EXHIBIT 10.41
                        DEVELOPMENT AND SUPPLY AGREEMENT


     AGREEMENT,    dated   April 17,    2001,   is   made   between   PAR
PHARMACEUTICALS,  INC., a _____________  corporation,  maintaining its principal
place of business at One Ram Ridge Road, Spring Valley,  New York 10977 ("PAR"),
DR.  REDDY'S  LABORATORIES  LIMITED,  an  Indian  corporation,  maintaining  its
principal  offices  at  7-1-27  Ameerpet,   Hyderabad  -  500  016,  India,  and
REDDY-CHEMINOR, INC., a New Jersey corporation, maintaining its principal office
at 66 S.  Maple  Avenue,  Ridgewood,  New  Jersey  07450,  U.S.A.  (collectively
"REDDY").

                                   WITNESSETH:

     WHEREAS,  REDDY has expertise in the development of generic  pharmaceutical
products; and

     WHEREAS,  PAR has expertise in the development,  marketing and sale of such
products in the United States; and

     WHEREAS, REDDY and PAR desire to collaborate in the development, marketing
and sale of certain generic pharmaceutical products; and

     WHEREAS,  REDDY desires to manufacture and supply to PAR and PAR desires to
purchase exclusively from REDDY for sale in the Territory,  as defined below, by
PAR all of PAR's requirements for the Reddy Finished Products, as defined below;

     NOW,  THEREFORE,  in consideration  of the mutual  promises,  covenants and
agreements hereinafter set forth, the parties agree as follows:

1.   Definitions.
     -----------

     (a)    "Affiliate"  means any corporation or business entity controlled by,
controlling,  or under common control with PAR or REDDY as the case may be. (For


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the purpose of this  definition,  "control" means direct or indirect  beneficial
ownership  of greater  than  fifty  percent  (50%) of the  voting  stock of such
corporation  or other  business  entity,  or a greater than fifty  percent (50%)
interest in the income of such  corporation  or other  business  entity,  or the
power to direct or cause the  direction of the  management  and policies of such
corporation or other business entity whether by ownership of voting  securities,
by contract or otherwise,  or such other  relationship as, in fact,  constitutes
control.)

     (b)    "ANDA" means an Abbreviated New Drug Application  filed with the FDA
for a Reddy Finished Product or Par Finished Product in the United States.

     (c)    Applicable Percentage" means [*********************]

     (d)    "Bulk  Product" means either REDDY's or a third party's bulk actives
for Reddy  Finished  Product or PAR's or a third  party's  bulk  actives for Par
Finished Product.

     (e)    "cGMP" means current good manufacturing practices for the methods to
be used in, and the  facilities  and controls to be used for,  the  manufacture,
storage and handling of each Reddy  Finished  Product and Par Finished  Product,
all as set forth from  time-to-time  by the FDA pursuant to the FD&C Act and the
rules and regulations promulgated thereunder (including specifically,  Title 21,
part 211 of the Code of Federal Regulations of the United States).

     (f)    "Commercial  Expenses"  means PAR's or REDDY's,  as the case may be,
commercially   reasonable   costs  and  expenses  for  marketing,   advertising,
promoting,  and selling  (including  but not limited to costs and  expenses  for
launch,  sales force training and  materials,  samples,  conventions,  symposia,
marketing,  direct  mailing,  marketing  research,  public  relations,   printed
materials,  medical  information,  regulatory  activities and distribution) each
Reddy Finished  Product or Par Finished  Product,  determined in accordance with
PAR's or REDDY's  customary  accounting  policies and  practices and in a manner
consistent with U.S. generally accepted  accounting  principles.

     (g)    "Competing  Product"  means,  with  respect  to a  particular  Reddy
Finished Product or Par Finished Product, a generic pharmaceutical product which


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is in the same dosage form,  has the same active  ingredient,  the same strength
and is for the same  indication  as the Reddy  Finished  Product or Par Finished
Product but which is manufactured and supplied by or purchased and acquired from
any Person other than REDDY or its Affiliates or PAR or its  Affiliates,  as the
case may be.

     (h)    "Development  Costs"  means the  commercially  reasonable  costs and
expenses of REDDY or PAR, as the case may be,  incurred in the  preparation  and
filing of a DMF for each Bulk Product and in  obtaining  the ANDA for each Reddy
Finished  Product  or Par  Finished  Product,  including  but  not  limited  to:
allocated costs for manufacturing,  personnel,  packaging,  stability,  testing,
analytical,   Bulk  Product   supplied  for  ANDA   submission   (calculated  at
Manufacturing Cost) and all costs relating to the development of finished dosage
including R&D, preformulation,  formulation,  bio-equivalence, ANDA preparation,
validation, issuance and submission.

     (i)    "DMF" means the drug master file for each Bulk Product,  as the same
may be amended or supplemented from time to time.

     (j)    "Exclusivity  period"  means,  with  respect  to any reddy  finished
product  (or any  strength or dosage  form of a reddy  finished  product) or par
finished product (or any strength or dosage form of a par finished product), the
granting of up to six (6) months of marketing  exclusivity  in the united states
from the fda for being first to file an anda with a patent certification for the
given reddy finished product or par finished product enabling par to market such
product during such period in the u.S. With no other generic competitor.

     (k)    "FDA" means the United States Food and Drug Administration.

     (l)    "FD&C Act" means the Federal Food, Drug and Cosmetic Act of 1938, as
amended,  and the regulations  thereunder,  including current good manufacturing
practice regulations, as the same may be amended or revised.

     (m)    "Form 483" means the written  notice of  objectionable  practices or


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deviations from the regulations  that is prepared by the FDA investigator at the
end of an inspection.

     (n)    "Group 2 Term"  means,  for each  Reddy  Group 2  Product,  the date
commencing upon the execution of this Agreement and ending on December 31, 2004.

     (o)    "Indemnified  Party"  has the  meaning  set forth in  Section  15(c)
hereof.

     (p)    "Indemnifying  Party" has the  meaning  set forth in  Section  15(c)
hereof.

     (q)    "Intellectual  Property  Costs" means REDDY's or PAR's,  as the case
may be,  out-of-pocket  payments to patent counsel (or other experts,  including
outside  laboratories)  in connection with pre- or  post-marketing  patent work,
including patent litigation.

     (r)    "Know-How" means all Reddy Finished Product or Par Finished Product,
as the case  may be,  related  technical  knowledge,  manufacturing  procedures,
expertise,  methods, protocols and current and accumulated experiences which any
party hereto acquires in connection with this Agreement and/or has acquired as a
result of scientific research,  practical experiences and otherwise which have a
demonstrated  usefulness in manufacturing,  obtaining and maintaining Regulatory
Approval,  including  but not  limited  to (i) plant  validation  protocols  and
specifications;  (ii)  process  validation  procedures;  (iii)  quality  control
procedures;  (iv) analytical methods and procedures; (v) bio-equivalence testing
protocols and  procedures;  (vi) cleaning  validation  protocols and procedures;
(vii) procedures for preparation of applications for Regulatory Approval; (viii)
ongoing regulatory compliance  procedures;  and (ix) galenical  formulations and
processes.

     (s)    "Launch Date" means,  with respect to each Reddy Finished Product or
Par Finished  Product,  the date on which PAR makes its first commercial sale of
such Reddy  Finished  Product or Par  Finished  Product in the  Territory  to an
unrelated third party in an arm's length transaction but no later than the later
of:  thirty (30) days after the date on which all  regulatory  and  governmental
approvals for the manufacture,  delivery, sale and distribution in the Territory
have been  obtained  (including  Regulatory  Approval);  thirty  (30) days after
applicable patent expiration  (including  General Agreement on Trade and Tariffs


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extensions) or thirty (30) days after product exclusivity expiration.

     (t)    "Manufacturing Cost" means [*********************]

     (u)    "Net Margin" means [*********************]

     (v)    "Net Profit" means [*********************]

     (w)    "Net Sales" means [*********************]

     (x)    "Par Applicable Percentage" means [*********************]

     (y)    "Par Change in  Control"  means the  acquisition  by any third party
individual  or entity  (other than by Merck KGaA (but not a successor or assign)
or an  Affiliate of Merck KGaA (but not a successor or assign)) of more than 50%
(in any one  transaction or in any series of  transactions)  of the  outstanding
shares of capital  stock of  Pharmaceutical  Resources,  Inc.  or PAR having the
right to vote or generally to participate, in a manner similar to equity shares,
in the profits and losses of Pharmaceutical Resources, Inc. or PAR.

     (z)    "Par Finished Products" means [*********************]

            (aa)   "Par Group 1 Products" means [*********************]

            (bb)    "Par Group 4 Products" means [*********************]

            (cc)   "Person"  means an  individual,  partnership,  joint venture,
association,  corporation,  company and any other form of business organization,
government  regulatory  or  governmental  agency,   commission,   department  or
instrumentality.

            (dd)   "Promotional  Expenses"  means  promotional  payments or fees
directly  related to a Reddy  Finished  Product or Par Finished  Product paid to
REDDY's or PAR's customers, as the case may be.

            (ee)   "Reddy Applicable Percentage" means [*********************]

            (ff)   "Reddy Change in Control" means the  acquisition by any third
party  individual or entity of more than 50% (in any one  transaction  or in any
series of  transactions)  of the  outstanding  shares of capital  stock of REDDY
having the right to vote or generally  to  participate,  in a manner  similar to


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equity shares, in the profits and losses of REDDY.

