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March 25, 2002


Pharmaceutical Resources, Inc.
One Ram Ridge Road
Spring Valley, NY  10977
USA

                        11 PRODUCT DEVELOPMENT AGREEMENT
                        --------------------------------

      Genpharm Inc. ("GENPHARM") wishes to expand its business relationship with
Pharmaceutical  Resources,  Inc. ("PRI") to include the development,  supply and
distribution  in the  Territory  (as  defined  below) of generic  pharmaceutical
products   (identified   below)  not  currently  covered  by  existing  business
relationships between us, upon the basic business terms of this letter agreement
(the "LETTER AGREEMENT"), as follows:

1.    The  molecules  which  are to be  the  subject  matter  of  this  expanded
      relationship  are as follows  (each,  a "PRODUCT"  and  collectively,  the
      "PRODUCTS"):

            *** tablets 10 mg

            *** tabs 5, 10, 20, 40 mg

            *** tabs, 5 mg/6.25 mg, 10 mg/12.5 mg, 20 mg/12.5 mg and 20 mg/25 mg

            *** XR 500 mg

            *** tabs 15, 30, 45 mg

            *** tabs .25, .50, 1, 2, 3, 4 mg

            *** tabs 25, 50 mg

            *** chewable tabs 5, 25 mg

            *** tabs 125, 250, 500 mg

            *** tabs 250 mg

            *** capsules 20, 40 mg

2.    Genpharm  (directly,  through its  Affiliates  or third  parties)  will be
      responsible for the  development of the Products,  for applying for an FDA
      Product  approval to market the  Products in the  Territory  (the ANDA for
      such Products to be registered in Genpharm's name or in the name of one of
      its  Affiliates)  and to supply the Products to PRI or its  affiliates for
      commercialization in the Territory.



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3     Genpharm  reserves  the right to  manufacture  the  Products,  but PRI and
      Genpharm  will discuss,  in good faith,  opportunities  to maximize  Gross
      Profit  through  the  technical   transferring  of  manufacturing   and/or
      packaging  to PRI  and/or  by  allowing  PRI to  suggest  alternative  raw
      material   sources.   Both   parties  must  agree  with  any  shifting  of
      manufacturing  and/or  packaging  to PRI as well as with any raw  material
      suppliers  suggested by PRI. The costs of conversion  will be funded *** %
      by PRI and *** % by Genpharm.

4.    The  obligations  of  Genpharm  to  develop,  manufacture  and  supply the
      Products to PRI and the obligations of PRI to  commercialize  the Products
      in the Territory  will be upon the terms set forth in Schedules "A" to "L"
      annexed  hereto.  Terms and phrases  used in this Letter  Agreement or the
      Schedules  hereto and not otherwise  defined  shall have their  respective
      meanings set forth in Schedule "M" hereto.

5.    Subject to adjustment  pursuant to Paragraph 8 and 10 below, Gross Profits
      will be shared *** % to PRI and *** % to Genpharm.

6.    PRI shall pay to Genpharm a non-refundable  fee of $*** U.S. in respect of
      ***  Tablets  10 mg and ***  Tablets  15, 30 and 45 mg  (collectively  the
      "APPROVED PRODUCTS" and individually an "APPROVED PRODUCT"). PRI shall pay
      to Genpharm an  additional  non-refundable  fee of $*** U.S.  upon the FDA
      accepting  for  filing   Genpharm's   (and/or  its   Affiliates')   ANDA's
      submissions in respect of 6 of the 9 remaining  Products  contemplated  by
      this  Agreement;   provided,   however,   that  if  Genpharm  (and/or  its
      Affiliates) have not had its (their) ANDA submissions  accepted for filing
      by the FDA in respect of 6 Products  (other than Approved  Products) prior
      to April 1,  2004  then the  additional  non-refundable  fee of $***  U.S.
      herein  contemplated  shall be paid to  Genpharm  at the rate of $*** U.S.
      upon  acceptance  for  filing  by the  FDA of an ANDA  submission  made by
      Genpharm  (or its  Affiliates)  in  respect  of a Product  (other  than an
      Approved  Product),  the  portions of the  additional  non-refundable  fee
      accruing in respect of Products whose ANDA  submissions have been accepted
      for  filing  by the FDA prior to April 1, 2004 to be paid on April 1, 2004
      and the remaining  instalments of the additional  non-refundable fee to be
      paid as an ANDA submission for a Product is accepted for filing by the FDA
      (provided that the aggregate instalments of the additional  non-refundable
      fee paid to Genpharm shall not exceed $*** U.S.).

      In the event that third  party  agents are used to develop a Product,  PRI
      will also pay to Genpharm *** % of the associated research and development
      costs  incurred  to such  third  party in  accordance  with  the  relevant
      development agreement.

7.    Subject to the final sentence of this Paragraph 7, PRI will be responsible
      for *** % of the costs of  development  raw material,  as well as *** % of
      the costs of producing  the  bio-batches  and  conducting  the  applicable
      bio-studies and *** % of the costs of producing the necessary  validation,
      confirmation  and  exhibition  batches of each  Product  (irrespective  of
      whether any of such costs were incurred prior to or subsequent to the date
      hereof).  PRI will pay its share of such costs to Genpharm  within  thirty



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      (30) days after its receipt of an invoice therefor from Genpharm. Genpharm
      will not  forward  an  invoice  to PRI for  PRI's  share  of the  costs of
      producing  the  bio-batches  and  conducting  the  applicable  biostudy in
      respect of any Product until the earlier of (i) the  acceptance for filing
      of Genpharm's (or its Affiliate's)  submission of an ANDA for such Product
      and (ii) the expiry of 6 months  from the date upon which the  biostudy is
      completed or abandoned. PRI shall be only responsible for its share of the
      cost of the  development  raw  materials,  producing  the bio  batches and
      conducting  the  applicable  biostudies  and  the  cost of  producing  the
      necessary  validation,  confirmation and exhibition  batches in respect of
      the Approved Products to the extent that PRI's *** % share thereof exceeds
      $*** U.S.

8.    PRI shall pay to  Genpharm,  within 30 days of the  receipt  of an invoice
      therefor  (which  invoice  shall be  accompanied  with a copy of the third
      party invoice evidencing the expense in question), *** % of the legal fees
      and  disbursements  and other  reasonable  expenses  actually  incurred by
      Genpharm  and its  Affiliates  (irrespective  of whether  such legal fees,
      disbursements  or other  expenses were incurred  prior to or subsequent to
      the date  hereof) in  connection  with legal  matters  relating  to patent
      issues and/or the development and registration of each Product  including,
      without   limiting  the   generality   of  the   foregoing,   legal  fees,
      disbursements  and other reasonably  expenses  incurred in connection with
      patent certification ( hereinafter referred to as "PATENT OPINIONS") to be
      made by Genpharm or its  Affiliate  in the ANDA to be  submitted  for such
      Product  (including,  without  limitation,  reasonable  costs of obtaining
      initial  patent  opinions  regarding  the validity and  enforceability  of
      patents in the Territory and non-infringement thereof by such Product), to
      investigate and defend the claim of any Person (hereafter referred to as a
      "CLAIM") that the Product as developed by Genpharm (and/or its Affiliates)
      infringes any patent or other proprietary right of such Person enforceable
      in the Territory and to seek, defend, intervene in or appeal a decision of
      the  FDA  or of any  court  of  competent  jurisdiction  in the  Territory
      (hereinafter  referred to as a  "CITIZEN'S  PETITION")  relating to market
      exclusivity  claimed by Genpharm  or by any other  Person in relation to a
      Product (such legal fees,  disbursements  and other  expenses  incurred by
      Genpharm and its Affiliates in relation to a Product being herein referred
      to  collectively  as the "LEGAL  EXPENSES").  Genpharm  shall  control the
      defense  of any such  Claim  and the  prosecution  and/or  defense  of any
      Citizen's  Petition  and PRI shall  have the right to  participate  in the
      defense or prosecution  of same.  Genpharm will provide PRI with access to
      counsel  of  Genpharm  or  its   applicable   Affiliate   engaged  in  the
      prosecution, defense or investigation of such Claim, Citizen's Petition or
      Patent  Opinion to discuss with and disclose to PRI possible  future Legal
      Expenses to be incurred in the  investigation,  defense or  prosecution of
      the Claim,  Citizen's  Petition or Patent Opinion and to provide access to
      all relevant documentation with regard to the same. Genpharm and PRI shall
      cooperate in good faith to develop a strategy  acceptable to both Genpharm
      and PRI for the  defense or  prosecution  of any such  Claim or  Citizen's
      Peitition  and  in the  strategy  for  patent  certification  under  ANDA.
      Genpharm  shall not admit or assume  liability for (on behalf of itself or
      PRI) or settle or compromise any Claim or Citizen's  Petition  without the
      prior written consent of PRI, such consent not to be unreasonably withheld
      or unduly  delayed.  If the Legal  Expenses  incurred by Genpharm  and its
      Affiliates  in  respect  of a Product  exceeds  $*** US then,  at any time



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      thereafter  and prior to receipt by Genpharm or its  Affiliate  of a final
      ANDA  approval  from the FDA for such  Product,  PRI shall  have the right
      defer its obligation to fund *** % of any future Legal  Expenses  incurred
      by Genpharm and its  Affiliates  with respect to such Product by notice in
      writing to Genpharm (a "NOTICE"), which Notice shall be effective upon its
      receipt by  Genpharm  and shall  defer the  obligation  of PRI to fund any
      Legal  Expenses  incurred by Genpharm and its  Affiliates  with respect to
      such Product after the date upon which such Notice is received by Genpharm
      (the  Legal   Expenses   incurred  after  receipt  of  such  Notice  being
      hereinafter  referred to as the "FUTURE  LEGAL  EXPENSES"  and PRI's *** %
      share  thereof  being  hereinafter  referred  to as  the  "Deferred  Legal
      Expenses") but, for greater certainty,  PRI shall pay to Genpharm,  within
      30 days of the receipt of an invoice therefor, *** % of the Legal Expenses
      incurred by Genpharm and its  Affiliates  to and  including  the date upon
      which such Notice is so received by Genpharm. Deferral by PRI hereunder of
      its obligation to fund Future Legal Expenses  incurred by Genpharm and its
      Affiliates  in  respect  of one or more  Products  shall  not  affect  the
      obligation of PRI to fund, on a current basis,  Legal Expenses incurred by
      Genpharm and its  Affiliates  with respect to other  Products  (subject to
      PRI's rights to defer its  obligations  to fund such expenses with respect
      to any other Product or Products in accordance with the provisions hereof)
      or  reduce  or  eliminate  PRI's  obligations  to pay the  Deferred  Legal
      Expenses  to  Genpharm.  The  obligation  of PRI to  fund  Legal  Expenses
      (including  Future Legal Expenses)  incurred in respect of a Product shall
      terminate  upon  termination  of this Letter  Agreement in respect of such
      Product  provided  that PRI shall remain  liable to Genpharm for the Legal
      Expenses  (including  Future  Legal  Expenses)  relating  to such  Product
      incurred prior to such date of termination,  which liability shall survive
      the  termination  of this  agreement.  In the event that PRI exercises its
      right  pursuant  to this  paragraph  to defer its  obligation  to fund any
      Future Legal Expenses in respect of a Product (hereinafter in this Section
      referred to as the "SPECIFIC  PRODUCT")  then the Deferred  Legal Expenses
      owing to Genpharm  for PRI in respect of such  Specific  Product  shall be
      paid to Genpharm as a first  charge  against  PRI's share of Gross  Profit
      earned  by PRI from  commercialization  of such  Specific  Product  in the
      Territory provided that:

            (i) if the full amount of Deferred Legal Expenses owing the Genpharm
      are not paid to Genpharm within 6 months of the first commercialization of
      such Specific  Product in the Territory by PRI (the date upon which such 6
      month period expires being hereinafter referred to as the "EXPIRY DATE");

            (ii) if the parties  mutually  determine not to launch such Specific
      Product or determine  not to continue the  development  or to seek an ANDA
      approval  in respect of such  Specific  Product  (the date upon which such
      determination is made being hereinafter  referred to as the "DETERMINATION
      DATE");

            (iii) this  Agreement  is  terminated  in  respect of such  Specific
      Product  prior to payment in full by PRI of the  Deferred  Legal  Expenses
      relating  thereto (the  effective date of  termination  being  hereinafter
      referred to as the "TERMINATION DATE"); or




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            (iv)  one (1) year  has  elapsed  since  Genpharm  or its  Affiliate
      incurred  such  Deferred  Legal  Expense (the date upon which one (1) year
      period expires being hereinafter referred to as the "Maturity Date")

then such Deferred Legal  Expense(s) (or the balance  thereof) owing to Genpharm
shall  fall  due  and  be  paid  by  PRI  to  Genpharm  within  30  days  of the
Determination  Date, the Termination Date, the Expiry Date or the Maturity Date,
whichever first occurs. Where the settlement or judgment of any Claim results in
the award or payment of funds to Genpharm,  Genpharm  shall pay *** % thereof to
PRI  within 30 days of  receipt  of the award or payment of funds from the third
party.  Where the  settlement or judgment of a Claim in relation to such Product
results in an award  against  Genpharm  requiring  Genpharm  to pay funds to any
Person, PRI shall pay to Genpharm *** % of such liability upon receipt of a copy
of the  settlement  or  judgment  and at or prior to the time that  Genpharm  is
required to make such payment to the third party.

9.    Nothing in this Agreement  constitutes a guarantee or warranty of Genpharm
      that

      a. development of a Product will be successful; or

      b. a Product Approval for any Product will be obtained.

      In the event that any of  Products  are not  developed  for  technical  or
      commercial  reasons  no  replacement  products  are to be  added  to  this
      Agreement in lieu thereof.

10.   Gross  Profits  applicable  to a Product  earned by PRI in  respect of any
      period during which PRI enjoys generic market  exclusivity shall be shared
      *** % by Genpharm and *** % by PRI; provided,  however, that the aggregate
      incremental  additional  Gross  Profits  payable to Genpharm in respect of
      such  Product as a result of such  exclusivity  (being  the Gross  Profits
      payable to Genpharm in excess of the Gross  Profits  that would be payable
      to  Genpharm  but for this  paragraph  10)  shall not  exceed  $*** US and
      thereafter  Gross  Profits  shall be  shared  by  Genpharm  and PRI in the
      proportions contemplated in Section 5 above.

11.   (a) No later than thirty (30) days from the execution  date of this Letter
      Agreement,  the parties shall  establish a Product  Development  Committee
      (the  "PDC")  consisting  of at  least  one  person  from  each of PRI and
      Genpharm which shall act as liaison between the parties to ensure that PRI
      is  kept  current  of the  development  status  of  each  Product.  Unless
      otherwise  agreed by the  parties,  the PDC shall  meet at least  once per
      quarter,  such meetings to continue until one (1) year after  commencement
      of  commercialization  of the last  Product  or such  other time as may be
      agreed by the parties. The PDC will meet alternately at the offices of PRI
      and Genpharm or as otherwise agreed by the parties.  Each party shall bear
      the cost of its own travel expenses relating to meetings of the PDC.

