EXHIBIT 10.40




EXECUTION COPY








                              Dated April 26, 2001




                       ELAN TRANSDERMAL TECHNOLOGIES, INC.


                                       AND


                            PAR PHARMACEUTICAL, INC.


                          LICENSE AND SUPPLY AGREEMENT


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                                    CONTENTS

Clause I                    Preliminary

Clause 2                    The License

Clause 3                    Intellectual Property

Clause 4                    Competing Products

Clause 5                    Registration Of The Product

Clause 6                    Marketing And Promotion Of The Product

Clause 7                    Supply Of The Product

Clause 8                    Financial Provisions

Clause 9                    Payments, Reports And Audits

Clause 10                   Duration And Termination

Clause 11                   Warranty And Indemnity

Clause 12                   Customer Complaints, Product Recall And Insurance

Clause 13                   Miscellaneous Provisions

Schedule 1                  Product

Schedule 2                  Product Manufacturing Cost

Schedule 3                  Complaint Handling Procedures

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THIS AGREEMENT is made on April 26, 2001.

BETWEEN:
-------

(1)       ELAN  TRANSDERMAL  TECHNOLOGIES,  INC., a company  organized under the
          laws of  Florida,  with  offices at 3250  Commerce  Parkway,  Miramar,
          Florida 33025, United States of America ("Elan"); and

(2)       PAR  PHARMACEUTICAL,  INC., a company  organized under the laws of New
          Jersey,  with offices at One Ram Ridge Road,  Spring Valley,  New York
          10977, United States of America ("Par").

RECITALS:
--------

A.        Elan  is  beneficially  entitled  to the use of  various  information,
          including  the Elan  Know-How,  in  relation  to the  development  and
          production of drug specific dosage forms for  pharmaceutical  products
          and processes.

B.        Elan is  knowledgeable  in the  development  of drug specific oral and
          transdermal  dosage forms and has developed a unique range of delivery
          systems   designed  to  provide  newer  and  better   formulations  of
          medicaments.

C.        Elan is  prepared  to  grant  Par an  exclusive  license  of the  Elan
          Know-How to package,  import, use, offer for sale and sell the Product
          in the Territory and to supply the Product to Par.

D.        Elan and Par are desirous of entering into an agreement to give effect
          to the arrangements described at Recital C.

NOW IT IS HEREBY AGREED AS FOLLOWS:

                             CLAUSE 1 - PRELIMINARY

1.1.      DEFINITIONS: In this Agreement unless the context otherwise requires:
          ----------

          AB RATEABLE shall have the meaning as defined and accepted by the FDA.

          AFFILIATE  shall  mean  any  corporation  or  entity   controlling  or
          controlled  or under common  control with Elan or Par, as the case may
          be.  For the  purposes  of this  Agreement,  "control"  shall mean the
          direct or  indirect  ownership  of more than 50% of the issued  voting
          shares  or  other  voting  rights  of  the  subject  entity  to  elect
          directors.

          cGCP,  cGMP,  cGLP  shall  mean  respectively  current  Good  Clinical
          Practice,   current  Good  Manufacturing  Practice  and  current  Good
          Laboratory  Practice  as  defined  in the US  Federal  Food,  Drug and
          Cosmetic Act and the  regulations  promulgated  thereunder,  as may be
          amended from time to time.



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


          CFR shall mean the US Code of Federal  Regulations 21, as amended from
          time to time.

          CMC SECTION  shall mean the  chemistry,  manufacturing,  and  controls
          section of the  Regulatory  Filing,  as defined in the CFR,  as may be
          amended from time to time,  and/or its equivalent in other  Regulatory
          Filings.

          COMPETING PRODUCT shall mean a product AB Rateable to the Product, but
          shall exclude Clonidine marketed by Boehringer Ingelheim.

          DATE FOR LAUNCH  shall mean the date on which Par is obliged to effect
          full  commercial  launch of the Product in the  Territory  pursuant to
          Clause 6.7.

          DMF shall mean Drug Master File, as defined in the CFR.

          EFFECTIVE  DATE shall mean the date on which this  Agreement is signed
          by the last of the Parties to do so.

          ELAN shall mean Elan Transdermal Technologies, Inc. and Affiliates and
          subsidiaries  of Elan  Corporation,  plc.  within the division of Elan
          Corporation,   plc.  carrying  on  business  as  Elan   Pharmaceutical
          Technologies.  For the  avoidance of doubt,  "Elan" shall  exclude the
          Excluded Entities.

          ELAN KNOW-HOW  shall mean all knowledge,  information,  trade secrets,
          data and expertise which is not generally  known to the public,  owned
          by Elan,  or to which Elan has rights  under the terms of a license or
          licenses in force on the Effective Date which permit(s)  disclosure of
          same to Par  relating  to the  Product,  whether or not covered by any
          patent,  copyright,  design patent,  trademark,  trade secret or other
          industrial or any intellectual property rights.

          In the event that Elan  acquires or merges with a third party  entity,
          Elan  Know-How  shall not include any know-how to the extent that such
          know-how relates to a product containing the same active ingredient as
          the Product which has been approved for marketing or is in development
          by the said  third  party  entity at the time of such  acquisition  or
          merger.  For the  avoidance  of  doubt,  the  occurrence  of any  such
          acquisition  or  merger  shall  not  affect  the  license  of the Elan
          Know-How granted to Par hereunder.

          EXCLUDED ENTITIES shall mean [****************]

          FDA shall mean the United States Food and Drug  Administration  or any
          other  successor  agency  whose  approval is  necessary  to market the
          Product in the Territory.

          FDA  APPROVAL  shall mean the final  approval to market the Product in
          the  Territory  (notwithstanding  that such approval may be subject to
          expiration  of the 30 month Waxman Hatch patent stay)  including  post
          approval  validation  and scale up inspection  and any other  approval
          which is  required  to launch  the  Product  in the  normal  course of
          business.

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


          FOB shall  have the same  meaning  as such term is  defined in the ICC
          Incoterms,  1990,  International Rules for the Interpretation of Trade
          Terms, ICC Publication No. 460.

          FIRST  COMMERCIAL  SALE shall mean the first sale under this Agreement
          in an arm's length transaction to an independent third party. Par will
          provide Elan with written notice of the date of the same.

          IN MARKET  shall mean the sale of the Product in the  Territory by Par
          or its Affiliates,  or where applicable by a permitted sub-licensee or
          distributor, to an unaffiliated third party, including but not limited
          to a wholesaler, chain store, distributor,  managed care organization,
          hospital or pharmacy.

          LAUNCH STOCKS shall mean [****************]

          MARKETING COMMITTEE shall have the meaning set forth in Clause 6. 1.

          NET SALES PRICE ("NSP") shall mean [****************]

          PAR shall mean Par Pharmaceutical, Inc. and any of its Affiliates.

          PAR TRADEMARK shall mean the  trademark(s) of Par to be applied to the
          Product.

          PARTY  shall mean Elan or Par as the case may be.  Parties  shall mean
          Elan and Par.

          PRODUCT shall mean [****************]

          PRODUCT MANUFACTURING COST shall mean [****************]

          PRODUCT  SPECIFICATIONS shall mean the specifications set forth in the
          Regulatory Filings, the specifications set forth in the Agreement, and
          such  specifications  as may from time to time be  established  by the
          applicable  regulatory  authorities,   including  without  limitation,
          cGCPs,  cGMPs and cGLPs,  and such additional  specifications  for the
          Product as may be agreed by the Parties in writing.

          PROFIT shall mean [****************]

          REGULATORY  FILING  shall  include,  but shall not be  limited  to, an
          abbreviated  new drug  application  ("ANDA"),  a new drug  application
          ("NDA") or any other  application  acceptable to the FDA for marketing
          approval  for the  Product,  which  Elan will  file in the  Territory,
          including any supplements or amendments thereto.

          TECHNOLOGICAL  COMPETITOR shall mean a company or corporation having a
          substantial  part of its  business  in the  oral or  transdermal  drug
          delivery,  research,   development  and  manufacturing  areas  of  the
          pharmaceutical industry, with a market capitalization of at least $100
          million,  in the case of a  publicly-held  company,  or at  least  $75
          million of annual revenues, in the case of a privately-held company.

          TERRITORY shall mean the United States of America, its territories and
          possessions.

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          $ shall mean United States Dollars.