            (gg)   "Reddy Finished Product" means [*********************]

            (hh)   "Reddy Group 1 Products" means [*********************]

            (ii)   "Reddy Group 2 Products" means [*********************]

            (jj)   "Reddy Group 3 Products" means [*********************]

            (kk)   Reddy Group 4 Products means [*********************]

            (ll)   "Reddy Group 5 Products" means [*********************]

            (mm)   "Reddy Group 6 Products" means [*********************]

            (nn)   "Regulatory  Approval"  means any  ANDAs or other  approvals,
supplements, amendments, pre- and post-approvals, marketing authorizations based
upon such  approvals  (including  any  prerequisite  manufacturing  approvals or
authorizations related thereto) and labeling approval(s), technical, medical and
scientific licenses,  registrations or authorizations of any national, regional,
state or local regulatory agency,  department,  bureau,  commission,  council or
other governmental  entity,  necessary for the manufacture,  distribution,  use,
import, or sale of Reddy Finished Products or Par Finished Products.

            (oo)   "Specifications" means the specifications  required to obtain
the ANDA of each Reddy Finished Product or Par Finished Product based on the NDA
specifications  of the  innovator  product and as  contained in the DMF for Bulk
Product   unless  changes  are  required  as  described  in  the  United  States
Pharmacopoeia,  as such  specifications may be amended at the request of the FDA
or by mutual agreement of the parties from time to time.

            (pp)   "Technical  Information"  means all information and expertise
which  REDDY or PAR,  as the case  may be,  acquires  in  connection  with  this
Agreement   and/or  has  acquired  which  have  a  demonstrated   usefulness  in
manufacturing,   packaging  and  labeling   and/or   obtaining  and  maintaining
Regulatory  Approval of the Reddy Finished Products or the Par Finished Products


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pursuant to this Agreement,  including,  but not limited to, all specifications,
manuals and computer  programs  relating to manufacturing  and similar materials
and access to the DMF of Bulk Product.

            (qq)   "Term" means,  for each Reddy Finished  Product (other than a
Reddy Group 2 Product) or Par  Finished  Product,  the later to occur of (i) the
date  commencing  upon  execution of this  Agreement  and ending seven (7) years
after the date of execution of this Agreement or (ii) the date commencing on the
Launch Date of each Reddy  Finished  Product or Par Finished  Product and ending
three (3) years after the Launch Date of such product.

            (rr)   "Territory"   means  the  United  States,   its  territories,
possessions and the Commonwealth of Puerto Rico.

            (ss)   "Third Party Bulk Product" means a Bulk Product  manufactured
by an entity other than REDDY or PAR, as the case may be.

     2.     Development of Products.
            -----------------------

            (a)    REDDY shall be responsible  for the  development of all Reddy
Finished  Products to be supplied  by REDDY to PAR under this  Agreement.  REDDY
shall use commercially  reasonable efforts to develop each of the Reddy Finished
Products. All Development Costs and Intellectual Property Costs, including,  but
not limited to, initiation, preformulation development, formulation development,
scale-up and any legal costs and expenses  incurred in  connection  with a Reddy
Finished Product shall be the sole  responsibility  of REDDY.  Nothing contained
herein shall constitute a guarantee or warranty of REDDY that development of any
Reddy  Finished  Product will be commenced or continued,  that a submission  for
Regulatory  Approval  for such Reddy  Finished  Product will be filed within any
specific  time  period,  or that a Regulatory  Approval  for any Reddy  Finished
Product will be obtained.

            (b)    REDDY shall prepare each application for Regulatory  Approval
for each Reddy Finished Product and shall use commercially reasonable efforts to
obtain  Regulatory  Approval.  REDDY shall hold all ANDAs for the Reddy Finished
Product in its own name,  provided that such  ownership  shall be subject to the
exclusive  licenses  granted to PAR hereunder.  Unless  expressly  agreed by the
parties,  in writing, it is the parties' intent that each Reddy Finished Product


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to be marketed and sold in the Territory under this Agreement will be sold under
a REDDY label.  REDDY shall ensure that all ANDAs  provide for such labeling and
take all steps reasonably necessary to ensure that under the Regulatory Approval
for a Reddy Finished  Product PAR can market,  distribute,  sell and promote the
product in the  Territory in  packaging  which  includes  both the PAR and REDDY
names.  In the event that REDDY elects to have PAR repackage and relabel a Reddy
Finished  Product under Section 6 of this Agreement,  REDDY shall take all steps
reasonably necessary to enable PAR to repackage and relabel under the Regulatory
Approval for such Reddy Finished Product.

            (c)    Notwithstanding  Section  2(a) hereof or any other  provision
contained in this Agreement,  REDDY shall have the right, upon written notice to
PAR, to immediately  terminate its obligations  hereunder to develop and/or seek
Regulatory  Approval  for a Reddy  Finished  Product(s)  if,  in the  reasonable
opinion  of REDDY,  it is not  commercially  reasonable  to  develop  such Reddy
Finished  Product  or to  seek to  obtain  or  maintain  a  Regulatory  Approval
therefor.  If REDDY  shall  terminate  its  obligations  to develop  and/or seek
Regulatory Approval for a Reddy Finished Product,  then (i) PAR may develop such
product or license a  Competing  Product  from any other third party for sale in
the Territory and (ii) REDDY or its Affiliate shall not manufacture such product
for sale in the Territory or license a Competing  Product from a third party for
sale in the Territory.

            (d)    PAR  shall  be  responsible  for the  development  of all Par
Finished Products. PAR shall use commercially reasonable efforts to develop each
of the Par Finished  Products.  All Development Costs and Intellectual  Property
Costs, including,  but not limited to, initiation,  preformulation  development,
formulation  development,  scale-up and any legal costs and expenses incurred in
connection with a Par Finished Product shall be the sole  responsibility of PAR.
Each Par Finished  Product to be marketed and sold in the  Territory  under this
Agreement  will be sold  under  a PAR  label.  Nothing  contained  herein  shall


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constitute a guarantee or warranty of PAR that  development  of any Par Finished
Product  will be  commenced  or  continued,  that a  submission  for  Regulatory
Approval  for such Par Finished  Product will be filed within any specific  time
period,  or that a  Regulatory  Approval  for any Par  Finished  Product will be
obtained.  For all purposes under this Agreement,  PAR shall be deemed to be the
manufacturer  of the Par  Finished  Product  and PAR  shall  assume  any and all
responsibilities  and any  liabilities  associated  therewith,  arising from the
manufacture of the Par Finished Product.

            (e)    PAR shall  prepare or cause to be prepared  each  application
for Regulatory Approval for each Par Finished Product and shall use commercially
reasonable  efforts to obtain Regulatory  Approval.  PAR shall have the right to
distribute  all Par Finished  Products and shall act as the United  States agent
for such Par Finished Products.

            (f)    Notwithstanding  Section  2(d) hereof or any other  provision
contained in this  Agreement,  PAR shall have the right,  upon written notice to
REDDY, to immediately terminate its obligations hereunder to develop and/or seek
Regulatory  Approval for a Par Group 4 Product(s) if, in the reasonable  opinion
of PAR, it is not commercially reasonable to develop such Par Group 4 Product or
to seek to obtain or maintain a Regulatory Approval therefor.

If PAR shall  terminate  its  obligations  to  develop  and/or  seek  Regulatory
Approval  for a Par Group 4 Product,  then (i) REDDY may develop such product or
license a Competing Product from any other third party for sale in the Territory
and (ii) PAR or its Affiliates  shall not  manufacture  such product for sale in
the Territory or license a Competing  Product from a third party for sale in the
Territory.

            (g)    REDDY  shall  prepare  the  Scale-Up  Post  Approval   Change
("SUPAC") to enable REDDY to manufacture  the Reddy Group 6 Products.  PAR shall
provide REDDY with reasonable  assistance in the  preparation of the SUPAC.  PAR
shall  file the  SUPAC  with the FDA and shall  provide  REDDY  with  reasonable
assistance  to  develop  the  manufacturing  capability  for the  Reddy  Group 6


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Products at REDDY's current manufacturing facility..

     3.     Sales and Marketing.
            -------------------

            (a)    PAR and REDDY shall establish a sales and marketing committee
(the "Committee")  consisting of an equal number of  representatives  from REDDY
and PAR,  which  shall  remain in effect  through  December  31,  2004.  The PAR
representatives  and REDDY  representatives  shall meet,  at such times and such
places,  as either  party  reasonably  requests,  provided  that  each  group of
representatives  provides the other with reasonable advance notice of its desire
to  schedule a meeting of the  Committee.  The  Committee  shall  determine  the
pricing and  marketing  strategy  for the Reddy Group 2 Products,  Reddy Group 4
Products and Reddy Group 5 Products  and shall  approve all pricing of the Reddy
Group 2  Products,  Reddy  Group 4 Products  and Reddy Group 5 Products to PAR's
customers. In the event the PAR representatives and REDDY representatives cannot
agree  on any  marketing  decision,  including,  but not  limited  to,  pricing,
marketing budgets, marketing expenditures and marketing strategies, the decision
of the REDDY  representatives  shall  control  and shall be binding  upon PAR in
connection  with the  marketing  and sale of the Reddy Group 2  Products,  Reddy
Group 4 Products  and Reddy  Group 5  Products.  Notwithstanding  the  foregoing
sentence, if PAR, in its commercially  reasonable business judgment,  determines
that the pricing of any of the  foregoing  products is  materially  inconsistent
with PAR's customary pricing methods, PAR shall notify REDDY, in writing, of the
basis for its  determination  and REDDY shall make such adjustments as REDDY, in
its commercially reasonable business judgment,  determines to the pricing of any
such product to eliminate the material inconsistency disclosed by PAR.

