EXHIBIT 10.25

                   AMENDED AND RESTATED DISTRIBUTION AGREEMENT

         This Amended and Restated Distribution Agreement (the "Agreement") is
entered into as of the 28th day of July, 1997 (the "Execution Date") by and
among SANO Corporation, a Florida corporation ("SANO"), Pharmaceutical
Resources, Inc., a New Jersey corporation ("PRI"), and Par Pharmaceutical, Inc.,
a New Jersey corporation ("PPI").

         WHEREAS, SANO, PRI and PPI have previously entered into that certain
Distribution Agreement as of the 24th day of February, 1994 (the "Original
Agreement"); and

         WHEREAS, SANO, PRI and PPI wish to amend and restate their agreement
with respect to the subject matter of the Original Agreement, and supersede the
Original Agreement in its entirety;

         NOW, therefore, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

<PAGE>

        CONFIDENTIAL INFORMATION OMMITTED AND FILED SEPARATELY WITH THE
                       SECURITIES AND EXCHANGE COMMISSION
                         ASTERIKS DENOTE SUCH OMMISSION

                                    ARTICLE I

                              TERMS AND CONDITIONS

         1.1      DEFINITIONS.  As used in this Agreement,  the following terms
shall have the meaning  ascribed to them below:

                  (a) "AFFILIATE," as to any Person, shall have the meaning set
forth in Rule 405 under the Securities Act of 1933.

                  (b) "COSTS" shall mean, with respect to production of a
Licensed Product, the cost of goods incurred by SANO in the production thereof
determined in accordance with generally accepted accounting principles applied
on a consistent basis, as determined by SANO's independent certified public
accountants; provided, however, that notwithstanding the foregoing, it being the
intent of the parties that Costs make SANO whole with respect to all reasonable
expenditures related to the Licensed Product, Costs shall include, without
limitation, (i) the delivered cost of all ingredients and other raw materials
used therein, (ii) a percentage of SANO's overall labor cost equal to the
portion which labor hours devoted to the Licensed Product's production bears to
total labor hours devoted to all SANO product production, (iii) packaging and
other direct manufacturing and quality control costs and (iv) ratably allocated
costs of marketing and promotion (if any), product liability insurance and
general overhead; provided, further, that, notwithstanding the foregoing, Costs
shall not include (i) any cost incurred by SANO in completing the Development
Program, (ii) any royalties or similar payments paid or payable by SANO with
respect to any Licensed Product, or (iii) any cost specifically related to the
distribution of the Licensed Product outside the United States; additionally,
(x) with respect to the transdermal nicotine Licensed Product (generic of
Habitrol(R)) described herein as Product B, Costs shall be reduced on a one-time
basis by [*****], (y) with respect to the transdermal

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nitroglycerin Licensed Product (generic of Nitro Dur(R)) described herein as
Product A, Costs shall be reduced on a one-time basis by the sum of the amount
set forth in Section 7.1 hereof as the Licensed Product Fee for such Licensed
Product and the amount set forth as an additional Licensed Product Fee for that
Licensed Product pursuant to Section 7.4 hereof, and (z) with respect to the
transdermal nitroglycerin Licensed Product (generic of Transderm Nitro(R))
described herein as Product C, Costs shall be reduced on a one-time basis by the
sum of the amount set forth in Section 7.1 hereof as the Licensed Product Fee
for such Licensed Product and the amounts set forth as an Additional Licensed
Product Fee for that Licensed Product pursuant to Section 7.4 hereof.

                  (c) "DEVELOPMENT PROGRAM" shall mean all actions, including,
without limitation, research conducted as a part of SANO's pre-clinical and
clinical activities, which is required or reasonably necessary to obtain all
requisite governmental approvals for the testing, manufacture and sale of
Licensed Products during the term of this Agreement.

                  (d) "EXCLUSIVE" shall mean, with respect to any right herein
granted, that no other party shall have such right, directly or indirectly.

                  (e) "GENERIC" shall mean, with respect to any drug or
product, that such drug or product does not comprise a substance or compound
that is covered by a claim under any unexpired U.S. Patent and/or which is not
entitled to any period of market exclusivity under the Orphan Drug Act or the
Drug Price Competition and Patent Term Restoration Act of 1984 according to 21
U.S.C.A. 355(j)(4)(D)(i)or (ii).

                  (f) "LICENSED PRODUCT" shall mean the Transdermal Generic
Drug Delivery Systems listed on Exhibit A hereto.

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                  (g) "NET SALES" shall have the meaning set forth in Exhibit B
hereto.

                  (h) "PERSON" shall include any individual, corporation, 
partnership, association, cooperative, joint venture, or any other form of
business entity recognized under the law.

                  (i) "SALE" shall mean any action involving selling.

                  (j) "SANO'S TECHNOLOGY" shall mean any and all data,
information, technology, know-how, process, technique, method, skill,
proprietary information, trade secret, development, discovery, and inventions,
owned or controlled by SANO and specifically related to a Transdermal Generic
Drug Delivery System for the Licensed Products now existing or developed in the
future under and during the course of the Development Program or otherwise, as
well as information related to the manufacture of Licensed Product(s) and
specifications and procedures related thereto.

                  (k) "SELL" shall mean to, directly or indirectly, sell,
distribute, supply, solicit or accept orders for, negotiate for the sale or
distribution of, or take any other action that is in furtherance of any of the
foregoing.

                  (l) "SPECIFICATIONS" shall mean the terms and conditions
applicable to the Licensed Product(s) as described in the abbreviated new drug
application ("ANDA") approved by the United States Food and Drug Administration
(the "FDA") covering the Licensed Product(s), as the same may be supplemented
from time to time.

                  (m) "STANDARD PACKAGING" shall mean a Licensed Product
packaged in individual pouches and in individual folding cartons consisting of
pouch units per carton reasonably specified by PPI and containing any labels and
labelling required therefor by the FDA and provided in packages that are
appropriate for regulatory and marketing purposes, and


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produced at a SANO facility in the United States, the grade and quality of the
labels, labelling and packaging materials being as specified in the ANDA
therefor.

                  (n) "TRANSDERMAL GENERIC DRUG DELIVERY SYSTEM" shall mean a
generic version of a branded transdermal adhesive patch.

                  (o) "UNITED STATES" shall mean the 50 states of the United
States of America, plus the District of Columbia, the Commonwealth of Puerto
Rico, the U.S. Virgin Islands, Guam, Samoa and any other territory which, on the
Execution Date, is a United States government protectorate wherein an ANDA
approved by the FDA is required to sell the Licensed Products in such territory.

                                   ARTICLE II

                             REPRESENTATIONS OF SANO

         2.1 SANO represents and warrants as follows:

                  2.1.1 ORGANIZATION, ETC. It is duly organized and validly
existing under the laws of the State of Florida, has all requisite power and
authority to conduct its business as now, and as proposed to be, conducted and
to execute, deliver and perform its obligations under this Agreement. This
Agreement has been duly authorized, executed and delivered by SANO and
represents a valid and binding obligation enforceable against SANO in accordance
with its terms.

                  2.1.2 NO CONFLICTS; CONSENTS. Execution and delivery hereof,
or performance by SANO hereunder, will not (a) violate or create a default under
(i) SANO's Articles of Incorporation or by-laws (true and correct copies of
which have been delivered to PPI), (ii) any mortgage, indenture, agreement, note
or other instrument to which it is a party or to which its assets are subject or
(iii) any court order or decree or other governmental directive or (b) result in


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the action of any lien, charge or encumbrance on any material portion of SANO's
assets, except as contemplated hereby.

                  2.1.3 SANO'S TECHNOLOGY. SANO's Technology is, to the best
knowledge of SANO, sufficient to enable SANO to complete the Development Program
as contemplated hereby. Except as set forth in Schedule 2.1.3, SANO has received
no notice, and is not aware, that any portion of SANO's Technology infringes
upon the rights of any other Person.

                  2.1.4 DEVELOPMENT PROGRAM. SANO has filed an ANDA with
respect to each of the Licensed Products and has no knowledge of any fact or
circumstance which is reasonably likely to prevent approval by the FDA, other
than general conditions related to the approval process; SANO does not hereby
represent or warrant that any Licensed Product will be approved for commercial
sale, or will ultimately be marketed.

                  2.1.5 INFORMATION. All data and other information relating
to SANO and/or the Licensed Products provided by SANO, or its agents, to PPI was
derived from SANO's records (which have been diligently, and to the best of
SANO's knowledge, accurately maintained in all material respects) and is an
accurate copy or summary thereof in all material respects.

                  2.1.6 EMPLOYEES. All key employees of SANO have executed
appropriate confidentiality agreements with SANO and assignments of intellectual
property rights in favor of SANO. All key employees of SANO have executed
appropriate non-compete agreements which, by their terms, extended at least
until December 31, 1996.