          US OR USA shall mean the United States of America.

1.2.      Interpretation: In this Agreement:

          1.2.1.   the  singular   includes  the  plural  and  vice  versa,  the
                   masculine includes the feminine and vice versa and references
                   to natural persons include corporate bodies, partnerships and
                   vice versa.

          1.2.2.   any  reference  to a Clause  or  Schedule,  unless  otherwise
                   specifically  provided,  shall be respectively to a Clause or
                   Schedule of this Agreement.

          1.2.3.   the headings of this Agreement are for ease of reference only
                   and shall not affect its construction or interpretation.

                             CLAUSE 2 - THE LICENSE

2.1.      LICENSE TO PAR:
          --------------

          2.1.1.   Subject to the terms of this Agreement, Elan hereby grants to
                   Par and Par hereby  accepts for the term of this Agreement an
                   exclusive license of the Elan Know-How to package, use, offer
                   for sale and sell the Product in the Territory.

          2.1.2.   Elan shall possess all rights including,  without limitation,
                   the right to research, develop, experiment with, manufacture,
                   sell,  license or  otherwise  market the Product  outside the
                   Territory.

          2.2.     Sub-licensing by Par:

          2.2.1.   Par shall be entitled,  subject to the prior written  consent
                   of Elan, which shall not be unreasonably withheld or delayed,
                   to grant sub-licenses to package, import, use, offer for sale
                   and sell the  Product  in the  Territory,  provided  that Par
                   shall not grant a sub-license to a  Technological  Competitor
                   of Elan.

          2.2.2.   Any sub-license  granted hereunder shall be in the same terms
                   mutatis  mutandis as the terms of this  Agreement  insofar as
                   they  are  applicable,  but  excluding  the  right to grant a
                   sub-license.

          2.2.3.   For the avoidance of doubt,  Par shall ensure that Elan shall
                   have the same  rights of audit  and  inspection  vis-a-vis  a
                   sub-licensee,   as  Elan  has  pursuant  to  this   Agreement
                   concerning Par.

          2.2.4.   Par shall be liable to Elan for all acts and omissions of any
                   sub-licensee  as though such acts and  omissions  were by Par
                   and Par shall  provide  the  indemnity  to Elan  outlined  in
                   Clause 11.7.

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          2.2.5.   Where a sub-license has been granted under Clause 2.2.1, such
                   sub-license shall  automatically  terminate if this Agreement
                   terminates  for  the  country  or  countries  covered  by the
                   sub-license.

          2.2.6.   Par shall undertake to protect the  confidentiality of Elan's
                   formulation,  engineering and manufacturing processes for the
                   Product in its  dealings  with  permitted  sub-licensees  and
                   shall  not  disclose  any  information  from the CMC  Section
                   and/or the DMF, as applicable,  to any third party, including
                   a permitted  sub-licensee,  without the prior written consent
                   of Elan, which consent shall not be unreasonably  withheld or
                   delayed. Par shall include confidentiality  provisions in any
                   permitted  sub-license  with the same  obligations as are set
                   out in the confidentiality provisions of this Agreement.

          2.2.7.   For the avoidance of doubt:

                   (1)   the parties agree that any sub-license granted pursuant
                         to this  Clause 2.2 shall not be  capable of  surviving
                         the termination of this Agreement; and

                   (2)   In  Market  sales of the  Product  by the  sub-licensee
                         shall be included in  calculating  NSP for the purposes
                         of this Agreement.

                        CLAUSE 3 - INTELLECTUAL PROPERTY

3.1.      OWNERSHIP OF ELAN KNOW-HOW:
          --------------------------

          3.1.1.   Elan shall remain the sole owner of the Elan Know-How.

          3.1.2.   Elan  shall be  entitled  to use the Elan  Know-How,  and all
                   technical and clinical data whether  generated by Elan or Par
                   pursuant to this  Agreement in  connection  with Elan's other
                   commercial  arrangements outside the Territory and, following
                   termination of this Agreement, in the Territory.

3.2.      INFRINGEMENTS
          ------------

          3.2.1.   Par and Elan  shall  promptly  inform the other in writing of
                   any alleged  infringement  of which it shall  become aware by
                   the  Product  of a  third  party's  patent  rights  ("Defense
                   Infringement")  or of any  alleged  infringement  by a  third
                   party of any rights  within the Elan  Know-How  ("Enforcement
                   Infringement").  The Party with such knowledge  shall provide
                   the  other  Party  with any  available  evidence  of  alleged
                   infringement.  Elan shall  thereafter  be entitled to conduct
                   the  defense  of such claim (in its own name  and/or  that of
                   Par) or,  as the  case  may be,  to  institute  and  carry on
                   proceedings  (in its own name  and/or that of Par) to prevent
                   or cease any  infringement or unauthorized  use. In the event
                   that  Elan  decides  in  writing  that  it does  not  wish to
                   institute such enforcement proceedings, or as the case may be
                   conduct  such  defense,  Par may at its option elect to do so
                   instead of Elan.

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          3.2.2.   In the event of any alleged  Defense  Infringement,  Elan and
                   Par shall  share  equally the cost of any patent  review.  If
                   such third party  institutes  proceedings  against Par and/or
                   Elan jointly or  separately,  the Parties shall share equally
                   the   litigation   expenses  in  defending   such  an  action
                   (including the reasonable  legal costs and expenses  incurred
                   by a Party who elects to have separate legal representation),
                   including reasonable attorney fees, experts' fees, etc.

          3.2.3.   Par shall  bear all and any  liability  to one or more  third
                   parties for patent infringement  (including a court order for
                   a lump sum,  ongoing  royalties  or a  settlement)  and shall
                   indemnify  and keep  indemnified  Elan  against  any claim or
                   order made against Par or Elan in respect of the same.

          3.2.4.   In each case where only one of the Parties  ("THE  LITIGATING
                   PARTY") is a party to  proceedings,  whether in respect of an
                   alleged  Enforcement   Infringement  or  an  alleged  Defense
                   Infringement, the litigating party shall provide to the other
                   Party ("THE NON-LITIGATING PARTY"):

                   (i)   updates as to its progress on a regular basis; and

                   (ii)  such other information concerning the litigation as the
                         non-litigating  party may reasonably  request,  subject
                         always  to the  non-litigating  party  having  provided
                         undertakings as to  confidentiality  and the non-waiver
                         of  privilege  to the  reasonable  satisfaction  of the
                         litigating party.

                   PROVIDED  THAT  the  litigating   party  shall  be  under  no
                   obligation to disclose to the non-litigating party any advice
                   of outside attorneys.  Furthermore the litigating party shall
                   discuss  litigation  strategy  at  reasonable  times with the
                   non-litigating  party  (but  shall not be bound to follow any
                   recommendation  of the  non-litigating  party) and shall keep
                   the  non-litigating  party informed of any actual or proposed
                   change  in  outside  counsel  used  in  respect  of the  said
                   litigation.

          3.2.5.   The   non-litigating   party  shall  provide  all  reasonable
                   co-operation in the litigation,  including without limitation
                   Product technical expertise to the other Party to support any
                   Defense Infringement  litigation or Enforcement  Infringement
                   litigation  (including complying with requests for orders for
                   discovery and depositions).  Any expenses incurred by Elan or
                   Par in providing such Product  technical  expertise  shall be
                   included in the total patent  review and legal  expenses,  in
                   accordance with Clause 3.2.2.

          3.2.6.   Costs  which are shared  pursuant to this Clause 3.2 shall be
                   paid in the first  instance by Elan.  Par shall pay its share
                   of such costs to Elan as and when  sufficient  Profit becomes
                   available to it to discharge  such share PROVIDED THAT in the
                   event of (i) the  termination  of this  Agreement,  howsoever
                   arising;   or  (ii)  Par  not  having   effected  full  scale
                   commercial  launch  of the  Product  in the  Territory  on or
                   before the Date For Launch (whether or not Elan exercises its
                   right of  termination  in respect  of the  same),  the entire
                   balance of Par's share of such costs shall become immediately
                   due and payable.

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


          3.2.7.   Elan  confirms  that to the best of its knowledge and belief,
                   the Product  does not  infringe  patent  number  [******] as
                   listed in the Orange Book.

