EXHIBIT 10.9.4


                              EMPLOYMENT AGREEMENT

            EMPLOYMENT  AGREEMENT (this  "Agreement"),  dated as of December 18,
2002, by and between  Pharmaceutical  Resources,  Inc., a New Jersey corporation
("Resources"), and Dr. Arie Gutman ("Executive").

                                     R E C I T A L S :

            A.    WHEREAS,  Executive is presently  employed by Resources in the
capacities of President and Chief  Executive  Officer of FineTech  Laboratories,
Ltd., a company organized under the laws of the State of Israel ("FineTech" and,
together with Resources,  "Employer"),  and currently  serves as a member of the
Board of Directors of Resources (the "Board"); and

            B.    WHEREAS,  Employer  and  Executive  desire to enter  into this
Agreement in order for  Executive  to continue to perform the duties  associated
with his positions with Employer on the terms and conditions set forth herein.

            In  consideration  of the  mutual  promises  herein  contained,  the
parties hereto hereby agree as follows:

            1.    EMPLOYMENT.

                  1.1.  GENERAL.  Resources  hereby  employs  Executive  in  the
capacities  of  President  and  Chief  Executive  Officer  of  FineTech  at  the
compensation  rate and benefits set forth in Section 2 hereof for the Employment
Term  (as  defined  in  Section  3.1  hereof).  Executive  hereby  accepts  such
employment,  subject to the terms and conditions herein  contained.  In all such
capacities,   Executive   shall   perform   and  carry  out  such   duties   and
responsibilities as may be assigned to him from time to time by the Board and by
the Chief Executive Officer of Resources reasonably  consistent with Executive's
positions  and this  Agreement,  and  shall  report  to the  Board and the Chief
Executive  Officer  of  Resources.  Executive  shall  be  headquartered  in  the
Company's New York office and FineTech's  Haifa,  Israel office and make himself
available  to the  Company  at  such  times  and  places  as the  Company  shall
reasonably request during the Employment Term.

                  1.2.  TIME   DEVOTED  TO  POSITION.   Executive,   during  the
Employment Term, shall devote  substantially all of his business time, attention
and skills to the business and affairs of Employer.

                  1.3.  CERTIFICATIONS.  Whenever  the Chief  Executive  Officer
and/or  Chief  Financial  Officer of  Resources  are  required  by law,  rule or
regulation  or  requested  by  any  governmental  authority  or by  auditors  of
Resources,  its wholly-owned  subsidiary,  Par Pharmaceutical,  Inc. ("Par"), or
FineTech  to  provide  certifications  with  respect  to  Resources's,  Par's or
FineTech's  financial  statements  or filings with the  Securities  and Exchange
Commission  or any  other  governmental  authority,  Executive  shall  sign such
certifications as may be reasonably  requested by the such officers,  Resources,
Par and/or  FineTech,  with such exceptions as Executive deems necessary to make
such certifications accurate and not misleading.



            2.    COMPENSATION AND BENEFITS.

                  2.1.  SALARY.  At all times  Executive is employed  hereunder,
Employer  shall  pay  to  Executive,   and  Executive  shall  accept,   as  full
compensation for any and all services  rendered and to be rendered by him during
such period to Employer in all  capacities,  including,  but not limited to, all
services that may be rendered by him to any of Employer's existing subsidiaries,
entities and organizations hereafter formed,  organized or acquired by Employer,
directly  or  indirectly   (each,   a   "Subsidiary"   and   collectively,   the
"Subsidiaries"),  the  following:  (i) a base  salary  at  the  annual  rate  of
$300,000,  or at such increased rate as the Board (through its  Compensation and
Stock Option Committee), in its sole discretion, may hereafter from time to time
grant to Executive,  subject to adjustment in accordance with Section 2.2 hereof
(as so  adjusted,  the "Base  Salary");  and (ii) any  additional  bonus and the
benefits set forth in Sections 2.3, 2.4 and 2.5 hereof. The Base Salary shall be
payable in accordance with the regular payroll practices of Employer  applicable

                             EXHIBIT 10.9.4 - Page 1
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to senior  executives,  less such deductions as shall be required to be withheld
by applicable law and regulations or otherwise.

                   2.2. ADJUSTMENTS IN BASE SALARY. On each October 1 during the
Employment Term, the Base Salary shall be increased by that percentage,  if any,
by which the Consumer Price Index, Urban Wage Earners and Clerical Workers,  for
the New York City metropolitan  area,  published by the United States Government
as of the month of September of such year exceeds such Index for the immediately
preceding September.

