EXHIBIT 10.9.3


                           SECOND AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT

            SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement"),
dated as of January 4, 2002, by and between  Pharmaceutical  Resources,  Inc., a
New Jersey corporation ("Resources"), and Kenneth I. Sawyer ("Executive").

                               R E C I T A L S :

            A.  WHEREAS,  Par  Pharmaceutical,  Inc.  ("Par" and  together  with
Resources,  the "Employer") and Executive entered into an Employment  Agreement,
dated as of October 14, 1992 (the "October 1992  Agreement"),  pursuant to which
Executive provided services to Employer and its existing subsidiaries,  entities
or organizations  hereafter formed,  organized or acquired by Resources directly
or indirectly  (all such existing  subsidiaries  and all such hereafter  formed,
organized or acquired corporations,  entities or organizations being hereinafter
individually  referred to as a "Subsidiary" and collectively  referred to as the
"Subsidiaries");

            B. WHEREAS,  on April 30, 1998,  Employer and Executive entered into
an amendment to the October 1992 Agreement (the "April Amendment");

            C. WHEREAS, on January 12, 2001, Employer and Executive entered into
an amendment to the October 1992 Agreement (the "January Amendment"); and

            D. WHEREAS,  Resources and Executive desire to supersede the October
1992  Agreement,  as previously  amended by the April  Amendment and the January
Amendment on the terms and conditions set forth herein.

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

            1.    EMPLOYMENT.
                  ----------

                  1.1.  GENERAL.  Resources  hereby  employs  Executive  in  the
capacities  of  Chairman  of the  Board of  Directors  (the  "Board")  and Chief
Executive  Officer of Resources and Chairman of the Board of Directors of Par at
the  compensation  rate and  benefits  set forth in Section 2 herein and for the
term set forth in Section 3.1 herein.  Following the Initial  Period (as defined
below), unless otherwise terminated pursuant to this Agreement, Resources hereby
employs  Executive in the capacity of Chairman of the Board at the  compensation
rate and benefits set forth in Section 2 herein.  Executive  hereby accepts such
employment  subject to the terms and conditions  herein  contained.  In all such
capacities,   Executive   will   perform   and   carry  out  such   duties   and
responsibilities  as may be  assigned  to him  from  time to  time by the  Board
reasonably consistent with Executive's title and this Agreement and shall report
only to the Board.

                  1.2. BOARD AND BOARD  COMMITTEES.  Resources will use its best
efforts to cause  Executive to be elected and re-elected to the Board during his
period of employment with Resources and to serve as the Chairman of the Board.

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                  1.3. TIME DEVOTED TO POSITION.  Executive,  during the Initial
Period, will devote substantially all of his business time, attention and skills
to the  business  and  affairs  of  Resources.  Following  the  Initial  Period,
Executive  will  devote  only such time as  Executive,  in his sole  discretion,
determines  is  reasonably  necessary  to perform  the duties of Chairman of the
Board,  including those duties assigned to him by the Board in such capacity for
which  Executive  has  received  reasonable  notice,  which  shall be limited to
regulatory and legal matters and strategic  planning;  PROVIDED,  HOWEVER,  such
time in the  aggregate  shall not exceed  fifty  (50%)  percent  of  Executive's
business  time. In addition,  following the Initial  Period,  Executive  will be
permitted to engage in other employment  activities  provided such activities do
not directly compete with the business of Resources and its Subsidiaries as such
business is conducted on the date of this Agreement.

                  1.4.  ACKNOWLEDGEMENT.   Resources  is  aware  of  Executive's
activities and investments in connection  with  Lionspride  Polymer LLC, and its
predecessor and affiliated entities  ("Lionspride"),  and acknowledges that such
activities  and  investments  do not  violate the terms and  conditions  of this
Agreement.  Executive  acknowledges  that  Resources  maintains a right of first
refusal on Lionspride's nail fungus project.

