EXHIBIT 10.40




EXECUTION COPY








                              Dated April 26, 2001




                       ELAN TRANSDERMAL TECHNOLOGIES, INC.




                                       AND




                            PAR PHARMACEUTICAL, INC.




                          LICENSE AND SUPPLY AGREEMENT





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                                    CONTENTS

Clause I               Preliminary

Clause 2               The License

Clause 3               Intellectual Property

Clause 4               Competing Products

Clause 5               Registration Of The Product

Clause 6               Marketing And Promotion Of The Product

Clause 7               Supply Of The Product

Clause 8               Financial Provisions

Clause 9               Payments, Reports And Audits

Clause 10              Duration And Termination

Clause 11              Warranty And Indemnity

Clause 12              Customer Complaints, Product Recall And Insurance

Clause 13              Miscellaneous Provisions

Schedule 1             Product

Schedule 2             Product Manufacturing Cost

Schedule 3             Complaint Handling Procedures


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THIS AGREEMENT is made on April 26, 2001.

BETWEEN:

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

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

RECITALS:

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

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

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

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

NOW IT IS HEREBY AGREED AS FOLLOWS:

                             CLAUSE 1 - PRELIMINARY

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

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

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

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



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

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

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

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

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

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

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

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

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

         EXCLUDED  ENTITIES  shall  mean  The  Liposome  Company,  Inc.  and its
         subsidiaries;  Athena  Neurosciences  Finance LLC;  Axogen  Limited and
         Neuralab Limited; Dura Pharmaceuticals, Inc. and its subsidiaries; Elan
         Pharmaceuticals   Research   Corporation  and  its  subsidiaries;   and
         Affiliates  (present or future) of Elan  Corporation,  plc.  within the
         division  of  Elan  Corporation,  plc.  carrying  on  business  as Elan
         Pharmaceuticals  which  incorporates,  inter  alia,  EPIL  (only to the
         extent that it is the owner of patents,  know-how or other intellectual
         property or technology invented and/or developed within the division of
         Elan  Corp  carrying  on  business  as  Elan  Pharmaceuticals),  Athena
         Diagnostics, Inc., Athena Neurosciences,  Inc., Elan Diagnostics, Inc.,
         Elan   Pharmaceuticals,   Inc.   and  Elan   Europe   Limited  and  its
         subsidiaries.



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<PAGE>

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

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

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

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

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

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

         MARKETING COMMITTEE shall have the meaning set forth in Clause 6.1.

         NET SALES PRICE  ("NSP")  shall mean in the case of Product sold by Par
         or an Affiliate or a permitted  sub-licensee,  that sum  determined  by
         deducting from the aggregate  gross  [***************]  proceeds billed
         for the Product by Par or, its  Affiliate or a permitted  sub-licensee,
         as the case may be,  in  accordance  with  Elan's  standard  accounting
         principles,  a  maximum  deduction  of  [***************]  to cover the
         following:

         (a)      customs duties or other taxes (excluding income or corporation
                  tax),  directly  related to the sale of the Product  which are
                  paid by Par or its Affiliate or permitted sub-licensees as the
                  case may be;

         (b)      a discount from the gross sales  proceeds to cover such normal
                  costs as are  incurred by Par or its  Affiliates  or permitted
                  sub-licensees,  as the case may be, in respect  of  transport,
                  shipping  insurance,  returns,  discounts or expenses  rebates
                  directly related to the sale of the Product.

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

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

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

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



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<PAGE>

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

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

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

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

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

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

         $ shall mean United States Dollars.

         US OR USA shall mean the United States of America.

1.2.     Interpretation: In this Agreement:

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

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

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

                             CLAUSE 2 - THE LICENSE

2.1.     LICENSE TO PAR:

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



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<PAGE>

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

         2.2.     Sub-licensing by Par:

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

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

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

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

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

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

         2.2.7. For the avoidance of doubt:

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

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



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                        CLAUSE 3 - INTELLECTUAL PROPERTY

3.1.     OWNERSHIP OF ELAN KNOW-HOW:

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

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

3.2.     INFRINGEMENTS

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

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

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

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

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

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

                  PROVIDED  THAT  the   litigating   party  shall  be  under  no
                  obligation to disclose to the non-litigating  party any advice
                  of outside  attorneys.  Furthermore the litigating party shall


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                  discuss  litigation  strategy  at  reasonable  times  with the
                  non-litigating  party  (but  shall not be bound to follow  any
                  recommendation of the non-litigating party) and shall keep the
                  non-litigating party informed of any actual or proposed change
                  in outside counsel used in respect of the said litigation.