3.3.      TRADEMARKS
          ----------

          3.3.1.   Par may market,  sell and/or distribute the Product under any
                   trademark  or  trademarks  and  trade  dress  as  Par  or its
                   customers may from time to time select. Such trademarks shall
                   remain the sole  property of Par or its customers as the case
                   may be, and Elan shall not use any such trademark(s)  whether
                   during  the term or  thereafter,  without  the prior  written
                   consent of Par.

          3.3.2.   For  the  term of  this  Agreement  Par  shall  grant  Elan a
                   royalty-free  license to the applicable Par Trademarks solely
                   to enable  Elan to fulfill  its  obligations  pursuant to the
                   terms of this Agreement.

                          CLAUSE 4 - COMPETING PRODUCTS

Par shall not develop,  market or sell any  Competing  Product in the  Territory
during the term of the Agreement (and for one year after the termination of this
Agreement if the Agreement is terminated due to Par's default of its obligations
hereunder beyond any applicable cure period).

                     CLAUSE 5 - REGISTRATION OF THE PRODUCT

5.1.      Elan  shall be  responsible  for the  compilation  and  filing  of the
          Regulatory Filings in respect of the Product with the FDA and shall be
          the holder of any FDA Approvals  granted for the Product and the Party
          principally responsible for interaction with the FDA.

5.2.      Elan shall  notify  Par of the date of  submission  of any  Regulatory
          Filing for the Product in the  Territory  and shall also notify Par in
          writing  of  the  FDA  Approval  as  soon  as is  reasonably  possible
          following said FDA Approval.  Elan shall notify Par in writing as soon
          as  possible  of any  notification  received  by Elan  from the FDA to
          conduct  an  inspection  of  its  manufacturing,   clinical  or  other
          facilities  as  directly  related  to  the  Product.   Copies  of  all
          correspondence  with  the FDA with  respect  to the  Product  post its
          acceptance  for filing  shall be  provided  to the other  Party;  such
          correspondence  shall be  subject to  redaction  by Elan to the extent
          that such correspondence  relates to the confidential  portions of the
          CMC Section relating to formulation and manufacturing processes. On or
          after the date of First Commercial Sale, Elan shall provide Par with a
          status update with regard to any audit or inspection  conducted by FDA
          which relates directly to the Product.

5.3.      Par shall be responsible for obtaining all applicable  state and local
          regulatory  approvals  for  the  distribution  of the  Product  in the
          Territory. Elan shall co-operate with Par in obtaining such approvals.

5.4.      It is  hereby  acknowledged  that  there  are  inherent  uncertainties
          involved in the registration of  pharmaceutical  products with the FDA
          in relation to achieving the Product  Specifications and obtaining the
          FDA Approval  and such  uncertainties  form part of the business  risk


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          involved in undertaking the form of commercial  collaboration outlined
          in this Agreement.

                CLAUSE 6 - MARKETING AND PROMOTION OF THE PRODUCT

6.1.      No later than  January  2002 the Parties  shall  establish a Marketing
          Committee  consisting of at least one  representative  from each Party
          who shall act as liaison between the Parties to ensure that Elan is up
          to date on the  prevailing  market  conditions  and Par's  efforts  at
          marketing  and selling the Product.  Within 90 days of the  Regulatory
          Filing in the Territory with respect to the Product,  Par will outline
          to Elan the structure of the promotional  activities to be carried out
          by Par for the period up to the First  Commercial  Sale of the Product
          and for a period of 1 year  thereafter.  Par shall  both  prior to and
          subsequent  to  the  launch  of  the  Product  communicate  with  Elan
          regarding its  objectives  for and  performance of such Product in the
          Territory.  At such  meetings,  Par shall report on the ongoing  sales
          performance  of the  Product  in the  Territory,  including  marketing
          approaches,   educational   campaigns,   promotional  and  advertising
          materials and campaigns, sales plans and results,  performance against
          competitors, its objectives for the Product and its plans for the next
          year of the  Agreement.  In addition  the  Marketing  Committee  shall
          review the quarterly royalty statements.

6.2.      Unless otherwise agreed by the Parties,  the Marketing Committee shall
          meet at least once each  calendar  quarter,  such meetings to continue
          until 2 years after  launch of the last  Product or such later time as
          may be agreed.  Thereafter, the Parties shall meet on an annual basis.
          The Marketing  Committee shall meet alternately at the offices of Elan
          and Par or as otherwise  agreed by the Parties.  Each Party shall bear
          the cost of its own travel expenses.

6.3.      Par shall control and shall be responsible for all decisions regarding
          the pricing  policies and strategies with respect to the marketing and
          sales of the Product.  Par shall control the format of the promotional
          campaign to be submitted to the FDA, but shall inform Elan thereof and
          provide  to  Elan  a  copy  of  each  such  promotional  material  for
          submission,  at latest  concurrent with its submission to the FDA. Par
          shall use  reasonable  efforts  to obtain  approval  by the FDA of the
          promotional  campaign for the Product and will provide to Elan any FDA
          correspondence thereto.

6.4.      Par shall use reasonable  efforts  consistent with its normal business
          practices to market and promote the Product  throughout  the Territory
          to all  appropriate  classes  of trade and in doing so,  shall use the
          same level of effort as with other  similar  products of similar sales
          potential which it markets.

6.5.      Par shall submit layout and designs for all trade  packaging,  cartons
          and labels and other printed materials to Elan at least 6 months prior
          to First Commercial Sale of the Product.  Elan shall provide label and
          insert copy in the  Regulatory  Filing to the FDA in  accordance  with
          current  FDA  requirements.  To the  extent  permitted  by  law,  such
          materials  shall  include  due  acknowledgment  that  the  Product  is
          developed and  manufactured  by Elan. Such  acknowledgment  shall take
          into  consideration   regulatory  requirements  and  Par's  commercial
          requirements.

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                     WITH SECURITIES AND EXCHANGE COMMISSION
                         ASTERISKS DENOTE SUCH OMISSION


6.6.      The Party  responsible  for  packaging  the Product shall mark or have
          marked  all  relevant  patent  number(s)  (if  any)  on  all  relevant
          packaging  and  labelling of the  Product,  subject to FDA control and
          regulations of all packaging copy, or otherwise reasonably communicate
          to the trade the existence of any patents of Elan for the Territory in
          such a manner as to ensure compliance with, and enforceability  under,
          applicable laws in the Territory.

6.7.      Par shall  effect the full scale  commercial  launch of the Product in
          the  Territory  as  expeditiously  as  practical  when allowed by law,
          subject to the receipt of Launch Stocks of the Product, PROVIDED THAT

          6.7.1.   Par shall not be  required  to launch  the  Product  during a
                   period in which Par would be at material risk of liability in
                   damages  arising from  litigation  instigated  by  Boehringer
                   Ingelheim to enforce  patent number  [*****] as listed in the
                   Orange  Book  or  any   equivalent   patent;   provided  that
                   notwithstanding such risk or litigation Par shall effect such
                   launch  not later  than the later of (a) 3 May 2002;  and (b)
                   thirty (30) days after FDA Approval;

          6.7.2.   Par shall not be  required  to launch  the  Product  during a
                   period in which Par would be at material risk of liability in
                   damages  arising from  litigation  instigated  to enforce any
                   patent  other  than that  numbered  [*****]  as listed in the
                   Orange Book or any equivalent thereof; and

          6.7.3.   in no circumstances  shall Par delay launch solely as a means
                   of reducing the license fees payable under Clause 8.5.

6.8.      Par warrants  that it shall not use the Product as a "loss  leader" in
          its  marketing  programs  and shall at all  times  use its  reasonable
          efforts in marketing the Product.

                        CLAUSE 7 - SUPPLY OF THE PRODUCT

7.1.      Save as otherwise  provided in this Agreement,  Elan shall produce and
          supply to Par on an  exclusive  basis its entire  requirements  of the
          Product  for the  Territory.  Elan  shall be the  sole  and  exclusive
          supplier of the Product to Par in the  Territory.  Par shall  purchase
          the Product exclusively from Elan in the Territory.

7.2.      Elan shall  deliver the Product to Par and/or any party  designated by
          Par in proper packaging so as to permit safe storage and transport.

7.3.      Product shall be  manufactured  by Elan in FDA approved  manufacturing
          facilities  containing active  ingredients  listed in the DMF from FDA
          approved facilities.

