TOLL MANUFACTURING AGREEMENT

TOLL MANUFACTURING AGREEMENT

THIS TOLL MANUFACTURING AGREEMENT (the " Agreement ") is made on 19 ^th of December, 2005 (" Effective Date ") between ALPHARMA BRANDED PRODUCTS DIVISION INC., a Delaware corporation (" Alpharma "), and PUREPAC PHARMACEUTICAL CO., a Delaware corporation (" Purepac "). Alpharma and Purepac are each individually a " Party " and are collectively the " Parties ".

WHEREAS, Alpharma will grant Purepac a non-exclusive, royalty free license to use Alpharma's Intellectual Property to allow Purepac to manufacture Kadian for Alpharma;

WHEREAS, Purepac desires to manufacture and supply Alpharma with certain of Alpharma's requirements of such product; and

WHEREAS, the Parties are willing to carry out the foregoing pursuant to the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and the payments to be made by Alpharma to Purepac, all as hereinafter set forth, Alpharma and Purepac agree as follows:

1.     Definitions

In this Agreement the following terms shall have the respective meanings set forth below:

" 4 Wall Costs " shall mean $**** per blended cost per one thousand (1000) capsules.

" Affiliate " shall mean a legal entity controlling, controlled by or under common control with the Party in question. "Control" means having the right to direct the operation of the business by equity participation and/or contract.

" API " shall mean morphine sulphate meeting the requirements of the Specifications.

" Calendar Year " shall mean one calendar year, starting January 1 of each year.

" Certificate of Conformity " shall mean a document which confirms that the Product conforms with cGMP and other Regulatory Documents.

" cGMP " shall mean the interpretations and industry practices used in connection with 21 CFR ICH Q7 A by the FDA from time to time.

" Confidential Information " shall mean any information and data concerning the Product or any Derivative, including any technical or commercial information, which may come within the knowledge of either Party in connection with its performance under this Agreement, whether orally or in writing, whether learned prior to, on, or after the Effective Date, including, without limitation, any and all trade secrets, inventions, Know-how, designs, formulations, processes, specifications, data, manuals, supplier lists, customer lists, purchase and sales records, marketing information, in each case whether developed by either Party.

" DEA " shall mean the United States Drug Enforcement Agency or any successor agency.

" Derivative " shall mean, any morphine-based NDA product or Section 505(b)(2) product (exclusive of the Product) for which Alpharma may seek manufacture hereunder.

" DMF " shall mean a Drug Master File, a confidential submission containing the information necessary to support use of Product in applications approved by the FDA or any other national, regional or local government or any subdivision or agency thereof.

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

" Governmental Agency " shall mean the FDA, DEA or any state or local government or any subdivision or agency thereof within the Territory.

" Intellectual Property " shall mean Trademarks, trade dress, copyrights, Know-How, Patents, Confidential Information and other intellectual property rights related to Kadian or any Derivative.

" Indemnitee " shall mean the person or persons indemnified, or entitled, or claiming to be entitled to be indemnified, pursuant to Article 23.

" Indemnitor " shall mean the person having the obligation to indemnify the Indemnitee pursuant to Article 23.

" Kadian " means Kadian morphine sulfate extended release capsules.

" Know-how " shall mean all proprietary information, data, processes (including the production process for morphine sulphate) and technology relating to the Product and Derivatives, including the manufacturing process, line extensions and additional dosage forms of the Product, the anti-abuse delivery system and alcohol resistant coating process, whether for use in connection with Kadian or any other pharmaceutical product and any alterations or improvements on such system or process; excluding sustained release technology and any general manufacturing processes presently utilized in the Manufacturing process for the Product (to the extent not covered by a Patent) which is used by Purepac on the date hereof for manufacture of pharmaceutical products other than the Product.

" Liabilities and Damages " shall mean any and all claims, liabilities, actions, suits, proceedings, judgments, orders, fines, penalties, losses, injuries, damages (excluding consequential damages), costs and expenses (including, without limitation, costs of defense, settlements, and reasonable legal fees and expenses) of whatever kind or character, however occurring or arising and regardless of the basis of liability or legal principal involved (including, without limitation, contract, warranty, negligence, strict liability, other tort, violation of law or otherwise).