                  2.3.  BONUS. Subject to Section 3.3 hereof, Executive shall be
entitled to an annual bonus during the  Employment  Term in such amount (if any)
as  determined  by the  Board  based on such  performance  criteria  as it deems
appropriate,   including,   without  limitation,   Executive's  performance  and
Employer's  earnings,   financial  condition,  rate  of  return  on  equity  and
compliance with regulatory requirements.

                  2.4.  STOCK   OPTIONS.   Executive   shall  be   entitled   to
participate in stock option and similar equity plans of Employer.  In connection
herewith,  Executive  has been  granted  options to purchase  300,000  shares of
common  stock  of  Resources  on  terms  and  conditions  set  forth in the 2001
Performance Equity Plan and Executive's Stock Option Agreement with Resources.

                  2.5.  EXECUTIVE BENEFITS.

                        2.5.1.      EXPENSES.  Employer shall promptly reimburse
Executive for expenses he reasonably  incurs in connection  with the performance
of his duties (including business travel and entertainment  expenses) hereunder,
all in accordance  with  Employer's  policies with respect  thereto as in effect
from time to time.

                        2.5.2.      EMPLOYER PLANS.  Executive shall be entitled
to  participate  in such  employee  benefit  and welfare  plans and  programs as
Employer may from time to time generally offer or provide to executive  officers
of Employer or its Subsidiaries, including, but not limited to, participation in
life  insurance,  health and  accident,  medical  plans and  programs and profit
sharing and retirement plans.

                        2.5.3.      VACATION.  Executive  shall be  entitled  to
four (4) weeks of paid  vacation  per  calendar  year,  prorated for any partial
year.

                        2.5.4.      AUTOMOBILE. Employer shall provide Executive
with an automobile cash allowance commensurate with his titles and positions.

                        2.5.5.      LIFE   INSURANCE.   Employer   shall  obtain
(PROVIDED, that Executives qualifies on a non-rated basis) a term life insurance
policy,  the premiums of which shall be borne by Employer and the death benefits
of which shall be payable to  Executive's  estate,  or as otherwise  directed by
Executive, in the amount of $1 million throughout the Employment Term.

            3.    EMPLOYMENT TERM; TERMINATION.

                  3.1.  EMPLOYMENT TERM.  Executive's employment hereunder shall
commence  on the date hereof and,  except as  otherwise  provided in Section 3.2
hereof,  shall continue for such term (the "Initial  Term")  commencing on April
12,  2002 (the "Start  Date") and  terminating  on the fifth  (5th)  anniversary
thereof.   Thereafter,   this  Agreement  shall  automatically  be  renewed  for
successive  one-year  periods  commencing on the fifth (5th)  anniversary of the
Start Date (the  Initial  Term,  together  with any such  subsequent  employment
period(s),  being referred to herein as the "Employment Term"), unless Executive
or Employer shall have provided a Notice of  Termination  (as defined in Section
3.4.1 hereof) in respect of its or his election not to renew the Employment Term
to the other  party at least  ninety (90) days prior to such  termination.  Upon
non-renewal of the  Employment  Term pursuant to this Section 3.1 or termination
pursuant to Sections 3.2.1 through 3.2.6 hereof,  inclusive,  Executive shall be
released from any duties hereunder (except as set forth in Section 4 hereof) and
the  obligations  of Employer to Executive  shall be as set forth in Section 3.3
hereof only.

                  3.2.  EVENTS  OF   TERMINATION.   The  Employment  Term  shall
terminate upon the occurrence of any one or more of the following events:

                             EXHIBIT 10.9.4 - Page 2
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                        3.2.1.      DEATH.  In the event of  Executive's  death,
the Employment Term shall terminate on the date of his death.

                        3.2.2.      WITHOUT  CAUSE BY  EXECUTIVE.  Executive may
terminate  the  Employment  Term at any time  during  such  Term for any  reason
whatsoever  by  giving  a  Notice  of  Termination  to  Employer.  The  Date  of
Termination  pursuant to this Section  3.2.2 shall be thirty (30) days after the
Notice of Termination is given.

                        3.2.3.      DISABILITY.  In  the  event  of  Executive's
Disability (as hereinafter defined),  Employer may, at its option, terminate the
Employment  Term by giving a Notice of Termination  to Executive.  The Notice of
Termination  shall  specify  the Date of  Termination,  which  date shall not be
earlier  than thirty  (30) days after the Notice of  Termination  is given.  For
purposes of this  Agreement,  "Disability"  means  disability  as defined in any
long- term  disability  insurance  policy  provided  by  Employer  and  insuring
Executive, or, in the absence of any such policy, the inability of Executive for
180 days in any twelve  (12) month  period to  substantially  perform his duties
hereunder as a result of a physical or mental illness, all as determined in good
faith by the Board.