7.4.      Within 120 days following the  submission of the Regulatory  Filing to
          the FDA, Par shall provide Elan with a forecast of Par's  requirements
          for the Product for the 12 month period  following the anticipated FDA
          Approval. The said forecast shall be updated monthly until the date on
          which Par places a firm order for Launch  Stocks.  Except as otherwise
          provided herein,  all forecasts made hereunder shall be made to assist
          Elan in planning  its  production  and Par in planning  marketing  and
          sales. Such forecasts shall not be binding purchase orders,  and shall


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          be without  prejudice to Par's subsequent firm purchase orders for the
          Product in accordance with the terms of this Agreement.

7.5.      The Parties  shall  negotiate  in good faith as to the  quantities  of
          Launch  Stocks.  Par shall  place a firm order for  Launch  Stocks not
          later than one  hundred  and fifty (150) days before the date on which
          it  intends  to  launch  the  Product.  Par  shall  in  any  event  be
          responsible  for  ensuring  that it has placed a firm order for Launch
          Stocks not later than one hundred and fifty (150) days before the Date
          For  Launch  (notwithstanding  that  such date may not be  capable  of
          determination at the time for the order).  However,  for the avoidance
          of  doubt,  the  Parties  hereby  confirm  that  Elan's  manufacturing
          obligations shall only arise on receipt of firm purchase orders.

7.6.      Elan shall use its  reasonable  efforts to deliver  the Product to Par
          within 120 days of the receipt of a firm purchase  order therefor (150
          days in the case of Launch Stocks).

7.7.      Upon placing a firm order for Launch  Stocks and on or before the 23rd
          day of each calendar month thereafter,  Par shall provide a rolling 12
          month  forecast  for the  period  beginning  on the  first  day of the
          relevant  calendar  month.  The first four calendar  months of such 12
          months'  forecast  shall be a binding  purchase  commitment of Par and
          shall be formalized by a firm purchase order from Par to Elan.

7.8.      Elan shall make appropriate manufacturing  arrangements in order to be
          able to supply Par with  between  80% and 120% of the  rolling  annual
          forecasted requirements provided by Par for the Product.

7.9.      Elan will use its reasonable  efforts to fulfill Par's requirements in
          excess of 120% of forecasted amounts, but shall not be obliged to meet
          such  requirements  if  it  is  not  reasonably  practicable  to do so
          provided  that Elan  shall  supply  the  Product  so  ordered  as soon
          thereafter as reasonably practicable.

7.10.     Elan shall advise Par of a minimum batch size for the  manufacture and
          supply of each dosage strength of Product.

7.11.     Save as otherwise agreed between the Parties, delivery of consignments
          of Product  shall be effected by Elan FOB  Miramar,  Florida,  or such
          other  manufacturing  facility(ies)  designated  by Elan and all risks
          therein shall pass to Par when each such consignment of the Product is
          loaded onto the vehicle of Par's agent on which it is to be dispatched
          from the manufacturing facility designated by Elan.

7.12.     After receipt of a Product  shipment,  Par shall visually  inspect the
          Product  shipment  and  communicate  rejection  of all or part of such
          shipment as  appropriate  to Elan in writing.  The Parties  agree that
          Par's visual inspection consists of (i) comparing the applicable order
          against the documentation accompanying the shipment to verify that the
          delivery  date,  identity,  quantity and exterior  shipment  labelling
          comply with the order and (ii) visually inspecting the exterior of the
          Product  shipment  to verify that the  shipment  appears to be in good
          condition.  Elan is to  provide  Par  with a copy of a fully  executed
          Certificate of Analysis for each batch of Product  shipped to Par. All
          claims  for  failure  of any  delivery  of the  Product  to conform to
          Product Specifications under Clause 11 shall be made by Par to Elan in


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                         ASTERISKS DENOTE SUCH OMISSION


          writing  within  45 days  following  delivery  except  in the  case of
          defects not identifiable  upon visual  inspection.  Claims for defects
          not discovered during the visual inspection as set out above, shall be
          made by Par to Elan in writing within 30 days of discovery. Failure to
          make  timely  claims  in  the  manner   prescribed   shall  constitute
          acceptance of the delivery.

7.13.     Product  which has been  delivered  and which Par notifies Elan within
          the period  designated in Clause 7.12. does not conform to the Product
          Specifications  shall be replaced at Elan's cost within 90 days of the
          receipt by Elan of the failed Product except where such non-conformity
          is due to the negligent acts or omissions of Par.

7.14.     In the event of an unresolved dispute as to conformity in all material
          respects of the Product with Product Specifications, the Parties shall
          within 30 days appoint an  independent  laboratory  to  undertake  the
          relevant testing and its findings shall be conclusive and binding upon
          the Parties.  All costs relating to this process shall be borne solely
          by the  unsuccessful  Party. In the event that the Product is shown to
          have complied with the Product  Specifications  or that the failure to
          do so is  attributable  to the negligent acts or omissions of Par, Par
          shall promptly pay Elan for the additional Product supplied.

                         CLAUSE 8 - FINANCIAL PROVISIONS

8.1.      REGULATORY MANAGEMENT FEE

          [****************]

8.2.      MILESTONE PAYMENT

          [****************]

8.3.      PRICE OF PRODUCT:

          8.3.1.   Elan shall supply the Product to Par at Product Manufacturing
                   Cost in accordance with the terms of this Agreement.

          8.3.2.   Subject to the following paragraph, the Product Manufacturing
                   Cost of the  Product  may be  reviewed by Elan once per annum
                   and  may  be  adjusted  for  the   following   calendar  year
                   reflecting actual changes in direct  manufacturing  expenses.
                   Elan  shall  provide  Par  with  written  notice  of any such
                   increase in the Product Manufacturing Cost 60 days before the
                   end of each  calendar  year to take  effect in the  following
                   calendar year.

          8.3.3.   Any  increases  or  decreases  in  the  cost  of  the  active
                   ingredient  or any other  components  used in the  Product in
                   excess of 3% from the then  current  base are to be passed on
                   in the  Product  Manufacturing  Cost  manufactured  from  the
                   effective date of use of such active  ingredient or any other
                   component.

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                         ASTERISKS DENOTE SUCH OMISSION


          8.3.4.   Payment for all Product  delivered from Elan's  manufacturing
                   facility to Par shall be effected in U.S.  Dollars ($) within
                   thirty  (30) days of the date of the  delivery of the Product
                   FOB the applicable Elan manufacturing facility.

8.4.      ALLOCATION

          8.4.1.   [****************]

          8.4.2.   Within four weeks of the end of each  calendar  quarter,  Par
                   shall  notify  Elan of the NSP of Product  for that  previous
                   calendar  quarter.  Payments  shown by each calendar  quarter
                   report to have accrued but which have not yet been paid shall
                   be included in calculating the NSP for that quarter.

          8.4.3.   Payment of Profit shall be made once in each calendar quarter
                   within 45 days  after the  expiry  of the  relevant  calendar
                   quarter.

          8.4.4.   All payments due hereunder shall be made in U.S. Dollars.

          8.4.5.   In the event that Par or any  Affiliate of Par shall sell the
                   Product  together with other products of Par to third parties
                   (by the method commonly known in the pharmaceutical  industry
                   as "bundling"), Par shall not conduct such bundling in such a
                   manner as to  discount  the  Product at a greater  proportion
                   than the other products bundled by Par.

8.5.      ADJUSTMENT

          8.5.1.   In this Clause 8.5:

                   "Period of  Exclusivity"  means the period (if any) beginning
                   on the Relevant  Date and ending on the later of (a) the last
                   day of any  period of  exclusivity  granted to Elan under the
                   terms  of the  FDA  Approval;  or (b)  the  date  on  which a
                   Competing  Product becomes  actually  available in the market
                   for delivery and onward sale (whether or not  exclusivity has
                   been  granted  under the terms of the FDA Approval for all of
                   such period or at all); and

                   "Relevant  Date" means the earlier of (a) the Date For Launch
                   and (b) the date on which Par in fact  effects  a fall  scale
                   commercial launch of the Product in the Territory.

          8.5.2.   In the  event of  there  being a Period  of  Exclusivity,  in
                   addition to the payments set out above, Par shall pay to Elan
                   additional  milestone  payments  in  respect  of  the  period
                   referred to in the first column of the table  appearing below
                   equal to the sum in the corresponding  second column. For the
                   avoidance  of doubt,  such  payments are  cumulative  and not
                   alternative,  but each shall only be payable  where the whole
                   of  the  period  referred  to  falls  within  the  Period  of
                   Exclusivity.

