Document:

<PAGE>

                                                                 EXHIBIT 10.4

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

                       LICENSE AND MANUFACTURING AGREEMENT

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

                                    RECITALS

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

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

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

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

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

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

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

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

                                    ARTICLE 1
                                   DEFINITIONS

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

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

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

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

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

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

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

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

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

                                       -2-
<PAGE>
market potential taking into account efficacy, safety, the anticipated approved
labeling, the competitiveness of alternative products in the market place or
under development, the patent and other proprietary position of the product, the
likelihood of regulatory approval, the commercial value of the product and other
relevant factors.

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

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

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

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

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

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

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

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

                                       -3-
<PAGE>
     1.17 "Force Majeure" means any occurrence beyond the reasonable control of
a Party that prevents or substantially interferes with the performance by the
Party of any of its obligations hereunder, if such occurs by reason of any act
of God, flood, fire, explosion, earthquake, strike, lockout, labor dispute,
casualty, accident, war, revolution, civil disorder, terrorist attack, embargo,
any restriction of any Governmental Authority (to the extent such Governmental
Authority has ruling authority over such Party), or other similar event beyond
the reasonable control of such Party, if and only if the Party affected shall
have used Commercially Reasonable Efforts to avoid such occurrence.

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

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

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

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

     1.22 "Niacin ANDAs" means:

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

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

                                       -4-
<PAGE>
     1.23 "Niacin-Lovastatin ANDA" means:

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

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

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

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

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

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

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

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

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

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

                                       -5-
<PAGE>
     1.32 "Product Quality Complaint" means any complaint that questions the
purity, identity, potency or quality of any Licensed Product, its packaging, or
labeling, or any complaint that concerns any incident that causes the drug
product or its labeling to be mistaken for, or applied to, another article or
any bacteriological contamination, or any significant chemical, physical, or
other change or deterioration in the distributed drug product..

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

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

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

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

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

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

                                    ARTICLE 2
                                    LICENSES

2.1 License Grant.

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

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

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

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

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

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

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

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

                                       -7-
<PAGE>
obligations hereunder, or (b) in connection with a merger, reorganization,
change of control, or sale of all or substantially all of Barr's business to
which this Agreement relates; provided, further, that, in each case and
notwithstanding anything in this Section 2.4 to the contrary, any permitted
sale, transfer or license of the Approved ANDAs hereunder shall be expressly
subject to Kos' rights hereunder and any such transferee shall expressly agree
to assume Barr's obligations hereunder.

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

     2.6 Reservation of Rights.

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

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

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

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

                                    ARTICLE 3
                                 SUPPLY BY BARR

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

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

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

                                    ARTICLE 4
                               REGULATORY MATTERS

     4.1 Responsibility for ANDAs.

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

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

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

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

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

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

                                      -10-
<PAGE>
     4.3 Packaging.

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

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

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

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

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

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

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

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

     4.7 Compliance, Documentation, Monitoring and Recordkeeping.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                   ARTICLE 5
                       FORECASTING, ORDERING AND SHIPPING

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

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

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

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

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

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

                                   ARTICLE 6
                INSPECTION AND DEFECTIVE PRODUCTS; PRODUCT RECALL

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

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

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

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

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

     6.5 Recalls.

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

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

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

                                    ARTICLE 7
                              FINANCIAL PROVISIONS

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

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

          (a) ****

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

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

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

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

          (b) ****

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

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

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

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

                                   ARTICLE 8
                    REPRESENTATIONS, WARRANTIES AND COVENANTS

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

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

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

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

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

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

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

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

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

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

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

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

                                   ARTICLE 9
                                 CONFIDENTIALITY

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

     9.2 Public Announcements.

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

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

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

                                   ARTICLE 10
                          INDEMNIFICATION AND INSURANCE

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

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

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

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

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

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

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

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

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

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

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

     10.3 Notice of Claims; Third Party Claims.

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

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

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

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

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

                                   ARTICLE 11
                              TERM AND TERMINATION

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

          11.2 Rights of Termination.

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

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

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

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

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

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

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

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

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

                                   ARTICLE 12
                                    GUARANTEE

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

                                   ARTICLE 13
                                  MISCELLANEOUS

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

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

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

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

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

                    and to:

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

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

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

               with a copy to

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

               and

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

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

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

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

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

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

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

     13.9 Dispute Resolution.

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

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

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

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

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

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

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

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

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

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

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

                                        BARR LABORATORIES, INC.

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

                                        KOS LIFE SCIENCES, INC.

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

                                        KOS PHARMACEUTICALS, INC.

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------<PAGE>

                                                            EXHIBIT 10.5

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

                          SUPPLY AND EMPLOYEE AGREEMENT

                                     BETWEEN

                                       BPI

                                       AND

                                       KOS

                             DATED AS OF MAY 2, 2005
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
ARTICLE 1  DEFINITIONS...................................................     1

ARTICLE 2  PURCHASE AND SALE OF PRODUCT..................................     9
   2.1     General.......................................................     9
   2.2     Supply and Purchase of the Product............................     9
   2.3     Supply Prices for Product.....................................     9
   2.4     Samples of Product............................................     9
   2.5     Product Form and Labeling.....................................     9
   2.6     Forecasts and Purchase Orders.................................    10
   2.7     Product Supply................................................    11
   2.8     Product Supply Capacity.......................................    12
   2.9     Delivery......................................................    12
   2.10    Product Quality...............................................    12
   2.11    Changes in Product Specifications.............................    13
   2.12    Manufacturing Changes.........................................    13
   2.13    Records/Facilities............................................    13
   2.14    Rejection of Product; Remedies................................    13
   2.15    Product Warranties............................................    14
   2.16    Regulatory Compliance.........................................    15
   2.17    Access to Facilities..........................................    15
   2.18    Inspections...................................................    16
   2.19    Threshold Purchases...........................................    16
   2.20    CMC Information...............................................    17
   2.21    Shelf-life....................................................    17

ARTICLE 3  MARKETING PLANS AND REGULATORY MATTERS........................    17
   3.1     Intentionally Deleted.........................................    17
   3.2     Marketing Plans...............................................    17
   3.3     Marketing Plan Activities.....................................    17
   3.4     Intentionally Deleted.........................................    18
   3.5     Intentionally Deleted.........................................    18
   3.6     Intentionally Deleted.........................................    18
</TABLE>

                                        i
<PAGE>
                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
   3.7     Promotional Materials and Other Materials.....................    18
   3.8     Provisions Applicable to Sales Representatives................    19
   3.9     Market Conditions.............................................    22
   3.10    Managed Care..................................................    22
   3.11    Compliance with Laws..........................................    23
   3.12    Intentionally Deleted.........................................    24
   3.13    Regulatory Matters............................................    24
   3.14    Authorized Generic............................................    27

ARTICLE 4  LIMITATIONS ON RIGHTS GRANTED TO KOS..........................    27
   4.1     Grant of Rights to other Persons..............................    27
   4.2     No Implied Grants.............................................    28
   4.3     Retained Rights...............................................    28
   4.4     Ex-Territory Activities.......................................    28

ARTICLE 5  FINANCIAL TERMS...............................................    28
   5.1     Purchase Price for Product Sold Commercially..................    28
   5.2     Closing Date Payment..........................................    28

ARTICLE 6  PAYMENT TERMS.................................................    29
   6.1     Payment Method................................................    29
   6.2     Reports and Payments of Purchase Price........................    29
   6.3     Books and Records; Audit......................................    30

ARTICLE 7  EMPLOYEE TRANSFER.............................................    31
   7.1     Employee Transfer.............................................    31
   7.2     Transition of Benefits........................................    32
   7.3     Welfare Benefits Generally....................................    33
   7.4     Retention of Liabilities by BPI...............................    34
   7.5     Retention of Liabilities by Kos...............................    34
   7.6     Severance.....................................................    34
   7.7     Calendar Year 2005 Bonuses....................................    35
   7.8     Termination of Agreements.....................................    35

ARTICLE 8  CONFIDENTIALITY...............................................    35
</TABLE>

                                       ii
<PAGE>
                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
   8.1     Confidential Information......................................    35
   8.2     Publicity; Filing of this Agreement...........................    37
   8.3     Publication...................................................    37
   8.4     Use of Names..................................................    37
   8.5     Confidentiality of this Agreement.............................    38
   8.6     Survival......................................................    38

ARTICLE 9  INTELLECTUAL PROPERTY.........................................    38
   9.1     Ownership of Names............................................    38
   9.2     Trade Dress...................................................    38
   9.3     Domain Names..................................................    38

ARTICLE 10 REPRESENTATIONS AND WARRANTIES................................    38
   10.1    Representations and Warranties................................    38
   10.2    Performance by Affiliates.....................................    40
   10.3    Disclaimer of Warranty........................................    41
   10.4    Limitation of Liability.......................................    41
   10.5    Survival of Certain Representations/Warranties................    41

ARTICLE 11 TERM AND TERMINATION..........................................    41
   11.1    Term..........................................................    41
   11.2    Allegations of Material Breach................................    41
   11.3    Bankruptcy Event..............................................    42
   11.4    Termination Prior to Closing..................................    42

ARTICLE 12 EFFECTS OF TERMINATION........................................    42
   12.1    Effects of Termination........................................    42
   12.2    Accrued Rights................................................    43
   12.3    Intentionally Omitted.........................................    43
   12.4    Survival......................................................    43
   12.5    Sale of Inventory.............................................    43

ARTICLE 13 INDEMNIFICATION; INSURANCE....................................    43
   13.1    Indemnification...............................................    43
   13.2    Notice of Claim...............................................    44
</TABLE>

                                       iii
<PAGE>
                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
   13.3    Control of Defense............................................    45
   13.4    Right to Participate in Defense...............................    45
   13.5    Settlement....................................................    45
   13.6    Cooperation...................................................    46
   13.7    Expenses of the Indemnified Party.............................    46
   13.8    Product Liability.............................................    46
   13.9    Additional BPI Indemnification Obligations....................    47
   13.10   Insurance.....................................................    47

ARTICLE 14 DISPUTE RESOLUTION............................................    47
   14.1    Disputes......................................................    47
   14.2    Litigation....................................................    48
   14.3    Injunctive Relief.............................................    48

ARTICLE 15 CLOSING AND CLOSING CONDITIONS................................    48
   15.1    Closing.......................................................    48
   15.2    Conditions to Obligations of Kos..............................    48
   15.3    Conditions to Obligations of BPI..............................    49
   15.4    Further Assurances............................................    49

ARTICLE 16 MISCELLANEOUS.................................................    49
   16.1    Entire Agreement; Amendment...................................    49
   16.2    Force Majeure.................................................    49
   16.3    Notices.......................................................    50
   16.4    Independent Contractors.......................................    51
   16.5    Non-Solicitation..............................................    51
   16.6    United States Dollars.........................................    51
   16.7    No Strict Construction........................................    51
   16.8    Assignment....................................................    51
   16.9    Governing Law.................................................    52
   16.10   Counterparts..................................................    52
   16.11   Further Actions...............................................    52
   16.12   Severability..................................................    52
</TABLE>

                                       iv
<PAGE>
                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
   16.13   Ambiguities...................................................    52
   16.14   Headings......................................................    53
   16.15   No Waiver.....................................................    53
</TABLE>

                                        v
<PAGE>
Schedules

Schedule 1.6         Cardizem LA Threshold Purchases
Schedule 1.27        Net Selling Price Example
Schedule 2.4         Sample Prices
Schedule 2.6.1       Batch Sizes
Schedule 2.6.2       Template for Initial Firm Zone
Schedule 2.6.5(A)    Initial Purchase Order
Schedule 2.6.5(B)    Maximum Capacity
Schedule 5.1.1       Floor Price
Schedule 5.1.2       Authorized Generic
Schedule 6.2.2       Reconciliation Calculation Example
Schedule 8.1.3       Permitted Disclosures
Schedule 9.3         Domain Names
Schedule 10.1.2(e)   Actions and Claims
Schedule 10.1.2(f)   Actions and Claims

Exhibits

Exhibit A            Domain Name Assignment

                                       -1-
<PAGE>
                          SUPPLY AND EMPLOYEE AGREEMENT

     THIS SUPPLY AND EMPLOYEE AGREEMENT (the "AGREEMENT") is dated as of May 2,
2005 (the "EFFECTIVE DATE") by and between Biovail Pharmaceuticals, Inc., a
Delaware corporation having a principal place of business at 700 Route 202/206
North, Bridgewater, New Jersey 08807 ("BPI"), and Kos Pharmaceuticals, Inc., a
Florida corporation having a principal place of business at 1 Cedar Brook Drive,
Cranbury, New Jersey 08512 ("KOS"). BPI and Kos are sometimes referred to herein
individually as a "PARTY" and collectively as the "PARTIES".

                                    RECITALS

     WHEREAS, BPI was previously the authorized distributor of Product in the
Territory and Kos is currently an authorized distributor of Product in the
Territory;

     WHEREAS, BPI is the authorized supplier of Product in the Territory;

     WHEREAS, BPI desires to supply Kos with the Product for sale in the
Territory, and Kos desires to purchase the Product from BPI for sale in the
Territory, on the terms and subject to the conditions of this Agreement; and

     WHEREAS, the Parties hereto desire to set forth the terms and conditions of
such supply and purchase arrangement and related matters.

     NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants contained herein, the Parties, intending to be legally bound, agree as
follows:

                                    ARTICLE 1
                                   DEFINITIONS

The following terms shall have the following meanings as used in this Agreement:

     1.1 "ACT" means the United States Federal Food, Drug and Cosmetics Act, as
amended from time to time, and the rules, regulations and guidelines promulgated
thereunder.

     1.2 "AFFILIATE" means a Person that controls, is controlled by or is under
common control with a Party. For the purposes of this definition, the word
"control" (including, with correlative meaning, the terms "controlled by" or
"under common control with") means the actual power, either directly or
indirectly through one or more intermediaries, to direct the management and
policies of such Person, whether by the ownership of fifty percent (50%) or more
of the voting stock of such Person (it being understood that the direct or
indirect ownership of a lesser percentage of such stock shall not necessarily
preclude the existence of control), or by contract or otherwise. Notwithstanding
the foregoing, for the purposes of this Agreement, none of the following persons
shall be considered to be an "Affiliate" of Kos or any of Kos's Affiliates: (i)
Michael Jaharis or the spouse or any sibling or lineal descendent of Michael
Jaharis or their estates, (ii) any trust for the benefit of Michael Jaharis or
the spouse or any sibling or lineal descendent of Michael Jaharis, or (iii) any
corporation, limited liability company,
<PAGE>
partnership, limited partnership, or other entity that is beneficially owned or
controlled by any of the persons in clauses (i) or (ii) above, other than a
publicly traded entity and its direct and indirect subsidiaries.

     1.3 "AUTHORIZED GENERIC" means a generic equivalent of the Product for sale
in the Territory which has been authorized by the holder of the NDA for the
Product and has been mutually agreed upon by the Parties pursuant to Section
3.14 of this Agreement.

     1.4 "BANKRUPTCY EVENT" means that the person or entity in question becomes
insolvent, or voluntary or involuntary proceedings by or against such person or
entity are instituted in bankruptcy or under any insolvency law, or a receiver
or custodian is appointed for such person or entity, or proceedings are
instituted by or against such person or entity for corporate reorganization or
the dissolution of such person or entity, which proceedings, if involuntary,
shall not have been dismissed within sixty (60) days after the date of filing,
or such person or entity makes an assignment for the benefit of its creditors,
or substantially all of the assets of such person or entity are seized or
attached and not released within sixty (60) days thereafter.

     1.5 "BUSINESS DAY" means any day other than (i) Saturday or Sunday or (ii)
any other day on which banks in New York, New York, United States are permitted
or required to be closed.

     1.6 "CARDIZEM LA THRESHOLD PURCHASES" means, for any given calendar year
during the Threshold Purchases Term, the aggregate Purchase Price for the
Product as set forth on Schedule 1.6 for such calendar year.

     1.7 "CGMP" means current Good Manufacturing Practices relating to
manufacturing practices for fine chemicals, active pharmaceutical ingredients,
intermediates, bulk products or finished pharmaceutical products, including the
principles set forth in 21 C.F.R. Parts 210 and 211.

     1.8 "CONTROL" means, with respect to any intellectual property right or
other intangible property, that a Party or one of its Affiliates owns or has a
license or sublicense to such item or right, and has the ability to grant
access, license or sublicense in or to such right without violating the terms of
any agreement or other arrangement with any Third Party.

     1.9 "COPYRIGHT" means any and all Promotional Materials used by BPI in the
Territory as of the Closing Date which may be subject to copyright protection
and/or registration, including, but not limited to, designs, graphics, logos,
colors, text and any combination thereof, but excluding the Corporate
Trademarks.

     1.10 "CORPORATE TRADEMARK" means the "Biovail" or "Biovail Pharmaceuticals"
tradenames, the Biovail symbol, the Biovail.com website addresses and all
goodwill associated therewith and all other trademarks, trade names, brand
names, logo types, symbols, trade dress and domain names (including the overall
look and feel of BPI's (or its Affiliate's) package design, the block color
design of all BPI's (and its Affiliate's) packaging, the color coding of all
BPI's (and its Affiliate's) packaging, labeling and package inserts) other than
the Product Trade Dress and the Product Trademarks (including registrations and
applications for registration

                                       -2-
<PAGE>
thereof and all renewals, modifications and extensions thereof) used by BPI or
its Affiliates in connection with the manufacture, marketing, sale and
distribution of their products.

     1.11 "DETAIL" or "DETAILING" means, with respect to the Product, the
communication by a Sales Representative during a Sales Call (a) involving
face-to-face contact, (b) describing in a fair and balanced manner the
FDA-approved indicated uses and other relevant FDA-approved characteristics of
the Product, (c) using the Promotional Materials, where appropriate, in an
effort to increase the prescribing and/or hospital ordering preferences of the
Product for its FDA-approved indicated uses, and (d) made at such medical
professional's office, in a hospital, at marketing meetings sponsored by a Party
for the Product or other appropriate venues conducive to pharmaceutical product
informational communication where the principal objective is to place an
emphasis, either primary, secondary or tertiary on the Product and not simply to
discuss the Product with such medical professional. For the avoidance of doubt,
discussions at conventions or other meetings not specifically and solely
sponsored by a Party for the Product shall not constitute "Details" or
"Detailing".

     1.12 "DILIGENT EFFORTS" means the carrying out of obligations or tasks
consistent with the standard of practice in the pharmaceutical industry for the
distribution, marketing, offering for sale and selling, of a pharmaceutical
product having similar market potential, profit potential or strategic value as
the Product, based on conditions then prevailing, including, without limitation,
the maturity of the Product and the intellectual property protection surrounding
the Product. Diligent Efforts requires that the Party, at a minimum, provided
that such actions are commercially reasonable: (a) determine the general
industry practices with respect to the applicable activities; (b) reasonably
promptly assign responsibility for such obligations to specific employee(s) who
are held accountable for progress, and monitor such progress on an on-going
basis; (c) set and consistently seek to achieve specific and meaningful
objectives for carrying out such obligations; and (d) make and implement
decisions and allocate resources designed to advance progress with respect to
such objectives.

     1.13 "DISTRIBUTION" means any and all activities directed to the
distribution, marketing, offering for sale and selling of a Product, including,
advertising, educating, planning, promoting and conducting reporting.

     1.14 "DISTRIBUTION AGREEMENT" means that certain Distribution and Product
Acquisition Agreement to be entered into between an Affiliate of BPI and Kos as
of the date hereof.

     1.15 "FDA" means the United States Food and Drug Administration or any
successor federal agency thereto.

     1.16 "GAAP" means generally accepted accounting principles in the United
States.

     1.17 "GENERIC ENTRY" means the first to occur of (i) the end of the ****
during which the aggregate number of prescriptions filled for an A/B rated
generic version(s) of the Product (which generic version(s) is labeled for the
same indications as the Product) sold by one or more Third Parties in the
Territory constitutes on average at least **** of the Total Market for the
Product during such **** period; provided, however in the event that the date of
such Generic

                                       -3-
<PAGE>
Entry is triggered pursuant to this clause (i), then the date of Generic Entry
shall be deemed to be the **** period or (ii) the first commercial sale in the
Territory of an Authorized Generic.