                        3.2.4.      CAUSE.   Employer   may,   at  its   option,
terminate the Employment Term for "Cause" based on objective factors  determined
in good faith by a majority of the Board as set forth in a Notice of Termination
to  Executive  specifying  the  reasons for  termination  and the failure of the
Executive to cure the same within ten (10) days after  Employer shall have given
the Notice of  Termination;  PROVIDED,  HOWEVER,  that in the event the Board in
good  faith  determines  that  the  underlying   reasons  giving  rise  to  such
determination cannot be cured, then the ten- (10) day period shall not apply and
the  Employment  Term shall  terminate on the date the Notice of  Termination is
given.  For  purposes  of this  Agreement,  "Cause"  shall mean (i)  Executive's
conviction of, guilty or no contest plea to, or confession of guilt of, a felony
or other crime involving moral  turpitude;  (ii) an act or omission by Executive
in connection with his employment that constitutes fraud,  criminal  misconduct,
breach of fiduciary duty,  dishonesty,  gross negligence,  malfeasance,  willful
misconduct  or other  conduct  that is  materially  harmful  or  detrimental  to
Employer;  (iii)  a  material  breach  by  Executive  of  this  Agreement;  (iv)
continuing  failure to perform  such  duties as are  assigned  to  Executive  by
Employer in accordance with this Agreement,  other than a failure resulting from
a Disability;  (v) Executive's knowingly taking any action on behalf of Employer
or any of its affiliates without appropriate authority to take such action; (vi)
Executive's knowingly taking any action in conflict of interest with Employer or
any of its affiliates given Executive's position with Employer; and/or (vii) the
commission of an act of personal  dishonesty by Executive that involves personal
profit in connection with Employer.

                        3.2.5.      WITHOUT CAUSE BY EMPLOYER.  Employer may, at
its option, terminate the Employment Term for any reason or no reason whatsoever
(other than for the reasons set forth elsewhere in this Section 3.2) by giving a
Notice of Termination to Executive.  The Notice of Termination shall specify the
Date of Termination, which date shall not be earlier than thirty (30) days after
the Notice of Termination is given.

                        3.2.6.      EMPLOYER'S  MATERIAL BREACH.  Executive may,
at his option,  terminate the Employment Term upon Employer's material breach of
this Agreement and the  continuation  of such breach for more than ten (10) days
after  written  demand for cure of such breach is given to Employer by Executive
(which  demand  shall  identify  the  manner in which  Employer  has  materially
breached this  Agreement).  Employer's  material  breach of this Agreement shall
mean (i) the failure of Employer to make any payment that it is required to make
hereunder to Executive  when such payment is due or within two (2) business days
thereafter;  (ii) the  assignment  to  Executive,  without  Executive's  express
written consent, of duties inconsistent with his positions, responsibilities and
status with  Employer,  or a change in Executive's  reporting  responsibilities,
titles or offices or any plan, act, scheme or design to constructively terminate
the  Executive,  or any removal of Executive  from his positions  with Employer,
except in connection with the termination of the Employment Term by Employer for
Cause,  without  Cause or  Disability  or as a result  of  Executive's  death or
voluntary resignation or by Executive other than pursuant to this Section 3.2.6;
or (iii) a reduction by Employer in Executive's Base Salary.

                  3.3.  CERTAIN OBLIGATIONS OF EMPLOYER FOLLOWING TERMINATION OF
THE EMPLOYMENT  TERM.  Following  termination  of the Employment  Term under the
circumstances described below, Employer shall pay to Executive or his estate, as
the case may be, the following  compensation and provide the following  benefits
in full satisfaction and final settlement of any and all claims and demands that
Executive  now  has  or  hereafter  may  have  hereunder  against  Employer.  In
connection  with  Executive's  receipt of any or all monies and  benefits  to be
received  pursuant to this Section 3.3,  Executive shall not have a duty to seek
subsequent  employment  during  the  period in which he is  receiving  severance

                             EXHIBIT 10.9.4 - Page 3
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payments and the Severance Amount (as defined in Section 3.3.2 hereof) shall not
be reduced solely as a result of Executive's  subsequent employment by an entity
other than Employer.

                        3.3.1.      FOR CAUSE.  In the event that the Employment
Term is terminated by Employer for Cause, Employer shall pay to Executive,  in a
single  lump-sum,  an amount equal to any unpaid but earned Base Salary  through
the Date of Termination (as defined in Section 3.4.3 hereof).