      (b)   Genpharm hereby agrees to:


<PAGE>

            (i) provide PRI at regularly scheduled meetings of the PDC access to
      and copies of all scientific  information  relevant to the development and
      registration of each Product;

            (ii)  provide PRI with copies of all  communications  to or from the
      FDA in connection with the development and registration of each Product as
      soon as reasonably practicable, but in any event within three (3) business
      days of the receipt or transmittal by Genpharm of such communication;

            (iii)  promptly  advise PRI in writing  of any  unforeseen  material
      problems or delay  encountered  or  additional  requirements  imposed upon
      Genpharm or its Affiliates, as the case may be, since the date of its last
      report in connection with the  development  and  registration of a Product
      (and of which PRI has not been otherwise advised pursuant hereto);

            (iv) provide PRI with such other  information  as PRI may reasonably
      request  in  writing  from time to time with  respect to the status of the
      development  and/or  registration  of a  particular  Product,  as  soon as
      reasonably  practicable but in any event within three (3) business days of
      receipt of such request; and

            (v) within two (2) business days of receipt by Genpharm of a request
      therefor,  and  subject  to the  availability  of the  parties,  arrange a
      conference call among PRI, Genpharm and Genpharm's legal counsel to answer
      PRI's  questions or provide PRI with  information  regarding legal matters
      surrounding the development and/or registration of each Product.

12.   PRI  represents  and  warrants to Genpharm  that neither it nor any of its
      Affiliates is an Ineligible  Person.  Genpharm  represents and warrants to
      PRI  that  neither  it nor  any of its  Affiliates  who  have  or  will be
      developing a Product for the Territory or who is or will be a Manufacturer
      thereof is an Ineligible Person.

13.   In the event that any provision of this Letter  Agreement  contradicts any
      provision  contained in Schedules  "A" through "M"  attached  hereto,  the
      provisions of this Letter Agreement shall govern.

14.   In the event that the innovator/  brand, or any competing generic product,
      applicable to a Product becomes an  over-the-counter  pharmaceutical  then
      PRI shall use reasonable best commercial efforts to exploit the OTC market
      for such Product,  failing which the rights to market the Product as a OTC
      pharmaceutical  in the  Territory  shall  revert  exclusively  to Genpharm
      without any  obligation on Genpharm to share with PRI the Gross Profits or
      other  revenue  earned from the  commercialization  of such Product in the
      Territory  and  without  any  payment  from  Genpharm  to PRI as a  result
      thereof.

                            [SIGNATURE PAGE FOLLOWS]



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      If the foregoing  terms are acceptable to you,  kindly sign and return the
duplicate copy of this agreement  enclosed herewith on or before the 25th day of
March, 2002.

Yours very truly,

GENPHARM INC.

Per:  /S/ HANK KLAKURKA
      -----------------
      Hank Klakurka

The undersigned hereby acknowledges and agrees to the foregoing.

DATED this 25th day of March, 2002.

PHARMACEUTICAL RESOURCES, INC.

Per:  /S/ SCOTT TARRIFF
      -----------------
      Scott Tarriff



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                                  SCHEDULE "A"

                              EXCLUSIVE APPOINTMENT

A.1 EXCLUSIVE  DISTRIBUTOR:  Subject to the  provisions of this agreement and to
the  receipt  by  Genpharm  or its  Affiliate,  as the case may be, of a Product
Approval  for  such  Product,  Genpharm  hereby  appoints  PRI as the  sole  and
exclusive  distributor  of the Products for the Territory and PRI hereby accepts
such  appointment and agrees to act as such sole distributor upon such terms and
conditions.  Except for its right to delegate to an  Affiliate  of PRI any duty,
obligation or right  hereunder in relation to a Product in  accordance  with the
provisions  of Section L.8 of Schedule  "L" hereto (but only for so long as such
Person  remains an Affiliate  of PRI),  PRI shall not delegate to any Person any
duty or obligation  of PRI hereunder in relation to a Product  without the prior
written  consent  of  Genpharm  (which  consent  may be  withheld  in  the  sole
discretion of Genpharm).

A.2 NATURE OF  RELATIONSHIP:  This  agreement does not constitute or create (and
the  parties  do  not  intend  to  create  hereby)  a  joint  venture,   pooling
arrangement,  partnership,  or formal business  organization of any kind between
and among any of the  parties,  and the rights and  obligations  of the  parties
shall be only those  expressly set forth herein.  The  relationship  established
between PRI and  Genpharm by this  agreement is solely that of buyer and seller,
each is an independent contractor engaged in the operation of its own respective
business.  Neither party shall be considered to be an agent of the other for any
purpose  whatsoever.  Each party  shall be  responsible  for  providing  its own
personnel and workers'  compensation,  medical coverage or similar benefits, any
life, disability or other insurance protection;  and shall be solely responsible
for the payment of social security  benefits,  unemployment  insurance,  pension
benefits,    withholding   any   required   amounts   for   income   and   other
employment-related  taxes and benefits of its own employees,  and shall make its
own  arrangements  for injury,  illness or other  insurance  coverage to protect
itself; its Affiliates,  its subcontractors and personnel from any damages, loss
and/or liability arising out of the performance of this agreement. Neither party
has the  power or  authority  to act for,  represent,  or bind the other (or its
Affiliates) in any manner.

A.3 TERRITORIAL AND PRODUCT  RESTRICTIONS  APPLICABLE TO PRI: During the term of
this  agreement  applicable to a Product,  neither PRI nor any of its Affiliates
will directly or indirectly sell such Product outside of the Territory or to any
Person  in the  Territory  where it knows or has  reason  to  believe  that such
Product will be resold by such Person outside of the Territory. In the event the
foregoing provision is or becomes unenforceable or is unlawful in the Territory,
then it shall be deemed replaced by the most restrictive  provision on marketing
or sale  of the  Product  outside  of the  Territory  as  shall  be  lawful  and
enforceable  in the  Territory.  If  Genpharm  establishes  that  one  of  PRI's
customers or a customer of any of its  Affiliates is exporting  such Product out
of the Territory,  PRI shall (and shall cause its Affiliates to) either cease to
supply such customer or obtain (and enforce,  if necessary) an undertaking  from
such customer not to sell the Product  outside of the Territory  (unless PRI [or
its  Affiliate,  as the case may be] is precluded  from taking such action under
applicable law). In addition, PRI shall not (and it shall not authorize,  permit
or suffer  any of its  Affiliates  to),  directly  or  indirectly,  manufacture,
purchase,  sell or  distribute a Competing  Product in the Territory at any time
during  the term of this  agreement  applicable  to a  Product  (including,  for



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greater  certainty,  prior to receipt by Genpharm or any of its  Affiliate  of a
Product Approval for such Product).



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                                  SCHEDULE "B"

                        MANUFACTURE AND SUPPLY OF PRODUCT

B.1  EXCLUSIVE  SUPPLIER:  Subject to receipt by Genpharm or its  Affiliate of a
Product  Approval  for a  Product  Genpharm  shall use  commercially  reasonable
efforts to  manufacture  (or cause to be  manufactured)  and  supply to PRI,  in
accordance  with the  terms and  conditions  set  forth  herein  and in a timely
fashion,  reasonable  quantities of such Product.  PRI shall order from Genpharm
all of its and its Affiliate's  requirements of the Product for the Territory in
accordance with the terms and conditions set forth herein.

B.2 MANUFACTURING RESPONSIBILITIES:  Each Product supplied by Genpharm hereunder
shall be manufactured  (which shall include,  without  limitation,  all testing,
bulk packaging and labelling) in an FDA approved facility and in accordance with
the following (collectively, the "Product Manufacturing Requirements"),  (i) the
Specifications  for the  Product,  (ii)  applicable  cGMP  and  good  laboratory
practices and (iii) all other applicable rules,  regulations and requirements of
the FDA relative to the manufacture of such Product.

B.3 STORAGE OF PRODUCTS PENDING  SHIPMENT:  The finished bulk Product to be made
available to PRI hereunder shall be stored by Genpharm and/or the  Manufacturer,
pending  shipment,  in accordance with the  Specifications  for such Product and
applicable cGMP.

B.4 QUALITY CONTROL AND ASSURANCES AND RELEASE DOCUMENTATION: Genpharm shall, or
shall cause the  Manufacturer  to, perform all in-process  quality control tests
and  quality  assurance  reviews  on the  Product  as  required  by the  Product
Manufacturing  Requirements  and  shall,  or shall  cause the  Manufacturer  to,
certify  in  writing  that  each  batch  of the  Product  delivered  to PRI  was
manufactured in strict  conformity with the Product  Manufacturing  Requirements
and the other terms of this agreement.

B.5 PRODUCT  WARRANTY:  Genpharm warrants that all Product supplied by it to PRI
pursuant to this agreement shall be manufactured,  packaged,  tested, stored and
handled in accordance with the Product  Manufacturing  Requirements  and that at
the time of the  delivery of such  Product to the carrier at  Genpharm's  or the
Manufacturer's  Plant,  as the  case  may be,  such  Product:  (i)  will  not be
adulterated  or  misbranded  within the  meaning of the Federal  Food,  Drug and
Cosmetic Act ("Act"),  as amended, or within the meaning of any applicable state
or municipal law in which the  definitions of  adulteration  and misbranding are
substantially  the same as those contained in the Act, as such Act and such laws
are  constituted  and  effective at the time of delivery and (ii) will not be an
article which may not, under the provisions of Sections 404 and 505 of such Act,
be introduced into interstate  commerce.  NEITHER  GENPHARM NOR THE MANUFACTURER
MAKES ANY REPRESENTATION  THAT THE PRODUCT IS USEFUL FOR THE INTENDED PURPOSE OR
THAT IT IS FREE FROM INHERENT SIDE EFFECTS EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT.


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                                  SCHEDULE "C"

                   PRODUCTION FORECASTS, ORDERS AND DELIVERIES

C.1 FORECASTS AND COMMITMENTS:  To assist Genpharm to schedule production of the
Products,  PRI shall  provide to Genpharm (or as it directs) for each Product to
be  manufactured  and supplied to PRI hereunder,  quarterly (at least 45 days in
advance of the commencement of the first calendar month forecasted  thereunder),
a 12 month  rolling  forecast of PRI's  estimated  requirements  of the Product,
which forecast  shall  represent a commitment of PRI to purchase the quantity of
Product projected for the first month thereunder and a commitment,  subject to a
20% variance,  to purchase the quantity of Product forecasted for the second and
third months forecasted thereunder.  Subject to the foregoing, all forecasts are
estimates  only and PRI shall only be bound to purchase the Product  pursuant to
purchase  orders  submitted,  or  deemed  hereunder  to be  submitted,  by it to
Genpharm (or to such person as Genpharm may direct).  All purchase  orders for a
Product shall specify the delivery date  therefor,  which delivery date shall be
no sooner than 16 weeks  following the receipt of such order by Genpharm or such
other  period of time as  Genpharm  shall  specify  in  writing  to PRI within a
reasonable  period of time following  receipt by Genpharm or the Manufacturer of
the Product Approval for such Product. PRI shall deliver the first such forecast
within a reasonable period of time following receipt of such Product Approval by
Genpharm  or the  Manufacturer  and  shall  deliver  the  updated  and  extended
forecasts every 3 months thereafter.

C.2 PURCHASE ORDERS: All orders for Product shall be placed using PRI's standard
form of purchase order and shall be invoiced using  Genpharm's  standard form of
invoice.  All purchase orders submitted by PRI shall contemplate the purchase of
Product  in  minimum  batch  sizes as  contemplated  in the  applicable  Product
Approval or  multiples  thereof  (unless  Genpharm  agrees in writing to smaller
quantities  [either  generally or in respect of any particular  purchase order])
and shall  specify,  amongst other things,  the required  delivery  date. In the
event of any conflict  between the terms of any purchase  order and the terms of
any invoice related  thereto,  the terms of the purchase order shall govern.  In
the event of any conflict  between the terms of any purchase order and the terms
of this agreement,  the terms of this agreement shall govern (unless the parties
shall have mutually agreed to the contrary in writing in respect of a particular
instance).

C.3 DELIVERY OF PRODUCT:

(a)   Products  shall be made  available  to PRI for  pickup in bulk  containers
      (where applicable) at Genpharm's or the Manufacturer's  Plant, as the case
      may be.  PRI shall  arrange  for  shipping  and/or  transportation  of the
      Products from such Plant to PRI's Spring Valley, New York facility and pay
      all  shipping  and related  costs,  including  insurance,  and any customs
      duties and other taxes imposed on the  importation of the Product into the
      Territory.  Genpharm shall (or shall cause the  Manufacturer  to) promptly
      notify  PRI by fax that any  order  (or part  thereof)  is  available  for
      pick-up  at  its  or at  such  Manufacturer's  Plant  (this  notice  shall
      hereafter  be referred  to as the  "AVAILABILITY  NOTICE").  PRI shall use
      reasonable commercial efforts to pick up the Products that are the subject
      of an  Availability  Notice  within 10  business  days of  receipt  of the
      Availability Notice;  provided that, if such pickup has not occurred on or



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      prior to the expiry of such 10 day period,  PRI shall, for purposes of its
      payment  obligations  to  Genpharm  pursuant  to  Sections  D.1 and D.2 of
      Schedule "D" hereto,  be deemed to have picked up the  Products  which are
      the subject of the Availability Notice on the last business day of such 10
      day period.  If the Products in question  have not been picked up by or on
      behalf of PRI within 20 business days of an Availability Notice,  Genpharm
      may, but shall not be obligated  to, cause the Products to be delivered to
      PRI's Spring Valley, New York, facility at PRI's sole cost and expense and
      risk of loss and title to the  Products  shall pass to PRI upon  pickup of
      the Products at Genpharm's or such  Manufacturer's  Plant, as the case may
      be, in the same  manner as if the pickup had been  effected by PRI itself,
      provided that Genpharm shall provide for the Products to be insured during
      transit  in a  commercially  reasonable  manner  at  PRI's  sole  cost and
      expense.

(b)   Genpharm  shall,  or shall cause the  Manufacturer  to,  supply to PRI all
      documentation necessary to export such Product from the jurisdiction where
      its Plant is located and all documentation  required by PRI to import such
      Product  into the  Territory  to the  extent  that  same is  available  to
      Genpharm  (or  such  Manufacturer)  or  is  reasonably  capable  of  being
      generated by it.

(c)   Risk of loss and title to the  Products  shall pass to PRI upon  pickup of
      the Product by, on behalf of, or for the account of PRI at  Genpharm's  or
      such Manufacturer's Plant as aforesaid.

(d)   Products supplied by Genpharm hereunder shall have a minimum shelf life of
      20 months  which shall run from the date that the  Availability  Notice in
      respect of such Product is received by PRI.

C.4  CANCELLATION OF ORDER:  Notwithstanding  anything herein  contained,  if an
Availability  Notice in respect of any Product  subject to a purchase  order has
not been given within 60 days following the required delivery date hereunder PRI
shall be entitled  to cancel such order (or portion  thereof in respect of which
no Availability Notice has so been given) by notice in writing to Genpharm.

C.5  Documentation to Accompany  Deliveries:  All deliveries of Product by or on
behalf of Genpharm  shall be  accompanied  by all  documentation  required under
applicable  law to import the Product into, and for PRI to offer the Product for
sale in, the Territory including,  without limitation,  any quality assurance or
quality control audit results and/or  certifications  that the Product  Approval
for the Product have been audited to ensure that any Product supplied  hereunder
has been manufactured in conformity with cGMP and applicable FDA regulations.

C.6  Assistance  With Export & Import Laws:  PRI and Genpharm shall provide such
commercially  reasonable  assistance  as the other may  request  relative to the
exportation or importation of Products not expressly provided in this agreement.




