Exhibit 10.40


            CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
                   WITH SECURITIES AND EXCHANGE COMMISSION
                         ASTERISKS DENOTE SUCH OMISSION



                      PATENT AND KNOW HOW LICENSE AGREEMENT


THIS  AGREEMENT,  ("Agreement")  is made and entered  into as of the 14th day of
June,  2002  (the  "Commencement   Date")  by  and  between  Nortec  Development
Associates,  Inc. a  corporation  organized  and existing  under the laws of the
State of New  Jersey,  with  office at 100 Spear  Road,  Ramsey,  NJ  07446-1288
(hereinafter referred to as "NORTEC"), and Par Pharmaceuticals,  Inc., a company
organized  and  existing  under the laws of the State of New York and  having an
address at One Ram Ridge Road, Spring Valley, NY 10977 (hereinafter  referred to
as "PAR").

WITNESSETH:

WHEREAS,  NORTEC owns directly or through  Affiliates,  particularly  its parent
organization Glatt GmbH., Patent Rights and Know-How, that are applicable to the
manufacture of  pharmaceutical  formulations of  ***********,  as that terms are
hereinafter defined;

WHEREAS,  PAR wishes to  undertake a program to register and  commercialize  the
Product in the Territory  including the stability and clinical studies necessary
to  commercialize  the Product in the Territory (as those terms are  hereinafter
defined);

WHEREAS,  PAR  wishes  to take an  exclusive  license  to use and sell  NORTEC'S
sustained release  ***********  product in the Territory under the Patent Rights
and using the Know-How and to further  cooperate with NORTEC in the  development
and  registration  of the  Product  by the FDA and  equivalent  agencies  in the
Territory;

WHEREAS,  NORTEC has  indicated  its  willingness  to grant a license  and other
rights to Par on the terms and subject to conditions set forth in this Agreement
and to manufacture and supply to PAR its requirements of *********** for sale in
the Territory;

NOW THEREFORE,  in  consideration  of the foregoing  premises,  which are hereby
incorporated  in and made a part of the terms and conditions of this  Agreement,
and in consideration of the mutual covenants recited hereinafter, NORTEC and PAR
agree as follows:


ARTICLE 1 - DEFINITIONS

As used in this  Agreement,  each term  which is used in the form  listed  below
shall have the meaning which is given after it.


                                                                               1
<PAGE>

            CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
                   WITH SECURITIES AND EXCHANGE COMMISSION
                         ASTERISKS DENOTE SUCH OMISSION


1.1   "DMF"  shall  mean  Drug  Master  File as  maintained  with  the FDA or an
      equivalent organization in the Territory.

1.2   "FDA" shall mean the United States Food and Drug Administration.

1.3   "Know-How"  shall mean any idea,  invention,  information,  data and other
      know-how,  relating to *********** whether or not patentable,  except that
      which is otherwise included in the Patent Rights, which are owned by or to
      which  NORTEC  has  rights to or  develops  or  possesses  on or after the
      Commencement  Date of this  Agreement and which are necessary or useful in
      the evaluation, development, registration, manufacture, use or sale of the
      Product, including, but not limited to, the following:

      (a) copies of all papers relating to patents applied for in the Territory
          in which patent protection which relate in any way to the Product;

      (b) all data and/or information regarding the procedures for manufacturing
          Product,

      (c) all data and/or  information,  including  summaries and completed case
          reporting forms, concerning the testing, manufacture, pharmacology and
          clinical use of Product.

1.4   "Affiliate" shall be understood to include any corporation, association or
      other organization,  which directly or indirectly controls,  is controlled
      by, or is under common control with the party in question. As used herein,
      the term control means control with possession of the power to direct,  or
      cause the direction of a corporation or other entity.

1.5   "Net  Sales"  shall  mean the  amounts  invoiced  in the  first  bona fide
      arm's-length  sales to independent  unaffiliated  third parties by PAR and
      any affiliate or designee of PAR,  less the  following  deductions in each
      case to the extent related specifically to the Product: (i) any sales, use
      or excise taxes included in such amount, (ii) discounts allowed and taken,
      (iii) amounts  refunded or credited by reason of returns,  allowances  for
      retroactive  price  adjustments,  or payments  made by PAR to  independent
      unaffiliated  third parties as part of rebate  arrangements,  (iv) charges
      for  freight,  handling  and  transportation  separately  itemized  on the
      invoice;  and (v)  charge-back  rebates  and state or federal  Medicare or
      Medicaid  rebates.  In the event that  Product is sold to a customer  at a
      discount which exceeds the discounts  afforded such customer for other PAR
      pharmaceutical products, the Net Sales to such customer shall be deemed to
      be the average  undiscounted Net Sales of the Product to all customers for
      the period in question  discounted to a level  consistent with the average
      discount afforded to such customer on other pharmaceutical products.


                                                                               2
<PAGE>

            CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
                   WITH SECURITIES AND EXCHANGE COMMISSION
                         ASTERISKS DENOTE SUCH OMISSION

1.6   "Net  Price"  shall  mean  the  price  at  which  PAR  sells  Products  to
      unaffiliated third parties in the Territory which, for the purpose of this
      Agreement  shall be defined as that price for each tablet dosage  strength
      of the Product,  calculated  monthly,  which  corresponds to the total Net
      Sales for said  quarter  divided by the number of tablets sold to generate
      such Net Sales.