     1.18 "GOVERNMENTAL AUTHORITY" means any court, tribunal, arbitrator,
agency, legislative body, commission, official or other instrumentality of (i)
any government of any country, (ii) a federal, state, province, county, city or
other political subdivision thereof or (iii) any supranational body, in each
case having jurisdiction over the applicable subject matter.

     1.19 "LAW" or "LAWS" means all laws, statutes, rules, codes, regulations,
orders, judgments and/or ordinances of any Governmental Authority.

     1.20 "LOSSES" means any and all amounts paid or payable to Third Parties
with respect to a Third Party Claim, including without limitation, damages
(including all incidental and consequential damages), deficiencies, defaults,
awards, settlement amounts, assessments, fines, dues, penalties, costs,
liabilities, obligations, taxes, liens, losses, lost profits, fees and expenses
(including, without limitation, court costs, interest and reasonable fees of
attorneys, accountants and other experts).

     1.21 "LOST PROFITS" means an amount equal to the profits (after taking into
account any and all costs and expenses associated with the sale of Product)
(such "profits", "costs" and "expenses" being determined in accordance with
GAAP) that Kos would have actually realized on the sale of Ordered Product by
Kos in the Territory but for the fact that such Ordered Product was not supplied
by BPI hereunder due to a Supply Failure and shall not include any such profits
associated with sales merely reflected in a drawdown of pipeline inventory where
such drawdown does not adversely affect end-user sales.

     1.22 "LOST PROFITS CAP" means the amount in effect during a given calendar
month during the Term in which a particular Supply Failure first occurs,
calculated based on the following formula: an amount equal to **** on the
Closing Date, which amount shall be decreased monthly in equal monthly
installments, on a straight line amortization basis over the period from the
****. Such Lost Profits Cap is an aggregate cap for any and all Lost Profits
Claims.

     1.23 "MANUFACTURE" means all activities related to the manufacturing of a
pharmaceutical product, including but not limited to manufacturing of supplies,
for commercial sale, packaging, in-process and finished product testing, release
of product or any component or ingredient thereof, quality assurance activities
related to manufacturing and release of product, ongoing stability tests and
regulatory activities related to any of the foregoing.

     1.24 "MARKETING PLAN" means a written marketing plan and budget for a
Product for a calendar year that contains at least the following for the
relevant time period: (i) general strategies and programs for promoting,
Detailing and marketing such Product, (ii) the definitions of the levels, types
of efforts and spending for such period and (iii) a budget for expenses for
Distributing the Product for at least such full calendar year broken down by
calendar quarters.

     1.25 "NDA" means a new drug application or any supplements or amendments
thereto submitted to the FDA for commercial sale or use of a Product in the
Territory.

                                       -4-
<PAGE>
     1.26 "NET SALES" means the recorded gross sales of the Products in the
Territory to Third Parties in accordance with GAAP less the following
deductions:

               (A) sales taxes, excise taxes and duties incurred by Kos, and any
other governmental charges imposed upon the production, importation, use or sale
of Product;

               (B) trade, quantity and cash discounts allowed on Product to
wholesalers or other Third Parties to whom Product is sold and shipped directly;

               (C) provision for actual or expected allowances or credits to
customers on account of rejection or return of Product; and

               (D) rebates and charge-backs and other price reduction programs
granted to managed care entities and pharmaceutical benefit management service
entities related to the sales of the Product;

     as determined in accordance with Kos's commercial and accounting policies
as described above consistently applied in a manner consistent with GAAP.

     If Kos chooses to sell one or more of the Products together with another
Kos product with composite pricing, Net Sales for the affected Product will be
recalculated based on the then-average price of the Product to the applicable
customer category when such Product is sold independently of any other Kos
product.

     In the case of any sale of a Product between or among Kos and its
Affiliates (or permitted grantee, licensees or sublicensees) for resale, Net
Sales shall be calculated as above only on the first arm's length sale
thereafter to a Third Party. Any of the items set forth above that would
otherwise be deducted from the invoice price in the calculation of Net Sales but
which are separately charged to, and paid by, Third Parties shall not be
deducted from the invoice price in the calculation of Net Sales. In the case of
any sale of a Product or part thereof for value other than in an arm's length
transaction exclusively for cash, such as barter or counter-trade, Net Sales
shall be determined by referencing Net Sales at which substantially similar
quantities of such Product are sold in an arm's length transaction for cash.

     1.27 "NET SELLING PRICE" means Net Sales on a per Unit basis of the Product
(broken down on an SKU-by-SKU basis). ****

     1.28 "ORDERED PRODUCT" means Product ordered by Kos hereunder pursuant to
accepted Purchase Orders in accordance with the terms of this Agreement.

     1.29 "PERSON" means any natural person, corporation, firm, business trust,
joint venture, association, organization, company, partnership or other business
entity, or any government, or any agency or political subdivisions thereof.

     1.30 "PHASE IV CLINICAL TRIALS" means certain post-marketing studies to
delineate additional information about a pharmaceutical product's risks,
benefits, and optimal use, commenced after receipt of Regulatory Approval in the
indication for which such trial is being conducted.

                                       -5-
<PAGE>
     1.31 "PRODUCT" means the extended release tablet formulation pharmaceutical
product of the active pharmaceutical ingredient diltiazem hydrochloride
currently marketed under the Product Trademark Cardizem(R) LA as specified in
the FDA approved NDA # 21-392.

     1.32 "PRODUCT SPECIFICATIONS" means those manufacturing, performance,
quality control release, packaging and labeling specifications for the Product
in the Territory, which are initially as set forth in the applicable Regulatory
Approval for the Product, as such specifications may be amended from time to
time pursuant to the terms of this Agreement.

     1.33 "PRODUCT TRADE DRESS" means the packaging and labeling (including the
package insert) that has been approved by the FDA prior to the Closing Date for
use with the Product in the Territory.

     1.34 "PRODUCT TRADEMARKS" means each trademark which Kos has rights to use
in the Territory in connection with the Distribution of the Product and which
are set forth on Schedule 1.34.

     1.35 "PROMOTIONAL MATERIALS" means all written, printed, video or graphic
advertising, promotional, educational and communication materials (other than
Product labels and package inserts) for marketing, advertising and promotion of
the Product, including, without limitation, copyrights in any such materials and
all designs, industrial designs, design patents, design registrations, and
design patent applications developed in connection with such materials, for use
by (a) a Sales Representative or (b) advertisements, web sites or direct mail
pieces, in accordance with the terms of the applicable Marketing Plan.

     1.36 "REGULATORY APPROVAL" means all approvals (including, without
limitation, where applicable, pricing and reimbursement approval and schedule
classifications), product and/or establishment licenses, registrations or
authorizations of any Regulatory Authority, necessary for the manufacture, use,
storage, import, export, transport, offer for sale, or sale of a pharmaceutical
product in a regulatory jurisdiction in the Territory.

     1.37 "REGULATORY AUTHORITY" means the FDA and any other national,
supra-national, regional, state or local regulatory agency, department, bureau,
commission, council or governmental entity in the Territory.

     1.38 "SALES CALL" means a personal visit by a Sales Representative to one
or several medical professional(s) having prescribing authority for the
indications in which a Product is approved, as well as to other individuals or
entities that have significant impact or influence on prescribing decisions for
the indications for which such Product is approved during which such Sales
Representative Details a Product.

     1.39 "SALES REPRESENTATIVE" means a pharmaceutical sales representative
engaged or employed by Kos to conduct Detailing and other promotional efforts
with respect to the Product.

     1.40 "SAMPLES" means Product packaged and distributed as a complementary
trial for use with patients in the United States and in accordance with the
Prescription Drug Marketing Act of 1987, as amended (the "PDM ACT") and free
goods provided for this purpose through coupons or other mechanisms.

                                       -6-
<PAGE>
     1.41 "SEVERANCE BENEFITS" means any and all liabilities in respect of
severance, redundancy and similar pay and benefits, salary continuation, and
similar obligations, relating to the termination or alleged termination of
employment, whether arising under an employment agreement, collective bargaining
agreement, employee benefit plan, applicable law, or otherwise.

     1.42 "SUPPLY FAILURE" means the failure of BPI to supply to Kos at least
**** of the aggregate number of Units ordered by Kos in accepted Purchase Orders
hereunder during any **** period during the Term, other than as a result of
force majeure pursuant to Section 16.2.

     1.43 "TERRITORY" means the United States of America and Puerto Rico.

     1.44 "THIRD PARTY" means any entity other than Kos or BPI or their
respective Affiliates.

     1.45 "THRESHOLD PURCHASES TERM" means the period commencing on the Closing
Date and ending on December 31, 2008.

     1.46 "TOTAL MARKET" means, with respect to the Product, the aggregate total
number of prescriptions filled for said Product and any generic and other
versions of said Product made available in finished form in the Territory.

     1.47 "UNIT" means an individual unit of a Product.

     1.48 "WELFARE BENEFITS" means the type of benefits described in Section
3(1) of ERISA (whether or not covered by ERISA), other than Severance Benefits.

INTERPRETATION. Unless the context of this Agreement otherwise requires: (a)
words of one gender include the other gender; (b) words using the singular or
plural number also include the plural or singular number, respectively; (c) the
terms "hereof," "herein," "hereby," and other similar words refer to this entire
Agreement; (d) the terms "Article" and "Section" refer to the specified Article
and Section of this Agreement; and (e) the term "including" shall mean
"including, without limitation". Whenever this Agreement refers to a number of
days, unless otherwise specified, such number shall refer to calendar days.

ADDITIONAL DEFINITIONS. Each of the following definitions is set forth in the
Section of this Agreement indicated below:

<TABLE>
<CAPTION>
                DEFINITION                      SECTION
-----------------------------------------   --------------
<S>                                         <C>
Affected Employees                          Section 7.1
Agreement                                   Preamble
Breaching Party                             Section 11.2.1
BPI                                         Preamble
BPI Account Plans                           Section 7.2
BPI Plan                                    Section 7.2
BPI Savings Plan                            Section 7.2
Chargebacks                                 Section 3.10
Closing                                     Section 15.1.1
</TABLE>

                                       -7-
<PAGE>
<TABLE>
<CAPTION>
                DEFINITION                      SECTION
-----------------------------------------   --------------
<S>                                         <C>
Closing Date                                Section 15.1.1
Closing Date Payment                        Section 5.2
COA                                         Section 2.10.2
Confidential Information                    Section 8.1.1
Delivery Point                              Section 2.9.1
Disclosing Party                            Section 8.1.1
Dollars                                     Section 16.6
Effective Date                              Preamble
Firm Zone                                   Section 2.6.2
Immediate Transfer Date                     Section 7.1
Indemnification Claim Notice                Section 13.2
Indemnified Party                           Section 13.2
Indemnifying Party                          Section 13.2
Indemnitee                                  Section 13.2
Indemnitees                                 Section 13.2
Kos                                         Preamble
Kos Plan                                    Section 7.2
Kos Savings Plan                            Section 7.2
Limited Recall                              Section 3.13.8
Managed Market Activities                   Section 3.10
Manufacturing Facility                      Section 2.7.2
Material Breach                             Section 11.2.1
NDA                                         Section 1.25
NDC                                         Section 3.10.1
Notice of Termination For Material Breach   Section 11.2.3
Notifying Party                             Section 11.2.1
Parties                                     Preamble
Party                                       Preamble
PDM Act                                     Section 1.40
Permanent Recall                            Section 3.13.8
Purchase Order                              Section 2.6.5
Purchase Price                              Section 5.1
Purchase Price Differential                 Section 6.2.2
Rebates                                     Section 3.10
Receiving Party                             Section 8.1.1
Representatives                             Section 14.1
Sample Price                                Section 2.4
Selected Employee                           Section 7.1
Subsequent Transfer Date                    Section 7.1
Term                                        Section 11.1
Third Party Claim                           Section 13.1.1
Third Party Manufacturer                    Section 2.7.1
Transfer Date                               Section 7.1
Transaction Documents                       Section 15.1.2
</TABLE>

                                       -8-
<PAGE>
<TABLE>
<CAPTION>
                DEFINITION                      SECTION
-----------------------------------------   --------------
<S>                                         <C>
Transferred Employees                       Section 7.1
$                                           Section 16.6
</TABLE>

                                   ARTICLE 2
                          PURCHASE AND SALE OF PRODUCT

     2.1 GENERAL. The general purpose of the collaboration described in this
Agreement is for BPI to supply Kos with the Product for sale in the Territory
and for Kos to purchase the Product from BPI for sale in the Territory.

     2.2 SUPPLY AND PURCHASE OF THE PRODUCT. Upon the terms and subject to the
conditions of this Agreement and effective as of the Closing Date, during the
Term, BPI shall supply exclusively to Kos, and Kos shall be obligated to
purchase exclusively from BPI, all of Kos's requirements of Product for use in
the Territory. For purposes of clarity, all Product supplied by BPI to Kos
hereunder shall be in finished form and packaged in primary packaging. For
purposes of clarity, the foregoing shall not give Kos any rights with respect to
(i) the development of the Product or (ii) except as otherwise set forth in
Section 3.13, regulatory matters in connection with the Product. Kos hereby
grants to BPI an irrevocable, fully-paid, royalty-free, sublicensable, right and
license in and to the Product Trade Dress and Product Trademarks to perform its
obligations under this Agreement.

     2.3 SUPPLY PRICES FOR PRODUCT. The price for supply of Product shall be as
set forth in Article 5.

     2.4 SAMPLES OF PRODUCT. Upon Kos's request from time to time, BPI shall
provide to Kos, at a cost per Unit of Product equal to the applicable amount set
forth on Schedule 2.4 for such Product (the "SAMPLE PRICE"), such number of
Units of Product as Kos may reasonably request for use as Samples in the
Territory; provided, however, that no such Samples shall be sold by Kos. The
supply of Samples pursuant to this Section 2.4 shall be excluded in all cases
from the calculation of Purchase Price pursuant to Section 5.1. Kos shall pay
the Sample Price to BPI within thirty (30) days of delivery of the Samples.

     2.5 PRODUCT FORM AND LABELING. BPI shall supply Product to Kos in the form
set out in the applicable Regulatory Approval for each Product. As soon as
practicable following the execution of this Agreement, Kos shall provide to BPI
camera ready art for the final packaging of each Product, which shall be in
compliance with all applicable Laws and Regulatory Approvals for the Product in
the Territory and shall otherwise be in compliance with the provisions of this
Agreement. BPI shall promptly order Kos's packaging from BPI's supplier for use
as soon as available. The cost of any additional labeling changes shall be borne
by the Party requesting such change. In the event of a change mandated by the
FDA, such costs shall be borne by Kos. In the event of a subsequent labeling
change requested by Kos or required by the FDA, Kos shall reimburse BPI for the
actual costs of packaging on hand that cannot be used, including, without
limitation, packaging, labeling, work-in-process or other materials made
obsolete by such change. BPI will use reasonable efforts to minimize the amount
of such unusable packaging.

                                       -9-
<PAGE>
     2.6 FORECASTS AND PURCHASE ORDERS.

          2.6.1 During the Term, Kos shall deliver to BPI, by the 14th day of
each month commencing on the Closing Date, Kos's monthly projection of the
quantities of Product (broken down on an SKU-by-SKU basis), including Samples,
that Kos anticipates ordering from BPI pursuant to this Agreement for the next
succeeding eighteen (18) months. Such projections shall be in multiples of the
Batch Sizes set out Schedule 2.6.1 and shall be in a form reasonably acceptable
to BPI. Notwithstanding the foregoing, the first such forecast shall incorporate
the Initial Firm Zone requirements as set forth in Section 2.6.2.

          2.6.2 The anticipated quantities required for each Product as set
forth for each of the first four (4) months of each such monthly projection
shall be a binding commitment by Kos under this Agreement to purchase the
specified quantities of Product (each such four month period shall be referred
to herein as the "FIRM ZONE"). Notwithstanding the foregoing, Kos shall
determine the quantities of Product for the initial Firm Zone, subject to a
pro-rated amount of the maximum quantities set forth in Schedule 2.6.5(B), and
subject to BPI's approval, such approval not to be unreasonably withheld (the
"INITIAL FIRM ZONE"), which determination shall, in all cases, be made no later
than the seventh (7th) day following the Effective Date, and which Initial Firm
Zone shall be in the form as set forth on Schedule 2.6.2.

          2.6.3 The anticipated quantities required for Product for the fifth
(5th) through eighteenth (18th) month of each monthly projection shall be
non-binding estimates of Product requirements of Kos, provided, however that,
the anticipated quantities required for each Product for a specified month in
the Firm Zone portion of any monthly projection shall not vary from Kos's
previously delivered monthly projection for such month, except as follows:

               (A) The quantities may vary by up to **** from those set forth on
the last non-binding estimates for such month before it entered the Firm Zone;

               (B) The quantities for months five (5), six (6) and seven (7) may
vary by up to **** from the average of the next two prior non-binding estimates
related to such month; and

               (C) The quantities for months eight (8) through eighteen (18) may
vary by up to **** from the average of the remaining prior non-binding estimates
related to such month.

          2.6.4 For purposes of this Section 2.6, the month in which a monthly
projection is delivered shall be considered month 0 and the following month
shall be considered month 1. By way of example, if a monthly projection is
delivered on May 14, then the months of June, July, August, and September shall
be the Firm Zone. May shall also be considered to be in the Firm Zone based upon
the monthly projections delivered in the months of January, February, March and
April.

          2.6.5 During the Term, Kos shall deliver to BPI, with each monthly
projection delivered pursuant to Section 2.6.1, a firm purchase order ("PURCHASE
ORDER") for the quantities of Product (broken out by SKU), including Samples,
required by Kos for the fourth (4th) month in the Firm Zone for that monthly
projection, and the required delivery date for such quantities;

                                      -10-
<PAGE>
provided, however that the first purchase order shall be as set forth on
Schedule 2.6.5(A). Each Purchase Order shall be in multiples of the Batch Sizes
set out on Schedule 2.6.1 for each Product required and BPI shall be entitled to
reject any Purchase Order that exceeds the maximum monthly capacity as set forth
on Schedule 2.6.5(B) for each Product required. The Purchase Orders may be
delivered electronically or by other means to such location as BPI shall
designate and shall be in a form reasonably acceptable to BPI; provided, however
that a Purchase Order shall not be binding until BPI confirms receipt of such
Purchase Order to Kos (which confirmation shall be provided by BPI within five
(5) Business Days of receipt of such Purchase Order).

          2.6.6 In the event that Kos fails to deliver to BPI the required
monthly projection or any Purchase Orders related thereto on or prior to the
fourteenth (14th) day of any calendar month in accordance with Section 2.6, then
the quantities projected and the terms applicable thereto, for the next
applicable calendar month as set forth for such month in the immediately
preceding applicable monthly projection delivered to BPI by Kos, shall be
regarded as orders with a delivery date selected by BPI within the applicable
calendar month.

          2.6.7 From time to time, due to significant unforeseen circumstances,
Kos may deliver to BPI under Section 2.6.5 a Purchase Order for quantities of
Product in excess of those specified in any Firm Zone. BPI shall use its
Diligent Efforts to provide Kos with Product necessary to accommodate such
excess quantities of Product, but shall not be obligated to do so.

     2.7 PRODUCT SUPPLY.

          2.7.1 The Parties acknowledge and agree that Affiliates of BPI or
Third Parties (a "THIRD PARTY MANUFACTURER") will Manufacture Product to be
supplied by BPI to Kos for Distribution in the Territory pursuant to this
Agreement. BPI shall ensure that any Affiliates or Third Parties Manufacturing
Product for supply hereunder shall be subject to the compliance, quality
assurance and all requirements related to such Manufacturing activities under
this Agreement related to such Manufacturing activities. The satisfactory
compliance of such Third Party Manufacturer or Affiliate with those obligations
shall be deemed to be satisfactory compliance by BPI with its obligations
hereunder. Notwithstanding the foregoing, BPI shall remain fully liable for the
performance of its obligations under this Agreement.