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                                  SCHEDULE "D"

                           PAYMENTS, REPORTS AND AUDIT

D.1   PURCHASE PRICE:

(a)   The  purchase  price  payable by PRI for  Product  supplied to it by or on
      behalf of Genpharm  shall be the  aggregate of (i) the  Transfer  Price of
      such Product and (ii) the additional  consideration to be paid to Genpharm
      pursuant to Section D.3 below in respect of Net Sales of such Product.

(b)   In addition to such purchase price PRI shall pay all applicable sales tax,
      use tax,  consumption  tax,  goods and  services  tax,  value added tax or
      similar  tax,  imposts or duties  levied  upon the sale of the  Product by
      Genpharm to PRI whether that tax,  impost or duty is levied under the laws
      of the  jurisdiction  where the  Manufacturer's  Plant is  located  or the
      jurisdiction where PRI or Genpharm is located (or of any state,  province,
      territory  or other  political  subdivision  thereof)  and  whether  it is
      currently  in force or comes into force after the  Effective  Date of this
      agreement.

(c)   The Transfer Price shall be invoiced and all payments  hereunder  shall be
      made in U.S.  dollars.  Any costs or expenses  which are to be paid by PRI
      hereunder or which were  incurred by Genpharm (or a  Manufacturer,  as the
      case may be) in a currency other than U.S. dollars shall be converted into
      its  U.S.  dollar  equivalent  in  accordance  with the  usual  procedures
      therefore used by Genpharm or the applicable  Manufacturer  in determining
      its Manufacturing Costs.

D.2 INVOICING AND PAYMENT:  Genpharm shall invoice PRI for the Transfer Price of
the  Product at the time such  product is picked up or is deemed to be picked up
by or on behalf of PRI as  contemplated in Section C.3 of Schedule "C" hereto or
within a reasonable  period of time thereafter.  The Transfer Price shall be due
and payable within 45 days following the date of such invoice.  Each shipment of
Product to PRI shall  constitute  a  separate  sale,  obligating  PRI to pay the
purchase  price  therefor,  whether  such  shipment be in whole or only  partial
fulfilment of any order.

D.3 ADDITIONAL CONSIDERATION:

(a)   As additional consideration for the Products PRI shall pay to Genpharm ***
      % of the Gross Profits arising out of Net Sales in the Territory by PRI or
      its  Affiliates of Product  supplied by or on behalf of Genpharm  pursuant
      hereto,  which additional  consideration shall be paid to Genpharm as part
      of the  purchase  price for the Product sold and shall not be treated as a
      royalty or similar payment.

(b)   The payment to Genpharm of its share of Gross Profits shall be made in U.S
      dollars. For the purposes of determining Gross Profits, any delivery costs
      or other expenses incurred by PRI which are relevant to the calculation of
      Gross Profits and which are payable or were paid in a currency  other than
      U.S.  Dollars shall be converted into their U.S. dollar  equivalent  based



<PAGE>

      upon the rate of  exchange  between  the  currency  in  question  and U.S.
      dollars as  reported in the Wall Street  Journal on the 2nd  business  day
      preceding the day on which any such payment on account of Gross Profits is
      due.


D.4  PAYMENT  OF  ADDITIONAL   CONSIDERATION  AND  ACCOMPANYING   DOCUMENTATION:
Genpharm's  share of Gross Profits  shall be paid by PRI to Genpharm  quarterly,
within 30 days following the end of each calendar quarter (being the last day of
March, June, August and December in each year) with respect to Net Sales made by
PRI or its Affiliates of such Products during such calendar  quarter.  Each such
payment  shall be  accompanied  by the  following  in  respect  of each  Product
supplied by or on behalf of Genpharm:

(a)   a sales summary  reasonably  satisfactory to Genpharm showing all sales of
      such Product by Units  (sku's) and dollars made by PRI and its  Affiliates
      during the quarter in question;

(b)   a detailed statement showing all returns,  adjustments,  credits,  rebates
      and other debits and credits  relevant to the  calculation of Net Sales of
      such  Product  for the  quarter in  question  together  with copies of all
      documentation to support allowable  deductions used in computing Net Sales
      during such quarter;

(c)   a detailed  statement showing  Repackaging  Expenses,  Recall Expenses and
      Excess  Reprocurement  Costs incurred by PRI and its Affiliates and duties
      and taxes  recovered by PRI and its  Affiliates  which are relevant to the
      calculation of Gross Profits for the quarter in question;

(d)   a  certificate  signed by the Chief  Financial  Officer of PRI  certifying
      that,  to the  best  of  his  knowledge,  information  and  belief,  after
      reasonable  investigation,  the foregoing statements  contemplated in (a),
      (b) and (c)  above  are true  and  correct  and do not  omit any  material
      information required to be provided pursuant to this Section; and

(e)   a summary of the  calculation of the Gross Profits  payable to Genpharm on
      such date.

For purposes of this  agreement a sale shall be  considered to have been made at
the time the Product is shipped by PRI's or its Affiliate's to its customer. For
purposes of computing Net Sales,  all sales and other  transactions  between PRI
and its Affiliates shall be disregarded.

D.5  ADDITIONAL  INFORMATION:  PRI shall provide to Genpharm and shall cause its
Affiliates to provide to Genpharm,  promptly following a request therefor,  such
additional  information  concerning any sales of a specific Product  (including,
without limitation,  in respect of any sale, the date of the shipment,  the name
of the customer,  the number of Units of the Product (by sku, if requested) sold
to such  customer  and the  invoice  price  charged  by PRI or its  Affiliates),
chargebacks, credits, returns, adjustments and other credits and debits relevant
to the  calculation  of Net Sales  and Gross  Profits  in  respect  of a Product
including  information  relating to Repackaging  Expenses,  Recall  Expenses and
Excess Reprocurement Costs incurred in or applicable to any period in respect of
such Product, as Genpharm may reasonably request. Genpharm shall, or shall cause
the applicable  Manufacturer  to, provide to PRI,  promptly  following a request



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therefor, such additional information concerning the calculation of the Transfer
Price of Products  previously  supplied to PRI  hereunder as PRI may  reasonably
request.

D.6 INTEREST:  All payments to be made to Genpharm  under this  agreement  shall
bear interest from and after the  Applicable Day (as that term is defined below)
until  paid at the  annualized  rate  equal  to the  daily  (as at the  close of
business  on each such day) prime rate as quoted  from time to time by  Citibank
N.A., New York, New York plus 5%, compounded daily. For purposes of this Section
the term "APPLICABLE DAY" shall mean:

      (i)   where the payment is on account of the  Transfer  Price of a Product
            which has not been made on its due date and PRI has not on 2 or more
            occasions  during the same  calendar  year  failed to pay a Transfer
            Price  to  Genpharm  on its due  date,  30 days  after  the due date
            therefore;

      (ii)  in any other case, the due date therefore.

D.7  MAINTENANCE OF RECORDS:  Each of Genpharm and PRI agrees that it shall keep
(and shall cause its Affiliates to keep) complete and accurate books and records
of  account  containing  all  information   required  for  the  computation  and
verification  of all amounts on which  payments  hereunder  are based and shall,
upon reasonable  written notice from the other,  make such records available for
examination by such other party or, at the requesting  party's  expense,  supply
copies of such records to such other party.

D.8 EXAMINATION OF RECORDS:  Each of Genpharm and PRI shall have the right, upon
reasonable  written notice to the other,  to designate an independent  certified
public or  chartered  accountant  (except one to whom the other has a reasonable
objection) to have access during  ordinary  working hours to such records as may
be necessary  to audit the  correctness  of any invoice,  report or payment made
under  this  agreement.  Genpharm  and PRI shall  provide  and  shall  cause its
Affiliates to provide to the  accountant  engaged by the other full and complete
access to their  pertinent  books and records.  In the event that any accountant
shall have  questions  which are not in his judgment  answered by such books and
records,  the accountant shall have the right to confer with  representatives of
the  Person  whose  books and  records  are  under  review  including  its Chief
Financial  Officer.  If  any  audit  under  this  Section  D.8  shall  reveal  a
discrepancy  by more than 3% of any amount  payable  hereunder or $10,000.00 US,
whichever   is   greater,    the   costs   and   expenses   relating   to   such
investigation/audit  shall be  borne by the  party  creating  such  discrepancy.
Genpharm  and PRI shall each have the right to audit  such books and  records of
the other  pursuant to this Section D.8 no more often than twice in any contract
year (as  hereinafter  defined) unless in any of the prior 3 contract years such
investigation  revealed  a  discrepancy  by more  than 3% or  $10,000.00  US, as
aforesaid,  in which  case  Genpharm  or PRI shall  have the right to audit such
books and records of the other 3 times in such contract  year.  For the purposes
hereof,  a  contract  year  shall be a period  of 12  months  commencing  on the
Effective Date of this agreement or on an anniversary  thereof. Any Person whose
books and records are to be audited in accordance  with the foregoing  may, as a
condition to providing any accountant  access to its books and records,  require
such accountant to execute a reasonable confidentiality agreement.




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D.9 SURVIVAL OF  OBLIGATION:  The obligation to make the payments and to provide
the reports contemplated in this Schedule "D" and the rights of PRI and Genpharm
to conduct audits or investigations pursuant to Section D.8 hereof shall survive
the  termination or expiration of this agreement and shall apply to all Products
supplied  to PRI by or on  behalf  of  Genpharm  pursuant  hereto  prior  to the
effective date of the  termination or expiration of this agreement or thereafter
notwithstanding  that such Product may have been resold by PRI or its Affiliates
to its customers  after the  termination  or expiration of this  agreement.  For
greater  certainty,  the  parties  acknowledge  and agree  that PRI shall pay to
Genpharm  *** % of the  Gross  Profit  derived  from  Net  Sale of all  Products
supplied  by or on  behalf  of  Genpharm  to  PRI  pursuant  to  this  agreement
irrespective  of whether such Product is resold by PRI or its Affiliate prior to
or subsequent to the termination or expiration of this agreement.


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                                  SCHEDULE "E"

                          REPACKAGING AND DISTRIBUTION

E.1 PRI'S REPACKAGING RESPONSIBILITIES:

(a)   PRI shall  repackage and relabel the Product into finished  labelled Units
      for sale in the Territory in an FDA approved  facility and shall be solely
      responsible  for the  contents  of the labels and  artwork on all Units of
      finished  labelled  Product sold or otherwise  released by PRI (except for
      information  contained  in such  labels  which are also  contained  on the
      labels of the bulk  Product  supplied  by or on behalf of  Genpharm to PRI
      pursuant  hereto).  In repackaging  and  relabelling the Product PRI shall
      comply with (i) the Specifications  for such Product,  (ii) applicable FDA
      cGMP and (iii) all other applicable rules, regulations and requirements of
      the  FDA and any  other  applicable  governmental  or  regulatory  bodies,
      agencies  and  officials  in the  Territory  relative to  repackaging  and
      labelling  of the  Product for sale in the  Territory.  All labels and all
      artwork concepts on all packaging  material used by PRI in connection with
      relabelling  and  packaging  of a Product  shall be  subject  to the prior
      reasonable approval of Genpharm, provided that the approval by Genpharm of
      any label or artwork  concept shall not relieve or otherwise  affect PRI's
      obligations or  responsibilities  hereunder in relation to relabelling and
      packaging  of the  Product  or  arising  out of the use of such  labels or
      packaging  material or the release of Product in the Territory so labelled
      and packaged (or impose any  obligation or  responsibility  on Genpharm in
      connection with such labels or packaging material or their use or release,
      as aforesaid,  except as expressly  contemplated above with respect to the
      contents of  information  contained on the labels which was provided by or
      on behalf of Genpharm).

(b)   Genpharm  shall,  or shall cause the  Manufacturer  to,  supply to PRI all
      information  and data  relating  to a  Product  which it is  obligated  to
      provide to PRI and its  Affiliates as a repackager  and relabeller of such
      Product  pursuant to applicable  laws.  Genpharm shall, or shall cause the
      Manufacturer to, deliver to PRI, upon reasonable request of PRI, a copy of
      all correspondence  which it receives from or forwards to the FDA or other
      regulatory  authority with respect to a Product  following  receipt of its
      Product  Approval  therefor  provided  that such  correspondence  does not
      contain Confidential Information of Genpharm or such Manufacturer which it
      desires to maintain  confidential  and which it is not obligated by law to
      disclose to PRI.

E.2 PRI'S  OBLIGATION RE MARKETING:  PRI shall use  reasonable  best  commercial
efforts (utilizing its marketing,  distribution and management systems and those
of its  Affiliate)  to develop a market for the Products in the Territory and to
actively and  continuously  promote the sale of the  Products in the  Territory,
such  efforts  shall be not less than  those used by PRI and its  Affiliates  to
promote  the sale of other  products  which  they  market.  PRI  shall be solely
responsible  for  advertising and promotion of the Product and shall comply with
all applicable  laws,  rules and regulations in that regard  including,  without
limitation, applicable FDA regulations and guidelines.


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E.3 PRICING: PRI shall have sole discretion in setting the price for the sale of
the Products in the Territory,  provided that it shall not discount the price of
any  Product  to  enhance  the  sale of PRI's  or any of its  Affiliates'  Other
Products (as that term is defined  below) or use any Product as a loss leader or
incentive to procure the sale of PRI's or any of its Affiliates'  Other Products
(including, without limitation, through tied or bundled sales). Rebate and other
discount programs (excluding any pricing programs where the price of the Product
is  discounted  to  enhance  the sale of PRI's or any of its  Affiliates'  Other
Products  or where a Product  is used as such loss  leader  or  incentive  or to
procure the sale of PRI's or its Affiliates' Other Products) generally available
to PRI's or its  Affiliates'  customers  in  connection  with  the  purchase  of
pharmaceutical  products shall not be prohibited by this Section.  Any discounts
to a price below what is reasonably  necessary to secure sales of any Product or
discounts  that  are  used to  secure  sale of  Other  Products  of PRI's or its
Affiliate's  (through  bundled sales or otherwise) will be fully absorbed by PRI
out of its share of Gross  Profits in relation to the Product or will be charged
to  those  Other  Products  of PRI or its  Affiliates  that  are in the  product
bundles,  as the  case  may be,  and  will not  directly  or  indirectly  reduce
Genpharm's share of Gross Profits  hereunder.  For purposes of this Section E.3,
the term "OTHER PRODUCTS" shall mean pharmaceutical  products sold, marketed and
distributed by PRI or its Affiliates other than the Products.

E.4  STORAGE AND  HANDLING  BY PRI:  PRI shall  ensure  that all  Products  made
available  to it by or on behalf of  Genpharm  pursuant  to this  agreement  are
transported,  received,  handled,  stored and delivered in  accordance  with the
Specifications  for the Product applicable thereto and applicable cGMP and other
FDA requirements  (and the requirements of all other applicable  governmental or
regulatory  bodies,  agencies  or  affiliates  in the  Territory)  so that  such
Products  do  not  become   adulterated   or  otherwise   cease  to  meet  their
Specifications as a result of any acts or omissions of PRI, its Affiliates,  and
their respective  agents,  employees,  transporters or those for whom PRI or its
Affiliates are responsible.

E.5 RELEASE OF PRODUCT BY PRI: PRI shall  conduct or cause to be conducted  such
quality control tests as it deems necessary or as are required by law (including
any rules,  regulations and  requirements of the FDA and the requirements of all
other  applicable  governmental or regulatory  body,  agency or officials in the
Territory) prior to sale or other release of a Product in the Territory.