                  2.1.7 STATUS. SANO represents and warrants to PPI that, to
the best of its knowledge, information and belief, it is not prohibited by any
federal, state or local law, rule or regulation or by any order, directive or
policy of the United States government or any state or local government thereof
or any federal, state or local regulatory agency or authority having

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jurisdiction with respect to the distribution of pharmaceutical products within
its territorial jurisdiction from selling the Licensed Products within the
territorial jurisdiction of such government, regulatory agency or authority (on
the assumption that it holds whatever licenses are required for a foreign
corporation to carry on business generally within such jurisdiction) and that
SANO is not an Ineligible Person or Person from whom any United States federal,
state or local government, regulatory authority or agency which purchases
pharmaceutical products (including, without limitation, the federal Defense
Logistics Agency) will or may not purchase any products manufactured by it or
with whom it will or may not otherwise conduct business as a result its being
publicly listed or otherwise (except for the fact that it is a foreign
corporation).

                                   ARTICLE III

                               OBLIGATIONS OF SANO

         3.1 LEVEL OF EFFORT. SANO shall use its reasonable efforts,
including, without limitation, the employment of a sufficient number of
technically qualified officers and employees, to attempt to complete the
Development Program for each Licensed Product.

         3.2 PROGRESS REPORTS. SANO shall, on a monthly basis, by the tenth
day of each month, inform PPI in writing of the progress of the Development
Program and the commencement of any project within the Development Program.

         3.3 PROGRAM UPDATES. On a date which shall be approximately three (3)
months after the date hereof, and at three-month intervals thereafter,
representatives of SANO and of PPI shall meet to review the progress and status
of the Development Program then underway. At such meetings, PPI shall have the
right to request the allocation of priorities to the various projects comprising
the Development Program and to suggest procedures for their implementation,
which requests shall be reasonably considered by SANO.

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<PAGE>

         3.4 Intentionally omitted.

         3.5 SUPPLY AND USE OF INFORMATION. The parties shall, as promptly as
possible, provide to each other any information that comes to the knowledge of a
responsible officer of any party relating to any adverse reaction or other
adverse event occasioned during research on, development or use of a Licensed
Product. Any provision of information to PPI shall be subject to the
confidentiality obligations of Section 14.4.

         3.6 CLINICAL TESTING. All pre-clinical, clinical and post-clinical
testing and stability testing and other actions, including but not limited to
completion of the Development Program, required to obtain all requisite
government approvals in the United States for the manufacture and sale of each
Licensed Product shall be conducted by SANO, at its expense unless otherwise set
forth herein.

         3.7 GOVERNMENTAL APPROVALS. SANO shall file all appropriate requests
and other filings with the appropriate government agencies within the United
States in order to seek to obtain all requisite approvals for the testing,
manufacture, sale and use of the Licensed Product(s). The decision regarding the
timing of said filings shall be in SANO's sole discretion. SANO shall have full
and complete ownership of all governmental approvals relating to Licensed
Products. SANO shall provide PPI with appropriate sections of and a right of
reference to any application for registration in the United States except with
respect to those aspects of any formulation or manufacturing process that is
reasonably deemed proprietary by SANO.

         3.8 OTHER PRODUCTS. SANO shall reasonably apportion or allocate its
resources among its products to accommodate the Development Programs for
Licensed Products.

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<PAGE>

         3.9 TITLE. SANO will protect and defend its rights to all Licensed
Products and SANO's Technology, and will indemnify and hold PPI, PRI and their
Affiliates, harmless, from and against any claims of infringement or other claim
that SANO is not the owner thereof.

         3.10 SUBSIDIARIES AND AFFILIATES. SANO will cause its subsidiaries
and affiliates to comply with the restrictions and limitations imposed on SANO
hereunder with respect to Licensed Products.

                                   ARTICLE IV

                              EXCLUSIVE DISTRIBUTOR

         4.1 Subject to the provisions of this Agreement, SANO hereby appoints
PPI as the exclusive distributor of the Licensed Products for the United States
and PPI hereby accepts such appointment and agrees to act as such exclusive
distributor. The rights and licenses granted to PPI under this Agreement shall
henceforth be referred to as "the Right." PPI acknowledges that it has no rights
with respect to SANO's Technology or the Licensed Products, except for the
distribution rights with respect to the Licensed Products as herein described.

         4.2 SANO, or PPI, as applicable, covenants and agrees that, during
the term of this Agreement or until the Right (or its exclusive nature) is
terminated in accordance with the provisions hereof:

                  4.2.1 SANO will refer to PPI all inquiries concerning
potential purchases of Licensed Products received by it from Persons located in
the United States or from Persons outside the United States if SANO knows or
reasonably suspects that such Person intends to resell or export the Licensed
Product to the United States;

                  4.2.2 SANO will not, directly or indirectly, knowingly sell
any Licensed Product in the United States nor to any Person outside of the
United States if SANO reasonably


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expects that such Person intends to resell or export the Licensed Product to the
United States and, if notified by PPI that one of SANO's customers is selling
the Licensed Product in the United States in any material respect, SANO shall
either cease to supply such customer or obtain (and enforce, if necessary) an
undertaking from such customer not to sell the Licensed Product in the United
States (unless SANO is precluded from taking such action under applicable law).
PPI acknowledges that SANO will use reasonable efforts to prevent the sale of
Licensed Products in United States by Persons other than PPI, but shall not be
held responsible if, despite such efforts, it is unsuccessful in so doing
(subject to its obligations above to cease to supply or to obtain and enforce
the undertaking as and to the extent contemplated above).

                  4.2.3 PPI shall not, and shall not authorize, permit or
suffer any of its Affiliates to, purchase any Transdermal Generic Drug Delivery
System which has the same strength, contains the same active ingredient and is
for the same indication as, and is competitive with, any of the Licensed
Products (a "Competitive Product") for distribution, sale or use in the United
States from any Person other than SANO. PPI shall not, and shall not authorize,
permit or suffer any of its Affiliates to, seek regulatory approval in the
United States for any Competitive Product or to, directly or indirectly,
manufacture, sell, handle, distribute or be financially interested (except as a
stockholder with not greater than a 5% interest in a public company) in the
sales of such products within the United States for its own account or for the
account of any other Person as agent, distributor or otherwise.

                  Notwithstanding the foregoing, if PPI or PRI becomes an
Affiliate of an entity (the "Merger Partner") as a result of a merger,
acquisition, or other similar extraordinary corporate transaction, and such
Merger Partner is engaged in the manufacture or distribution of a Competitive
Product, PPI shall so notify SANO and shall offer (the "Offer") to sell, assign
and


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transfer to SANO the Right with respect to the Licensed Product with which
such Competitive Product is competitive in exchange for an amount equal to the
Licensed Product Fee (as hereinafter defined) for such Licensed Product. If,
within thirty (30) days after its receipt of the Offer, SANO accepts the Offer,
SANO shall, within fifteen (15) days of such acceptance, deliver to PPI, against
delivery of appropriate instruments of release and transfer, its promissory note
in form and substance reasonably acceptable to PPI, payable to the order of PPI,
in the principal amount of the Licensed Product Fee, bearing interest at the
prime rate of Citibank, N.A., as announced from time to time at its offices in
New York City (the "Prime Rate"), with interest and principal payable on the
first anniversary of the date of delivery of such note. From and after the date
of delivery of such note, PPI shall have no rights with respect to the relevant
Licensed Product and SANO shall be free to grant any rights related thereto to a
third party or to retain such rights for itself. If SANO declines to accept the
Offer or fails to accept the Offer within the aforesaid 30-day period, this
Agreement shall remain in full force and effect, except that the provisions of
this Section 4.2.3 shall not apply to that Competitive Product. PPI shall notify
SANO promptly if any Merger Partner has a Competitive Product.

                  4.2.4 PPI shall not, and shall not authorize, permit or
suffer any of its Affiliates to, directly or indirectly, sell any Licensed
Product to any Person outside of the United States, nor to any Person in the
United States if PPI or any of its Affiliates reasonably expects that such
Person intends, directly or indirectly, to sell or export the Licensed Product
outside of the United States. If PPI is notified by SANO that one of its
customers or a customer of PPI or any of its Affiliates is exporting the
Licensed Product from the United States in any material respect PPI shall (or
shall cause its Affiliates to) either cease to supply such customer or obtain
(and enforce, if necessary) an undertaking from such customer not to sell the
Product outside of the United


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States (unless PPI or any such Affiliate is precluded from taking such action
under applicable law). SANO acknowledges that PPI will use (and will cause its
Affiliates to use) reasonable efforts to prevent its customers from exporting
any Licensed Product out of the United States but shall not be held responsible
if, despite such efforts, it is unsuccessful in so doing (subject to its
obligations above to cease to supply or to obtain and enforce the undertaking as
and to the extent contemplated above).