          2.7.2 The Product shall initially be manufactured at either the
Steinbach, Manitoba, Canada manufacturing facility or one of the Puerto Rico
manufacturing facilities (each, a "MANUFACTURING FACILITY") of Affiliates of
BPI, or any combination thereof. If BPI (or its Affiliates) desires to change
the site of Manufacture of a Product (or engage a new Third Party Manufacturer),
BPI shall provide to Kos as much prior notice as reasonably possible, but in any
event, other than as a result of a force majeure as set forth in Section 16.2 of
this Agreement, no less than ninety (90) days. To the extent BPI (or its
applicable Affiliate) determines to make any such changes which require
Regulatory Approval, BPI shall use Diligent Efforts to continue to supply Kos
with Product from the prior Manufacturing Facility, or Product manufactured by
the prior Third Party Manufacturer, pending the receipt of such approval for the
new Manufacturing Facility and/or new Third Party Manufacturer.

                                      -11-
<PAGE>
     2.8 PRODUCT SUPPLY CAPACITY. BPI shall notify Kos if BPI determines that it
will be unable to supply the quantities of any Product set out in a monthly
projection delivered pursuant to Section 2.6 as soon as practicable, but in any
event within ten (10) Business Days after receiving the applicable monthly
projections from Kos; provided that any such notice shall not relieve or
prejudice either Party of any of their obligations or rights, respectively,
under this Agreement. Subject to Section 2.14.3, BPI shall not be obligated to
make more than one delivery of Product to Kos in any calendar month.

     2.9 DELIVERY.

          2.9.1 BPI shall be entitled to deliver Product as much as fifteen (15)
days prior to or fifteen (15) days after the delivery date specified by Kos in
the applicable Purchase Order and such delivery shall be deemed to have been
delivered on a timely basis hereunder. In addition, in order to allow for
Product Manufacturing variances, BPI shall be entitled to deliver quantities of
Product as much as **** the amount of Product specified by Kos in the applicable
Purchase Order and such delivery shall be deemed to have been delivered in
satisfaction of BPI's obligations hereunder. All Product shall be delivered by
BPI DDP (as defined in INCOTERMS, 2000 Edition, published by the International
Chamber of Commerce, ICC Publication 560) at Kos's designated warehouse that is
in the United States or Puerto Rico (such location, the "DELIVERY POINT")
(provided, however, that Kos shall, at Kos's determination, either pay the
freight cost directly to the shipping company or reimburse BPI, for the cost of
shipping Product from the place of manufacture of Product to the Delivery
Point). Upon such delivery at the Delivery Point, title to, ownership of, and
risk of loss of Product shall pass from BPI to Kos.

          2.9.2 BPI shall notify Kos as soon as BPI determines that it will be
unable to deliver Product ordered by Kos within fifteen (15) days after the
delivery date specified in the Purchase Order. Without prejudice to any of the
Parties' rights under this Agreement, if such inability is due to normal
constraints associated with Manufacturing, scheduling or delivery of the
Product, Kos and BPI shall cooperate to establish a mutually agreeable alternate
delivery date.

     2.10 PRODUCT QUALITY.

          2.10.1 BPI shall perform, or cause to be performed, on each batch of
Product all tests required by the Product Specifications before delivery of any
Product from that batch to Kos.

          2.10.2 BPI shall provide a Certificate of Analysis (a "COA") to Kos
for each shipment of Product certifying that Product conforms with the Product
Specifications, along with the results of such analysis and any supporting data.
Kos shall be under no obligation to accept any shipment of Product for which BPI
has not provided a COA or which Kos reasonably believes does not comply with the
COA and, subject to the limitations on liability provided for herein, BPI shall
be responsible for any reasonable out-of-pocket costs incurred by Kos with
respect to the storage, shipment, return or, at BPI's direction, destruction, of
such non-conforming shipment.

                                      -12-
<PAGE>
     2.11 CHANGES IN PRODUCT SPECIFICATIONS. BPI shall notify Kos before any
changes in the Product Specifications are made which require additional
Regulatory Approval. BPI shall promptly notify Kos of any request BPI (or an
Affiliate) receives from the FDA to change the Product Specifications.
Notwithstanding the foregoing, if BPI (or an Affiliate) is required by the FDA
to make any change to the Product Specifications or Manufacturing procedures for
the Product, BPI shall (or shall cause its Affiliate to), at the expense of BPI,
subject to Section 2.5, file any amendment or supplement to the NDA required to
effect such change.

     2.12 MANUFACTURING CHANGES. BPI (or an Affiliate) may, in its sole
discretion, make any changes to the Manufacturing process for the Product;
provided, however that any such changes are made in accordance with all
applicable Laws, and provided further that (i) BPI shall notify Kos, in writing,
of such changes if such changes require additional Regulatory Approval and (ii)
to the extent any such change affects (a) the Batch Size or (b) the shelf life
of a Product, BPI shall obtain Kos's written approval of the timing of the
implementation of such change, which shall not be unreasonably withheld, delayed
or conditioned.

     2.13 RECORDS/FACILITIES.

          2.13.1 BPI (or its applicable Affiliate) shall maintain all
Manufacturing and analytical records, and all validation data relating to the
Product to the extent and for the time periods set forth by the Product
Specifications and applicable Laws.

          2.13.2 BPI shall maintain, and shall ensure that any Third Party
Manufacturer maintains, all records as are necessary and appropriate to
demonstrate compliance with cGMPs.

     2.14 REJECTION OF PRODUCT; REMEDIES.

          2.14.1 Kos shall be entitled to reject any Product that fails to
conform to the Product Specifications or warranties with respect to the Product
given by BPI herein (including, without limitation, those set forth in Section
2.15). Kos shall notify BPI of such rejection within thirty (30) days after
delivery of such Product to Kos, and shall set forth in such notification the
basis for such rejection, including any testing or inspection results. Failure
to notify BPI within such thirty (30) day period or failure to specify the basis
for such rejection, shall constitute acceptance of such Product.

          2.14.2 If BPI does not agree with the basis specified by Kos in
connection with Kos's rejection of Product, the senior quality assurance officer
of Kos and BPI, or such other persons as Kos or BPI may designate in writing,
shall confer to review the available samples and/or batch records, as
appropriate. If the disagreement is not resolved, then the samples, batch
records and other data relating to the batch in dispute shall promptly be
submitted for testing and evaluation to an independent qualified Third Party
testing laboratory approved in writing by both Parties. The cost of the testing
and evaluation by the Third Party shall be borne by the Party whose position is
found erroneous. Any disagreement about the selection of a testing laboratory or
conclusions of any testing laboratory so selected shall be resolved in
accordance with Section 14.1 of this Agreement. Notwithstanding anything to the
contrary contained herein, any such Product subject to such dispute shall not be
included as Product not supplied by BPI hereunder for purposes of determining
the existence of a Supply Failure unless and until it is

                                      -13-
<PAGE>
ultimately determined that such Product was rightfully rejected by Kos in
accordance with the provisions of this Agreement.

          2.14.3 With respect to Product agreed or found to have been rightfully
rejected by Kos, BPI shall, at its option:

               (A) replace such Product as soon as reasonably practicable, at no
additional cost to Kos; or

               (B) give Kos a credit in an amount equal to the amount paid or
payable by Kos with respect to such rejected Product.

          2.14.4 Except to the extent Kos is entitled to indemnification from
BPI for Third Party Claims under Section 13.1.1, the remedies set forth in
Section 2.14.3 shall be Kos's sole and exclusive remedies for any rejected
Product hereunder. Notwithstanding anything to the contrary contained herein,
BPI shall have no liability to Kos to the extent that: (a) the replacement of
any Product shall have been necessitated by the negligence or willful misconduct
of Kos, (b) the contamination or defect complained of is caused by the handling
of Product by Kos, or after delivery to Kos, by a Third Party outside of BPI's
control not in accordance with the Product Specifications, or (c) Product has
not been stored or used by Kos, or after delivery to Kos, by a Third Party, in
accordance with the applicable Product Specifications.

          2.14.5 The period provided for rejection of Product in Section 2.14.1
shall not apply to any failure of the Product to comply with the Product
Specifications or any warranty with respect to the Product given by BPI herein
at the time of delivery which was not reasonably detectable within thirty (30)
days of delivery of the Product to Kos. Kos shall notify BPI of any such failure
as soon as reasonably possible, but in any event within thirty (30) days after
the failure is detected by Kos.

     2.15 PRODUCT WARRANTIES.

          2.15.1 COMPLIANCE WITH CGMP. BPI hereby represents, warrants and
covenants that all Product supplied by BPI hereunder shall be manufactured,
tested and handled by BPI or its Affiliates or a Third Party Manufacturer, as
applicable, in compliance with all applicable cGMPs, in each case solely to the
extent such Product is manufactured, tested and handled by BPI or its Affiliates
or a Third Party Manufacturer.

          2.15.2 CONFORMITY WITH SPECIFICATIONS. BPI hereby represents, warrants
and covenants that Product supplied by BPI hereunder shall be manufactured,
tested and handled by BPI or its Affiliates or a Third Party Manufacturer, as
applicable, in compliance with the applicable Product Specifications (which are
in effect at the time of manufacture) at the time of delivery to the common
carrier for such Product, in each case solely to the extent such Product is
manufactured, tested and handled by BPI or its Affiliates or a Third Party
Manufacturer.

          2.15.3 COMPLIANCE WITH THE ACT. BPI hereby represents, warrants and
covenants that all Product supplied by BPI hereunder shall, at the time of
delivery to the common carrier for such Product, not be adulterated or
misbranded within the meaning of the Act to the extent manufactured by BPI or
its Affiliates or a Third Party Manufacturer.

                                      -14-
<PAGE>
          2.15.4 COMPLIANCE WITH APPLICABLE LAWS. BPI hereby represents,
warrants and covenants that Product supplied by BPI hereunder shall be
manufactured, tested and handled by BPI or its Affiliates or a Third Party
Manufacturer, as applicable, in compliance with all applicable Laws in the
Territory (which are in effect at the time of manufacture) at the time of
delivery to the common carrier for such Product, in each case solely to the
extent such Product is manufactured, tested and handled by BPI or its Affiliates
or a Third Party Manufacturer.

     2.16 REGULATORY COMPLIANCE. Each Party shall advise the other Party
immediately if an authorized agent of a Regulatory Authority visits its (or its
supplier's or contractor's, to the extent such information is not confidential
and is otherwise permitted to be disclosed by applicable Law) manufacturing or
warehousing facilities where the Product is being Manufactured, quality tested
or stored, provided, in each case, such visit is related to the Product. Each
Party shall, and shall use commercially reasonable efforts to cause its supplier
or contractor to) furnish to the other Party all material information supplied
to, or supplied by, any Regulatory Authority, including the Form 483
observations and responses, to the extent that such report relates to the safety
or efficacy of the Product or the ability of such Party to supply such Product
hereunder or Distribute such Product hereunder (which report may be redacted for
Confidential Information unrelated to the Product) within five (5) Business Days
of their receipt of such information or delivery of such information, as the
case may be.

     2.17 ACCESS TO FACILITIES. Upon the reasonable prior written request of a
Party, such Party (or its Affiliate or contractor) shall have the right during
regular business hours to inspect one (1) time per calendar year those portions
of the manufacturing, storage and testing facilities of the other Party or its
Affiliates or its Third Party suppliers or contractors (except in the case of
existing suppliers or contractors, in which case each such Party shall use
commercially reasonable efforts to cause such Third Party supplier or contractor
to allow such inspection) where Product is being manufactured, stored or tested,
as the case may be, to ascertain compliance with cGMPs. If (i) deficiencies
related to cGMPs are found by such Party with regard to the Product during the
course of such inspection, (ii) BPI has failed to deliver the Product in
accordance with Section 2.15 and the circumstances giving rise to such failure
relate to the BPI facilities referred to in the previous sentence (and/or the
inability to Manufacture the Product therein) or (iii) notice has been delivered
by BPI pursuant to Section 2.8 and the circumstances giving rise to such notice
relate to the BPI facilities referred to in the previous sentence (and/or the
inability to manufacture the Product therein), then the requesting Party with
respect to clause (i), or Kos with respect to clause (ii) or (iii), shall be
entitled to perform reasonable follow-up inspections to monitor correction of
such deficiencies or the circumstances giving rise to such failure or notice, as
the case may be.

     2.18 INSPECTIONS. BPI shall arrange for inspections of the Manufacturing
Facility for the Product and any other of its or its Affiliate's or its Third
Party Manufacturer's (except in the case of existing Third Party Manufacturers,
in which case BPI shall use commercially reasonable efforts to cause such Third
Party Manufacturer to allow such inspection) sites relevant to the Product and
premises which may be requested by any Governmental Authority or for insurance
underwriting purposes. The findings of any such inspection with respect to the
Product at such site shall promptly be made known solely with respect to the
Product (and BPI, and to the extent such information is provided by suppliers
or contractors, its supplier or contractor, shall be entitled to redact any and
all such information not related to the Product, or such portions with

                                      -15-
<PAGE>
respect to Third Parties that is confidential) in writing to Kos insofar and to
the extent that they may materially and adversely impact the commercialization
or manufacture, including but not limited to quality and testing of the Product
under this Agreement.

     2.19 THRESHOLD PURCHASES.

          2.19.1 PRODUCT. For any given calendar year during the Threshold
Purchases Term, in the event that the aggregate Purchase Price paid by Kos to
BPI for all Units of the Product as calculated in Section 5.1 for such calendar
year is less than the applicable Cardizem LA Threshold Purchases for such
calendar year, then Kos shall pay to BPI an additional amount equal to **** of
the difference between such Cardizem LA Threshold Purchases and the aggregate
Purchase Price paid by Kos for Product for such calendar year. Kos shall pay
such amount to BPI in immediately available funds within sixty (60) days after
the end of the applicable calendar year. Notwithstanding the foregoing, Kos
shall be relieved of its obligation to pay the amounts set forth in this Section
2.19.1 from and after the date of Generic Entry in the Territory; provided,
however that in all cases, in the event the date of Generic Entry occurs on any
day other than the last day of a calendar year, the amounts payable pursuant to
this Section 2.19.1 for such calendar year shall be pro-rated for the number of
days that elapsed during such calendar year prior to such date of Generic Entry.

          2.19.2 SUPPLY FAILURES OR RECALLS. Notwithstanding anything to the
contrary in Section 2.19.1, in the event that during a given calendar year
during the Threshold Purchases Term there is either (i) a Supply Failure, (ii) a
Permanent Recall of the Product in the Territory, or (iii) an event subject to
Section 16.2 prevents the supply or distribution of the Product in the Territory
for a period of at least ****, then the Cardizem LA Threshold Purchases amount
for such calendar year shall be reduced pro-rata based on the number of months
during such calendar year prior to the occurrence of the applicable conditions
set forth in the foregoing clauses (i), (ii) or (iii) divided by twelve (12).
For the next subsequent calendar year during the Threshold Purchases Term, the
Cardizem LA Threshold Purchases amount shall be the lesser of (x) the amount of
such Cardizem LA Threshold Purchases for such calendar year as set forth on
Schedule 1.6 and (y) (I) the actual pro-rated aggregate Net Sales of Product
sold during the period commencing on the first day of the calendar month in such
calendar year in which the events set forth in the foregoing clauses (i) or
(iii) occurred and ending on the last day of such calendar year multiplied by
(II) the fraction equal to twelve (12) divided by the number of months in such
period; provided, however, that the Cardizem LA Threshold Purchases amount for
the next subsequent calendar year during the Threshold Purchases Term following
the calendar year in which the event set forth in the foregoing clause (ii)
occurred shall be zero.

     2.20 CMC INFORMATION. Notwithstanding anything to the contrary contained
herein, in no event shall BPI (or its Affiliates) be required to disclose any
information related to the Chemistry, Manufacturing and Controls section of any
NDA or other regulatory approval for the Product to Kos or any other Person
under any circumstances whatsoever.

     2.21 SHELF-LIFE. Subject to any applicable Law or directive of any
Governmental Authority, the remaining shelf life of the Product supplied by BPI
to Kos shall be at least sixteen (16) months at the time of delivery. In the
event that, for legal, regulatory or other reasons, the remaining shelf life of
the Product supplied is less than sixteen (16) months, Kos may elect, in its

                                      -16-
<PAGE>
sole discretion, to accept the Product notwithstanding such fact. BPI shall, or
shall cause its Affiliates to, use commercially reasonable efforts to generate
stability data to support the extension of the maximum shelf-life of the Product
from eighteen (18) months to twenty-four (24) months; provided, however, that in
no event shall BPI be in breach of this Agreement or have any liability to Kos
whatsoever for failure to so generate such data to extend the shelf-life of the
Product beyond the current eighteen (18) month shelf-life. In the event that the
maximum shelf-life of the Product is so extended to twenty-four (24) months,
then the minimum remaining shelf life of Product supplied by BPI to Kos
hereunder shall be not less than twenty (20) months at the time delivery.
Notwithstanding anything to the contrary contained herein, to the extent that
BPI's inventory of Product does not meet the minimum shelf-life requirements for
supply of Product to Kos as set forth herein, BPI shall be allowed to donate
such Product to relief organizations for use outside of the United States.

                                    ARTICLE 3
                     MARKETING PLANS AND REGULATORY MATTERS

     3.1 INTENTIONALLY DELETED.

     3.2 MARKETING PLANS. On an annual basis and no later than December 31 of
each year (the first such plan being developed no later than sixty (60) calendar
days after the Closing Date), Kos will develop and send to BPI an annual
Marketing Plan regarding Product for the Territory. Each annual Marketing Plan
shall include, among other things, a description of strategy and positioning
implementation and the key marketing issues, and a Detailing strategy for the
Product. Kos shall submit each annual Marketing Plan to BPI for its review and
shall consider any comments thereto in good faith. Kos may, from time to time,
amend the Marketing Plan as it determines to be appropriate.

     3.3 MARKETING PLAN ACTIVITIES.

          3.3.1 GENERAL. Kos shall use Diligent Efforts to perform all
activities set forth in the Marketing Plan. In furtherance of the foregoing,
following the Closing Date, Kos shall have the sole right to, and be responsible
for, (a) handling all returns of Product in the Territory relating to sales of
the Product made after the Closing Date (based on lot numbers), (b) receiving,
accepting and filling orders for the Product in the Territory, (c) controlling
invoicing, order processing and collection of accounts receivable for the sales
of Product in the Territory, (d) recording sales of the Product in the Territory
in its books of account and (e) distributing and managing inventory of Product,
in each case in accordance with applicable Law and, to the extent applicable,
GAAP. If, for any reason, BPI receives orders for Product in the Territory
following the Closing Date, BPI shall forward such orders to Kos as soon as
practicable but in no event later than two (2) Business Days after BPI's receipt
of such order. Notwithstanding the foregoing, from and after the Closing Date,
BPI shall continue to be solely responsible (including with respect to any
related costs) for (x) processing all returns of Product in the Territory (in
accordance with BPI's returned goods policies) relating to sales of the Product
prior to the Closing Date (based on lot numbers), including without limitation,
all financial obligations and (y) collecting, and shall retain all right, title
and interest to, any accounts receivable outstanding which were created prior to
the Closing Date with respect to the Product, and Kos shall not be entitled to
receive any of the proceeds from such collection efforts. Without limiting the

                                      -17-
<PAGE>
generality of the foregoing, to the extent that Products bearing the same lot
number were sold by BPI prior to Closing Date and sold by Kos (or available for
sale by Kos) from and after the Closing (each, a "SHARED LOT"), Kos shall
process all such returns, but the Parties shall share all financial
responsibility for such Shared Lot returns based on the percentage of such
Shared Lot sold by BPI prior to the Closing Date and the percentage of the
Shared Lot sold by Kos (or available for sale by Kos) from and after the Closing
Date.

          3.3.2 OPEN ORDERS. With respect to any customer orders relating to the
Product in the Territory received by BPI after 3:00 p.m. EST on April 29, 2005
through the Closing Date (the "OPEN ORDERS"), BPI shall either (i) cancel such
Open Orders and direct the customer to place such orders with Kos, (ii) transfer
all right, title and interest in and to such Open Orders to Kos, or (iii) fill
such Open Orders and promptly after receipt of payment for such Open Orders, pay
to Kos an amount equal to **** of the net sales amount received with respect to
such Open Orders.