E.6 CREDIT RISKS: PRI shall assume sole  responsibility for all credit risks and
collections  of  receivables in respect of Products sold by it or its Affiliates
in the  Territory and in respect of all dealings  between PRI or its  Affiliates
and its  customers  and any third  parties  from whom PRI and/or its  Affiliates
sources any goods and services  required by it in connection  with  repackaging,
labelling,  transporting,  storing, promoting,  marketing, selling or delivering
the Product.

E.7 REPACKAGING AND MARKETING EXPENSES: For greater certainty,  PRI acknowledges
and  agrees  that it shall be solely  responsible  for all  costs  and  expenses
incurred by it or its  Affiliates in  connection  with  relabelling,  packaging,
promoting,  marketing  and selling the Products in the  Territory  (or otherwise
performing its obligations hereunder) without any right to recover same directly
or indirectly  from Genpharm (save and except for partial  recovery of permitted



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listing fees and other similar  payments  contemplated  in Paragraph (iv) of the
definition  "Net Sales" and  Repackaging  Expenses  through the  calculation and
sharing of Gross Profits hereunder).



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                                  SCHEDULE "F"

                         PRODUCT REJECTIONS AND RETURNS

F.1   PRODUCT REJECTION:

(a)   Within 35 days from the date of receipt of each  delivery  of Product  PRI
      shall  inspect the Product (PRI hereby  acknowledging  that its failure to
      inspect shall not release it from the  obligations it would otherwise have
      had it conducted an inspection as herein contemplated,  or provide it with
      additional  rights).  PRI shall advise  Genpharm in writing (a  "REJECTION
      NOTICE") if a shipment  of Product is not in  conformity  with  Genpharm's
      obligations hereunder or is otherwise defective,  provided,  however, that
      PRI's  failure to advise  Genpharm  in a timely  manner that a shipment of
      Product  does not  conform  shall not  prejudice  PRI's right to reject or
      return the Product if the defect or other  non-conforming  condition which
      justifies  rejection  or  return  could not have  been  detected  by PRI's
      inspection in accordance with cGMP standards.  If PRI delivers a Rejection
      Notice  in  respect  of all or any part of a  shipment  of  Product,  then
      Genpharm and PRI shall have 60 days from the date of Genpharm's receipt of
      such notice to resolve any  dispute  regarding  whether all or any part of
      such shipment of Product fails to conform with the Product  Specifications
      or is otherwise defective. Disputes between such parties as to whether all
      or  any  part  of  a  shipment  rejected  by  PRI  conforms  with  Product
      Specifications  not  resolved in the 60 day period shall be resolved by an
      independent  testing  laboratory  or a  consultant  (if  not a  laboratory
      analysis  issue),  the cost of  which  shall  be paid by the  party  least
      successful in such dispute.

(b)   In the event any Product is  appropriately  rejected by PRI (being Product
      which does not satisfy the Product warranty contemplated in Section B.5 of
      Schedule  "B" hereto as a result of any act by or  omission of Genpharm or
      the  Manufacturer),  Genpharm  shall replace such Product with  conforming
      goods within 16 weeks or, if requested by PRI, provide a credit to PRI for
      the Transfer  Price  previously  paid by PRI to Genpharm on account of the
      Product in  question,  and for all  transportation  and  insurance  costs,
      duties,  taxes and fees paid or payable by PRI to import and  deliver  the
      Product in question from  Genpharm's or the  Manufacturer's  Plant, as the
      case may be, to PRI's  facility  in Spring  Valley,  New York.  The credit
      shall be provided  immediately  following  the expiry of the period during
      which  Genpharm  may  dispute  a  Rejection   Notice  as  contemplated  in
      Subsection (a) above (unless the Rejection Notice is disputed by Genpharm,
      in which  event such  credit  shall only be given upon  resolution  of the
      dispute). Replacement Products shall be delivered to PRI at no cost to PRI
      if PRI has  already  paid for the  rejected  Products  and not  received a
      credit therefor, as aforesaid.

(c)   For  purposes  of Section H.2 of  Schedule  "H" hereto,  once a Product is
      rejected  by PRI,  PRI's  obligation  to pay for  such  Product  shall  be
      suspended until such time as it is determined:

      (i)   by the independent  laboratory or consultant that the Product should
            not have been rejected by PRI; or


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      (ii)  by the parties or by any arbitration conducted pursuant hereto or by
            a final  order of a court of  competent  jurisdiction  (which is not
            subject to further appeal) that no act by or omission of Genpharm or
            the Manufacturer was the cause of the problem.

F.2   PRODUCTS RETURNS:

(a)   Notwithstanding the provisions of Section F.1 above, Genpharm shall accept
      the  return  of any  Product  which is  returned  to PRI by its  customers
      because   of   defects   (including   failure   to  meet   the   Product's
      Specifications)  which are due to any act or omission of Genpharm.  In the
      event of such an accepted  return,  Genpharm shall provide a credit to PRI
      for the Transfer  Price paid by PRI to Genpharm  for the returned  Product
      and all  transportation  and insurance costs and custom duties,  taxes and
      fees paid by PRI upon the  importation  and  delivery of such Product from
      Genpharm's  or the  Manufacturer's  Plant,  as the case  may be,  to PRI's
      facility in Spring Valley,  New York (or an allowance on account  thereof)
      or,  at PRI's  request,  shall  make  available  to PRI,  without  charge,
      replacement Product within a period of 16 weeks. At PRI's option, and with
      the consent of Genpharm, which shall not be unreasonably withheld, PRI may
      destroy any Product returned to it.

(b)   Any return of Product  accepted by PRI from its  customers in the ordinary
      course of business,  including  without  limitation,  Product  returned as
      defective due to acts or omissions  attributable to PRI, its Affiliates or
      their respective agents or employees,  shall be treated as returns for the
      purpose  of  calculating  Net Sales so that when PRI next  calculates  the
      share of Gross  Profits  payable to  Genpharm in respect of the Product in
      question,  it shall not include (if the sale of the  returned  Product was
      not previously  included in a prior  reporting  period) or it shall deduct
      from Net Sales (if  previously  included  in respect of a prior  reporting
      period),  as the  case  may  be,  an  amount  equal  to the  Gross  Profit
      attributable to returned  Product,  it being the intention of Genpharm and
      PRI that no share of Gross  Profit shall be paid or payable to Genpharm in
      respect of the sale of a returned Product.

(c)   In the event any Product is returned to Genpharm by its customers  because
      the Product is alleged to be defective  and PRI believes  that such defect
      is due to an act or omission of  Genpharm or the  Manufacturer,  PRI shall
      notify  Genpharm  within a reasonable  period of any such return and shall
      provide or make  available to Genpharm (or, at Genpharm's  direction,  the
      Manufacturer) such samples (if available) and other information concerning
      the  returned  Product  available  to PRI or its  Affiliate so as to allow
      Genpharm  (or  such  Manufacturer)  to test  and  evaluate  the  allegedly
      defective Product.  PRI shall retain a sufficient number of samples of the
      allegedly  defective Product so that additional samples are available at a
      later date should additional testing be required by an independent testing
      laboratory or consultant as  contemplated  in Subsection (d) below,  or by
      PRI or by Genpharm (or such  Manufacturer) for their own purposes.  If not
      enough samples exist to be so divided,  then PRI and Genpharm shall confer
      and reach agreement as to the handling of any available samples.


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(d)   Genpharm shall complete its review and evaluation of the returned Products
      (or cause the Manufacturer to complete such review and evaluation)  within
      20 business  days of  receiving  the  returned  Products  from PRI or such
      longer period of time as may be reasonable in the  circumstances to enable
      Genpharm (or such  Manufacturer)  to conduct or cause to be conducted such
      tests, studies or investigations (and to receive the results therefrom) as
      may be required to confirm or dispute the  existence  of the problem or to
      identify  the  cause or  source  thereof.  If  Genpharm  asserts  that the
      returned Product satisfies the Product Manufacturing  Requirements or that
      the  defect  is  not  due  to  any  act or  omission  of  Genpharm  or the
      Manufacturer,  representative samples of the Product shall be submitted to
      a mutually acceptable independent testing laboratory or consultant (if not
      a laboratory  analysis  issue) for analysis or review,  the costs of which
      shall be paid by the party against whom the discrepancy is resolved. If it
      is  determined  by the  independent  laboratory  or  consultant  that  the
      returned  Product does not satisfy the Product  warranty  contemplated  in
      Section B.5 of Schedule "B" hereto and that such failure is due to any act
      by or  omission  of Genpharm  or the  Manufacturer,  then the  replacement
      Product in respect  of the  returned  Product  shall be  delivered  to PRI
      without  charge  or  appropriate  credit  (or  allowance)  shall  be given
      therefor as contemplated in Subsection F.2(a) above.

F.3 EXCLUSIVE REMEDY:  Subject to Section G.1 and G.2 of Schedule "G" hereto and
to its rights,  if any, to recover  expenses  associated with a Recall as herein
contemplated, PRI hereby acknowledges and agrees (on its own behalf or on behalf
of its Affiliates) that the sole remedy for Genpharm's failure to supply Product
in  accordance  with the  provisions of this  agreement  (unless such failure is
wilful  or  due  to  gross  negligence  of  Genpharm  or  the  Manufacturer,  if
applicable)  shall be to require  Genpharm to replace the Product  that does not
meet such Product's  warranty  hereunder with  conforming  goods within the time
periods hereinbefore  contemplated or to provide PRI with a credit in the amount
contemplated in this Schedule "F" and that Genpharm (and its  Affiliates)  shall
not be liable to PRI for consequential or incidental damages including,  without
limitation, loss of profits or prospective profits of any kind (and that neither
PRI nor any of its  Affiliates  shall  have any  rights or  recourse  whatsoever
against the Manufacturer,  all of which rights and recourses, if any, are herein
waived and  released);  provided that in the event that Genpharm fails to supply
Product (or  replacement  Product)  to PRI in  accordance  with its  obligations
hereunder  and, as a result of such failure,  a customer of PRI or its Affiliate
is entitled to cancel an order for such Product from PRI or its Affiliate and to
source a Competing  Product from an alternate  source (being a Person other than
PRI or any of its Affiliates) and to require PRI or its Affiliate to pay to such
customer the reasonable  excess  reprocurement  costs incurred by such customer,
then Genpharm's  responsibility shall be limited to reimbursing PRI for *** % of
such  excess  reprocurement  costs  actually  paid  or  credited  by  PRI or its
Affiliate to its customer  (such costs being the  difference  between the landed
cost to such customer of such Competing Product over and above the sale price of
the Product in question  from PRI to such  customer  [the "EXCESS  REPROCUREMENT
COSTS"]).

F.4 RETURN POLICY: Other than Product which have been appropriately  rejected by
PRI  pursuant  to  Section  F.1 above or  returned  Product as  contemplated  in


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Subsection  F.2(a) above, PRI shall not have the right to return to Genpharm any
Product purchased by it without Genpharm's prior written consent.

F.5 SURVIVAL OF  PROVISIONS:  The  provisions of this Schedule "F" shall survive
the termination or expiration of this agreement.



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                                  SCHEDULE "G"

                     DAMAGES, INDEMNIFICATION AND INSURANCE

G.1 LIMITATION RE CLAIMS:  Subject to the  limitations set forth in this Section
G.1,  PRI and  Genpharm  covenant  and agree to  indemnify,  save  harmless  and
compensate  the other (and its  Affiliates,  for whose  benefit such other party
shall hold the benefit of this provision in trust) from,  against or for, as the
case may be, any and all  claims,  demands,  actions,  causes of action,  suits,
proceedings, judgements, damages, expenses (including reasonable attorney's fees
and expenses),  losses, fines,  penalties and other similar assessments,  as the
case may be, (the "DAMAGES")  relating to or arising out of a breach by Genpharm
or PRI, as the case may be, of any of the representations, warranties, covenants
or agreements  herein;  provided that, except where the breach arises out of the
representation   or  warranty  being   intentionally   false  or  inaccurate  or
constitutes  a wilful  material  breach  by  Genpharm  or PRI of its  duties  or
obligations hereunder or an act or omission  constituting gross negligence,  the
claim of the  aggrieved  party for Damages  arising  out of the breach  shall be
limited to claiming the amounts  owing or payable to it in  accordance  with the
provisions of this agreement and any out of pocket costs and expenses (including
amounts paid or payable by it to third parties,  other than Excess Reprocurement
Costs [except to the extent contemplated in Section F.3 of Schedule "F" hereto])
which it has incurred and the  aggrieved  party shall not be entitled to recover
from the  defaulting  or breaching  party any lost profits or  consequential  or
punitive damages, including loss or damage to its goodwill or reputation.

G.2 THIRD  PARTY  CLAIMS:  In the event  that the sale or other  release  in the
Territory by PRI or its  Affiliates  of any Product  supplied by or on behalf of
Genpharm to PRI pursuant to this agreement results in a third party claim:

(a)   to the extent that the Damages  awarded or incurred relate to or arise out
      of the manufacturing,  testing, bulk packaging, labelling (if applicable),
      storage or  handling of a Product by  Genpharm  or a  Manufacturer  or any
      other act by or omission of Genpharm,  a Manufacturer or any other Persons
      for whose acts or omissions they are  responsible at law Genpharm shall be
      responsible therefor and shall defend, indemnify and hold harmless PRI and
      its Affiliate from and against all such Damages; and

(b)   to the extent that the Damages  awarded or incurred relate to or arise out
      of transporting,  receiving,  manufacturing (if applicable),  repackaging,
      labelling (if applicable),  testing,  storage,  handling,  use, marketing,
      distribution,  sale or delivery of a Product by PRI or its  Affiliates  or
      any other act by or omission  of PRI,  any of its  Affiliate  or any other
      Person  for  whose  acts or  omissions  they or any one or more of them is
      responsible  at law, PRI shall be  responsible  therefor and shall defend,
      indemnify and hold harmless  Genpharm and its Affiliates  from and against
      all such Damages;

Upon the  assertion of any third party claim  against  Genpharm or PRI (or their
respective Affiliates) that may give rise to right of indemnification under this
agreement,  the Person  claiming a right to  indemnification  (the  "INDEMNIFIED
PARTY")  shall  give  prompt  notice to the  Person  alleged to have the duty to
indemnify (the  "INDEMNIFYING  PARTY") of the existence of such claim  (provided


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that the  failure to give such  notice in timely  fashion  shall not release the
Indemnifying Party of its obligations of indemnification hereunder except to the
extent that the Indemnifying  Party has been prejudiced  thereby) and shall give
the Indemnifying Party reasonable  opportunity to control,  defend and/or settle
such claim at its own expense and with counsel of its own  selection;  provided,
however, that the Indemnified Party shall, at all times, have the right to fully
participate  in such  defense at its own  expense  with  separate  counsel  and,
provided  that both  parties to the extent  that they are not  contractually  or
legally excluded  therefrom,  or otherwise  prejudiced in a legal position by so
doing,  shall co-operate with each other and with their  respective  insurers in
relation to the defense of such third party claim. The Indemnifying  Party shall
consult with the Indemnified  Party with respect to settlement of any claim. The
Indemnifying  Party shall have the right to settle any claim without the consent
of the Indemnified Party, provided that the Indemnified Party is unconditionally
released  from such  claim and it is not  otherwise  prejudiced  by the terms of
settlement. In the event the Indemnifying Party elects to defend such claim, the
Indemnified Party may not settle such claim without the prior written consent of
the  Indemnifying  Party. If the Indemnifying  Party shall,  within a reasonable
time after such notice has been given, fail to defend, compromise or settle such
claim,  (or  thereafter  fails  to  diligently   defend  such  claim)  then  the
Indemnified  Party  shall have the right to defend,  compromise  or settle  such
claim   without   prejudice   to  its  rights  of   indemnification   hereunder.
Notwithstanding  the  foregoing,  in the event of any  dispute  with  respect to
indemnity hereunder,  each party shall be entitled to participate in the defence
of such claim and to join and implead the other in any such action.