                        3.3.2.      WITHOUT CAUSE BY EMPLOYER;  MATERIAL  BREACH
BY EMPLOYER;  ELECTION NOT TO RENEW BY EMPLOYER OR  EXECUTIVE;  WITHOUT CAUSE BY
EXECUTIVE  AFTER INITIAL  TERM. In the event that,  (i) during the Initial Term,
Executive's  employment  is  terminated  by Employer  pursuant to Section  3.2.5
hereof or by Executive pursuant to Section 3.2.6 hereof,  (ii) after the Initial
Term, Executive's employment is terminated by Employer pursuant to Section 3.2.5
hereof or by Executive  pursuant to Sections  3.2.2 or 3.2.6 hereof or (iii) the
Employment  Term is not renewed  pursuant to Section 3.1 hereof,  Employer shall
pay to Executive,  subject to Executive's continued compliance with the terms of
Section 4 hereof, an amount equal to one-and-a-half  (1.5) times the Base Salary
in effect at such applicable time (the "Severance Amount");  PROVIDED,  HOWEVER,
that in the event  Executive  shall  have  received  any  royalties  during  the
Employment  Term  pursuant  to  that  certain  letter  agreement  (the  "Royalty
Agreement"),  dated August 23, 2002,  between  Resources and FineTech Ltd., with
respect to royalty payments relating to Latanoprost,  the Severance Amount shall
be equal to one (1) times such Base Salary. Any payments made in accordance with
this  Section  3.3.2  shall be made in twelve (12) equal  installments  over the
course  of one  (1)  year  from  the  Date of  Termination  in  accordance  with
Employer's regular payroll practices.

                        3.3.3       WITHOUT  CAUSE BY EXECUTIVE  DURING  INITIAL
TERM. In the event that the  Employment  Term is  terminated  during the Initial
Term by Executive  during the Initial  Term  pursuant to Section  3.2.2  hereof,
Employer shall pay to Executive,  in a single  lump-sum,  an amount equal to any
unpaid but earned Base Salary through the Date of Termination.

                        3.3.4.      DEATH,  DISABILITY.  In the  event  that the
Employment Term is terminated by reason of Executive's death pursuant to Section
3.2.1 hereof or by reason of  Executive's  Disability  pursuant to Section 3.2.3
hereof, Employer shall pay to Executive,  subject to, in the case of Disability,
Executive's  continued  compliance with Section 4 hereof,  the Severance Amount,
less any life insurance and/or disability insurance received by Executive or his
estate pursuant to insurance policies provided by Employer  (including  pursuant
to Section 2.5.5 hereof), payable in accordance with Section 3.3.2 hereof.

                        3.3.5.      POST-EMPLOYMENT TERM BENEFITS.  In the event
Executive  is  terminated  pursuant  to Sections  3.2.1  through  3.2.6  hereof,
inclusive,  or either  Employer or Executive  elects not to renew this Agreement
pursuant to Section 3.1  hereof,  Employer  shall  reimburse  Executive  for any
unpaid expenses  pursuant to Section 2.5.1 hereof and if Executive is terminated
pursuant  to Sections  3.2.3,  3.2.5 or 3.2.6  hereof or Employer  elects not to
renew this  Agreement  pursuant to Section 3.1  hereof,  Employer  shall pay, on
behalf of Executive, for a period equal to twenty-four (24) months from the Date
of  Termination  (the  "Benefits  Period"),  subject  to  Executive's  continued
compliance  with the terms of  Section 4 hereof,  all life  insurance,  medical,
health and accident,  and disability  plans and programs in which  Executive was
entitled to participate immediately prior to the Date of Termination;  PROVIDED,
that Executive's  continued  participation is legally possible under the general
terms and provisions of such plans and programs; and PROVIDED,  further, that in
the  event  Executive  is  entitled  to  equal  or  comparable  benefits  from a
subsequent  employer  during the Benefits  Period,  Employer's  obligation  with
respect thereto pursuant to this Section 3.3.5 shall end as of such date. In the
event  that  Executive's  participation  in any such plan or  program is barred,
Employer,  at its sole cost and expense,  shall use its commercially  reasonable
efforts to provide Executive with benefits  substantially  similar to those that
Executive  was  entitled  to  receive  under  such  plans and  programs  for the
remainder of the Benefits Period.

                        3.3.6.      STOCK OPTIONS.
                                    -------------

                        (a)         If,  within  twelve (12) months  following a
Change of Control  (as  defined  in  Executive's  Stock  Option  Agreements)  of
Employer, the Employment Term is terminated other than for Cause, then Executive
(or his estate) shall have  twenty-four  (24) months from the date of such event
to exercise such stock  options;  PROVIDED,  that the relevant stock option plan
remains in effect and such stock  options  shall not have  otherwise  expired in
accordance with the terms thereof. In connection  therewith,  Employer agrees to
use commercially reasonable efforts to amend Executive's Stock Option Agreements
if necessary to effectuate the provisions of this Section 3.3.6(a).

