Materials ("Costs of Goods
     Sold" or "COGS").

     8.2.1 Annual price increases shall be limited to a percentage increase
          which does not exceed the average of the percentage increases over the
          preceding year for the Producers Prices Index, Drugs and
          Pharmaceuticals, Preparations, ethical (prescription) (Code 0635), but
          in any event no more than [**] percent ([**]%). DSM shall notify AAI
          of price increases at least thirty (30) days prior to the beginning of
          each calendar year hereunder.

     8.2.2 The Product price may also increased at any time if an AAI-Designated
          Supplier increases DSM's cost of API or Raw Materials. In such event,
          DSM shall promptly notify AAI that its specified vendor has announced
          such cost increases; and the Parties shall cooperate to effect the
          cost increase in an equitable manner.

8.3  Cost Reductions. DSM and AAI shall cooperate to reduce the Cost of Goods
     Sold ("COGS") for the Products; and DSM shall decrease Product prices in
     the event that DSM experiences decreased costs as a result of increased
     purchase volume or as a result of any other factor. Such price reduction
     shall equal no less than [**] percent ([**]%) of any reduction in COGS
     achieved by DSM, after DSM has recovered its costs for the development of
     improvements or adjustments resulting in the COGS reduction, provided that
     AAI shall previously been advised of the cost of such development
     improvement and approved the developmental work and any process changes
     relating thereto for which reimbursement would apply hereunder.

8.4  Payment Terms. DSM shall invoice AAI for the price of the Products at the
     time of delivery, and AAI shall pay each such invoice within [**] days
     after its receipt of the invoice. If AAI rejects a shipment pursuant to
     Article 9 of this Supply Agreement, then payment shall be due within [**]
     days after receipt by AAI of notice from the laboratory pursuant to Section
     9.3 of this Supply Agreement that the invoiced Product is conforming, or
     the receipt by AAI of replacement Product, as the case may be.

8.5  Audit Right. AAI shall have the option, on an annual basis and at its
     expense, to utilize an independent certified public accountant, mutually
     agreeable to DSM, to inspect records of DSM including accounting and
     financial records related to production of the Products, to the extent
     reasonably necessary to verify compliance by DSM with its

<PAGE>

     financial obligations under this Agreement. DSM shall cooperate in good
     faith to enable such audit to be concluded as rapidly as possible. The
     auditor shall be placed under obligations of confidentiality as set forth
     in Section 10.5 and EXHIBIT D hereinafter; and shall only disclose to AAI
     whether or not DSM has complied with financial obligations; and the extent
     to which any amounts are owed to AAI or to DSM according to the audit. If
     amounts are owed to AAI, DSM shall promptly credit AAI's account the amount
     owed and will reimburse AAI any amounts paid by AAI to the third party
     auditor; and if amounts are owed to DSM, DSM shall invoice AAI. If the
     auditor's findings are in dispute by either Party, the Parties shall
     resolve such disputes in accordance with Article 14.

                      ARTICLE 9: SHIPPING DEFECTS, RETURNS

9.1  Shipping. DSM will ship all Products ordered hereunder to AAI F.O.B. DSM's
     Greenville NC facility, at which point the title and risk of loss for such
     Products will pass to AAI. DSM shall ship the Products to the destination
     within [**] days of the delivery date specified by AAI on the relevant
     Purchase Order. The Parties agree that the method and route of shipment are
     at AAI's discretion, except that with respect to the shipment of controlled
     substances, the carrier shall be subject to the mutual agreement of the
     Parties.

9.2  Notification of Defects. AAI shall notify DSM in writing as soon as
     reasonably practicable after delivery to AAI of any non-conforming Product
     containing obvious defects, discoverable without affecting the integrity of
     such Products' packaging (but in any event within [**] days after
     delivery), and within [**] days of the earlier of AAI's discovery or its
     notification by a third party of any latent defects. DSM shall be
     responsible for AAI's costs to inspect the Products if it is determined
     that the defect was caused by DSM. DSM agrees to provide reasonable support
     to assist AAI in pursuing any claims it may have against carriers for
     damaged or lost Product.

9.3  Returns.

     9.3.1 At AAI's direction, and subject to the requirements of this Section
          9.3, DSM shall accept for return and replacement or credit (at
          invoiced cost) any Product sold to AAI under this Supply Agreement
          that does not met applicable Specifications or the representations,
          warranties or covenants set forth herein (hereinafter the "Defective
          Products"). All returns of Defective Products shall be properly
          disposed of or, only if acceptable to AAI and permitted by applicable
          Law, reworked by DSM. Upon prior notification to DSM, AAI shall ship
          the Defective Products to DSM F.O.B. AAI, at which point the title and
          risk of loss for such Products will pass to DSM. DSM agrees to pay all
          costs of shipping and any costs of freight insurance obtained by AAI
          at the request of DSM. AAI agrees to provide reasonable support to
          assist DSM in pursuing any claims it may have against carriers for
          damaged or lost Product.

     9.3.2 DSM shall undertake appropriate investigation of any Defective
          Product samples provided by AAI and shall notify AAI, within [**] days
          after receipt of the Defective Product, whether it has confirmed such
          non-conformity. If DSM

<PAGE>

          notifies AAI that it has not confirmed such non-conformity, and AAI
          continues to insist such non-conformity exists, DSM shall submit the
          disputed shipment for testing to an independent testing laboratory of
          recognized standing in the industry and mutually agreeable to AAI and
          DSM. The findings of the laboratory shall be binding on the Parties.
          The expenses for such testing shall be borne by the Party whose
          analysis was not substantiated by the findings of the laboratory.

              ARTICLE 10: INTELLECTUAL PROPERTY AND CONFIDENTIALITY

10.1 Ownership of Intellectual Property. Except as set forth herein, AAI
     acknowledges that DSM shall remain the exclusive owner of all of the DSM's
     intellectual property, technology, know-how and processes (whether or not
     patented or patentable) developed by DSM prior to execution of this
     Agreement (the "DSM Intellectual Property"). DSM acknowledges that AAI
     shall remain the exclusive owner of all of AAI's intellectual property,
     technology, know-how and processes (whether or not patented or patentable)
     developed by it prior to execution of this Agreement or provided by AAI in
     connection with this Agreement (the "AAI Intellectual Property").

10.2 Grant of License to DSM. AAI hereby grants DSM a limited, non-exclusive,
     royalty-free license for the term of this Supply Agreement to use the AAI
     Intellectual Property, including the Product formulations, the Drug
     Applications, the Work Product (as hereafter defined) and the related
     documentation for the sole purpose of meeting DSM's obligations to AAI
     under this Supply Agreement. All other rights are reserved by AAI. This
     license does not include the right to copy, sublicense or create derivative
     works from the AAI Intellectual Property. The limited license granted
     hereby shall immediately terminate upon termination or expiration of this
     Supply Agreement.

10.3 Grant to License to AAI. Excluding only any DSM Intellectual Property
     expressly identified and agreed to in writing between the parties in an
     attachment to the applicable Product Schedule as being subject to royalty
     payments post-termination or post-expiration of the applicable Product
     Schedule, DSM grants to AAI a non-exclusive perpetual, royalty-free license
     to the DSM Intellectual Property to the extent necessary to enable AAI to
     exercise all rights in and to the Work Product (as hereinafter defined) as
     it relates to Manufacture of the related Product.

10.4 Intellectual Property.

     10.4.1 Developments. Except for the limited license granted in Section
          10.2, DSM will acquire no rights of any kind with respect to any AAI
          Intellectual Property or AAI Confidential Information (as defined in
          the Confidentiality Agreement attached hereto as SCHEDULE D). Subject
          to Section 10.4.2 hereinafter, AAI shall exclusively own all results,
          records, documents, drug product, formulas, materials, analytical
          methods, inventions (whether or not patentable), patent applications,
          patents, copyrights, trademarks, developments, trade secrets, or any
          other intellectual property made or created by DSM as a result or work
          performed pursuant to this Supply Agreement or related to any AAI
          Intellectual Property or any AAI Product hereunder (the "Work
          Product"); but in the event that ownership

<PAGE>

          of any Work Product by AAI is not permitted by applicable Law, DSM
          hereby grants a non-exclusive, irrevocable, perpetual, world-wide,
          royalty-free, fully paid license under the Work Product for any
          purpose.

     10.4.2 To the extent that the Work Product is derived from DSM Intellectual
          Property and is incorporated into the Specifications and/or the NDA
          and ANDA for any Product hereunder, AAI and DSM shall negotiate in
          good faith to reach agreement upon reasonable terms and conditions,
          including royalties, for licensing such DSM Intellectual Property for
          use in the production of any Product at an AAI-owned facility or a
          third party facility.

     10.4.3 DSM shall not use AAI's Confidential Information or any other AAI
          Intellectual Property for any purpose other than as set forth in this
          Supply Agreement. Likewise, AAI shall not use DSM's Confidential
          Information or any DSM Intellectual Property for any purpose other
          than as set forth in this Supply Agreement. DSM agrees to execute any
          assignment or other documentation reasonably requested by AAI to vest
          ownership of all results, records, documents, and intellectual
          property in AAI. The Parties further agree to provide reasonable
          assistance to each other, at the other's expense, in obtaining,
          enforcing, and defending intellectual property rights related to this
          Supply Agreement.

10.5 Confidentiality. THE PARTIES ACKNOWLEDGE AND AGREE THAT THE TERMS OF THIS
     AGREEMENT AND THE PRODUCTS COVERED HEREBY ARE HIGHLY CONFIDENTIAL. The
     Parties agree to the confidentiality provisions set forth in EXHIBIT D
     hereto.

10.6 Trademarks. Any and all trademarks of AAI and the Products, including but
     not limited to: aaiPharma, Inc., aaiPharma LLC, aaiPharma (hereinafter the
     "Trademarks") are owned by AAI. AAI may grant to DSM a royalty-free
     non-exclusive license to use and/or reproduce certain Trademarks in the
     Territory only where pre-approved in writing by AAI and solely in
     connection with meeting DSM's Manufacture and supply obligations hereunder.
     DSM agrees not to use the Trademarks except as specifically authorized by
     AAI under this Supply Agreement in connection with the Manufacture and
     supply of the Products to AAI.

                        ARTICLE 11: TERM AND TERMINATION

11.1 Term. Unless earlier terminated in accordance with the provisions hereof,
     the term of this Supply Agreement shall commence on the Effective Date and
     shall thereafter continue in effect with respect to each Product for a
     minimum term of five (5) years following the date of first commercial
     production of the Product, and from year-to-year thereafter until
     terminated. Either Party may terminate a Product Schedule and this Supply
     Agreement (to the extent related to such Product Schedule) upon written
     notice to the other Party given at least two (2) years prior to the
     conclusion of the initial five-year term of any one-year extension
     thereafter.

11.2 Termination for Breach, Bankruptcy, Force Majeure or Failure to Qualify.

<PAGE>

     11.2.1 Either Party may terminate this Supply Agreement on written notice
          to the other Party, effective immediately:

          (i)  If the other Party commits a material breach of any of its
               obligations hereunder which is not cured within ninety (90) days
               of written notice from the other party specifying the breach,
               except that breach by AAI for failure to pay an uncontested
               invoice shall be cured within thirty (30) days following written
               notice by DSM:

          (ii) If the other Party is dissolved or liquidated, files or has filed
               against it a petition under any bankruptcy or insolvency Law,
               makes an assignment to the benefit of its creditors, has a
               receiver appointed for all or substantially all of its property,
               or has a petition under any bankruptcy or insolvency Law filed
               against it which is not dismissed within ninety (90) days;

          (iii) As permitted by Section 11.4.3 hereof;

          (iv) On a Product Schedule-by-Product Schedule basis, if any required
               material license, permit or certificate required of the other
               Party to perform its obligations hereunder is not approved and/or
               issued, or is revoked, by the FDA or any applicable Governmental
               Authority.