            2.    COMPENSATION AND BENEFITS.
                  -------------------------

                  2.1. SALARY.  At all times Executive is employed  hereunder in
any capacity Employer will pay to Executive,  and Executive will accept, as full
compensation for any and all services  rendered and to be rendered by him during
such period to Resources in all capacities,  including,  but not limited to, all
services  which may be rendered by him to any  Subsidiary and all services which
may be rendered by him as an officer of  Resources or member of the Board or any
committee  thereof,  the  following:  (i)  during the  Initial  Period and while
Executive  is employed as Chief  Executive  Officer and Chairman of the Board of
Resources,  a base  salary  at the  annual  rate  of (A)  $395,163,  or at  such
increased  rate  as  the  Board  (through  its  Compensation  and  Stock  Option
Committee),  in its sole  discretion,  may hereafter  from time to time grant to
Executive,  subject to adjustment in accordance with Section 2.1.1 hereof (as so
adjusted,  the "CEO Base  Salary"),  and (B)  during any  subsequent  employment
period when  Executive  is no longer the Chief  Executive  Officer and is solely
employed  as  Chairman  of the Board,  $250,000  (the  "Chairman  Base  Salary";
sometimes  referred  to  collectively  with the CEO  Base  Salary  as the  "Base
Salary");  and (ii) the additional  bonus and benefits  hereinafter set forth in
this Section 2. The Base Salary shall be payable in accordance  with the regular
payroll  practices  of  Resources  applicable  to senior  executives,  less such
deductions as shall be required to be withheld by applicable law and regulations
or otherwise.

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

                        2.1.2. $1,000,000 PAYMENT.  Immediately upon the earlier
of the  termination of the (i) Initial Period (as defined in Section 3.1 hereof)
or (ii)  Employment  Period (as defined in Section 3.1  hereof),  for any of the

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reasons  set forth in  Section  3 hereof,  Employer  shall  pay to  Executive  a
one-time cash payment of $1,000,000.

                  2.2. BONUS. Subject to Section 3.3 hereof,  Executive shall be
entitled to an annual bonus during the Employment Period in such amount (if any)
as  determined  by the  Board  based on such  performance  criteria  as it deems
appropriate,  including Employer's earnings, financial condition, rate of return
on equity  and  compliance  with  regulatory  requirements.  Further,  Resources
acknowledges  Executive's efforts to complete strategic deals for the benefit of
Resources  and may  decide  in its  discretion  to  award  Executive  additional
bonus(es) in recognition thereof during the Employment Period.

                  2.3.  EXECUTIVE BENEFITS.
                        ------------------

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

                        2.3.2.  EMPLOYER  PLANS.  Executive  will be entitled to
participate in such employee benefit and welfare plans and programs as Resources
may from time to time offer or provide to executive officers of Resources or its
Subsidiaries,  including,  but not limited to,  participation in life insurance,
health  and  accident,  medical  plans  and  programs  and  profit  sharing  and
retirement  plans.  In addition,  on January 15, 2002,  Resources shall transfer
ownership  to  Executive  of the life  insurance  policies  with  the  Principal
Financial  Group,  policy  numbers  4272715 and 4018743,  respectively,  and the
settlement  shares  related  thereto,  it  currently  maintains  on the  life of
Executive.

                        2.3.3.  VACATION.  During the Initial Period,  Executive
will be entitled to such  vacation  time as may be  determined to be in the best
interests  of  Executive  and  Resources,  but in no case  less than a pro rated
amount of vacation equal to four weeks vacation for a 12-month period.  No later
than January 15, 2002,  Executive  shall  receive a single lump sum cash payment
(calculated  pursuant to the CEO Base Salary) equal to  forty-five  (45) days of
vacation time previously accrued and unused during  Executive's  employment with
Resources.

                        2.3.4.  AUTOMOBILE.  Resources  shall provide  Executive
with an automobile cash allowance commensurate with his title and position.

                        2.3.5.  OFFICE SPACE.  Subject to Section 3.3 hereof and
subsequent to the Initial  Period,  Resources  shall provide  Executive  with or
reimburse  Executive  for any  costs and  expenses  in  respect  of the rent and
maintenance of reasonable  office space at such location as chosen by Executive,
in his sole discretion, for the duration of the Employment Period.

            3.    EMPLOYMENT PERIOD; TERMINATION.
                  ------------------------------

                  3.1. EMPLOYMENT PERIOD. Executive's employment hereunder shall
commence on the date hereof and shall continue until (i) terminated  pursuant to
Sections  3.1.1 or 3.2  hereof,  (ii) a Change in Control (as defined in Section
3.4.1.  hereof)  or (iii) the  election  by the  Board of a new Chief  Executive

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Officer (defined herein as the "Initial  Period").  If the Employment  Period is
extended beyond the Initial Period,  such employment shall be as Chairman of the
Board at the  compensation  rate and  benefits set forth in Section 2 hereof and
for the term set forth in Section 3.1.1 below (the "Subsequent Period", together
with the Initial Period and any subsequent  employment period, being referred to
herein as the "Employment  Period").  Upon termination of the Employment  Period
pursuant to Sections 3.1.1 and 3.2.1 through 3.2.6 hereof, inclusive,  Executive
will be  released  from any duties  hereunder  (except as set forth in Section 4
hereof) and the  obligations  of Resources to Executive  will be as set forth in
Section 3.3 hereof.