1.7   "Patent  Rights" means (i) the claims of pending patent  applications  and
      issued patents,  if any, in the Territory,  listed, as of the Commencement
      Date, in Exhibit A attached hereto and made a part hereof;  (ii) claims of
      any patent applications or issued patents in the Territory filed or issued
      during the term of this Agreement owned, controlled or licensed with right
      of  sublicense  by NORTEC which  relate to any  composition,  process,  or
      methods  of  use or  ***********,  and  (iii)  and  reissues,  extensions,
      continuations,  continuations-in-part  or divisions of which are hereafter
      granted in the Territory.  Exhibit A lists the relevant patents and patent
      applications  of NORTEC or  patents  or patent  applications  under  which
      NORTEC  has  rights  as of the  Commencement  Date and  shall  be  updated
      periodically by NORTEC to reflect the current status of the Patent Rights.

1.8   "Territory"  shall  mean the  United  States  of  America,  including  its
      territories and possessions, and the Commonwealth of Puerto Rico.

1.9   "Product" shall mean any and all bulk or finished  pharmaceutical products
      in solid oral dosage form which are  developed or  manufactured  using the
      Patent Rights or Know How that contain  sustained-release  ***********  as
      the active pharmaceutical  ingredient and are intended to be bioequivalent
      to ******* **.

1.10  "Bulk Product" shall mean the Product developed under this Agreement in an
      oral  solid  dosage  form,  bulk  packaged  for  intermediate  use in bulk
      containers which will subsequently be packaged in its final packaging form
      by PAR for PAR's  analytical  stability  studies and pilot and pivotal bio
      equivalency studies.

ARTICLE 2 - GRANT OF LICENSE

2.1   GRANT

      Subject  to the terms and  conditions  of this  Agreement,  NORTEC  hereby
      grants to PAR and PAR hereby accepts,  an exclusive  license,  without the
      right to grant any sublicense, under the Patent Rights and the Know-How to
      use and sell Product in the Territory. No license is granted for any other
      product than sustained  release  ***********  which is  bio-equivalent  to
      ******* **.

2.2   DISCLOSURE OF KNOW-HOW

      Within 14 days after the Commencement Date, NORTEC will disclose,  subject
      to the  confidentiality  provisions  of Article  5, to PAR,  to the extent
      necessary  for PAR to describe the  manufacture  of Product in  connection


                                                                               3
<PAGE>

            CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
                   WITH SECURITIES AND EXCHANGE COMMISSION
                         ASTERISKS DENOTE SUCH OMISSION

      with any ANDA or equivalent document, all existing Know-How not previously
      disclosed to PAR. Thereafter,  NORTEC shall promptly identify and disclose
      to PAR to the  extent  PAR  requests  disclosure,  any  new or  additional
      Know-How  which  comes into  NORTEC'S  or its  Affiliates'  possession  or
      control.  NORTEC  shall  provide  to PAR,  at no  additional  cost to PAR,
      assistance that NORTEC deems necessary for PAR to describe the manufacture
      of Product under this Agreement.

2.3   DEVELOPMENT & CLINICAL SUPPLIES MANUFACTURING COOPERATION

      PAR shall supply to NORTEC all API (Active Pharmaceutical  Ingredient) and
      inactive  raw  material  ingredients   reasonably  required  for  NORTEC's
      development  of the Product and for NORTEC's  manufacture  of bulk Product
      for PAR's pilot and pivotal bio equivalency  studies  ("Clinical  Supplies
      Manufacturing") under this Agreement.  PAR shall use reasonable commercial
      efforts to provide in a timely  manner  all  analytical  testing  services
      required  to  support   NORTEC's   development   and   Clinical   Supplies
      Manufacturing  activities under this Agreement.  Nortec will notify PAR in
      writing of its  requirement  for  materials  which will be  furnished in a
      timely manner. Nortec will not charge any additional fee for manufacturing
      bulk Product for the pilot and pivotal biostudies,  other than the license
      fee payments and royalties described in Article 3.

2.4   ANDA COOPERATION

      NORTEC shall provide all documents and  information in its possession that
      are reasonably  required by PAR to support PAR's filing and prosecution of
      an ANDA or other  application  with the FDA to register the  Product.  The
      application shall be owned by PAR and submitted in its name, and PAR shall
      have final authority with respect to all decisions concerning the content,
      compilation, prosecution, amendment or supplementation of the ANDA. NORTEC
      will not be obligated to carry out any  analytical,  stability or clinical
      studies in  connection  with its duty to provide  information  to PAR that
      NORTEC has in its possession.

      NORTEC shall have a right of consultation  with respect to the preparation
      of the  Product  ANDA for FDA  filing,  and  agrees to  exercise  diligent
      efforts  to assist  PAR in the  review  and  compilation  of reports to be
      included in the ANDA application.


ARTICLE 3 - LICENSE FEES & ROYALTIES

3.1   LICENSE FEE PAYMENTS

      In partial  consideration of the grant of licenses under the Patent Rights
      with  respect to issued  patents and patent  applications  included in the
      Patent Rights  existing on the  Commencement  Date and the  Know-How,  PAR


                                                                               4
<PAGE>

            CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
                   WITH SECURITIES AND EXCHANGE COMMISSION
                         ASTERISKS DENOTE SUCH OMISSION

      shall make the following payments to NORTEC at the following times, except
      to the extent it has given  notice of  Agreement  termination  as provided
      herein  prior  to any  payment  due  date.  In no event  shall  any of the
      following payments be made more than one time regardless of the numbers of
      Product which are commercialized hereunder:

      (a) $125,000   non-refundable  payment  on  the  Effective  Date  of  this
          Agreement.