     11.2.2 Any right of termination specified in this Section 11.2 shall be in
          addition to any other remedy a non-defaulting Party may have at Law or
          in equity due to the other Party's breach of its obligations
          hereunder.

11.3 Effect of Termination. Upon termination or expiration of a Product Schedule
     and this Supply Agreement (to the extent related to such Product Schedule)
     the following shall occur:

     11.3.1 Cessation of Activities. Except as provided in Section 11.3.6, DSM
          shall stop the Manufacturing of the terminated Products; shall cease
          to use the Intellectual Property and other documents, instructions and
          information (in whatever format, including but not limited to
          electronically stored data) to the extent that such information
          relates to such Products and/or their Manufacture, quality control
          testing, handling and/or storage; shall return all such Confidential
          Information to AAI, at AAI's expense; and shall surrender all
          authorizations, licenses and permits specifically allowing the
          Manufacture of such Products to the appropriate authorities for
          cancellation.

     11.3.2 Reimbursement of Cost. AAI shall reimburse DSM for its full variable
          and fixed costs that DSM has incurred in connection with the
          preparation for Manufacturing of the terminated Products, including
          Raw Materials and API purchased by DSM before the effective date of
          termination, that were reasonably required by DSM in order to meet
          AAI's requirements of such Products as set out in any Firm Commitment
          or Firm Forecast delivered prior to such termination or expiration and
          that have not yet been Manufactured into finished Product.

<PAGE>

     11.3.3 Payment for Firm Commitment. Except in the event of termination by
          AAI for breach by DSM, AAI shall complete payment to DSM for any Firm
          Commitments as provided in Section 7.2 above, net of any
          reimbursements in respect of such Firm Commitments which are already
          covered in by Section 11.3.2.

     11.3.4 AAI to Take Product. At AAI's option, AAI shall be entitled to take
          delivery upon prior payment to DSM (pursuant to Section 11.3.2 above)
          for any Raw materials, API, work-in-process not Manufactured into
          finished Product in accordance with Sections 11.3.3 or 11.3.6 herein
          (at DSM's material costs) or finished Product (at prices then in
          effect under this Supply Agreement).

     11.3.5 AAI Equipment. Unless otherwise agreed between the Parties, DSM
          shall deliver to AAI, at the location designated by AAI, any Equipment
          purchased by AAI and related to the terminated Products.

     11.3.6 Outstanding Firm Commitments. In the event termination by AAI as a
          result of breach by DSM, then at AAI's option, Firm Commitments for
          terminated Product not yet started may be cancelled without penalty to
          either Party. If requested by AAI, DSM shall complete or shall cause
          the completion of the Manufacturing of any work-in-process that is
          subject to a valid and effective Firm Commitment on the date on which
          the termination is effective. Once such work-in-process is completed,
          the resulting Product shall be shipped in accordance with AAI's Firm
          Commitment.

     11.3.7 Termination or expiration of this Supply Agreement and any Product
          Schedule shall not relieve the Parties of any obligation accruing
          prior to such termination. The rights and obligations of the Parties
          under Sections 6.3, 8.4, 8.5 (for one year after termination), 9.2,
          9.3, 11.3, 13.1 and 13.2 and Articles 1, 5, 10 (except Section 10.2),
          12, 14, 15, 16 and 17 of this Supply Agreement shall survive the
          expiration or termination of this Supply Agreement.

11.4 Force Majeure.

     11.4.1 The failure of either of the Parties hereto to perform any
          obligation under this Supply Agreement, including any Product
          Schedule, solely by reason of any cause beyond its control (and due to
          no fault of its own), including, by way of example and not limitation,
          fire, flood, explosion, storm, hurricane, acts of God, acts of
          government, riots, wars, strikes and accidents in transportation,
          shall not be deemed to be a breach of this Supply Agreement; provided,
          however, that the Party so prevented from complying herewith shall
          continue to take all actions within its power, including payment of
          outstanding invoices, to comply as fully as possible herewith. A Party
          affected by an event of force majeure shall use commercially
          reasonable efforts to remedy, remove or mitigate such event and the
          effects thereof with all reasonable dispatch.

<PAGE>

     11.4.2 The Party affected by any event of force majeure shall promptly
          notify the other Party, explaining the nature, details and expected
          duration thereof. Such Party shall also notify the other Party from
          time to time as to when the affected Party reasonably expects to
          resume performance in whole or in part of its obligations hereunder,
          and notify the other Party of the cessation of any such event. If a
          Party anticipates that an event of force majeure may occur, such Party
          shall notify the other Party of the nature, details and expected
          duration thereof.

     11.4.3 If, due to force majeure, DSM is prevented or expected to be
          prevented from supplying AAI with a Product for a period exceeding one
          hundred twenty (120) days, then AAI shall have the right to terminate
          the related Product Schedule and this Supply Agreement to the extent
          related to such Schedule with immediate effect.

                    ARTICLE 12: INDEMNIFICATION AND INSURANCE

12.1 By DSM. Subject to Section 12.3 and the limitations set forth in Section
     5.3, from and after the Effective Date, DSM shall indemnify defend and hold
     harmless AAI, its Affiliates, and their respective officers, directors,
     employees, successors and assigns (the "AAI Indemnified parties") from and
     against any and all costs, losses, liabilities, damages, Lawsuits,
     deficiencies, claims and expenses, including reasonable fees and
     disbursements of attorneys, (collectively, the "Damages") incurred by such
     entities and arising out of third party claims resulting from (a) any
     material breach of this Supply Agreement by Manufacture, including any
     breach by DSM of its representations or warranties or a failure by DSM to
     comply with or perform any covenants hereunder; (b) the gross negligence or
     willful misconduct of DSM or any subcontractor of DSM; and (c) any
     allegation that DSM's processes or Intellectual Property breaches,
     infringes upon or otherwise misappropriates the intellectual property
     rights of any third party; provided that DSM shall not be responsible to
     indemnify the AAI Indemnified Parties to the extent that Damages were
     caused by the negligence or willful misconduct of AAI, its Affiliates, or
     its or their employees or agents.

12.2 By AAI. Subject to Section 12.3 and the limitations set forth in Section
     5.3, from and after the Effective Date, AAI shall indemnify, defend and
     hold harmless DSM, its Affiliates and their respective officers, directors,
     employees, successors and assigns (the "DSM Indemnified Parties") from and
     against any and all Damages incurred by such entities in connection with or
     arising out of third party claims resulting from (a) any material breach by
     AAI of its obligations hereunder and/or its representations or warranties
     in Section 5.2 herein; (b) the gross negligence or willful misconduct by
     AAI; (c) any allegation that Intellectual Property provided by AAI to DSM
     breaches, infringes upon or otherwise misappropriates the intellectual
     property rights of any third party, and (d) any final judicial
     determination that AAI failed to provide adequate and proper instructions
     or warnings regarding the use of the Products to any user thereof; provided
     that AAI shall not be responsible to indemnify DSM Indemnified Parties to
     the extent that any Damages were caused by the negligence or willful
     misconduct of DSM, its Affiliates, or is or their employees, agents or
     subcontractors.

<PAGE>

12.3 Procedures.

     12.3.1 The Indemnified Party (as defined below) shall give the indemnifying
          Party written notice (an "Indemnification Claim Notice") within seven
          (7) days (or such other additional reasonable period that the
          Indemnified Party can establish is reasonably necessary to permit it
          to determine whether to make a request for indemnification) of the
          occurrence of any Damages or discovery of fact upon which such
          Indemnified Party intends to base a request for indemnification under
          Section 12.1 or Section 12.2, but in no event shall the indemnifying
          Party be liable for any Damages that result from failure to provide
          such notice within such period. Each Indemnification Claim Notice must
          contain a description of the claim and the nature and amount of such
          Damages (to the extent that the nature and amount of such Damages are
          known at such time). The Indemnified Party shall furnish promptly to
          the indemnifying Party copies of all papers and official documents
          received in respect of any Damages. All indemnification claims in
          respect of a Party, its Affiliates or their respective directors,
          officers, employees and agents (collectively, the "Indemnitees" and
          each an "Indemnitee") shall be made solely by such Party to this
          Supply Agreement (the "Indemnified Party").

     12.3.2 At its option, the indemnifying Party may assume the defense of any
          third party claim by giving written notice to the Indemnified Party at
          any time after the indemnifying Party's receipt of an Indemnification
          Claim Notice with respect to such third party claim. Upon assuming the
          defense of a third party claim, the indemnifying Party may appoint as
          lead counsel any legal counsel selected by the indemnifying Party. In
          the event the indemnifying Party assumes the defense of a third party
          claim, the Indemnified Party shall immediately deliver to the
          indemnifying Party all original notices and documents (including court
          papers) received by any Indemnitee in connection with the third party
          claim. Should the indemnifying Party assume the defense of a third
          party claim, the indemnifying Party shall not be liable to the
          Indemnified Party or any other Indemnitee for any legal expenses
          subsequently incurred by such Indemnified Party or other Indemnitee in
          connection with the analysis, defense or settlement of the third party
          claim. In the event that it is later determined that the negligence or
          willful misconduct of the Indemnified Party caused, or was a
          contributing cause to, the third party claim or the Damages relating
          thereto, the Indemnified Party shall reimburse the indemnifying Party
          for the legal costs and all costs and expenses (including attorneys'
          fees and costs of suit) and any Damages, or its equitable proportion,
          as the case may be, incurred by the indemnifying Party in its defense
          of the third party claim with respect to such Indemnitee.

     12.3.3 Without limiting Section 12.3.1, any Indemnitee shall be entitled to
          participate in, but not control, the defense of such third party claim
          and to employ counsel of its choice for such purpose; provided,
          however, that such employment shall be at the Indemnitee's own expense
          unless (i) the employment thereof has been specifically authorized by
          the indemnifying Party in writing, or (ii) the indemnifying Party has
          failed to assume the defense and employ counsel in accordance with
          Section 12.3(b) (in which case the Indemnified Party shall control the
          defense).

<PAGE>

     12.3.4 With respect to any Damages relating solely to the payment of money
          damages in connection with a third party claim and that will not
          result in the Indemnitee's becoming subject to injunctive or other
          relief or otherwise adversely affect the business of the Indemnitee in
          any manner, and as to which the indemnifying Party shall have
          acknowledged in writing the obligation to indemnify the Indemnitee
          hereunder, the indemnifying Party shall have the sole right to consent
          to the entry of any judgment, enter into any settlement or otherwise
          dispose of such Damages, on such terms as the indemnifying Party, in
          its sole discretion, shall deem appropriate. With respect to all other
          Damages in connection with third party claims, where the indemnifying
          Party has assumed the defense of the third party claim in accordance
          with Section 12.3.2 of this Supply Agreement, the indemnifying Party
          shall have authority to consent to the entry of any judgment, enter
          into any settlement or otherwise voluntarily dispose of such Damages;
          provided that it obtains the prior written consent of the Indemnified
          Party (which consent shall not be unreasonably withheld or delayed).
          The indemnifying Party shall not be liable for any settlement or other
          voluntary disposition of Damages by an Indemnitee that is reached
          without the written consent of the indemnifying Party. Regardless of
          whether the indemnifying Party chooses to defend or prosecute any
          third party claim, no Indemnitee shall admit any liability with
          respect to, or settle, compromise or discharge, any third party claim
          without the prior written consent of the indemnifying Party.