            (b)    REDDY  shall  have  the  right  to  have  one or  more of its
representatives  travel with PAR sales  representatives to PAR's accounts during
all preliminary,  pre-launch,  launch and post-launch visits; provided, however,
that REDDY  representatives  shall not participate in more than three (3) visits
to a PAR  account  during  any  calendar  year  unless  otherwise  agreed to, in
writing,  by PAR.  REDDY shall provide  reasonable  advance notice (but not less
than thirty (30) days' prior  notice) to PAR  management  of those PAR  accounts


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where REDDY  representatives  shall  participate.  PAR shall provide  reasonable
notice of field visits where REDDY representatives have requested participation.
During any visit with a PAR account, REDDY  representative(s)  shall participate
in only the portion of the meeting  which  involves  the Reddy Group 2 Products,
Reddy Group 4 Products and/or Reddy Group 5 Products.  Prior to January 1, 2005,
REDDY  representatives  shall  not meet  with  any PAR  customer  without  a PAR
representative  being  present at such  meeting for purposes of  discussing  any
Reddy Finished Product, (other than a Reddy Group 6 Product).

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            (c)    In connection with the marketing and sale of a Reddy Finished
Product  or a Par  Finished  Product,  REDDY or PAR,  as the  manufacturer  of a
product,  shall be responsible to pay the "stocking  charge" to a customer which
purchases such Reddy Finished Product or Par Finished Product.  In the case of a
Reddy Finished  Product,  PAR shall  reimburse REDDY for such stocking charge in
two (2) installments of 50% each. The first  installment shall be paid by PAR to
REDDY  within  thirty  (30) days after  payment  by REDDY to a customer  and the
second  installment shall be paid by PAR to REDDY twelve (12) months thereafter.
PAR shall deduct such  reimbursement  to REDDY from Net Sales to  calculate  Net
Profit,  as and when such  reimbursements  are made by PAR. In the case of a Par
Finished Product, PAR shall amortize such stocking charge against Net Sales over
two-year period to calculate Net Profit.

            (d)    In    connection    with   the    marketing   and   sale   of
[*********************]during  the Exclusivity  Period,  REDDY, at its sole cost
and  expense,  shall  provide  PAR with an  amount of  sample  product  that PAR
reasonably requires to market such product.

            (e)    PAR and its  Affiliates  shall  use  commercially  reasonable
efforts to develop,  market and sell each Reddy Finished Product and to actively
and  continuously  promote  the  sale  of each  Reddy  Finished  Product  in the
Territory.  Such  efforts  shall  be not  less  than  those  used by PAR and its
Affiliates  to  promote  the sale of other  products  which  they  market in the
Territory.  PAR  shall  not have any  minimum  purchase  obligation  under  this
Agreement.

            (f)    PAR and its Affiliates shall commit  commercially  reasonable
but no less than  equivalent  promotional and sales efforts to the marketing and
sale of [*********************] manufactured by REDDY as PAR, and its Affiliates
will commit to the marketing and sale of [*********************].

            (g)    At such time as REDDY shall be able to manufacture  the Reddy
Group 6 Products,  PAR and REDDY shall  jointly  determine  which of the parties
shall market and sell the Reddy Group 6 Products.


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     4.     License and Supply - REDDY Finished Products.
            --------------------------------------------

            (a)    Subject to the  provisions of Sections 3(g) and 4(e),  during
the Term,  PAR shall have the  exclusive  right to market  each  Reddy  Finished
Product  (other than a Reddy Group 2 Product) in the  Territory  and REDDY shall
supply PAR's forecasted requirements of each Reddy Finished Product.  Subject to
the  provisions  of Section  2(d),  during the Group 2 Term,  PAR shall have the
exclusive  right to market each Reddy Group 2 Product in the Territory and REDDY
shall supply PAR's  forecasted  requirements of each Reddy Group 2 Product.  PAR
shall commence  marketing each Reddy Finished  Product in the Territory no later
than thirty (30) days after the date on which final, unqualified FDA approval to
market the Reddy Finished  Product in the Territory is received,  provided REDDY
has supplied PAR with Reddy  Finished  Product in  accordance  with PAR's orders
therefor.

            (b) Except as provided in Section 3(g) and subject to the provisions
of  Section  4(e)  below,  upon  Regulatory  Approval  of an ANDA for each Reddy
Finished  Product and during the Term or Group 2 Term, as the case may be, REDDY
will grant PAR an exclusive  license to sell the Reddy  Finished  Product in the
Territory under the technology and Know-How included in the ANDA.

            (c)    Except as set forth in Section 4(d) below,  PAR agrees to buy
each Reddy Finished Product  exclusively from REDDY. PAR shall not (and it shall
not  authorize,  permit  or  suffer  any  of its  Affiliates  to),  directly  or
indirectly, manufacture, purchase, sell or distribute a Competing Product in the
Territory at any time during the Term of this  Agreement  applicable  to a Reddy
Finished Product (including, for greater certainty, prior to receipt by REDDY or
any of its Affiliate of Regulatory Approval for such Reddy Finished Product).

            (d)    Notwithstanding  any other  provision of this  Agreement,  if
REDDY is unable (or  anticipates an inability) to manufacture or deliver a Reddy
Finished  Product  to PAR,  REDDY  shall  promptly  notify PAR in writing of the
period for which such inability (or anticipated  inability) to so manufacture or
deliver is expected.  If REDDY is unable to meet PAR's  forecasted  requirements


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for a Reddy Finished  Product as a result of  circumstances or events beyond the
reasonable  control  of REDDY,  then PAR's  obligation  to  purchase  that Reddy
Finished Product  exclusively from REDDY shall be suspended and PAR may purchase
Competing  Product  for sale in the  Territory;  provided  that if REDDY  has an
inventory of that Reddy Finished  Product that it is ready,  willing and able to
deliver to PAR,  PAR shall  order such  remaining  inventory  prior to  ordering
Competing  Product from any other party. If at any time thereafter REDDY is able
to  manufacture  and  deliver  that  Reddy  Finished  Product  to PAR in amounts
sufficient  to meet  PAR's  requirements,  then,  subject  to PAR's  contractual
commitments  with third  parties  (which  shall only be made for the quantity of
that Reddy Finished  Product that REDDY and PAR reasonably  determine that REDDY
will be unable to supply to PAR),  PAR's above stated  obligation to exclusively
order that Reddy  Finished  Product  from  REDDY and not to  purchase  Competing
Product shall resume.

            (e)    From and after  January  1,  2005,  REDDY and its  Affiliates
shall have the  unrestricted  right to market and sell Reddy  Group 1  Products,
Reddy Group 3 Products, Reddy Group 4 Products and Reddy Group 5 Products in the
Territory;  provided,  however,  such right to market and sell shall not include
the right to license such products to a Person who is a manufacturer  of generic
pharmaceutical products and seeks approvals through ANDA filings.

            (f)    If,  prior  to the  expiration  of six (6)  months  from  the
execution of this Agreement,  PAR's current supplier of  [*********************]
does not consent to REDDY's exclusive supply to PAR of [*********************] ,
[*********************]under  this  Agreement,  the following  provisions  shall
apply:

                   (i)   REDDY shall not supply  Reddy  Group 1 Products  (other
                         than   [*********************])   into  the   Territory
                         through December 31, 2004; and

                   (ii)  PAR shall pay to REDDY,  as  additional  consideration,
                         the  amounts  set  forth  in  Sections  10(c)  of  this
                         Agreement.

            (g)    During  the  Term  or  Group  2  Term,  as the  case  may be,
applicable to a Reddy  Finished  Product,  neither PAR nor any of its Affiliates


                                       14
<PAGE>

will  directly or indirectly  sell such Reddy  Finished  Product  outside of the
Territory  or to any  Person in the  Territory  where it knows or has  reason to
believe that such Reddy  Finished  Product will be resold by such Person outside
of  the  Territory.   In  the  event  the  foregoing  provision  is  or  becomes
unenforceable or is unlawful in the Territory,  then it shall be deemed replaced
by the most  restrictive  provision on  marketing or sale of the Reddy  Finished
Product  outside  of the  Territory  as shall be lawful and  enforceable  in the
Territory. If REDDY establishes that one of PAR's customers or a customer of any
of its  Affiliates  is,  directly or  indirectly,  exporting such Reddy Finished
Product  out of the  Territory,  PAR shall (and shall cause its  Affiliates  to)
either cease to supply such customer or obtain an undertaking from such customer
not to market Reddy Finished  Product  outside of the Territory  (unless Par [or
its  Affiliate,  as the case may be] is precluded  from taking such action under
applicable law).

            (h)   Except as  expressly  provided in Section  4(e) above,  REDDY
agrees  that,  during the Term or Group 2 Term  applicable  to a Reddy  Finished
Product,  neither it nor any of its  Affiliates  shall,  directly or indirectly,
sell such Reddy  Finished  Product in the Territory or to any Person  outside of
the Territory  where it knows or has reason to believe that such Reddy  Finished
Product  will be  resold  by such  Person  in the  Territory.  In the  event the
foregoing provision is or becomes unenforceable or unlawful in the Territory, it
shall be deemed to be replaced by the most restrictive provision on marketing or
sale of the  Reddy  Finished  Product  in the  Territory  as shall be  lawful or
enforceable  in the  Territory.  If PAR notifies REDDY that one of its customers
(or a customer of its Affiliate) is, directly or indirectly, marketing the Reddy
Finished  Product in the Territory,  REDDY shall (and shall cause its Affiliates
to) either cease to supply such customer or obtain (and enforce if necessary) an
undertaking  from such customer not to market such Reddy Finished Product in the
Territory (unless REDDY [or its Affiliate, as the case may be] is precluded from
taking such action under applicable law).

            (i)    If for any  reason  during  the Term PAR  shall be  unable to
market and sell Par Group 1  Products,  then PAR shall  purchase  Reddy  Group 1


                                       15
<PAGE>
              CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
                     WITH SECURITIES AND EXCHANGE COMMISSION
                         ASTERISKS DENOTE SUCH OMISSION


Products exclusively from REDDY pursuant to the terms of this Agreement.