" Losses " shall refer to " Purepac Losses " or " Alpharma Losses ", as referred to in Article 23.

" Manufacture " shall mean the production, packaging and labelling of the Products in a form ready for consumer use and marked with Alpharma's pertinent Trademark(s), such Trademark(s) being at all times the property of Alpharma.

" Patents " means any patents or patent applications relating to any Product or a Derivative now or hereafter held by Alpharma, including without limitation patents as to which Alpharma is a licensee under that certain "Technology Transfer and License Agreement" between FH Faulding & Co. Limited, as licensor and Faulding Pharmaceuticals Inc. (assigned to Alpharma; the "Faulding Patents"), and the patents and patent applications listed in Appendix 3 .

" Product " shall mean Kadian as presently manufactured pursuant to the current NDA and any related supplements to the NDA (whether currently effective or approved hereafter).

" Product Facility " or the " Site " shall mean the plant and equipment located at Purepac's plant in Elizabeth, New Jersey which is registered with the FDA to the full extent required.

" Purchase Price " shall have the meaning referred to in Article 16.

" Recall " shall mean a withdrawal of the Product from the marketplace after it has left the possession of the Parties hereto pursuant to an order from the FDA or a reasonable decision by either of the Parties hereto that such recall is necessary to comply with the rules and regulations of the FDA.

" Regulatory Documents " shall include the NDA and such other similar documents used to support the Manufacture, sale and use of Product in applications approved by Governmental Agencies and licenses, certificates or other written approvals issued by Governmental Agencies.

" Specifications " shall mean the specifications for Kadian as are set forth in Appendix 1 . Appendix 1 may be amended or supplemented from time to time by Alpharma (including without limitation, amendments or supplements required in connection with any Product or any Derivative), or as required by the FDA, or other orders or regulations of a Government Agency; provided that any amendment in or supplement to the Specifications which is not required by a Government Agency shall be subject to Purepac's consent, which shall not be unreasonably withheld or delayed.

" Trademarks " shall mean the trademarks relating to Kadian or a Derivative now or hereafter held by Alpharma, including without limitation the trademarks listed in Appendix 2 .

" Term " shall have the meaning provided in Section 19.1.

" Territory " shall mean the United States and its territories, commonwealths and possessions.

" Test Protocols " shall mean the test protocols set forth in Appendix 5.

"Third Party", and collectively " Third Parties ", shall mean any individual, corporation, partnership, joint venture, association, trust, unincorporated organization or Governmental Agency or other entity, other than Purepac and Alpharma and their respective Affiliates.

2.     Grant of License

2.1     Alpharma hereby grants to Purepac during the Term of this Agreement a non-exclusive, non-transferable, royalty free license (or, sublicense to the extent Alpharma holds such rights pursuant to the aforesaid Technology Transfer and License Agreement) to use the Intellectual Property for use in or in connection with the Manufacture of Products to be sold to Alpharma pursuant hereto and not for any product otherwise manufactured and/or sold by Purepac whether within or outside the Territory.

2.2     To the extent Alpharma has not already done so, promptly after the date of this Agreement, Alpharma shall make available to Purepac the Intellectual Property not previously furnished to Purepac and which Alpharma determines is necessary for Purepac to perform its obligations hereunder or which Purepac reasonably requests for such purpose. All Intellectual Property previously furnished to Purepac on the subject matter hereof shall be deemed to have been provided pursuant to the terms of this Agreement.

2.3     Purepac recognizes that the Intellectual Property belongs to Alpharma and shall continue to solely belong to Alpharma during and after the Term of this Agreement. Purepac agrees that it will not file for or use a trademark identical to or causing confusion with the Trademarks either within or outside the Territory.

2.4     To the extent any goodwill attached to the rights in and to the Trademarks are deemed to accrue to Purepac, Purepac hereby assigns any and all such rights at such time as they may be deemed to accrue to Alpharma and hereby agrees to execute any and all documents reasonably requested by Alpharma as necessary to accomplish such assignment.