                  4.2.5 PPI shall refer to SANO any inquiry or order for
Licensed Products which PPI or any of its Affiliates may receive from any Person
located outside of the United States and from any Person located in the United
States where PPI or any of its Affiliates knows or has reason to suspect that
such Person intends to export the Licensed Products outside of the United
States.

                  4.2.6 The parties acknowledge, agree and declare that the
relationship hereby established between PPI and SANO is solely that of buyer and
seller, that each is an independent contractor engaged in the operation of its
own respective business, that neither party shall be considered to be the agent
of the other party for any purpose whatsoever, except as otherwise expressly
indicated in this Agreement, and that, except as otherwise expressly indicated
in this Agreement, neither party has any authority to enter into any contract,
assume any obligations or make any warranties or representations on behalf of
the other party. Nothing in this Agreement shall be construed to establish a
partnership or joint venture relationship between or among the parties.

                  4.2.7 SANO shall not engage in marketing and promotion of the
Licensed Products in the United States unless reasonably requested to do so by
PPI.

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<PAGE>

                                    ARTICLE V

                   REPRESENTATIONS OF PPI AND PRI; OBLIGATIONS

         5.1  PPI and PRI jointly and severally represent, warrant and covenant
as follows:

                  5.1.1 ORGANIZATION, ETC. They are duly organized and validly
existing under the laws of the State of New Jersey, have all requisite power and
authority to conduct their business as now and as proposed to be conducted and
to execute, deliver and perform their obligations under this Agreement. This
Agreement has been duly authorized, executed and delivered by PPI and PRI and
represents a valid and binding obligation enforceable against PPI and PRI in
accordance with its terms.

                  5.1.2 NO CONFLICTS; CONSENTS. Execution and delivery hereof,
or performance by either PPI or PRI hereunder, will not (a) violate or create a
default under (i) PPI's and PRI's Certificates of Incorporation or by-laws (true
and correct copies of which have been delivered to SANO), (ii) any mortgage,
indenture, agreement, note or other instruments to which either is a party or by
which either's assets are subject or (iii) any court order or decree or other
governmental direction or (b) result in the action of any lien, charge or
encumbrance on any material portion of PPI's and PRI's assets.

                  5.1.3 INFORMATION. All data and other information relating
to PPI and PRI provided to SANO by PPI and PRI, or their agents, was derived
from PPI's and PRI's records (which have been diligently maintained) and is an
accurate copy or summary thereof in all material respects.

                  5.1.4 SUFFICIENCY. PPI maintains and agrees that it will
continue to maintain those places of business and equipment to be used in
storing and shipping the Licensed Products in accordance with Current Good
Manufacturing Practices of the FDA and all other applicable


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requirements of the FDA (as the same may be modified from time to time). PPI
hereby further represents and warrants that it currently has and/or has
available to it and maintains and agrees to continue to have and/or to have
available to it and maintain an adequate marketing organization and qualified
sales persons to promote the sale of the Licensed Products in the United States.

         5.2 PPI shall purchase the Licensed Products from SANO as contemplated
in Article VI hereof.

         5.3 PPI will use its reasonable efforts (utilizing its marketing,
distribution and management systems and those of its Affiliates) to develop a
market for and sell the Licensed Products in the United States, such efforts to
be not less rigorous than those efforts used by PPI in relation to its leading
or principal products. PPI shall devote particular attention to the marketing
and sale of the Licensed Products and shall use its resources in a way it deems
most effective in promoting the Licensed Products given market conditions.

         5.4 PPI shall have sole discretion in setting the sales price for the
sale of the Licensed Products, provided that PPI shall not specifically discount
the price of the Licensed Products for the benefit of PPI or any of its
Affiliates' other products or to otherwise use the Licensed Products as a loss
leader or incentive to procure the sale of PPI's or any of its Affiliates' other
products. Rebate and other discount programs (excluding any program where the
price of the Licensed Products are discounted primarily for the benefit of
enhancing the sale of PPI's or any of its Affiliates' other products) generally
available to PPI's customers on the purchase of pharmaceutical products shall
not be prohibited by this Section 5.4, provided that such programs shall be in
accordance with industry standards for comparable products and shall be designed
to promote the sale of the Licensed Products and not other products.

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         5.5 PPI shall comply with all applicable laws, rules and regulations
relating to transporting, storing, advertising, promoting and selling of the
Licensed Products within the United States and shall assume sole responsibility
for all credit risks and collection of receivables with respect to Licensed
Products sold by it and its Affiliates, and, except as expressly provided
herein, in respect of all dealings between itself (and its Affiliates) and its
(and their) customers.

         5.6 PPI shall notify SANO promptly upon becoming aware of any adverse
information relating to the safety or effectiveness of a Licensed Product and
shall consult from time to time with regard to competition or potentially
competitive products.

         5.7 PPI hereby further represents and warrants to SANO that, to the
best of its knowledge, information and belief, neither it nor any of its
Affiliates is prohibited by any federal, state or local law, rule or regulation
or by any order, directive or policy of the United States government or any
state or local government thereof or any federal, state or local regulatory
agency or authority having jurisdiction with respect to the distribution of
pharmaceutical products within its territorial jurisdiction from selling the
Licensed Products within the territorial jurisdiction of such government,
regulatory agency or authority and that neither PPI nor any of its Affiliates is
a Person who, by public notice, is listed by a United States federal agency as
debarred, suspended, proposed for debarment or otherwise ineligible for federal
programs in the United States (an "Ineligible Person") or Person from whom any
United States federal, state or local government, regulatory authority or agency
which purchases pharmaceutical products (including, without limitation, the
federal Defense Logistics Agency) will or may not purchase any products or with
whom it will or may not otherwise conduct business as a result of any of its
Affiliates or PPI being publicly listed or otherwise.

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                                   ARTICLE VI

                                    DELIVERY

         6.1 Licensed Products shall be made available to PRI for pickup ready
for shipment in Standard Packaging, or as otherwise permitted by the FDA, at
SANO's facilities located in Plantation, Florida, or such other facilities in
the continental United States as SANO may utilize with the consent of PPI, which
consent shall not be unreasonably withheld or delayed, and SANO shall use its
reasonable efforts to make available to PPI sufficient quantities of the
Licensed Products to satisfy orders for the Licensed Products. SANO shall be
solely responsible for the contents of the labels and artwork on all finished
labelled products sold by PRI and its Affiliates. SANO shall provide all
Standard Packaging for the Licensed Products.

         6.2 To assist SANO in scheduling production for the manufacture of
the Licensed Products, PPI shall provide to SANO, quarterly, a nine month
rolling forecast of its requirements for a Licensed Product. The first forecast
shall be provided by PPI to SANO approximately six months prior to the
anticipated market launch of a Licensed Product, as reasonably estimated by the
parties, and thereafter shall be provided to SANO on or before the 20th day of
the first month of each successive quarterly period (to forecast the
requirements for the next nine succeeding calendar months). It is understood and
agreed that all forecasts are estimates only and PPI shall only be bound to
purchase the Licensed Products pursuant to purchase orders submitted by it to
SANO. All purchase orders shall be for minimum batch size quantities reasonably
agreed by the parties and shall anticipate an order/production/availability
cycle of approximately twelve weeks during the first two contract years (as
defined below) of this Agreement and an order/production/availability cycle of
approximately sixteen weeks thereafter.

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         6.3 PPI shall arrange for shipping and/or transportation of the
Licensed Products from SANO's facility to PPI's Spring Valley, New York facility
and pay all shipping and related costs. Risk of loss and title to the Licensed
Product(s) shall pass to PPI upon pick-up of the Licensed Products by, on behalf
of or for the account of PPI at SANO's facility.

                  6.3.1 SANO shall promptly notify PPI by both fax and
telephone that any order (or part thereof acceptable to PPI) is available for
pick-up at SANO (this notice shall hereafter be referred to as the "Availability
Notice").

                  6.3.2 PPI shall use reasonable and good faith efforts to
pick up the Licensed Products that are the subject of an Availability Notice
within ten (10) business days of receipt of the Availability Notice; provided
that, if such pickup has not occurred on or prior to the expiry of such ten day
period, PPI shall, for purposes of its payment obligations to SANO pursuant to
Section 7.2 below, be deemed to have picked up the Licensed Products which are
the subject of the Availability Notice on the last business day of such ten-day
period. If the Licensed Products in question have not been picked up by or on
behalf of PPI within twenty (20) business days of an Availability Notice, SANO
may, but shall not be obligated to, cause the Licensed Products to be delivered
to PPI's Spring Valley, New York, facility by truck or other overland delivery
at PPI's sole cost and expense and risk of loss and title to the Products shall
pass to PPI upon pickup of the Products at SANO's facility in the same manner as
if the pickup had been effected by PPI itself, provided that SANO shall provide
for the Licensed Products to be insured during transit in a commercially
reasonable manner at PPI's sole cost and expense.