      (b) $375,000  due  upon  NORTEC  submitting  to PAR  the  formulation  and
          physical  specifications  of immediate  release core *********** beads
          produced  during  NORTEC's  first  immediate  release  core bead trial
          campaign.  PAR  may,  at its sole  option,  elect  to  terminate  this
          Agreement  in  accordance  with the  provisions  defined  in Article 4
          herein any time prior to NORTEC's  submission of the immediate release
          core  ***********  bead data described in this Article 3.1(b).  NORTEC
          shall not  submit to PAR the data  described  in this  Article  3.1(b)
          prior to July 1, 2002.

      (c) $400,000 due upon a successful  pivotal biostudy that demonstrates bio
          equivalence to the branded sustained release solid dosage  ***********
          Product and  demonstration  of stability  of the Product  under 90 day
          accelerated stability conditions.

      (d) $600,000  due on the day of  first  commercial  sale of the  developed
          Product.

3.2   ROYALTY PAYMENTS

      In addition to the license fee payments outlined in Article 3.1, PAR shall
      pay a royalty to NORTEC on Net Sales of the Product  developed  under this
      Agreement based upon the following  Royalty Payment  Schedule  outlined in
      this  Article  3.2.  The  royalty  payments  shall be paid to  NORTEC on a
      quarterly  basis  for such  time as PAR  continues  to offer  the  Product
      developed  under this Agreement for commercial  sale in the Territory.  In
      the event that a total of two (2) generic  sustained  release  ***********
      products,  bioequivalent  to ******* **, are  approved by the FDA and have
      been launched for commercial sale (excluding any generic sustained release
      ***********   products,   bioequivalent   to  *******  **,  a.)  that  are
      manufactured marketed and/or distributed by the company, or any affiliates
      or designees of the company,  owning the rights to the ******* ** product,
      and; (b) with an AWP (Average Wholesale Price) equal to or greater than **
      % of the AWP of ******* **),  then the royalty  payments  pursuant to this
      Article  3.2 will be capped at ** % of PAR's  Gross  Profit on the Product
      developed under this  Agreement.  AWP shall be based on the data published
      in the most recent issue of Price  Alert(TM).  "Gross  Profit"  shall mean
      PAR's Net Sales of the Product  minus  PAR's Cost of Goods to  manufacture
      and package the Product. "Cost of Goods" shall mean: a.) NORTEC's transfer
      price to PAR to supply  the  Product  to PAR under  the  Supply  Agreement
      outlined in Article 9.1,  plus; b.) PAR's direct  out-of-pocket  costs for


                                                                               5
<PAGE>

            CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
                   WITH SECURITIES AND EXCHANGE COMMISSION
                         ASTERISKS DENOTE SUCH OMISSION

      all packaging raw materials  needed to package the Product for  commercial
      sale,  plus;  c.) ** % of a.) and b.) above in  respect  of PAR's  cost of
      direct labor for packaging, quality assurance, quality control, release of
      the Product,  administrative  costs and overhead,  plus;  d.) PAR's direct
      out-of-pocket  costs  for all  active  pharmaceutical  and  excipient  raw
      material  ingredients  contained in the un-packaged  Product.  In no event
      shall the Gross  Profit  computation  and  royalty  cap  outlined  in this
      Article 3.2 cause the minimum  royalty  payable to NORTEC to be lower than
      ** % of the royalty  amounts  listed in the Royalty  Payment  Schedule for
      each market share level as outlined in this Article 3.2.

      ROYALTY PAYMENT SCHEDULE:

                    ------------------------------------------------------
                                         PAR's MARKET SHARE (MS) OF THE
                      ROYALTY AMOUNT      TOTAL SUSTAINED RELEASE SOLID
                     (% Of NET SALES)       DOSAGE *********** MARKET
                    ------------------------------------------------------
                           ** %                     MS > ** %
                                                       -
                    ------------------------------------------------------
                           ** %                  ** %> MS > ** %
                                                          -
                    ------------------------------------------------------
                           ** %                  ** %> MS > ** %
                                                          -
                    ------------------------------------------------------
                            * %                  ** %> MS > ** %
                                                          -
                    ------------------------------------------------------
                            * %                     MS < ** %
                    ------------------------------------------------------

      Market share shall be based on the total sales  reported  for  ***********
      controlled  release  products  which are  bioequivalent  to  ******* ** as
      reported by IMS at the end of each calendar  year. If no patent is granted
      by the USPTO based on the pending  patent  applications,  the royalty rate
      will continue for the life of the Agreement.

ARTICLE 4 - TERM AND TERMINATION

4.1.  TERM

      The Agreement shall become effective on the  Commencement  Date and unless
      terminated  earlier by one of the parties  hereto in  accordance  with its
      terms,  shall  continue for as long as PAR markets the Product.  If, after
      three years from the date of the launch of the Product, the Net Sales fall
      below ** % market  share of the  total  generic  sustained  release  solid
      dosage ***********  market,  the license to PAR will become  non-exclusive
      and NORTEC will have the right to grant additional  non-exclusive licenses
      to  third-parties  under  such  terms and  conditions  that  NORTEC  deems
      appropriate.