                  3.1.1.  AUTOMATIC RENEWAL.  The Subsequent Period shall be for
successive  and  additional  one-year  periods  unless  Executive  or  Resources
provides six (6) months' prior written  notice of termination to the other party
in respect of its  intention  to terminate  the  Employment  Period,  subject to
Section 3.2 hereof.  In the event this Agreement is terminated  pursuant to this
Section  3.1.1,  Employer will pay to Executive his Base Salary through the Date
of Termination.

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

                        3.2.1.  DEATH.  In the event of Executive's  death,  the
Employment Period will terminate on the date of his death.

                        3.2.2.   WITHOUT  CAUSE  BY  EXECUTIVE.   Executive  may
terminate  the  Employment  Period at any time during such Period for any reason
whatsoever  by  giving  a  Notice  of  Termination  to  Resources.  The  date of
termination  of the  Employment  Period  pursuant to this Section 3.2.2 shall be
thirty  (30) days  after  the date of  receipt  by  Resources  of the  Notice of
Termination.

                        3.2.3.   DISABILITY.   In  the   event  of   Executive's
Disability (as hereinafter defined), Resources will have the option to terminate
the Employment  Period by giving a Notice of Termination  (as defined in Section
3.4.2 hereof) to Executive.  The Notice of Termination shall specify the date of
termination,  which date shall not be earlier  than  thirty  (30) days after the
Notice of Termination  is given.  For purposes of this  Agreement,  "Disability"
means the  inability  of Executive  for 180  consecutive  days to  substantially
perform his duties hereunder as a result of a physical or mental illness, all as
determined in good faith by the Board of Resources.

                        3.2.4.  CAUSE.  Resources may, at its option,  terminate
the Employment Period for "Cause" based on objective factors  determined in good
faith by a  majority  of the  Board of  Resources  as set  forth in a Notice  of
Termination to Executive  specifying the reasons for termination and the failure
of the  Executive  to cure the same  within ten (10) days of his  receiving  the
Notice of  Termination;  PROVIDED,  that in the event the Board of  Resources in
good  faith  determines  that  the  underlying   reasons  giving  rise  to  such
determination  cannot be cured,  then said cure  period  shall not apply and the
Employment  Period  shall  terminate on the date of  Executive's  receipt of the
Notice of Termination.  For purposes of this Agreement, "Cause" shall be limited

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to willful  misconduct by Executive  which results in material harm to Resources
and/or a material violation by Executive of the provisions of Section 4 hereof.

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

                        3.2.6. RESOURCES' MATERIAL BREACH. Executive may, at his
option,  terminate the Employment Period upon Resources' material breach of this
Agreement and the  continuation of such breach for more than ten (10) days after
written demand for cure of said breach is given to Resources by Executive (which
demand will identify the manner in which Employer has  materially  breached this
Agreement);  PROVIDED,  that  no  such  demand  will be  required  if  Executive
determines in good faith that such material breach is not capable of being cured
by Employer within said ten (10) day period.  Employer's material breach of this
Agreement  shall include,  but not be limited to, (i) the failure of Employer to
make any payment which it is required to make  hereunder to Executive  when such
payment is due or within two business days  thereafter;  (ii) the  assignment to
Executive without Executive's express written consent of any duties inconsistent
with his positions,  duties,  responsibilities  and status with  Employer,  or a
change in Executive's reporting responsibilities, titles or offices or any plan,
act, scheme or design to constructively  terminate the Executive, or any removal
of Executive  from or any failure to use its best efforts to re-elect  Executive
to any of such  positions,  except in  connection  with the  termination  of the
Employment  Period  by  Employer  for  Cause or  Disability  or as a  result  of
Executive's  death or voluntary  resignation or by Executive other than pursuant
to this Section 3.2.6; and (iii) a reduction by the Employer in Executive's Base
Salary.