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        CONFIDENTIAL INFORMATION OMMITTED AND FILED SEPARATELY WITH THE
                       SECURITIES AND EXCHANGE COMMISSION
                         ASTERIKS DENOTE SUCH OMMISSION


                                   ARTICLE VII

                           PAYMENTS AND PAYMENT TERMS

         7.1 LICENSED PRODUCT FEE. As consideration for the rights herein
granted, upon execution hereof, PRI shall pay to SANO a fee (each, a "Licensed
Product Fee") as follows:

                  Product A (described in SANO's pending ANDA for transdermal
         nitroglycerin--generic to Nitro Dur(R))---[*****]

                  Product B (described in SANO's pending ANDA for transdermal
         nicotine--generic to Habitrol(R))---[*****]

                  Product C (described in SANO's pending ANDA for transdermal
         nitroglycerin--generic to Transderm Nitro(R))---[*****]

         7.2 PRICE. The price to PRI for each order, or part thereof reasonably
acceptable to PRI as contemplated in Section 8.2(d), of Licensed Products made
available to PRI hereunder shall be SANO's Costs related to such order or part
thereof. PPI shall also pay to SANO any applicable federal or state sales or
excise tax payable on the purchase of such Licensed Products, which payment
shall be remitted with the payment of the price as contemplated in Section 7.3
below and upon payment thereof by PPI to SANO, SANO shall be solely responsible
for remitting the amount so paid on account of such taxes to the relevant
governmental collecting authorities. Promptly upon PPI's request, SANO shall
provide PPI with reasonable evidence of such direct costs and applicable taxes
and payment of such taxes.

         7.3 PAYMENT TERMS. Payment for each order of Licensed Products made
available by SANO for pick-up by PPI shall be due within 35 days of pick-up
(whether actual or deemed pursuant to Section 6.3.2) by PPI at SANO's facility.

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        CONFIDENTIAL INFORMATION OMMITTED AND FILED SEPARATELY WITH THE
                       SECURITIES AND EXCHANGE COMMISSION
                         ASTERIKS DENOTE SUCH OMMISSION


         7.4 ADDITIONAL LICENSED PRODUCT FEE. Upon request by SANO, PPI will 
remit up to an aggregate of [*****] to fund skin irritation studies required by
the FDA for any of the Licensed Products. Such request shall specify the amount
to be paid for the specific Licensed Product which is the subject of such study
or studies, and the amount so paid by PPI shall be deemed an addition to and
part of the Licensed Product Fee for such Licensed Product.

         7.5 ADDITIONAL CONSIDERATION. PPI shall pay to SANO the Additional
Consideration described in Section 11.1 and Schedule B hereto, in accordance
with the provisions of said Section 11.1.

         7.6 PAYMENTS BY SANO. As consideration for prior payments by PPI and
for PPI's and PRI's agreements set forth herein, upon execution hereof, SANO
will (i) pay PPI [*****], and (ii) deliver its promissory note in the form
attached hereto as Schedule C.

                                  ARTICLE VIII

                               PRODUCT ACCEPTANCE

         8.1 SANO shall manufacture the Licensed Products and make them
available for pickup by PPI in accordance with all applicable laws, rules and
regulations including, without limitation, the Specifications applicable to the
Licensed Product in question, Current Good Manufacturing Practices of the FDA
(as the same may change from time to time) and all other applicable requirements
of the FDA and other governmental authorities having jurisdiction.

         8.2 All Licensed Products made available for pick up by PPI shall be
accompanied by quality control certificates of analysis signed by a duly
authorized laboratory official of SANO confirming that each batch of Licensed
Product covered by such certificate meets its release


                                       19
<PAGE>

Specifications and shall be deemed accepted by it unless PPI, acting reasonably
and in good faith, shall give written notice of rejection (hereafter referred to
as a "Rejection Notice") to SANO within 35 days after pick up of the Licensed
Products by, on behalf of or for the account of PPI at SANO's facility.

                  (a) The Rejection Notice shall state in reasonable detail
(sufficient to enable SANO to identify the nature of the problem and the tests
or studies to be conducted by or on its behalf to confirm or dispute same) the
reason why the Licensed Products are not acceptable to PPI. If the Licensed
Products meet the applicable provisions of Section 8.1 and are in quantities
specified in a purchase order, PPI shall not be entitled to reject them. Any
Rejection Notice shall be accompanied by copies of all written reports relating
to tests, studies or investigations performed to that date by or for PPI on the
Licensed Product batch rejected.

                  (b) Upon receipt of such Rejection Notice, SANO may require
PPI to return the rejected Licensed Products or samples thereof to SANO for
further testing, in which event such Licensed Products or samples thereof, as
the case may be, shall be returned by PPI to SANO or, at SANO's direction, at
SANO's expense. If it is later determined by the parties or by an independent
laboratory or consultant that PPI was not justified in rejecting the Licensed
Products or that PPI or its Affiliates were the cause of or were responsible for
the problem, PPI shall reimburse SANO for the costs of the return, as well as
any other costs or expenses incurred by SANO as a result of the rejection or
return.

                  (c) PPI's test results or basis for rejection shall be
conclusive unless SANO notifies PPI, within 30 days of receipt by SANO of the
rejected Licensed Products or samples or such longer periods of time as may be
reasonable in the circumstances to enable SANO to conduct (and receive the
results of) the appropriate tests, studies or investigations which SANO


                                       20
<PAGE>

should reasonably conduct to confirm the problem in question and to identify the
source thereof, that it disagrees with such test results or its responsibility
for the problem in question. In the event of such a notice by SANO,
representative samples of the batch of the Licensed Product in question shall be
submitted to a mutually acceptable independent laboratory or consultant (if not
a laboratory analysis issue) for analysis or review, the costs of which shall be
paid by the party that is determined by the independent laboratory or consultant
to have been responsible for the rejection.

                  (d) If a Licensed Product is rejected by PPI, PPI's duty to
pay the amount payable to SANO pursuant to Section 7.2 hereof in respect of the
rejected Licensed Product shall be suspended until such time as it is determined
(I) by an independent laboratory or consultant that the Licensed Product in
question should not have been rejected by PPI or (II) by the parties or by any
arbitration conducted pursuant hereto or by a final order of a court of
competent jurisdiction (which is not subject to further appeal) that any act or
omission of, on behalf of or for which PPI or its Affiliates is responsible was
the cause of the problem that was the basis for the rejection. If only a portion
of an order is rejected, only the duty to pay the amount allocable to such
portion shall be suspended.

         8.3 In the event any Licensed Products are appropriately rejected by
PPI (being Licensed Products that do not meet the applicable provisions of
Section 8.1 other than as a result of any act or omission by PPI or its
Affiliates), SANO shall replace such Licensed Products with conforming goods or,
if requested by PPI, shall provide a credit to PPI for the amount, if any,
previously paid by PPI to SANO on account of the Licensed Products in question.
The credit shall be provided by SANO to PPI immediately following the expiry of
the period during which SANO may dispute a Rejection Notice as contemplated in
Section 8.2(c) above (unless the


                                       21
<PAGE>

Rejection Notice is disputed by SANO, in which event such credit shall be given
only if the dispute is resolved in favor of PPI). Replacement Licensed Products,
as aforesaid, shall be delivered to PPI at no cost to PPI if PPI has already
paid for the rejected Licensed Products and not received a credit therefor, as
aforesaid. All delivery costs, including insurance, incident to the return of
Licensed Products to SANO and delivery of the replacement Licensed Products to
PPI's Spring Valley facility shall be paid by SANO, unless the rejection is
determined not to have been appropriately rejected, in which case the last
sentence of Section 8.2(a) shall apply.

                                   ARTICLE IX

                             RETURNS AND ALLOWANCES

         9.1 RETURNS. If PPI, acting reasonably and in good faith, accepts
from a customer a return of a Licensed Product and issues to such customer a
credit for the invoice price thereof, PPI may debit against the amount of
Additional Consideration, as hereinafter defined, due to SANO with respect to
Net Sales, as hereinafter defined, in the month in which such return occurs, any
Gross Profit, as hereinafter defined, previously paid, credited or due to SANO
in respect of the sale of such returned Licensed Product.

         9.2 HANDLING OF RETURNS.

                  (a) In the event any Licensed Product is returned to PPI by
its customers because the Licensed Product is alleged to be defective and PPI
reasonably believes that such defect is due to the fault of SANO, PPI shall
notify SANO within ten (10) working days of any such return and provide or make
available to SANO such samples (if available) and other information concerning
the returned Licensed Product so as to allow SANO to test and evaluate the
allegedly defective Licensed Product. PPI shall retain a sufficient number of
samples of the allegedly defective Licensed Product so that additional samples
are available at a later date


                                       22
<PAGE>

should additional testing be required by an independent testing laboratory as
described in Section 9.3(b) below, or by PPI or SANO for their own purposes. If
not enough samples exist to be so divided, then the parties shall confer and
reach agreement as to the handling of any available samples.