     3.4 INTENTIONALLY DELETED.

     3.5 INTENTIONALLY DELETED.

     3.6 INTENTIONALLY DELETED.

     3.7 PROMOTIONAL MATERIALS AND OTHER MATERIALS.

          3.7.1 EXISTING PRODUCT PROMOTIONAL MATERIALS AND OTHER MATERIALS.
Promptly after the Closing Date, but in no event later than ten (10) Business
Days thereafter, BPI shall make available to Kos, at Kos's sole cost and
expense, all existing promotional materials of BPI currently utilized in
connection with the Distribution of the Product in the Territory (provided,
however that BPI shall provide samples of such promotional materials to Kos no
later than five (5) Business Days after the Closing Date) as well as a copy of
BPI's prior call lists, customer lists, and all related data associated with the
Product in the Territory in hard copy and electronic form; in each case, to the
extent available and in the possession of BPI. BPI hereby grants to Kos the
right to use the Copyrights in connection with the Promotional Materials for
sale of the Product in the Territory upon the terms and subject to the
conditions of this Agreement. Subject to Section 12.5, Kos undertakes that,
following expiration or termination of this Agreement, it will refrain from all
further use of the Copyrights and that it will not use any designs, graphics,
logos, colors, or text, or any combination thereof, which are confusingly
similar to the Copyrights.

          3.7.2 CREATION OF PROMOTIONAL MATERIALS. Kos will create and develop
Promotional Materials for the Product in the Territory in accordance with the
Marketing Plan. Kos shall provide samples of such Promotional Materials to BPI
at the same time as provided to DDMAC (or, in the event such Promotional
Materials are not required to be provided to DDMAC, prior to use of such
Promotional Materials).

          3.7.3 INCLUSION OF LOGOS ON PACKAGING AND PROMOTIONAL MATERIALS. The
Kos housemark, logo, and any trademarks (other than trademarks related to the
Product) or logos that Kos deems appropriate may be included on all Promotional
Materials, package inserts, labeling and packaging materials utilized by Kos
with respect to Product in the Territory. Solely to the

                                      -18-
<PAGE>
extent required by applicable Law and subject to obtaining necessary FDA
approvals, the BPI housemark shall also be included on all Promotional
Materials, package inserts, labeling and packaging materials utilized by Kos
with respect to Product in the Territory, and each Party hereby grants to the
other Party, the right to use, with the right to grant Affiliates the right to
use (or Third Parties to the extent otherwise permitted under this Agreement),
such housemarks in the Territory solely for the purpose of performing its
obligations under this Agreement. The Parties shall use the housemark of the
other Party, with the necessary trademark designations, and the Parties shall
use Diligent Efforts to use the respective housemarks in a manner that does not
derogate from the other's rights in the respective trademarks, names and logos.
Each of BPI and Kos will take no action that will interfere or diminish the
other's rights in its respective trademarks, names and logos. The Parties agree
that all use of the other's trademarks, names and logos will inure to the
benefit of the owner of such trademarks, names and logos.

          3.7.4 OWNERSHIP OF PROMOTIONAL MATERIALS. Kos shall own all right,
title and interest in and to any Promotional Materials created by Kos relating
to the Product, but excluding trademarks owned or used by BPI or its Affiliates
in accordance with the terms of this Agreement.

          3.7.5 USE OF PROMOTIONAL MATERIALS EXCLUSIVELY FOR PRODUCT. The
Promotional Materials, and any aspects of those materials uniquely tied to the
Product, shall be used exclusively in connection with the Product in accordance
with the terms of this Agreement.

     3.8 PROVISIONS APPLICABLE TO SALES REPRESENTATIVES.

          3.8.1 NO CHANGES TO THE PROMOTIONAL MATERIALS. Kos will instruct its
Sales Representatives to use only Promotional Materials, Samples, and literature
approved for use by Kos for the promotion of the Product in the Territory which
have been approved pursuant to the terms of this Agreement. Kos will not
misbrand, or adulterate any Promotional Material or Samples supplied to it by
BPI for distribution or use by it or its Sales Representatives.

          3.8.2 MONITORING OF SALES REPRESENTATIVES. Kos will instruct its Sales
Representatives to do the following: (a) limit claims of efficacy and safety for
the Product to those that are approved by the FDA for the Product, and not add,
delete or modify claims of efficacy and safety in the promotion of the Product
in any respect from those claims of efficacy and safety that are consistent with
those claims approved by the FDA for the Product, and in each case in accordance
with applicable Law; (b) not make any changes in Promotional Materials supplied
by BPI other than adding the Kos housemark, trademark and/or logos; (c) use
Promotional Materials and Samples in a manner that is consistent with the
Marketing Plan, with applicable Law, and with the Product labeling for the
Product as approved by the FDA; and (d) promote the Product in adherence with
applicable Laws.

          3.8.3 PDM ACT. Kos shall use Samples in the Territory strictly in
accordance with the then-current Marketing Plan and shall distribute Samples in
full compliance with applicable Laws, including the requirements of the PDM Act.
Specifically, Kos shall establish, maintain and adhere to written procedures
designed to assure that it and its Sales Representatives comply with all
requirements of the PDM Act. Such procedures shall include requirements that Kos
notify BPI immediately upon learning that any Samples shipped by such Party have
been

                                      -19-
<PAGE>
lost or have not been received as scheduled, that Kos maintain records as
required by the PDM Act, and that Kos allow representatives of BPI to inspect
such records on reasonable request and at reasonable times. Upon reasonable
advance notice to Kos not more than once per year (unless BPI reasonably
believes that such use of Samples is not in accordance with this Section 3.8.3
or such inspection is requested or required by a Governmental Authority, in
which case the number of inspections shall not be so limited to one per year),
and in a manner that does not materially interfere with Kos's business
operations, BPI shall be entitled, at its sole cost and expense, to conduct an
inspection and audit of Kos's Sample distribution practices by its Sales
Representatives in the Territory and any facilities where Samples are stored by
Kos, provided, however, that in the case of facilities owned by a Third Party,
BPI shall only have the right to inspect such facility upon the consent of the
Third Party. Kos agrees to use its commercially reasonable efforts to obtain
such consent.

          3.8.4 INTENTIONALLY DELETED.

          3.8.5 INSURANCE. Kos acknowledges and agrees that BPI does not and
will not maintain or procure any worker's compensation, healthcare, or other
insurance for or on behalf of Kos's Sales Representatives, all of which shall be
Kos's sole responsibility after the Closing Date.

          3.8.6 NO PARTICIPATION IN BENEFIT PLANS. Except as otherwise set forth
in Article 7, Kos acknowledges and agrees that all Sales Representatives of Kos
are not, and are not intended to be or be treated as, employees of BPI or any of
its Affiliates, and that such individuals are not, and are not intended to be,
eligible to participate in any benefits programs or in any "employee benefit
plans" (as such term is defined in section 3(3) of ERISA) that are sponsored by
BPI or any of its Affiliates or that are offered from time to time by BPI or its
Affiliates to its own employees (the "BENEFIT PLANS"). All matters of
compensation, benefits and other terms of employment for any such Sales
Representatives shall be solely a matter between Kos and such individual. Except
as otherwise set forth in Article 7, BPI shall not be responsible to Kos, or to
its Sales Representatives for any compensation, expense reimbursements or
benefits (including, without limitation, vacation or holiday remuneration,
healthcare coverage or insurance, life insurance, severance or termination of
employment benefits, pension or profit-sharing benefits and disability
benefits), payroll-related taxes or withholdings, or any governmental charges or
benefits (including without limitation unemployment and disability insurance
contributions or benefits and workmen's compensation contributions or benefits)
that may be imposed upon or be related to the performance by Kos of its
obligations under this Agreement, all of which shall be the sole responsibility
of Kos with respect to its Sales Representatives.

          3.8.7 RESPONSIBILITY FOR ACTS AND OMISSIONS OF ITS PERSONNEL. Kos
shall be solely responsible for its acts and omissions and for those acts or
omissions of its Sales Representatives in connection with the Distribution of
the Product in the Territory. Kos shall be solely responsible and liable for all
probationary and termination actions taken by it, as well as for the
formulation, content and dissemination (including content) of all employment
policies and rules (including written probationary and termination policies)
applicable to its employees and contractors.

                                      -20-
<PAGE>
          3.8.8 INDEMNIFICATION FOR EMPLOYEE RECLASSIFICATION. Subject to the
provisions of Article 7, Kos will indemnify, defend, and hold harmless BPI and
its Affiliates, and their respective directors, officers, employees and agents,
from and against any damage, liability, loss or cost that may be paid or payable
by any such Person resulting from or in connection with any claim or other cause
of action asserted by any Sales Representative of Kos or any Third Party
(including without limitation, any Governmental Authority) arising out of the
execution and/or performance of this Agreement that is based on or relates to:

               (A) any claim for benefits that any Sales Representative of Kos
may make under or with respect to any Benefit Plan;

               (B) any payment or obligation to make a payment to any Sales
Representative of Kos relating in any way to any compensation, benefits of any
type under any employee benefit plan (as such term is defined in Section 3(3) of
ERISA) (and corresponding employee benefits plans under any other country's
laws), and any other bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance, termination benefits, and
other similar fringe or employee benefit plans, programs or arrangements that
may be sponsored at any time by BPI or any of its Affiliates or by Kos or any of
its Affiliates;

               (C) the payment or withholding of any contributions, payroll
taxes, or any other payroll-related item by or on behalf of Kos or any of its
Sales Representative with respect to which Kos or any such individuals may be
responsible hereunder or pursuant to applicable law to pay, make, collect,
withhold or contribute;

               (D) failure of Kos to withhold or pay required taxes or failure
to file required forms with regard to compensation and benefits paid or extended
by Kos to any of its Sales Representatives; and

               (E) the employment, terms and conditions of employment, or
termination of employment of any Sales Representative of Kos;

provided, however, in each case, that such claims or causes of action as
described in subsections (a) through (e) above have not accrued prior to the
Closing Date and do not arise out of a relationship between such Sales
Representative and BPI prior to the Closing Date; and BPI will indemnify,
defend, and hold harmless Kos and its Affiliates, and their respective
directors, employees and agents, from and against any damage, liability, loss or
cost that may be paid or payable by any such Person resulting from or in
connection with any such claim or cause of action that accrued prior to the
Closing Date and arises out of a relationship between such Sales Representative
and BPI prior to the Closing Date.

     3.9 MARKET CONDITIONS. On no less than a quarterly basis or upon the
reasonable request of BPI, Kos shall brief BPI about the current marketplace
conditions for the Product in the Territory.

     3.10 MANAGED CARE.

                                      -21-
<PAGE>
          3.10.1 MANAGED MARKET ACTIVITIES. As soon as is reasonably practicable
following the Closing Date and to the extent permitted by applicable Law, Kos
shall become responsible for managing the marketing and promotion of the Product
across all managed market and government segments in the Territory, and with
respect thereto, shall have exclusive responsibility for: (i) contracting
execution, (ii) government reporting, rebate and chargeback processing and
payment, federal supply schedule calculations and pricing schedules, (iii)
contract compliance, monitoring and audits, and (iv) contract administration and
claims processing (collectively, the "MANAGED MARKET ACTIVITIES"). Without
limiting the generality of the foregoing, with respect to Rebates under Medicaid
and federal supply service contracts, Kos shall assume as soon as is reasonably
practicable following the Closing Date responsibility therefor after the Closing
Date under its own Medicaid and federal supply service contracts. In furtherance
of its obligations to become responsible as soon as is reasonably practicable
following the Closing Date with respect to Managed Market Activities and all
reporting obligations thereunder, Kos shall have obtained within one (1) year of
the Closing Date, its own NDC numbers for the Product and shall use commercially
reasonable efforts to have in place as soon as reasonably practicable all
resources such that sales can be accomplished under the NDC numbers of Kos. Kos
shall have the right to utilize the existing BPI packaging and NDC number on all
invoices, orders and other communications with customers and Governmental
Authorities until the later of such time as (A) new inventory of packaged
Product is available with Kos packaging and NDC numbers and (B) Kos has
exhausted any remaining portion of its inventory of Product that is in BPI
packaging and contains BPI NDC numbers. Thereafter, Kos shall use its new NDC
numbers on all invoices, orders and other communications with customers and
Governmental Authorities. As used herein, the term "NDC" means the "National
Drug Code", which is the eleven digit code registered by a company with the FDA
with respect to a Product.

          3.10.2 AVERAGE MANUFACTURER PRICE AND BEST PRICE. From and after the
Closing Date, Kos shall be responsible for calculating for the Product in the
Territory (i) the "Best Price" (or "BP") (as defined under the Social Security
Act, 42 U.S.C. Section 1396r-8(c)(1)(C), and (ii) the "Average Manufacturer
Price" (or "AMP") (as defined under the Social Security Act, 42 U.S.C. Section
1396r-8(k)(1). To the extent not otherwise prohibited by applicable
confidentiality restrictions, for so long as Product is sold under BPI's NDC
numbers, Kos shall submit to BPI the AMP and BP values and a written summary
describing Kos's methodology for calculation such values, in each case by the
twenty-fifth (25th) day of the month following the end of each calendar month
during the Term; provided, however that Kos agrees to use commercially
reasonable efforts to obtain permission from Third Parties to share such
information with BPI. Following receipt of such values, BPI shall submit such
values to the Center for Medicaid and Medicare Services in compliance with all
applicable Laws. To the extent not otherwise prohibited by applicable
confidentiality restrictions or by applicable Law, within thirty (30) days of
the Closing Date, BPI shall provide Kos with the baseline information and AMP
and any such similar information needed by Kos to establish its rebate and
chargeback systems. BPI agrees to use commercially reasonable efforts to obtain
permission from Third Parties to share such information with Kos.

          3.10.3 CHARGEBACKS. For so long as a given Product is sold under BPI's
NDC numbers, BPI shall continue to be responsible for the processing, payment,
administration and support of all chargebacks under any government or managed
market contract ("CHARGEBACKS"), regardless of when the claim for such
Chargeback is made; provided, however that Kos shall

                                      -22-
<PAGE>
reimburse BPI for all such amounts relating to Chargebacks for Product sold
after the Closing Date on a monthly basis within thirty (30) days after receipt
of an invoice from BPI therefor and BPI shall remain solely responsible for all
such amounts relating to Chargebacks for Product sold prior to the Closing Date.
Notwithstanding the foregoing, to the extent that a Third Party incorrectly
reports a Chargeback using the wrong NDC number, the Parties will discuss any
equitable adjustment to account for such incorrect reports.

          3.10.4 REBATES. For so long as a given Product is sold under BPI's NDC
numbers, BPI shall continue to be responsible for the processing, payment,
administration and support of (i) all quarterly Medicaid rebates with respect to
such Product in the Territory submitted by state governments to be paid by
manufacturers in accordance with Section 1927(c)(1), (2) and (3) of the Social
Security Act, (ii) supplemental rebates in accordance with supplemental rebate
agreements with state governments for such Product in the Territory (but only
until the time such supplemental rebate agreements for such Product expire or
are terminated by Kos), (iii) rebates submitted with respect to such Product in
the Territory for participating in State Pharmacy Assistance Programs and (iv)
rebates submitted pursuant to managed market contracts, including, Pharmacy
Benefit Managers and Health Maintenance Organizations (collectively, "REBATES"),
in each case, solely for the Product labeled with BPI's NDC number, regardless
of when the claim for such Rebate is made; provided, however that Kos shall
reimburse BPI for all such Rebates relating to Product sold after the Closing
Date on a quarterly basis within thirty (30) days after receipt of an invoice
from BPI therefor and BPI shall remain solely responsible for all such Rebates
relating to Product sold prior to the Closing Date. Notwithstanding the
foregoing, to the extent that a Third Party incorrectly reports a Rebate using
the wrong NDC number, the Parties will discuss any equitable adjustment to
account for such incorrect reports.

          3.10.5 OTHER DISCOUNTS. Notwithstanding the provisions of Section
3.10.3 or 3.10.4, Kos will be solely responsible for all discounts, receivables
and trade terms with respect to sales of the Product following the Closing Date,
and BPI shall be solely responsible for all discounts, receivables and trade
terms with respect to sales of the Product prior to the Closing Date. Kos shall
ensure that all information provided with respect to any sales of the Product
with the NDC number of BPI shall be in compliance with applicable Laws.

     3.11 COMPLIANCE WITH LAWS. Kos and its permitted Third Party contractors
shall perform their respective responsibilities under this Article 3, including
those set forth in a Marketing Plan, in accordance with all applicable Laws. BPI
shall perform its responsibilities under this Article 3 in accordance with all
applicable Laws.

     3.12 INTENTIONALLY DELETED.

     3.13 REGULATORY MATTERS. From and after the Closing Date, with respect to
the Product in the Territory, Kos shall have full responsibility for, and
thereafter during the Term, Kos shall be responsible for, dealing directly with
the FDA with respect to the following regulatory matters:

          3.13.1 DDMAC. Kos shall be responsible for interfacing, corresponding
and meeting with the Division of Drug Marketing, Advertising and Communications
of the FDA

                                      -23-
<PAGE>
("DDMAC") with respect to the marketing and promotion of the Product in the
Territory. Kos shall provide BPI reasonable prior notice of any meetings and
conferences scheduled with DDMAC with respect to a Product in the Territory. At
all such meetings and conferences BPI shall have the right to attend as an
observer to the extent permitted by DDMAC. In the event that Kos or BPI receives
a warning letter, corrective action notice, or other request from DDMAC with
respect to the Product in the Territory, the receiving Party shall immediately
forward a copy thereof to the other Party. Kos shall be responsible for
responding to and otherwise complying with such warning, notice or other
request; provided, however, that to the extent BPI reasonably believes that Kos
is not using Diligent Efforts to appropriately respond to such warning, notice
or other request, BPI shall have the right, at its own cost and expense, to take
such actions as BPI reasonably believes are necessary to respond thereto or
comply therewith. BPI shall fully cooperate with Kos in connection with Kos's
obligations hereunder, including providing Kos with copies of all past
correspondence with DDMAC with respect to the Product and Promotional Materials
in use as of the Closing Date.

          3.13.2 SAMPLES. Kos shall be responsible for preparing and filing any
and all reports and reconciliation records in connection with Kos's use of
Samples in the Territory as required by applicable Law, including, the PDM Act.
Kos shall provide a copy of such reports and records to BPI at the time Kos
submits such reports and records to the applicable Governmental Authority.

          3.13.3 REGISTRATION OF DRUG ESTABLISHMENT. To the extent required by
applicable Law, with respect to the Product in the Territory, Kos shall be
responsible for obtaining and maintaining a current drug establishment
registration with the FDA as set forth in 21 C.F.R. Section 207 for Kos's
facilities.

          3.13.4 PHARMACOVIGILANCE. BPI shall be responsible for all processing
of information related to any adverse event related to the Product in the
Territory, including, without limitation, any information regarding such adverse
events which is received from a Third Party. Kos shall immediately (and in all
cases in within time frames necessary to allow BPI and its Affiliates to comply
with requirements under applicable Law) forward copies of all such information
to BPI and shall otherwise cooperate with BPI to allow BPI and its Affiliates to
comply with requirements under applicable Law. BPI shall be responsible for
preparing all expedited and periodic reports of adverse events for the FDA in
accordance with 21 C.F.R. Sections 312.32 and 314.80, and submitting such
reports to the FDA in accordance with all applicable laws, and BPI shall submit
a copy thereof to Kos at the time of submission to the FDA. As soon as
reasonably practicable following the Effective Date, the pharmacovigilance
departments of each of BPI and Kos shall meet and determine the approach to be
taken for the collection, review, assessment, tracking and filing of information
related to adverse events associated with the Product, consistent with the
provisions of this Section 3.13.4, including, without limitation, Kos's
obligations to timely supply adverse event information to BPI. Such approach
shall be documented in a separate written pharmacovigilance agreement between
each of BPI and Kos within thirty (30) days after the Closing Date. Each Party
agrees to share relevant information it receives (either directly or indirectly)
with the other Party in a timely manner so as to allow such other Party to
comply with its responsibility to process pharmacovigilance information under
this Section 3.13.4.