                                                                               6
<PAGE>

            CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
                   WITH SECURITIES AND EXCHANGE COMMISSION
                         ASTERISKS DENOTE SUCH OMISSION

4.2.  TERMINATION

      Notwithstanding  the  foregoing,  and  subject to Section  4.3.  of this
      Article:

      (a) A party to the  Agreement  may  terminate  the license  granted  under
          Article 2 if the other party  commits a material  breach of any of the
          material terms of the Agreement and does not remedy such breach within
          ninety  (90) days after  receipt of a notice  demanding  that any such
          breach be  remedied,  or if ninety  (90)  days is an  inadequate  cure
          period, such longer period as necessary,  provided the breaching party
          continues to act with reasonable  diligence to cure the breach and the
          breach is capable of cure;

      (b) In the event  that PAR in good faith  determines  that it is no longer
          economically viable to pursue the development, registration or sale of
          the Product in the Territory,  then PAR may terminate this  agreement.
          In the  event  that PAR  exercises  this  right,  then PAR  shall  use
          reasonable  commercial  efforts  to  transfer  to NORTEC  all  rights,
          contracts,  data and information associated with the Product including
          all  rights  under  any  unapproved  or  approved   ANDA.   Upon  such
          termination,  PAR shall allow NORTEC,  without any fee,  access to any
          trademark  PAR may have  selected as a brand  trademark  for  Product.
          Notwithstanding  the  foregoing,  in subsequent  promotion of Product,
          NORTEC may  utilize in such  promotion  efforts  previously  published
          material  such  as for  example  clinical  results  and  studies  that
          reference  PAR'S  trademark  for the  Product.  The  right  to use the
          trademark  does not  include  the right to use PAR'S name or any other
          trademark of PAR.

4.3   RIGHTS UPON TERMINATION

      Termination of this Agreement or a portion thereof for any reason shall be
      without prejudice to:

      (a) NORTEC's  right  to  receive  payments  that  are  unpaid  under  this
          Agreement as of the date the  Agreement is  terminated,  including but
          not  limited  to  payment  for  Product  delivered  to PAR and work in
          progress under firm purchase orders of PAR.

4.4   SALE OF INVENTORY

      Upon  termination  of this  Agreement,  PAR will have the right to sell or
      otherwise dispose of any inventory on hand.

                                                                               7
<PAGE>

            CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
                   WITH SECURITIES AND EXCHANGE COMMISSION
                         ASTERISKS DENOTE SUCH OMISSION

ARTICLE 5 - CONFIDENTIALITY

5.1   CONFIDENTIALITY OBLIGATIONS

      Each party  hereto shall hold in  confidence  all  confidential  and other
      proprietary  information  of the other party  disclosed  to the  receiving
      party and relating to this Agreement, except for information:

      (a) Which  is or  becomes  public  knowledge  (through  no  fault  of  the
          receiving party), or

      (b) Which is made available to the receiving party by an independent third
          party, or

      (c) Which is already in the  receiving  party's  possession at the time of
          receipt from the  disclosing  party (and such prior  possession can be
          properly demonstrated), or

      (d) Which is required by law to be disclosed, or

      (e) Which becomes publicly known as a result of required  disclosures made
          to or as a result  of FDA  regulations  under  which  the  Product  is
          approved for sale in the  Territory.  If in  connections  with studies
          which are  carried  out to obtain  FDA  approval  it is  necessary  to
          disclose confidential information under this Agreement, the disclosing
          party  will  make  diligent  efforts  to bind the  receiving  party to
          customary confidentiality and use restrictions.



ARTICLE 6 - REPRESENTATIONS AND WARRANTIES, INDEMNITIES AND LIMITATIONS OF
LIABILITY

6.1   OWNERSHIP AND LEGAL AUTHORITY

      NORTEC  represents and warrants that it is the owner of or has contractual
      rights to all of the Patent Rights and Know-how licensed to PAR hereunder,
      and that it has the legal power, authority and right to grant the licenses
      set forth in  Section  2.1,  and to  perform  its  obligations  under this
      Agreement.

6.2   NO THIRD PARTY INFRINGEMENT

      NORTEC  represents  and warrants  that it has no knowledge of any claim or
      allegation,  or any  basis  therefore,  of  misuse  of any  third  party's
      confidential  or  proprietary  information  with  regard  to use of Patent
      Rights or Know-How licensed by NORTEC to PAR hereunder.

                                                                               8
<PAGE>

            CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
                   WITH SECURITIES AND EXCHANGE COMMISSION
                         ASTERISKS DENOTE SUCH OMISSION

6.3   NO INFRINGEMENT OF THIRD PARTY PATENTS

      NORTEC  does not  represent  or  warrant  as of the date  hereof  that the
      manufacture,  use and sale of  Product  solely  because  of the use of the
      Know-How or Patent Rights will present any question of infringement of any
      adversely held patent in the Territory.

6.4   NO THIRD PARTY OPTIONS OR RIGHTS

      NORTEC  represents  and warrants that neither it nor its  Affiliates  have
      granted any  effective  options(s)  or  license(s)  to any third person or
      entity  under  any of  Patent  Rights  or  Know-How  with  respect  to the
      manufacture, use or sale of Product within the Territory.

6.5   PRODUCT WARRANTIES

      NORTEC  represents  and warrants that all Product which it supplies to PAR
      hereunder:

          (i)   shall have been  manufactured in accord with all applicable laws
                and regulations  governing the production and supply thereof and
                all regulations  and  requirements of the FDA including the then
                current Good Manufacturing  Practice (CGMP)  Regulations,  which
                apply to the production and supply of such Product;

          (ii)  shall,  at the time of delivery to PAR, meet the  specifications
                set forth for the Product by mutual  agreement of NORTEC and PAR
                (which  specifications  may be  amended  only by mutual  written
                consent of the parties hereto) and shall be merchantable and fit
                for its intended use;

          (iii) shall  meet such  written  acceptance  tests  and  requirements,
                including without limitation,  providing samples,  provided such
                tests  are   reasonable  and  customary  in  the  United  States
                pharmaceutical industry;

          (iv)  shall not be adulterated or misbranded as defined by the Federal
                Food,  Drug and Cosmetic  Act and  regulations  thereunder  (the
                "Act") or any  foreign  equivalent  thereof  in any  country  of
                manufacture; and

          (v)   shall  not  be an  article  which  may  not be  introduced  into
                interstate commerce under the applicable provisions of the Act.