                  (b) SANO shall complete its review and evaluation of the
returned Licensed Product within twenty (20) business days of receiving the
returned Licensed Product from PPI or such longer period of time as may be
reasonable in the circumstances to enable SANO to conduct or cause to be
conducted such tests, studies or investigations (and to receive the results
therefrom) as may be required to confirm or dispute the existence of the problem
or to identify the cause or source thereof.

         9.3 COSTS AND CREDITS.

                  (a) If SANO concludes or it is otherwise determined pursuant
to Section 9.3(b) hereof that the returned Licensed Product is defective due to
the fault of SANO:

                           (i) any replacement Licensed Product to be provided
         by SANO in respect of the returned Licensed Product shall be made
         available to PPI without charge or appropriate credit shall be given
         therefor (giving account to any adjustment made pursuant to Section 9.1
         hereof);

                           (ii) all delivery costs, including insurance,
         incident to the delivery of the replacement Licensed Products to PPI's
         Spring Valley facility shall be paid by SANO or appropriate credit
         shall be given therefor; and

                           (iii) SANO shall provide a credit to PPI for the
         reasonable costs incurred by PPI (or where the duty has been performed
         by an Affiliate, pursuant to the


                                       23
<PAGE>

         provisions of this Agreement, for the reasonable costs incurred by
         such Affiliate) in respect of the defective Licensed Product.

                  (b) If SANO asserts that the returned Licensed Product is
defective due primarily to any act or omission of PPI or its Affiliates or any
agents or other persons acting on their behalf as aforesaid, then representative
samples of the Licensed Products shall be submitted to a mutually acceptable
independent laboratory or consultant (if not a laboratory analysis issue) for
analysis or review, the costs of which shall be paid by the party determined by
the independent laboratory or consultant to have been responsible.

                  (c) If it is determined in accordance with Section 9.3(b)
above that any such defect is primarily due to any act or omission by PPI, then
no credit or other payment of costs shall be due from SANO, and PPI shall
reimburse SANO for all costs and expenses it incurred in connection with the
return and investigation.

                  (d) If it is determined in accordance with Section 9.3(b)
above that no such defect exists or, if existing, cannot be attributable
primarily to an act or omission of either party, then any replacement Licensed
Product in respect of the returned Licensed Product shall be made available to
PPI without additional charge or appropriate credit, if any, shall be given
therefor, but no other credits or payments of costs shall be due from SANO.

         9.4 PPI acknowledges that the Licensed Products may be of a
perishable nature and that the Licensed Product must be stored and shipped in
accordance with the Specifications applicable thereto (to the extent disclosed
in writing to PPI or its Affiliates) or the conditions, if any, set forth on its
package label.

         9.5 PPI agrees to notify SANO of any customer complaints with respect
to the quality, nature or integrity of a Licensed Product or alleged
adverse-drug experiences ("ADE")


                                       24
<PAGE>

within five (5) working days of their receipt by PPI and of any PPI or FDA
complaints within 24 hours, except on weekends and holidays. SANO shall have the
sole and primary obligation to file any required adverse experience report with
FDA. SANO shall also be responsible for maintaining complaint files as required
by FDA regulations. SANO agrees to investigate and respond in writing to any
complaint or ADE forwarded to it by PPI promptly and in no event later than 30
days after receipt of the ADE or complaint from PPI (or such longer period as
may be required in the circumstances to enable SANO to conduct such tests,
studies or investigations as may be reasonably required [and to receive the
results therefrom] to enable SANO to appropriately respond). SANO shall provide
PPI with a copy of any correspondence, reports, or other documents relating to a
complaint or ADE within a reasonable period following generation of such
document by SANO.

         9.6 The provisions of this Article 9 shall survive the termination or
expiration of this Agreement.

                                    ARTICLE X

                     DAMAGES, INDEMNIFICATION AND INSURANCE

         10.1 Subject to the limitations set forth in this Article X and to
the other provisions of this Agreement, SANO, on the one hand, and PPI, on the
other hand, covenant and agree to indemnify and save harmless the other of them
from and against any and all claims, demands, actions, causes of action, suits,
proceedings, judgments, damages, expenses (including reasonable attorney fees
and expenses), losses, fines, penalties and other similar assessments (the
"Damages") relating to or arising out of a breach by any such party of any of
its representations, warranties, covenants or agreements contained herein;
provided that, except where the breach arises out of a representation or
warranty made by a party in this Agreement being intentionally


                                       25
<PAGE>

false or inaccurate, or constitutes a willful material breach by a party of any
of its duties or obligations hereunder, the claim of an aggrieved party for
Damages arising out of the breach shall be limited to claiming the amounts owing
or payable to it in accordance with the provisions of this Agreement and any
out-of-pocket costs and expenses (including amounts paid or payable by it to
third parties, other than re-procurement costs [except to the extent
contemplated in Section 14.3 hereof] which it has incurred and the aggrieved
party shall not be entitled to recover from the defaulting or breaching party
any lost profits or consequential or punitive damages, including loss or damage
to its goodwill or reputation. For purposes of this Agreement where PPI is in
breach of its duties or obligations hereunder and such duties or obligations, if
delegated by PPI to any of its Affiliates, could reasonably be performed by such
Affiliate and PPI has either not delegated such duty or obligation to such
Affiliate or such Affiliate has either refused to perform or willfully breached
such duty or obligation then PPI shall be deemed to have willfully breached such
duty or obligation hereunder. Similarly, whenever in this Agreement PPI is
required to cause any of its respective Affiliates to do or to refrain from
doing any thing herein provided and such Affiliate refuses to do or refrain from
doing such thing or otherwise willfully breaches the provision herein
contemplated (on the assumption that such Affiliate were bound by the provision
herein contemplated as if a signatory hereto) then PPI will be deemed to have
willfully breached the provision of this Agreement in question.

         10.2 In the event that the release of a Licensed Product by PPI or
its Affiliates in the United States results in a third party claim:

                  (a) to the extent that the Damages awarded or incurred
relate to or arise out of the safety or effectiveness of the Licensed Product or
the manufacturing, packaging, labelling,


                                       26
<PAGE>

storage or handling of the Product by SANO, SANO shall be responsible therefor
and shall indemnify and hold PPI harmless from and against all such damages; and

                  (b) to the extent that the Damages awarded or incurred
relate to or arise out of the transportation, storage, handling or selling of
the Licensed Product by PPI or its Affiliates, then PPI shall be responsible
therefor and shall indemnify and hold SANO harmless from and against all such
damages.

         Upon the assertion of any third party claim against a party hereto that
may give rise to a right of indemnification under this Agreement, the party
claiming a right to indemnification (the "Indemnified Party") shall give prompt
notice to the party alleged to have the duty to indemnify (the "Indemnifying
Party") of the existence of such claim and shall give the Indemnifying Party
reasonable opportunity to control, defend and/or settle such claim at its own
expense and with counsel of its own selection; provided, however, that the
Indemnified Party shall, at all times, have the right fully to participate in
such defense at its own expense and with separate counsel and, provided,
further, that both parties, to the extent they are not contractually or legally
excluded therefrom or otherwise prejudiced in their legal position by so doing,
shall cooperate with each other and their respective insurers in relation to the
defense of such third party claims. In the event the Indemnifying Party elects
to defend such claim, the Indemnified Party may not settle the claim without the
prior written consent of the Indemnifying Party. The Indemnifying Party may not
settle the claim without the prior written consent of the Indemnified Party
unless, as part of such settlement, the Indemnified Party shall be
unconditionally released therefrom or the Indemnified Party otherwise consents
thereto in writing. If the Indemnifying Party shall, within a reasonable time
after such notice has been given, fail to defend, compromise or settle such
claim, then the Indemnified Party shall have the right to defend, compromise or
settle such


                                       27
<PAGE>

claim without prejudice to its rights of indemnification hereunder.
Notwithstanding the foregoing, in the event of any dispute with respect to
indemnity hereunder, each party shall be entitled to participate in the defense
of such claim and to join and implead the other in any such action.

         In addition to the foregoing, SANO will defend, at its sole cost and
expense, its rights with respect to the Licensed Products and PPI's rights to
distribute the Licensed Products hereunder against any claim, action, suit or
proceeding ("Action") by any third party asserting prior or superior rights with
respect to the Licensed Product, product infringement or similar claims (other
than as may be based on acts of PPI not contemplated herein or authorized
hereby) and shall indemnify and hold PPI and its affiliates harmless from the
cost of the defense thereof. PPI shall, at all times, have the right fully to
participate in such defense at its own expense. SANO shall control such defense
and shall, in its reasonable discretion, defend or settle such Action; provided
that, notwithstanding the foregoing SANO shall not enter into any settlement or
compromise of any such Action which requires PPI or any of its Affiliates to
make payments of any kind without the prior written consent of PPI or an
unconditional release of PPI and its Affiliates with respect to the subject
matter of such Action. The provisions of this paragraph should not be construed
as requiring SANO to bear any damages, judgments or other liabilities entered
against PPI in any such Action, provided that the foregoing shall not be
construed as or deemed a waiver of any rights PPI may have against SANO as a
result of such Action hereunder, at law or otherwise, and all of such rights, if
any, are expressly reserved.