     4A.    Supply - [*********************]
            --------------------------------

            PAR and REDDY  acknowledge  that  each of REDDY  and  PAR's  current
supplier may be required to commence manufacturing of [*********************] in
order to have sufficient  quantities of each product to meet PAR's  requirements
for the launch of such product.  In the event that PAR's  current  supplier does
not consent to REDDY's exclusive supply of [*********************],  REDDY shall
be reimbursed  within  thirty (30) days of the  submission of an invoice for the
Manufacturing Cost of the [*********************]  manufactured by REDDY and not
sold by PAR in the  Territory.  Said amount shall be deducted  from Net Sales to
calculate Net Profits of such product.  If PAR's  current  supplier  consents to
REDDY's  exclusive  supply of  [*********************],  PAR's current  supplier
shall be reimbursed  within thirty (30) days of the submission of an invoice for
the manufacturing cost of product manufactured by PAR's current supplier and not
sold by PAR in the  Territory.  Said amount shall be deducted  form Net Sales to
calculate Net Profit for such product.

     5.     Forecasts,  Ordering,  Delivery  and  Purchase  Obligations  - Reddy
            --------------------------------------------------------------------
Finished Products.
------------------

            (a)    Within a reasonable  period of time prior to the  anticipated
Launch Date of a Reddy Finished Product, PAR shall submit to REDDY a non-binding
forecast of the quantity of each Reddy  Finished  Product  that PAR  anticipates
ordering from REDDY for such Reddy Finished  Product launch and during the first
twelve (12) month period thereafter.  PAR shall update such forecast every three
(3) months thereafter with a rolling twelve (12) month forecast.

            (b)    REDDY shall deliver Reddy Finished  Product to PAR within one
hundred  twenty  (120) days after the date of PAR's order  therefor,  unless PAR
specifies a later date in such order.

                                       16
<PAGE>

            (c)    REDDY  shall  provide  PAR  with  each  shipment  of a  Reddy
Finished  Product a certificate from REDDY's quality  assurance  department that
includes  the  results  of  quality  control  testing  in  accordance  with  the
specifications  and which indicates that the Reddy Finished Product contained in
the shipment meets the Specifications.

     6.     PAR's Repackaging Responsibilities.
            ----------------------------------

            (a)    At the  request of REDDY,  and with  commercially  sufficient
notice,  PAR shall repackage and label any Reddy Finished  Product into finished
label units for sale in the territory in a cGMP  approved  facility and shall be
responsible, with REDDY review for the printing of the labels in accordance with
FDA  guidelines  for such.  PAR will rely on the  information  contained  on the
labels of the bulk dosage product supplied by REDDY to PAR.

            PAR will  rely,  when  pertinent,  on REDDY for  specifications  for
container  closure  systems and on stability data,  moisture  permeation data in
carrying out packaging.



                                       17
<PAGE>

            PAR will conduct ongoing  stability where required by cGMP's as well
as impurity  identification  where  required all at the cost of REDDY.  PAR will
provide data to REDDY arising out of the stability  program.  In repackaging and
labeling   the  Reddy   Finished   Product,   PAR  shall  comply  with  (i)  the
Specifications  for such Reddy Finished Product,  (ii) applicable cGMP and (iii)
all other  applicable  rules,  regulations  and  requirements of the FDA and any
other applicable  governmental or regulatory  bodies,  agencies and officials in
the Territory relative to repackaging and labeling of the Reddy Finished Product
for sale in the Territory.  All labels and all artwork concepts on all packaging
material  used by PAR in  connection  with  labeling  and  packaging  of a Reddy
Finished  Product  shall be subject to the prior  reasonable  approval of REDDY,
provided  that the approval by REDDY of any label or artwork  concept  shall not
relieve or otherwise affect PAR's obligations or  responsibilities  hereunder in
relation to labeling and packaging of the Reddy Finished  Product or arising out
of the use of such labels or  packaging  material or the sale of Reddy  Finished
Product in the  Territory  so labeled  and  packaged.  REDDY shall own all trade
dress created hereunder.

            (b)    Upon  PAR's  receipt of  written  notice  from REDDY that PAR
shall  repackage  and label  any Reddy  Finished  Product,  PAR and REDDY  shall
mutually agree upon an acceptable  time schedule to transfer the repackaging and
labeling of such Reddy Finished Product to PAR. All direct costs incurred by PAR
in connection with repackaging and labeling of such Reddy Finished Product shall
be treated as a Manufacturing  Cost for purposes of calculating New Profits from
the sale of such Reddy Finished Product.

            (c)    REDDY shall supply to PAR all  information  and data relating
to a Reddy  Finished  Product  which  it is  obligated  to  provide  PAR and its
Affiliates as a repackager and labeler of such REDDY Finished  Product  pursuant
to applicable laws.

                                       18
<PAGE>

     It is not the intent that PAR shall be caused to make  significant  capital
expenditures to satisfy the repackaging  requirements.  PAR and REDDY agree that
if this should be required the parties will reach agreement as to funding.

     7.     Product Rejection, Non-Conforming Goods.
            ---------------------------------------

            (a)    Within thirty-five (35) days from the date of receipt of each
delivery of any Reddy  Finished  Product,  PAR shall inspect such Reddy Finished
Product (PAR hereby  acknowledging that its failure to inspect shall not release
it from the  obligations it would  otherwise have had it conducted an inspection
as herein contemplated,  or provide it with additional rights). PAR shall advise
REDDY in writing (a "Rejection  Notice") if a shipment of Reddy Finished Product
is  not  in  conformity  with  REDDY's  obligations  hereunder  or is  otherwise
defective;  provided,  however,  that PAR's  failure to advise REDDY in a timely
manner  that a shipment of Reddy  Finished  Product  does not conform  shall not
prejudice  PAR's  right to reject or return  the Reddy  Finished  Product if the
defect or other  nonconforming  condition  which  justifies  rejection or return
could not have been detected by PAR's inspection in accordance with cGMP. If PAR
delivers a Rejection Notice in respect of all or any part of a shipment of Reddy
Finished  Product,  then REDDY and PAR shall have thirty (30) days from the date
of REDDY's receipt of such notice to resolve any dispute  regarding  whether all
or any part of such shipment of Reddy Finished Product fails to conform with the
Product  Specifications or is otherwise defective.  Disputes between the parties
as to  whether  all or any part of a  shipment  rejected  by PAR  conforms  with
Specifications  shall be resolved in accordance with the provisions of paragraph
(b) below.  Disputes  between  the  parties  as to whether  all or any part of a
shipment  rejected  by  PAR  is  otherwise   defective  shall  be  submitted  to
arbitration in accordance with Section 22 of this Agreement.

            (b)    If  REDDY  and PAR  disagree  concerning  whether  the  Reddy
Finished Product delivered pursuant to Section 5 meets Specifications,  then PAR
and REDDY shall jointly  investigate  whether the Reddy  Finished  Product meets
Specifications.  If the parties do not agree  after  their joint  investigation,


                                       19
<PAGE>

they shall agree on an independent lab which shall  determine  whether the Reddy
Finished Product meets Specifications.  Initially, each party shall bear its own
costs and expenses  associated with performing such joint  investigation and the
parties shall share third party costs equally.  If such joint  investigation  or
the  independent  lab  concludes  that the  Reddy  Finished  Product  meets  the
Specifications,  then PAR shall reimburse REDDY for REDDY's  out-of-pocket costs
and expenses  associated with such investigation and the independent lab, and if
such  joint  investigation  or the  independent  lab  concludes  that the  Reddy
Finished  Product does not meet the  Specifications,  then REDDY shall reimburse
PAR  for  PAR's   out-of-pocket   costs  and  expenses   associated   with  such
investigation  and the  independent  lab.

            (c)    In the event  any Reddy  Finished  Product  is  appropriately
                   rejected by PAR, REDDY shall replace, at PAR locations,  such
                   Reddy Finished  Product with conforming  goods within sixteen
                   (16) weeks. REDDY shall bear all transportation costs, import
                   duties,  if any, taxes,  insurance and handling costs and any
                   other  costs  or  charges   incurred  in  transporting   such
                   replacement  Reddy  Finished  Product to the PAR  location at
                   which such  nonconforming  Reddy Finished  Product is located
                   and shall reimburse PAR for all transportation  costs, import
                   duties, if any, taxes,  insurance and handling costs incurred
                   by  PAR  in  connection   with  such  out  of   Specification
                   nonconforming Reddy Finished Product.

     8.     Terms and Conditions of Sale.
            ----------------------------

            REDDY  will  retain  title  and risk of loss to all  Reddy  Finished
Products until delivered CIP (as such term is defined in the ICC Incoterms 2000)
on a duty paid  basis to PAR's  facility  in  Spring  Valley,  New  York,  or as
otherwise  directed  by  PAR  within  the  Territory.  Each  shipment  shall  be
segregated by lot and accompanied by an appropriate certification of analysis.

                                       20
<PAGE>
              CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
                     WITH SECURITIES AND EXCHANGE COMMISSION
                         ASTERISKS DENOTE SUCH OMISSION


     9.     Price - Reddy Finished Product.
            ------------------------------
            [*********************]

                                       21
<PAGE>
              CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
                     WITH SECURITIES AND EXCHANGE COMMISSION
                         ASTERISKS DENOTE SUCH OMISSION


     10.    Additional Consideration to REDDY.
            ---------------------------------
            [*********************]

     11.    Additional Consideration to Par.
            -------------------------------
            [*********************]

     12.    Payment by PAR.
            --------------

            (a)    REDDY shall  invoice PAR for  REDDY's  Manufacturing  Cost of
each Reddy  Finished  Product  estimated  in good faith,  delivered  pursuant to
Section 5 hereof and PAR shall pay such  invoice  within  thirty (30) days after
the later of (i) the receipt of such  invoice  from REDDY or (ii) the receipt of
the Reddy Finished Product from REDDY.  Within sixty (60) days following the end
of each calendar year, REDDY shall calculate its actual  Manufacturing  Cost for
each Reddy Finished Product  delivered  pursuant to Section 5 hereof during such
calendar  year and notify PAR of the amount by which REDDY has been  overpaid or
underpaid  during such  calendar  year.  Such notice shall be  accompanied  by a
statement  setting  forth in detail by product the amounts used to calculate its
Manufacturing Cost for each Reddy Finished Product for such calendar year. REDDY
shall return to PAR any overpayment and PAR shall pay to REDDY any underpayment,
as the case may be, with respect to each Reddy  Finished  Product  within thirty
(30) days thereafter.