                   -------------------------------------------------------------
                   PERIOD                            [****************]
                   ------
                   -------------------------------------------------------------

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                         ASTERISKS DENOTE SUCH OMISSION


                   -------------------------------------------------------------
                   30   days    beginning   on   the [****************]
                   Relevant Date
                   -------------------------------------------------------------
                   60 days  beginning  30 days after [****************]
                   the Relevant Date
                   -------------------------------------------------------------
                   90 days  beginning  90 days after [****************]
                   the Relevant Date
                   -------------------------------------------------------------

          8.5.3.   A payment referred to in Clause 8.5.2 shall be due:

                   (a)   if the period in  question  falls  within the Period of
                         Exclusivity solely by reason of exclusivity  granted to
                         Elan  under  the  terms  of the  FDA  Approval,  on the
                         Relevant Date;

                   (b)   in each other case,  within  fourteen  (14) days of the
                         last day of the period in question.

          8.5.4.   [****************]

                   8.5.4.1. [****************]

                   8.5.4.2. [****************]

8.6.      FURTHER ADJUSTMENT

          8.6.1.   Where in a period in respect of which an additional milestone
                   payment is payable under Clause 8.5.2:

                   (a)   Par is unable in all or part of that period to sell the
                         Product by reason of Elan's  failure to supply  Product
                         confirming to its  Specification  or at all (other than
                         in  circumstances  of force  majeure  as  described  in
                         Clause 13.5) or by reason of action taken by the FDA to
                         restrain such sale; and

                   (b)   such inability to sell causes demonstrable and material
                         harm to Par's  commercial  interests  in respect of the
                         Product -

                   each  additional  milestone  payment  paid or  payable  under
                   Clause  8.5.2 shall be reduced on a pro rata basis (or as the
                   case may be  eliminated)  having regard to the  proportion of
                   the period in  respect  of which  such  payment is payable in
                   which the  circumstances  set out in  paragraphs  (a) and (b)
                   apply.

          8.6.2.   For the avoidance of doubt,  the reduction or  elimination of
                   the  additional  milestone  payment as provided for in Clause
                   8.6.1   shall  be  Par's  sole   remedy  in  respect  of  the
                   consequences of the circumstances  described in paragraph (a)
                   of that Clause.

                                       15
<PAGE>

                     CLAUSE 9 - PAYMENTS, REPORTS AND AUDITS

9.1.      In accordance with its ordinary business practice, Par shall keep true
          and accurate records of gross sales of the Product, the items deducted
          from  the  gross  amount  in  calculating  the  NSP,  the  NSP and the
          royalties  payable to Elan under Clause 8. Par shall deliver to Elan a
          written statement ("the  Statement")  thereof within 28 days following
          the end of each calendar quarter, (or any part thereof in the first or
          last calendar  quarter of this  Agreement) for such calendar  quarter.
          The  Statement  shall  outline the  calculation  of the NSP from gross
          revenues during that calendar quarter, the applicable percentage rate,
          the  units  of  Product  sold,  marketing,  selling  and  distribution
          expenses allocated to the Product and a computation of the sums due to
          Elan.  The Parties'  financial  officers  shall agree upon the precise
          format of the Statement.

9.2.      Any  income  or other  taxes  which Par is  required  by law to pay or
          withhold  on behalf of Elan with  respect to  royalties  and any other
          monies payable to Elan under this Agreement shall be deducted from the
          amount of such NSP payments, royalties and other monies due. Par shall
          furnish Elan with proof of such payments.  Any such tax required to be
          paid or withheld  shall be an expense of and borne solely by Elan. Par
          shall promptly  provide Elan with a certificate  or other  documentary
          evidence  to enable  Elan to support a claim for a refund or a foreign
          tax credit  with  respect to any such tax so  withheld  or deducted by
          Par. The Parties will  reasonably  co-operate in completing and filing
          documents  required  under the provisions of any applicable tax treaty
          or under any other applicable law, in order to enable Par to make such
          payments to Elan without any deduction or withholding.

9.3.      All  payments  due  hereunder  shall  be made to the  designated  bank
          account of Elan in accordance with such timely written instructions as
          Elan shall from time to time provide.

9.4.      If meetings of the Marketing  Committee have ceased, and where Elan so
          requests,  to  supplement  the  information  available  to Elan at the
          meetings  of the Parties  pursuant  to Clause 6. 1, Par shall  provide
          Elan with quarterly sales reports  outlining the status of the Product
          in the Territory,  including a summary of the market share for each of
          the Product in their respective market segments.

9.5.      For the 90 day period following the close of each calendar year of the
          Agreement,  Elan and Par  will,  in the  event  that the  other  Party
          reasonably  requests  such access,  provide  each other's  independent
          certified accountants  (reasonably acceptable to the other Party) with
          access,   during   regular   business   hours  and   subject   to  the
          confidentiality  provisions  as contained in this  Agreement,  to such
          Party's  books and  records  relating to the  Product,  solely for the
          purpose of verifying the accuracy and  reasonable  composition  of the
          calculations hereunder for the calendar year then ended.

9.6.      In the event of a discovery of a  discrepancy  which exceeds 5% of the
          amount  due or  charged  by a Party for any  period,  the cost of such
          audit shall be borne by the audited Party; otherwise,  such cost shall
          be borne by the auditing Party.

                                       16
<PAGE>

9.7.      During normal business hours and provided  reasonable  notice has been
          furnished by Par,  Elan shall make (and where  relevant  shall procure
          that   Elan's   subcontractor   shall   make)  that   portion  of  its
          manufacturing,   testing  or  storage   facility   where   Product  is
          manufactured,  tested or stored,  including  all record and  reference
          samples relating to the Product available for inspection by Par's duly
          qualified  employee  or by the  relevant  governmental  or  regulatory
          authority.  The investigation  shall be limited to determining whether
          there  is  compliance  with the  Regulatory  Filing,  cGMP  and  other
          requirements of applicable law.

                      CLAUSE 10 - DURATION AND TERMINATION

10.1.     This  Agreement  shall  be  deemed  to have  come  into  force  on the
          Effective Date and,  subject to the rights of termination  outlined in
          this  Clause  10 will  expire on the 15th  anniversary  of the date of
          First Commercial Sale of the Product in the Territory.

10.2.     In addition to the rights of  termination  provided  for  elsewhere in
          this Agreement,  either Party will be entitled  forthwith to terminate
          this Agreement by written notice to the other Party if;

          10.2.l.  that other Party  commits any  material  breach of any of the
                   provisions  of this  Agreement,  and in the  case of a breach
                   capable  of remedy,  fails to remedy the same  within 60 days
                   after receipt of a written notice giving full  particulars of
                   the breach and requiring it to be remedied; or

          10.2.2.  that  other  Party  goes  into  liquidation  (except  for the
                   purposes of amalgamation or reconstruction and in such manner
                   that the company resulting therefrom effectively agrees to be
                   bound by or assume  the  obligations  imposed  on that  other
                   Party under this Agreement); or

          10.2.3.  an encumbrancer  takes  possession or a receiver is appointed
                   over any of the property or assets of that other Party; or

          10.2.4.  any  proceedings  are filed or  commenced by that other Party
                   under  bankruptcy,   insolvency  or  debtor  relief  laws  or
                   anything  analogous to any of the foregoing under the laws of
                   any jurisdiction occurs in relation to that other Party; or

          10.2.5.  the  other  Party  fails to  promptly  secure  or  renew  any
                   material  license,  registration,  permit,  authorization  or
                   approval  for  the  conduct  of its  business  in any  manner
                   contemplated  by  this  Agreement  or if  any  such  material
                   license,  registration,  permit, authorization or approval is
                   revoked or  suspended  and not  reinstated  within sixty (60)
                   days; or

          10.2.6.  an  award  is  made  against  Elan  and/or  Par  in a  patent
                   infringement   action   (which   is  not   appealed,   or  is
                   unsuccessfully  appealed)  so  that  further  development  or
                   marketing   of  the   Product   is   prohibited   or  becomes
                   economically unviable to Elan and/or Par.