6.6   PAR'S WARRANTIES

      PAR  warrants  to NORTEC that PAR will  exercise  due care  regarding  the
      ***********  formulation,  including  but not  limited  to the  design  of
      biostudies, the selection of qualified test facilities, funding and review
      of final  reports  from the  qualified  test  facilities  carrying out and


                                                                               9
<PAGE>

            CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
                   WITH SECURITIES AND EXCHANGE COMMISSION
                         ASTERISKS DENOTE SUCH OMISSION

      evaluating the bioequivalency of the *********** formulation,  the storage
      of the ***********  product,  the labeling of the *********** product, the
      packaging  of  the   ***********   product  and/or  the  shipment  of  the
      ***********   product,   the  selection  and  use  of  trademarks  on  the
      *********** product.

      Prior to filing of the ANDA,  PAR will have a study  carried  out at PAR's
      expense for the purpose of determining if there are any unexpired  patents
      in the Territory  that would be infringed as a result of the  manufacture,
      use or sale of the  Product.  PAR will  disclose  the  results of all such
      studies to Nortec.



6.7   LIMITATION OF LIABILITY

      Neither  party shall have any  liability  to the other party under or with
      respect to this  Agreement  or  otherwise  at law or equity  under or with
      respect to this  Agreement for any indirect,  incidental or  consequential
      damages, including,  without limitation, lost profits. It is the intention
      of the parties that any liabilities of one party to the other arising from
      performance or lack of performance  under this Agreement  shall be limited
      to direct damages as customarily defined.

6.8   INDEMNITIES BY PAR

      PAR agrees to indemnify and hold harmless  NORTEC and its  Affiliates  and
      their  respective  employees,  agents,  officers  and  directors  from and
      against  any costs,  claims,  judgments,  expenses  (including  reasonable
      attorney  fees),  damages  and awards  (but not  incidental,  indirect  or
      consequential  damages)  arising  out of or  resulting  from  its  acts or
      omissions  and which result from a breach of its  warranties  set forth in
      this Article,  or from PAR's breach of any of the terms and  conditions of
      this  Agreement.  PAR will  provide  NORTEC and  periodically  update upon
      NORTEC's request a certificate of insurance for product liability coverage
      in the minimum  amount of $ ********  which it agrees to maintain  for the
      Territory  during the term of this  Agreement and will undertake to obtain
      an endorsement of any and all insurance policies for the benefit of NORTEC
      as NORTEC's interest may appear.

      PAR further agrees to defend, indemnify and hold NORTEC and its Affiliates
      harmless for any loss (including  reasonable  attorneys' fees) arising out
      of a claim alleging  infringement of any patent.  In any such action,  PAR
      shall undertake the defense of such claims,  and shall control the defense
      of  the  action  and  the  prosecution  of  any  relevant   counterclaims.
      Notwithstanding  the  foregoing,  PAR shall  not agree to settle  any such
      action on terms that are  materially  prejudicial to any right or claim of
      NORTEC in the Product, the Patents, or the Know-How without the consent of
      NORTEC,  which  consent  shall not be  withheld  or delayed  unreasonably.


                                                                              10
<PAGE>

            CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
                   WITH SECURITIES AND EXCHANGE COMMISSION
                         ASTERISKS DENOTE SUCH OMISSION

      NORTEC  agrees  to  cooperate  with  PAR in the  defense  of such  claims,
      including,  without limitation,  agreeing to timely supply such witnesses,
      documents  and other  information  as is  necessary  to fulfill  the PAR's
      obligations concerning discovery in the action.

6.9   Each party agrees to give the other prompt  written  notice  within thirty
      (30) days of any claims made, including any claims asserted or made by any
      governmental  authority having jurisdiction,  for which the other might be
      liable under the foregoing indemnifications, together with the opportunity
      to defend,  negotiate  and settle such claims and will provide  reasonable
      assistance  to such  other  party's  defense of such  claim.  For any suit
      covered by a party's  indemnification  hereunder,  the  indemnified  party
      shall permit the indemnifying  party to have control of the conduct of the
      defense of such suit, including, without limitation, selection of counsel.

ARTICLE 7 - FDA APPROVAL

7.1   PROCEDURES FOR FILING AND ANDA


      PAR shall diligently undertake to prepare,  compile and submit an ANDA for
      the Product in the  Territory  and following  such  submission,  PAR shall
      diligently prosecute the ANDA with the FDA with a view to obtaining timely
      approval for the Product.

      7.1.1. REPORTS AND MONITORING

            PAR shall  provide  NORTEC  with  quarterly  written  reports on the
            efforts  to  obtain   marketing   approval  in  the  Territory  with
            supporting  documentation  reasonably  requested  by NORTEC.  NORTEC
            shall   have  the  right  to   inspect   the  ANDA  and   associated
            correspondence  at any time upon prior notice during normal business
            hours during the term of the Agreement.

      7.1.2. REFERENCE TO NORTEC AS MANUFACTURER

            All application  for marketing  approval in the Territory shall list
            NORTEC as  manufacturer  and PAR as the  exclusive  distributor  and
            final packager of bulk product.  NORTEC's name shall be displayed as
            the  manufacturer  to  the  extent  that  such  display  is  legally
            permissible on the labeling and packaging for Product.