                  3.3. CERTAIN OBLIGATIONS OF EMPLOYER FOLLOWING  TERMINATION OF
THE EMPLOYMENT PERIOD.  Following termination of the Employment Period under the
circumstances  described below, Employer will pay to Executive or his estate, as
the case  may be,  the  following  compensation,  in  addition  to the  one-time
financial  obligation  set  forth in  Section  2.1.2  hereof,  and  provide  the
following  benefits in full  satisfaction  and final  settlement  of any and all
claims and  demands  that  Executive  now has or  hereafter  may have  hereunder
against Resources.

                        3.3.1.  FOR  CAUSE.  In the  event  that the  Employment
Period is terminated for Cause prior to the end of the Employment  Period,  then
Resources  will pay to  Executive  in a single  lump sum an amount  equal to any
unpaid but earned Base Salary through the Date of Termination.

                        3.3.2.  WITHOUT CAUSE BY RESOURCES;  MATERIAL  BREACH BY
EMPLOYER.  In the event that the  Employment  Period is  terminated by Resources
pursuant to Section  3.2.5  hereof or by  Executive  pursuant  to Section  3.2.6
hereof, Employer will pay to Executive,  following the Date of Termination, in a
single lump sum an amount  equal to (i) if such  termination  occurs  during the
Initial  Period,  the Base  Salary  unpaid and owed  through  December 31 of the
current year of the Initial Period,  or (ii) if such  termination  occurs during
the Subsequent  Period,  the Base Salary unpaid and owed through the duration of
the Subsequent  Period,  at the  compensation  rate in effect at such applicable
time.
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                        3.3.3 WITHOUT CAUSE BY EXECUTIVE.  In the event that the
Employment  Period is terminated by Executive  pursuant to Section 3.2.2 hereof,
then Resources will pay to Executive in a single lump sum an amount equal to any
unpaid but earned Base Salary through the Date of Termination.

                        3.3.4.  DEATH,   DISABILITY.   In  the  event  that  the
Employment  Period is  terminated  by Resources by reason of  Executive's  death
pursuant to Section 3.2.1 hereof or by reason of Executive's Disability pursuant
to Section 3.2.3, hereof, Employer will pay to Executive,  following the Date of
Termination,  in a single lump sum an amount equal to any unpaid but earned Base
Salary through the Date of Termination.

                        3.3.5.  POST-EMPLOYMENT  PERIOD  BENEFITS.  In the event
Executive  is  terminated  pursuant  to Sections  3.2.1  through  3.2.6  hereof,
inclusive,  Resources shall reimburse Executive for any unpaid expenses pursuant
to Section  2.3.1 hereof and  Resources  shall pay, on behalf of Executive for a
period equal to twenty four (24) months from the Date of  Termination,  all life
insurance,  medical,  health and accident,  and disability plans and programs in
which  Executive was entitled to  participate  immediately  prior to the Date of
Termination;  PROVIDED,  that  Executive's  continued  participation is possible
under the general terms and provisions of such plans and programs.  In the event
that Executive's participation in any such plan or program is barred, Resources,
at its sole  cost  and  expense,  will use its  reasonable  efforts  to  provide
Executive  with  benefits  substantially  similar to those which  Executive  was
entitled  to  receive  under  such  plans and  programs.  In the event  that the
Employment Period is terminated  pursuant to Section 3.2.3 hereof  (Disability),
the Executive  will also be entitled to receive any unpaid  disability  benefits
under any insurance program in effect on the Date of Termination.

                        3.3.6.  STOCK  OPTIONS.  In the  event  of a  Change  of
Control (as defined in Section  3.4.1.  hereof),  all stock options in Resources
theretofore  granted to Executive shall vest  immediately upon the occurrence of
such event.

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

                        3.4.1.   "CHANGE  OF  CONTROL"  DEFINED.  A  "Change  in
Control" of Resources means (A) the approval by the  stockholder(s) of Resources
of the sale, lease,  exchange or other transfer (other than pursuant to internal
reorganization) by Resources or Par of all or substantially all of its assets to
a  single  purchaser  or to a group  of  associated  purchasers;  (B) the  first
purchase of shares of equity securities of Par or Resources pursuant to a tender
offer or exchange  offer (other than an offer by Par or Resources)  for at least
fifteen  (15%) percent of the equity  securities  of Par or  Resources;  (C) the
approval by the  stockholder(s)  of Resources  of an  agreement  for a merger or
consolidation in which neither Par nor Resources will survive as an independent,
publicly-owned corporation; (D) the acquisition (including by means of a merger)
by a single  purchaser or a group of associated  purchasers of securities of Par
or  Resources  from  either Par or  Resources  or any third  party  representing
thirty-five  (35%)  percent or more of the  combined  voting  power of Par's (or
Resources')  then  outstanding  equity  securities in one or a related series of
transactions  (other than  pursuant to an internal  reorganization);  or (E) the
change of the  membership of a majority of the Board of Par or Resources  during
any period of two consecutive years, unless the election,  or the nomination for