                             EXHIBIT 10.9.4 - Page 4
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                        (b)         In  the   event  the   Employment   Term  is
terminated by Employer  pursuant to Section 3.2.5 hereof and the reason for such
termination  is  not  related  to  the  performance  of  Employer  (financially,
operationally  or  otherwise)  or of  Executive  in his duties  with  respect to
Employer,  the Board shall cause the  Compensation and Stock Option Committee to
consider in good  faith,  but in the  Committee's  sole  discretion,  whether to
accelerate  the vesting of all or a portion of  Executive's  then unvested stock
options  and  whether to extend the period of time within  which  Executive  may
exercise his vested stock options.

                        (c)         In  the   event  the   Employment   Term  is
terminated by Executive pursuant to Section 3.2.6 hereof, then all stock options
theretofore  granted to Executive  shall thereupon vest and Executive shall have
twenty-four (24) months from such date to exercise such options;  PROVIDED, that
the relevant  stock option plan remains in effect and such stock  options  shall
not have otherwise  expired in accordance with the terms thereof.  In connection
therewith,  Employer  agrees to use  commercially  reasonable  efforts  to amend
Executive's Stock Option Agreements if necessary to effectuate the provisions of
this Section 3.3.6(c).

                  3.4.  DEFINITIONS.
                        -----------


                        3.4.1.      "NOTICE OF TERMINATION" DEFINED.  "Notice of
Termination"  means a written  notice that  indicates  the specific  termination
provision  relied  upon by  Employer  or  Executive  and,  except in the case of
termination  pursuant to Sections 3.2.1, 3.2.2 or 3.2.5 hereof, which sets forth
in reasonable detail the facts and circumstances  claimed to provide a basis for
termination of the Employment Term under the termination provision so indicated.

                        3.4.2.      "DATE  OF  TERMINATION"  DEFINED.  "Date  of
Termination" means such date as the Employment Term is expired if not renewed or
terminated in accordance with Sections 3.1 or 3.2 hereof.

            4.    CONFIDENTIALITY AND NONSOLICITATION; PROPERTY RIGHTS.

                  4.1.  "CONFIDENTIAL   INFORMATION"   DEFINED.    "Confidential
Information"  means  any and all  information  (oral  or  written)  relating  to
Employer or any  Subsidiary or any person  controlling,  controlled by, or under
common  control  with  Employer  or any  Subsidiary  or any of their  respective
activities,  including, but not limited to, information relating to: technology,
research,  test procedures and results,  machinery and equipment;  manufacturing
processes;   financial  information;   products;  identity  and  description  of
materials  and  services  used;  purchasing;   costs;  pricing;   customers  and
prospects;  advertising,  promotion and  marketing;  and selling,  servicing and
information   pertaining  to  any   governmental   investigation,   except  such
information  which  becomes  public,  other  than as a result of a breach of the
provisions of Section 4.2 hereof.

                  4.2.  NON-DISCLOSURE  OF CONFIDENTIAL  INFORMATION.  Executive
shall  not  at any  time  (other  than  as may be  required  or  appropriate  in
connection  with the  performance by him of his duties  hereunder),  directly or
indirectly,   use,   communicate,   disclose  or  disseminate  any  Confidential
Information  in any manner  whatsoever  (except as may be  required  under legal
process by subpoena or other court order).

                  4.3.  CERTAIN ACTIVITIES.  Executive shall not, while employed
by  Resources  and for a  period  of  three  (3)  years  following  the  Date of
Termination,  directly or indirectly, hire, offer to hire, entice away or in any
other  manner  persuade or attempt to persuade  any  officer,  employee,  agent,
lessor, lessee, licensor, licensee,  customer,  prospective customer or supplier
of  Employer  or any of its  Subsidiaries  to  discontinue  or alter  his or its
relationship with Employer or any of its Subsidiaries.

                  4.4.  NON-COMPETITION.  Executive shall not, while employed by
Resources and for a period of one (1) year  following  the Date of  Termination,
engage or  participate  in,  directly  or  indirectly  (whether  as an  officer,
director, employee, partner, consultant, equityholder, lender or otherwise), any
business  that  manufactures,  markets or sells  products  that compete with any
product of Employer that is  significant  to Employer's  business based on sales
and/or  profitability of any such product as of the Date of Termination,  unless
the Employment  Term is terminated by Employer  pursuant to Section 3.2.5 hereof
or by Executive properly pursuant to Section 3.2.6 hereof.  Nothing herein shall
prohibit  Executive from being a passive owner of not more than one (1%) percent
of any  publicly-traded  class of  capital  stock  of any  entity  engaged  in a
competing business.