                                      -24-
<PAGE>
          3.13.5 FIELD ALERTS. BPI shall be responsible for all processing of
information related to any NDA field alert report related to the Product in the
Territory. Kos shall immediately (and in all cases in within time frames
necessary to allow BPI and its Affiliates to comply with requirements under
applicable Law) forward copies of all such information to BPI and shall
otherwise cooperate with BPI to allow BPI and its Affiliates to comply with
requirements under applicable Law. BPI shall be responsible for preparing all
NDA field alert reports and submitting such reports to the FDA in accordance
with all applicable Law and BPI shall submit a copy thereof to Kos at the time
of submission to the FDA.

          3.13.6 MEDICAL INQUIRIES. Following the Closing Date, Kos shall be
responsible for handling all medical questions or inquiries in the Territory
with regard to the Product (including, to the extent necessary, setting up a
call center in connection therewith), but shall consider in good faith input
from BPI in connection therewith. BPI shall, or shall cause its Affiliates to,
immediately forward any and all medical questions or inquiries which it receives
with respect to the Product in the Territory to Kos in accordance with all
applicable Laws.

          3.13.7 OTHER INFORMATION. Each Party shall promptly inform the other
Party of any notification of any action by, or notification or other information
which it receives (directly or indirectly) from, any Governmental Authority in
the Territory (together with copies of correspondence related thereto), which
(a) raises any material concerns regarding the safety or efficacy of any
Product, (b) which indicates or suggests a potential material liability for
either Party to Third Parties arising in connection with the Product, (c) which
indicates a reasonable potential for a recall or market withdrawal of the
Product or (d) otherwise relates to regulatory matters with respect to the
Product.

          3.13.8 RECALLS.

               (A) Each Party shall promptly notify the other in writing if it
determines that any event, incident or circumstance has occurred which may
result in the need for a permanent "recall" or "market withdrawal", as such
terms are defined in 21 C.F.R. Part 7.3, of a Product in the Territory
("PERMANENT RECALL") or a limited "recall" or "market withdrawal," as such terms
are defined in 21 C.F.R. Part 7.3, of the Product in the Territory that is
limited in territory or as to any lot(s) or batches of the Product ("LIMITED
RECALL" and collectively with Permanent Recall, a "RECALL").

               (B) BPI shall determine whether to voluntarily implement any
Permanent Recall and upon what terms and conditions the Product shall be subject
to a Permanent Recall; provided, however that prior to any implementation of a
Permanent Recall, BPI shall consult with Kos and consider in good faith any
comments Kos may have with respect to such implementation. BPI shall be
primarily responsible for discussions with the FDA regarding all aspects of a
Permanent Recall. BPI shall provide Kos reasonable prior notice of any meetings
and conferences scheduled with the FDA with respect to a Product in the
Territory. At all such meetings and conferences Kos shall have the right to
attend as an observer to the extent permitted by the FDA.

               (C) BPI shall determine whether to voluntarily implement a
Limited Recall and upon what terms and conditions the Product shall be subject
to a Limited Recall or

                                      -25-
<PAGE>
otherwise temporarily or on a limited basis withdrawn from sale to Third Parties
in the Territory; provided, however that prior to any implementation of a
Limited Recall, BPI shall consult with Kos and consider in good faith any
comments Kos may have with respect to such implementation. BPI shall be
primarily responsible for discussions with the FDA regarding all aspects of
Limited Recalls. BPI shall provide Kos reasonable prior notice of any meetings
and conferences scheduled with the FDA with respect to the Product in the
Territory. At all such meetings and conferences Kos shall have the right to
attend as an observer to the extent permitted by the FDA.

               (D) If Kos reasonably believes that a Limited Recall or Permanent
Recall of the Product is necessary, Kos shall consult with BPI and BPI shall
consider in good faith any comments Kos may have with respect thereto. In the
event that, after such consultation, Kos continues to reasonably believe that a
Limited Recall or Permanent Recall of the Product is necessary, but BPI
disagrees with such determination, then, upon written notice from Kos confirming
Kos's determination to implement a Limited Recall or Permanent Recall, BPI shall
promptly authorize such Limited Recall or Permanent Recall hereunder.
Notwithstanding the foregoing, such dispute shall be subject to resolution
pursuant to Section 14.1, and in the event it is ultimately determined that such
Limited Recall or Permanent Recall was unwarranted, Kos shall not be relieved of
paying the full amount of the Cardizem LA Threshold Purchases amounts resulting
therefrom (to the extent Kos's obligation was relieved or reduced pursuant to
Section 2.19.2).

               (E) In the event it is determined that a Permanent Recall or
Limited Recall is implemented, Kos shall, in consultation with BPI, conduct and
carry out such Recall. Kos shall utilize a batch tracing and recall system which
will enable Kos to identify, on a prompt basis, customers within the Territory
who have been supplied with Product of any particular batch, and to recall such
Product from such customers.

               (F) All costs and expenses associated with implementing a Recall
of a Product in the Territory shall be allocated between BPI and Kos as follows:

                    (I) In the event, and to the extent, that the Recall arises
out of (i) the negligence or willful misconduct of Kos, (ii) a material breach
of this Agreement by Kos, or (iii) the manufacturing, handling, shipping or
storage of any Product by Kos, Kos shall bear the costs and expenses for the
Recall (including any out-of-pocket expenses reasonably incurred by BPI in
conducting such Recall).

                    (II) In the event, and to the extent, that the Recall arises
out of (i) the negligence or willful misconduct of BPI, (ii) a material breach
of this Agreement by BPI, or (iii) the handling, shipping or storage of a
Product by BPI, BPI shall bear the costs and expenses for the Recall (including
any out-of-pocket expenses reasonably incurred by Kos in conducting such
Recall).

                    (III) In the event, and to the extent, that the Recall
arises out of any event other than those set forth in Sections 3.13.8(f)(i) or
3.13.8(f)(ii), such costs and expenses shall be borne ****.

                                      -26-
<PAGE>
          3.13.9 COOPERATION Each Party shall reasonably cooperate with the
other Party to allow such Party (or its Affiliates or its designees) to fulfill
any of its reporting or other regulatory requirements under the Act or under any
other applicable Law with respect to the Product in the Territory. Except as
otherwise set forth in this Section 3.13 or otherwise required by applicable
Law, Kos shall not interface, correspond or otherwise meet with the FDA or other
Governmental Authorities with respect to regulatory matters related to the
Product in the Territory without the prior written consent of BPI, which shall
not be unreasonably withheld.

     3.14 AUTHORIZED GENERIC. In the event Kos obtains rights to Distribute an
Authorized Generic in the Territory and Kos desires to be supplied with an
Authorized Generic, Kos shall notify BPI in writing of its request to purchase
supply of an Authorized Generic for Distribution in the Territory from BPI,
which request shall include a forecast of Kos's demand for the Authorized
Generic for the first eighteen (18) months from launch. BPI may, (i) from and
after the Effective Date through the end of the Threshold Purchases Term, in
BPI's sole discretion and (ii) after the end of the Threshold Purchases Term to
the end of the Term, in BPI's reasonable discretion (which discretion shall not
take into account the supply price financial terms, which shall be set forth in
Section 5.1.2), and in each case after discussions with its Affiliates, within
thirty (30) Business Days of Kos's written request, notify Kos whether it agrees
to supply Kos with Product for use as an Authorized Generic on the terms of this
Agreement, mutatis, mutandis (except as otherwise set forth in Section 5.1.2)
and thereafter, such Authorized Generic shall be included as a "Product" under
this Agreement.

                                    ARTICLE 4
                      LIMITATIONS ON RIGHTS GRANTED TO KOS

     4.1 GRANT OF RIGHTS TO OTHER PERSONS. Kos shall not, without the prior
written consent of BPI, such consent not to be unreasonably withheld, grant the
right to any other Person to exercise the limited rights granted to Kos under
this Agreement with respect to Copyrights; provided, however, that Kos shall
have the right to grant an Affiliate of Kos the right to exercise such rights
without the need to obtain such consent (but only for so long as such entity
remains an Affiliate of Kos). Any such grant by Kos shall be subject in all
respects to the same terms, conditions and provisions contained in this
Agreement, and Kos shall be responsible for ensuring that any grantee complies
with such terms and conditions. Kos shall not be entitled to grant its entire
rights and obligations under this Agreement (other than in connection with a
permitted assignment of this Agreement). Any grant by Kos of all or any portion
of its rights under this Agreement shall immediately terminate in the event this
Agreement terminates.

     4.2 NO IMPLIED GRANTS. Except as otherwise provided in this Agreement, BPI
does not grant to Kos any right in any intellectual property. Kos hereby
covenants and agrees not to use, or grant rights with respect to, any of its
rights under the limited grants set forth in this Article 4 except as expressly
permitted in this Agreement.

     4.3 RETAINED RIGHTS. Kos shall not have any rights of BPI not expressly
granted to it under this Agreement. In furtherance of, and without limiting, the
foregoing, but subject to the terms of this Agreement, Kos acknowledges that BPI
(and its Affiliates) shall have the right to perform its supply and other
obligations pursuant to the terms of this Agreement.

                                      -27-
<PAGE>
     4.4 EX-TERRITORY ACTIVITIES. BPI agrees that from and after the Closing
Date, it will not knowingly sell the Product in Canada or anywhere else outside
the Territory under the trademark Cardizem(R) LA. To the extent legally
permissible, at all times during the Term, BPI agrees to use commercially
reasonable efforts to prevent importation of the Product into the Territory.

                                    ARTICLE 5
                                 FINANCIAL TERMS

     5.1 PURCHASE PRICE FOR PRODUCT SOLD COMMERCIALLY.

          5.1.1 GENERAL. For each Unit of Product supplied by BPI to Kos for
commercial sale in the Territory, Kos shall pay BPI a purchase price per Unit
(the "PURCHASE PRICE"), which Purchase Price per Unit shall equal ****;
provided, however, that in no event shall the Purchase Price be less than the
applicable amount for such Unit of Product set forth on Schedule 5.1.1 (on an
SKU-by-SKU basis). The Purchase Price shall be paid in accordance with Section
6.2.

          5.1.2 AUTHORIZED GENERIC. To the extent an Authorized Generic is
included as a Product hereunder, the Purchase Price per Unit of such Authorized
Generic shall equal the sum of ****.

     5.2 CLOSING DATE PAYMENT. Kos shall pay to BPI on the Closing Date by wire
transfer of immediately available funds to an account designated by BPI in
writing the following non-refundable payments (collectively, the "CLOSING DATE
PAYMENT"):

          5.2.1 WORKFORCE. In consideration for the rights granted to (and
taking into account the obligations undertaken by) Kos under Article 7 (Employee
Transfer) and related provisions of this Agreement, the amount of ****; and

          5.2.2 PURCHASE PRICE FOR PRODUCT SOLD COMMERCIALLY. In consideration
for the terms granted to Kos under Sections 5.1 (Purchase Price for Product Sold
Commercially) and 2.19 (Threshold Purchases), the amount of ****.

                                    ARTICLE 6
                                  PAYMENT TERMS

     6.1 PAYMENT METHOD. All amounts due to either Party hereunder will be paid
in United States Dollars by wire transfer in immediately available funds to an
account designated by such Party in writing or by check without set-off or
counterclaim (unless being contested in good faith). Any payments or portions
thereof due hereunder that are not paid by the date such payments are due under
this Agreement will bear simple interest at the lower of (a) the US Prime Rate,
as reported in the Wall Street Journal, Eastern Edition, on the due date (or, if
the due date is not a Business Day, on the last Business Day prior to such due
date) plus ****, or (b) the maximum rate permitted by applicable Law, calculated
on the number of days such payment is delinquent. All payments required by this
Agreement shall be increased above the amount otherwise due to include any and
all transfer taxes, VAT and other similar taxes payable by the payee on such
amounts, to the extent such taxes are instituted in the Territory and all such

                                      -28-
<PAGE>
payments shall be made free and clear of, and without deduction for, any income,
withholding or similar taxes.

     6.2 REPORTS AND PAYMENTS OF PURCHASE PRICE.

          6.2.1 PURCHASE PRICE PAYMENT. The Purchase Price shall be payable in
accordance with the provisions of this Section 6.2. No later than December 31st
of each calendar year during the Term, Kos shall determine and send to BPI its
good faith estimated Net Selling Price per Unit for each Product in the
Territory for the upcoming calendar year (the "PROJECTED SELLING PRICE") and Kos
shall thereafter update such Projected Selling Price in writing to BPI from time
to time during such calendar year to the extent there are changes to the good
faith estimated Net Selling Price per Unit for a given Product. The Projected
Selling Price shall take into account actual historical experience of returns,
rebates and other deductions allowed in the calculation of Net Sales, which
historical experience of returns, rebates and other deductions shall be
submitted to BPI for BPI's review and Kos shall consider any comments thereto in
good faith. With each shipment of Product supplied to Kos pursuant to the terms
of this Agreement, BPI shall send Kos a written invoice for such shipment
setting forth an estimate of the Purchase Price for each Unit of Product in such
shipment based upon the Projected Selling Price determined by Kos pursuant to
the terms of this Section 6.2.1 (the "PROJECTED PURCHASE PRICE"). Kos shall be
required to pay the Projected Purchase Price for each Unit of Product to BPI
within forty-five (45) days of the delivery date of the Product.

          6.2.2 REPORTS. Within twelve (12) days after the end of each calendar
month during the term, Kos shall submit to BPI (i) a good faith preliminary
report providing in reasonable detail the reconciliation of actual gross sales
to actual Net Sales for sales of Product by Kos during such calendar month (ii)
a calculation of the good faith estimate of the difference between the actual
Purchase Price and the Projected Purchase Price during such calendar month
broken down on an SKU-by-SKU basis as set forth in Schedule 6.2.2 (the "PURCHASE
PRICE Differential") and (iii) the sum of the product of Units of Product
shipped by BPI to Kos during such calendar month on an SKU-by-SKU basis and the
Purchase Price Differential on an SKU-by-SKU basis (the "RECONCILIATION
CALCULATION"), an example of which is set forth on Schedule 6.2.2. Within thirty
(30) days after the end of each calendar month during the Term, Kos shall
provide an update of the Reconciliation Calculation for the preceding month
taking into account any new information. In addition, within forty five (45)
days of the end of each calendar year, Kos shall submit to BPI a report,
providing in reasonable detail an accounting of the aggregate Purchase Price for
all Units of Product (broken down by SKU, in a manner similar to that shown on
Schedule 6.2.2) shipped by BPI to Kos during such calendar year and a
calculation of any amounts due pursuant to Section 2.19.1 with respect to such
calendar year. Within two hundred and ten (210) days after the end of each
calendar year during the Term, Kos shall submit to BPI an update to the
Reconciliation Calculation taking into account the actual gross to net sales
deductions used in the determination of Net Selling Price for the entire
preceding calendar year, including, taking into account new information from
Third Parties such as annual Managed Care and Medicaid discount reports.

          6.2.3 RECONCILIATION. If the Reconciliation Calculation (or any update
thereto) for any given calendar month (or year, as applicable) indicates that
the actual aggregate Purchase Price due exceeded the aggregate Projected
Purchase Price paid for such calendar month (or

                                      -29-
<PAGE>
year, as applicable) in the aggregate, then Kos shall, along with the delivery
of each report specified in Section 6.2.2, pay to BPI an amount equal to such
difference. If the Reconciliation Calculation for any given calendar month (or
year, as applicable) indicates that the actual aggregate Purchase Price due was
less than the aggregate Projected Purchase Price paid for such calendar month
(or year, as applicable) in the aggregate, then BPI shall, within ten (10)
Business Days of receipt of the applicable report specified in Section 6.2.2,
pay to Kos an amount equal to such difference. Notwithstanding the foregoing, in
the event that either Party disputes any amount payable by such Party under this
Section 6.2.3, such Party shall provide written notice within five (5) Business
Days after receipt of the written report in question to the other Party,
specifying such dispute (and shall not be required to pay the amount in dispute
until resolution thereof). Kos and BPI shall promptly thereafter meet and
negotiate in good faith a resolution to such dispute.

          6.2.4 INTENTIONALLY DELETED.

     6.3 BOOKS AND RECORDS; AUDIT. The Parties shall keep comprehensive books
and records relating to its obligations under this Agreement (including, without
limitation, any Net Sales and Purchase Price payments) on either a cash or
accrual basis of accounting in accordance with GAAP. All such records shall be
maintained for at least two (2) years following the relevant calendar year
during the Term or, upon termination of this Agreement, for eighteen (18) months
following such termination date, or such longer period as is required by
applicable Law. During each calendar year, and for a year thereafter, Kos and
BPI, shall have the right, at the auditing Party's own expense, to have an
independent nationally recognized accounting firm audit such books and records
of the other Party in order to verify the amount of the payments owed and/or
paid pursuant to this Agreement. Each Party may perform an audit not more than
once in any twelve (12) month period. If the amount owed by one Party was
underpaid, the underpaying Party shall pay the additional amount owed and all
accrued interest thereon to the other Party within fifteen (15) days after its
receipt of notice of such underpayment. If the amount underpaid was in excess of
ten percent (10%) of the amount owed, the fees of such audit shall also be paid
by such underpaying Party within thirty (30) days after its receipt of notice of
same. If the amount owed by one Party was overpaid, the auditing Party shall
notify the other Party of such overpayment and refund such overpayment to the
other Party within thirty (30) days after becoming aware of such overpayment.
Each audit shall be conducted during normal business hours, upon reasonable
advance written notice and in a manner that does not cause unreasonable
disruption to the conduct of business by the audited Party. Each Party will
treat all information subject to review under this Section 6.3 in accordance
with the provisions of Article 8. Prior to conducting any audit hereunder, the
Party conducting such audit will cause its accounting firm to enter into a
reasonably acceptable confidentiality agreement with the audited Party
obligating such accounting firm to maintain all such financial information in
confidence with standards no less stringent that the terms of Article 8 of this
Agreement.

                                    ARTICLE 7
                                EMPLOYEE TRANSFER

     7.1 EMPLOYEE TRANSFER. As soon as practicable, but in no event later than
one (1) Business Day following the Effective Date, the Parties shall begin to
cooperate, and shall thereafter continue cooperating as expeditiously as is
practicable, to permit Kos to distribute to

                                      -30-
<PAGE>
BPI's primary care sales force, BPI's cardiovascular specialty sales force, and
such employees of BPI's United States headquarters site as have been notified of
the termination of their employment with BPI as a result of this Agreement (all
such employees being the "AFFECTED EMPLOYEES"), such forms, documents, e-mails
and voice mails relating to their employment or potential employment by Kos as
Kos may reasonably request. The Parties agree that, prior to the Effective Date,
BPI may select such employees as it shall decide in its sole discretion from its
primary care and cardiovascular sales forces for transfer to its dermatology
sales force, and such employees shall not be Affected Employees. As soon as
practicable, but in no event later than ten (10) Business Days following the
Effective Date, Kos shall make, or shall cause one of its Affiliates to make,
offers of employment to at least **** employees of BPI employed by BPI in its
primary care or cardiovascular sales forces and home office personnel who are
responsible for the sale or marketing of the Product (each such employee who
receives such an offer of employment is a "SELECTED EMPLOYEE"), on such terms
and conditions of employment as Kos shall determine, but including at a minimum
terms and conditions that: (i) are, in the aggregate as to each individual, as
favorable as the employment terms and conditions, including employee benefits,
currently provided by BPI to such Selected Employees, and (ii) do not require
relocation by the Selected Employee without their consent; provided, however
that Kos shall be relieved of its obligation to make offers to at least ****
such BPI employees to the extent that at least **** of such Selected Employees
have previously accepted such offer of employment. Such offers shall be
contingent on, and shall only be contingent on, (i) the Closing having occurred,
(ii) such Selected Employee demonstrating reasonably satisfactory results of a
drug test and (iii) such Selected Employee demonstrating a reasonably
satisfactory driving record. Except as specified below or unless otherwise
agreed to by the Parties, Kos or its Affiliates shall require that such offers
of employment to Selected Employees be accepted within two (2) Business Days of
the offer or it shall be withdrawn, and employment of such Selected Employees
shall be effective commencing as of May 10, 2005 or such earlier date as may be
specified in the offer letter (which date shall be the "IMMEDIATE TRANSFER DATE"
for the Selected Employees). For any Selected Employee who is not actively at
work immediately before the applicable Immediate Transfer Date as a result of an
approved leave of absence from employment with BPI or absence from employment
with BPI on account of short term or long term disability, such employment shall
be effective only if and when such Selected Employee actually returns to work,
provided that such return to work is within the time permitted by, and otherwise
complies with, the terms of such approved leave of absence or the applicable
short term or long term disability plan (and the date that such employment
becomes effective is referred to as the Selected Employee's "SUBSEQUENT TRANSFER
DATE"). All Immediate Transfer Dates and Subsequent Transfer Dates are referred
to hereafter as "TRANSFER DATES." All Selected Employees who accept the offers
of employment specified in this Section 7.1 by reporting to work as of the
applicable Transfer Date are referred to as "TRANSFERRED EMPLOYEES." Subject to
making the number of offers on the terms described above, Kos reserves the right
to amend, modify or terminate any employee benefit plan, program or arrangement
in accordance with the applicable terms of such employee benefit plan, program
or arrangement, or to terminate the employment of any employee, in its
discretion at any time. Kos shall notify BPI in writing of each of the following
events as soon as reasonably practicable, but in all cases, within one (1)
Business Day after the occurrence of (i) an offer of employment by Kos (or its
Affiliates) to a Selected Employee (including identification of such employee
and the anticipated start date of such employment), (ii) receipt of acceptance
or rejection of employment

                                      -31-
<PAGE>
by such Selected Employee and (iii) the commencement of employment by such
Selected Employee.