            (b)    (i)   Within  thirty  (30)  days  following  the  end of each
calendar  quarter,  PAR shall pay to REDDY the amounts due to REDDY  pursuant to
Sections 9(a)(ii) and 10(a),  (b), (c) and (dc) for such calendar quarter.  Each
payment shall be  accompanied by the following in respect of each Reddy Finished
Product supplied hereunder:

                         A.   a sales summary  reasonably  satisfactory to REDDY
                              showing all sales of such Reddy  Finished  Product
                              and Par Finished Product by Units (SKUs);

                         B.   a  detailed   statement   showing   all   returns,
                              adjustments, credits, rebates and other debits and


                                       22
<PAGE>

                              credits  relevant to the  calculation of Net Sales
                              of such Reddy  Finished  Product and Par  Finished
                              Product for the quarter in question, together with
                              copies of all  documentation to support  allowable
                              deductions used in computing Net Sales during such
                              quarter;

                         C.   a detailed  statement  showing  Cost of Goods Sold
                              for such Reddy  Finished  Product and Par Finished
                              Product;

                         D.   a  certificate   signed  by  the  Chief  Financial
                              Officer of PAR certifying that, to the best of his
                              knowledge,    information   and   belief,    after
                              reasonable investigation, the foregoing statements
                              contemplated  in A, B and C  above  are  true  and
                              correct and do not omit any  material  information
                              required to be provided  pursuant to this Section;
                              and

                         E.   a summary of the  calculation  of the Net  Profits
                              payable to REDDY on such date.

For purposes of this Agreement,  a sale shall be considered to have been made at
the time the Product is shipped by PAR or its Affiliates to its customer.

                   (ii)  PAR  shall   provide  to  REDDY  and  shall  cause  its
Affiliates  to provide to REDDY,  promptly  following a request  therefor,  such
additional information concerning any sales of a specific Reddy Finished Product
(including,  without  limitation,  in  respect  of any  sale,  the  date  of the
shipment,  the name of the customer,  the number of Units of the Reddy  Finished
Product (by SKU,  if  requested)  sold to such  customer  and the invoice  price
charged by PAR or its Affiliates),  chargebacks,  credits, returns,  adjustments
and other credits and debits  relevant to the  calculation  of Net Sales and Net
Profits in respect of a Reddy Finished Product as REDDY may reasonably request.

                                       23
<PAGE>

            (c)    REDDY  maintains a standard set of cost  accounting  policies
and practices in accordance with U.S. generally accepted  accounting  principles
which are applicable to all products  manufactured by REDDY. The cost accounting
policies and practices implemented by REDDY for this Agreement shall not deviate
in any material  respect  from REDDY's  standard  cost  accounting  policies and
practices.  REDDY shall notify PAR, in writing,  of any  material  change in its
standard cost accounting policies and practices which would adversely impact PAR
under  this  Agreement.  The  cost  accounting  policies  and  practices  to  be
implemented  by  REDDY  for this  Agreement  shall be in  accordance  with  U.S.
generally accepted  accounting  principles and shall not deviate in any material
respect  from  the  standard  cost  accounting   policies  and  practices  being
implemented  by REDDY  generally.  REDDY shall  notify  PAR, in writing,  of any
significant  change in these  standard  cost  accounting  policies and practices
which would adversely impact PAR under this Agreement.

            (d)    PAR shall keep and maintain  complete and accurate records of
the Net Sales and Net  Profit  for each  calendar  year and  shall  retain  such
records  for a period  of three  (3)  years  thereafter.  REDDY  shall  keep and
maintain  complete and accurate records of Manufacturing  Cost for each calendar
year and shall retain such  records for a period of three (3) years  thereafter.
Each party  shall have the right to  nominate  a firm of  independent  certified
public  accountants  reasonably  acceptable to the other party to have access to
the records of such other party during reasonable business hours for the purpose
of verifying,  at the auditing party's expense,  Net Sales and Net Profit in the
case of an audit of PAR and Manufacturing Cost in the case of an audit of REDDY;
provided  that this right may not be  exercised  more than once in any  calendar
year (except as set forth below) or for any period for which such other party is
not obligated to keep records  hereunder.  The results of the accountant's audit
shall be final and binding on both  parties.  A party  required to reimburse the
other party for an  underpayment  (in any amount) shall do so within thirty (30)
days of its  receipt  of  notice  from the  other  party of the  results  of the
accountant's  audit.  In the event that the  auditing  accountant  finds that an
underpayment  of five percent (5%) or more has been made, the party who made the


                                       24
<PAGE>

underpayment shall also: (a) pay the cost of that audit (within thirty (30) days
of its  receipt  of notice of the  results  of the  audit) and (b) be subject to
semi-annual  audits  for the  following  two (2)  years.  In the event  that the
auditing accountant finds that an overpayment was made, the party which received
the  overpayment  shall reimburse the other party within thirty (30) days of its
receipt of notice of the results of the audit.

            (e)    All amounts payable hereunder shall be paid in U.S. dollars.

     13.    Payments by REDDY.
            -----------------

            (a)    (i)   Within  thirty  (30)  days  following  the  end of each
calendar  quarter,  REDDY shall pay to PAR the  amounts  due to PAR  pursuant to
Sections  11(a) and 11(b)  for such  calendar  quarter.  Each  payment  shall be
accompanied by the following:

                         A.   a sales  summary  reasonably  satisfactory  to PAR
                              showing all sales by REDDY of such Reddy  Finished
                              Product by Units (SKUs);

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

                         C.   a detailed  statement showing  Manufacturing  Cost
                              for such Reddy Finished Product;

                                       25
<PAGE>
                         D.   a  certificate   signed  by  the  Chief  Financial
                              Officer of REDDY  certifying  that, to the best of
                              his  knowledge,   information  and  belief,  after
                              reasonable investigation, the foregoing statements
                              contemplated  in A, B and C  above  are  true  and
                              correct and do not omit any  material  information
                              required to be provided  pursuant to this Section;
                              and

                         E.   a summary of the  calculation  of the Net  Profits
                              payable to PAR on such date.

For purposes of this Agreement,  a sale shall be considered to have been made at
the time the Product is shipped by REDDY or its Affiliates to its customer.

                  (ii)   REDDY  shall   provide  to  PAR  and  shall  cause  its
Affiliates  to provide  to PAR,  promptly  following  a request  therefor,  such
additional information concerning any sales of a specific Reddy Finished Product
(including,  without  limitation,  in  respect  of any  sale,  the  date  of the
shipment,  the name of the customer,  the number of Units of the Reddy  Finished
Product (by SKU,  if  requested)  sold to such  customer  and the invoice  price
charged by REDDY or its Affiliates),  chargebacks, credits, returns, adjustments
and other credits and debits  relevant to the  calculation  of Net Sales and Net
Profits in respect of a Reddy Finished Product as PAR may reasonably request.

     14.    Representations, Warranties and Covenants.
            -----------------------------------------

            (a)    REDDY makes the  following  representations,  warranties  and
covenants:

                   (i)   REDDY shall  submit to the FDA, and shall  maintain,  a
                         DMF for each Bulk Product that REDDY shall manufacture;

                   (ii)  REDDY shall  submit to the FDA,  and, if issued,  shall
                         maintain, an ANDA for each Reddy Finished Product;


                                       26
<PAGE>

                   (iii) REDDY   shall   permit  the  FDA  to  inspect   REDDY's
                         manufacturing facilities for each Bulk Product and each
                         Reddy  Finished  Product in connection  with the review
                         and approval of REDDY's  applications  for registration
                         of each Reddy Finished Product;

                   (iv)  each Reddy Finished  Product (1) shall be  manufactured
                         in  conformance  with the ANDA for the  Reddy  Finished
                         Product and with all  applicable  statutes,  ordinances
                         and regulations  (including without limitation the FD&C
                         Act) as the same may be amended or revised from time to
                         time, (2) shall be manufactured in conformance with the
                         Specifications,   (3)  shall  not  be   adulterated  or
                         misbranded  within the meaning of the FD&C Act, and (4)
                         shall not be a product  which would violate any section
                         of the FD&C Act if introduced into interstate commerce;
                         and

                                       27
<PAGE>
                   (v)   each Bulk  Product  manufactured  by REDDY (1) shall be
                         manufactured  in conformance  with the DMF therefor and
                         with   all   applicable   statutes,    ordinances   and
                         regulations  (including,  without limitation,  the FD&C
                         Act) as the same may be amended or revised from time to
                         time, (2) shall be manufactured in conformance with the
                         Specifications,   (3)  shall  not  be   adulterated  or
                         misbranded  within the meaning of the FD&C Act, and (4)
                         shall not be a product  which would violate any section
                         of the FD&C Act if introduced into interstate commerce.