         10.3 INSURANCE. Each of SANO and PPI shall carry product liability
insurance in an amount at least equal to Ten Million Dollars ($10,000,000) with
an insurance carrier reasonably acceptable to the other party, such insurance to
be in place at times reasonably acceptable to the


                                       28
<PAGE>

parties, but not later than the date of the first commercial sale of a Licensed
Product. Each party shall promptly furnish to the other evidence of the
maintenance of the insurance required by this Section 10.3 and shall name the
other as an "additional insured" under such insurance policy. Each party's
coverage shall (i) include broad form vendor coverage and such other provisions
as are typical in the industry and (ii) name the other party as an additional
insured thereunder. SANO shall carry clinical testing insurance in an amount and
at times reasonably acceptable to the parties.

         10.4 SURVIVAL. The provisions of this Article X shall survive the
termination or expiration of this Agreement, provided that the requirement to
maintain the insurance contemplated in Section 10.3 above shall only survive for
a period of 36 months from the effective date of termination or expiration of
this Agreement.

                                   ARTICLE XI

              ADDITIONAL CONSIDERATION, REPORTING AND VERIFICATION

         11.1 ADDITIONAL CONSIDERATION. As additional consideration for SANO
entering into this Agreement and permitting PPI to sell the Licensed Products in
the United States in accordance with the provisions hereof, PPI agrees to pay to
SANO the additional amounts more particularly described in Exhibit B to this
Agreement in respect of the aggregate Gross Profit (as that term is defined in
Exhibit B) of the Licensed Products. The amount payable to SANO determined in
accordance with Exhibit B is herein and in Exhibit B annexed hereto referred to
as the "Additional Consideration." PPI shall pay to SANO, monthly, on the
seventh day of each month, commencing on the seventh day of the third month
after the month in which sales of the Licensed Products commence, the Additional
Consideration payable to SANO in respect of the Net Sales of the Licensed
Products made by PPI and its Affiliates during the third preceding


                                       29
<PAGE>

month. For greater certainty, examples of what constitutes the "third preceding
calendar month" are contained in Exhibit B annexed hereto. The consideration
payable to SANO pursuant to this Article XI shall be paid to it as part of the
sale price of the Licensed Product from SANO to PPI and shall not be treated as
a royalty or similar payment.

         11.2 REPORTING AND INFORMATION OBLIGATIONS OF PPI.

                  (a) APPROVED CONTRACTS. PPI shall provide to SANO, monthly,
within seven days of the expiry of each calendar month during the term hereof, a
copy of each Approved Contract (as hereinafter defined), entered into by PPI
with its customers during the immediately preceding month irrespective of
whether a copy of such contract had previously been forwarded to SANO. If the
Approved Contract has a term of less than 18 months, PPI may delete (e.g., by
blacking out) any information in the Approved Contract that tends to indicate
the identity or location of the PPI customer; provided, however, that PPI marks
each such Approved Contract with a unique customer code relative to the customer
that is the party to that Approved Contract.

                  (b) NET SALES AND GROSS PROFITS. PPI shall report to SANO
monthly, on the 7th day of each calendar month during the term hereof and for 12
months after the termination hereof:

                           (i) a sales summary, in the form annexed hereto as
Exhibit D, showing all sales of the Licensed Products made by PPI and its
Affiliates during the immediately preceding calendar month;

                           (ii) a detailed statement showing all returns and
         all credits, rebates, allowances and other debit and credits relevant
         to the calculation of Net Sales and Gross Profits (as those terms are
         defined in Exhibit B annexed hereto) for the immediately


                                       30
<PAGE>

         preceding calendar month together with copies of all documentation to
         support allowable adjustments used in computing Net Sales during the
         period in question;

                           (iii) a certificate signed by the Chief Financial
         Officer of PPI certifying that, to the best of his knowledge,
         information and belief, after reasonable investigation, the foregoing
         statements contemplated in (i) and (ii) above are true and correct and
         do not omit any material information required to be provided pursuant
         to this Section 11.2(b) and

                           (iv) a summary of the calculation of the
         Additional Consideration payable to SANO on such date.
         For purposes of this Agreement a sale shall be considered to have been
         made at the time the Product(s) are shipped to the customer.

         11.3 PPI shall make available for inspection by SANO at PPI's
facilities and shall cause its Affiliates to make available for inspection by
SANO at their respective facilities, promptly following a reasonable request
therefor, such additional information concerning any sales (including, without
limitation, in respect of any sale, the date of the shipment, the code number of
the customer [or the name of the customer in the case of a customer disclosed to
SANO pursuant to Section 11.2(a) hereof and an Approved Contract], the number of
units of each Licensed Product in each dosage involved (broken down by container
size per Product [e.g., 18 boxes of 30 patches of Product A], and the invoice
price charged by PPI or its Affiliates), credits, returns, allowances and other
credits and debits previously reported to SANO pursuant to Section 11.2(b)(ii)
hereof or with respect to Approved Contracts previously reported to SANO
pursuant to Section 11.2(a) hereof as SANO may reasonably require from time to
time (except information concerning the identity or location of a customer where
PPI is not already required


                                       31
<PAGE>

to disclose that information to SANO pursuant to Section 11.2(a) hereof) to
enable SANO to confirm or reconcile the amounts which are or were to have been
paid to it pursuant to this Agreement (without the need to audit the books and
records of PPI or its Affiliates pursuant to Section 11.4 hereof).

         11.4 PPI shall keep and shall cause its Affiliates to keep complete
and accurate records and books of account containing all information required
for the computation and verification of the amounts to be paid to SANO
hereunder. PPI further agrees that at the request of SANO, it will permit and
will cause its Affiliates to permit one or more accountants selected by SANO,
except any to whom PPI or such Affiliate has some reasonable objection, at any
time and from time to time, to have access during ordinary working hours to such
records as may be necessary to audit, with respect to any payment report period
ending prior to such request, the correctness of any report or payment made
under this Agreement, or to obtain information as to the payments due for any
such period in the case of failure of PPI to report or make payment pursuant to
the terms of this Agreement. Such accountant shall not disclose to SANO any
information relating to the business of PRI except that which is reasonably
necessary to inform SANO of:

                           (i) the accuracy or inaccuracy of PPI's reports and
         payments;

                           (ii) compliance or non-compliance by PPI with the
         terms and conditions of this Agreement; and

                           (iii) the extent of any such inaccuracy or
         non-compliance; provided, that if it is not reasonably possible to
         separate information relating to the business of PPI from that which is
         reasonably necessary to so inform SANO, the accountant may disclose any
         information necessary to so inform SANO and SANO shall retain all other
         information disclosed as confidential.

                                       32
<PAGE>


         PPI shall provide and shall cause its Affiliates to provide full and
complete access to the accountant to PPI's and such Affiliates' pertinent books
and records and the accountant shall have the right to make and retain copies
(including photocopies). Should any such accountant discover information
indicating inaccuracy in any of PPI's payments or non-compliance by PPI or its
Affiliates with any of such terms and conditions, and should PPI fail to
acknowledge in writing to SANO the deficiency or non-compliance discovered by
such accountant within ten (10) business days of being advised of same in
writing by the accountant, the accountant shall have the right to deliver to
SANO copies (including photocopies) of any pertinent portions of the records and
books of account which relate to or disclose the deficiency or non-compliance
(to the extent not acknowledged by PPI). In the event that the accountant shall
have questions which are not in its judgment answered by the books and records
provided to it, the accountant shall have the right to confer with officers of
PPI or such Affiliate, including PPI's or such Affiliate's Chief Financial
Officer. If any audit under this Section shall reveal an underpayment or
understatement of the amount payable to SANO by more than $10,000.00 for any
period in question, PPI shall reimburse SANO for all costs and expenses relating
to such investigational audit. SANO shall only have the right to audit such
books and records of PPI and its Affiliates pursuant to this Section 11.4 no
more often than twice in any contract year unless earlier in such contract year
or in any of the prior three contract years such investigation revealed a
discrepancy of more than $10,000.00, as aforesaid, in which case SANO shall have
the right to audit such books and records three times in such contract year. For
purposes of this Agreement, a contract year shall be a period of twelve months
commencing on either the date of this Agreement or on an anniversary thereof.
Unless the disclosure of same is reasonably required by SANO in connection with
any litigation or arbitration arising out of such audit, the accountant shall
not

                                       33
<PAGE>

reveal to SANO the name or address (or other information reasonably tending to
identify the location of a customer) of any customer of PPI or its Affiliates
[other than one whose name has been disclosed to SANO pursuant to Section 11.2
hereof], but shall identify such customer to SANO, if necessary, by the customer
code number used by PPI in its reporting obligations to SANO [and PPI and its
Affiliates shall make such information known to the accountant]. PPI may, as a
condition to providing any accountant access to its books and records (or those
of its Affiliates), require SANO to execute a reasonable confidentiality
agreement consistent with the terms of this Section 11.4.