                                       17
<PAGE>

10.3.     In  further  addition  to the  rights  and  termination  provided  for
          elsewhere in this  Agreement,  Elan shall be entitled to terminate the
          license  granted to Par under this  Agreement for the Territory in the
          event that:

          10.3.1.  Par  fails to effect  the  commercial  launch of the  Product
                   required  by Clause 6.7. in  accordance  with the  provisions
                   thereof or fails to place a firm  order for Launch  Stocks on
                   or before the date required by Clause 7.5; or

          10.3.2.  Par  notifies  Elan  in  writing  that it  does  not  wish to
                   commercialize the Product in the Territory.

          10.3.3.  a  Technological  Competitor  of  Elan  or a  company  with a
                   Competing  Product acquires 20% or more of Par's voting stock
                   or  where  20% or more  of such  company's  voting  stock  is
                   acquired by Par; or

          10.3.4.  the net price  payable  to Elan (that is the price of Product
                   and the percentage of Profit) is less than Manufacturing Cost
                   plus 15% for a period of one year; or

          10.3.5.  if the innovator  for such Product  acquires more than 20% of
                   Par's voting stock; or

          10.3.6.  in the event that Par should market any Competing  Product in
                   the Territory  during the term of this Agreement,  Elan shall
                   be entitled to terminate the Agreement.

10.4.     In  further  addition  to the  rights  and  termination  provided  for
          elsewhere in this  Agreement,  Par shall be entitled to terminate  the
          Agreement for the Territory in the event that: -

          10.4.1.  Elan fails to file the  Regulatory  Filing  for such  Product
                   within 2 years of the date of this  Agreement or FDA Approval
                   is not obtained  within 30 months of the date of a Regulatory
                   Filing,  unless otherwise extended by the Parties in writing;
                   or

          10.4.2.  Elan  has  submitted  fraudulent  filings  to the  FDA or has
                   failed  to  respond  to  FDA  deficiency   correspondence  as
                   requested by FDA in a timely manner; or

          10.4.3.  the share of the Net Profits  payable to Par is less than 15%
                   of the Product  Manufacturing Cost for the said Product for a
                   period of one year.

10.5.     Upon exercise of those rights of termination  specified in this Clause
          10 or elsewhere in this Agreement,  this Agreement  shall,  subject to
          the provisions of the Agreement  which survive the  termination of the
          Agreement,  automatically  terminate  forthwith  and be of no  further
          legal force or effect.

10.6.     Upon termination of the Agreement by either Party, or upon termination
          by Elan of the license for the  Product,  the  following  shall be the
          consequences relating to the Product:

          10.6.l.  any sums that were due from Par to Elan under the  provisions
                   of Clause 8 or otherwise  howsoever  prior to the exercise of
                   the right to  terminate  this  Agreement  as set forth herein
                   shall be paid in full within 30 days of  termination  of this

                                       18
<PAGE>

                   Agreement  and Elan  shall  not be liable to repay to Par any
                   amount of money paid or payable by Par to Elan up to the date
                   of the termination of this Agreement;

          10.6.2.  all confidentiality provisions set out herein shall remain in
                   full  force and  effect for a period of 5 years from the date
                   of termination of this Agreement;

          10.6.3.  all   responsibilities   and  warranties   shall  insofar  as
                   appropriate remain in full force and effect;

          10.6.4.  the rights of  inspection  and audit shall  continue in force
                   for the period referred to in the relevant provisions of this
                   Agreement;

          10.6.5.  Elan shall be entitled to research, develop and commercialize
                   the Product for its own benefit in the Territory;

          10.6.6.  Par  shall  have an  ongoing  right  for a period  of six (6)
                   months  to sell or  otherwise  dispose  of the  stock  of any
                   Product  on  hand  as of  the  date  of  termination  of  the
                   Agreement,  which  such sale shall be subject to Clause 8 and
                   the other applicable terms of this Agreement.

10.7.     Elan shall be entitled to use the Elan Know-How, and all technical and
          clinical  data  whether  generated  by  Elan or Par  pursuant  to this
          Agreement in the Territory following termination of this Agreement.

                       CLAUSE 11 - WARRANTY AND INDEMNITY

11.1.     Elan represents and warrants as follows;

          11.1.1.  Except as set forth in this  Clause  11.1.1,  that it has the
                   sole,  exclusive and unencumbered right to grant the licenses
                   and rights herein granted to Par, and that it has not granted
                   any  option,  license,  right or  interest  in or to the Elan
                   Know-How to any third party  which  would  conflict  with the
                   rights  granted  by this  Agreement.  The  execution  of this
                   Agreement  and the  full  performance  and  enjoyment  of the
                   rights of Par under this  Agreement will not breach or in any
                   way be  inconsistent  with the  terms and  conditions  of any
                   license,  contract,   understanding  or  agreement,   whether
                   express,  implied, written or oral between Elan and any third
                   party;

          11.1.2.  the Product supplied by Elan to Par under this Agreement will
                   conform  to  the  Product   Specifications   and  regulations
                   governing  the  conduct  of  clinical  trials  and  stability
                   requirements;

          11.1.3.  the Product sold by Elan to Par  pursuant  hereto shall be of
                   good,  merchantable and usable quality,  free of defects, and
                   shall not be adulterated or misbranded  within the meaning of
                   the US Food, Drug and Cosmetics Act;

                                       19
<PAGE>

          11.1.4.  Elan's  manufacturing  facilities  conform  in  all  material
                   respects  to  applicable  laws,   regulations  and  approvals
                   governing  such  facility  and are  adequate  to produce  the
                   quantities of the Product contemplated hereby;

          11.1.5.  to the best of Elan's  knowledge,  all bulk active ingredient
                   used in the  manufacture of the Product shall be manufactured
                   at an FDA-approved  manufacturing facility in accordance with
                   cGMP and current Bulk Drug Substances  Guidelines,  and shall
                   be in compliance with the applicable specifications under the
                   bulk product monograph.

11.2.     Par represents and warrants as follows;

          11.2.1.  Par represents  and warrants that it has the sole,  exclusive
                   and unencumbered  right to enter into this Agreement and that
                   it has not granted any  obligations  to any third party which
                   would  conflict  with  the  terms  of  this  Agreement.   The
                   execution  of this  Agreement  and the full  performance  and
                   enjoyment of the rights of Elan under this Agreement will not
                   breach  or in any way be  inconsistent  with  the  terms  and
                   conditions  of  any  license,   contract,   understanding  or
                   agreement,  whether express, implied, written or oral between
                   Par and any third party; and

          11.2.2.  Par is cognizant in all material  respects of all  Applicable
                   statutes,  ordinances  and  regulations of the Territory with
                   respect to the handling,  packaging,  storage,  distribution,
                   marketing and sale of the Product including,  but not limited
                   to,  the  U.S.  Federal  Food,  Drug  and  Cosmetic  Act  and
                   regulations promulgated  thereunder,  including cGLP and cGMP
                   and shall conduct such  activities in a manner which complies
                   with such statutes, ordinances, regulations and practices;

11.3.     Each of Elan and Par represents and warrants to the other that:

          11.3.l.  it  has  such  permits,   licenses  and   authorizations   of
                   governmental  or regulatory  authorities  as are necessary to
                   own its  respective  properties,  conduct  its  business  and
                   consummate the transactions contemplated hereby; and

          11.3.2.  each of Elan and Par  represents  and  warrants  to the other
                   that it is not  currently  debarred,  suspended  or otherwise
                   excluded  by  any  United  States  governmental  agency  from
                   receiving Federal contracts.

11.4.     Except as  expressly  stated in this Clause 11, all other  warranties,
          conditions  and  representations,  express or  implied,  statutory  or
          otherwise,  including  a warranty as to the quality or fitness for any
          particular purpose of the Product are hereby excluded.

11.5.     Par represents and warrants that:

          11.5.1.  the execution of this  Agreement and the full  performance of
                   its  obligations  and rights  under this  Agreement  will not
                   breach  or in any way be  inconsistent  with  the  terms  and
                   conditions  of  any  license,   contract,   understanding  or
                   agreement,  whether express, implied, written or oral between
                   Par and any third party; and

                                       20
<PAGE>

          11.5.2.  it  acknowledges  and agrees that it shall be a condition  to
                   the  effectiveness of this Agreement that this Agreement does
                   not   require   any   filings   under   Title   II   of   the
                   Hart-Scott-Rodino  Antitrust  Improvements  Act of  1976,  as
                   amended,  and the rules  promulgated  thereunder  (16  C.F.R.
                   801.1 et seq.).