                             EXHIBIT 10.9.4 - Page 5
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                  4.5.  PROPERTY RIGHTS; ASSIGNMENT OF INVENTIONS.  With respect
to  information,  inventions  and  discoveries  or any interest in any copyright
and/or other property right developed, made or conceived of by Executive, either
alone or with others,  at any time during his employment by Employer and whether
or not within working hours,  arising out of such employment or pertinent to any
field of  business or research  in which,  during such  employment,  Employer is
engaged or (if such is known to or  ascertainable  by Executive) is  considering
engaging, Executive hereby agrees:

                  (a)   that all such information, inventions and discoveries or
any  interest in any  copyright  and/or  other  property  right,  whether or not
patented or patentable, shall be and remain the exclusive property of Employer;

                  (b)   to disclose promptly to an authorized  representative of
Employer all such  information,  inventions  and  discoveries  or any  copyright
and/or other property right and all information in Executive's  possession as to
possible applications and uses thereof;

                  (c)   not to file any patent application  relating to any such
invention or discovery  except with the prior  written  consent of an authorized
officer of Employer (other than Executive);

                  (d)   that  Executive  hereby  waives and releases any and all
rights  Executive  may  have  in  and  to  such   information,   inventions  and
discoveries,  and  hereby  assigns  to  Executive  and/or  its  nominees  all of
Executive's  right, title and interest in them, and all Executive's right, title
and interest in any patent,  patent  application,  copyright  or other  property
right based  thereon.  Executive  hereby  irrevocably  designates  and  appoints
Employer  and each of its duly  authorized  officers and agents as his agent and
attorney-in-fact  to act for him and on his  behalf  and in his stead to execute
and file any document and to do all other lawfully permitted acts to further the
prosecution,  issuance and enforcement of any such patent,  patent  application,
copyright or other  property right with the same force and effect as if executed
and delivered by Executive; and

                  (e)   at the  request  of  Employer,  and  without  expense to
Executive,  to execute  such  documents  and perform such other acts as Employer
deems  necessary  or  appropriate,  for  Employer  to  obtain  patents  on  such
inventions in a jurisdiction  or  jurisdictions  designated by Employer,  and to
assign to  Employer  or its  designee  such  inventions  and any and all  patent
applications and patents relating thereto.

                  4.6.  INJUNCTIVE  RELIEF.  The parties hereby  acknowledge and
agree that (a) Employer will be irreparably  injured in the event of a breach by
Executive of any of his obligations  under this Section 4; (b) monetary  damages
will  not be an  adequate  remedy  for any such  breach;  (c)  Employer  will be
entitled to  injunctive  relief,  in addition to any other  remedy  which it may
have, in the event of any such breach;  and (d) the existence of any claims that
Executive may have against Employer,  whether under this Agreement or otherwise,
will not be a defense to the  enforcement by Employer of any of its rights under
this Section 4.

                  4.7.  NON-EXCLUSIVITY AND SURVIVAL. The covenants of Executive
contained  in this  Section  4 are in  addition  to,  and not in  lieu  of,  any
obligations  that  Executive may have with respect to the subject matter hereof,
whether by contract,  as a matter of law or  otherwise,  and such  covenants and
their  enforceability  shall survive any  termination of the Employment  Term by
either party and any  investigation  made with respect to the breach  thereof by
Employer at any time. 5. MISCELLANEOUS PROVISIONS.

                  5.1.  SEVERABILITY.  If,  in any  jurisdiction,  any  term  or
provision hereof is determined to be invalid or unenforceable, (a) the remaining
terms and  provisions  hereof shall be  unimpaired;  (b) any such  invalidity or
unenforceability   in  any   jurisdiction   shall  not   invalidate   or  render
unenforceable such provision in any other  jurisdiction;  and (c) the invalid or
unenforceable  term or provision  shall, for purposes of such  jurisdiction,  be
deemed  replaced by a term or provision that is valid and  enforceable  and that
comes closest to expressing the intention of the invalid or  unenforceable  term
or provision.

                  5.2.  EXECUTION  IN   COUNTERPARTS.   This  Agreement  may  be
executed in one or more  counterparts,  and by the different  parties  hereto in
separate  counterparts,  each of which shall be deemed to be an original but all
of which taken  together  shall  constitute  one and the same agreement (and all
signatures  need not appear on any one  counterpart),  and this Agreement  shall
become  effective when one or more  counterparts  has been signed by each of the
parties hereto and delivered to each of the other parties hereto.