            (b)    PAR  makes  the  following  representations,  warranties  and
covenants:

                   (i)   PAR shall  permit the FDA to inspect  PAR's  facilities
                         used  for the  packaging  and  storing  of  each  Reddy
                         Finished  Product  in  connection  with the  review and
                         approval of REDDY's  applications  for  registration of
                         the Reddy Finished Product;

                   (ii)  each  Reddy   Finished   Product   packaged   at  PAR's
                         facilities   (1)  shall  be  packaged  and  labeled  in
                         conformance  with all  applicable  requirements  of the
                         FDA, the ANDA for the Reddy  Finished  Product and with
                         all applicable  statutes,  ordinances  and  regulations
                         (including,  without limitation,  the FD&C Act), as the
                         same may be amended or revised  from time to time,  (2)
                         shall be packaged and labeled in  conformance  with the
                         Specifications,   (3)  shall  not  be   adulterated  or
                         misbranded  within the meaning of the FD&C Act, and (4)
                         shall not be a product  which would violate any section
                         of the FD&C Act if introduced into interstate commence.

                   (iii) each Par Finished  Product (1) shall be manufactured in
                         conformance  with the ANDA for the Par Finished Product


                                       28
<PAGE>
                         and  with  all  applicable  statutes,   ordinances  and
                         regulations (including without limitation the FD&C Act)
                         as the same may be  amended  or  revised  from  time to
                         time, (2) shall be manufactured in conformance with the
                         Specifications,   (3)  shall  not  be   adulterated  or
                         misbranded  within the meaning of the FD&C Act, and (4)
                         shall not be a product  which would violate any section
                         of the FD&C Act if introduced into interstate commerce;

                   (iv)  each Bulk Product manufactured for Par Finished Product
                         (1) shall be manufactured  in conformance  with the DMF
                         therefor and with all applicable  statutes,  ordinances
                         and regulations  (including,  without  limitation,  the
                         FD&C Act) as the same may be amended  or  revised  from
                         time to time, (2) shall be  manufactured in conformance
                         with the  Specifications,  (3) shall not be adulterated
                         or  misbranded  within the meaning of the FD&C Act, and
                         (4) shall  not be a product  which  would  violate  any
                         section of the FD&C Act if introduced  into  interstate
                         commerce; and

                   (v)   PAR  and  its   Affiliates   shall   use   commercially
                         reasonable  promotional and sales efforts to market and
                         sell  the  Reddy  Finished  Products  and Par  Finished
                         Products,  and such  efforts  shall  be not  less  than
                         efforts used by PAR and its  Affiliates  to promote the
                         sale of other products marketed in the Territory.

            (c)    Each party  represents,  warrants and  covenants to the other
that:

                   (i)   such  party is not  debarred  under  the  Generic  Drug
                         Enforcement  Act of 1992  and that it does not and will


                                       29
<PAGE>

                         not use in any  capacity  the  services  of any  person
                         debarred  under the  Generic  Drug  Enforcement  Act of
                         1992;  neither  such  party,  nor,  to the  best of its
                         knowledge, any of its employees, agents or contractors,
                         has  engaged  in any  activity  which  could lead to it
                         becoming  debarred  under the Generic Drug  Enforcement
                         Act of 1992;

                   (ii)  such party is duly  authorized  to execute  and deliver
                         this   Agreement  and   consummate   the   transactions
                         contemplated hereby; and

                   (iii) neither the execution,  delivery or performance of this
                         Agreement,  nor the  consummation  of the  transactions
                         contemplated  hereby, (a) will violate or conflict with
                         such party's articles of incorporation or by-laws,  (b)
                         will  result  in any  breach  of or  default  under any
                         provision  of any  contract or  agreement to which such
                         party is bound, or to which such party's  properties or
                         assets are subject,  (c) is prohibited  by, or requires
                         such   party   to   obtain   authorization,   approval,
                         registration  or to make  any  filing  under,  any law,
                         rule,  regulation,  order or judgment,  or of any other
                         person  (except as  contemplated  herein),  or (d) will
                         result  in the  creation  or  imposition  of any  lien,
                         claim,  charge,  restriction,  equity or encumbrance of
                         any kind  whatsoever  upon or give to any other  person
                         any   interest  or  right   (including   the  right  of
                         termination or  cancellation) in or with respect to any
                         of the properties,  assets,  contracts or agreements of
                         such party.

                                       30
<PAGE>

     15.    Indemnification.
            ---------------

            (a)    REDDY agrees to indemnify,  defend and hold harmless,  and to
pay and reimburse, PAR, its Affiliates,  and its and their respective employees,
agents and representatives,  from and against any and all third party claims and
losses, damages and liabilities,  including reasonable attorney's fees, relating
thereto,  incurred by any of them arising out of,  relating to or occurring as a
result of REDDY's  negligence  or the breach of any  representation  or warranty
made by REDDY in this Agreement.

            (b)    PAR agrees to indemnify, defend and hold harmless, and to pay
and reimburse,  REDDY, its Affiliates,  and its and their respective  employees,
agents and representatives,  from and against any and all third party claims and
losses, damages and liabilities,  including reasonable attorney's fees, relating
thereto,  incurred by any of them arising out of,  relating to or occurring as a
result of PAR's negligence or the breach of any  representation or warranty made
by PAR in this Agreement.

            (c)    If PAR,  REDDY or an Affiliate (in each case an  "Indemnified
Party") receives any written claim which it believes is the subject of indemnity
hereunder,  the Indemnified Party shall, as soon as reasonably practicable after
forming  such  belief,  give  notice  thereof  to the other  (the  "Indemnifying
Party"),  including  all  particulars  of such claim to the extent  known to the
Indemnified  Party;  provided  that the  failure  to give  timely  notice to the
Indemnifying  Party as  contemplated  hereby shall not release the  Indemnifying
Party  from any  liability  to the  Indemnified  Party  except to the extent the
Indemnifying  Party is  materially  prejudiced  in  defending  any claim by such
failure.  The  Indemnifying  Party shall have the right, by prompt notice to the
Indemnified  Party,  to assume the  defense  of such  claim with  counsel of its
choice reasonably  satisfactory to the Indemnified Party, and at the cost of the
Indemnifying  Party.  If  the  Indemnifying  Party  assumes  such  defense,  the
Indemnified  Party may  participate in the action through counsel of its choice,
but the cost of such counsel shall be at the expense of the  Indemnified  Party.
If the  Indemnifying  Party does not so assume the  defense of such  claim,  or,
having  assumed such defense fails to  vigorously  prosecute  such defense,  the


                                       31
<PAGE>

Indemnified  Party may assume such  defense,  with counsel of its choice,  to be
paid or reimbursed by the Indemnifying Party.

            (d)    The party not  assuming  the  defense of any such claim shall
render all  reasonable  assistance to the party  assuming such defense,  and all
reasonable  out-of-pocket  costs of such  assistance  shall be promptly  paid or
reimbursed by the Indemnifying Party.

            (e)    No such claim shall be settled and no  admission  may be made
other than by the party  defending  the same,  and then only with the consent of
the other party,  which shall not be  unreasonably  withheld;  provided that the
Indemnified  Party shall have no obligation to consent to any  settlement of any
such claim which  imposes on the  Indemnified  Party any liability or obligation
which will not be assumed and performed in full by the Indemnifying Party.

     16.    Recall or Seizure - Reddy Finished Product.
            ------------------------------------------

            (a)    In the  event PAR  believes  that a Recall  may be  necessary
and/or  appropriate,  prior to taking any action  PAR shall  immediately  notify
REDDY, and PAR and REDDY shall cooperate and cause their  respective  Affiliates
to cooperate  with each other in  determining  the  necessity  and nature of the
action to be taken.

            (b)    With  respect to any recall,  REDDY  shall make all  contacts
with the FDA and shall be  responsible  for  coordinating  all of the activities
required in  connection  with such  recall.  PAR and REDDY and their  respective
Affiliates  shall  cooperate  with each other in recalling  the  affected  Reddy
Finished Product.

            (c)    In the event of any recall or  seizure of any Reddy  Finished
Product  arising out of,  relating  to, or  occurring as a result of, any act or
omission by REDDY, REDDY shall, at the election of PAR, either:

                   (i)   replace the amount of Reddy Finished  Product  recalled
                         or seized; or

                   (ii)  give credit to PAR against outstanding  receivables due
                         from PAR in an amount  equal to the amount  paid by PAR


                                       32
<PAGE>

                         for the Reddy Finished Product so recalled or seized or
                         otherwise owing by PAR hereunder;

plus  reimburse  (or at the  election  of PAR,  credit)  PAR for the  Commercial
Expenses  allocated thereto (in the same proportion as such quantity of recalled
or seized  product  bears to the total  quantity  of product  sold  during  such
calendar year), and all transportation  costs,  export or import duties, if any,
taxes,  insurance and handling costs incurred by PAR in respect of such recalled
or seized product.

            (d)    In the event of any recall or  seizure of any Reddy  Finished
Product  arising  out of,  relating to or  occurring  as a result of, any act or
omission  of PAR,  PAR shall be solely  responsible  for and shall  exclude  for
purposes of calculating Net Profit REDDY's  Manufacturing Cost allocated thereto
(in the same  proportion as such quantity of recalled or seized product bears to
the total quantity of product sold in such calendar year) and all transportation
costs,  import duties,  if any, taxes,  insurance and handling costs incurred by
PAR in respect of such recalled or seized product.

            (e)    For  purposes  of this  Section  16,  "recall"  means (i) any
action  by  REDDY,  PAR or any  Affiliate  of  either  to  recover  title  to or
possession  of any  Reddy  Finished  Product  sold or  shipped  and/or  (ii) any
decision by PAR not to sell or ship  product to third  parties  which would have
been subject to recall if it had been sold or shipped, in each case taken in the
good faith belief that such action was appropriate under the circumstances.  For
purposes of this Section 16, "seizure" means any action by any government agency
to detain or destroy product.