2.5     All labels, tags, packaging and printed matter bearing the Trademarks shall be timely approved by Alpharma and supplied by Purepac.

3.     Supply and Sale of Product

3.1     Manufacture.

3.1.1   During the Term of this Agreement, Purepac agrees to Manufacture at the Product Facility and exclusively sell and deliver the Product to Alpharma for marketing and sale in the Territory in full compliance with the terms of this Agreement.

3.1.2   At Alpharma's option, Purepac will Manufacture and supply any Derivative pursuant to the terms hereof, and upon the exercise of such option any such Derivative shall be considered a Product hereunder, subject only to the Purchase Price for the Derivative being equal to ****. The Parties agree that on January 1, 2009, the 4 Wall Costs shall be adjusted via a multiplier equal to the most recently published manufacturing index for the past calendar year published by the United States Government or such other index as to be agreed upon in good faith by the Parties for the pharmaceutical industry.

3.1.3   Upon Alpharma's prior written consent, not to be unreasonably withheld, Purepac shall have the right, at costs to be borne exclusively by Purepac, to transfer the Manufacture of the Products to an alternate facility ("New Facility"). Any such New Facility shall be subject to the same standards under this agreement as the Product Facility, and Purepac's responsibilities under this agreement shall not be altered due to the transfer. Alpharma agrees that in the event Purepac elects to transfer Manufacture to a New Facility, it shall provide Purepac with all reasonable cooperation necessary (including, but not limited to the performance of bioequivalence studies and other testing, at Purepac's cost) to effectuate such a transfer.

3.2     Alpharma reserves the right to manufacture or have manufactured by Third Parties the Product for sale in the Territory; provided only that Alpharma (i) first satisfy any purchase obligations set forth herein and (ii) give notice to Purepac at least **** prior to the first calendar quarter during which Alpharma intends to reduce its order for the Products by **** percent (****%) from the quantity of the Products Alpharma had ordered in the same calendar quarter in the prior year (the " Reduction Amount ") in order for a Third Party to manufacture such Reduction Amount (or greater amount) of the Products for Alpharma. Alpharma's obligations under this Section 3.2 shall be waived but only to the extent of any failure by Purepac to timely deliver Products in accordance with a purchase order issued pursuant to Section 7.2, any breach of this Agreement by Purepac, or any force majeure inability of Purepac to timely supply the Product in the quantities required by this Agreement.

3.3     Alpharma shall market and sell the Product in full conformity with all Regulatory Documents. All other terms and conditions of sale, including without limitation price, shall be at the full discretion of Alpharma.

4.     Regulatory Documents

4.1     The Parties shall reasonably cooperate to submit, in satisfactory form and timely manner consistent with industry standards, such additional Regulatory Documents to the FDA and such other relevant Governmental Agencies as Alpharma finds appropriate. The Regulatory Documents shall be submitted in the name of Alpharma, (or where required by law, in the name of Purepac), with Alpharma acting as exclusive agent.

4.2     Alpharma shall (i) prepare any additional Regulatory Documents in Alpharma's layout, for filing with any Governmental Agency with the cooperation of Purepac (which shall include providing Alpharma access to relevant testing and manufacturing information required for inclusion in such Regulatory Documents), (ii) submit the Regulatory Documents to the relevant Governmental Agency in the Territory, (iii) be responsible for the review and acceptance process of the Regulatory Documents and conduct all correspondence with the Governmental Agency to this effect, (iv) maintain and update the Regulatory Documents when necessary or advisable after Governmental Agency acceptance of the Regulatory Documents is obtained and (v) provide a copy of any accepted Regulatory Documents submitted to the Governmental Agencies and any filed updates concerning changes to Purepac.

4.3     Purepac shall cooperate at Alpharma's request and at Purepac's own expense, with Alpharma in all matters relating to the Regulatory Documents, including any reporting requested or required by any Governmental Agency.

4.4     All rights to the Regulatory Documents belong to Alpharma. Purepac acknowledges and agrees that Alpharma's ownership of the NDA requires the following:

4.4.1   Only Alpharma shall submit documents to Governmental Agencies.

4.4.2   Only Alpharma shall submit any update, variation, supplement or annual update to the NDA to the relevant authorities.