     7.2 TRANSITION OF BENEFITS. For all purposes under any Kos Plan, such
Transferred Employee shall be credited with his or her years of service with BPI
and its Affiliates before his or her Transfer Date, to the same extent as such
Transferred Employee was entitled, before his or her Transfer Date, to credit
for such service under any similar BPI Plan, except for purposes of accrual of
benefits under any defined benefit pension plan and except to the extent such
credit would result in a duplication of benefits. In addition, without limiting
the generality of the foregoing: (i) Transferred Employee shall be eligible to
participate immediately as of his or her Transfer Date, without any waiting time
to the extent legally permitted, in each Kos Plan to the extent coverage under
such Kos Plan replaces coverage under a comparable BPI Plan in which such
Transferred Employee participated immediately before his or her Transfer Date;
(ii) for purposes of each Kos Plan providing medical, dental, pharmaceutical
and/or vision benefits to any Transferred Employee, Kos shall cause all
pre-existing condition exclusions and actively-at-work requirements of such Kos
Plan to be waived for such employee and his or her covered dependents to the
extent they were not applicable under the corresponding BPI Plan, and Kos shall
cause any eligible expenses incurred by such employee and his or her covered
dependents during the portion of the plan year of the corresponding BPI Plan
ending on the date such employee's participation in the corresponding Kos Plan
begins to be taken into account under such Kos Plan for purposes of satisfying
all deductible, coinsurance and maximum out-of-pocket requirements applicable to
such employee and his or her covered dependents for the applicable plan year as
if such amounts had been paid in accordance with such Kos Plan; and (iii) Kos
hereby agrees to accept a rollover of the account balances under a tax-qualified
defined contribution plan maintained by BPI or any of its Affiliates (a "BPI
SAVINGS PLAN") into a tax-qualified defined contribution plan maintained by Kos
or any of its Affiliates (a "KOS SAVINGS PLAN") in which the Transferred
Employees are eligible to participate; provided the rollover satisfies the
applicable requirements of the Internal Revenue Code of 1986, as amended. To the
extent permitted by Law and the respective Kos plans, Kos and its Affiliates
shall give all Transferred Employees credit for the current calendar year in
Kos's flexible spending account, dependent care account and cafeteria plans (the
"KOS ACCOUNT PLANS") for any credits or contributions under BPI's flexible
spending account, dependent care account and cafeteria plans ("BPI ACCOUNT
PLANS"), in the amounts to be provided by BPI in writing to Kos within five (5)
Business Days after receipt of a written list from Kos of all Transferred
Employees (as such amounts may be increased by further contributions between the
date hereof and the applicable Transfer Date and/or reduced by deductions
properly made to pay benefits on or before such Transfer Date); provided that
BPI, as soon as possible thereafter, transfers to Kos and its Affiliates an
amount in cash equal to the excess of the aggregate accumulated contributions to
the BPI Account Plans made during the year in which the Closing Date occurs by
Transferred Employees over the aggregate reimbursements made for such year from
the BPI Account Plans to the Transferred Employees; provided further that the
Transferred Employees continue to be subject to their existing contribution
elections for the year in which the Closing Date occurs and may not change such
elections (except as permitted by the Kos Account Plans). For purposes of this
Agreement, "BPI PLAN" means an employee benefit plan of BPI or any of its
Affiliates that provided benefits to any Transferred Employee before his or her
Transfer Date, and "KOS PLAN" means an employee benefit plan of Kos or any of
its Affiliates providing benefits to any Transferred Employee from and after his
or her Transfer Date. As of the Transfer Date, Kos

                                      -32-
<PAGE>
shall assume, and hereby does assume, all right, title and interest in and to,
and all obligations under, all automobile leases for all Transferred Employees
and upon expiration of such leases, Kos shall return or otherwise dispose of the
applicable automobile in accordance with the applicable automobile lease terms
and thereafter, Kos shall provide such Transferred Employees with new
automobiles in accordance with Kos' standard practice. BPI shall transfer to
Kos, and Kos shall take from BPI, all right, title and interest in and to the
laptop computers utilized by such Transferred Employees (provided, however that
BPI shall have the right to remove any and all licensed software and all other
proprietary or other confidential information from such laptops). Kos shall,
within five (5) Business Days after the Transfer Date, pay to BPI an amount
equal to $550.00 for each such laptop computer, which amount represents the fair
market value thereof.

     7.3 WELFARE BENEFITS GENERALLY. BPI and its Affiliates shall be solely
responsible for (i) claims for Welfare Benefits and for workers' compensation,
in each case that are incurred by or with respect to any Transferred Employee
and his or her beneficiaries and dependents before his or her Transfer Date;
(ii) claims relating to COBRA coverage attributable to "qualifying events" with
respect to any Transferred Employee and his or her beneficiaries and dependents
that occur on or before such Transferred Employee's Transfer Date; (iii) claims
for Welfare Benefits and for workers' compensation, in each case that are
incurred by or with respect to any Selected Employee who does not become a
Transferred Employee and his or her beneficiaries and dependents, regardless of
when incurred; and (iv) claims relating to COBRA coverage attributable to
"qualifying events" with respect to any Selected Employee who does not become a
Transferred Employee and his or her beneficiaries and dependents, regardless of
when incurred. Kos and its Affiliates shall be solely responsible for (i) claims
for Welfare Benefits and for workers' compensation, in each case that are
incurred by or with respect to any Transferred Employee and his or her
beneficiaries and dependents on or after his or her Transfer Date, and (ii)
claims relating to COBRA Coverage attributable to "qualifying events" with
respect to any Transferred Employee and his or her beneficiaries and dependents
that occur after such Transferred Employee's Transfer Date. For purposes of the
foregoing, a medical/dental claim shall be considered incurred when the services
are rendered, the supplies are provided or medication is prescribed, and not
when the condition arose; provided that claims relating to a hospital
confinement that begins on or before a Transferred Employee's Transfer Date but
continues thereafter shall be treated as incurred on or before such Transfer
Date. A disability or workers' compensation claim shall be considered incurred
on or before the relevant Transferred Employee's Transfer Date if the injury or
condition giving rise to the claim occurs on or before such Transfer Date.

     7.4 RETENTION OF LIABILITIES BY BPI. Except as specifically provided in
this Article 7: (i) neither Kos nor any of its Affiliates shall adopt, become a
sponsoring employer of, or have any obligations under or with respect to the BPI
Plans, and BPI and its Affiliates shall be solely responsible for any and all
liabilities which have arisen or may arise under or in connection with any BPI
Plan (including liabilities arising from income or excise tax assessments,
participant benefit claims, fiduciary conduct, or under Title IV of ERISA) and
(ii) BPI and its Affiliates shall be solely responsible for any and all
liabilities relating to or arising out of the employment of any Transferred
Employee by BPI and its Affiliates on or before his or her Transfer Date.

                                      -33-
<PAGE>
     7.5 RETENTION OF LIABILITIES BY KOS. Except as specifically provided in
this Article 7: (i) neither BPI nor any of its Affiliates shall adopt, become a
sponsoring employer of, or have any obligations under or with respect to the Kos
Plans, and Kos and its Affiliates shall be solely responsible for any and all
liabilities which have arisen or may arise under or in connection with any Kos
Plan (including liabilities arising from income or excise tax assessments,
participant benefit claims, fiduciary conduct, or under Title IV of ERISA); (ii)
Kos and its Affiliates shall be solely responsible for any and all liabilities
relating to or arising out of the decisions or actions of Kos and its Affiliates
in deciding to offer or not to offer employment to any employees of BPI under
Section 7.1, and the terms and conditions of such offers; and (iii) subject to
the provisions of Section 7.8, Kos and its Affiliates shall be solely
responsible for any and all liabilities relating to or arising out of the
employment, terms and conditions of employment, and termination of employment,
of any employees of Kos and its Affiliates, including any Transferred Employee
from and after his or her Transfer Date.

     7.6 SEVERANCE. Without limiting the generality of the foregoing provisions
of this Article 7, BPI and its Affiliates shall remain solely responsible for
all Severance Benefits and other liabilities or obligations relating to or
arising out of the termination or alleged termination of employment with BPI and
its Affiliates of any Selected Employee of BPI or its Affiliates who does not
become a Transferred Employee, whether arising under a BPI Plan, an agreement
with an individual employee, or applicable Law. Notwithstanding anything
contained in this Agreement to the contrary, Kos and its Affiliates shall,
except as set forth in Section 7.8, be solely responsible for all Severance
Benefits and other liabilities and obligations relating to or arising out of the
termination or alleged termination of employment with Kos or its Affiliates of
any Transferred Employee from and after his or her Transfer Date or of any other
person employed by Kos or its Affiliates before or after the Closing Date.
Notwithstanding the foregoing, in the event that a Transferred Employee is
terminated by Kos or any of its Affiliates at any time during the six-month
period following the Transferred Employee's Transfer Date, the Transferred
Employee shall be entitled to receive from Kos the greater of: (a) the Severance
Benefits to which the Transferred Employee would have been entitled under the
severance plan maintained by BPI and its Affiliates immediately prior to the
Transfer Date or (b) the Severance Benefits to which the Transferred Employee is
entitled under the severance plan maintained by Kos and its Affiliates.

     7.7 CALENDAR YEAR 2005 BONUSES. BPI will be liable for, and will pay to
Transferred Employees, any annual bonuses to which they may become entitled,
based upon actual performance, for the year in which the Closing Date occurs,
subject to pro-ration to reflect the portion of such year that precedes the
applicable Transfer Date, in accordance with the applicable BPI bonus plan(s).
Kos will be liable for, and will pay to Transferred Employees, any annual
bonuses to which they may become entitled under the applicable Kos bonus plan(s)
for such year (disregarding any provision of such bonus plan(s) requiring
full-year employment as a condition to receiving a bonus under such plan(s)),
subject to pro-ration to reflect the portion of such year that follows the
applicable Transfer Date.

     7.8 TERMINATION OF AGREEMENTS. If this Agreement is terminated for any
reason following the Closing Date, then: (i) no Selected Employee shall
thereafter become a Transferred Employee and (ii) BPI may, in its sole
discretion, offer to rehire any Transferred Employee, on terms and conditions
determined by BPI.

                                      -34-
<PAGE>
                                   ARTICLE 8
                                 CONFIDENTIALITY

     8.1 CONFIDENTIAL INFORMATION.

          8.1.1 CONFIDENTIAL INFORMATION. As used in this Agreement, the term
"CONFIDENTIAL INFORMATION" means all secret, confidential or proprietary
information or data, whether provided in written, oral, graphic, video,
computer, electronic or other form, provided pursuant to this Agreement or
generated pursuant to this Agreement by one Party (the "DISCLOSING PARTY") to
the other Party or otherwise obtained by such Party (the "RECEIVING Party"),
including but not limited to, information relating to the Disclosing Party's
existing or proposed research, development efforts, patent applications,
business or products, and any other materials that have not been made available
by the Disclosing Party to the general public. Notwithstanding the foregoing
sentence, Confidential Information shall not include any information or
materials that:

               (A) were already known to the Receiving Party (other than under
an obligation of confidentiality), at the time of disclosure by the Disclosing
Party, to the extent such Receiving Party has documentary evidence to that
effect;

               (B) were generally available to the public or otherwise part of
the public domain at the time of disclosure thereof to the Receiving Party;

               (C) became generally available to the public or otherwise part of
the public domain after disclosure or development thereof, as the case may be,
and other than through any act or omission of a Party in breach of such Party's
confidentiality obligations under this Agreement;

               (D) were disclosed to a Party, other than under an obligation of
confidentiality, by a Third Party who had no obligation to the Disclosing Party
not to disclose such information to others; or

               (E) were independently discovered or developed by or on behalf of
the Receiving Party without the use of the Confidential Information belonging to
the other Party, to the extent such Receiving Party has documentary evidence to
that effect.

          8.1.2 CONFIDENTIALITY OBLIGATIONS. Each of Kos and BPI shall keep all
Confidential Information received from the other Party with the same degree of
care it maintains the confidentiality of its own Confidential Information.
Neither Party shall use such Confidential Information for any purpose other than
in performance of this Agreement or disclose the same to any other Person other
than to such of its and its Affiliates' directors, managers, employees,
independent contractors, agents or consultants who have a need to know such
Confidential Information to implement the terms of this Agreement or enforce its
rights under this Agreement; provided, however, that a Receiving Party shall
advise any of its and its Affiliates' directors, managers, employees,
independent contractors, agents or consultants who receives such Confidential
Information of the confidential nature thereof and of the obligations contained
in this Agreement relating thereto, and the Receiving Party shall ensure
(including, in the case of a Third Party, by means of a written agreement with
such Third Party having terms at least as

                                      -35-
<PAGE>
protective as those contained in this Article 8) that all such directors,
managers, employees, independent contractors, agents or consultants comply with
such obligations as if they had been a Party hereto. Upon termination of this
Agreement, the Receiving Party shall return or destroy all documents, tapes or
other media containing Confidential Information of the Disclosing Party that
remain in the possession of the Receiving Party or its directors, managers,
employees, independent contractors, agents or consultants, except that the
Receiving Party may keep one copy of the Confidential Information in the legal
department files of the Receiving Party, solely for archival purposes. Such
archival copy shall be deemed to be the property of the Disclosing Party, and
shall continue to be subject to the provisions of this Article 8. It is
understood that receipt of Confidential Information under this Agreement will
not limit the Receiving Party from assigning its employees to any particular job
or task in any way it may choose, subject to the terms and conditions of this
Agreement.

          8.1.3 PERMITTED DISCLOSURE AND USE. Notwithstanding Section 8.1.2, (i)
either Party may disclose Confidential Information belonging to the other Party
only to the extent such disclosure is reasonably necessary to: (a) comply with
or enforce any of the provisions of this Agreement; (c) comply with Laws; or (c)
comply with applicable stock exchange or Nasdaq regulation and (ii) BPI may
disclose Confidential Information belonging to Kos related to the Product only
to the extent such disclosure is reasonably necessary to obtain or maintain
Regulatory Approval of a Product to the extent such disclosure is made to a
Governmental Authority. If a Party deems it necessary to disclose Confidential
Information of the other Party pursuant to this Section 8.1.3, such Party shall
give reasonable advance written notice of such disclosure to the other Party to
permit such other Party sufficient opportunity to object to such disclosure or
to take measures to ensure confidential treatment of such information.
Notwithstanding anything to the contrary in this Article 8, (i) Kos shall not
disclose to any Third Party Confidential Information of BPI relating to the
manufacture of a Product unless required by a Governmental Authority without the
prior written consent of BPI and (ii) BPI shall be allowed to disclose
Confidential Information of Kos related to the Product to Third Parties as set
forth on Schedule 8.1.3.

          8.1.4 NOTIFICATION. The Receiving Party shall notify the Disclosing
Party promptly upon discovery of any unauthorized use or disclosure of the
Disclosing Party's Confidential Information, and will cooperate with the
Disclosing Party in any reasonably requested fashion to assist the Disclosing
Party to regain possession of such Confidential Information and to prevent its
further unauthorized use or disclosure.

     8.2 PUBLICITY; FILING OF THIS AGREEMENT. The Parties shall jointly agree
upon and issue a press release in connection with the transactions set forth
herein. Any other publication, news release or other public announcement by a
Party relating to this Agreement or to the performance hereunder shall first be
reviewed and consented to in writing by the other Party; provided, however, that
(i) any disclosure that is required by Law as advised by the disclosing Party's
counsel may be made without the prior written consent of the other Party and
(ii) any Party may issue a press release or public announcement if the contents
of such press release or public announcement have previously been made public
other than through a breach of this Agreement by the issuing Party, without the
prior written consent of the other Party. To the extent practicable, the
disclosing Party shall give at least one (1) Business Day advance notice of any
such legally required disclosure to the other Party, and such other Party shall
provide any

                                      -36-
<PAGE>
comments on the proposed disclosure during such period. To the extent that
either Party determines that it or the other Party is required to file or
register this Agreement or a notification thereof to comply with the
requirements of an applicable stock exchange or Nasdaq regulation or any
Governmental Authority, including without limitation the Securities and Exchange
Commission, such Party shall promptly inform the other Party thereof. Prior to
making any such filing, registration or notification, the Parties shall consult
with respect thereto regarding confidentiality. The Parties shall cooperate,
each at its own expense, in such filing, registration or notification, including
without limitation such confidential treatment request, and shall execute all
documents reasonably required in connection therewith.

     8.3 PUBLICATION. Kos shall submit copies of each proposed academic,
scientific, medical and other publication sponsored or developed by Kos or
developed in collaboration with Kos that contains or refers to any Product in
the Territory to BPI at least thirty (30) days in advance of submitting such
proposed publication to a publisher or other Third Party. BPI shall have the
right to review and comment on each such proposed publication for accuracy and
to ascertain whether BPI's Confidential Information is being inappropriately
utilized and/or released. BPI shall have the right to remove any of its
Confidential Information prior to submission for publication. Kos shall redact
or otherwise modify the proposed publication to remove any such Confidential
Information of BPI. In addition, in the event that the document includes data,
information or material generated by a Party's (or the Affiliates' of a Party)
scientists, and professional standards for authorship would be consistent with
including such Party's scientists as co-authors of the document, the names of
such scientists will be included as co-authors. A Party may publicly disclose
without regard to the preceding requirements of this Section 8.3 any information
that was previously disclosed in a public disclosure that was in compliance with
such requirements.

     8.4 USE OF NAMES. Except as otherwise set forth in this Agreement, neither
Party shall use the name of the other Party in relation to this transaction in
any public announcement, press release or other public document without the
written consent of such other Party, which consent shall not be unreasonably
withheld or delayed; provided, however, that either Party may use the name of
the other Party in any document filed with any regulatory agency or Governmental
Authority, including the FDA and the Securities and Exchange Commission.

     8.5 CONFIDENTIALITY OF THIS AGREEMENT. The terms of this Agreement shall be
Confidential Information of each Party and, as such, shall be subject to the
provisions of this Article 8.

     8.6 SURVIVAL. The obligations and prohibitions contained in this Article 8,
as they apply to Confidential Information, shall survive the expiration or
termination of this Agreement for the longer of (i) a period of ten (10) years
or (ii) the useful life of the property to which the Confidential Information
relates.

                                   ARTICLE 9
                              INTELLECTUAL PROPERTY

     9.1 OWNERSHIP OF NAMES. Each Party and its Affiliates shall retain all
right, title and interest in and to its and their respective corporate names and
logos.

