EXHIBIT 10.5 SUPPLY AND EMPLOYEE AGREEMENT BETWEEN BPI AND KOS

Supply Agreement

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Title: EXHIBIT 10.5 SUPPLY AND EMPLOYEE AGREEMENT BETWEEN BPI AND KOS
Governing Law: New York Date: 8/9/2005
Industry: Biotechnology and Drugs Law Firm: with a copy to: Holland & Knight LLP; with a copy to: Morgan, Lewis & Bockius LLP Sector: Healthcare

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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

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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

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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

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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

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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

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16.13 Ambiguities................................................... 52

16.14 Headings...................................................... 53

16.15 No Waiver..................................................... 53

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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

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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,

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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

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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

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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.

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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;

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.

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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.

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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:

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DEFINITION SECTION

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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

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DEFINITION SECTION

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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

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DEFINITION SECTION

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Transferred Employees Section 7.1

$ Section 16.6

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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.

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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

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;

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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.

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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.

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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

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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.

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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

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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

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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

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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

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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

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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

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