         11.5 Except as specifically set forth to the contrary, all payments
to be made under this Agreement shall bear interest equal to two percent above
the prime rate as quoted by Citibank N.A., New York, New York, calculated daily
(as at the close of business on each such day) and compounded monthly, from the
day following the day the payment is due until the date on which it is paid. Any
adjustment to the prime rate as quoted by Citibank N.A. from time to time shall
result in a corresponding adjustment to the rate of interest payable hereunder,
the rate of interest quoted by Citibank N.A. at the close of business on each
day to be the rate applicable for such day.

         11.6 The obligation of PPI to make the payments contemplated in
Section 11.1 and to provide the reports and information contemplated in Sections
11.2 and 11.3 and the right of SANO to conduct its audits or investigations
pursuant to Section 11.4 hereof shall survive the termination or expiration of
this Agreement and shall apply to all Licensed Products made available to PPI by
SANO prior to the effective date of the termination or expiration of this
Agreement (or made available to PPI after such date pursuant to any provision of
this Agreement) notwithstanding that such Licensed Products may have been resold
by PPI or its


                                       34
<PAGE>

Affiliates to its or their customers after the effective date of termination or
expiration. For greater certainty, the parties acknowledge and agree that it is
their intention that PPI pay to SANO the Additional Consideration applicable to
Net Sales of all Licensed Products supplied by SANO to PPI pursuant to this
Agreement (in respect of which the purchase price charged by SANO to PPI
therefor [whether paid or owing] was determined in accordance with the
provisions of Section 7.2 hereof or was provided to PPI free of such charge
pursuant to any other provision of this Agreement) irrespective of whether such
Licensed Product is resold by PPI or its Affiliates prior to or subsequent to
the effective date of termination or expiration of this Agreement and that
SANO's rights pursuant to Section 11.4 hereof shall continue for a period of
twelve (12) months following the final sale of all such Licensed Products.

         11.7 PPI shall have the right, upon reasonable advance written notice
to SANO, to inspect SANO's facilities at which the Licensed Products are being
manufactured to monitor compliance by SANO with FDA Good Manufacturing Practices
and to otherwise confirm that the Licensed Products are being manufactured in
accordance with their respective Specifications. Similarly, SANO shall have the
right, upon reasonable advance written notice to PPI to inspect those facilities
of PPI and any of its Affiliates which are used in the storage of any of the
Licensed Products to ensure compliance by PPI or such Affiliate with FDA Good
Manufacturing Practices and to otherwise ensure that the Licensed Products do
not cease to meet their Specifications as a result of any storage or shipping
conducted by PPI or its Affiliates. SANO shall cooperate with PPI in providing
access to its facilities and PPI shall cooperate and shall cause its Affiliates
to cooperate in providing access to SANO to its facilities and those of its
Affiliates used as aforesaid.

                                       35
<PAGE>

         11.8 SANO shall keep complete and accurate records and books of
account containing all information required for the computation and verification
of SANO's Costs as contemplated in Section 7.2 hereof with respect to the
Licensed Product(s) made available to PPI by SANO pursuant hereto. SANO further
agrees that at the request of PPI it will permit one or more accountants
selected by PPI except any to whom SANO has some reasonable objection, to have
access during ordinary working hours to such books and records as may be
necessary to audit the amounts previously charged by SANO to PPI pursuant to
Section 7.2 hereof. Such accountant shall not disclose to PPI any information
relating to the business of SANO except the accuracy or inaccuracy of SANO's
previously reported charges and the amount, if any, that PPI may have been
overcharged or undercharged with respect to Licensed Products made available to
it. Should any such accountant discover information indicating that PPI has been
overcharged for Products made available to it, and should SANO fail to
acknowledge in writing to PPI the inaccuracy discovered by such accountant
within ten (10) business days of being advised of same in writing by the
accountant, the accountant shall have the right to make and retain copies
(including photocopies) of any pertinent portions of the records and books of
account which relate to or disclose the inaccuracy (to the extent not
acknowledged by SANO). SANO shall provide full and complete access to the
accountant to SANO's pertinent books and records. In the event that the
accountant shall have questions which are not in its judgment answered by such
books and records, the accountant shall have the right to confer with officers
of SANO, including SANO's Chief Financial Officer. If any audit under this
Section shall reveal an overstatement of the amount payable to SANO by more than
$10,000.00 for the Licensed Products in question, SANO shall reimburse PPI for
all costs and expenses relating to such investigation/audit. It is understood
and agreed that PPI shall only have the right to audit such books and records of


                                       36
<PAGE>

SANO pursuant to this Section 11.8 no more often than twice in any contract year
unless earlier in such contract year or in any of the prior three contract years
such investigation revealed a discrepancy of more than $10,000.00, as aforesaid,
in which case PPI shall have the right to audit such books and records three
times in such contract year. Unless the disclosure of same is reasonably
required by PPI in connection with any litigation or arbitration arising out of
such audit, the accountant shall not reveal to PPI the name or address (or other
information reasonably tending to identify the location of a supplier) of any
supplier of materials to SANO in the manufacturing or packaging of the Licensed
Products (but shall identify such supplier to PPI if necessary, by a code name
or number supplied by such accountant) or the name of or financial information
relating to any employee of SANO. SANO may, as a condition to providing any
accountant access to its books-and records, require PPI to execute a reasonable
confidentiality agreement consistent with the terms of this Section 11.8. The
rights of PPI pursuant to this Section 11.8 shall survive the termination or
expiration of this Agreement for a period of one year.

                                   ARTICLE XII

                             RIGHT OF FIRST REFUSAL

         12.1 RIGHT OF FIRST REFUSAL. During the term hereof, PPI shall have
the right of first refusal to distribute the Licensed Products in the State of
Israel, on a product by product basis, in accordance with the following
procedures.

         12.2 PROCEDURES. For each Licensed Product with respect to which SANO
proposes to enter into a distribution agreement in Israel with a third party,
SANO shall communicate to PPI in writing a reasonably detailed description of
the provisions of such agreement (a "Proposed Israeli Distribution Agreement").
Within 30 days of its receipt of a Proposed Israeli


                                       37
<PAGE>

Distribution Agreement (the "Acceptance Period"), PPI shall notify SANO whether
it wishes to enter into an agreement with SANO on such terms. If PPI notifies
SANO within the Acceptance Period that it wishes to do so, PPI and SANO will
enter into a distribution agreement on such terms. If PPI fails to notify SANO
of its election to enter into such an agreement within the Acceptance Period,
SANO may enter into a license or distribution agreement with respect to such
Licensed Product with a third party on substantially the same terms as set forth
in the Proposed Israeli Distribution Agreement and PPI's rights under this
Article XII will terminate. SANO may not enter into such an agreement with a
third party on terms substantially different from those set forth in the
relevant Proposed Israeli Distribution Agreement without first offering such
terms to PPI for a period of thirty days. If SANO shall not enter into the
Proposed Israeli Distribution Agreement within 30 days following the expiration
of the Acceptance Period or any extension thereof as set forth in the preceding
sentence, SANO's execution of any such Agreement or any other Proposed Israeli
Distribution Agreement shall again be subject to PPI's rights under this Article
XII. Each Proposed Israeli Distribution Agreement for each Licensed Product
shall be subject to PPI's rights of first refusal in accordance with the
procedures set forth in this Section 12.2.

                                  ARTICLE XIII

                              TERMS AND TERMINATION

         13.1 This Agreement shall become effective on the date hereof and
shall remain in effect for a period of ten years per Licensed Product starting
on the date such Licensed Product becomes available for sale in commercial
quantities, unless earlier terminated in accordance with the provisions of this
Agreement. Thereafter, this Agreement shall automatically be renewed as to each
Licensed Product from year to year unless either party gives notice of
termination to the


                                       38
<PAGE>

other party at least one hundred and twenty days prior to the expiry of the
initial term or of any renewal term.

         13.2 Either party may, by notice in writing to the other party,
terminate this Agreement if such other party shall have breached any of its
material duties or obligations under this Agreement (other than the obligations
of PPI to pay to SANO any amount due to SANO hereunder [whether on account of
Additional Consideration, the price for the Licensed Products or otherwise] or
to provide SANO with the reports or information contemplated in Section 11.2 or
11.3 hereof) and such breach shall remain uncured for at least sixty days after
the aggrieved party shall have given notice of the breach to the other party.