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election by Par's or Resources' stockholders,  of each new director was approved
by a vote of at least  two-thirds  of the directors of the Board still in office
who were directors of Resources at the beginning of the period.

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

                        3.4.3.   "DATE  OF   TERMINATION"   DEFINED.   "Date  of
Termination"  means  such  date  as  the  Employment  Period  is  terminated  in
accordance with Section 3.2 hereof;  PROVIDED,  HOWEVER,  that in the event that
within  thirty  (30) days after any Notice of  Termination  is given,  the party
receiving  such Notice of  Termination  notifies  the other party that a dispute
exists  concerning the termination,  the Date of Termination will be the date on
which the dispute is finally  determined,  either by mutual written agreement of
the  parties  or by a final  judgment,  order or decree of a court of  competent
jurisdiction  entered  upon an  arbitration  award  rendered  in an  arbitration
proceeding pursuant to Section 5.12 hereof.

            4.    CONFIDENTIALITY AND NONSOLICITATION.
                  -----------------------------------

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

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

                  4.3. CERTAIN ACTIVITIES. Executive will not, while employed by
Resources and for the period,  if any, during which he is paid on a timely basis
(subject to any legal offsets by  Resources)  pursuant to Section 3.3 (unless he
shall be terminated  for cause  pursuant to Section 3.2.4 hereof,  in which case
for a period of one (1) year  following  the Date of  Termination),  directly or
indirectly,  hire, offer to hire, entice away or in any other manner persuade or
attempt to persuade any officer,  employee,  agent,  lessor,  lessee,  licensor,
licensee, customer,  prospective customer or supplier of Resources or any of its
Subsidiaries to discontinue or alter his or its  relationship  with Resources or
any of its Subsidiaries.

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                  4.4.  NON-COMPETITION.  Executive  will not, while employed by
Resources and for the period,  if any, during which he is paid on a timely basis
(subject to any legal offsets by the Resources)  pursuant to Section 3.3 (unless
he shall be terminated for cause pursuant to Section 3.2.4 hereof, in which case
for a period  of one (1) year  following  the Date of  Termination),  engage  or
participate  in,  directly  or  indirectly  (whether  as an  officer,  director,
employee, partner, consultant,  equityholder, lender or otherwise), any business
in the generic drug industry within the States of New York or New Jersey.

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

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

            5.    MISCELLANEOUS PROVISIONS.
                  ------------------------

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

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

                  5.3.  NOTICES.  All  notices,   requests,  demands  and  other
communications hereunder shall be in writing and shall be deemed duly given when
delivered by hand, or when  delivered if mailed by registered or certified  mail
or private courier  service,  postage  prepaid,  return receipt  requested,  via
facsimile (with confirmed answerback) as follows:

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      If to Resources, to:

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

      Copy to:

            Stephen A. Ollendorff, Esq.
            c/o Kirkpatrick & Lockhart LLP
            1251 Avenue of the Americas
            New York, NY  10022
            Telecopy No.:  (212) 536-3901

      If to Executive, to:

            Kenneth I. Sawyer
            c/o Pharmaceutical Resources, Inc.
            One Ram Ridge Road
            Spring Valley, New York  10977

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

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

                  5.5. ENTIRE AGREEMENT.  This Agreement  constitutes the entire
agreement of the parties hereto with respect to the subject  matter hereof,  and
supersedes all prior agreements and  understandings of the parties hereto,  oral
or written,  including but not limited to the October,  July,  January,  May and
October 1992  Agreements,  with respect to the subject matter hereof.  Executive
and Employee  hereby agree that the October 1992 Agreement is hereby  superseded
and of no further force and effect,  and that this Agreement  shall be effective
as of the date hereof.

                  5.6.  APPLICABLE  LAW. This  Agreement  shall be governed by
                        ---------------
and construed in accordance  with the laws of the State of New York applicable
to contracts made and to be wholly  performed  therein,  without regard to its
conflicts or choice of law provisions.