11.6.     Indemnification

          11.6.1.  Elan shall indemnify and hold Par and its Affiliates harmless
                   from and against any claim, action, suit,  proceeding,  loss,
                   liability,  damage or expense  (including  without limitation
                   reasonable attorneys' fees) arising directly or indirectly as
                   a result of Elan's  negligent  acts or  omission or breach of
                   its   representations,   warranties,   covenants   or   other
                   obligations hereunder;  provided, however that Elan shall not
                   be  required  to  indemnify  Par with  respect  to any claim,
                   action, suit, proceeding,  loss, liability, damage or expense
                   to the extent  arising from or related to Par's breach of its
                   representations,  warranties,  covenants or other obligations
                   hereunder,  or from  information  supplied  by Par to Elan or
                   contained in regulatory filings or correspondence prepared or
                   delivered by Par.

          11.6.2.  Par shall  indemnify  and hold Elan harmless from and against
                   any claim, action, suit, proceeding,  loss, liability, damage
                   or expense (without  limitation  reasonable  attorneys' fees)
                   arising directly or indirectly as a result of Par's negligent
                   acts  or   omission   or  breach   of  its   representations,
                   warranties,   covenants  or  other   obligations   hereunder,
                   provided; however that Par shall not be required to indemnify
                   Elan with  respect to any claim,  action,  suit,  proceeding,
                   loss, liability, damage or expense to the extent arising from
                   or   related  to  Elan's   breach  of  its   representations,
                   warranties, covenants or other obligations hereunder, or from
                   information   supplied  by  Elan  to  Par  or   contained  in
                   regulatory filings or correspondence prepared or delivered by
                   Elan.

11.7.     With reference to Clause 2.2.4,  Par shall indemnify and hold harmless
          Elan to the extent  that any  claims,  damages,  liabilities,  claims,
          costs or  expenses  arise  out of any such  acts or  omissions  of any
          sub-licensee.

11.8.     As a condition of obtaining an indemnity in the  circumstances set out
          in Clauses 11.6 and/or 11.7, the Party seeking an indemnity shall:

          11.8.1.  fully and  promptly  notify  the other  Party of any claim or
                   proceedings,  or threatened  claim or  proceedings,  provided
                   that  failure  to do so shall not  release  the  indemnifying
                   Party of its  obligations  under this Clause 11 except to the
                   extent that it is actually prejudiced;

          11.8.2.  permit the  indemnifying  Party to take full  control of such
                   claim or proceedings;

          11.8.3.  assist in the  investigation  and  defense  of such  claim or
                   proceedings;

          11.8.4.  neither the indemnifying Party or the Party to be indemnified
                   shall  compromise  or  otherwise  settle  any  such  claim or
                   proceedings  without the prior  written  consent of the other
                   Party, which consent shall not be unreasonably withheld; and

                                       21
<PAGE>

          11.8.5.  take all  reasonable  steps to mitigate any loss or liability
                   in respect of any such claim or proceedings.

11.9.     This Clause 11 and the  obligations  contained  herein  shall  survive
          termination of this Agreement,  whether  pursuant to Clause 10 hereof,
          by expiration of the Term, or otherwise.

11.10.    NOTWITHSTANDING  ANYTHING TO THE CONTRARY IN THIS AGREEMENT,  ELAN AND
          PAR SHALL  NOT BE LIABLE TO THE OTHER BY REASON OF ANY  REPRESENTATION
          OR  WARRANTY,  CONDITION  OR OTHER TERM OR ANY DUTY OF COMMON  LAW, OR
          UNDER THE EXPRESS TERMS OF THIS AGREEMENT, FOR ANY INDIRECT,  SPECIAL,
          CONSEQUENTIAL, INCIDENTAL OR PUNITIVE LOSS OR DAMAGE (WHETHER FOR LOSS
          OF PROFITS OR OTHERWISE)  AND WHETHER  OCCASIONED BY THE NEGLIGENCE OF
          THE RESPECTIVE PARTIES,  THEIR EMPLOYEES OR AGENTS OR OTHERWISE EXCEPT
          FOR THIRD PARTY PRODUCT LIABILITY CLAIMS.

            CLAUSE 12 - ADVERSE EVENTS, CUSTOMER COMPLAINTS, PRODUCT
                              RECALLS AND INSURANCE

12.1.     Par shall  notify  Elan  promptly of any  reports  from third  parties
          reported to Par involving any serious and  unexpected  adverse  events
          resulting  from the use of the  Product in the  Territory.  Elan shall
          notify Par promptly of any reports from third parties reported to Elan
          involving any serious and unexpected adverse events resulting from the
          use of the Product outside of the Territory.

12.2.     Par and Elan have  established  a procedure  for formal  adverse event
          handling and reporting as set out in Schedule 3. This procedure  shall
          be reviewed by Elan and Par from time to time.  It is  envisaged  that
          Par shall be responsible for furnishing post-marketing reports to Elan
          and where  applicable,  Elan will be responsible  for furnishing  such
          reports to the FDA.  Par and Elan shall keep each other  informed  and
          shall copy the other  Party with all  communications  with the FDA and
          other relevant regulatory agencies with respect to the Product.

12.3.     Par and Elan will  establish a procedure  for  complaint  handling and
          reporting.  It is envisaged that Par will have primary  responsibility
          for  addressing  complaints,  however  Elan will  provide  support  in
          addressing responses to technical queries as requested by Par. Par and
          Elan shall keep each other  informed and copy the other party with all
          communications  with the FDA and other  relevant  regulatory  agencies
          with respect to the Product.

12.4.     Subject  to and  without  in  any  way  limiting  or  altering  Elan's
          statutory  duties and  obligations as the holder of the ANDA, Elan and
          Par shall consult when reviewing whether or not to perform a recall of
          Product  and if so,  the  extent  and  method  of such  recall  in the
          Territory.

12.5.     In the event of any recall of the  Product,  as suggested or requested
          by any governmental authority:

                                       22
<PAGE>

          12.5.1.  Par shall perform the recall of the Product in the Territory;

          12.5.2.  if the recall  arises  from Par's  acts or  omissions  in the
                   transportation,  storage, distribution,  marketing or sale of
                   the Product, the recall costs shall be borne by Par;

          12.5.3.  if the recall  arises from Elan's  acts or  omissions  in the
                   manufacturing and packaging of the Product,  the recall costs
                   shall be borne by Elan. In such event, Elan shall be entitled
                   but not  obliged to take over and  perform  the recall of the
                   Product and Par shall  provide  Elan at no cost with all such
                   reasonable assistance as may be required by Elan; and

          12.5.4.  if the  recall  arises  from any  other  reason  than set out
                   above,  the  recall  costs  shall be borne by Elan and Par in
                   proportion  to the  percentage  of  Profit  allocated  to the
                   Parties for such Product.

12.6.     Par and Elan shall  each  maintain  in force,  during the term of this
          Agreement,  products liability insurance coverage in minimum limits of
          $10,000,000 and, upon request, each Party shall furnish to the other a
          Certificate  of  Insurance;  provided,  however  to  so  request  such
          Certificate  shall not be deemed a waiver to the  Party's  obligations
          hereunder.

                      CLAUSE 13 - MISCELLANEOUS PROVISIONS

13.1. SECRECY:
      -------

          13.1.1.  Any  information,  whether written or oral (oral  information
                   shall be  reduced  to  writing  within one month by the Party
                   giving the oral  information  and the  written  form shall be
                   furnished to the other Party)  pertaining to the Product that
                   has been or will be communicated or delivered by Elan to Par,
                   or by Par  to  Elan,  including,  without  limitation,  trade
                   secrets, business methods, and cost, supplier,  manufacturing
                   and customer  information,  shall be treated by Par and Elan,
                   respectively,  as confidential information,  and shall not be
                   disclosed or revealed to any third party  whatsoever  or used
                   in any  manner  except  as  expressly  provided  for  herein;
                   provided,  however, that such confidential  information shall
                   not be subject to the restrictions and prohibitions set forth
                   in  this  Clause  to  the  extent   that  such   confidential
                   information:

          13.1.1.1.      is  available  to the  public in public  literature  or
                         otherwise,  or  after  disclosure  by one  Party to the
                         other becomes  public  knowledge  through no default of
                         the Party receiving such confidential information; or

          13.1.1.2.      was  known to the  Party  receiving  such  confidential
                         information  prior to the receipt of such  confidential
                         information by such Party,  whether  received before or
                         after the date of this Agreement; or

                                       23
<PAGE>

          13.1.1.3.      is obtained by the Party  receiving  such  confidential
                         information  from  a  third  party  not  subject  to  a
                         requirement  of  confidentiality  with  respect to such
                         confidential information; or

          13.1.1.4.      is required to be disclosed  pursuant to: (A) any order
                         of a court having  jurisdiction and power to order such
                         information  to be released or made public;  or (B) any
                         lawful action of a  governmental  or regulatory  agency
                         provided  that each  Party  shall  notify  the other in
                         writing of any disclosure of information required under
                         this sub-Clause prior to such disclosure, or

          13.1.1.5.      is  independently  discovered  by the  receiving  Party
                         without  the  aid or  application  of the  confidential
                         information.