            (f)    Any and all  disputes  or  controversies  arising  under this
                   Section 16 regarding the respective  fault of the parties for
                   recalls shall be submitted to arbitration in accordance  with
                   Section 23 of this  Agreement and the award of the arbitrator
                   or arbitrators  designated  thereunder shall, subject to law,
                   be final and binding upon the parties hereto.

                                       33
<PAGE>

     17.    Termination.
            -----------

            (a)    Notwithstanding any other provision of this Agreement, either
party may  terminate  this  Agreement,  or any  Reddy  Finished  Product  or Par
Finished Product under this Agreement, by notice in writing to the other upon or
at any time after the occurrence of any of the following events:

                   (i)   if  the  other  commits  a  material   breach  of  this
                         Agreement  which (a) in the case of a breach capable of
                         a remedy,  shall not have been  remedied  within  sixty
                         (60)  days of the  receipt  by the  other  of a  notice
                         identifying  the breach and  requesting  its remedy and
                         (b)   continues   to  exist  at  the  time   notice  of
                         termination  is given;  provided  that if the breaching
                         party is  diligently  pursuing in good faith the remedy
                         of any  breach,  then such sixty  (60) day cure  period
                         shall be extended for such period as may be  reasonably
                         required to effectuate such cure; or

                   (ii)  if the  other  is  unable  to pay  its  debts,  becomes
                         bankrupt  or  insolvent,  or  enters  into  liquidation
                         whether  compulsorily  or  voluntarily,  or  convenes a
                         meeting of its creditors,  or has a receiver  appointed
                         over all or part of its assets, or takes or suffers any
                         similar  action in consequence of a debt, or ceases for
                         any reason to carry on business.

            (b)    Notwithstanding  any other  provision of this  Agreement,  if
during any rolling  twelve (12) month  period after the Launch Date of any Reddy
Finished Product or Par Finished Product, the Net Profit for such Reddy Finished
Product or Par  Finished  Product  shall be less than ten  percent  (10%) of Net
Sales,  then either party may terminate this  Agreement,  solely with respect to
such Reddy Finished Product or Par Finished Product, by notice in writing to the
other,  given no later than one hundred  twenty (120) days after the end of such
rolling twelve (12) month period;  provided,  however, a party may not terminate
the Agreement as to a Product under this Section 17(b) if its own breach of this


                                       34
<PAGE>

Agreement has caused the Net Profit for such twelve (12) month period to be less
than ten percent (10%) of Net Sales.

            (c)    Notwithstanding  any other provision of this  Agreement,  PAR
may terminate any Reddy  Finished  Product  under this  Agreement,  by notice in
writing to REDDY given with sixty (60) days after PAR receives  notice of any of
the following events:

                   (i)   Prior to June 30, 2004, a Reddy Change in Control shall
                         have occurred;

                   (ii)  REDDY has  received a Form 483 report with respect to a
                         Reddy Finished  Product or the  manufacturing  facility
                         therefor  and it has not  complied  with  such Form 483
                         within  a  reasonable   time   thereafter  and  is  not
                         diligently   pursuing  corrective  action  in  response
                         thereto;

                   (iii) REDDY has violated the fraud provisions of the FD&C Act
                         in  connection  with a Reddy  Finished  Product  or the
                         manufacturing facility therefor; or

                   (iv)  REDDY has  entered  into a consent  agreement  with the
                         FDA,   or  a   similar   event  has   occurred,   which
                         significantly impairs REDDY's ability to manufacture or
                         sell a Reddy Finished Product.

            (d)    Notwithstanding any other provision of this Agreement,  REDDY
may  terminate  any Reddy  Finished  Product or Par Finished  Product under this
Agreement,  by notice in writing to PAR given within sixty (60) days after REDDY
receives notice or otherwise becomes aware of any of the following events:

                   (i)   Prior to June 30, 2004,  a Par Change in Control  shall
                         have occurred;

                   (ii)  There has occurred a material negative  diminishment in
                         the sales/marketing  capability of PAR, including,  but
                         not   limited   to,  a   significant   change   in  the
                         sales/marketing  personnel of PAR and, after notice and
                         a reasonable  opportunity  to cure,  such personnel are
                         not replaced  with  individuals  as a group  possessing


                                       35
<PAGE>

                         comparable experience;

                   (iii) PAR has received  Form 483 with respect to packaging or
                         labeling or the  packaging  or labeling  facility for a
                         Reddy  Finished  Product and it has not  complied  with
                         such Form 483 within a reasonable  time  thereafter and
                         it is not  diligently  pursuing  corrective  action  in
                         response thereto;

                   (iv)  PAR (or its current supplier of Par Finished Product or
                         its  manufacturer  of Bulk Product used to  manufacture
                         any Par  Finished  Product)  has  received  a Form  483
                         report with  respect to a Par  Finished  Product or the
                         manufacturing facility therefor and it has not complied
                         with such Form 483 within a reasonable  time thereafter
                         and is not  diligently  pursuing  corrective  action in
                         response thereto;

                   (v)   PAR (or its current supplier of Par Finished Product or
                         its  manufacturer  of Bulk Product used to  manufacture
                         any  Par  Finished  Product)  has  violated  the  fraud
                         provisions of the FD&C Act in  connection  with a Reddy
                         Finished Product or Par Finished Product;

                   (vi)  PAR has entered into a consent  agreement with the FDA,
                         or a similar  event has occurred,  which  significantly
                         impairs PAR's ability to sell a Reddy Finished Product;
                         or

                                   36
<PAGE>

                   (vii) PAR (or its current supplier of Par Finished Product or
                         its  manufacturer  of Bulk Product used to  manufacture
                         any Par  Finished  Product)  has entered into a consent
                         agreement with the FDA, or a similar event has occurred
                         which  significantly  impairs REDDY's ability to sell a
                         Par Finished Product.

            (e)    Expiration or termination of this Agreement  shall be without
prejudice to the right of any party to receive all  payments  accrued and unpaid
at the effective date of such  expiration or termination,  without  prejudice to
the  remedy  of  either  party  in  respect  to  any  previous   breach  of  the
representations,  warranties or covenants herein contained, without prejudice to
any rights to  indemnification  set forth  herein and without  prejudice  to any
other  provision  hereof which  expressly or necessarily  calls for  performance
after such  expiration or  termination.  Without  limiting the generality of the
foregoing,  Sections  3(c),  7, 12, 13, 14, 15, 16, 19, 20 and 21 shall  survive
expiration or termination of this Agreement.

            (f)    Notwithstanding any other provision of this Agreement, either
party may terminate this  Agreement as to any specific  Reddy  Finished  Product
which does not receive  Regulatory  Approval  within one year after the later of
the patent expiration date or the product exclusivity expiration date; provided,
however,  that in the event of a termination by one party, the other party shall
have  the  right to use all  information  and data  generated  pursuant  to this
Agreement  that is or would be contained in the ANDA  relating to that  specific
Reddy Finished Product.

            (g)    If PAR  terminates the Agreement with respect to a particular
Reddy Finished  Product  pursuant to Section 17(b), PAR shall not (and shall not
authorize,  cause or permit any of its Affiliates  to),  directly or indirectly,
manufacture, purchase, sell or distribute in the Territory any Competing Product
to any Reddy Finished  Product as to which this Agreement has been so terminated
for the balance of the Term of such Reddy Finished Product.


                                       37
<PAGE>


            (h)    If  REDDY   terminates  this  Agreement  with  respect  to  a
particular  Reddy Finished  Product  pursuant to Section 17(b),  REDDY shall not
(and shall not authorize, cause or permit any of its Affiliates to), directly or
indirectly,  sell or distribute such Reddy Finished Product in the Territory for
the balance of the Term of such Reddy Finished Product.

     18.    Right to Inspect.
            ----------------

            REDDY and PAR shall have  access to and the right,  upon  reasonable
notice and at reasonable  times,  to inspect the  manufacturing  and warehousing
facilities,  supporting  systems,  documents  and  records  (including,  without
limitation,  adverse drug reactions,  annual product reviews,  stability reports
and complaints) of the other that are associated  with a Reddy Finished  Product
or Par Finished Product. After an inspection, the inspecting party shall provide
the inspected party with a copy of its inspection report and the inspected party
shall  promptly  provide the other with a written  response to such  report.  If
needed  the   parties   will   arrange  to  meet  to  discuss  the  results  and
recommendations contained in such inspection report.

     19.    Adverse Drug Reactions.
            ----------------------

            REDDY  and PAR  shall  keep  the  other  fully  informed  of (i) any
notification  or other  information,  whether  received  directly or indirectly,
which  might  affect the  marketability,  safety or  effectiveness  of any Reddy
Finished  Product or Par  Finished  Product,  or which might result in liability
issues or otherwise  necessitate  action on the part of either  party,  or which
might result in recall or seizure of any Reddy Finished  Product or Par Finished
Product and (ii) nonclinical  reports with respect to any Reddy Finished Product
or Par Finished Product.

     20.    Confidentiality and Non-Use.
            ---------------------------

            (a)    Except as  otherwise  expressly  provided in Section  2(e) of
this Agreement,  during the Term of this Agreement and any renewal thereof,  and
for a period of five (5) years thereafter,  each party shall hold in confidence,
not  disclose  and not use for the benefit of any party,  except the  disclosing


                                       38
<PAGE>

party, any and all confidential  information  provided by the disclosing  party,
except with the express prior written consent of the disclosing party,  provided
that  non-disclosing  party shall not be prevented from  disclosing  information
which:

                   (i)   at, prior or subsequent to the time of such  disclosure
                         is  independently  known to the receiving party without
                         obligation of secrecy or non-use to a third party;

                   (ii)  at,  prior or  subsequent  to the  time of  disclosure,
                         becomes part of the public knowledge  through no breach
                         hereof by the receiving party;

                   (iii) subsequent  to  the  time  of  such  disclosure  is the
                         subject of another agreement between the parties hereto
                         which explicitly permits use or disclosure; or

                   (iv)  is required by law or judicial process to be disclosed.