                                                                              11
<PAGE>

            CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
                   WITH SECURITIES AND EXCHANGE COMMISSION
                         ASTERISKS DENOTE SUCH OMISSION

ARTICLE 8 - MARKETING

8.1   MARKETING EFFORTS

      PAR will use  reasonable  commercial  efforts to market the Product in the
      Territory during the term of the Agreement.

8.2   FURTHER OBLIGATIONS

      PAR shall furnish and label Product in compliance with the  specifications
      and  requirements  set forth in the  marketing  approval  documents in the
      Territory.



8.3   ADVERSE DRUG REACTIONS

      Each party  shall  promptly  after  learning  thereof  notify the other in
      writing  of any report of  adverse,  or  possible  or  suspected  adverse,
      effects of Product,  and whenever  either party intends to report the same
      to any governmental  authority,  such party shall, when feasible,  consult
      with the other party with respect to such notification.  Specifically, PAR
      shall provide NORTEC with adverse event data for filing with the FDA.

8.4   REPORTING

      The parties  hereto agree to meet on a quarterly  basis for the first year
      following the initial  launch of the Product,  on a semi-annual  basis for
      the second and third year and on an annual  basis for the fourth and fifth
      year. At such meetings which will be at location(s)  specified by PAR, PAR
      will  report  on the  ongoing  sales  performance  of the  Product  in the
      Territory,  including  marketing  approaches,  promotion  and  advertising
      campaigns,  sales plans and results,  performance against competitors etc.
      Each party  shall bear all of its own costs and  expenses  with  regard to
      such meetings.  At the request of NORTEC, PAR shall provide information at
      other  times  provided  that all  information  disclosed  at  meetings  or
      otherwise shall only be information  kept by PAR in the ordinary course of
      business.

ARTICLE 9 - MANUFACURING AND SUPPLY

9.1.  MANUFACTURE AND SUPPLY:

      The parties shall promptly enter good faith negotiations with respect to a
      Supply  Agreement with respect to the Product.  It is envisioned  that the
      Supply  Agreement will provide,  among other things,  terms and conditions
      under  which  PAR  shall  purchase  all of its  requirements  for  Product


                                                                              12
<PAGE>

            CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
                   WITH SECURITIES AND EXCHANGE COMMISSION
                         ASTERISKS DENOTE SUCH OMISSION

      exclusively from NORTEC (or its reasonably acceptable designee) and NORTEC
      (or its  reasonably  acceptable  designee)  shall sell to PAR all of PAR's
      requirements  for  Product  for  sale  in  the  Territory.  It is  further
      envisioned that the Supply  Agreement shall contain such other  provisions
      with  respect to  forecasting,  orders,  quality  control,  adverse  event
      reporting,  warranties  and  indemnities  as it  usual  and  customary  in
      commercial  agreements  of this  type.  NORTEC  shall  sell  such  Product
      exclusively  to  PAR in  the  Territory.  Except  as  otherwise  expressly
      permitted hereunder,  PAR shall not manufacture Product itself or purchase
      Product from any other source for sale in the Territory during the term of
      this Agreement.  On or about, but no later than; a.) the time at which PAR
      submits the Product for the pivotal bio equivalency  studies;  and b.) the
      time  at  which  the  Product  demonstrates  stability  under  accelerated
      stability  conditions,  NORTEC will  calculate and present to PAR NORTEC's
      transfer  price,  +/- ** %, to supply the  Product to PAR,  based upon the
      process  to  manufacture   the  Product  and  PAR's   anticipated   supply
      requirements  as defined  and known at that time.  The  transfer  price as
      defined  at the time  specified  above may only be  adjusted  by NORTEC to
      reflect any  subsequent  changes in; a.) the  process to  manufacture  the
      Product; b.) Par's supply requirements; and c.) inflation costs during the
      time  commencing with the  establishment  of the transfer price and ending
      with the time of commercial  launch of the Product.  In the event that PAR
      and NORTEC are unable to mutually  agree upon a transfer price at the time
      specified  above,  PAR may, at its sole option,  elect to  terminate  this
      Agreement in accordance with the provisions defined in Article 4 herein.

ARTICLE 10 - RECORDS AND PAYMENTS

10.1  NET SALES REPORTS

      Beginning  ninety (90) days after the end of the first calendar quarter in
      which Net Sales of the Product are first made,  and ninety (90) days after
      the  end of any  subsequent  calendar  quarter  during  the  term  of this
      Agreement,  PAR shall deliver or cause to be delivered to NORTEC a written
      report showing the sale of Product during the preceding quarterly period.


10.2  AUDIT RIGHTS

      During  the  term of the  Agreement  and for a  period  of six (6)  months
      thereafter,  NORTEC  shall  have the right at its own  expense  to have an
      independent  certified public accounting firm reasonably acceptable to PAR
      examine the records described in Section 10.1 (excluding those records, if
      any, which relate to the qualitative commentary of 10.1 above) and Section
      3.2, herein during  reasonable  business  hours,  not more often than once
      each calendar  year for the present year and for the  preceding  three (3)
      years.  Such  examination  shall be for the sole  purpose  of  determining


                                                                              13
<PAGE>

            CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
                   WITH SECURITIES AND EXCHANGE COMMISSION
                         ASTERISKS DENOTE SUCH OMISSION

      whether appropriate accounting and payment have been made hereunder.  Such
      independent certified public accounting firm shall be required to treat as
      confidential, and not disclose to NORTEC, any information obtained, except
      that which would  properly be contained in a sales report  hereunder.  Nor
      shall it disclose to any other party any information  obtained as a result
      of such examination, except as may be required by binding legal process or
      government requirements, and then only upon reasonable prior notice and in
      consultation with PAR.