4.4.3   Only Alpharma shall issue letters of authorization/access (" LoA's ").

4.4.5   All questions from authorities and customers relating to the NDA shall be directed to Alpharma and Alpharma shall be responsible for any related communications to Purepac, authorities and/or customers.

4.4.5   Purepac shall not contact or respond directly or indirectly to any Governmental Agency with respect to Products and Derivatives unless legally required to do so, or if failure to do so would materially adversely affect Purepac.

4.5     Alpharma hereby grants Purepac for the Term and solely for the purposes of supplying Product to Alpharma in the Territory under this Agreement a non-exclusive, non-transferable, royalty-free license to use all information contained within the Regulatory Documents as is reasonably required to enable Purepac to fulfill its obligations hereunder.

4.6     Alpharma shall have the right, at its discretion during the Term, to identify and contract with additional manufacturers for the Product and to take all action necessary to qualify such additional suppliers with the FDA including without limitation the preparation and filing of all necessary Regulatory Documents. Purepac shall, upon reasonable advance written notice by Alpharma, cooperate with Alpharma in all reasonable manners in connection with the qualification of such additional suppliers, including without limitation any reasonably necessary access to the Product Facility (and in any event only during business hours) and testing and manufacturing information.

5.     Supply and Testing of Components

5.1     Alpharma shall be responsible for selecting the suppliers of all components (API, raw and packaging materials) necessary to produce the Product, consistent with the Specifications and the Regulatory Documents. With respect to the API supplier, in addition to selecting that supplier, Alpharma shall manage the business relationship therewith.

5.2     Purepac shall test all API to ensure that API meets Specifications prior to use for Manufacturing of the Product. The results of such testing shall be available within thirty (30) days of receipt of API by Purepac. Purepac shall promptly report any failure to meet Specifications to Alpharma.

5.3     Purepac and Alpharma shall, from time to time, and in a timely manner, cooperate with each other in all reasonable efforts to obtain the required Regulatory Documents from the DEA to authorize the purchase of API in sufficient quantities to Manufacture at least ****-percent (****%) of the forecasts (both binding and non-binding) submitted by Alpharma pursuant to Section 7.1 for the period to be covered by the authorization being sought from the DEA. Alpharma shall make (and Purepac shall facilitate and participate in) all necessary filings and undertake all discussions with the DEA reasonably necessary or appropriate to obtain the necessary Regulatory Documents. Alpharma shall have the right to review all filings before submission to the DEA and to participate in any discussions with the DEA.

6.     Purepac's responsibilities

6.1     Purepac hereby warrants and undertakes to Alpharma that it shall adhere to the Specifications for the Manufacture, packaging and labeling of the Product and shall comply in all respects with the applicable laws and regulations and the requirements of any Governmental Agency having jurisdiction over such Manufacture, packaging and labeling.

6.2     Purepac hereby warrants and undertakes to Alpharma that, in no event later than one hundred and twenty (120) days following the Closing (as such term is defined in the Stock and Asset Purchase Agreement signed by the Parties of even date herewith), it shall maintain all registrations, permits, licenses, consents and/or approvals from all Governmental Agencies of the Territory in place as of the Closing which are necessary for Purepac to carry out the Manufacture and other obligations of Purepac hereunder with respect to the Product, and shall obtain (with cooperation from Alpharma where reasonably necessary) all such registrations, permits, licenses, consents and/or approvals which shall become necessary during the Term.

6.3     Purepac further warrants and undertakes to Alpharma that it shall, upon request by Alpharma, promptly deliver all documents evidencing the effecting of any of the documentation requirements, registrations, recordals and/or filings stated in Section 6.2 to Alpharma for its inspection and/or retention.