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

                                       9
<PAGE>

                  5.8. BINDING EFFECT; SUCCESSORS AND ASSIGNS. Executive may not
delegate his duties or assign his rights hereunder. This Agreement will inure to
the benefit of, and be binding  upon,  the parties  hereto and their  respective
heirs, legal representatives,  successors and permitted assigns. Resources shall
require  any  successor  (whether  direct or indirect  and whether by  purchase,
merger,  consolidation or otherwise) to all or substantially all of the business
and/or  assets of Resources,  by an agreement in form and  substance  reasonably
satisfactory  to  Executive,  to  expressly  assume  and agree to  perform  this
Agreement  in the same  manner and to the same extent  that  Resources  would be
required to perform if no such succession had taken place.

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

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

                  5.11.  ENFORCEMENT.  If any party  institutes  legal action to
enforce or interpret the terms and conditions of this Agreement,  the prevailing
party shall be awarded  reasonable  attorneys'  fees at all trial and  appellate
levels,  and the  expenses  and  costs  incurred  by such  prevailing  party  in
connection  therewith.  Venue for any such action shall  exclusively be New York
City, New York.

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

                        (a)   Any dispute under  Section 3 of this  Agreement,
including  but not limited to the  determination  by the Board of Resources of a
termination  for Cause  pursuant to Section 3.2.4  hereof,  or in respect of the
breach thereof will be settled by arbitration in the Borough of Manhattan,  City
of New York.  The  arbitration  will be  accomplished  in the following  manner.
Either  party may serve upon the other party  written  demand that the  dispute,
specifying the nature  thereof,  shall be submitted to  arbitration.  Within ten
(10) days after the service of such demand,  each of the parties will  designate
an arbitrator and serve written notice of such appointment upon the other party.
If either party fails within the specified time to appoint such arbitrator,  the
other party will be entitled to appoint both arbitrators. The two arbitrators so
appointed will appoint a third arbitrator. If the two arbitrators appointed fail
to agree upon a third arbitrator  within ten (10) days after their  appointment,
then an application may be made by either party hereto, upon notice to the other

                                       10
<PAGE>

party, to the American  Arbitration  Association  (the "AAA"),  or any successor
thereto,  or if the AAA or its  successor  fail to  appoint  a third  arbitrator
within ten (10) days after  such  request,  then  either  party may apply,  with
notice to the other,  to the  Supreme  Court of the State of New York,  New York
County,  for the appointment of a third arbitrator,  and any such appointment so
made will be binding upon both parties hereto.

                        (b)   The  decision of the  arbitrators  will be final
and binding upon the parties.  The party against whom the award is rendered (the
"non-prevailing  party")  will  pay  all  fees  and  expenses  incurred  by  the
prevailing  party  in  connection  with  the  arbitration  (including  fees  and
disbursements of the prevailing party's counsel), as well as the expenses of the
arbitration  proceeding.  The  arbitrators  will determine in their decision and
award which of the parties is the prevailing party,  which is the non-prevailing
party,  the  amount of the fees and  expenses  of the  prevailing  party and the
amount of the arbitration  expenses.  The arbitration will be conducted,  to the
extent consistent with this Section 5.12, in accordance with the then prevailing
rules of commercial  arbitration  of the AAA or its successor.  The  arbitrators
will have the right to retain and  consult  experts  and  competent  authorities
skilled in the matters under arbitration,  but all consultations will be made in
the  presence of both  parties,  who will have full right to  cross-examine  the
experts and  authorities.  The  arbitrators  will render their  award,  upon the
concurrence  of at least two of their  number,  not later than  thirty (30) days
after the appointment of the third  arbitrator.  The decision and award shall be
in writing, and counterpart copies shall be delivered to each of the parties. In
rendering  an award,  the  arbitrators  will have no power to modify  any of the
provisions  of  this  Agreement,  and the  jurisdiction  of the  arbitrators  is
expressly  limited  accordingly.  Judgment  may be  entered  on the award of the
arbitrators and may be enforced in any court having jurisdiction.

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


                              By:  /s/ Mark Auerbach
                                  ----------------------------
                                  Name:  Mark Auerbach
                                         Authorized Signatory


                                 /s/ Kenneth I. Sawyer
                              ---------------------------------
                              KENNETH I. SAWYER