     12.3.5 Regardless of whether the indemnifying Party chooses to defend or
          prosecute any third party claim, the Indemnified Party shall, and
          shall cause each other Indemnitee to, cooperate in the defense or
          prosecution thereof and shall furnish such records, information and
          testimony, provide such witnesses and attend such conferences,
          discovery proceedings, hearings, trials and appeals as may be
          reasonably requested in connection therewith. Such cooperation shall
          include access during normal business hours afforded to the
          indemnifying Party to, and reasonable retention by the Indemnified
          Party of, records and information that are reasonably relevant to such
          third party claim, and making Indemnitees and other employees and
          agents available on a mutually convenient basis to provide additional
          information and explanation of any material provided hereunder, and
          the indemnifying Party shall reimburse the Indemnified Party for all
          its reasonable out-of-pocket expenses in connection therewith. To the
          extent the records of the Indemnitee referenced in this Section 12.3.5
          are privileged, the Parties shall cooperate in a manner as to preserve
          such privilege but to afford the indemnifying Party with all
          information relevant to such third party claim.

12.4 Insurance. Each Party hereto shall maintain, with a financially sound and
     reputable insurer and throughout the term of this Supply Agreement,
     comprehensive general liability insurance, including, without limitation,
     product liability insurance and intellectual property infringement with
     liability limits of at least $3,000,000 per occurrence and in the
     aggregate. Each Party hereto shall also provide the other Party with such
     evidence thereof as is reasonably requested by the other Party from time to
     time. Additionally, DSM shall obtain insurance on Equipment, as more fully
     described in Article 16 hereof.

<PAGE>

                     ARTICLE 13: REGULATORY MATTERS; RECORDS

13.1 Notification of Inspections; Communications. DSM shall notify AAI in
     writing as soon as practicable upon receipt of notice of any proposed visit
     or inspection by the FDA, or after any unannounced visit or inspection (to
     the extent that such report or communication relates to a Product or the
     Manufacture thereof), within 72 hours of such notice or visit. DSM shall
     provide to the AAI a copy of any report and other written communications
     received from the FDA, to the extent that such report or communication
     relates to a Product, or the Manufacture thereof, within five (5) business
     days after receipt thereof. DSM shall be entitled to redact any FDA reports
     to remove the third party confidential information that does not relate to
     the Products to be supplied and purchased hereunder.

13.2 Recalls; Market Withdrawals.

     13.2.1 Recall Procedures. DSM and AAI shall each maintain such records as
          required by applicable Laws and codes of practice to permit effective
          recall, field correction or market withdrawal of any Product delivered
          to AAI or customers of AAI, whether such recall, field correction or
          withdrawal is effected voluntarily or under a directive of any
          government and regulatory authority. Each Party agrees that in
          connection with a recall, field correction or market withdrawal, it
          shall provide copies of its relevant records to the other Party upon
          request, excluding confidential AAI customer information or
          information subject to attorney-client or other privilege. Each Party
          shall give immediate notice by telephone (to be confirmed in writing)
          to the other Party upon discovery that any Product should be recalled,
          corrected or withdrawn from the market, or may be required to be
          recalled, corrected or withdrawn from the market. The decision to
          initiate a recall or market withdrawal to take any other corrective
          action shall be made by AAI. While DSM shall reasonably cooperate with
          AAI in developing any necessary recall, market withdrawal or
          correction plan, the manner and extent of such plan shall be
          reasonably decided by AAI. DSM shall cooperate as reasonably required
          by AAI in the implementation of such plan; and both Parties shall
          reasonably cooperate with each other to comply with all applicable
          regulatory obligations.

     13.2.2 Cost of Recall. DSM shall bear the cost of a recall, market
          withdrawal or corrective action in the event and to the extent that
          the recall, market withdrawal or corrective action is as a result of
          (i) any failure of DSM or the Product to comply with CGMP
          Requirements, the Specifications or any warranty or other requirement
          under this Supply Agreement or (ii) any failure of DSM to comply in
          all material respects with applicable Law; otherwise AAI shall bear
          the costs of a recall, market withdrawal or corrective action.

     13.2.3 Regulatory Assistance. DSM agrees to provide to AAI such information
          and assistance as AAI may reasonably require for purposes of (a)
          applying for and maintaining all Drug Applications for the Products in
          the Territory, or (b) enabling AAI to comply with CGMP Requirements
          and other applicable Laws. Such information or assistance (the
          "Regulatory Services") shall include without

<PAGE>

          limitation, providing AAI with all reasonable reports, authorizations,
          certificates, methodologies, and other documentation in the possession
          or under the control of DSM relating to the Manufacture of the
          Products (or any Raw Materials or API thereof). Upon request by AAI
          and at reasonable rates to be mutually agreed upon between the
          parties, DSM may perform services for AAI in addition to the
          Regulatory Services.

     13.2.4 Inspections. Upon reasonable notice to DSM, and in a manner
          calculated not to excessively interfere with DSM's conduct of
          business, DSM shall allow:

          (i)  Routine Manufacturing Audit. Access to one or more AAI quality
               assurance employees, consultants or agents, or one or more
               representatives of AAI's third party contract manufacturers to
               observe the entire process of Manufacture of each Batch, or
               selected Batches of Raw Materials, API and Products; and in
               connection therewith DSM agrees to give AAI twenty (20) business
               days prior written notice of all production runs of the Products
               at its facilities; and AAI shall be entitled to have one or more
               representatives observe, review and inspect all aspects of such
               production; and

          (ii) Annual Audit. One (1) time during each calendar year,
               representatives from the quality assurance department of AAI to
               have access to DSM's manufacturing, warehousing and laboratory
               premises and associated records related to the Products for audit
               purposes. Where significant quality issues are reasonably
               suspected by AAI, including as a result of any manufacturing
               audit, Product quality problems or the results of the annual
               quality audit, AAI shall be permitted to perform additional
               audits in order to attempt to resolve these issues (or confirm
               correction thereof) and may require DSM to retain an independent
               expert to certify that such issues have been resolved. AAI
               commits during any audit to follow reasonable DSM safety and
               security procedures.

          (iii) General. AAI shall ensure that all employees, representatives,
               consults, or other agents conducting inspections pursuant to this
               Section 13.2.4 shall be subject to the requirements of the
               Confidentiality Agreement set forth in Schedule D. All such
               inspections shall be organized so as to reasonably minimize
               disruption to DSM's on-going production processes and other
               business operations. The Parties shall cooperate in scheduling
               and arranging all such inspections.

13.3 Corrective Actions. DSM shall promptly correct any defects identified
     during AAI audits. DSM will implement corrective action in accordance with
     the time schedule imposed by AAI quality assurance, where such defects
     threaten to impact Product quality.

13.4 Complaints. Adverse event reports and Product complaints shall be handled
     as provided in the Quality Agreement agreed to between the Parties.

<PAGE>

                       ARTICLE 14: ARBITRATION OF DISPUTES

14.1 Except as provided below, the Parties agree to submit all dispute between
     them relating to this Agreement and its formation, breach, performance,
     interpretation and application to arbitration in accordance with this
     Article 14.

14.2 In the event that the Parties are in dispute with respect to any matter
     related to this Agreement, the Parties shall first attempt in good faith to
     resolve such dispute. If any dispute has not been resolved within sixty
     (60) days after delivery of written notice thereof by the aggrieved Party
     to the other Party, then such dispute will be referred by the Parties for
     final resolution to a single arbitrator mutually agreed upon by the
     Parties. If the Parties are unable to agree on a single arbitrator within
     thirty (30) days following expiration of such sixty (60) day period, the
     Parties will promptly refer the dispute to three (3) arbitrators, of whom
     one will be selected by DSM, one by AAI, and one selected by the two
     arbitrators selected by DSM and AAI. Such arbitration, if it occurs, shall
     be conducted in a location of substantially equal distance between the
     principal offices of the Parties set forth in Section 15.1 below and
     pursuant to the rules of the American Arbitration Association, as modified
     herein. The decision of the arbitrators, which my include interest, shall
     be final and binding on the Parties hereto and may be enforced in any court
     of competent jurisdiction by any Party. The arbitration shall be pursued
     and brought to conclusion as rapidly as possible. Unless the arbitrator(s)
     find that exceptional circumstances require otherwise, the arbitrator(s)
     will grant the prevailing Party in arbitration its costs of arbitration and
     reasonable attorneys' fees as part of the arbitration award.

14.3 Neither Party will be required to arbitrate any dispute relating to actual
     or threatened unauthorized disclosure of Confidential Information, but
     shall be entitled to seek in any court of competent jurisdiction
     injunctive, preliminary or other equitable relief, in addition to damages,
     including court costs and reasonable attorneys fees.

                               ARTICLE 15: NOTICES

15.1 Delivery. All notices, consents, requests and other communications
     hereunder shall be in writing and shall be sent by hand delivery, by
     certified or registered mail (return-receipt requested), or by a recognized
     national overnight courier service as set forth below:

          If to DSM:

          DSM Pharmaceuticals, Inc.
          5900 NW Greenville Blvd.
          Greenville, NC 27834
          Attn: Terence S. Novak, Sr. V.P. Commercial Operations

          If to AAI:

          aaiPharma LLC
          2320 Scientific Park Drive

<PAGE>

          Wilmington, North Carolina  28405
          Attention: J. Fred Pruden, V.P. Manufacturing Operations

          With a copy to:

          aaiPharma Inc.
          2320 Scientific Park Drive
          Wilmington, North Carolina  28405
          Attention: Office of General Counsel

15.2 Effective Time. Notices delivered pursuant hereto shall be deemed given:
     (a) at the time delivered, if personally delivered; (b) at the time
     received, if mailed; and (c) one (1) business day after timely delivery to
     the courier, if by overnight courier service.

15.3 Changes. Either Party hereto may change the address to which notice is to
     be sent by written notice to the other Party in accordance with the
     provisions of this Article 15.

                         ARTICLE 16: EQUIPMENT PURCHASES

16.1 Equipment Purchases. AAI will reimburse DSM for the cost of Equipment
     purchased by DSM upon AAI's request and approval, including all related,
     reasonable and necessary out-of-pocket expenses associated with the
     purchase, installation and validation of such items, together with a
     purchasing services fee equal to [**] dollars ($[**]) or [**] percent
     ([**]%) of the purchase price of all Equipment procured by DSM, whichever
     is less, provided that DSM provides AAI receipts and/or third party
     invoices evidencing the amounts of such expenses. Any such sale of
     Equipment by DSM to AAI shall be deemed subject to the terms and conditions
     of this Article 16. Unless otherwise agreed, DSM shall only be acting as
     AAI's agent for the procurement of the Equipment; and DSM shall not be held
     to have warranted, in any manner, the fitness of the Equipment for the
     purposes hereunder. Subject only to Section 16.5 hereof, SUCH EQUIPMENT
     SHALL BE TRANSFERRED BY DSM TO AAI "AS IS", "WHERE IS" AND "WITH ALL
     FAULTS"; AND DSM HEREBY DISCLAIMS ANY WARRANTIES IN CONNECTION THEREWITH.

16.2 Title, Use. Title to the Equipment shall pass to AAI upon payment to DSM or
     the original vendor for the purchase price therefore. Unless otherwise
     requested by AAI, DSM shall retain and use such Equipment at DSM's facility
     until expiration or termination of the Product Schedule related to such
     Equipment. DSM shall be responsible for any such Equipment until delivery
     to AAI and shall bear all risk of loss to the Equipment prior to that date.
     DSM shall conduct routine maintenance of the Equipment; however major
     capital repairs or improvements caused through no fault of DSM or its
     representatives shall be for the account of AAI.