ARTICLE 11 - TRADE NAMES AND TRADEMARKS

11.1  PAR  hereby  acknowledges  that it does not have,  and shall not  acquire,
      during or after the term of the  Agreement any interest in any of NORTEC's
      trademarks or trade names  appearing on the labels or packaging  materials
      for Product.


ARTICLE 12 - GENERAL

12.1  ASSIGNMENT

      This Agreement shall not be assignable by either party, except to a wholly
      owned  Affiliate,  without the prior  written  consent of the other party,
      such consent not to be unreasonable withheld.

12.2  NON-WAIVER

      The waiver by either of the parties of any breach of any provision  hereof
      by the other party shall not be construed to be a waiver of any succeeding
      breach of such provision or a waiver of the provision itself.

12.3  GOVERNING LAW

      This Agreement  shall be construed and  interpreted in accordance with the
      laws of New York.

12.4  BINDING ARBITRATION

      Any and all claims, disputes, controversies, and other matters arising out
      of or  relating  to  this  Agreement,  including  but not  limited  to the
      formation  (including  any claim as to fraud in the  inducement),  breach,
      performance,  interpretation,  or termination thereof, shall be settled by
      binding arbitration in accordance with the commercial Arbitration Rules of
      the American Arbitration Association.  Three arbitrators shall conduct the
      arbitration  in the  English  language  in the  State  of  New  York.  The


                                                                              14
<PAGE>

            CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
                   WITH SECURITIES AND EXCHANGE COMMISSION
                         ASTERISKS DENOTE SUCH OMISSION

      arbitrators  must be  knowledgeable  or experienced in the  pharmaceutical
      industry. Each party will, within 20 days of the date on which arbitration
      is requested,  select one  arbitrator and advise the opposite party of the
      name of that  arbitrator,  and those two  arbitrators  will select a third
      arbitrator.  If the two arbitrators  selected by the parties are unable to
      agree upon a third arbitrator  within forty (40) days of the date on which
      arbitration is requested,  the third  arbitrator  will be appointed by the
      American  Arbitration  Association.  The  decision of any two of the three
      arbitrators  will  be  the  decision  of the  arbitrators.  The  costs  of
      arbitration,  including  reasonable  attorney's fees, shall be borne by as
      assessed by the Arbitrators.  Notwithstanding anything contained herein to
      the contrary,  the terms and provisions of this Section shall not preclude
      any party hereto from seeking,  or a court of competent  jurisdiction from
      granting,  a temporary  restraining order,  temporary  injunction or other
      equitable   relief  for  any  breach  of  any   restrictive   covenant  or
      confidentiality  covenant in this  Agreement.  The  arbitrators'  decision
      shall be reduced to writing and shall be binding on the parties.  Judgment
      upon the award(s) rendered by the arbitrators may be entered and execution
      had in any court of competent  jurisdiction  or application may be made to
      such  court  for a  judicial  acceptance  of the  award  and an  order  of
      enforcement.  In arbitration,  all privileges under state and federal law,
      including attorney-client and work-product privileges,  shall be preserved
      and protected to the same extent that such  privileges  would be protected
      in a United States district court proceeding  applying the internal law of
      the State of New York  (without  reference  to the law of conflicts of any
      jurisdiction).  Failure  of  either  party to  abide  by the  arbitrators'
      decision shall permit the other party to terminate this Agreement in whole
      or in part.

12.4  INVENTIONS

      During the course of the Agreement, it is contemplated that NORTEC and PAR
      employees  will  cooperate  in the  development  of the  Product and it is
      recognized  that  inventions  and know-how  may be developed  which may be
      applicable in the  manufacture of the Product other products which are not
      covered  by this  Agreement.  For  these  reasons,  PAR  agrees  that  all
      inventions,  whether  patentable or  unpatentable,  except for  inventions
      which relate solely to analytical procedures or to testing procedures that
      are directly  related to the Product,  and which are made by PAR employees
      jointly  with NORTEC  employees  or solely by PAR  employees  or solely by
      NORTEC  employees,  will be  assigned  to  NORTEC.  In the event  that PAR
      obtains any patent on an  analytical or testing  procedure,  PAR agrees to
      give NORTEC a royalty  free license  insofar as NORTEC uses such  patented
      subject matter in the manufacture of ***********.

12.5  PARTIAL INVALIDITY

      If and to the extent that any court or tribunal of competent  jurisdiction
      holds any of the terms,  provisions  or conditions or part thereof of this
      Agreement, or the application thereof to any circumstances,  to be invalid


                                                                              15
<PAGE>

            CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
                   WITH SECURITIES AND EXCHANGE COMMISSION
                         ASTERISKS DENOTE SUCH OMISSION

      or  unenforceable  in a final  nonappealable  order, the parties shall use
      their best  efforts  to reform  the  portions  of the  Agreement  declared
      invalid as to fully  realize the intent of the parties as  practical,  and
      the remainder of this agreement and the  application of such invalid term,
      provision or condition or part thereof to  circumstances  other than those
      as to which it is held  invalid  or  unenforceable  shall not be  affected
      thereby,  and each of the remaining  terms,  provisions  and conditions of
      this Agreement shall be valid and enforceable to the fullest extent of the
      law.