G.3 INSURANCE:  Each of PRI and Genpharm shall (and shall cause their respective
Affiliates,  as required, to) during the term of this agreement and for a period
of not less than 36 months following the termination of this agreement, carry or
be subject to coverage under (as a named insured)  product  liability  insurance
(including  blanket  contractual  liability)  in an  amount of not less than $10
Million  U.S.  combined  single  limit,  which  insurance  will be written on an
occurrence  policy form with an insurance carrier  reasonably  acceptable to the
other  party.  Each of  Genpharm  and PRI  shall,  at the  request of the other,
provide  evidence to such  requesting  party of  compliance  with its  insurance
obligations  (and those of its  Affiliate)  under this  Section and  evidence of
renewals of any such policy, from time to time.

G.4 SURVIVAL:  The provisions of this Schedule "G" shall survive  termination or
expiration of this agreement.


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                                  SCHEDULE "H"

                              TERM AND TERMINATION

H.1 TERM:  The initial term of this  agreement  shall  commence on the Effective
Date and, for each particular  Product,  shall terminate on the 10th anniversary
of the date upon which Genpharm or its Affiliate  receives the Product  Approval
for such Product, unless earlier terminated in accordance with the provisions of
this agreement.  Thereafter,  this agreement  shall, in respect of such Product,
automatically  renew from year to year  unless  PRI or  Genpharm  gives  written
notice of  termination to the other at least 180 days prior to the expiration of
the initial  term or any renewal  term,  as the case may be,  subject to earlier
termination as provided in this agreement.

H.2 PAYMENT AND REPORTING  DEFAULTS:  Genpharm may, by notice in writing to PRI,
terminate this agreement or, at its option,  terminate this agreement in respect
of the particular  Product or Products to which the default herein  contemplated
relates,  if PRI fails to pay to Genpharm  any amount  payable by it to Genpharm
hereunder  as and when the same shall have  become due and payable or shall have
failed to deliver  (or caused to be  delivered,  as the case may be),  in timely
fashion,  the reports or  information  contemplated  in  Sections  D.4 or D.5 of
Schedule  "D" hereto  and in either  case,  such  breach  shall  have  continued
unremedied  for a period of 15 business days after written notice of such breach
has been given by Genpharm to PRI; provided that PRI shall not have the right to
such 15 business day grace period within which to cure such default and Genpharm
shall have the immediate right to terminate the agreement for such breach if PRI
shall have previously  breached  Section D.4 or D.5, or failed to remit any sums
of at least  $100,000.00 to Genpharm when due, in the aggregate,  three times in
the 12 month period immediately  preceding the default in question. In the event
that PRI has been given notice  pursuant to this Section H.2 and it disputes the
alleged  breach,  the dispute  shall be  submitted  to  arbitration  pursuant to
Schedule "K" hereto and this  agreement  shall continue in full force until such
time as the  arbitrator  renders his  decision.  Termination  of this  agreement
pursuant  hereto  shall be without  prejudice to any other right or remedy which
Genpharm  may have  against PRI arising out of the breach in question  including
the right to obtain compensation for its damages (provided that such right shall
be subject to the limitations set forth in Schedule "G" hereto).

H.3 MATERIAL BREACH: Subject to the provisions of Section H.2 above, Genpharm or
PRI may, by notice in writing to the other,  terminate this agreement or, at its
option,  terminate this agreement in respect only of those Products to which the
default in question relates,  if such other party shall have breached any of its
material duties or obligations  under this agreement and such default  continues
unremedied for a period of 60 days  following  receipt of notice of such default
(or, if such default is capable of being remedied but is not reasonably  capable
of being  remedied  within such 60 day period,  such longer period of time as is
reasonable  in the  circumstances,  not  exceeding  90  days  in the  aggregate,
provided that the defaulting party has, within such 60 day period, commenced and
thereafter  actively and diligently  pursues the remedying of such default).  In
the event that a party has been given  notice  pursuant to this  Section H.3 and
such party  disputes  the alleged  breach,  the dispute  shall be  submitted  to
arbitration pursuant to Schedule "K" hereto and this agreement shall continue in
full  force  until  such  time  as the  arbitrator  renders  his  decision.  The


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arbitrator shall determine whether or not there has been a breach and/or whether
or not the same has been remedied  within the required cure period.  Termination
of this agreement  pursuant hereto shall be without prejudice to any other right
or remedy the party  terminating  this agreement may have against the defaulting
party  arising  out of the  breach  in  question  including  the right to obtain
compensation  for its damages  (provided that such right shall be subject to the
limitations set forth in Section G.1 of Schedule "G" hereto).

H.4 EVENTS OF DEFAULT: Genpharm shall have the right to terminate this agreement
upon  written  notice to PRI in the event that any one or more of the  following
events  shall  become  applicable  to PRI or any of its  Affiliates  to whom any
material duty or obligations of PRI hereunder has been delegated or assigned and
PRI may  terminate  this  agreement  in the  event  that  any one or more of the
following  events shall  become  applicable  to Genpharm or, at its option,  may
terminate  this  agreement  in respect  only to those  Products  which are being
manufactured  by a  Manufacturer  (other than  Genpharm) if any of the following
events shall become applicable to a Manufacturer  (PRI, its Affiliate,  Genpharm
or the Manufacturer affected by such event being referred to as the "PARTY"):

      (i)   an order is made or a  resolution  or other  action of such Party is
            taken  for  the  dissolution,   liquidation,  winding  up  or  other
            termination of its corporate existence;

      (ii)  the Party commits a voluntary act of bankruptcy,  becomes insolvent,
            makes an assignment  for the benefit of its creditors or proposes to
            its  creditors  a   reorganization,   arrangement,   composition  or
            readjustment  of its debts or obligations  or otherwise  proposes to
            take  advantage  of or  shelter  under any  statute  in force in the
            United States or in the governing jurisdiction of such Party for the
            protection of debtors;

      (iii) if any  proceeding  is commenced  with  respect to a  compromise  or
            arrangement,  or to have such Party  declared  bankrupt or to have a
            receiver appointed in respect of such Party or a substantial portion
            of its property and such proceeding is not fully stayed or dismissed
            within 30 days after such commencement;

      (iv)  a receiver  or a receiver  and  manager of any of the assets of such
            Party is appointed  and such receiver or receiver and manager is not
            removed within 30 days of such appointment; or

      (v)   such Party ceases or takes steps to cease to carry on its business.

H.5 INELIGIBLE  PERSON:  Genpharm or PRI may terminate this agreement in respect
of a Product upon 30 days prior written  notice to the other party if such party
(otherwise than by reason of a breach of its obligations hereunder in respect of
such Product) is legally prohibited from performing its obligations hereunder or
becomes (or, in case of PRI, its Affiliates  become and in the case of Genpharm,
a Manufacturer  thereof becomes) an Ineligible Person in respect of such Product
(and,  where the party  purporting to terminate this agreement is also the party
prohibited from  performing or it or its Affiliate as hereinbefore  contemplated
is the Ineligible  Person, it [or such Affiliate,  as the case may be], has made



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diligent best efforts to remove the  prohibition  or its status as an Ineligible
Person) and such  prohibition  or status as an  Ineligible  Person has continued
uninterrupted for a period of 120 days.

H.6 FORCE  MAJEURE:  Either party may terminate this agreement with respect to a
particular  Product  materially  affected  by  an  event  of  Force  Majeure  in
accordance  with the  provisions of Section L.2 of Schedule "L" hereto (but this
agreement  shall  continue in respect of the other Products which remain subject
to this agreement and which are not effected by such Force Majeure event).

H.7 PRICE  EROSION:  Either  Genpharm or PRI may  terminate  this  agreement  in
respect of a  particular  Product  (the  "Specific  Product")  on 120 days prior
written  notice to the other party if, in any calendar  year,  the Gross Profits
derived  from Net Sale of such  Specific  Product  is less than 20% of the Gross
Sales of the Specific Product during such period.

H.8 MINIMUM THRESHOLD SALES: If, with respect to a Product:

      (i)   in the first 12 month period  (such period being herein  referred to
            as the "PERIOD")  commencing on the date (the  "COMMENCEMENT  DATE")
            which is the 2nd business days  immediately  following the date upon
            which the first  Availability  Notice (as contemplated in Subsection
            C.3(a) of Schedule "C" hereto) is given to PRI  hereunder in respect
            of such  Product,  the  aggregate Net Sales of such Product for such
            Period is less than the Threshold Amount applicable thereto; or

      (ii)  in any subsequent 12 month period (a "SUBSEQUENT PERIOD") commencing
            on the anniversary of the Commencement  Date the aggregate number of
            Units of such Product sold (excluding,  for greater certainty,  free
            goods) by PRI and its  Affiliates  in such  Subsequent  Period  (and
            included  in the Net  Sales  of such  Product  for  such  Subsequent
            Period) is, without reasonable  justification (having regard to such
            factors as, by way of illustration only but without limitation,  the
            Market  Factors  [as defined  below])  less than 70% of the Units of
            such Product sold (excluding,  for greater certainty, free goods) by
            PRI and its Affiliates during the Period;

and the  shortfall  in sales  cannot be  attributable  primarily to the fault of
Genpharm,  then  Genpharm  shall have the right to terminate  this  agreement in
respect of such Product upon 90 days prior  written  notice to PRI. For purposes
of this Section, the term "MARKET FACTOR" means:

      (A)   the  introduction  into the  Territory  of a  Competing  Product  or
            additional  Competing Products during that or a preceding Subsequent
            Period  which had a material  adverse  effect on the market share of
            PRI and any other  manufacturers  and  distributors  who were at the
            time  of  such  introduction  marketing  Competing  Products  in the
            Territory;

      (B)   a significant  price  erosion  relating to the Product and Competing
            Products  as a result of market  forces  resulting  in a decision by
            PRI, acting  reasonably,  not to seek additional and less profitable



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            sales of such Product  merely to increase Unit sales of such Product
            at the expense of Gross Profit;

      (C)   the  introduction  into the Territory of new branded  products which
            materially  adversely  affected  the  market  for such  Product  and
            Competing  Products,  if  any,  in the  Territory  during  that or a
            preceding Subsequent Period;

      (D)   the introduction  into the Territory of a product which has the same
            active ingredient and is for the same indication as such Product but
            which is in a different dosage form and which  materially  adversely
            affected the market for such Product and Competing Products, if any,
            in the Territory in that or a preceding Subsequent Period;

      (E)   Force Majeure (as defined in Section L.2 of Schedule "L" hereto).

H.9  NON-COMPETE  OBLIGATION OF PRI: If Genpharm  terminates  this agreement (or
terminates  this agreement in respect of a particular  Product or Products only)
pursuant to Section H.2, H.3 or H.8 hereof or if PRI  terminates  this agreement
pursuant to Section H.7 hereof,  PRI shall not (and shall not authorize,  cause,
permit or suffer any of its Affiliates to) directly or indirectly,  manufacture,
purchase,  sell or distribute  in the  Territory  any Competing  Products to any
Product(s) as to which this  agreement has been so terminated for a period of 24
months following the effective date of such termination.

H.10  NON-COMPETE  OBLIGATION OF GENPHARM:  If PRI terminates this agreement (or
terminates  this agreement in respect of a particular  Product or Products only)
pursuant to Section H.3 hereof or if Genpharm terminates this agreement pursuant
to Section  H.7  hereof,  Genpharm  shall not (and shall not  authorize,  cause,
permit or suffer any of its  Affiliates  to)  directly  or  indirectly,  sell or
distribute such Product(s) in the Territory for a period of 24 months  following
the effective date of such termination.

H.11 PURCHASE OF MATERIALS AND STOCK:  Upon termination of this agreement by PRI
(or  termination of this  agreement by PRI in respect of certain  Products only)
pursuant  to  Sections  H.3 or H.5 (as a result of  Genpharm  or a  Manufacturer
becoming an Ineligible  Person or being legally  prohibited  from performing its
obligations  hereunder),  Genpharm shall, at the request of PRI,  repurchase all
such Products in respect of which this  agreement  has so terminated  which were
supplied by it or on its behalf and which are then in the possession, custody or
control of PRI and  available for sale (and which have not been  adulterated  or
damaged   since  they  were  picked  up  by  the  carrier  at  Genpharm's  or  a
Manufacturer's  Plant for delivery to PRI and which remain qualified for sale in
the Territory) and all packaging material in the possession,  custody or control
of PRI which were specifically  acquired by PRI for the Products in question and
which cannot be used by PRI or its Affiliates for any other products sold by any
of them, at the landed cost to PRI of such Products and materials (determined in
accordance with generally accepted accounting principles),  which purchase price
shall be paid within 30 days  following  delivery of such products and materials
by PRI to the carrier  for  delivery to  Genpharm.  Genpharm  shall also pay all
transportation  costs  associated with shipping or transporting  the repurchased
Product or materials to Genpharm or to such other place as Genpharm may require.



<PAGE>

              CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
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                         ASTERISKS DENOTE SUCH OMISSION

H.12  SURVIVAL:  Any cause of action for breach of  contract  shall  survive the
termination or expiration of this  agreement.  The  termination or expiration of
this  agreement  shall not affect any right or  obligation  of  Genpharm  or PRI
existing  prior to the effective  date of termination or expiration and which is
by expressed hereunder to survive termination. Termination or expiration of this
agreement  shall not affect any right,  duty or obligation  arising  pursuant to
Section  I.3,  I.4,  I.5, I.6 or I.7 hereof or  Schedules  "D",  "F", "G" or "J"
hereto (which shall survive termination).



<PAGE>
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                         ASTERISKS DENOTE SUCH OMISSION

                                  SCHEDULE "I"

                   REGULATORY MATTERS AND ACCESS TO FACILITIES

I.1  ACCESS TO  GENPHARM'S  AND  MANUFACTURER'S  FACILITIES:  PRI shall have the
right, upon reasonable advance written notice to Genpharm, to inspect each Plant
where a  Product  is being  manufactured  or  stored to  monitor  compliance  by
Genpharm and the Manufacturer with the Product Manufacturing Requirements and to
otherwise confirm that the Product is being  manufactured,  and that Genpharm is
operating in compliance  with the  provisions of this  agreement in all material
respects. Genpharm shall have the right to have its representatives and/or those
of its Affiliate present throughout such inspections.  PRI shall promptly notify
Genpharm of any  non-compliance  at such Plant determined  through an inspection
herein  contemplated  and upon receipt of such notice,  Genpharm shall, or shall
cause the  applicable  Manufacturer  to,  promptly  and  diligently  rectify any
non-compliance  and  implement  appropriate  procedures  with a view to avoiding
repetition  of  such  non-compliance   prior  to  commencing  or  continuing  to
manufacture  the  Product(s) in question.  Genpharm  shall,  or shall cause each
Manufacturer to, promptly notify PRI, in writing, of any circumstances  relating
to its Plant that may  affect the  quality  of the  Product  being  manufactured
thereat.