6.4     Purepac at its own cost shall maintain the Product Facility and promptly repair or replace the equipment used to Manufacture the Product as necessary to perform its obligations hereunder in accordance with Purepac's past practice. Purepac is also responsible for all Product Facility costs related to the Manufacture of the Product, including all capital investments required to implement Alpharma's manufacturing process except any future capital investment for equipment that will be dedicated solely to the Manufacture of the Product which, subject to Alpharma's prior written approval, shall be purchased by Purepac but paid for and owned by Alpharma; provided that Alpharma shall not be required to pay for any such dedicated equipment unless (i) such equipment becomes necessary as a result of increased quantities of Products ordered hereunder by Alpharma and then (ii) only if such additional equipment would be necessary if the equipment then at the Product Facility continues to be utilized to Manufacture the Products in the same manner, and for the same periods of time, as it was used immediately prior to the request by Purepac for the purchase of dedicated equipment or (Hi) if such equipment is requested by Alpharma.

6.5     Subject to the fulfillment of its supply obligations hereunder, nothing in this Agreement shall limit Purepac from using the Product Facility and the equipment therein to manufacture products other than the Products.

6.6     Purepac warrants that it will Manufacture the Product in accordance with cGMP, the Specifications, and all applicable laws in order to enable Alpharma to sell the Product in the Territory. Alpharma shall make any final determination with respect to Product disposition. Purepac agrees that if Alpharma requests a change in the Specifications, Purepac will use its reasonably commercial efforts to deliver the Products in conformance with the changed Specifications. If Purepac is unable to deliver the Products in conformance with the changed Specifications Alpharma may terminate this Agreement with six (6) months written notice. In addition Purepac undertakes and warrants that it will, at costs to be borne by Alpharma, alter the Specifications and/or the testing required by this Agreement if such alterations are required by the FDA, or other orders or regulations of any other Government Agency (including pharmacopendial requirements). Purepac shall implement such alterations in time to allow Alpharma to sell the Product on the date that the altered Specifications or testing requirements are to take effect. Alpharma will provide reasonable technical consultation to implement any changes requested or required by this Section.

6.7     Purepac will be responsible for creating and retaining manufacturing, analytical and distribution records, testing materials, undertaking production and quality controls, and analyses relating to the Product and the raw materials (including the API) contained in the Product in accordance with cGMP and shall provide Alpharma access to this information upon reasonable notice to Purepac.

6.8     Purepac will conduct relevant stability studies on Product in accordance with cGMP and the NDA to assure validity of such Product for its shelf-life.

6.9     Purepac will promptly inform Alpharma in writing of any noted incidents occurring or abnormal results found at any time during the Manufacture or testing of the Product or its raw materials (including API) and refrain from any activity that will adversely affect the quality of the Product.

6.10    From and after the receipt of each Annual Forecast Quantity, Purepac shall take all action reasonably necessary to assure that the Product Facility has and will maintain available capacity and ability to timely deliver Products in accordance with the Annual Forecast Quantity. Purepac shall timely deliver Products as required by the Quarterly Delivery Forecast provided for in this Agreement as defined in Article 7. Product shall be shipped to Alpharma (or to a third party facility at Alpharma's direction) no later than **** from the release date for Product on the Certificate of Conformity. All Products so delivered shall be salable in the marketplace pursuant to the Specifications and relevant Regulatory Documents for at least **** after the date of delivery of the Product to Alpharma hereunder. Purepac acknowledges that time is of the essence with respect to Purepac's obligations hereunder and that prompt and timely performance of all such obligations is strictly required for Alpharma in light of its commitments to Third Parties. In the event that Purepac is unable to meet its obligations hereunder, Purepac shall be liable to Alpharma for all reasonable costs of cover incurred by Alpharma. If Alpharma is not able to obtain cover due to the fact that no Third Party is then currently able or authorized to Manufacture the Product, Purepac shall then be liable for Liabilities and Damages actually suffered or incurred by Alpharma.

6.11    Packaging design and the contents of product inserts and labels shall be provided by Alpharma in a timely manner to permit Purepac to meet the delivery requirements set forth in Section 7. Purepac shall package the Product in accordance with the Specifications and all applicable laws. Alpharma may request that certain Product be delivered in bulk without packaging and in the event that Alpharma so requests all packaging costs shall be deducted from the Purchase Price for all Product subject to such request. Materials and products procured by Purepac and used in the Product (excluding materials and products supplied by Alpharma or its designee) shall be suitable for their intended purpose and meet applicable Specifications and quality standards.