                             EXHIBIT 10.9.4 - Page 6
<PAGE>

                  5.3.  NOTICES.  All  notices,   requests,  demands  and  other
communications hereunder shall be in writing and shall be deemed duly given upon
receipt when delivered by hand,  overnight  delivery or telecopy (with confirmed
delivery),  or  three  (3)  business  days  after  posting,  when  delivered  by
registered or certified mail or private courier service, postage prepaid, return
receipt requested, as follows:

      If to Employer, to:

            Pharmaceutical Resources, Inc.
            One Ram Ridge Road
            Spring Valley, New York  10977
            Attention:  Chairman
            Telecopy No.:  (845) 425-7922

      Copy to:

            Stephen A. Ollendorff, Esq.
            Whitney John Smith, Esq.
            Kirkpatrick & Lockhart LLP
            599 Lexington Avenue
            New York, New York  10022
            Telecopy No.:  (212) 536-3901

      If to Executive, to:

            Dr. Arie Gutman
            c/o Pharmaceutical Resources, Inc.
            One Ram Ridge Road
            Spring Valley, New York  10977

or to such other  address(es)  as a party hereto shall have  designated  by like
notice to the other parties hereto.

                  5.4.  AMENDMENT.   No  provision  of  this  Agreement  may  be
modified,  amended,  waived  or  discharged  in any  manner  except by a written
instrument executed by both Resources and Executive.

                  5.5.  ENTIRE  AGREEMENT.  This Agreement and Executive's Stock
Option  Agreement  constitute  the entire  agreement of the parties  hereto with
respect to the subject  matter  hereof,  and supersede all prior  agreements and
understandings  of the  parties  hereto,  oral or  written,  including,  but not
limited to, any agreement between Executive and International Specialty Products
Inc. or ISP FineTech Ltd. or any of their  respective  affiliates (the "Previous
Employers");  PROVIDED,  HOWEVER, that if there shall be a conflict between this
Agreement and Executive's  Stock Option  Agreement,  the terms of this Agreement
shall  govern;  and  PROVIDED,   FURTHER,   that  Executive  hereby  agrees  and
acknowledges  that under no  circumstances  whatsoever shall Employer assume any
liabilities, or be responsible for any obligations,  monetary or otherwise, owed
by any of the Previous  Employers to Executive.  Executive  and Employer  hereby
agree that each of such agreements and  understandings  is hereby superseded and
of no further force and effect, and that this Agreement shall be effective as of
the date  hereof.  Notwithstanding  anything to the contrary  contained  herein,
nothing in this  Section 5.5 shall impair  Executive's  rights in respect of the
Royalty Agreement.

                  5.6.  APPLICABLE  LAW. This Agreement shall be governed by and
construed in  accordance  with the laws of the State of New York  applicable  to
contracts made and to be wholly performed therein.

                  5.7.  HEADINGS. The headings contained herein are for the sole
purpose of  convenience  of reference,  and shall not in any way limit or affect
the  meaning  or  interpretation  of any of the  terms  or  provisions  of  this
Agreement.

                  5.8.  BINDING  EFFECT;  SUCCESSORS AND ASSIGNS.  Executive may
not delegate any of his duties or assign his rights  hereunder.  This  Agreement
shall inure to the benefit of, and be binding upon, the parties hereto and their
respective  heirs,  legal  representatives,  successors  and permitted  assigns.
Employer shall require any successor  (whether direct or indirect and whether by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business  and/or  assets of  Employer,  by an  agreement  in form and  substance
reasonably  satisfactory to Executive,  to expressly assume and agree to perform

                             EXHIBIT 10.9.4 - Page 7
<PAGE>

this  Agreement in the same manner and to the same extent that Employer would be
required to perform if no such succession had taken place.

                  5.9.  WAIVER, ETC. The failure of either of the parties hereto
to at any time  enforce any of the  provisions  of this  Agreement  shall not be
deemed  or  construed  to be a waiver of any such  provision,  nor to in any way
affect the validity of this  Agreement or any  provision  hereof or the right of
either of the parties hereto  thereafter to enforce each and every  provision of
this  Agreement.  No  waiver  of any  breach  of any of the  provisions  of this
Agreement shall be effective unless set forth in a written  instrument  executed
by the party against whom or which enforcement of such waiver is sought,  and no
waiver of any such  breach  shall be  construed  or deemed to be a waiver of any
other or subsequent breach.

                  5.10. CAPACITY,  ETC.  Executive and Employer hereby represent
and warrant to the other that,  as the case may be: (a) he or it has full power,
authority and capacity to execute and deliver this Agreement, and to perform his
or its obligations hereunder; (b) such execution, delivery and performance shall
not (and with the giving of notice or lapse of time or both would not) result in
the breach of any  agreements or other  obligations to which he or it is a party
or he or it is otherwise  bound;  and (c) this Agreement is his or its valid and
binding obligation in accordance with its terms.