I.2 ACCESS TO PRI'S STORAGE  FACILITIES:  Genpharm shall have the right (through
its own  representatives  and/or by  representatives  of a  Manufacturer),  upon
reasonable  advance  notice  to  PRI,  to  inspect  PRI's  and  its  Affiliate's
manufacturing  and warehouse  facilities  which are used to receive,  repackage,
label,  store or handle any Product to ensure  compliance with the provisions of
this  agreement  including,  without  limitation,  that the  Products  are being
received,  repackaged,  labelled,  stored  and  handled in  accordance  with the
Specifications  for  the  Product  relating  thereto  and  applicable  laws  and
regulations  (including FDA cGMP  guidelines)  and to otherwise  ensure that the
Products  do  not  become   adulterated   or  otherwise   cease  to  meet  their
Specifications  as a result of any acts by or omissions  of PRI, its  Affiliates
and their  respective  agents  and  employees  or those for whom they are at law
responsible.  PRI shall have the right to have its  representatives  or those of
its Affiliate present throughout such inspection. Genpharm shall promptly notify
PRI of any non-compliance  determined through an inspection herein  contemplated
and, upon receipt of such notice,  PRI shall promptly and diligently  rectify or
cause  the  rectification  of any  non-compliance  and  implement  or cause  the
implementation of appropriate  procedures with a view to avoiding  repetition of
such  non-compliance.  PRI shall promptly notify  Genpharm,  in writing,  of any
circumstances relating to its facilities or those of its Affiliates where any of
the  Products are  received,  repackaged,  labelled,  stored or handled that may
affect the quality of any Product.

I.3 DETENTION OF TECHNICAL  RECORDS AND SAMPLES:  Each of Genpharm and PRI shall
keep,  or cause its  Affiliates  to keep,  as  required,  such  samples and such
records  (or copies  thereof)  in respect of the  Products  being  manufactured,
supplied  or  distributed  by it as  are  required  by  the  applicable  Product
Manufacturing  Requirements and/or applicable law for such period of time as may
be  required  thereunder.  PRI shall  permit and shall cause its  Affiliates  to
permit  Genpharm  and the  Manufacturers  to have  access  to such  samples  and
original records as are required to be maintained by PRI at all reasonable times



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                         ASTERISKS DENOTE SUCH OMISSION

upon prior reasonable notice and shall,  upon written request,  promptly provide
Genpharm (or any Manufacturer,  as directed by Genpharm) with a copy of all such
records.

I.4  CO-OPERATION RE PRODUCT SAFETY:  Genpharm and PRI shall promptly advise the
other of any safety or  toxicity  problem  of which such party or its  Affiliate
becomes aware regarding a Product being manufactured, supplied or distributed by
it, intermediates or other ingredients or processes used in the manufacture such
Product.

I.5 FDA  Correspondence:  Following  receipt of a Product Approval for a Product
Genpharm  and PRI shall  provide  the  other  (and  Genpharm  shall  cause  each
Manufacturer  to  provide  PRI)  with a copy of any  correspondence  or  notices
received by such party from the FDA  relating to or  referring  to such  Product
within 10 days of receipt and a copy of any response to any such  correspondence
or notices with 10 days of making a response.

I.6 Customer Complaints:

(a)   PRI shall notify Genpharm and each Manufacturer, as applicable:

      (i)   of any  customer  complaints  or alleged  adverse  drug  experiences
            ("ADE")  relating to a Product  promptly  following their receipt by
            PRI or any of its  Affiliates  (but in any  event  within  5 days of
            receipt  thereof,  except in the case of a Serious  ADE [as  defined
            below] in which event PRI shall notify Genpharm and the Manufacturer
            of same  within  24 hours,  which  latter  notification  shall be by
            telephone with a facsimile confirmation immediately following); or

      (ii)  of any FDA  complaints or complaints  of any other  governmental  or
            regulatory  body,  agency or  official  in the  Territory  within 48
            hours, except on weekends and holidays.

      For purposes of this  agreement  "SERIOUS ADE" shall mean an adverse event
      which gives rise to one or more of the following:  death,  threat to life,
      new or prolonged  in-patient  hospitalization,  permanent  or  significant
      disability or incapacitation,  overdose,  cancer or congenital abnormality
      or  serious  laboratory  abnormality  which is  thought  by the  reporting
      physician to be serious or  associated  with  relevant  clinical  signs or
      symptoms.  Genpharm shall, or shall cause the applicable  Manufacturer to,
      notify  PRI in  the  manner  and  within  the  time  periods  hereinbefore
      contemplated  of any  ADE or FDA  complaint  (or of the  complaint  of any
      governmental  body, agency or official in the Territory)  relating to such
      Product in respect of the Territory following their receipt by Genpharm or
      such Manufacturer.

(b)   Genpharm shall be responsible  for filing or causing the  Manufacturer  to
      file any necessary complaint report required by the FDA in accordance with
      applicable FDA regulations.

(c)   To enable Genpharm or the  Manufacturer to respond to any  requirements of
      the FDA in connection  with a complaint or ADE, PRI agrees to  investigate
      and respond in writing to any  complaint  or ADE  forwarded  to it by or a


<PAGE>

      Manufacturer  promptly and, in no event,  later than 30 days after receipt
      of the ADE or complaint from Genpharm or a Manufacturer.  In addition, PRI
      shall provide Genpharm and the applicable  Manufacturer with a copy of any
      correspondence, reports, or other documents relating to a complaint or ADE
      received by PRI or its Affiliate  relating to the Product  promptly of the
      receipt thereof and shall also provide to Genpharm (and such Manufacturer)
      PRI's response thereto within a reasonable period following  generation of
      such  document  by PRI.  Upon the  request  of  Genpharm,  PRI  shall  use
      reasonable  commercial  efforts to retrieve and shall cause its Affiliates
      to use  reasonable  commercial  efforts to  retrieve  such  samples of the
      Product  which are the  object of a  complaint  or ADE to enable  Genpharm
      and/or the  applicable  Manufacturer  to conduct  such tests,  studies and
      investigations  as it determines to be necessary to respond to such ADE or
      complaint or to take appropriate corrective action.

I.7   RECALLS:

(a)   In the event that Genpharm or a  Manufacturer  shall be required (or shall
      voluntarily  decide) to  initiate a recall,  product  withdrawal  or field
      correction  of any  Product (a  "RECALL"),  whether or not such Recall has
      been  requested  or  ordered by the FDA (or any other  governmental  body,
      agency or official  having  jurisdiction  in the Territory) or by a court,
      Genpharm shall, or shall cause the applicable  Manufacturer to, notify PRI
      and PRI shall fully  co-operate  and shall cause its  Affiliates  to fully
      co-operate  with  Genpharm  (and such  Manufacturer)  in  notifying  their
      customers   to  return  all  such  Product  and  shall  follow  any  other
      instructions provided by Genpharm (or such Manufacturer).

(b)   In the event  that PRI  believes  that a Recall  may be  necessary  and/or
      appropriate,  prior to taking  any  action  PRI shall  immediately  notify
      Genpharm  and the  applicable  Manufacturer  and  Genpharm  and PRI  shall
      co-operate and cause their  respective  Affiliates to co-operate with each
      other (and the other's  Affiliate) in determining the necessity and nature
      of the action to be taken.

(c)   With respect to any Recall,  Genpharm or the  Manufacturer  shall make all
      contacts with the FDA and shall be responsible  for  co-ordinating  all of
      the necessary  activities in connection  with such Recall and PRI (and its
      Affiliates)  and Genpharm (and its Affiliate)  shall each  co-operate with
      the other (and with the  other's  Affiliate)  in  recalling  the  affected
      Product.

(d)   In the event  that it is  determined  by  agreement  of the  parties or by
      arbitration as herein  contemplated  that a Recall results solely from any
      cause or event arising from the manufacture, labelling, storage, handling,
      or packaging of the Product by Genpharm or a  Manufacturer  or other cause
      or event  attributable  to Genpharm or a  Manufacturer,  Genpharm shall be
      responsible  for all  expenses  of such  Recall.  In the event  that it is
      determined  by  agreement  of the  parties  or by  arbitration  as  herein
      contemplated  that a Recall results solely from any cause or event arising
      from  the  transportation,  manufacturing  (if  applicable),  repackaging,
      labelling,  storage, handling, marketing or distribution of the Product by
      PRI or any of its Affiliates or other cause or event  attributable  to PRI


<PAGE>

      or any of its  Affiliates,  PRI shall be  responsible  for all expenses of
      such Recall. If:

      (i)   within 60 days of the initiation of a Recall, the parties are unable
            to agree that the cause of such Recall was solely the responsibility
            of  PRI  or  its  Affiliates  or  Genpharm  or  a  Manufacturer   as
            hereinbefore contemplated; or

      (ii)  an  arbitrator  pursuant to an  arbitration  initiated by one of the
            parties  in  respect  of  such  Recall  within  the  60  day  period
            contemplated in (i) above,  determines that the cause of such Recall
            was not solely the  responsibility  of PRI or its  Affiliates  or of
            Genpharm or a Manufacturer as hereinbefore contemplated;

      then PRI shall initially pay or reimburse Genpharm and its Affiliates,  as
      the case may be, for the  expenses  of the Recall but shall be entitled to
      recover from Genpharm *** % of the expenses so incurred through deductions
      to and sharing of Gross Profits.

(e)   For purposes of this agreement,  Recall expenses shall include, but not be
      limited to, the expenses of notification  and destruction or return of the
      recalled Product,  as the case may be, and PRI's (and its Affiliates') and
      Genpharm's  and  its  Affiliates'   reasonable   out-of-pocket   costs  in
      connection  with such  Recall  including  but not  limited  to  reasonable
      attorney's fees and expenses and credits and recall  expenses  claimed and
      paid to customers (the "RECALL EXPENSES").  Each of the parties shall use,
      and shall cause its  Affiliates  to use,  its  reasonable  best efforts to
      minimize  the Recall  Expenses  which it incurs  and shall  provide to the
      other, upon request,  reasonable  evidence of the  out-of-pocket  expenses
      being  claimed by it. The direct  out-of-pocket  costs and expenses of the
      Recall  contemplated  above shall not include the gross amount invoiced by
      PRI or its  Affiliates  to  the  customers  on  the  sale  of the  Product
      recalled,  which  amount  shall  be  dealt  with in  accordance  with  the
      provisions  of  Section  F.2 of  Schedule  "F"  hereto  and shall also not
      include any Excess  Reprocurement Costs (within the meaning of Section F.3
      of Schedule "F" hereto),  which costs shall be paid by PRI (subject to its
      right to partially recover same through deduction from Gross Profits).

(f)   All  Product  recalled  pursuant  to this  Section I.7 shall be treated as
      Product returned to PRI by its customers and the provisions of Section F.2
      of Schedule "F" hereto shall apply thereto.

(g)   All  communications  relating to a Recall shall be held in confidence  and
      shall be subject to the terms of Schedule "J" hereof.



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                         ASTERISKS DENOTE SUCH OMISSION

                                  SCHEDULE "J"

                                 CONFIDENTIALITY

J.1  CONFIDENTIAL  NATURE OF AGREEMENT:  Each of the parties hereto agrees that,
without the prior written  consent of the other, or except as may be required by
law or court  order,  the  existence  and terms of this  agreement  shall remain
confidential  and shall not be disclosed to any Person other than  employees and
professional  advisers of such party or its  Affiliate  who  reasonably  require
knowledge of the existence or terms of this  agreement and who are bound to such
party or its Affiliate by a like obligation of  confidentiality.  Such employees
and advisors will be advised of the nature and existence of the  confidentiality
undertakings of this agreement and of the  applicability of such undertakings to
them and will agree to be bound hereby.

J.2 DUTY OF  CONFIDENTIALITY:  Each of Genpharm  and PRI agrees to hold in trust
and confidence (and to cause its Affiliates to hold in trust and confidence) for
the benefit of the other party (and its Affiliates) all Confidential Information
of such other party and its Affiliates and each further agree to safeguard,  and
to cause its Affiliates to safeguard,  the Confidential Information of the other
(or its  Affiliates)  to the same extent that it does with its own  confidential
information and to limit and control copies,  extracts and reproductions made of
such Confidential  Information.  Neither party will, without the express written
consent of the other,  directly  or  indirectly,  use (or  authorize,  permit or
suffer any of its Affiliates to use) any  Confidential  Information of the other
party  or of its  Affiliates  for  any  purpose  other  than  to  implement  the
provisions of this  agreement or in  regulatory  proceedings  or in  litigation.
Neither party will disclose  Confidential  Information to any Person, other than
its employees or other  representatives  or those of its  Affiliates  who have a
need to know to fulfill the provisions and intent of this agreement  (where such
provisions and intent cannot properly be fulfilled  without such disclosure) and
who have been informed of the  confidential  nature of the  information and have
agreed to be bound by the terms  hereof.  Each of Genpharm and PRI shall use its
best  efforts to prevent  unauthorized  use or  disclosure  of the  Confidential
Information of the other or its Affiliates and shall use protective  measures no
less  stringent  than those used by it in its own  business  to protect  its own
confidential  information,  including  segregating such information at all times
from the confidential material of others so as to prevent any commingling.

J.3 COMPULSORY DISCLOSURES:  In the event that either Genpharm or PRI (or any of
their respective  Affiliates)  shall be legally compelled or required by a court
of  competent  jurisdiction  to  disclose  all or any  part of the  Confidential
Information of the other (or its Affiliates),  it shall provide prompt notice to
the other so that such other party (or its Affiliates) may determine  whether or
not to seek a protective order or any other appropriate  remedy. If a protective
order or other  appropriate  remedy is not obtained  before such  disclosure  is
required,  the party  required  to make  disclosure  will  disclose  only  those
portions of the  Confidential  Information  in  question  which it is advised by
written  opinion of counsel  (which opinion shall be addressed to such party and
to the other  party),  it is legally  required to disclose and will exercise its
best efforts to obtain reliable  assurances that confidential  treatment will be
accorded such Confidential Information.

J.4 RETURN OF CONFIDENTIAL INFORMATION:  Upon termination of this agreement each
of  Genpharm  and  PRI  shall  immediately  return  to the  other  all  material
containing  or reflecting or referring to any  Confidential  Information  of the


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other party or its Affiliates (including all notes, summaries, analysis or other
documents  prepared  or derived  therefrom)  and all copies  thereof in any form
whatsoever  under the power or control of such party or its  Affiliates,  except
that one copy may be retained for legal archival purposes,  and such party shall
delete such  Confidential  Information from all retrieval systems and data bases
or destroy  same as directed by the other party and furnish to the other  party,
if requested,  a certificate of a senior officer of such party  certifying  such
return,  deletion  and/or  destruction.  Where this  agreement is  terminated in
respect of a particular Product or Products only then the foregoing  obligations
shall thereupon apply to  Confirmation  Information  relating to such Product or
Products.

J.5 SURVIVAL: The obligations of confidentiality  contained herein shall survive
the termination of this agreement.



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                                  SCHEDULE "K"

                                   ARBITRATION

K.1  ARBITRATION:  Any controversy or claim arising out of, or relating to, this
agreement or the breach  thereof  shall be referred for decision  forthwith to a
senior  executive of each party not involved in the dispute.  If no agreement is
reached  within  30 days of the  request  by one party to the other to refer the
same to such senior  executive,  then such controversy or claim shall be settled
by  arbitration  in  accordance  with the  Commercial  Arbitration  Rules of the
American Arbitration  Association,  such arbitration to be held in New York, New
York  on  an  expedited  basis.   Judgement  upon  the  award  rendered  by  the
Arbitrator(s) may be entered in any court having jurisdiction thereof.