16.3 Insurance. So long as AAI retains rights to any Equipment sold and assigned
     hereunder, DSM shall keep in force liability insurance, in form, substance
     and amount satisfactory to AAI, naming AAI as an additional insured under a
     Broad Form Vendor's endorsement, covering property damage and personal
     injury arising from or to the Equipment. Each insurer shall agree by
     endorsement upon the policy or policies issued by it or by

<PAGE>

     independent instrument furnished to AAI that it will give AAI thirty (30)
     days' written notice before the policy in question shall be materially
     altered or canceled.

16.4 The purchase of Equipment hereunder and closing with respect thereto shall
     be deemed to have occurred at DSM's offices in Greenville, North Carolina.

16.5 DSM representations, warranties and covenants as of the date hereof and
     again upon the date the Equipment is purchased, that:

     16.5.1 DSM will have the absolute right to sell and assign the Equipment
          and upon such sale, AAI will acquire good and marketable title to the
          Equipment, free and clear of all liens, claims, interests and
          encumbrances.

     16.5.2 With respect to all Equipment purchased hereunder (including related
          Software), DSM transfers and assigns AAI, to the full extent
          permitted, all warranties and indemnities of the manufacturer,
          licensor and other suppliers of the Equipment. To the extent any
          warranties or indemnities concerning the Equipment may not be
          assignable, DSM agrees to enforce them for the benefit of AAI or at
          AAI's request to assign to AAI the rights to enforce them in DSM's
          name for the benefit of AAI.

     16.5.3 Except for Equipment identified by DSM in writing as "used
          Equipment", all Equipment purchased hereunder shall be new.

16.6 DSM shall ensure that so long as it remains in possession of AAI's
     equipment, it shall not permit the attachment of liens or other
     encumbrances to the title of such equipment.

16.7 DSM shall comply with the purposes and applicable standards of the
     Occupational Safety and Health Act of 1970 (OSHA) as amended and other
     applicable federal, state and local regulations in the operation of the
     Equipment.

                            ARTICLE 17: MISCELLANEOUS

17.1 Severability. If any provision of this Supply Agreement is held to be
     invalid, illegal or unenforceable, the validity, legality and
     enforceability of the remaining provisions shall not in any way be affected
     or impaired, and the Parties shall use their best efforts to substitute a
     valid, legal and enforceable provision, which insofar as practical,
     implements the purpose of this Supply Agreement.

17.2 Counterparts. This Supply Agreement may be executed in one or more
     counterparts, each of which shall be deemed an original, but all which
     together shall be deemed one and the same instrument.

17.3 Governing Law. This Supply Agreement shall be subject to, governed by, and
     any matter or dispute arising out of this Supply Agreement shall be
     determined by, the Laws of the State of North Carolina, without reference
     to its conflict of Laws principles that might apply to the Laws of another
     jurisdiction.

<PAGE>

17.4 Headings; Gender. "Article," "Section" and other headings combined in this
     Supply Agreement are for reference purposes only and shall not affect in
     any way the meaning or interpretation of this Supply Agreement. All
     personal pronouns used in this Supply Agreement shall include the other
     genders, whether used in the masculine, feminine or neuter gender, and the
     singular shall include the plural and vice versa, whenever and as often as
     may be appropriate.

17.5 Entire Agreement. This Supply Agreement and the related Product Schedules
     represents the entire agreement of the Parties with respect to its subject
     matter. Any and all prior discussions or agreements with respect hereto are
     merged into and superseded by the terms of this Supply Agreement. This
     Supply Agreement may be modified or amended only in writing signed by both
     Parties which expressly refers to this Supply Agreement and states an
     intention to modify or amend it. No such amendment or modification shall be
     effected by use of any purchase order, acknowledgment, invoice or other
     form of either Party and in the event of conflict between the terms of this
     Supply Agreement and any such form, the terms of this Supply Agreement
     shall control.

17.6 No Assignment. Neither Party hereto may assign this Supply Agreement, in
     whole or in part, without the prior written consent of the other Party
     (which consent shall not be unreasonably withheld or delayed); and any
     attempted assignment not in accordance herewith shall be null and void and
     of no force or effect, except that no prior written consent shall be
     required if AAI assigns any or all of its rights hereunder to one of its
     Affiliates. No assignment of this Supply Agreement or any portion of any
     rights hereunder shall relieve the assigning Party of any of its
     obligations or liability hereunder.

17.7 Binding Effect. This Supply Agreement shall be binding upon and shall inure
     to the benefit of the Parties hereto and their respective successors, and
     permitted assigns.

17.8 Interpretation. This Supply Agreement was fully negotiated by both Parties
     hereto and shall not be construed more strongly against either Party hereto
     regardless of which Party is responsible for its preparation.

17.9 Further Assurances. Upon the reasonable request of the other Party, each
     Party hereto agrees to take any and all actions necessary or appropriate to
     give effect to the terms set forth in this Supply Agreement.

17.10 Subcontracting. DSM may not subcontract with any Affiliate or
     non-Affiliated third party to perform any of its obligations hereunder
     except with the prior written consent of the AAI, which shall not be
     unreasonably withheld or delayed. In no event shall any such subcontract
     release DSM from any of its obligations under this Supply Agreement except
     to the extent they are performed by such subcontractor. Any subcontract
     shall be in writing and shall include a provision that grants AAI
     commercially reasonable rights to monitor the subcontractor, conduct
     inspections and audits of the subcontractor's facilities and to receive
     notice of regulatory actions and communications, and in each case such
     benefit shall be on terms no less favorable than AAI has with respect to
     DSM under this Supply Agreement (as amended from time to time). AAI will be
     provided a copy of any such subcontract.

<PAGE>

17.11 Independent Contractors. It is expressly agreed that DSM, on the one hand,
     and AAI, on the other hand, shall be independent contractors and that the
     relationship between the two Parties shall not constitute a partnership,
     joint venture or agency. Neither DSM, on the one hand, nor the AAI, on the
     other hand, shall have the authority to make any statements,
     representations or commitments of any kind, or to take any action, which
     shall be binding on the other, without the prior consent of the other Party
     to do so. All persons employed by a Party shall be employees of such Party
     and not of the other Party and all costs and obligations incurred by reason
     of any such employment shall be for the account and expense of such Party.

17.12 Waiver. The waiver by either Party of any right hereunder or the failure
     to perform or of a breach by the other Party shall not be deemed a waiver
     of any other right hereunder or of any other breach or failure by said
     other Party whether of a similar nature or otherwise.

17.13 Counterparts. This Supply Agreement may be executed in one or more
     counterparts, each of which shall be deemed an original, but all of which
     together shall constitute one and the same instrument.

                         [Signatures on following page]

<PAGE>

IN WITNESS WHEREOF, the Parties hereto have caused their duly authorized
representatives to execute this Supply Agreement as of the day and year first
above written.

DSM PHARMACEUTICALS, INC. ("DSM")

By: /s/ Terence S. Novak
    ---------------------------------
    Terence S. Novak, Sr. V.P.
    Commercial Operations

AAIPHARMA LLC ("AAI")

By: /s/ David M. Hurley
    ---------------------------------
    David M. Hurley, Chief Operating
    Officer of aaiPharma Inc.

<PAGE>

                                   EXHIBIT A:

                       MANUFACTURING AND SUPPLY AGREEMENT
                                PRODUCT SCHEDULE

PRODUCT SCHEDULE NO. _____ TO MANUFACTURING AND SUPPLY AGREEMENT (the "Supply
Agreement") DATED ___________ 2003, AND ORIGINALLY EXECUTED BY DSM
PHARMACEUTICALS, INC. ("DSM") AND AAIPHARMA LLC ("AAI")

This Product Schedule, effective as of ___________, supplements the Supply
Agreement by, among other things, identifying a particular Product, the purchase
and sale of which shall be governed by the terms of the Supply Agreement as well
as this Schedule. Except as modified by this Schedule, the Parties agree that
all terms and conditions of the Supply Agreement shall apply.

1.   Product: [insert name of the Product. Note that the Parties are currently
     considering the following products. A separate schedule, in the form hereof
     should be completed and executed for each Product.]

2.   Product dosage form(s) and stages of completion (e.g. bulk or finished
     package form): [__]

3.   Product Specifications: [reference and attach specifications]

4.   Active Pharmaceutical Ingredient: [__]

5.   Raw Materials:

6.   Packaging Specifications:

7.   Product Price: [__]

8.   Bulk Yield Requirements:

9.   Percentage of Guaranteed Shelf-Life

10.  Special Equipment

11.  Lead-Times

12.  Other Requirements, including any additional exclusivity commitments of
     DSM: [insert additional agreements related to Product, or if not
     applicable, so state].

This Schedule is subject to and incorporates all terms and conditions of the
Supply Agreement, and, except as modified herein, all terms and conditions of
the Supply Agreement shall remain in full force and effect.

<PAGE>

Each Party represents that neither this Schedule nor any of its obligations
hereunder or under the Supply Agreement incorporated herein by reference will
conflict with, or result in a breach of, any arrangement or agreement between
such Party and any third party.

In WITNESS WHEREOF, each of the undersigned Parties hereby accepts and agrees to
the terms and conditions of this Schedule, including their respective
obligations set forth in the Supply Agreement and incorporated herein by
reference.

DSM PHARMACEUTICALS, INC.

By:
    ---------------------------------
Name/Title:
            -------------------------
Date:
      -------------------------------

AAIPHARMA LLC

By:
    ---------------------------------
Name/Title:
            -------------------------
Date:
      -------------------------------

<PAGE>

                                   EXHIBIT B:
                                   [RESERVED]

<PAGE>

                                   EXHIBIT C:
                                QUALITY AGREEMENT

  (TO BE AGREED UPON BY THE PARTIES AS SOON AS PRACTICABLE AFTER THE EFFECTIVE
  DATE. THE PARTIES WILL WORK IN GOOD FAITH TO FINALIZE THE QUALITY AGREEMENT.)
<PAGE>

                                QUALITY AGREEMENT

                           Date Effective: 21 Feb 2007

                                 By and Between

                         XANODYNE PHARMACEUTICALS, INC.
                              One Riverfront Place
                                Newport, KY 41071
                          (Hereafter called "XANODYNE")

Approved by:

XANODYNE

/s/ G. Kevin Arvin
-------------------------------------
G. Keith Arvin
Director of Quality Assurance
Date: Feb 14 2007

                                       AND

                            DSM PHARMACEUTICALS, INC.
                            5900 NW Greenville Blvd.
                        Greenville, North Carolina 27834
                            (Hereafter called "DSM")

Approved by:

DSM PHARMACEUTICALS, INC.