                                      -37-
<PAGE>
     9.2 TRADE DRESS. As soon as reasonably practicable after the Closing Date
and otherwise in accordance with all applicable Laws, Kos shall prepare and
submit to BPI for BPI's approval a sample of Kos's trade dress to be utilized to
Distribute the Product in the Territory (the "KOS TRADE DRESS"). Kos hereby
grants to BPI the right to use, with the right to grant Affiliates and Third
Parties the right to use, such Kos Trade Dress in the Territory solely for the
purpose of performing its obligations under this Agreement. Kos shall be
responsible for complying with all applicable Laws in connection with the Kos
Trade Dress. Kos shall own and retain all rights to the Kos Trade Dress and all
goodwill associated therewith. The Kos Trade Dress shall be used only pursuant
to the terms of this Agreement to identify, and in connection with, the
marketing of the Product, and shall not be used by either Party to identify, or
in connection with, the marketing of any other products. BPI's right to use the
Kos Trade Dress shall automatically terminate upon the termination or expiration
of this Agreement.

     9.3 DOMAIN NAMES. BPI shall (or shall cause its Affiliate to), promptly
after the Closing Date, assign to Kos those Internet domain names or sub-domain
names with respect to the Product in the Territory set forth on Schedule 9.3
(the "DOMAIN NAMES"). Thereafter, Kos shall be responsible, at its sole cost and
expense, for maintaining such Domain Names; provided, however, such domain names
shall be used only pursuant to the terms of this Agreement to identify, and in
connection with, the marketing of the Product, and shall not be used by Kos to
identify, or in connection with, the marketing of any other products. Except as
set forth in this Section 9.3, BPI shall also own rights to any Internet domain
names incorporating any of its (or its Affiliate's) trademarks.

                                   ARTICLE 10
                         REPRESENTATIONS AND WARRANTIES

     10.1 REPRESENTATIONS AND WARRANTIES.

          10.1.1 Each of the Parties hereby represents and warrants to the other
Party that, as of the Effective Date:

               (A) Such Party has full corporate right, power and authority to
enter into this Agreement and the other Transaction Documents to which it is a
Party and to perform its respective obligations under this Agreement and such
other Transaction Documents and that it has the right to grant the rights
granted pursuant to this Agreement and such other Transaction Documents.

               (B) This Agreement is a legal and valid obligation binding upon
such Party and enforceable in accordance with its terms, except as enforcement
may be affected by bankruptcy, insolvency or other similar laws and by general
principles of equity. The execution, delivery and performance of the Agreement
by such Party does not conflict with any agreement, instrument or understanding,
oral or written, to which it is a Party or by which it is bound, nor violate any
Law of any Governmental Authority having jurisdiction over it.

               (C) Such Party has not granted any right to any Third Party that
would conflict with the rights granted to the other Party hereunder.

                                      -38-
<PAGE>
               (D) Such Party has obtained all consents, approvals and
authorizations of all Government Authorities and other Persons required to be
obtained by it as of the Effective Date in connection with the execution,
delivery and performance of this Agreement.

               (E) Such Party is a corporation or other entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
formation.

               (F) No agent, broker, investment banker, financial advisor or
other Person, is or will be entitled to any brokers' or finder's fee or any
other commission or similar fee in connection with any of the transactions
contemplated by this Agreement from such Party.

          10.1.2 BPI hereby represents and warrants to Kos that as of the
Effective Date:

               (A) It has the right to grant the rights under this Agreement as
granted hereunder.

               (B) It has not previously granted to any Third Party the rights
granted to Kos under this Agreement, and is not currently obligated (whether or
not contingent on any future event or state of affairs) to supply the Product to
any Third Party for sale in the Territory.

               (C) BPI has not encumbered, with liens, mortgages, security
interests or otherwise, any of the rights granted under this Agreement, except
as would not reasonably be expected to materially adversely affect the rights of
Kos hereunder or with respect to taxes not yet due and payable.

               (D) Except with respect to matters which it has previously made
available to Kos or otherwise informed Kos in writing, BPI has received no
material and negative written communication with respect to the market
approvability or continued market approval for the sale of the Product in the
Territory from any Regulatory Authority.

               (E) Except as set forth on Schedule 10.1.2(e), there is no
action, suit, claim, proceeding or arbitration at law or in equity or before or
by any Governmental Authority pending or, to the knowledge of BPI, threatened
against BPI with respect to the Product.

               (F) Except as set forth on Schedule 10.1.2(f), there is no action
or proceeding pending or, to BPI's knowledge, threatened, with respect to
Product against BPI or its Affiliates or that questions the validity of this
Agreement or any action taken by BPI in connection with the execution of this
Agreement.

               (G) INTENTIONALLY DELETED.

               (H) INTENTIONALLY DELETED.

               (I) INTENTIONALLY DELETED.

               (J) FINANCIAL INFORMATION. Schedule 10.1.2(j) sets forth all
material sales information relating to the Product in the Territory for the
calendar years 2003 and 2004. Such information: (i) is true, correct and
complete in all material respects; (ii) was derived from

                                      -39-
<PAGE>
the books and records of BPI (or its applicable Affiliates); and (iii) was
prepared by BPI (or its applicable Affiliates) in good faith and fairly
presents, in all material respects, the gross and net sales of Product in the
Territory for the periods shown. No representations or warranty whatsoever is
made with respect to any financial projections provided by BPI.

          10.1.3 To the knowledge of BPI, in each case taken as a whole together
with the publicly filed reports of BPI or any of its Affiliates with the United
States Securities and Exchange Commission, (i) neither this Agreement nor any of
the schedules, attachments, written statements, documents, certificates, or
other items delivered to Kos pursuant to this Agreement or any items delivered
to Kos during the negotiations of this Agreement contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements contained herein or therein, in light of the circumstances under
which made, not misleading and (ii) BPI has disclosed, and provided copies of,
all material facts, information and documents pertaining to the Product to Kos.

          10.1.4 Kos hereby represents and warrants to BPI that as of the
Effective Date, Kos has access to, and as of the Closing Date, Kos will have,
sufficient readily available funds necessary to pay the Closing Date Payment as
and when due.

     10.2 PERFORMANCE BY AFFILIATES. The Parties recognize that each may assign
or contract the performance of some or all of its obligations under this
Agreement to Affiliates; provided, however, that each Party shall remain
responsible for and be guarantor of any such performance of its obligations
under this Agreement by its Affiliates and shall cause its Affiliates to comply
with the provisions of this Agreement in connection with any such performance.
Each Party hereby expressly waives any requirement that the other Party exhaust
any right, power or remedy, or proceed against an Affiliate or subcontractor,
for any obligation or performance hereunder prior to proceeding directly against
such Party. Notwithstanding the foregoing, in the event Kos wishes to so assign
or contract some or all of its rights or obligations to an Affiliate which is
incorporated or otherwise organized outside the United States or is not a
resident of the United States for United States federal income tax purposes,
then the prior written consent of BPI shall be required for such assignment or
contracting, to the extent any future payments due to BPI under this Agreement
would be subject to any withholding taxes or other taxes to be withheld at
source, such consent not to be unreasonably withheld.

     10.3 DISCLAIMER OF WARRANTY. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN
SECTION 10.1 OF THIS AGREEMENT, KOS AND BPI MAKE NO REPRESENTATIONS AND GRANT NO
WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY
STATUTE OR OTHERWISE, AND KOS AND BPI EACH SPECIFICALLY DISCLAIMS ANY OTHER
REPRESENTATIONS AND WARRANTIES, WHETHER WRITTEN OR ORAL, EXPRESS, STATUTORY OR
IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY OR FITNESS FOR A
PARTICULAR USE OR PURPOSE OR ANY WARRANTY AS TO THE VALIDITY OF ANY PATENTS OR
THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

     10.4 LIMITATION OF LIABILITY. IN NO EVENT WILL EITHER PARTY BE LIABLE FOR
LOST PROFITS OR FOR ANY SPECIAL, INDIRECT, INCIDENTAL, EXEMPLARY,

                                      -40-
<PAGE>
CONSEQUENTIAL OR PUNITIVE DAMAGES, HOWEVER CAUSED, ON ANY THEORY OF LIABILITY
AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES, ARISING UNDER ANY CAUSE OF ACTION AND ARISING IN ANY WAY OUT OF THIS
AGREEMENT. THE FOREGOING LIMITATIONS WILL NOT LIMIT EITHER PARTY'S OBLIGATIONS
TO THE OTHER PARTY UNDER SECTION 13.9.1 OR ARTICLE 13.

     10.5 SURVIVAL OF CERTAIN REPRESENTATIONS/WARRANTIES. The representations
and warranties contained in Section 10.1.3 shall survive the Closing Date for a
period of twelve (12) months. All other representations and warranties contained
in this Agreement shall survive the Closing Date until the end of the Term.

                                   ARTICLE 11
                              TERM AND TERMINATION

     11.1 TERM. This Agreement shall commence as of the Effective Date and,
unless sooner terminated as provided herein, shall continue in effect until the
expiration or termination of the Distribution Agreement.

     11.2 ALLEGATIONS OF MATERIAL BREACH.

          11.2.1 The Parties intend that this Agreement shall survive breach,
and shall not be terminable in the event of breach by a Party (the "BREACHING
PARTY"), unless the breach is of such a nature, duration or frequency that the
rights and interests of the other Party (the "NOTIFYING PARTY") and/or its
Affiliates under this Agreement have been materially and adversely affected
("MATERIAL BREACH"). In the event there is a dispute as to whether a Material
Breach has occurred, this Agreement shall survive pending a determination
pursuant to Article 14 that a Material Breach has occurred. This Section 11.2
shall apply to any allegation of Material Breach.

          11.2.2 If a Party believes that a Material Breach has occurred, it
shall give written notice to the Breaching Party of the nature of the breach and
the reason the Notifying Party believes it is a Material Breach. The alleged
Breaching Party shall then have a period of ninety (90) days following receipt
of such notice (fifteen (15) days in the event of non-payment unless such
payment obligation is being disputed in good faith) in which to cure the breach;
provided, however, that if the Material Breach is other than the payment of
money and is capable of being cured but cannot be reasonably cured in such
ninety (90)-day period, then the right to terminate this Agreement shall not
arise if the allegedly Breaching Party has (a) during such period of time
submitted a plan that, if successfully carried out, would be effective in curing
such Material Breach, and has commenced its execution of such plan, and (b)
diligently pursues such plan thereafter for a period of up to an additional
ninety (90) days. Any such notice of alleged Material Breach by the Notifying
Party shall include a reasonably detailed description of all relevant facts and
circumstances demonstrating, supporting and/or relating to each such alleged
Material Breach by the Breaching Party.

          11.2.3 If the alleged Material Breach is not cured within the cure
period specified in Section 11.2.2, the Notifying Party may give notice of
termination ("NOTICE OF TERMINATION

                                      -41-
<PAGE>
FOR MATERIAL BREACH") and thereafter this Agreement shall immediately terminate;
provided however, if the Breaching Party does not agree that a Material Breach
has occurred, then this Agreement shall survive, and the Parties shall continue
to perform their obligations hereunder, until the issue of whether there has
been a Material Breach by the Breaching Party is resolved in accordance with
Article 14.

     11.3 BANKRUPTCY EVENT. Either Party may terminate this Agreement
immediately upon written notice to the other Party where the other Party becomes
subject to a Bankruptcy Event.

     11.4 TERMINATION PRIOR TO CLOSING. This Agreement may be terminated at any
time prior to Closing:

          11.4.1 By mutual written consent of Kos and BPI;

          11.4.2 By Kos or BPI in the event that any competent Governmental
Authority shall have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement and such order, decree, ruling or other action shall have become
final and non-appealable.

          11.4.3 By Kos or BPI in the event the Distribution Agreement is
terminated.

          11.4.4 By a Party, if the other Party shall have materially breached,
or materially failed to comply with, any of such other Party's obligations under
this Agreement to be performed prior to the Closing, subject to notice and cure
as set forth in Section 11.2.

                                   ARTICLE 12
                             EFFECTS OF TERMINATION

     12.1 EFFECTS OF TERMINATION.

          12.1.1 EFFECT OF TERMINATION PRIOR TO CLOSING. In the event of
termination of this Agreement as provided in Section 11.4, this Agreement shall
forthwith become void and there shall be no liability on the part of either
Party hereto except nothing herein shall relieve either Party from liability for
any breach of this Agreement.

          12.1.2 EFFECT OF TERMINATION FROM AND AFTER CLOSING. Upon expiration
or termination of this Agreement at any time from and after the Closing, all
rights and grants to Kos hereunder shall immediately terminate and be of no
further force and effect and Kos shall immediately return and assign to BPI all
Samples, Product, Domain Names and all other materials (including tangible
manifestations of any intellectual property, including all data, information and
materials), related to the Product. If this Agreement is terminated based upon a
breach of this Agreement, the breaching party shall be responsible for the costs
and expenses related to the return of such materials to BPI.

     12.2 ACCRUED RIGHTS. Termination of this Agreement for any reason will be
without prejudice to any rights that will have accrued to the benefit of a Party
prior to the effective date

                                      -42-
<PAGE>
of such termination. Such termination will not relieve a Party from obligations
that are expressly indicated to survive the termination of this Agreement.

     12.3 INTENTIONALLY OMITTED.

     12.4 SURVIVAL. The following Articles and Sections, together with any
definitions used or exhibits referenced therein, will survive any termination or
expiration of this Agreement: Sections 3.8.7, 3.8.8, 6.3, 7.2 to 7.8, 9.1, 9.2,
10.3, 10.4 and 14.2 and Articles 8, 12, 13 (as to activities arising prior to
the termination) and 16.

     12.5 SALE OF INVENTORY. For a period of up to six months following
expiration of this Agreement pursuant to Section 11.1 or termination of this
Agreement pursuant to Section 11.2 where BPI is the breaching Party, Kos shall
be entitled to continue to sell any Product still in Kos's inventory (or being
held for delivery by BPI to Kos) (the "REMAINING INVENTORY"), subject to Kos's
payment of the Purchase Price pursuant to Article 5 and Article 6 with respect
to such sales and otherwise in compliance with the applicable terms and
conditions of this Agreement. Notwithstanding the foregoing, Kos shall not have
the right to so sell Product pursuant to this Section 12.5 in the event that
BPI, at its sole option, notifies Kos in writing of its desire to purchase the
Remaining Inventory at the Net Selling Price per Unit (the "REMAINING INVENTORY
PURCHASE OPTION"). Promptly after receipt of such notice, Kos shall deliver a
written invoice to BPI for all such Remaining Inventory and shall ship such
Remaining Inventory to BPI at its sole cost and expense. Within forty-five (45)
days of receipt of such Remaining Inventory, BPI shall pay the invoiced amount
to Kos.

                                   ARTICLE 13
                           INDEMNIFICATION; INSURANCE

     13.1 INDEMNIFICATION.

          13.1.1 INDEMNIFICATION BY BPI. BPI hereby agrees to save, defend and
hold Kos, its Affiliates, and their respective directors, officers, agents and
employees harmless from and against any and all Losses arising in connection
with any and all charges, complaints, actions, suits, proceedings, hearings,
investigations, claims, demands, judgments, orders, decrees, audits,
stipulations or injunctions by a Third Party (each a "THIRD PARTY CLAIM")
resulting directly from (a) any breach by BPI of any of its representations,
warranties, covenants or obligations pursuant to this Agreement, (b) the
negligence or willful misconduct by BPI or its Affiliates or their respective
officers, directors, employees, agents or consultants in performing any
obligations under this Agreement, (c) any liabilities of BPI and its Affiliates
described in Sections 7.4 and 7.6, (d) any alleged violation of any federal or
state Laws relating to the reimbursement, pricing, promotion or advertising of
any Product in the Territory resulting from a sale of the Product before the
Closing Date, (e) any property damage, personal injury or death caused by
Product sold prior to the Closing Date, (f) any non-withholding by Kos of
income, withholding or similar taxes (including any penalties, additions, fines,
surcharges or interest relating thereto) in respect of any payments made to BPI
pursuant to Article 5, including any adjustments asserted or claimed by any
Governmental Authority in respect of such taxes and related amounts and (g) any
action, suit, claim, proceeding or arbitration set forth on Schedule

                                      -43-
<PAGE>
10.1.2(e); in each case except to the extent that such Losses are subject to
indemnification by Kos pursuant to Section 13.1.2.

          13.1.2 INDEMNIFICATION BY KOS. Kos hereby agrees to save, defend and
hold BPI, its Affiliates, and their respective directors, officers agents and
employees harmless from and against any and all Losses arising in connection
with any and all Third Party Claims resulting directly from (a) any breach by
Kos of any of its representations, warranties, covenants or obligations pursuant
to this Agreement, (b) the negligence or willful misconduct by Kos or its
Affiliates or their respective officers, directors, employees, agents or
consultants in performing any obligations under this Agreement, (c) any
liabilities of Kos and its Affiliates described in Sections 7.5 and 7.6, (d) any
alleged violation of any federal or state Laws relating to the reimbursement,
pricing, promotion or advertising of any Product in the Territory resulting from
a sale of the Product by Kos after the Closing Date, or (e) any representations
or warranties made by Kos and/or its Affiliates to its customers or users with
respect to the Product other than representations expressly provided or approved
by BPI in writing and representations consistent with the FDA approved indicated
uses of the Product; in each case except to the extent that such Losses are
subject to indemnification by BPI pursuant to Section 13.1.1.

          13.1.3 The rights of indemnification under this Section 13.1 shall be
subject to the provisions of Sections 13.2 through 13.8 and Section 3.8.8.

     13.2 NOTICE OF CLAIM. All indemnification claims in respect of any
indemnitee seeking indemnity under Section 13.1 (collectively, the "INDEMNITEES"
and each an "INDEMNITEE") will be made solely by the corresponding Party (the
"INDEMNIFIED PARTY"). The Indemnified Party will give the indemnifying Party
(the "INDEMNIFYING Party") prompt written notice (an "INDEMNIFICATION CLAIM
NOTICE") of any Losses and any Third Party Claim or the discovery of any fact
upon which such Indemnified Party intends to base a request for indemnification
under Section 13.1, but in no event will the Indemnifying Party be liable for
any Losses that result from any delay in providing such notice which materially
prejudices the defense of such Third Party Claim. Each Indemnification Claim
Notice must contain a description of the claim and the nature and amount of such
Loss (to the extent that the nature and amount of such Loss are known at such
time). Together with the Indemnification Claim Notice, the Indemnified Party
will furnish promptly to the Indemnifying Party copies of all notices and
documents (including court papers) received by any Indemnitee in connection with
the Third Party Claim. The Indemnifying Party shall not be obligated to
indemnify the Indemnified Party to the extent any admission or statement made by
the Indemnified Party materially prejudices the defense of such Third Party
Claim.

     13.3 CONTROL OF DEFENSE. At its option, the Indemnifying Party may assume
the defense of any Third Party Claim subject to indemnification as provided for
in Sections 13.1.1 and 13.1.2, as applicable, by giving written notice to the
Indemnified Party within thirty (30) days after the Indemnifying Party's receipt
of an Indemnification Claim Notice. Upon assuming the defense of a Third Party
Claim, the Indemnifying Party may appoint as lead counsel in the defense of the
Third Party Claim any legal counsel it selects. Should the Indemnifying Party
assume the defense of a Third Party Claim, the Indemnifying Party will not be
liable to the Indemnified Party or any other Indemnitee for any legal expenses
subsequently incurred by such

                                      -44-
<PAGE>
Indemnified Party or other Indemnitee in connection with the analysis, defense
or settlement of the Third Party Claim.

     13.4 RIGHT TO PARTICIPATE IN DEFENSE. Without limiting Section 13.3, any
Indemnitee will be entitled to participate in, but not control, the defense of a
Third Party Claim for which it has sought indemnification hereunder and to
employ counsel of its choice for such purpose; provided, however, that such
employment will be at the Indemnitee's own expense unless (a) the employment
thereof has been specifically authorized by the Indemnifying Party in writing,
or (b) the Indemnifying Party has failed to assume the defense and employ
counsel in accordance with Section 13.3 (in which case the Indemnified Party
will control the defense).