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                                  SCHEDULE "L"

                      GENERAL CONTRACT TERMS AND CONDITIONS

L.1 NOTICE:  Subject to the express  provisions  of this  agreement,  any notice
required or permitted  to be given under this  agreement  shall be  sufficiently
given  if  in  writing  and  delivered  by  facsimile   (with   confirmation  of
transmittal) or overnight courier (with confirmation of delivery), as well as by
prepaid  registered mail (with return receipt requested) or hand delivery to the
appropriate party at the address set forth below, or at such other address or to
the  attention  of such  other  individual  as such  party may from time to time
specify for that purpose in a notice similarly given:

      To Genpharm at:
      85 Advance Road,
      Etobicoke, Ontario,
      M8Z 2A6,
      Canada

      Attention:  Chief Financial Officer
      Fax Number:  (416) 236-9807

      To PRI at:

      One Ram Ridge Road
      Spring Valley, NY 10977 U.S.A.

      Attention:  Chief Financial Officer
      Fax Number:  (914) 425-7922

Any such notice shall be effective (i) if sent by mail, as aforesaid, 5 business
days after  mailing,  (ii) if sent by facsimile,  as aforesaid,  when sent (with
confirmation  of receipt),  and (iii) if sent by courier or hand  delivered,  as
aforesaid, when received,  provided that if any such notice shall have been sent
by mail and if on the date of mailing  thereof or during the period prior to the
expiry of the 5th business day  following  the date of mailing  there shall be a
general postal disruption (whether as a result of rotating strikes or otherwise)
in the  country or  territory  where the  sender or the  intended  recipient  is
situated then such notice shall not become  effective until the 5th business day
following the date of resumption of normal mail service.

Where PRI is  authorized or required to notify or otherwise  communicate  with a
Manufacturer  other than Genpharm it shall notify or otherwise  communicate with
such Manufacturer in the foregoing manner (and the provisions hereof shall apply
mutatis  mutandis) at the address or facsimile  number (and to the  attention of
such  individual)  as Genpharm  shall notify PRI from time to time in accordance
with the  foregoing  notice  provisions  or at such other  address or  facsimile
number or the  attention  of such  other  individual  as such  Manufacturer  may
specify in a notice similarly given, provided that a copy of each such notice or



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other  communication  shall be  forwarded  to Genpharm at its address for notice
hereunder.

L.2 FORCE MAJEURE: Neither party shall be considered to be in default in respect
of any  obligation  hereunder  if failure of  performance  shall be due to Force
Majeure (as hereinafter defined). If either party is affected by a Force Majeure
event such party  shall,  within 20 days of its  occurrence,  give notice to the
other party stating the nature of the event,  its  anticipated  duration and any
action  being  taken  to  avoid  or  minimize  its  effect.  The  suspension  of
performance shall be of no greater scope and no longer duration than is required
by such  Force  Majeure  and the  non-performing  party  shall use  commercially
reasonable  efforts to remedy its  inability to perform.  The  obligation to pay
money in a timely  manner is  absolute  and shall  not be  subject  to the Force
Majeure  provisions,  except to the extent payment is prohibited by governmental
rule or regulations  other than rules or  regulations  incident to bankruptcy or
insolvency  proceedings of a party. Force Majeure shall mean an unforeseeable or
unavoidable  cause beyond the control and without the fault or  negligence  of a
party or its Affiliate  including,  but not limited to,  explosion,  flood,  war
(whether  declared  or  otherwise),  accident,  labour  strike  or other  labour
disturbance,  inability to obtain materials or services,  sabotage, acts of God,
newly enacted  legislation,  newly issued orders or decrees of any Court and any
binding act or order of any  governmental  agency.  Notwithstanding  anything in
this  Section,  the  party to whom  performance  is owned  but to whom it is not
rendered  because of an event of Force Majeure as  contemplated  in this Section
shall,  after  the  passage  of 120 days,  have the  option  to  terminate  this
agreement  in respect  of the  Product  affected  by such event on 30 days prior
written notice to the other party hereto. For greater  certainty,  Force Majeure
in relation to Genpharm's  obligation to supply  Product  hereunder to PRI shall
include the  inability  to obtain the  required  Product  from the  Manufacturer
thereof as a result of events or  circumstances  relating  to such  Manufacturer
which would  otherwise be an Event of Force  Majeure had it occurred in relation
to Genpharm.

L.3 GOVERNING LAW AND CONSENT TO JURISDICTION: This agreement shall be deemed to
have been made  under,  and shall be  governed  by, the laws of the State of New
York without giving effect to New York's choice of law provisions.

L.4  ENTIRE  AGREEMENT:   This  agreement  contains  the  entire  agreement  and
understanding  of the parties with respect to its subject  matter and supersedes
all negotiations, prior discussions and any agreements relating to the Products.
This  agreement  may not be amended or modified  except by a written  instrument
signed by the parties.

L.5 WAIVER:  Any waiver of, or consent to depart from, the  requirements  of any
provision  of this  agreement  shall be  effective  only if it is in writing and
signed by the party  giving it, and only in the  specific  instance  and for the
specific  purpose  for which it has been  given.  No  failure on the part of any
party to exercise,  and no delay in  exercising,  any right under this agreement
shall  operate as a waiver of such right.  No single or partial  exercise of any
such right  shall  preclude  any other or further  exercise of such right or the
exercise of any other right.

L.6 COUNTERPARTS:  This agreement may be executed in identical  duplicate copies
exchanged by facsimile transmission.  The parties agree to execute two identical
original copies of the agreement after  exchanging  signed  facsimile  versions.


<PAGE>

Each  identical  counterpart  shall  be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.

L.7  SEVERABILITY  OF  PROVISIONS:  If,  for any  reason  whatsoever,  any term,
covenant or provision of this agreement or the application  thereof to any party
or  circumstance  or in any  jurisdiction  is to any  extent  held  or  rendered
invalid,  unenforceable or illegal, then such term, covenant or condition (a) is
deemed to be  independent of the remainder of this agreement and to be severable
and divisible  therefrom and its validity,  unenforceability or illegality shall
not affect,  impair or  invalidate  the  remaining  provisions  hereof;  and (b)
continue to be applicable and enforceable to the fullest extent permitted by law
in every other  jurisdiction and against any party and circumstances  other than
those  as to  which  or in  respect  of  which  it has  been  held  or  rendered
unenforceable or illegal.  To the extent  permitted by applicable law,  Genpharm
and PRI hereby waive any  provision of law which  renders any  provision of this
agreement  prohibited or unenforceable  in any respect.  Should any provision of
this agreement be so held to be unenforceable,  such provision,  if permitted by
law, shall be considered to have been  superseded by a legally  permissible  and
enforceable  clause which  corresponds most closely to the intent of the parties
as evidenced by the provision held to be unenforceable.

L.8  ASSIGNMENT:  Neither this agreement nor rights of a party  hereunder may be
assigned nor may the performance of any duties  hereunder be delegated by PRI or
by  Genpharm   without   the  prior   written   consent  of  the  other   party.
Notwithstanding  the foregoing,  Genpharm and PRI may delegate from time to time
some of their respective duties hereunder to any of their respective  Affiliates
and,  in  addition,   Genpharm   and/or  its  Affiliate  may   subcontract   the
manufacturing of a Product, in whole or in part, to any other Person (whether or
not an Affiliate),  provided that (a) such  subcontracting is done in compliance
with all applicable  requirements of the FDA; (b) prior to any such  delegation,
the  delegating  party gives  written  notice  thereof to the other party hereto
(indicating  the duties being so delegated and the duration of such  delegation)
and (c) no such delegation or  subcontracting  shall relieve Genpharm or PRI, as
the case may be, of any of its obligations  hereunder.  Subject to the foregoing
this agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns.

L.9 NON  CONTRAVENTION:  Each party  represents and warrants that the execution,
delivery and  performance  of this agreement by it will not contravene any other
contract or agreement to which it is a party or by which it is bound.

L.10 COMPLIANCE: Where, in accordance with the provisions of this agreement, the
Affiliate  of a  party  is  required  to do or  omit  to  do or  use  reasonable
commercial  (or other) efforts to do or refrain from doing any act or thing such
party shall use reasonable  best  commercial  efforts to cause its Affiliates to
comply.



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                                  SCHEDULE "M"

                                   DEFINITIONS

"AFFILIATE" means, subject to the limitations set forth below, any Person which,
directly or  indirectly,  controls,  is controlled by or is under common control
with such Person.  For purposes of this definition,  the term "control" (as used
in the terms  "CONTROLS",  "CONTROLLED  BY" and "UNDER  COMMON  CONTROL")  means
either (i) holding 50% or more of the voting  securities of such Person or, (ii)
in the case of a Person that has no outstanding  voting  securities,  having the
right to 50% or more of the  profits  of such  Person or having the right in the
event of  dissolution  to 50% or more of the net assets of such Person or, (iii)
the power to direct or cause the  direction  of the  management  and policies of
such Person, whether pursuant to the ownership of voting securities, by contract
or otherwise;  provided,  however,  that Merck KGaA and its Affiliates  shall be
deemed not to be  Affiliates  of Genpharm  unless such Person is Merck  Generics
Group B.V.  or a  subsidiary  of Merck  Generics  Group  B.V.  so that by way of
illustration  only and without  limiting the  generality of the  foregoing,  Dey
Laboratories, Inc. will not be an Affiliate of Genpharm;

"ANDA" means the abbreviated new drug application  heretofore or hereafter filed
by  Genpharm  or any of its  Affiliates  with  the  FDA for or in  respect  of a
Product;

"APPROVED  LISTING FEE" means,  in respect of a Product,  listing fees and other
similar  up-front  payments paid by PRI and its  Affiliates  to unrelated  third
party customers in consideration for such customers  agreeing to buy the Product
to the  exclusion of other  Competing  Products for a specified  period of time,
where:

      (i)   the agreement  pursuant to which such payment is to be made has been
            entered into in compliance  with the policy relating to listing fees
            and other similar up-front payments previously approved by Genpharm,
            or the proposed agreement has been approved in writing by Genpharm;

      (ii)  the agreement  pursuant to which such payment is to be made has been
            entered into  exclusively to enhance the sale of such Product and is
            not entered into to directly or  indirectly  enhance the sale of PRI
            or any of its  Affiliates  Other  Products  (within  the  meaning of
            Section E.3 of  Schedule  "E"  hereto) or as an  incentive  for such
            customer to purchase any Other Products of PRI or its Affiliates;

      (iii) the amount to be paid  pursuant to such  agreement to such  customer
            plus the amount  previously paid to such customer and/or  Affiliates
            of such  customer in respect of such  Product  pursuant to any other
            similar  agreement  is less  than the sum of $*** , or such  greater
            amount as Genpharm may approve in writing,  which approval shall not
            be  unreasonably  withheld or unduly  delayed (and Genpharm shall be
            deemed to have approved a request for an increased amount to be paid
            to a customer unless Genpharm  notifies PRI within 12 business hours
            (being hours  between 9:00 a.m. and 5:00 p.m.,  Toronto  time,  on a



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            business  day) of the receipt by  Genpharm of a written  request for
            such  increased  fee or  payment  that it does not  consent  to such
            increased amount; and

      (iv)  not more  than 2  unrelated  third  party  customers  of PRI and its
            Affiliates  have  already been paid (or are entitled to receive from
            PRI or its  Affiliates)  a  listing  fee or  other  similar  upfront
            payment  from PRI or its  Affiliates  in  respect  of such  Product,
            unless Genpharm consents to increase the number of customers to whom
            listing fees or similar  upfront  payments may be made in accordance
            with the foregoing, which consent shall not be unreasonably withheld
            or unduly  delayed [and Genpharm  shall be deemed to have approved a
            request to the  payment of a listing  fee or other  similar  upfront
            payment to a specified  customer where such payment would  otherwise
            be in breach of this  paragraph  (iv) unless  Genpharm  notifies PRI
            within 12 business  hours  (being  hours  between 9:00 a.m. and 5:00
            p.m., Toronto time, on a business day) of the receipt by Genpharm of
            a written request for such a payment to such specified customer that
            it does not so consent];

"BUSINESS  DAY" means a day other than a Saturday,  a Sunday or a day which is a
statutory  holiday in the Province of Ontario,  Canada or the State of New York,
United States of America;

"cGMP" means the current Good  Manufacturing  Practices of the FDA (as in effect
from time to time);

"COMPETING  PRODUCT"  means,  with  respect to a particular  Product,  a generic
pharmaceutical  product  which is in the same dosage  form,  has the same active
ingredient, the same strength and is for the same indication as such Product but
which is  manufactured  and supplied by or purchased or acquired from any Person
other than Genpharm or its Affiliates;

"CONFIDENTIAL  INFORMATION"  shall mean information  disclosed to or obtained by
one party from another party (including  information  obtained by one party as a
result of access to the facilities of the other party) either prior to or during
the term of this agreement  which is non-public,  confidential or proprietary in
nature (including,  without limitation,  trade secrets,  financial data, product
information,  manufacturing  methods,  market  research data,  marketing  plans,
identity of customers,  or product information  [including the nature and source
of raw  materials,  product  formulation  and methods of producing,  testing and
packaging]) and which relates to the disclosing  party's past, present or future
research, development or business activities Confidential Information shall not,
however, include information that a party can demonstrate by written evidence:

      (i)   is in the public domain  (provided  that  information  in the public
            domain has not and does not come into the public  domain as a result
            of a breach  by a party  hereto  (or any of its  Affiliates)  of its
            obligations of confidentiality contained herein;

      (ii)  is known by the  receiving  party prior to  disclosure  by the other
            party; or

      (iii) which has been developed by the receiving  party  independent of any
            disclosure by the other party;




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      (iv)  is  subsequently,  lawfully  and  in  good  faith  obtained  by  the
            receiving  party on a  non-confidential  basis from a third party as
            shown by  documentation  sufficient  to establish the third party as
            the source of the  information,  provided  that such third party was
            not under an obligation to treat such  information in a confidential
            manner and had a lawful right to make such disclosure;

"DEDUCTIBLE  LISTING FEE" means, in relation to a Product in respect of a period
for  which Net  Sales is being  calculated  hereunder,  the  aggregate  of those
amounts,  each of which is the portion of an Approved Listing Fee paid by PRI or
its  Affiliates  in such period or in any prior period  amortized,  on a monthly
basis, over the period of the agreement  pursuant to which such Approved Listing
Fee is paid, applicable to such period;

"EFFECTIVE DATE" means the 25th day of March, 2002;

"FDA" shall mean the United  States Food and Drug  Administration  (or  whatever
such agency might be called from time to time),  or any successor  agency having
regulatory jurisdiction over the manufacture,  distribution and sale of drugs in
the United States.

"GROSS PROFITS" means,  for a Product in respect of any period,  PRI's Net Sales
of such Product in such period less the aggregate of the following:

(a)   the landed cost to PRI of such  Product  sold in such period by PRI and/or
      its Affiliate to unrelated third party customers, determined in accordance
      with generally accepted  accounting  principles  consistently  applied, to
      include,  without duplication,  the Transfer Price of such Product to PRI,
      import  duties and taxes paid or payable by PRI in respect of  purchase or
      importation  of such Product and delivery  charges  (including  insurance)
      incurred by PRI for the  delivery  of the Product  from the Plant to PRI's
      Spring Valley, New York, facility;

(b)   Recall Expenses incurred in such period in respect of such Product;

(c)   Excess  Reprocurement  Costs  incurred  in such  period in respect of such
      Product; and

(d)   Repackaging Expenses incurred by PRI applicable to the quantity of Product
      sold in such period  determined  in  accordance  with  generally  accepted
      accounting principles, consistently applied;

For greater  certainty,  where Product sold by PRI or its Affiliates in a period
(the "RESALE") had previously been sold by PRI or its Affiliates to an unrelated
third party  customer in that period or any prior  period and returned to PRI or
its  Affiliates  by such customer in such period or a prior period and an amount
on account of the landed cost of such Product as  contemplated  in (a) above has
been deducted in calculating Gross Profits in respect of the prior sale for such
period or a prior  period then the amount to be  deducted  under  Paragraph  (a)
above in respect of the Resale shall be deemed to be nil.