/s/ (Illegible)
-------------------------------------
For Warren A. Horton
Vice President Quality Assurance
DATE: 21 FEB 2007

THE PRODUCTS LISTED IN APPENDIX III (HEREAFTER CALLED THE "PRODUCT" OR
"PRODUCTS") ARE SUBJECT TO THE FOLLOWING CONDITIONS:

                           QUALITY AGREEMENT - PAGE 1

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                           <C>
1  PURPOSE                                                                     3
2  RELATIONSHIP TO SUPPLY AGREEMENT                                            3
3  SCOPE                                                                       3
4  RESPONSIBILITY                                                              3
5  GMP STANDARDS                                                               4
6  PREMISES                                                                    4
7  AUDITS                                                                      5
8  REGULATORY AGENCY INSPECTIONS                                               6
9  DOCUMENTATION/CHANGE MANAGEMENT                                             7
10 RAW MATERIAL/PACKAGING COMPONENTS                                           8
11 LABORATORY ANALYSIS/DOCUMENTATION                                           8
12 STABILITY                                                                   9
13 RETENTION OF SAMPLES                                                       10
14 VALIDATION                                                                 10
15 COMPUTER SYSTEMS                                                           11
16 CALIBRATION/PREVENTATIVE MAINTENANCE                                       11
17 SUBCONTRACTING                                                             12
18 TRAINING/QUALIFICATION                                                     12
19 INVESTIGATIONS                                                             12
20 DOCUMENTATION REVIEW                                                       13
21 PRODUCT DISPOSITION                                                        14
22 STORAGE AND SHIPMENT                                                       15
23 DOCUMENT RETENTION                                                         15
24 REGULATORY                                                                 16
25 COMPLAINTS                                                                 17
26 RECALLS                                                                    17
27 DISPUTE RESOLUTION                                                         18
</TABLE>

                           QUALITY AGREEMENT - PAGE 2

<PAGE>

1    PURPOSE

     This Agreement defines the roles and responsibilities for DSM when
     providing services and/or Products for XANODYNE. This Agreement also
     defines how the quality departments of DSM and XANODYNE will interact with
     each other. Unless otherwise specified, XANODYNE refers to XANODYNE
     PHARMACEUTICALS, INC. and DSM refers to DSM PHARMACEUTICALS, INC.

2    RELATIONSHIP TO SUPPLY AGREEMENT

     This Agreement supplements and is hereby incorporated by reference into the
     Pharmaceutical Product Supply Agreement ("Supply Agreement") between the
     Parties for each of the Products as to which this Quality Agreement
     relates. If such Manufacturing Agreement has not been finalized, the roles
     and responsibilities in this Agreement remain in force and effect as a
     stand-alone agreement. In the event of a quality conflict between any of
     the provisions in the Supply Agreement and this Quality Agreement, this
     Quality Agreement shall control.

3    SCOPE

     This Quality Agreement covers the quality-related services to be provided
     by DSM for each Product supplied pursuant to the related Supply
     Agreement(s), including such additional Products as may be agreed between
     the parties and added in writing to such Supply Agreement(s).

4    RESPONSIBILITY

     4.1  Communication and Implementation. Responsibility for communication and
          implementation of this Quality Agreement for XANODYNE and for DSM
          rests with the management of each party's respective Quality
          departments. This Agreement is effective upon signature approval of
          ail parties. The operations for the services and/or Products to be
          performed by DSM are defined in the Supply Agreement; and
          quality-related responsibilities are outlined in APPENDIX I of this
          Quality Agreement. No changes to the terms

                           QUALITY AGREEMENT - PAGE 3

<PAGE>

          of this Agreement may be made without the express written consent of
          both parties.

     4.2  Amendments. This Quality Agreement may be amended as new services
          and/or Products are added, or as Products are deleted, all as mutually
          agreed upon by the parties. DSM and XANODYNE contact information may
          be updated as required by notification to either party.

     4.3  Duration of this Agreement. This Agreement shall commence on execution
          by both Parties and, subject to the following provisions of this
          section, shall expire or terminate on the expiry or termination of the
          Supply Agreement. Any section of this Agreement which has a predefined
          retention, survival or maintenance period (for example raw data
          storage, product complaints and sample retention) shall survive the
          termination of this Agreement for the period defined in the
          appropriate section. This Agreement cannot be modified except with the
          written approval of both Parties. Specifications and Master Batch
          Records may be modified with written authorization from designated
          Quality Assurance representatives of both companies.

5    GMP STANDARDS

     The services contracted from DSM will comply with applicable domestic and
     international good manufacturing practices standards (cGMP) as mutually
     agreed upon in writing, prior to the submission of the application in the
     foreign country. XANODYNE agrees to comply with policies and procedures
     adopted by DSM to establish and maintain cGMP, including investigative
     methodology that governs how DSM interprets and dispositions data in
     support of final batch disposition.

6    PREMISES

     6.1  Operations. DSM will perform required operations for manufacturing
          activities at its Greenville, North Carolina site. The premises and
          equipment used to manufacture the Products will be maintained
          according to current

                           QUALITY AGREEMENT - PAGE 4

<PAGE>

          regulatory requirements and in accordance with the controlled
          documentation approved by XANODYNE. The manufacture of the Products
          will be conducted in a suitably controlled environment; and such
          facilities will be regularly monitored for parameters critical to the
          process in order to demonstrate and maintain compliance with (i)
          applicable GMP guidelines and (ii) mutually agreed upon
          specifications.

     6.2  Controlled Access. DSM will maintain controlled access to the
          premises. All visitors shall comply with applicable access policies,
          dress code, cell phone usage, security, and safety requirements.

     6.3  DSM will manufacture the Products at the Plant and will not use or
          transfer at a later date any of the Manufacturing operations for the
          Product(s) to Third Parties or other sites without the prior written
          agreement of Xanodyne Corporate Quality Assurance.

7    AUDITS

     7.1  Annual Audits. DSM will permit XANODYNE's Quality Department to
          perform a minimum of [**] standard cGMP compliance audit per year for
          the services contracted, upon reasonable notification from XANODYNE,
          with actual audit dates subject to mutual agreement with DSM based
          upon the availability of DSM's personnel and prior audit commitments.
          Such audit shall not exceed two (2) business days and shall have no
          more than four (4) auditors. XANODYNE representatives will be escorted
          by DSM personnel at all times and will only have access to the
          facility and records relating to the services and Products under
          contract with XANODYNE.

     7.2  Supplementary Audits. Notwithstanding the foregoing, DSM will permit
          XANODYNE's Quality Assurance department to conduct additional audits
          on a date mutually agreed upon by both parties to the extent necessary
          prior to pre-approval inspections (PAI) or to address significant
          product

                           QUALITY AGREEMENT - PAGE 5

<PAGE>

          quality or compliance problems. Such audits shall be scheduled
          promptly after notice from XANODYNE following a quality or safety
          occurrence.

     7.3  Report of Findings. XANODYNE will report audit findings verbally at
          the close of the audit and will provide a written report within [**]
          business days of the audit. DSM shall formally respond to observations
          made by XANODYNE's representatives on areas requiring corrective
          action. DSM's response will include root cause evaluation, corrective
          actions, preventative actions, and remedial actions, where
          appropriate, and shall include a timeline for completion of each
          action. The response will be sent to the XANODYNE auditor within [**]
          business days of the receipt of the audit report.

REGULATORY AGENCY INSPECTIONS

     8.1  Regulatory Actions. DSM will promptly inform XANODYNE of any
          regulatory agency action that specifically affects the contracted
          services and/or Products to be supplied pursuant to the Supply
          Agreement. XANODYNE will promptly inform DSM of any regulatory agency
          action that specifically affects the contracted services for all
          marketed products produced by DSM.

     8.2  Regulatory Inspections. DSM shall notify XANODYNE of any regulatory
          agency inspection specifically impacting the products covered by this
          Agreement within two (2) business days of the initiation of the audit
          by the regulatory agency. XANODYNE reserves the right to be available
          on site during an agency inspection when the inspection pertains to a
          XANODYNE product, DSM shall respond to the regulatory agency on any
          XANODYNE product-specific citations after consultation with XANODYNE.
          Upon request, DSM will forward all appropriately redacted regulatory
          agency documentation (e.g., EIR, FDA-483) and responses that pertain
          to XANODYNE products to XANODYNE's Quality Department within [**]
          business days of request or completion of submission. XANODYNE shall
          notify DSM of any regulatory agency inspection specifically impacting
          the

                           QUALITY AGREEMENT - PAGE 6

<PAGE>

          products covered by this Agreement within [**] business days of the
          initiation of the audit by the regulatory agency. DSM reserves the
          right to present site data and/or procedures upon specific requests
          regarding DSM responsibilities. Copies of formal response letters from
          DSM including the 483 observations to the FDA that relate to the
          Product will also be forwarded to Xanodyne Quality Assurance. DSM will
          consider Xanodyne's comments and suggestions regarding any citations
          or observations that specifically relate to the manufacture of
          Xanodyne's products.

9    DOCUMENTATION/CHANGE MANAGEMENT

     9.1  XANODYNE shall not make any changes to DSM-owned or DSM-controlled
          cGMP documentation without the consent of DSM, in order to ensure that
          all cGMP documentation, which is maintained at DSM and subject to
          regulatory review, matches or is consistent with information filed
          with regulatory authorities. XANODYNE shall be responsible for all
          costs and penalties incurred if it makes any changes to GMP
          documentation without DSM's consent.

     9.2  All changes to the Product and related documents shall proceed through
          a technical and cGMP impact assessment by DSM's quality and change
          management personnel. The documents which (a) contain changes that may
          affect XANODYNE's regulatory submissions or the support system and
          which (b) have a direct impact on the quality systems affecting
          XANODYNE's Product, will also be reviewed and assessed by XANODYNE's
          quality and change management personnel for regulatory advice and
          implementation requirements, as per the agreements between XANODYNE
          and DSM.

                           QUALITY AGREEMENT - PAGE 7

<PAGE>

10   RAW MATERIAL/PACKAGING COMPONENTS

     10.1 DSM shall be responsible for using raw material / packaging components
          from approved vendors agreed upon by both parties. Prior to use, all
          raw material / packaging components must be found to be acceptable
          against pre-established standards. Changes to test methods, or
          deviations from existing raw materials, packaging components,
          packaging component specifications or vendors must be documented and
          approved by XANODYNE and DSM in accordance with the requirements of
          Section 9, above.

     10.2 For vendors designated or utilized by XANODYNE, which are not DSM-
          approved vendors, XANODYNE shall be responsible for qualifying such
          vendors and will provide DSM with a Certificate of Compliance
          statement for such vendors upon request. XANODYNE shall be responsible
          for ensuring that ail materials and components supplied by XANODYNE or
          by its designated vendors for use in manufacture of the Products are
          in full compliance with the specifications registered. XANODYNE shall
          also forward to DSM a Certificate of Analysis for materials supplied
          directly by XANODYNE or by its designated vendors.

11   LABORATORY ANALYSIS/DOCUMENTATION

     11.1 Methods Validation. For those analytical methods to be provided by
          XANODYNE, XANODYNE shall be responsible for providing to DSM approved
          copies of the current and complete regulatory filed analytical methods
          and supporting validation documentation relating to the Products, for
          application by DSM in the production process, including receipt of API
          and raw materials, in-process product testing, product batch release,
          drug and product stability, and cleaning validation.

     11.2 In-Process and Finished Product Testing: Transfer of Methods. A method
          transfer of any test method developed by XANODYNE will be completed
          prior to DSM's disposition of Products, utilizing the transferred
          method(s),

                           QUALITY AGREEMENT - PAGE 8

<PAGE>

          for release by XANODYNE. XANODYNE will work collaboratively with DSM
          to transfer any methods required by DSM.

     11.3 Reference Standards. XANODYNE is responsible for supplying any
          required reference standards that are not readily available through a
          commonly recognized source. Such reference standards must be
          accompanied by a Certificate of Analysis listing the expiration date
          and any correction factors that need to be applied.

     11.4 Confirmation of DSM Data. XANODYNE may perform testing to confirm the
          DSM data. XANODYNE may perform confirmatory testing during the initial
          term of this Agreement to validate the DSM data. Periodically
          thereafter, XANODYNE may test material to confirm the DSM data.
          Dispute resolutions in conflicting test data will be handled according
          to the provisions of Section 27.