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

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

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

3.3.     TRADEMARKS

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

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

                          CLAUSE 4 - COMPETING PRODUCTS

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

                     CLAUSE 5 - REGISTRATION OF THE PRODUCT

5.1.     Elan  shall  be  responsible  for the  compilation  and  filing  of the
         Regulatory  Filings in respect of the Product with the FDA and shall be


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         the holder of any FDA  Approvals  granted for the Product and the Party
         principally responsible for interaction with the FDA.

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

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

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

                CLAUSE 6 - MARKETING AND PROMOTION OF THE PRODUCT

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

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


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<PAGE>

         and Par or as otherwise  agreed by the  Parties.  Each Party shall bear
         the cost of its own travel expenses.

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

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

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

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

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

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

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



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<PAGE>

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

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

                        CLAUSE 7 - SUPPLY OF THE PRODUCT

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

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

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

7.4.     Within 120 days following the  submission of the  Regulatory  Filing to
         the FDA, Par shall  provide Elan with a forecast of Par's  requirements
         for the Product for the 12 month period  following the  anticipated FDA
         Approval.  The said forecast shall be updated monthly until the date on
         which Par places a firm order for Launch  Stocks.  Except as  otherwise
         provided  herein,  all forecasts made hereunder shall be made to assist
         Elan in  planning  its  production  and Par in planning  marketing  and
         sales.  Such forecasts shall not be binding purchase orders,  and shall
         be without  prejudice to Par's  subsequent firm purchase orders for the
         Product in accordance with the terms of this Agreement.

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

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

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



                                       12
<PAGE>

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

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

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

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

7.12.    After receipt of a Product  shipment,  Par shall  visually  inspect the
         Product  shipment  and  communicate  rejection  of all or  part of such
         shipment  as  appropriate  to Elan in writing.  The Parties  agree that
         Par's visual inspection  consists of (i) comparing the applicable order
         against the documentation  accompanying the shipment to verify that the
         delivery  date,  identity,  quantity  and exterior  shipment  labelling
         comply with the order and (ii) visually  inspecting the exterior of the
         Product  shipment  to verify  that the  shipment  appears to be in good
         condition.  Elan is to  provide  Par  with a copy  of a fully  executed
         Certificate  of Analysis for each batch of Product  shipped to Par. All
         claims for failure of any delivery of the Product to conform to Product
         Specifications  under Clause 11 shall be made by Par to Elan in writing
         within 45 days  following  delivery  except in the case of defects  not
         identifiable upon visual inspection.  Claims for defects not discovered
         during the visual inspection as set out above,  shall be made by Par to
         Elan in writing  within 30 days of  discovery.  Failure to make  timely
         claims in the manner  prescribed  shall  constitute  acceptance  of the
         delivery.

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

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





                                       13
<PAGE>

                         CLAUSE 8 - FINANCIAL PROVISIONS

8.1.     REGULATORY MANAGEMENT FEE

         In consideration of Elan's  undertaking in Clause 5.1 hereof, Par shall
         pay to Elan a monthly  payment of  [************]  for each of the next
         [************]  to support  required  interaction  by Elan with FDA for
         compilation  and  filing  of  the  Regulatory   Filings  and  regulated
         management activities, the first of which such payments shall be due on
         the date of acceptance of Elan's  application for Regulatory Filing for
         the Product by the FDA.

8.2.     MILESTONE PAYMENT

         Par shall pay to Elan a milestone  payment of  $1,000,000  [one million
         dollars]  upon the grant of FDA  Approval,  subject  to  adjustment  in
         accordance with Clause 8.5.

8.3.     PRICE OF PRODUCT:

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

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

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

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

8.4.     ALLOCATION

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

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

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



                                       14
<PAGE>

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

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

8.5.     ADJUSTMENT

         8.5.1.   In this Clause 8.5:

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

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

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

                 ---------------------------- ----------------------------------
                 PERIOD                       ADDITIONAL MILESTONE PAYMENT
                 ---------------------------- ----------------------------------
                 30 days beginning on the     $1,000,000 [one million dollars]
                 Relevant Date
                 ---------------------------- ----------------------------------
                 60 days beginning 30 days    $1,000,000 [one million dollars]
                 after the Relevant Date
                 ---------------------------- ----------------------------------
                 90 days beginning 90 days    $1,000,000 [one million dollars]
                 after the Relevant Date
                 ---------------------------- ----------------------------------