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It is  understood  and  agreed  that  where  Product  purchased  by PRI has been
returned  to  Genpharm  or  otherwise  disposed  of (in a manner  approved of by
Genpharm)  entitling  PRI to  claim a  reduction,  refund,  remission  or  other
recovery of the import  duties or taxes paid or payable by PRI in respect of the
purchase or  importation  of such  Product  then PRI shall  promptly  claim such
reduction,  refund,  remission  or other  recovery of such duties and taxes (and
shall  promptly  file and submit all required  documentation  to the  applicable
fiscal  authority  therefore)  and the Gross  Profit for the period in which the
reduction,  refund,  remission  or other  recovery  of such  duties and taxes is
recognized by PRI (or its  Affiliates)  in accordance  with  generally  accepted
accounting  principles  shall  be  increased  by the  amount  of the  recognized
reduction, refund, remission or other recovery of such duties and taxes.

The  deduction  under  (b) and (c) are  limited  to  Recall  Expenses  or Excess
Reprocurement  Costs actually  incurred in such period and shall not include any
amount  accrued,  provided or reserved for  estimated  or potential  deductions.
Excess  Reprocurement  Costs and Recall  Expenses (to the extent they  represent
amounts  payable to unrelated third party  customers)  shall be considered to be
actually  incurred  only  when the  payment  is made or credit is issued to such
customer by PRI or its Affiliates.

"GROSS SALES"  means,  in respect of sale of Units of the Product by PRI and its
Affiliates  in the  Territory,  the gross  invoice  price charged by PRI and its
Affiliates  to  unrelated  third  party  customers  less  freight,  postage  and
insurance  related to the delivery of the Product to such customer to the extent
that such  amount is  charged  to such  customer  and shown  separately  on such
invoice and has been  included in the gross  invoice  price and less sales taxes
and other  governmental  charges imposed upon the sale of such Product by PRI or
its  Affiliates  to such  customer  (to the extent that such  amounts  have been
included in gross invoice price);

"INELIGIBLE  PERSON"  means any Person  who is  prohibited  by any law,  rule or
regulation or by any order, directive or policy from selling any of the Products
(assuming that the Product Approvals have been obtained) or other pharmaceutical
products within the Territory or who is listed by a United States federal agency
as debarred,  suspended,  proposed for  debarment  or otherwise  ineligible  for
federal  programs  in the  United  States  or  other  jurisdictions  within  the
Territory;

"MANUFACTURER"  means,  in respect of a Product,  the  Affiliate  of Genpharm in
whose name the Product Approval for such Product is registered;

"MANUFACTURING  COST"  shall mean the cost to Genpharm  or the  Manufacturer  to
manufacture  (including  quality  control and  testing)  and package the Product
including,  without  limitation,  the landed cost of raw materials and packaging
materials,  component costs,  energy, labor (salary and benefits) and reasonable
overhead charges (not to exceed 20% of the  Manufacturing  Cost) relating to the
manufacture  of the Product,  and other direct and allocable  indirect  costs to
manufacture such Product, including but not limited to manufacturing charges for
material  adjustments,  for off grade or defective  material,  handling  losses,
physical adjustments,  salvage and depreciation but specifically excluding costs
incurred in research, development, design, marketing, promotion,  administration
or  obtaining  the Product  Approval,  determined  in  accordance  with  methods
currently  employed by Genpharm or such  Manufacturer  in the manufacture of all



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products   produced  in  the  facility  or   facilities   in  which  Product  is
manufactured. If, in the sole discretion of Genpharm or the Manufacturer, all or
any portion of the manufacturing or packaging of the Product is subcontracted by
Genpharm or such  Manufacturer to a third party (or to any Affiliate of PRI) the
Manufacturing  Costs shall include the amount paid to such third party (or PRI's
Affiliate).  The  Manufacturing  Cost of the Product shall be established on the
date that the Product  Approval  for such Product is acquired by Genpharm or the
Manufacturer  and on the first day of each calendar  quarter  thereafter,  which
amount shall be used to determine the Transfer Price of Product  manufactured by
Genpharm  or  the  Manufacturer  for  PRI  during  the  period  until  the  next
Manufacturing Cost determination date. The parties further acknowledge and agree
that where, during a period between  Manufacturing Cost determination dates, the
variable  costs  incurred by Genpharm or the  Manufacturer  to  manufacture  the
Product  (and  which  are  included  in the  Manufacturing  Cost)  have,  in the
aggregate, increased or decreased by more than 5%, a pro rata adjustment will be
made to the Manufacturing  Cost of Products  manufactured  during such period as
agreed  upon by  Genpharm  and PRI  or,  failing  agreement,  as  determined  by
arbitration  pursuant to Schedule "K" of this agreement.  In determining changes
in Manufacturing  Cost due to changes in the variable costs incurred by Genpharm
or Manufacturer for raw materials and components  including  active  ingredient,
such  materials  shall be used and  costed  on a first  in,  first  out basis in
accordance with generally accepted accounting principles,  consistently applied.
Within 30 days of the receipt of a Product Approval for such Product, and within
30 days of each Manufacturing Cost determination date, Genpharm shall deliver or
cause  to be  delivered  to  PRI a  statement  showing  the  calculation  of the
Manufacturing  Cost  applicable  to  such  period,   which  statement  shall  be
accompanied by a certificate  signed by the Chief Financial  Officer of Genpharm
or, at Genpharm's  option,  the Manufacturer of such Product certifying that, to
the  best  of  his  knowledge,   information   and  belief,   after   reasonable
investigation, such statement is true and correct in all material respects;

"NET  SALES"  means,  in respect  of a Product  for a period,  the gross  amount
invoiced  by PRI and its  Affiliates  in such  period to  unrelated  third party
customers on account of the sale of such Product (excluding amounts for freight,
postage,  insurance,  sales tax and other governmental charges imposed upon such
sale which are included in the gross amount  invoiced  and shown  separately  on
such invoice) PLUS any other form of revenue (other than interest  accruing from
or paid by such customers on account of outstanding overdue invoices) or expense
reimbursement or recovery  recognized by PRI or its Affiliates in such period in
accordance  with  generally  accepted  accounting  principles  as  a  result  of
commercial arrangements relating to such Product LESS, without duplication:

      (i)   credits  issued  or  payments  made  by PRI and  its  Affiliates  to
            unrelated  third  party  customers  for or on  account  of,  without
            duplication, bona fide rebates granted and customary trade discounts
            (other than prompt payment discounts) actually allowed by PRI or its
            Affiliates  to such  customers  in the  ordinary  course of business
            (except  rebates  or  discounts   granted  wholly  or  partially  in
            consideration  of such customer's  agreement to purchase any service
            or any  product  other  than the  Product  unless  such  rebates  or
            discounts  are   across-the-board   rebates  or  discounts   applied
            uniformly  to the Product and other  products or services as part of
            an  overall  program  of rebates  or  discounts  established  by PRI



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            covering   substantially   all  of  its   products),   shelf   stock
            adjustments,  chargebacks,  returned  Product,  rejection of damaged
            Product and billing and shipping errors related to the Product;

      (ii)  out-of-pocket  costs for freight,  postage and insurance incurred by
            PRI or its  Affiliates  in the  period to  deliver  the  Product  to
            unrelated  third party  customers  to the extent that such amount is
            not charged to such customer;

      (iii) payments made by PRI and its  Affiliates  for  administrative  fees,
            reimbursements  or similar  payments to or for Medicaid or any other
            government programs,  hospitals,  health maintenance  organizations,
            insurance carriers, or other similar arm's length entity or entities
            in connection with the purchase or utilization of the Product;

      (iv)  Deductible  Listing  Fees  paid by PRI or its  Affiliates  which are
            applicable to the period.

It is understood and agreed that:

(a)   deductions  under (i),  (ii),  (iii) and (iv) above from the gross  amount
      invoiced or other revenue  recognized  shall not include any amounts which
      would  be  categorized  as  packaging,  relabelling,  selling,  promotion,
      marketing  or  general  or  administrative  expenses  in  accordance  with
      generally accepted accounting principles;

(b)   deductions  under (i), (iii) and (iv) above from the gross amount invoiced
      or other revenue recognized are for actual credits issued or payments made
      by PRI and its Affiliates and do not include amounts accrued,  provided or
      reserved for estimated or potential deductions;

(c)   the  deduction  under (i) above from the gross  amount  invoiced  or other
      revenue  recognized  shall  not  include  any  Recall  Expenses  or Excess
      Reprocurement  Costs  credited or paid to such customer or any amount paid
      or credited to the customer on returned or rejected  Product to the extent
      of the Transfer Price of the Product  returned or rejected  (which amounts
      shall be dealt with in accordance  with the  provisions of Sections F.2 or
      F.3 of Schedule "F" hereto or the definition of "GROSS PROFIT");

(d)   no  amount  shall be  deducted  under  (i),  (ii),  (iii),  (iv)  above or
      otherwise  from the gross amount  invoiced or other revenue  recognized on
      account  of or as an  allowance  for a bad  debt or  doubtful  account  in
      relation to Product sold by PRI or its Affiliates;

(e)   no amount shall be deducted under (i), (ii), (iii), (iv) or otherwise from
      the gross amount  invoiced or other revenue  recognized  where PRI has the
      right to recover the amount paid or credited to a customer or other Person
      from Genpharm  pursuant to this  agreement  and, if any amount  previously
      claimed  as such  deduction  in  calculating  Net  Sales in one  period is
      subsequently  recovered or becomes  recoverable  from  Genpharm in another


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      period  the  amount  so  recovered  shall be added to the Net Sales in the
      period in which it is recovered or becomes  recoverable from Genpharm,  it
      being the  intention  of the  parties  hereto  that PRI shall not have the
      right to recover the same expense directly from Genpharm and again through
      the calculation of Gross Profits hereunder;

(f)   no credit  or  payment  to an  unrelated  third  party  customer  shall be
      deducted  under  (i) from  the  gross  amount  invoiced  or other  revenue
      recognized  where such  credit or payment  is an  attempt to  directly  or
      indirectly  circumvent the restrictions or limitations contained herein as
      to the nature or quantum of the items which may be deducted  hereunder  in
      calculating  Net Sales nor shall PRI or its Affiliates  reduce the selling
      price at which the Product is sold to an  unrelated  third party  customer
      with a view to circumventing such restrictions or limitations; and

(g)   in respect of  transfers of Product by PRI to its  Affiliates  (or between
      Affiliates)  for resale,  the price at which such  products  are resold by
      such  Affiliate to third parties  (other than other  Affiliates)  shall be
      included  in Gross  Profits  and the  transfer  price  between PRI and its
      Affiliates or between such Affiliates will be disregarded.

"PERSON"  shall  be  broadly   interpreted  and  shall  include  an  individual,
partnership, joint venture, association, corporation, company and any other form
of  business  organization,   government,  regulatory  or  governmental  agency,
commission, department and instrumentality;

"PLANT" means the  manufacturing  facility and/or  warehouse used by Genpharm or
any other Manufacturer to manufacture or store a Product which is to be supplied
to PRI pursuant hereto;

"PRODUCT" means the generic  pharmaceutical  products identified in Section 1 of
this  agreement  which are to be developed and  manufactured  by or on behalf of
Genpharm  or a  Manufacturer  and  supplied  by or on behalf of  Genpharm to PRI
pursuant hereto;

"PRODUCT APPROVAL" means, with respect to a Product, the final and unconditional
approval of an ANDA by the FDA  enabling  Genpharm or the  Manufacturer  to sell
such Product in the Territory;

"PRODUCT  MANUFACTURING  REQUIREMENTS" shall have the meaning attributed thereto
in Section B.2 of Schedule "B" hereto;

"RECALL" shall have the meaning  attributable thereto in Section I.7 of Schedule
"I" hereto;

"RECALL EXPENSES" shall have the meaning  attributable thereto in Section I.7 of
Schedule I hereto;

"REPACKAGING  EXPENSES"  means the cost to PRI or its  Affiliates to package the
Product including,  without  limitation,  the landed cost of packaging materials
and labour  (salaries  and  benefits) and  reasonable  overhead  charges (not to
exceed 20% of the Repackaging Expenses) relating to repackaging and labelling of
the  Product  into  finished  labelled  Units,  determined  in  accordance  with
generally accepted accounting principles,  consistently applied. The Repackaging



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Expenses of a Product shall be determined on the date that the Product  Approval
for such  Product is acquired by Genpharm or the  Manufacturer  and on the first
day of each calendar quarter thereafter, which amount shall be used to determine
the Repackaging  Expenses of Products  packaged into final labelled Units by PRI
or  its  Affiliates  during  the  period  until  the  next  Repackaging  Expense
determination date. The parties further acknowledge and agree that where, during
a period between  Repackaging  Expense  determination  dates, the variable costs
incurred by PRI or an Affiliate to repackage  and label a Product (and which are
included in the  Repackaging  Expenses)  have,  in the  aggregate,  increased or
decreased by more than 5%, a pro rata adjustment will be made to the Repackaging
Expenses of Products  packaged into final  labelled  Units during such period as
agreed  to  by  Genpharm  and  PRI  or,  failing  agreement,  as  determined  by
arbitration  pursuant to Schedule "K" of this agreement.  In determining changes
in Repackaging  Expenses due to changes in the variable costs incurred by PRI or
its  Affiliates  for packaging  material or other  supplies,  such materials and
supplies  shall be used and costed on a first in, first out basis in  accordance
with generally accepted accounting principles, consistently applied;

"SPECIFICATIONS"  means the  terms and  conditions  applicable  to a Product  as
described in the Product  Approval  covering  such  Product,  as the same may be
supplemented from time to time;

"TERRITORY"  means the 50  states of the  United  States  of  America,  plus the
District of Columbia,  the Commonwealth of Puerto Rico, the U.S. Virgin Islands,
Guam,  Samoa and any other  territory  which,  on the Effective Date is a United
States government  protectorate  wherein an ANDA approved by the FDA is required
to sell the Product in such territory;

"TRANSFER PRICE" means the  Manufacturing  Cost of the Product supplied by or on
behalf of Genpharm to PRI pursuant hereto;

"THRESHOLD AMOUNT" means in respect of the Period,  the following  percentage of
the generic  market for the Product  (measured in dollars) based upon unit sales
as determined through IMS reported sales for such Period:

      (i)   if, on the date the Period  (as that term is defined in Section  H.8
            of Schedule "H" hereto)  commences,  there are not more than 2 other
            Competing Products being distributed in the Territory, 15%; or

      (ii)  if, on the date the Period commences, there are more than 2 but less
            than 6  Competing  Products  being  distributed  in  the  Territory,
            7-1/2%; or

      (iii) on the date the Period  commences,  there are more than 5  Competing
            Products being distributed in the Territory, 5%;

"UNIT" means an individual packaged finished Product.