Specific  information  received by either party hereunder shall not be deemed to
fall within any of the  foregoing  exceptions  merely  because it is embraced by
general information within any such exceptions.  In addition, any combination of
features  received as  confidential  information by either party hereunder shall
not be deemed to fall  within any of the  foregoing  exceptions  merely  because
individual  features are separately  within any such exception,  but only if the
combination itself, and its principles of operation, are within such exception.

            (b)    In the event that either party shall be legally  compelled or
required by a court of competent jurisdiction to disclose all or any part of the
Confidential  Information  of the other (or its  Affiliates),  it shall  provide
prompt  notice to the other so that such  other  party (or its  Affiliates)  may
determine  whether or not to seek a  protective  order or any other  appropriate
remedy. If a protective order or other appropriate remedy is not obtained before
such disclosure is required, the party required to make disclosure will disclose
only those  portions of the  Confidential  Information  in question  which it is


                                       39
<PAGE>


advised by written  opinion of counsel (which opinion shall be addressed to such
party and to the other  party),  it is legally  required  to  disclose  and will
exercise  its best  efforts  to obtain  reliable  assurances  that  confidential
treatment will be accorded such Confidential Information.

            (c)    Without limiting the generality of the foregoing,  each party
shall limit disclosure of the confidential information to its employees who need
to receive  the  confidential  information  in order to further  the  activities
contemplated in this Agreement.  Each party shall take sufficient precautions to
safeguard  the  confidential   information,   including  obtaining   appropriate
commitments and enforceable  confidentiality  agreements. Each party understands
and agrees that the wrongful disclosure of confidential  information will result
in serious and irreparable damage to the other party, that the remedy at law for
any  breach of this  covenant  may be  inadequate,  and that the  party  seeking
redress hereunder shall be entitled to injunctive  relief,  without prejudice to
any other rights and remedies to which such party may be entitled.

            (d)    It is  acknowledged  that  confidential  information  may  be
disclosed  not  only in  writing  or  other  tangible  form,  but  also  through
discussions  between each party's  respective  representatives,  demonstrations,
observations and other intangible methods.

            (e)    The above  notwithstanding,  each party shall have the right,
with the  exercise  of  discretion,  and  insofar  as  practical  under  written
confidentiality  agreements  having  provisions  no less  stringent  than  those
contained   herein,  to  make  disclosures  of  such  portions  of  confidential
information  to  third  party  consultants,  attorneys,  contractors,  advisors,
Affiliates  and  governmental  agencies where in the  recipient's  judgment such
disclosure  is  essential  to  development,  approval  or  marketing  of a Reddy
Finished Product pursuant to this Agreement.

            (f)    Except  as  otherwise  set  forth  in  this  Agreement,  upon
termination  of this  Agreement  and at the  written  request of the  disclosing
party, the receiving party shall return all the confidential  information of the
disclosing  party  (including all copies  thereof) or destroy such  confidential



                                       40
<PAGE>


information at the option of the disclosing party.

     21.    Insurance.
            ---------

            Each of PAR and  REDDY  shall  (and  shall  cause  their  respective
Affiliates  to),  during the Term or Group 2 Term, as the case may be, and for a
period of not less than  thirty-six  (36) months  following  termination of this
Agreement,  maintain product liability insurance  (including blanket contractual
liability) in a minimum amount of $10,000,000  U.S.,  combined  single limit, to
cover product  liability claims of PAR and REDDY relating to each Reddy Finished
Product or Par Finished Product with the manufacturer's insurance coverage being
primary with respect to any claim  thereunder.  Each of Par and REDDY shall,  at
the  request  of the  other,  provide  evidence  to  such  requesting  party  of
compliance with its insurance  obligation  (and those of its  Affiliates)  under
this Section 21 and evidence of renewals of any such policy from time to time.

     22.    Arbitration.
            -----------

            Any  controversy  or claim  pursuant to Sections 7 and 16(f) of this
Agreement or the breach  thereof  shall be referred for decision  forthwith to a
senior  executive of each party not involved in the dispute.  If no agreement is
reached  within  thirty  (30) days of the  request  by one party to the other to
refer the same to such senior executive, then such controversy or claim shall be
settled by arbitration in accordance  with the Commercial  Arbitration  Rules of
the American Arbitration Association; such arbitration to be held in Newark, New
Jersey  on  an  expedited  basis.  Judgment  upon  the  award  rendered  by  the
Arbitrator(s) may be entered in any court having jurisdiction thereof.

     23.    Miscellaneous.
            -------------

            (a)    This Agreement does not constitute or create (and the parties
do  not  intend  to  create  hereby)  a  joint  venture,   pooling  arrangement,
partnership,  or formal business  organization of any kind between and among any
of the  parties,  and the rights and  obligations  of the parties  shall be only
those expressly set forth herein. The relationship  hereby  established  between
PAR and  REDDY  is  solely  that of buyer  and  seller,  each is an  independent



                                       41
<PAGE>


contractor  engaged in the  operation of its own  respective  business.  Neither
party  shall  be  considered  to be an  agent  of  the  other  for  any  purpose
whatsoever.  Each party shall be responsible for providing its own personnel and
workers' compensation,  medical coverage or similar benefits and shall be solely
responsible for the payment of social security benefits, unemployment insurance,
pension  benefits,  withholding  any  required  amounts  for  income  and  other
employment-related  taxes and benefits of its own employees,  and shall make its
own  arrangements  for injury,  illness or other  insurance  coverage to protect
itself, its Affiliates,  its subcontractors and personnel from any damages, loss
and/or liability arising out of the performance of this Agreement. Neither party
has the  power or  authority  to act for,  represent  or bind the  other (or its
Affiliates) in any manner.

            (b)    Any  notice  provided  for under this  Agreement  shall be in
writing,  shall be given either by hand or by mail, telegram,  facsimile message
or other  written  means,  and  shall be deemed  sufficiently  given if and when
received  by the party to be  notified  at its  address  first set forth  below.
Either party may, by notice to the other,  change its address for receiving such
notices.

            If to REDDY:
            DR. REDDY'S LABORATORIES LIMITED
            7-1-27 Ameerpet
            Hyderabad - 500 016
            India
            Attention: CEO
            Telefax:  0119140291955

            -and-

            REDDY-CHEMINOR, INC.
            66 South Maple Avenue
            Ridgewood, New Jersey  07450
            U.S.A.
            Attention: Strategic Business Unit Head
            Telefax:  12014441456

            If to PAR:

            PAR PHARMACEUTICALS, INC.
            One Ram Ridge Road
            Spring Valley, New York 10977



                                       42
<PAGE>


            Attention:  _________
            Telefax:  ___________

            (c)    This Agreement shall be deemed to have been made in the State
of New Jersey,  and shall be construed in  accordance  with and governed by such
law without regard to the choice of law principles  thereof.  Any action between
PAR and REDDY which relates in any way to this  Agreement or any Reddy  Finished
Product shall also be governed by New Jersey law without regard to choice of law
principles.  Except with respect to disputes  regarding the respective  fault of
the parties in the event of a recall or seizure as  controlled by Sections 7 and
16(f),  the parties agree to submit all disputes which relate in any way to this
Agreement or any Reddy Finished  Product,  to the  jurisdiction  of the Superior
Court of New Jersey.

            (d)    This  Agreement  may not be assigned by either party  without
consent of the other party.

            (e)    If the manufacture,  transportation, delivery, receipt or use
by either  party of any  material  or  services  covered  hereby  is  prevented,
restricted or interfered with by reason of any event or cause whatsoever  beyond
the reasonable control of the party so affected,  such party, upon prompt notice
to the other party, shall be excused from making or taking deliveries  hereunder
to the extent of such prevention, restriction or interference.

            (f)    This Agreement  constitutes the entire agreement  between the
parties  with  reference  to the subject  matter  hereof,  supersedes  any prior
agreements  with  respect  to such  subject  matter,  and may not be  changed or
modified  orally,  but only by an instrument in writing,  signed by the parties,
which states that it is an amendment to this Agreement. The terms and conditions
of sale contained in either PAR's or REDDY's purchase order and PAR's or REDDY's
invoice  shall  not  modify,  alter or add any term or  condition  of or to this
Agreement.

            (g)    Neither  party  shall be liable  to the other  party for lost
profits or special,  consequential,  punitive or indirect  damages in connection



                                       43
<PAGE>

with any  claim or cause of action  arising  out of the  subject  matter of this
Agreement.

            (h)    The  Parties   agree  that  costs  or   expenses   which  are
inadvertently  omitted from a party's  calculation of  Manufacturing  Costs, Net
Sales or Profit may be  included by that party in its  calculation  of same in a
later period.  Similarly,  should a change occur  resulting in a cost or expense
increase or decrease (after a calculation and the related payment is made),  the
increase or decrease shall be included in the calculation in the next period.

            (i)    This  Agreement  may be executed in one or more  counterparts
each of which  shall for all  purposes  be deemed to be an  original  and all of
which shall constitute one and the same instrument.

     IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above written.
                              PAR PHARMACEUTICALS, INC.

                                 /s/ Kenneth I. Sawyer
                              By:______________________________________________
                                     Name:  Kenneth I. Sawyer
                                     Title: President and CEO

                              DR. REDDY'S LABORATORIES LIMITED

                                 /s/ Cameron Reid
                              By:______________________________________________
                                     Name:  Cameron Reid
                                     Title:

                              REDDY-CHEMINOR, INC.

                                 /s/ Cameron Reid
                              By:______________________________________________
                                     Name:  Cameron Reid
                                     Title: President


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