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

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

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



                                       15
<PAGE>

         8.5.4.   In the event  that there is a Period of  Exclusivity,  then in
                  addition to the payments due to Elan under Clause  8.5.2,  the
                  royalty payable to Elan under Clause 8.4 shall be increased as
                  follows:

                  8.5.4.1  if  the  Period  of  Exclusivity  is  not  less  than
                           [****************]     days     but     less     than
                           [****************]     days    in    duration,     to
                           [****************]  for the duration of the Period of
                           Exclusivity  (after  the end of which  such  increase
                           shall lapse);

                  8.5.4.2. if  the  Period  of  Exclusivity  is  not  less  than
                           [****************]     days    in    duration,     to
                           [****************]   for  the  entire  term  of  this
                           Agreement.

8.6.     FURTHER ADJUSTMENT

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

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

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

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

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



                     CLAUSE 9 - PAYMENTS, REPORTS AND AUDITS

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


                                       16
<PAGE>

         financial   officers  shall  agree  upon  the  precise  format  of  the
         Statement.

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

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

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

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

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

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



                                       17
<PAGE>

                      CLAUSE 10 - DURATION AND TERMINATION

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

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

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

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

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

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

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

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

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

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

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



                                       18
<PAGE>

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

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

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

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

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

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

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

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

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

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

         10.6.l.  any sums that were due from Par to Elan  under the  provisions
                  of Clause 8 or  otherwise  howsoever  prior to the exercise of
                  the right to  terminate  this  Agreement  as set forth  herein
                  shall be paid in full  within 30 days of  termination  of this
                  Agreement  and Elan  shall  not be  liable to repay to Par any
                  amount of money  paid or payable by Par to Elan up to the date
                  of the termination of this Agreement;

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

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

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



                                       19
<PAGE>

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

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

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

                       CLAUSE 11 - WARRANTY AND INDEMNITY

11.1.    Elan represents and warrants as follows;

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

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

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

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

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

11.2.    Par represents and warrants as follows;

         11.2.1.  Par  represents  and warrants that it has the sole,  exclusive
                  and  unencumbered  right to enter into this Agreement and that
                  it has not  granted any  obligations  to any third party which


                                       20
<PAGE>

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

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

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

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

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

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

11.5.    Par represents and warrants that:

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

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

11.6.    Indemnification

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


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<PAGE>

                  representations,  warranties,  covenants or other  obligations
                  hereunder,  or  from  information  supplied  by Par to Elan or
                  contained in regulatory filings or correspondence  prepared or
                  delivered by Par.

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

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

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

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

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

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

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

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

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

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


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<PAGE>

         THE RESPECTIVE  PARTIES,  THEIR EMPLOYEES OR AGENTS OR OTHERWISE EXCEPT
         FOR THIRD PARTY PRODUCT LIABILITY CLAIMS.

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

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

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

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

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

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

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

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

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



                                       23
<PAGE>

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

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

                      CLAUSE 13 - MISCELLANEOUS PROVISIONS

13.1.    SECRECY:

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

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

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

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

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

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



                                       24
<PAGE>

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

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

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

13.2.    ASSIGNMENTS/SUB-CONTRACTING:

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

13.3.    PARTIES BOUND:

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

13.4.    SEVERABILITY:

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

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



                                       25
<PAGE>

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

13.5.    FORCE MAJEURE:

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

13.6.    RELATIONSHIP OF THE PARTIES:

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

13.7.    AMENDMENTS:

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

13.8.    WAIVER:

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

13.9.    NO EFFECT ON OTHER AGREEMENTS:

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

13.10.   APPLICABLE LAW AND JURISDICTION:

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



                                       26
<PAGE>

13.11.   NOTICE:

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

                  Elan at

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

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

                  with a copy to

                  Lincoln House
                  Lincoln Place
                  Dublin 2
                  Ireland

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

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

                  Par at

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

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

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

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



                                       27
<PAGE>

13.12    SET-OFF

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



IN WITNESS of which the Parties have executed this Agreement.

Executed by PAR on April 26, 2001



By:  /s/ Kenneth I. Sawyer
     ---------------------------------

Name:  Kenneth I. Sawyer

Title:  Chairman & CEO



Executed by Elan on April 26, 2001



By:  /s/ Larry A. Stenson
     ---------------------------------

Name:  Larry Stenson

Title:  Director









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