     11.5 Release Testing. In the event that XANODYNE completes any release
          testing required for the Products, XANODYNE will supply DSM with a
          Certificate of Analysis and any release testing data and test
          specifications from approved suppliers required for release by DSM.
          DSM shall evaluate all testing data supplied by XANODYNE in order to
          assign final disposition of Product For any testing which XANODYNE
          completes, the results shall be made available to DSM in a timely
          manner so as not to delay release procedures.

12   STABILITY

     DSM is responsible for maintaining a routine stability program for the
     Products. The stability activities (contract storage, contract testing)
     will be defined in a mutually agreed upon protocol, which will identify the
     storage requirements, testing responsibilities, testing specifications and
     methods, testing intervals, and bracketing, if applicable. DSM will provide
     a stability report upon completion of the time point testing. The stability
     program will generally follow ICH guidelines, The

                           QUALITY AGREEMENT - PAGE 9

<PAGE>

     stability protocol and/or any subsequent changes shall be approved by
     XANODYNE via the Change Control System.

     12.1 Out-of Specification Occurrences. Any Out-of-Specifications ("OOS")
          occurrences that are identified and confirmed according to the
          stability program will be promptly communicated by DSM to XANODYNE;
          and DSM shall provide such assistance to XANODYNE as is required for
          regulatory reporting purposes with respect thereto.

13   RETENTION OF SAMPLES

     13.1 API Samples. DSM will retain samples/of the active ingredients for/we
          (5) years beyond the ingredient date manufactured. DSM will retain
          samples of excipients for a minimum of [**] years beyond the Date of
          Manufacture. The amount of sample retained will be at least [**] the
          quantity required to carry out all of the tests required to determine
          if the material meets its specifications, with the exception of
          sterility and pyrogen testing.

     13.2 Product Samples. DSM will retain samples of the Products for [**] year
          beyond the expiry period. The amount of sample retained will be at
          least [**] the quantity required to carry out all of the tests
          required to determine if the material meets its specifications, with
          the exception of sterility and pyrogen testing.

     13.3 Destruction. DSM will notify XANODYNE prior to destruction of any
          product at the completion of the retention period.

14   VALIDATION

     14.1 Process Validation. DSM is responsible for ensuring that the
          manufacturing process is validated. The validation should ensure, with
          a high degree of certainty, that the process is capable of
          consistently achieving the Product's acceptance criteria.

     14.2 Cleaning Validation. DSM is responsible for ensuring that adequate
          cleaning is completed to prevent contamination. Data should be
          available to support the campaign of batches of the same product and
          the type of

                           QUALITY AGREEMENT - PAGE 10

<PAGE>

          cleaning that will be performed in between manufacturing of the same
          product, XANODYNE will provide information (i.e. LD50, toxicity,
          solubility, batch size, fill volume, product min dose/70Kg patient) to
          establish cleaning limits. DSM shall not use the Product run equipment
          to manufacture, package, or store a product concerning any of the
          following compounds without XANODYNE written prior consent: cytoxins,
          penicillins, steroids or other hormone products.

     14.3 Equipment, Computer, Facility, and Utilities Qualification. DSM is
          responsible for all equipment, computer, facility, and utility
          qualification activities associated with the Products.

     14.4 Laboratory Qualification. DSM is responsible for ensuring that all
          laboratories are in compliance with applicable cGMP guidelines. If
          analytical work is performed at DSM, then XANODYNE will also provide
          any existing analytical documentation to assist in methods transfer or
          methods validation. In addition, if analytical work is not performed
          at the Greenville site, DSM may elect to perform an audit on vendors
          to be used for analytical testing. DSM will be responsible for
          insuring that any vendor selected by DSM fully complies with cGMP
          requirements. Vendors selected by XANODYNE must be certified by
          XANODYNE and acceptable per cGMP.

15   COMPUTER SYSTEMS

     Computer Systems used in the manufacturing, packaging, analytical testing,
     storage, release and stability of XANODYNE Products shall be validated.
     Where compliance with 21 CFR Part 11, "Electronic Records and Electronic
     Signatures", is required, DSM will comply with those regulations or have a
     master plan to achieve compliance.

16   CALIBRATION/PREVENTAT1VE MAINTENANCE

     DSM will maintain a calibration and preventative maintenance program to
     support the manufacturing, testing, packaging and storage of XANODYNE
     Products. DSM

                           QUALITY AGREEMENT - PAGE 11

<PAGE>

     shall also follow a procedure that documents the actions to be taken in the
     event of a calibration failure.

17   SUBCONTRACTING

     Any subcontracted laboratory or manufacturing facility must be approved by
     XANODYNE (this may include an audit) prior to being used by DSM. DSM shall
     ensure that the subcontracted laboratory or manufacturing facility follows
     the applicable agreements with XANODYNE. DSM will obtain approval from
     XANODYNE prior to subcontracting any laboratory for XANODYNE's Product. DSM
     will audit such subcontractors to determine compliance with cGMP according
     to DSM's criteria, which may differ from the criteria in the contractor
     quality agreement with XANODYNE. Any discrepancies will be discussed with
     XANODYNE.

18   TRAINING/QUALIFICATION

     DSM shall provide a program to assure that all personnel engaged in the
     manufacturing, packaging, analytical testing, storage, release and
     stability testing of XANODYNE Products have the education, training and
     experience to properly perform their assigned functions in compliance with
     cGMP. Training shall be in the particular operations that the employee
     performs and in current applicable manufacturing regulations, as they
     relate to the employee's functions. Training records for all personnel
     shall be maintained and made available upon request by XANODYNE or pursuant
     to any regulatory review.

19   INVESTIGATIONS

     19.1 Out of Specification Results (OOS). DSM is responsible for
          investigating any testing performed by DSM that is confirmed as a
          failure to meet Product specifications. Each investigation will be
          reviewed by DSM's Quality Assurance designee, and will follow internal
          procedures that are in accordance with regulatory guidelines.
          Confirmed product OOS results will be communicated to XANODYNE as
          defined within Section 19.2 hereinafter.

                           QUALITY AGREEMENT - PAGE 12

<PAGE>

     19.2 Manufacturing Deviations. Any deviation from the process during
          manufacture, and any OOS result shall be documented by DSM and
          approved by DSM Quality Assurance and appropriate area management. DSM
          will notify XANODYNE on a timely basis if any problems are discovered
          that may impact Product batches previously shipped in order to assure
          that regulatory reporting guidelines may be met. A list of all
          investigations will be provided to XANODYNE with the Release
          Documentation package provided to XANODYNE. A copy of any final
          investigation report will be reviewed with XANODYNE and included in
          the Release Documentation package provided to XANODYNE. DSM will
          notify XANODYNE in the event that a Product or customer provided
          material will be rejected. This communication will be accompanied by a
          completed investigation with regard to the failure and include an
          evaluation of effect of the failure on other batches.

     19.3 Some deviations/OOSs may require that additional testing, stability,
          or validation be conducted. This work will be performed by DSM as
          agreed by both Parties.

20   DOCUMENTATION REVIEW

     DSM will provide a standard Certificate of Analysis indicating the test
     results as well as a signed Certificate of Compliance confirming that the
     Products have been manufactured, tested, and stored according to the
     requirements of the Master Production Record and cGMP criteria and include
     a statement that any deviations identified during the manufacturing process
     have been satisfactorily closed. These documents will also include the lot
     numbers, reference to any associated deviations, associated batch expiry
     dates, and quantities in each shipment DSM will, upon request, provide
     complete copies to XANODYNE of the batch documentation (Manufacturing Work
     Order and Packaging Work Order), subject to the mutual agreement of DSM and
     XANODYNE. DSM, if requested by XANODYNE, shall furnish additional copies,
     upon reimbursement of DSM's reasonable copying costs.

                           QUALITY AGREEMENT - PAGE 13

<PAGE>

21   PRODUCT DISPOSITION

     Release to commerce, shipment, and further distribution of the Products,
     once dispositioned by DSM for release, is the responsibility of XANODYNE's
     quality department. DSM will release the product for shipment if all
     pre-defined release criteria are met. In the event that an intermediate
     product is to be shipped to XANODYNE for further processing, DSM will
     release coded product for shipment if all pre-defined intermediate release
     criteria are met. In such cases, further release to commerce of the
     finished product shall be the responsibility of XANODYNE. XANODYNE's
     release to commerce shall be based on regulatory product approval,
     XANODYNE's internal procedures, the full document package provided by DSM,
     and completion of any release testing required by XANODYNE Quality Control
     for its internal release criteria. XANODYNE may, at its own discretion,
     reject a batch, which DSM has dispositioned as satisfactory. However, the
     decision to reject shall not be based on a discrepancy between XANODYNE and
     DSM's methodologies. Any problem discovered by XANODYNE likely to cause
     rejection of the approved Products will be communicated to DSM within
     thirty (30) days from receipt of the full release documentation package. If
     XANODYNE rejects Product, then XANODYNE assumes full financial
     responsibility for such rejection unless the rejected Product is determined
     to be non-conforming; and such non-conformity is determined to be the fault
     of DSM. Any disputes between the parties with respect to rejection of
     Product shall be resolved in accordance with Section 27 hereinafter.

                           QUALITY AGREEMENT - PAGE 14

<PAGE>

22   STORAGE AND SHIPMENT

     22.1 Storage. DSM will store the Products under conditions specified by
          product label requirements as supplied by XANODYNE. DSM will ensure
          that during storage before shipping of the Products, appropriate
          controls are in place to ensure that there is no interference, theft,
          product contamination, or mixture with any other products or
          materials. XANODYNE will provide details of any labeling requirements,
          container sealing and integrity, and storage and shipping conditions
          for the Products.

     22.2 Packaging and Labeling for Transit. The Products will be labeled and
          packaged for transit pursuant to instructions timely provided to DSM
          in writing by XANODYNE and complying with cGMP and other applicable
          regulations (e.g., OSHA, DEA, DOT).

     22.3 Shipment of Product to XANODYNE. DSM will ship to the designated
          locations. DSM will not ship any product that is under quarantine
          unless according to controlled procedures which fully comply with
          regulatory requirements and which are mutually agreeable between DSM
          and XANODYNE. In the event that XANODYNE requests DSM to ship product
          in quarantine, then XANODYNE shall supply DSM with a written
          certification stating, "Product will not be released to commerce until
          fully released." XANODYNE may request shipment in quarantine for
          further processing, or pending adverse weather events.

23   DOCUMENT RETENTION

     DSM will retain, at a minimum, batch production records for the Products
     and materials for [**] years from manufacture of each batch. Validation
     records may need to be held for longer than [**] years, considering the
     Product life cycle. DSM will retain batch records for the expiry date of
     the Clinical Trial Materials for a maximum of [**] years unless notified of
     a shorter retention period by XANODYNE, but at a maximum of [**] past the
     stop use date.

                           QUALITY AGREEMENT - PAGE 15

<PAGE>

     DSM will notify XANODYNE prior to destruction of any records at the
     completion of the retention period.

24   REGULATORY

     24.1 Regulatory filings. XANODYNE is responsible for ensuring all
          appropriate regulatory filings and import/export documentation are
          filed with regulatory agencies prior to shipment/human administration.
          XANODYNE will provide a copy of the applicable product registration as
          applicable to support regulatory inspection activities.

     24.2 Registration/Drug Listing. DSM is responsible for registering the
          facilities with the FDA and to maintain the registration form such
          that it is readily available for FDA inspection. DSM is responsible
          for drug listing as the manufacturer of the Products for XANODYNE,
          while XANODYNE is responsible for drug listing as the distributor of
          the Products. XANODYNE will provide DSM with all required information
          needed to register the Products with FDA. XANODYNE will notify DSM of
          changes in the countries of market and scheduled Product launch, where
          applicable.