12.6  NOTICE

      Any  notice  to be  given  to a party  under or in  connection  with  this
      Agreement  shall be in writing and shall be made by Express  Mail or FEDEX
      to the party at the address set forth for such party:



      To NORTEC DEVELOPMENT ASSOCIATES, INC.:

      100 Spear Road
      Ramsey, NJ  07446
      Attn:             Kenneth W. Olsen, President
      Telephone:  (201) 825-6301
      Fax:        (201) 934-6967

      With copies to:
      100 Spear Road
      Ramsey, NJ  07446
      Attn:       Oliver W. Mueller, Executive Vice President
      Telephone:  (201) 825-6327
      Fax:        (201) 934-6213

      To PAR PHARMACEUTICALS, INC.:

      One Ram Ridge Road
      Spring Valley, NY 10977
      Attn:       Dennis O'Connor, CFO
      Telephone:  (845) 425-7100
      Fax:        (845) 425-7922

      Or to such other  address as to which the party has given notice  thereof.
      Such notices shall be deemed given upon receipt.



                                                                              16
<PAGE>

            CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
                   WITH SECURITIES AND EXCHANGE COMMISSION
                         ASTERISKS DENOTE SUCH OMISSION

12.7  FORCE MAJEURE:

      No  failure  or  omission  by a party  hereto  in the  performance  of any
      obligation of this Agreement  shall be deemed a breach of this  Agreement,
      nor shall it create  any  liability,  provide  the party  uses  reasonable
      efforts to resume  performance  hereunder and the party is capable through
      the  exercise of such efforts in resuming  performance,  if the same shall
      arise from any cause or causes  beyond the control of the affected  party,
      including,  but not limited to, the  following,  which for purposes of the
      Agreement,  shall be  regarded  as  beyond  the  control  of the  party in
      question:  act of God;  acts or  omissions of any  government;  any rules,
      regulation,  or orders  issued  by any  governmental  authority  or by any
      officer, department, agency or instrumentality hereof; fire; storm; flood;
      earthquake;  accident;  war;  rebellion;   insurrection;  riot;  invasion;
      strikes; and lockouts, but does not apply to Section 3.1.

12.8  HEADINGS

      The  headings   appearing   herein  have  been  inserted  solely  for  the
      convenience of the parties  hereto and shall not affect the  construction,
      meaning  or  interpretation  of the  Agreement  or any  of its  terms  and
      conditions.

12.9  SURVIVAL

      The representations  and warranties  contained in the agreement as well as
      any other  express  provisions  herein  which are  intended to survive the
      termination or expiration of this Agreement  shall survive the termination
      or expiration of the Agreement.

12.10 ENTIRE AGREEMENT

      This Agreement  constituted the entire  understanding  between the parties
      with respect to the subject  matter  contained  therein and supersedes any
      and all prior agreements,  understandings and arrangements whether oral or
      written  between the parties  relating to the subject  matter  hereof.  No
      amendment,  change, modification or alteration of the terms and conditions
      of this Agreement shall be binding upon either party unless in writing and
      signed by the party to be changed.

12.11 INDEPENDENT CONTRACTORS

      It is understood that both parties hereto are independent  contractors and
      engage in the  operation  of their own  respective  business,  and neither
      party hereto is to be  considered  the agent of the other  party,  for any
      purpose  whatsoever.  Neither  party has any  authority  to enter into any
      contracts  or  assume  any  obligations  for the  other  party or make any
      warranties or representations in behalf of the other party.


                                                                              17
<PAGE>

            CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
                   WITH SECURITIES AND EXCHANGE COMMISSION
                         ASTERISKS DENOTE SUCH OMISSION

12.12 PUBLICITY

      Neither  party shall  publicize  or  disclose  the  existence  or terms or
      termination  of this  Agreement,  except as required by law, until the FDA
      has issued an approvable letter for the ANDA, unless first consented to in
      writing in advance of disclosure by an  authorized  representative  of the
      other  party.  No consent of a party shall be  required  after the FDA has
      issued  such  approvable  letter for the ANDA  insofar as such  disclosure
      refers  to  the  existence,   but  not  the  terms,   of  this  Agreement.
      Furthermore,  neither  party  shall  release  information  to the press or
      public  pertaining  to this  Agreement or its  performance  without  first
      agreeing  on  the  content  of  such  disclosure  with  the  other  party.
      Notwithstanding the above, both parties agree that PAR will release to the
      press a public  statement  announcing  the  agreement  of the  parties  to
      develop an oral sustained  release  product under an exclusive  license to
      utilize  NORTEC's  intellectual  property  on the  effective  date of this
      Agreement.





IN WITNESS WHEREOF,  the parties hereto have caused the Agreement to be executed
by their duly authorized officers as of the date first above written.

PAR PHARMACEUTICALS                 NORTEC DEVELOPMENT ASSOCIATES
                                    .

BY    /s/ Scott Tarriff                   BY    /s/ Kenneth W. Olsen
  ----------------------------------        ----------------------------------

TITLE  President and Ceo                  TITLE  President
     -------------------------------           -------------------------

DATE   05/24/02                     DATE   05/24/02
    --------------------------          --------------------------


                                                                              18
<PAGE>

            CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
                   WITH SECURITIES AND EXCHANGE COMMISSION
                         ASTERISKS DENOTE SUCH OMISSION

                                                                       EXHIBIT A





*********** ****** ** ****** ***              ***** *** * ****
----------------------------------------------------------------------


*********** ****** ** ****** ***               ***** *** ** ****
----------------------------------------------------------------


                                                                              19