6.12   Upon reasonable written notice (in no event less than seven (7) days) of Manufacture of the Product or quality control related to the Product by Purepac to Alpharma, a designated employee of Alpharma shall remain on-site at the Product Facility (or New Facility) as Alpharma's manufacturing coordinator during the course of said manufacturing or quality control (" Alpharma Coordinator "). Purepac shall provide such individual with a reasonably suitable and adequate work environment (commensurate with office and work environment of a Purepac employee at a similar level and pay grade), including reasonable office space and reasonable access to and use of Purepac's facilities. The parties agree that any Alpharma Coordinator shall be required to sign a Confidentiality Agreement (to be negotiated between the parties in good faith) before having access to the Product Facility (or New Facility) as contemplated by this Section 6.12.

6.13    The parties have entered into a Technical (GMP) Agreement in the form as set forth in Appendix 4 .

7.     Forecasts and Orders

7.1     On or before **** of each year (except as otherwise mutually agreed), Alpharma shall submit to Purepac in writing Alpharma's non-binding estimate of its desired quantity of production of morphine coated pellets for use in the Products for the next Calendar Year (the " Annual Forecast Quantity ").

7.2     Upon the Effective Date and thereafter at least **** prior to the beginning of each calendar quarter, Alpharma shall submit to Purepac in writing:

7.2.1   Alpharma's firm and binding forecast, specifying the quantity (by individual SKU) of Product Alpharma wishes to be available for delivery during the upcoming quarter, together with any instructions for special packaging (the " Quarterly Delivery Forecast ") Alpharma's firm and binding Quarterly Delivery Forecast for the upcoming quarter shall represent the minimum quantity that Alpharma agrees to purchase during that quarter. At least **** prior to the beginning of a calendar quarter, Alpharma may, at its option, increase its Quarterly Delivery Forecast for said quarter by placing a written purchase order for an increased amount; provided however that, while Purepac shall use its reasonable efforts to fulfill any such increased order it shall not be obligated to supply an increased order to the extent it exceeds an additional **** percent (****%) of the original Quarterly Delivery Forecast.

7.2.2   Forecasts for each of the **** calendar quarters immediately following the quarter for which a purchase order must be submitted (by SKU) concurrent with the delivery of said Quarterly Delivery Forecast. It is understood that such forecasts constitute an estimate of the future requirements of Alpharma and do not comprise a binding commitment of Alpharma. Alpharma shall use its reasonable commercial endeavors to provide Purepac with accurate forecasts.

7.2.3   All Products shall be purchased by way of submission of purchase orders by Alpharma. Alpharma shall submit a binding purchase order for Products conforming with the Quarterly Delivery Forecast, and setting forth requested delivery dates (which shall not require that any more than **** percent (****%) of the Quarterly Delivery Forecast, adjusted as permitted herein, be delivered in any single month) at least **** prior to the commencement of said calendar quarter. A purchase order will represent a firm commitment by Alpharma to purchase the Products included thereon. Purepac shall accept any purchase order which is ****-percent (****%) or less of Alpharma's Quarterly Delivery Forecast. Within **** of receipt of a purchase order, Purepac shall advise Alpharma whether it is able to fulfill the order and the date of shipment; provided that it shall have no right to object to the quantity or delivery dates requested by Alpharma to the extent such request is within the scope permitted by this Section 7.2. In case Purepac has not replied within the stated time limit, Purepac shall be deemed to have accepted the order as placed.

7.3     Purepac shall advise Alpharma promptly of any event or circumstance that may make Purepac unable to deliver the Product as contemplated by this Agreement. A failure by Alpharma to purchase the Product provided for in any purchase order which Purepac is unable to deliver shall not constitute a breach by Alpharma of any term of this Agreement.

7.4     Purchase orders shall be placed at least **** in advance of the requested delivery date.

7.5     The terms and conditions of this Agreement shall prevail if the terms and conditions stated in Alpharma's