     24.3 Annual Product Review. DSM, as required by cGMP's and applicable
          regulations, will prepare Annual Product Reviews. The Annual Product
          Review (APR) shall include, at a minimum, a summary of the following
          from the APR time frame: the batches processed, closed process
          deviations and investigations, closed complaints, active stability
          studies (for products tested at DSM), production work orders,
          analytical standards, and change controls with process validation
          impact. Statistical trending of finished product test results will be
          summarized and charted. A summary report of the product retain review
          will also be provided. The report shall be completed in writing and
          sent to XANODYNE no later than [**] days after the scheduled APR start
          date.

     24.4 Annual Report. XANODYNE is responsible for preparing any Annual Report
          as required by applicable regulations, including 21 CFR 314.70,
          314.81, and/or 601.12. XANODYNE will notify DSM as to the approval
          date of the

                           QUALITY AGREEMENT - PAGE 16

<PAGE>

          regulatory license. At least [**] calendar days before the Annual
          Report due date, XANODYNE shall request in writing from DSM the
          chemistry, manufacturing, and controls data required for submission of
          the Annual Report. DSM will provide the requested information to
          XANODYNE within [**] days.

25   COMPLAINTS

     XANODYNE is responsible for receiving and initially investigating any
     Product complaints. XANODYNE will notify DSM of any problems thought to be
     due to manufacture, which are found during the distribution of the product.
     Upon receipt of the notice of complaints, DSM will promptly perform
     investigations for these problems. Investigation reports will be forwarded
     to XANODYNE within [**] calendar days following the date of receipt by DSM.
     XANODYNE is responsible for reporting any complaint to the appropriate
     regulatory authority including adverse drug events reports. Any complaint
     received by DSM will be immediately forwarded to XANODYNE.

26   RECALLS

     XANODYNE, with data and assistance provided by DSM, is responsible for
     filing Field Alerts and initiating product recalls due to any defect
     considered sufficiently serious. XANODYNE will provide DSM with a copy of
     any regulatory correspondence related to field alerts or recalls, in the
     event that DSM has reason to believe that any Products should be recalled
     or withdrawn from distribution, DSM shall promptly inform XANODYNE in
     writing prior to taking any such action. XANODYNE shall notify the FDA,
     DEA, and any foreign regulatory agencies of any recall, and shall be
     responsible for coordinating all necessary activities regarding the action
     taken. XANODYNE acknowledges and understands that DSM, as manufacturer of
     the Product, has significant regulatory obligations if there are any
     indications that recall or withdrawal would be necessary. Accordingly, DSM
     and XANODYNE agree to cooperate fully regarding any proposed recall,
     product withdrawal, or field correction; and the Parties agree to keep each
     other advised,

                           QUALITY AGREEMENT - PAGE 17

<PAGE>

     and to exchange copies of such documentation as may be required, to assure
     regulatory compliance. With prior notification to the other party, either
     party may, in exigent circumstances, make a unilateral, final decision to
     notify appropriate regulatory agencies,

27   DISPUTE RESOLUTION

     In the event that a dispute arises between DSM and XANODYNE regarding the
     nonconformity of a batch of the Products or regarding other matters, the
     senior management of the quality departments from both companies shall in
     good faith promptly attempt to resolve disputed issues. If the parties
     cannot reach agreement, the matter shall be resolved in accordance with
     dispute resolution provisions of the Supply Agreement. XANODYNE may only
     dispute a batch of Product, which has been dispositioned by DSM for
     release. Xanodyne Corporate Quality Assurance retains at all times the
     right to determine Product release status for commercial distribution.
     Financial liability shall be determined according to the Supply Agreement.

                           QUALITY AGREEMENT - PAGE 18

<PAGE>

                     APPENDIX I: OUTLINE OF RESPONSIBILITIES

<TABLE>
<CAPTION>
FUNCTION                                                       DSM    XANODYNE
--------                                                       ----   --------
<S>                                                            <C>    <C>
MANUFACTURING                                                  [**]   [**]
In-Process TESTING (Physical, Chemical Microbial)              [**]   [**]
FP TESTING - Physical, Chemical                                [**]   [**]
FP TESTING - Sterility                                         [**]   [**]
FP RELEASE                                                     [**]   [**]
DISTRIBUTION                                                   [**]   [**]
FP RETAINS                                                     [**]   [**]
FP STABILITY                                                   [**]   [**]
C OF A                                                         [**]   [**]
BATCH RECORD REVIEW/SIGNOFF                                    [**]   [**]
INVESTIGATIONS INTO DEVIATIONS AND NON-CONFORMANCES            [**]   [**]
COMPLAINT RECEIPTS                                             [**]   [**]
COMPLAINT INVESTIGATIONS                                       [**]   [**]
ADVERSE EVENT REPORTS                                          [**]   [**]
FIELD ALERT REPORTS                                            [**]   [**]
RECALLS                                                        [**]   [**]
CUSTOMER RETURNS                                               [**]   [**]
RAW MATERIAL (Active) ORDERS                                   [**]   [**]
RAW MATERIAL (Active) TESTING AND Release                      [**]   [**]
RAW MATERIAL (Inactives/Printed Packaging Materials) ORDERS    [**]   [**]
RAW MATERIALS (Inactives/Printed Packaging Materials) TESTS    [**]   [**]
RAW MATERIAL (Inactives/Printed Packaging Materials) RELEASE   [**]   [**]
SUPPLIER AUDITS (Active)                                       [**]   [**]
SUPPLIER AUDITS (Inactives/Printed Packaging Materials)        [**]   [**]
MAINTENANCE OF VENDOR LISTS                                    [**]   [**]
NOTICE OF PROPOSED CHANGES                                     [**]   [**]
DOCUMENT CHANGE CONTROL                                        [**]   [**]
ANNUAL Product REVIEW                                          [**]   [**]
</TABLE>

                           QUALITY AGREEMENT - PAGE 19

<PAGE>

                        APPENDIX II: CONTACT INFORMATION

                              XANODYNE KEY CONTACTS

<TABLE>
<CAPTION>
                                                           PRODUCT
NAME                  TITLE       CONTACT NUMBERS          RESPONSIBILITY
----                  ---------   ----------------------   --------------
<S>                  <C>          <C>                      <C>
G. Keith Arvin        Director,   859-547-   859-814-      General Quality
karvin@xanodyne.com   Quality     3880       6338 (cell)
                      Assurance

Thomas L. Bader       Manager,    859-547-   859-992-      General Quality
tbader@xanodyne.com   Quality     38834      1756 (cell)
                      Assurance
</TABLE>

                                OSM Key CONTACTS

<TABLE>
<CAPTION>
                                                                  PRODUCT
NAME               TITLE               CONTACT NUMBERS            RESPONSIBILITY
----               -----------------   ------------------------   --------------
<S>                <C>                 <C>                        <C>
Warren             VP, Quality         Ph: 252-707-7710           General Quality
Norton             Assurance           warren.horton@dsm.com

Rob Koger          Director, Quality   Ph: 252-707-2425 rob.      Manufacturing
                   Assurance           koger@dsm. com             Oversight

Peter Amanatides   Director, Quality   Ph: 252-707-2517           Lab Oversight
                   Assurance           peter.amanatides@dsm.com

Will Mitten        Director, Lab       Ph: 252-707-2193           Lab Services
                   Services            will.mitten@dsm.com

Lora Landreth      Manager,            Ph: 252-707-2138 lora.     Stability
                   Stability           landreth @dsm. com

Lisa               Manager, Quality    Ph: 252-707-2083           APRs, Complaints,
Hackett            Assurance           lisa.hackett@dsm.com       Audits,
</TABLE>

                           QUALITY AGREEMENT - PAGE 20

<PAGE>

APPENDIX III: PRODUCTS

DARVOCETN-100

                           QUALITY AGREEMENT - PAGE 21

<PAGE>

QUALITY AGREEMENT

HISTORY OF CHANGES

<TABLE>
<CAPTION>
VERSION   DATE   NAME   REVISIONS/COMMENTS
-------   ----   ----   ------------------
<S>       <C>    <C>    <C>

</TABLE>

                           QUALITY AGREEMENT - PAGE 22

Page 1 of 63

<PAGE>

                                   EXHIBIT D:

                            CONFIDENTIALITY AGREEMENT

1.   During the term of this Agreement, the undersigned Parties may disclose
     certain confidential and proprietary information and data to each other
     relating to their respective products, including active pharmaceutical
     ingredients and the finished dosage forms of such active pharmaceutical
     ingredients (collectively "Products") and businesses, including, but not
     limited to, financial and other business information, Product samples,
     formulas, manufacturing processes, specifications, drawings, schematics and
     other technical, customer and Product development plans, forecasts,
     strategies and other data. Except as otherwise specifically provided
     herein, all information disclosed by one Party (in such capacity, the
     "Disclosing Party") to the other Party (in such capacity, the "Receiving
     Party") relating to the Disclosing Party's Products and/or its business
     operations and the results, reports, etc., of testing and evaluation of any
     such information shall constitute "Proprietary Information."

2.   The Disclosing Party shall disclose and supply its Proprietary Information
     to the Receiving Party solely to assist the Receiving Party in performing
     its obligations under this Agreement, any related API Schedules, and AAI
     purchase orders.

3.   In consideration of the Disclosing Party's disclosure and supply of
     Proprietary Information, each Party, as a potential Receiving Party, agrees
     that, for a period of seven (7) years from the date of such disclosure, it:
     (a) shall use The Disclosing Party's Proprietary Information exclusively
     for the limited purposes set forth in the first numbered paragraph hereof;
     and (b) shall not disclose, without the express written consent of the
     Disclosing Party, any Proprietary Information, including this Agreement or
     the interest of the Disclosing Party in exploring the possibility of
     entering into a business relationship with the Receiving Party, to any
     person other than to those employees of the Receiving Party
     ("Representatives") who will be directly involved in fulfilling the
     Receiving Party's obligations hereunder, provided that such Representatives
     have assumed like obligations of confidentiality to the Disclosing Party.

4.   Each Party, as a potential Receiving Party, agrees to advise those of its
     Representatives who receive Proprietary Information that such information
     (a) is proprietary and confidential to the Disclosing Party and (b) shall
     not be disclosed to anyone except as authorized herein. Each Party further
     agrees to take the precautions it normally takes with its own confidential
     and proprietary information to prevent unauthorized disclose or use of such
     Proprietary Information, but no less than reasonable precautions.

5.   In the event that the Receiving Party becomes compelled to disclose any
     Proprietary Information, it will provide the Disclosing Party with prompt
     advance notice in writing so that the Disclosing Party may, at its
     discretion, intervene prior to disclosure. The Receiving Party will
     exercise its commercially reasonable best efforts to obtain reliable
     assurance that confidential treatment will be accorded such Proprietary
     Information.

Page 2 of 63

<PAGE>

6.   Notwithstanding any of the foregoing, the term "Proprietary Information"
     and the obligation of confidentiality associated therewith shall not apply
     to the following information: (a) information which, at the time of the
     Disclosing Party's disclosure to the Receiving Party, is in the public
     domain; (b) information which, after the Disclosing Party's disclosure to
     the Receiving Party, enters the public domain, except where such entry is
     the result of the Receiving Party's breach of this Agreement or otherwise
     is the result of any unauthorized disclosure by any of its employees; (c)
     information which, prior to the Disclosing Party's disclosure to the
     Receiving Party, was already in the Receiving Party's possession; (d)
     information which, subsequent to the Disclosing Party's disclosure to the
     Receiving Party, is obtained by the Receiving Party from a third Party
     which is Lawfully in possession of such information and not subject to a
     contractual or fiduciary relationship to the Disclosing Party with respect
     thereto or (e) information which is developed independently by the
     Receiving Party without reference to the Proprietary Information.