     13.5 SETTLEMENT. With respect to any Losses relating solely to the payment
of money damages in connection with a Third Party Claim and that will not result
in the Indemnitee 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 will have acknowledged in writing the obligation to
indemnify the Indemnitee hereunder, the Indemnifying Party will have the sole
right to consent to the entry of any judgment, enter into any settlement or
otherwise dispose of such Loss, on such terms as the Indemnifying Party, in its
reasonable discretion, will deem appropriate (provided, however that such terms
shall include a complete and unconditional release of the Indemnified Party from
all liability with respect thereto), and will transfer to the Indemnified Party
all amounts which said Indemnified Party will be liable to pay prior to the time
of the entry of judgment. With respect to all other Losses in connection with
Third Party Claims, where the Indemnifying Party has assumed the defense of the
Third Party Claim in accordance with Section 13.3, the Indemnifying Party will
have authority to consent to the entry of any judgment, enter into any
settlement or otherwise dispose of such Loss provided it obtains the prior
written consent of the Indemnified Party (which consent will be at the
Indemnified Party's reasonable discretion). The Indemnifying Party that has
assumed the defense of the Third Party Claim in accordance with Section 13.3
will not be liable for any settlement or other disposition of a Loss by an
Indemnitee that is reached without the written consent of such Indemnifying
Party. Regardless of whether the Indemnifying Party chooses to defend or
prosecute any Third Party Claim, no Indemnitee will admit any liability with
respect to, or settle, compromise or discharge, any Third Party Claim without
first offering to the Indemnifying Party the opportunity to assume the defense
of the Third Party Claim in accordance with Section 13.3.

     13.6 COOPERATION. If the Indemnifying Party chooses to defend or prosecute
any Third Party Claim, the Indemnified Party will, and will cause each other
Indemnitee to, cooperate in the defense or prosecution thereof and will 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 with such Third Party Claim. Such cooperation
will 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 will reimburse the Indemnified Party for
all its reasonable out-of-pocket expenses incurred in connection with such
cooperation.

                                      -45-
<PAGE>
     13.7 EXPENSES OF THE INDEMNIFIED PARTY. Except as provided above, the
reasonable and verifiable costs and expenses, including fees and disbursements
of counsel, incurred by the Indemnified Party in connection with any Third Party
Claim will be reimbursed on a calendar quarter basis by the Indemnifying Party,
without prejudice to the Indemnifying Party's right to contest the Indemnified
Party's right to indemnification and subject to refund in the event the
Indemnifying Party is ultimately held not to be obligated to indemnify the
Indemnified Party.

     13.8 PRODUCT LIABILITY.

          13.8.1 Subject to Sections 13.1.1 and 13.1.2, each of BPI and Kos
shall be responsible for Losses from Third Party Claims resulting directly or
indirectly from the manufacture, use, handling, storage, sale or other
disposition of a Product (including, without limitation, those Third Party
Claims that involve death or bodily injury (or allegations thereof) to any
individual or any property other than intellectual property) (each, a "PRODUCT
CLAIM"). All Product Claims shall be borne ****.

          13.8.2 Each Party shall give the other prompt written notice of any
Product Claim (actual or potential), but the omission of such notice shall not
relieve either Party from its obligations under this Section 13.8, except to the
extent the other Party can establish actual prejudice and direct damages as a
result thereof. Kos shall assume the lead role in the defense of such Product
Claim based on the specific Product subject to the Claim; provided, however,
that all costs and expenses of such defense shall be borne ****. Kos shall
consult with BPI on all material aspects of, and shall obtain the prior written
consent of BPI (such consent not to be unreasonably withheld, refused,
conditioned or delayed) in respect of any material decisions to be taken with
regard to, the defense, including without limitation settlement of such Product
Claim, and BPI shall have a full opportunity to participate in decision-making
process with respect to the strategy of such defense, and the Parties shall
cooperate fully with each other in connection therewith. BPI shall also have the
right to participate in the defense of any Product Claim utilizing attorneys of
its choice, at its own expense. In furtherance of the Parties' cooperation, Kos
will consult with BPI regarding strategic decisions, including without
limitation the retention of counsel and defense of each Product Claim. Kos will
otherwise keep BPI fully informed of the status and progress of the defense and
any settlement discussions concerning the Product Claim.

     13.9 ADDITIONAL BPI INDEMNIFICATION OBLIGATIONS.

          13.9.1 LOST PROFITS CLAIMS. In addition to BPI's indemnification
obligations pursuant to Section 13.1.1, BPI hereby agrees to indemnify Kos for
Lost Profits resulting directly from a Supply Failure (a "LOST PROFITS CLAIM");
except to the extent that such amounts are subject to indemnification by Kos
pursuant to Section 13.1.2 and in each case other than Third Party Claims (which
are covered pursuant to Section 13.1.1). Notwithstanding anything to the
contrary contained herein the maximum aggregate liability of BPI under this
Section 13.9 shall not exceed the Lost Profits Cap in effect as of the date of
the occurrence of the event resulting in the Lost Profits Claim. The provisions
of this Section 13.9.1 shall be Kos's sole remedy with respect to any and all
claims for Lost Profits.

                                      -46-
<PAGE>
          13.9.2 LOST PROFITS CLAIMS. The provisions of Sections 13.2 to 13.7
shall not apply to Lost Profits Claims. Any Lost Profits Claim shall be asserted
by Kos promptly upon Kos becoming aware of a Supply Failure (but in no event
later than ten (10) Business Days following Kos becoming aware of such Supply
Failure (provided that Kos's failure to provide such notice in a timely manner
shall not affect Kos's right to assert a Lost Profits Claim except to the extent
that BPI is prejudiced thereby)) by providing BPI with written notice thereof.
Within ninety (90) days of the discontinuance of a Supply Failure, Kos shall
provide BPI with a good faith estimate of the amount of the Lost Profits Claim.
For a period of sixty (60) days from and after BPI's receipt of Kos's good faith
estimate, the Parties shall attempt in good faith to resolve such claim for
indemnification, including any amounts due. If the Parties are unable to resolve
such claim, the dispute shall be subject to resolution pursuant to Section 14.1.

     13.10 INSURANCE. Each Party will obtain and keep in force, through self
insurance or otherwise, in a form reasonably acceptable to the other Party
hereto, insurance in scope and amount as required by law applicable to a Party's
activities hereunder and such additional amounts as may be reasonably necessary
to cover such Party's indemnity obligations under this Agreement with scope and
coverage as is normal and customary in the biotechnology/pharmaceutical industry
generally for parties similarly situated, but in no event in an amount less than
****. It is understood that such insurance will not be construed to limit a
Party's liability with respect to its indemnification obligations under this
Article 13. Each Party will, except to the extent self insured, provide to the
other Party upon request a certificate evidencing the insurance such Party is
required to obtain and keep in force under this Article 13. Such certificate
will provide that such insurance will not expire or be cancelled or modified
without at least thirty (30) days' prior notice to the other Party.

                                   ARTICLE 14
                               DISPUTE RESOLUTION

     14.1 DISPUTES. For all matters under this Agreement, the Parties hereby
agree that the dispute shall be referred to the Chief Executive Officer of Kos
and the Chief Executive Officer of BPI (the "REPRESENTATIVES"). If any such
matter has not been resolved within thirty (30) Business Days of such referral
to the Representatives either Party may invoke the provisions of Section 14.2
for such dispute. No dispute resolution procedure set forth in this Agreement
shall be construed as an agreement to arbitrate under any federal or state
arbitration law, including but not limited to the Federal Arbitration Act, and
shall not deprive a court of competent jurisdiction from resolving any dispute
arising under, or related to, this Agreement. In the event of any dispute
between the Parties arising in connection with Article 9 of this Agreement, the
Parties agree that the dispute resolution described under this Article 14 will
be conducted with sufficient dispatch to prevent loss of patent rights in the
disputed subject matter.

     14.2 LITIGATION. Any dispute that is not resolved as provided in the
preceding Section 14.1, whether before or after termination of this Agreement,
may be submitted by either Party to any court of competent jurisdiction in the
State of New York.

     14.3 INJUNCTIVE RELIEF. Notwithstanding anything to the contrary in this
Agreement, either Party will have the right to seek temporary injunctive relief
in any court of competent jurisdiction in the State of New York as may be
available to such Party under the laws and rules

                                      -47-
<PAGE>
applicable in such jurisdiction with respect to any matters arising out of the
other Party's performance of its obligations under this Agreement.

                                   ARTICLE 15
                         CLOSING AND CLOSING CONDITIONS

     15.1 CLOSING.

          15.1.1 The closing of the transactions contemplated hereby (the
"CLOSING") will take place on May 2, 2005. The actual date of the Closing is
referred to as the "CLOSING DATE". The Closing shall be deemed to be effective
as of 11:59 p.m. on the Closing Date.

          15.1.2 At the Closing, the Parties (or their Affiliates) shall each
execute and deliver to the other Party a domain name assignment agreement
substantially in the form of Exhibit A hereto (the "DOMAIN NAME ASSIGNMENT" or
the "TRANSACTION DOCUMENT"), and such other instruments and documents, in form
and substance reasonably acceptable to the Parties, as may be necessary to
effect the Closing.

          15.1.3 At the Closing, Kos will pay the Closing Date Payment in full
in cash without any deductions or offsets by wire transfer of immediately
available funds to a bank account or accounts to be designated by BPI in writing
prior to Closing.

     15.2 CONDITIONS TO OBLIGATIONS OF KOS. The obligations of Kos hereunder to
consummate the transactions contemplated by this Agreement are subject to the
fulfillment, at or before the Closing, as applicable, of each of the following
conditions (all or any of which may be waived in whole or in part by Kos, but
only in writing, in its sole discretion):

          15.2.1 ORDERS AND LAWS. There shall not be in effect on the Closing
Date any proceeding, hearing, judgment, order, decree, ruling or charge
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement.

          15.2.2 DELIVERIES. BPI shall have executed and delivered to Kos the
items described in Section 15.1.2.

          15.2.3 DISTRIBUTION AGREEMENT. The Parties (or their applicable
Affiliates) shall have entered into the Distribution Agreement.

     15.3 CONDITIONS TO OBLIGATIONS OF BPI. The obligations of BPI hereunder to
consummate the transactions contemplated by this Agreement are subject to the
fulfillment, at or before the Closing, of each of the following conditions (all
or any of which may be waived in whole or in part by BPI, but only in writing,
in its sole discretion):

          15.3.1 ORDERS AND LAWS. There shall not be in effect on the Closing
Date any judgment, order, decree, ruling or charge restraining, enjoining or
otherwise prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement with respect to the Territory.

                                      -48-
<PAGE>
          15.3.2 PAYMENT AND DELIVERIES. Kos shall have paid the Closing Date
Payment to BPI and Kos shall have executed and delivered to BPI the items
described in Section 15.1.2.

          15.3.3 DISTRIBUTION AGREEMENT. The Parties (or their applicable
Affiliates) shall have entered into the Distribution Agreement.

     15.4 FURTHER ASSURANCES. Each of Kos and BPI will take such further actions
as may be commercially reasonable to cause to be fulfilled the conditions to the
respective obligations of the other Party set forth in Article 15.

                                   ARTICLE 16
                                  MISCELLANEOUS

     16.1 ENTIRE AGREEMENT; AMENDMENT. This Agreement, together with the
Transaction Documents, including the exhibits and schedules attached hereto and
thereto (each of which is hereby incorporated herein and therein by reference),
sets forth the complete, final and exclusive agreement and understanding between
the Parties and supersedes and terminates all prior agreements and
understandings between the Parties with respect to the subject matter hereof. No
subsequent alteration, amendment, change or addition to this Agreement shall be
binding upon the Parties unless reduced to writing and signed by an authorized
officer of each Party.

     16.2 FORCE MAJEURE. Each Party shall be excused from the performance of its
obligations under this Agreement to the extent that such performance is
prevented by force majeure and the nonperforming Party promptly provides notice
of the prevention to the other Party. Such excuse shall be continued so long as
the condition constituting force majeure continues and the nonperforming Party
uses its commercially reasonable efforts to avoid or remove such causes of
nonperformance and shall continue performance with the utmost dispatch whenever
such causes are removed. For purposes of this Agreement, force majeure shall
include conditions beyond the control of the Parties, including without
limitation, an act of God, voluntary or involuntary compliance with any
regulation, law or order of any government, war, civil commotion, labor strike
or lock-out, epidemic, failure or default of public utilities or common
carriers, destruction of production facilities or materials by fire, earthquake,
storm or like catastrophe. When such circumstances arise, the Parties shall
discuss what modifications of the terms of this Agreement may be required in
order to arrive at an equitable solution.

     16.3 NOTICES. All notices or other communications that are required or
permitted under this Agreement shall be in writing and delivered personally,
sent by facsimile (and promptly confirmed by personal delivery or overnight
courier as provided in this Agreement), or sent by internationally-recognized
overnight courier to the addresses below. Any such communication shall be deemed
to have been given (a) when delivered, if personally delivered or sent by
facsimile on a Business Day (so long as promptly confirmed by personal delivery
or overnight courier as provided in this Agreement), and (b) on the second
Business Day after dispatch, if sent by internationally-recognized overnight
courier. Unless otherwise specified in writing, the mailing addresses of the
Parties shall be as described below.

               For Kos:          Kos Pharmaceuticals, Inc.

                                      -49-
<PAGE>
                                 1 Cedar Brook Drive
                                 Cranbury, New Jersey 08512
                                 Fax: (609) 495-0907
                                 Attention: President & Chief Executive Officer

               with a copy to:   Kos Pharmaceuticals, Inc.
                                 2200 N. Commerce Parkway
                                 Suite 300
                                 Weston, FL 33326
                                 Fax: (954) 331-3877
                                 Attention: Senior Vice President & Controller

               with a copy to:   Kos Pharmaceuticals, Inc.
                                 1 Cedar Brook Drive
                                 Cranbury, New Jersey 08512
                                 Fax: (609) 495-0907
                                 Attention: Andrew I. Koven, Executive Vice
                                            President, General Counsel &
                                            Corporate Secretary

               with a copy to:   Holland & Knight LLP
                                 701 Brickell Avenue
                                 Suite 3000
                                 Miami, Florida 33131
                                 Fax: (305) 789-7799
                                 Attention: Rodney H. Bell

               For BPI:          Biovail Pharmaceuticals, Inc.
                                 700 Route 202/206
                                 North, Bridgewater, New Jersey 08807
                                 Fax: (908) 927-1401
                                 Attention: President

               with a copy to:   Biovail Corporation
                                 7150 Mississauga Road
                                 Mississauga, Ontario
                                 Canada
                                 L5N 8M5
                                 Fax: 905.286.3050
                                 Chief Legal Officer

               with a copy to:   Morgan, Lewis & Bockius LLP
                                 502 Carnegie Center
                                 Princeton, NJ 08540
                                 Fax: (609) 919-6701
                                 Attention: Randall B. Sunberg

                                      -50-
<PAGE>
     16.4 INDEPENDENT CONTRACTORS. In making and performing this Agreement, BPI
and Kos shall act at all times as independent contractors and nothing contained
in this Agreement shall be construed or implied for any purpose to create an
agency, partnership, limited partnership, joint venture or employer and employee
relationship between BPI and Kos and this Agreement shall not be construed to
suggest otherwise. At no time shall one Party make commitments or incur any
charges or expenses for or in the name of the other Party. Except as otherwise
provided in this Agreement, each Party shall be solely responsible for its own
costs and expenses associated with this Agreement.

     16.5 NON-SOLICITATION. Except as otherwise set forth in Article 7, from and
after the Effective Date until the **** anniversary of the termination or
expiration of this Agreement, neither Party shall, and shall cause each of its
Affiliates not to, directly or indirectly, without the other Party's prior
written consent, solicit the employment of any employee (or former employee
bound by a non-competition obligation) of the other Party or its Affiliates with
whom it has come in contact in conducting activities under this Agreement;
provided, however, that the foregoing provisions shall not apply to (a) a
general advertisement or solicitation program that is not specifically targeted
at such persons or (b) the solicitation of any employee after such time as such
employee's employment has been terminated by the other Party or its Affiliate.

     16.6 UNITED STATES DOLLARS. References in this Agreement to "Dollars" or
"$" shall mean the legal tender of the United States of America.

     16.7 NO STRICT CONSTRUCTION. This Agreement has been prepared jointly and
shall not be strictly construed against either Party.

     16.8 ASSIGNMENT. Neither Party shall sell, transfer, assign, subcontract,
pledge or otherwise dispose of, whether voluntarily, involuntarily, by operation
of Law or otherwise, this Agreement or any of its rights or obligations under
this Agreement without the prior written consent of the other Party (which
consent may be granted, withheld or conditioned at such other Party's sole and
absolute discretion); provided, however, that (a) either Party may assign,
transfer or subcontract this Agreement or any of its rights or obligations under
this Agreement without the consent of the other Party to any Affiliate of such
Party and (b) either Party may assign, transfer or subcontract this Agreement or
any of its rights or obligations under this Agreement without the consent of the
other Party to any Third Party with which it merges or consolidates, or to which
it transfers all or substantially all of its assets to which this Agreement
relates; provided further, however, that to the extent Kos wishes to assign,
transfer or subcontract this Agreement (or any of its rights or obligations
under this Agreement) pursuant to clauses (a) or (b) above and the assignee or
transferee is incorporated or otherwise organized outside the United States or
is not a resident of the United States for United States federal income tax
purposes, then the prior written consent of BPI shall be required for such
assignment, transfer or subcontracting, to the extent any future payments due to
BPI under this Agreement would be subject to any withholding taxes or other
taxes to be withheld at source, such consent not to be unreasonably withheld.
The assigning Party (unless it is not the surviving entity) shall remain jointly
and severally liable with, and shall guarantee the performance of, the relevant
Affiliate or Third Party assignee under this Agreement, and the relevant
Affiliate assignee, Third Party assignee or surviving entity shall assume in
writing all of the assigning Party's obligations under

                                      -51-
<PAGE>
this Agreement. Any purported assignment or transfer in violation of this
Section 16.8 shall be void ab initio and of no force or effect.

     16.9 GOVERNING LAW. Resolution of all disputes arising out of or related to
this Agreement or the performance, enforcement, breach or termination of this
Agreement and any remedies relating thereto shall be governed by and construed
under the substantive laws of the State of New York, without regard to conflicts
of law rules that would provide for application of the law of a jurisdiction
outside New York.

     16.10 COUNTERPARTS. This Agreement may be executed in two counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. Signatures provided by facsimile
transmission shall be deemed to be original signatures.

     16.11 FURTHER ACTIONS. Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement. Without limiting the generality of the foregoing, BPI shall (or shall
cause its applicable Affiliate to), upon the reasonable request of Kos and, to
the extent required by Kos's GAAP or Securities and Exchange Commission
requirements, provide Kos with audited or unaudited historical financial
information related to the Product, as reasonably requested by Kos, within a
reasonable timeframe after request by Kos, in each case, (i) solely to the
extent reasonably practicable and (ii) at Kos's expense.

     16.12 SEVERABILITY. If any one or more of the provisions of this Agreement
is held to be invalid or unenforceable by any court of competent jurisdiction
from which no appeal can be or is taken, the provision shall be considered
severed from this Agreement and shall not serve to invalidate any remaining
provisions hereof. The Parties shall make a good faith effort to replace any
invalid or unenforceable provision with a valid and enforceable one such that
the objectives contemplated by the Parties when entering this Agreement may be
realized.

     16.13 AMBIGUITIES. Ambiguities, if any, in this Agreement shall not be
construed against any Party, irrespective of which Party may be deemed to have
authored the ambiguous provision.

     16.14 HEADINGS. The headings for each article and section in this Agreement
have been inserted for convenience of reference only and are not intended to
limit or expand on the meaning of the language contained in the particular
article or section.

     16.15 NO WAIVER. Any delay in enforcing a Party's rights under this
Agreement or any waiver as to a particular default or other matter shall not
constitute a waiver of such Party's rights to the future enforcement of its
rights under this Agreement, excepting only as to an express written and signed
waiver as to a particular matter for a particular period of time.

                            [SIGNATURE PAGE FOLLOWS.]

                                      -52-
<PAGE>
     IN WITNESS WHEREOF, the Parties have executed this Supply and Employee
Agreement in by their proper officers as of the date first written above.

KOS PHARMACEUTICALS, INC.               BIOVAIL PHARMACEUTICALS, INC.

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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00088-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00088-of-00352.parquet"}]]