                  5.11. ENFORCEMENT; JURISDICTION. If any party institutes legal
action to enforce or interpret the terms and conditions of this  Agreement,  the
prevailing  party shall be awarded  reasonable  attorneys' fees at all trial and
appellate  levels,  and the expenses and costs incurred by such prevailing party
in connection therewith.  Any legal action, suit or proceeding,  in equity or at
law,  arising  out  of  or  relating  to  this  Agreement  shall  be  instituted
exclusively  in the State or Federal  courts  located in the State and County of
New York and each party agrees not to assert,  by way of motion, as a defense or
otherwise, in any such action, suit or proceeding,  any claim that such party is
not subject  personally to the jurisdiction of any such court,  that the action,
suit or proceeding is brought in an  inconvenient  forum,  that the venue of the
action,  suit or proceeding is improper or should be  transferred,  or that this
Agreement  or the  subject  matter  hereof may not be enforced in or by any such
court.  Each party further  irrevocably  submits to the jurisdiction of any such
court in any such action, suit or proceeding. Any and all service of process and
any other  notice in any such  action,  suit or  proceeding  shall be  effective
against any party if given personally or by registered or certified mail, return
receipt  requested or by any other means of mail that requires a signed receipt,
postage  prepaid,  mailed  to such  party as  herein  provided.  Nothing  herein
contained  shall be  deemed  to  affect or limit the right of any party to serve
process in any other manner permitted by applicable law.

                  5.12. ARBITRATION.
                        -----------

                        (a)         Any   dispute   under   Section   3  hereof,
including,  but not limited to, the  determination by the Board of a termination
for Cause pursuant to Section 3.2.4 hereof,  or in respect of the breach thereof
shall be settled by arbitration  in the Borough of Manhattan,  City of New York.
The arbitration shall be accomplished in the following manner.  Either party may
serve upon the other party  written  demand  that the  dispute,  specifying  the
nature thereof,  shall be submitted to  arbitration.  Within ten (10) days after
such demand is given in accordance with Section 5.3 hereof,  each of the parties
shall  designate an arbitrator and provide  written  notice of such  appointment
upon the other party. If either party fails within the specified time to appoint
such arbitrator,  the other party shall be entitled to appoint both arbitrators.
The two (2)  arbitrators so appointed shall appoint a third  arbitrator.  If the
two arbitrators  appointed fail to agree upon a third arbitrator within ten (10)
days after their  appointment,  then an application  may be made by either party
hereto,  upon  written  notice to the other party,  to the American  Arbitration
Association  (the  "AAA"),  or  any  successor  thereto,  or if  the  AAA or its
successor  fails to appoint a third  arbitrator  within ten (10) days after such
request,  then either party may apply,  with written notice to the other, to the
Supreme Court of the State of New York, New York County,  for the appointment of
a third arbitrator,  and any such appointment so made shall be binding upon both
parties hereto.

                        (b)         The  decision  of the  arbitrators  shall be
final and binding upon the parties. The party against whom the award is rendered
(the  "non-prevailing  party")  shall pay all fees and expenses  incurred by the
prevailing  party  in  connection  with  the  arbitration  (including  fees  and
disbursements of the prevailing party's counsel), as well as the expenses of the
arbitration  proceeding.  The arbitrators  shall determine in their decision and
award which of the parties is the prevailing party,  which is the non-prevailing
party,  the  amount of the fees and  expenses  of the  prevailing  party and the
amount of the arbitration expenses.  The arbitration shall be conducted,  to the
extent consistent with this Section 5.12, in accordance with the then prevailing
rules of commercial  arbitration  of the AAA or its successor.  The  arbitrators
shall have the right to retain and  consult  experts and  competent  authorities
skilled in the matters under arbitration, but all consultations shall be made in

                             EXHIBIT 10.9.4 - Page 8
<PAGE>

the presence of both parties, who shall have the full right to cross-examine the
experts and  authorities.  The  arbitrators  shall render their award,  upon the
concurrence  of at least two of their  number,  not later than  thirty (30) days
after the appointment of the third  arbitrator.  The decision and award shall be
in writing, and counterpart copies shall be delivered to each of the parties. In
rendering  an award,  the  arbitrators  shall have no power to modify any of the
provisions  of  this  Agreement,  and the  jurisdiction  of the  arbitrators  is
expressly  limited  accordingly.  Judgment  may be  entered  on the award of the
arbitrators and may be enforced in any court having jurisdiction.



                            [SIGNATURE PAGE FOLLOWS]

                             EXHIBIT 10.9.4 - Page 9
<PAGE>





<PAGE>


            IN WITNESS  WHEREOF,  this Agreement has been executed and delivered
by the parties hereto as of the date first above written.



                              PHARMACEUTICAL RESOURCES, INC.


                              By: /s/ KENNETH I. SAWYER
                                  -----------------------
                                  Name:Kenneth I. Sawyer
                                  Title:Chief Executive Officer



                              /s/ DR. ARIE GUTMAN
                              -------------------
                              DR. ARIE GUTMAN



                            EXHIBIT 10.9.4 - Page 10