7.   Upon the termination of this Agreement and upon receipt of a written
     request from the Disclosing Party, the Receiving Party shall promptly
     return to the Disclosing Party the originals and all copies of any
     Proprietary Information then in the Receiving Party's possession.
     Notwithstanding the foregoing, Receiving Party may retain one copy of such
     Proprietary Information for archival purposes.

8.   Each Party understands and acknowledges that, due to the unique nature of
     each Party's Proprietary Information, any unauthorized disclosure of any
     portion of Proprietary Information may cause irreparable injury to the
     Disclosing Party and that no adequate or complete remedy may be available
     to the Disclosing Party to compensate for such injury. Accordingly, each
     Party hereby acknowledges that the Disclosing Party may be entitled to
     injunctive relief in the event of such unauthorized disclosure by the
     Receiving Party or any of its employees in addition to whatever remedies it
     might have at Law. In addition, the Receiving Party shall indemnify the
     Disclosing Party from any loss or harm, including, without limitation,
     reasonable attorney's fees, resulting from any breach or enforcement of the
     Receiving Party's obligations hereunder or the unauthorized use or release
     of any such Proprietary Information. The Receiving Party will notify the
     Disclosing Party in writing promptly upon the occurrence of any such
     unauthorized release or other breach of which it becomes aware.

Page 3 of 63

<PAGE>

                       MANUFACTURING AND SUPPLY AGREEMENT
                                PRODUCT SCHEDULE

PRODUCT SCHEDULE TO MANUFACTURING AND SUPPLY AGREEMENT (the "Supply Agreement")
DATED JANUARY 26, 2004 AND ORIGINALLY EXECUTED BY DSM PHARMACEUTICALS
("Manufacturer") AND AAIPHARMA LLC ("AAI")

This Product Schedule, effective as of January 26, 2004, supplements the Supply
Agreement by, among other things, identifying a particular Product, the purchase
and sale of which shall be governed by the terms of the Supply Agreement as well
as this Schedule.

1.   PRODUCT: Darvocet-N 100 in the following dosage forms.

2.   PRODUCT DOSAGE FORM(S) AND STAGES OF COMPLETION (E.G. BULK OR FINISHED
     PACKAGE FORM): finished packaged form - 500-count and 100-count tablets in
     bottles.

3.   PRODUCT SPECIFICATIONS: To be provided by AAI.

4.   ACTIVE PHARMACEUTICAL INGREDIENT: propoxyphene napsylate and acetaminophen.

5.   PURCHASE PRICE FOR PRODUCT AND CERTAIN RELATED SERVICES: See Attachment 1
     to this Schedule, Pricing shall remain firm for the reminder of the
     calendar year following the Qualification Date and may be increased only
     upon written agreement between the parties or as provided by Article 8 of
     the Supply Agreement.

6.   OTHER ARRANGEMENTS, IF ANY:

     (a)  The parties agree to negotiate in good faith toward the execution of
          Product Schedules for additional propoxyphene dosage forms and
          strengths requested by AAI. DSM agrees to provide AAI all other dosage
          forms and strengths of propoxyphene at a profit margin no greater than
          the margin from the Darvocet-N 100 pricing set forth in this Product
          Schedule.

     (b)  AAI shall purchase at least [**] percent ([**]%) of its requirements
          for the Product from DSM during the term of this Product Schedule. The
          parties acknowledge that market dynamics, including additional third
          party entrants and potential line extensions by AAI, will affect the
          quantity necessary to satisfy AAI's commercial requirements.

     (c)  From and after the Effective Date of this Product Schedule and for a
          period of two (2) years following the expiration, or termination of
          this Product Schedule for any reason other than material breach by
          AAI, hereof (and the Supply Agreement, to the extent related hereto),
          DSM shall not manufacture, process, formulate, package, label, test or
          sell, on behalf of itself or any other entity, any pain relief product
          containing a formulation of propoxephene.

                     DARVOCET-N 100 PRODUCT SCHEDULE: PAGE 1

<PAGE>

     (d)  In the event that AAI forecasts zero (0) quantities of Darvocet-N 100
          for a period of [**] consecutive months, then this Product Schedule
          shall be deemed to be terminated.

7.   SPECIAL SHIPPING INSTRUCTIONS: Davocet N-100 is a Schedule IV Controlled
     Substance and thus must be handled per the applicable laws and regulations.
     The carrier shall be subject to the mutual agreement of the Parties.

This Schedule is subject to and incorporates all terms and conditions of the
Supply Agreement, and, except as modified herein, all terms and conditions of
the Supply Agreement shall remain in full force and effect.

Each party represents that neither this Schedule nor any of its obligations
hereunder or under the Supply Agreement incorporated herein by reference will
conflict with, or result in a breach of, any arrangements or agreement between
such party and any third party.

IN WITNESS WHEREOF, each of the undersigned parties hereby accepts and agrees to
the terms and conditions of this Schedule, including their respective
obligations set forth in the Supply Agreement and incorporated herein by
reference.

DSM PHARMACEUTICALS, INC.               AAIPHARMA LLC

By: /s/ Terence S. Novak                By: /s/ David M. Hurley
    ---------------------------------       ------------------------------------
    Terence S. Novak                        David M. Hurley, Chief Operating
    Sr. V.P. Commercial Operations          Officer of aaiPharma Inc.

Date: 1/26/04                           Date: January 30, 2004

                     DARVOCET-N 100 PRODUCT SCHEDULE: PAGE 2
<PAGE>
                                  ATTACHMENT 1

I. DEVELOPMENT SCOPE:

Manufacturer will perform the following transfer activities for Darvocet-N 100:

<TABLE>
<CAPTION>
Description of Service                                                     Price
----------------------                                                     -----
<S>                                                                        <C>
PHASE I - DARVOCET-N 100
   Cleaning Residue Detection Method Transfer                              $[**]
   Create Items Numbers and Analytical Standards                           $[**]
   Receive and Release Raw Materials                                       $[**]
   Provide Technical Transfer Report - Lilly API                           $[**]
   Provide Technical Transfer Report - Mallinckrodt API                    $[**]
   Provide Submission ready Documentation (copies of CoA, Batch Records)   $[**]
   Raw Materials                                                           $[**]
   Hartnett Printer Validation/Installation                                $[**]
   Development Work / Fette Press                                          $[**]
   Manufacturing Process Qualification                                     $[**]
   Packaging Process Qualification - 100 & 500 Count                       $[**]
   Cleaning Process Qualification                                          $[**]
   Validation Master Plan and Summary Report                               $[**]
      SUB-TOTAL $[**]
</TABLE>

Experimental, Stability and Validation Batches

<TABLE>
<CAPTION>
PRODUCT                                          QTY   PRICE/BATCH   EXTENDED PRICE
-------                                          ---   -----------   --------------
<S>                                              <C>   <C>           <C>
PHASE I
DARVOCET-N 100 - LILLY API
Experimental Batch                                1       $[**]           $[**]
   Submission Batch                               1       $[**]           $[**]
Validation Batch (500 & 100 Count) - Lilly API    3       $[**]           $[**]
Validation Batch (500 & 100 Count) -
   Mallincrodt API                                1       $[**]           $[**]
   Avicel Trial                                   1       $[**]           $[**]
   Placebo Batch                                  1       $[**]           $[**]
   Scale - Up Batch                               1       $[**]           $[**]
   Scale - Up Batch                               1       $[**]           $[**]
      TOTAL                                                               $[**]
</TABLE>

ASSUMPTIONS

1.   Batch prices include raw materials and packaging materials.

2.   Submission batch prices include packaging 100 count and 500 count bottles.

                     DARVOCET-N 100 PRODUCT SCHEDULE: PAGE 3

<PAGE>

3.   Analytical testing required to execute this project will be performed by
     AAI, with the exception of residual cleaning analysis and component release
     testing.

4.   A validated method for residual detection will be transferred to
     Manufacturer from AAI.

II. COMMERCIAL PRICING:

<TABLE>
<CAPTION>
Product            Anticipated Annual Volume Units   Commercial Price/Unit
-------            -------------------------------   ---------------------
<S>                <C>                               <C>
Darvocet-N 100
100 Count Bottle                 [**]                        $[**]
Darvocet-N 100
500 Count Bottle                 [**]                        $[**]
</TABLE>

ASSUMPTIONS

1.   Pricing review principles are more fully described in the Supply Agreement.

2.   Propoxyphene Napsylate will be available to Manufacturer at a cost of
     $[**]/Kg

3.   Darvocet-N 100 - Bottle of 100 Package Configuration

     a.   200cc round bottle

     b.   38mm C/R cap with induction seal

     c.   16 gram Rayon coil

     d.   One label per bottle

     e.   One topsert applied by glue to the top of each bottle

     f.   Six bottles per bundle

     g.   Forty-eight bottles per shipper

     h.   Unprinted shipper with shipping label

4.   Darvocet-N 100 - bottle of 500 Package Configuration

     a.   625cc round bottle

     b.   53mm C/T cap with induction seal

     c.   28gm Rayon coil

     d.   One label per bottle

     e.   One topsert applied by glue to top of each cap

     f.   Six bottles per bundle

     g.   Twelve bottles per shipper

     h.   Unprinted shipper with shipping label

III. GENERAL PROJECT ASSUMPTIONS

1.   The project's scope involves technology transfer of Darvocet-N 100
     manufacture and is therefore developmental in nature. As such, issues and
     unexpected outcomes are anticipated for which ongoing technical support by
     Manufacturer may be required. The project will be executed by Manufacturer
     on a best efforts basis.

2.   Manufacturer Regulatory Affairs will provide, at a minimum, in-house
     regulatory support and raw data necessary to support the regulatory
     submission. Additional Regulatory consulting will be billed at a rate of
     $[**] per hour as requested.

                     DARVOCET-N 100 PRODUCT SCHEDULE: PAGE 4

<PAGE>

3.   The cost of Manufacturer vendor audits for client specified components, if
     required, are incremental to this proposal. AAI, at its discretion, may
     hire Manufacturer to perform such audits or perform the audits itself.

4.   All manufacturing will take place at the Manufacturer's facility in
     Greenville, North Carolina.

5.   All documentation and reports will be provided in standard Manufacturer
     format(s). Any preparation of AAI-specific report formats or any
     reformatting of previously prepared reports will be provided at additional
     costs.

6.   For non-US destinations: All fees are quoted and payable in US dollars. Any
     shipping or other expenses due and payable after delivery FOB to a common
     carrier by Manufacturer will be the responsibility of AAI. Examples of such
     amounts include, but are not limited to: export fees, customs, tariffs,
     excise fees, brokerage charges, port fees, importation charges,
     documentation certification and/or notarization, etc.

IV. CAPITAL ESTIMATE:

DSM will purchase the items listed below. AAI will reimburse DSM for the cost of
the items purchased and all out-of-pocket expenses associated with the purchase
and installation of such items.

<TABLE>
<CAPTION>
Description                             Cost
-----------                            -----
<S>                                    <C>
Compressing Tooling (Darvocet-N 100)   $[**]
Printer Tooling (Darvocet-N 100)       $[**]
Compressing Tooling (PO 4537080)       $[**]
Change Parts Quote (PO 4542225)        $[**]
</TABLE>

                     DARVOCET-N 100 PRODUCT SCHEDULE: PAGE 5

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