          13.1.2.  Each  Party  shall  take  in  relation  to  the  confidential
                   information  of the other  Party all such  precautions  as it
                   normally  takes  with  its own  confidential  information  to
                   prevent  any  improper   disclosure   of  such   confidential
                   information to any third party; provided,  however, that such
                   confidential  information may be disclosed  within the limits
                   required to obtain any authorization  from the applicable FDA
                   or any  governmental or regulatory  agency or, with the prior
                   written  consent  of the  other  Party,  which  shall  not be
                   unreasonably  withheld,  or as may  otherwise  be required in
                   connection with the purposes of this Agreement.

          13.1.3.  Each of the Parties agrees that it will not use,  directly or
                   indirectly,  any  know-how  of  the  other  Party,  or  other
                   confidential  information  disclosed to it by the other Party
                   or  obtained  by it from the  other  Party  pursuant  to this
                   Agreement, other than as expressly provided herein.

          13.1.4.  Neither Party will  publicize the existence of this Agreement
                   in any way  without  the prior  written  consent of the other
                   Party subject to the  disclosure  requirements  of applicable
                   laws and  regulations.  In the event that either Party wishes
                   to make an announcement concerning the Agreement,  that Party
                   will seek the  consent of the other  Party.  The terms of any
                   such  announcement  shall be agreed in good  faith but in any
                   event shall refer to the Product as having been developed and
                   manufactured by Elan.

13.2.     ASSIGNMENTS/SUB-CONTRACTING:
          ---------------------------

          Neither Party shall be permitted to assign or  sub-license  any of its
          rights under this Agreement  without the prior written  consent of the
          other;  provided  that Elan and Par may assign  this  Agreement  to an
          Affiliate  without such consent  provided that such  assignment has no
          adverse tax  consequences for the other Party (which shall not include
          consequences of an  administrative  nature only) and provided  further
          that  such  assigning   Party  is  not  relieved  of  its  obligations
          hereunder.  Elan shall also have the right to  subcontract  all or any
          portion  of the  manufacturing  or  packaging  of one or  more  of the
          Product to one or more third parties.  Each Party shall be responsible
          for  the  acts  and/or  omissions  of its  respective  Affiliates  and
          subcontractors.

                                       24
<PAGE>

13.3.     PARTIES BOUND:
          -------------

          This  Agreement  shall be  binding  upon and inure for the  benefit of
          Parties hereto, their successors and permitted assigns.

13.4.     SEVERABILITY:
          ------------

          If any provision in this  Agreement is agreed by the Parties to be, or
          is deemed to be, or becomes  invalid,  illegal,  void or unenforceable
          under any law that is applicable hereto:

          13.4.1.  such   provision   will  be  deemed  amended  to  conform  to
                   applicable  laws so as to be valid and  enforceable or, if it
                   cannot  be  so  amended  without   materially   altering  the
                   intention  of the  Parties,  it will be deleted,  with effect
                   from the date of such  agreement  or such earlier date as the
                   Parties may agree; and

          13.4.2.  the validity,  legality and  enforceability  of the remaining
                   provisions  of  this  Agreement  shall  not  be  impaired  or
                   affected in any way.

13.5.     FORCE MAJEURE:
          -------------

          Neither  Party to this  Agreement  shall be  liable  for  delay in the
          performance of any of its obligations  hereunder if such delay results
          from  causes  beyond  its  reasonable  control,   including,   without
          limitation,  acts of God, fires, strikes, acts of war, or intervention
          of a government authority,  non-availability of raw materials, but any
          such  delay or  failure  shall be  remedied  by such  Party as soon as
          practicable.

13.6.     RELATIONSHIP OF THE PARTIES:
          ---------------------------

          Nothing  contained in this Agreement is intended or is to be construed
          to  constitute  Elan and Par as partners or members of a joint venture
          or either  Party as an employee  of the other.  Neither  Party  hereto
          shall  have any  express or implied  right or  authority  to assume or
          create any  obligations on behalf of or in the name of the other Party
          or to bind the other Party to any contract,  agreement or  undertaking
          with any third party.

13.7.     AMENDMENTS:
          ----------

          No amendment,  modification  or addition  hereto shall be effective or
          binding on either  Party unless set forth in writing and executed by a
          duly authorized representative of both Parties.

13.8.     WAIVER:
          ------

          No waiver of any right under this Agreement shall be deemed  effective
          unless  contained in a written  document  signed by the Party  charged
          with such  waiver,  and no waiver of any  breach or failure to perform
          shall be deemed  to be a waiver of any  future  breach or  failure  to
          perform or of any other right arising under this Agreement.

13.9.     NO EFFECT ON OTHER AGREEMENTS:
          -----------------------------

                                       25
<PAGE>

          No  provision  of this  Agreement  shall be construed so as to negate,
          modify  or  affect in any way the  provisions  of any other  agreement
          between the Parties unless specifically referred to, and solely to the
          extent provided, in any such other agreement.

13.10.    APPLICABLE LAW AND JURISDICTION:
          -------------------------------

          This Agreement  shall be governed by and construed in accordance  with
          the laws of the  State of New York  without  regard to  principles  of
          conflicts of law. For the purpose of this  Agreement the Parties agree
          that any dispute  shall be  adjudicated  upon and hereby submit to the
          jurisdiction  of the United  States  District  Court for the  Southern
          District of the State of New York.  Each Party  consents to service of
          process pursuant to the notice provisions of this Agreement.

13.11.    NOTICE:
          ------

          13.11.1. Any notice to be given under this Agreement  shall be sent in
                   writing in English by registered airmail or telecopied to:

                   Elan at

                   Elan Transdermal Technologies, Inc.
                   3250 Commerce Parkway
                   Miramar
                   Florida 33025
                   United States of America

                   Attention: Vice-President & General Counsel,
                   Elan Pharmaceutical Technologies
                   Telephone:  +l 954 430 3340
                   Telefax :+1954 430 3390

                   with a copy to

                   Lincoln House
                   Lincoln Place
                   Dublin 2
                   Ireland

                   Telephone:  +353 1709 4000
                   Telefax:  +353 1709 4124

                   Attention: Vice-President & General Counsel,
                   Elan Pharmaceutical Technologies

                   Par at

                                       26
<PAGE>

                   Par Pharmaceuticals
                   One Ram Ridge Road
                   Spring Valley, New York 10977

                   Attention: Office of the President
                   Fax: +1 845 425 7922

                   or to such other  address(es)  and telecopier  numbers as may
                   from time to time be  notified  by either  Party to the other
                   hereunder.

          13.11.2. Any  notice  sent by  registered  air mail shall be deemed to
                   have been delivered  within 7 working days after dispatch and
                   any notice sent by telex or telecopy  shall be deemed to have
                   been  delivered  within 24 hours of the time of the dispatch.
                   Notice of change of address shall be effective upon receipt.

13.12     SET-OFF
          ------

          Each of the  Parties  will be  entitled  but not  obliged  to  set-off
          against  any  amount  of  money  payable  to it  by  the  other  Party
          hereunder,  any  amount  of money  payable  by it to the  other  Party
          hereunder.



IN WITNESS of which the Parties have executed this Agreement.

Executed by PAR on April 26, 2001


   /s/ Kenneth I. Sawyer
By:____________________________

Name:   Kenneth I. Sawyer

Title:  Chairman & CEO



Executed by Elan on April 26, 2001


   /s/ Larry Stenson
By:____________________________

Name:  Larry Stenson

Title: Director

                                       27