         13.3 SANO may, by notice in writing to PPI, terminate this Agreement
if PPI fails to pay to SANO any amount payable by PPI to SANO hereunder, whether
on account of the Additional Consideration, the purchase price for the Licensed
Products, interest or otherwise, as and when the same shall have become due and
payable or PPI shall have failed to deliver (or caused to be delivered, as the
case may be), in timely fashion, the reports or information contemplated in
Section 11.2 or 11.3 hereof, and in either case, such breach shall have
continued unremedied for a period of twelve business days after written notice
of such breach has been given by SANO to PPI; provided that PPI shall not have
the right to such twelve-day grace period within which to cure such default and
SANO shall have the immediate right to terminate the Agreement for such breach
if PPI shall have previously breached Section 11.2 or 11.3, or failed to remit
any sums of at least $10,000.00 to SANO, when due, in the aggregate, one time in
the twelve month period immediately preceding the default in question.

         13.4 Either party may terminate this Agreement on thirty days prior
written notice to the other party if such party or the other party is legally
prohibited from performing its


                                       39
<PAGE>

obligations hereunder (other than by reason of a breach of its obligations
hereunder) or becomes (or, in the case of PPI, its Affiliate becomes) an
Ineligible Person (and, where the party purporting to terminate the Agreement is
also the party prohibited from performing or it or its Affiliate is the
Ineligible Person, it [or its Affiliate, as the case may be] has made diligent
good faith best efforts to remove the prohibition or its status as an Ineligible
Person) and such prohibition or status as an Ineligible Person shall have
continued uninterrupted for a period of 120 days.

         13.5 Either party may terminate this Agreement in respect of a
particular Licensed Product (the "Specific Product"), but this Agreement shall
continue in respect of any other Licensed Product, on thirty (30) days prior
written notice to the other party (which notice must be delivered within 90 days
of the expiration of the applicable contract year) if the aggregate Net Sales of
the Specific Product made by PRI and its Affiliates for any complete contract
year after the second anniversary of the date on which such Specified Product
became available for sale shall be less than the amounts stated in or determined
pursuant to Section 13.8; provided, however, SANO may not terminate with respect
to any Specific Product pursuant to this Section 13.5 without the consent of PPI
in the event that SANO shall have previously terminated the exclusive nature of
the Right pursuant to Section 13.8 and shall be selling, directly or indirectly,
such Licensed Product in the United States.

         13.6 Either party may terminate this Agreement in accordance with the
provisions of Section 15.1 hereof.

         13.7 PPI or SANO shall have the right to terminate this Agreement
upon written notice to the other in the event that any one or more of the
following events shall become applicable to such other party (herein referred to
as the "Party"):

                                       40
<PAGE>

                  (a) an order is made or a resolution or other action of such
Party is taken for the dissolution, liquidation, winding up or other termination
of its corporate existence;

                  (b) the Party commits a voluntary act of bankruptcy, becomes
insolvent, makes an assignment for the benefit of its creditors or proposes to
its creditors a reorganization, arrangement, composition or readjustment of its
debts or obligations or otherwise proposes to take advantage of or shelter under
any statute in force in the United States for the protection of debtors;

                  (c) if any proceeding is taken with respect to a compromise
or arrangement, or to have such Party declared bankrupt or to have a receiver
appointed in respect of such Party or a substantial portion of its property and
such proceeding is instituted by such Party or is not opposed by such Party or
if such proceeding is instituted by a Person other than such Party, such Party
does not proceed diligently and in good faith to have such proceeding withdrawn
forthwith;

                  (d) a receiver or a receiver and manager of any of the assets
of such Party is appointed and such receiver or receiver and manager is not
removed within ninety days of such appointment;

                  (e) such Party ceases or takes steps to cease to carry on its
business. 

SANO shall similarly have the right to terminate this Agreement upon written
notice to PRI if any of the foregoing events becomes applicable to any Affiliate
of PRI that has been expressly assigned obligations under this Agreement.

         13.8 (a)  If

                           (i) in the twenty-four (24) month period (such
         period being herein referred to as the "A Period") beginning on the
         date (the "A Commencement Date") the first of any shipments of Licensed
         Product "A" is made available to PPI hereunder, the


                                       41
<PAGE>

        CONFIDENTIAL INFORMATION OMMITTED AND FILED SEPARATELY WITH THE
                       SECURITIES AND EXCHANGE COMMISSION
                         ASTERIKS DENOTE SUCH OMMISSION


         aggregate Net Sales of Licensed Product "A" for such A Period is less
         than the Product Sales Threshold (as hereinafter defined);

                           (ii) in the twenty-four (24) month period (such
         period being herein referred to as the "B Period") beginning on the
         date (the "B Commencement Date") the first of any shipments of Licensed
         Product "B" is made available to PPI hereunder, the aggregate Net Sales
         of Licensed Product "B" for such B Period is less than the Product
         Sales Threshold; or

                           (iii) in any twenty-four (24) month period (such
         period being herein referred to as the "C Period") beginning on the
         date (the "C Commencement Date") the first of any shipments of Licensed
         Product "C" is made available to PPI hereunder, the aggregate Net Sales
         of Licensed Product "C" for such Period is less than [*****];

                           (iv) in any twelve month period commencing on the
         second and each subsequent anniversary of the A Commencement Date or
         the B Commencement Date the Net Sales of the relevant Licensed Product
         sold by PPI and its Affiliates in such period is less than the Product
         Sales Threshold; or

                           (v) in any twelve month period commencing on the
         second and each subsequent anniversary of the C Commencement Date, the
         Net Sales of Licensed Product "C" sold by PPI and its Affiliates in
         such period is less than [*****];

and the shortfall in sales cannot be attributable primarily to the fault of
SANO, SANO shall have the right to convert PPI's Right hereunder from an
exclusive to a non-exclusive right to distribute such Licensed Product upon
ninety days prior written notice to PPI. As used herein, as to any Licensed
Product, the Product Sales Threshold shall mean an amount reasonably agreed upon
by PPI and SANO after consideration of relevant market factors and conditions,
provided that if PPI


                                       42
<PAGE>

        CONFIDENTIAL INFORMATION OMMITTED AND FILED SEPARATELY WITH THE
                       SECURITIES AND EXCHANGE COMMISSION
                         ASTERIKS DENOTE SUCH OMMISSION


and SANO shall fail or be unable to agree as to any Licensed Product for any
period in question, the Product Sales Threshold for such period and Licensed
Product shall be [*****].

                  (b) Notwithstanding the exercise by SANO of its right
pursuant to Section 13.8(a) hereof, and the resultant conversion of PPI to a
non-exclusive distributor hereunder, PPI shall have the right to sell the
Licensed Products on a non-exclusive basis on the terms and conditions as set
forth herein, except as provided otherwise in this Paragraph 13.8, during the
balance of the term of the Agreement (subject to earlier termination as herein
provided) and SANO shall continue to supply the Licensed Products to PPI in
accordance with the provisions hereof, provided that the obligation of SANO to
use its reasonable best efforts to supply PPI with its requirements of the
Licensed Products shall take into account PPI's requirements as well as the
requirements of SANO and any other third party distributor or distributors
appointed by SANO to sell the Licensed Products in the United States.

                  (c) In the event that SANO exercises its rights under
Section 13.8(a) and contemporaneously therewith or subsequent thereto enters
into an agreement with any Person (herein referred to as a "Third Party
Licensee"), authorizing or licensing such Third Party Licensee to sell any of
the Licensed Products in the United States on royalty, payment or other cash
equivalent or otherwise readily economically measured terms more favorable to
the Third Party Licensee (such more favorable terms being herein referred to as
the "MFP") then:

                           (i) SANO shall promptly notify PPI of such agreement
and shall describe in the notice both the MFP and any obligations, duties,
undertakings or other consideration to be provided by the Third Party Licensee;
and

                                       43
<PAGE>

                           (ii) PPI shall have thirty days from the date of
         receipt of such notice to notify SANO whether PPI desires to have the
         benefit of the MFP, which can be accepted only if PPI shall agree (to
         the extent not already assumed in this Agreement) to any additional
         obligations, duties, or undertakings, and to provide any consideration
         to be provided by the Third Party Licensee.

PPI's entitlement to seek the benefit of the MFP shall be conditioned upon and
subject to PPI assuming and being capable of fully performing all the non-cash
obligations assumed by the Third Party Licensee in a manner substantially as
valuable to SANO. If PPI shall dispute such assessment, PPI shall so notify
SANO, whereupon the issue shall be deemed to be a dispute between the parties
and subject to resolution pursuant to Section 15.2 hereof.

         13.9 Notwithstanding the termination or expiration of this Agreement
pursuant to this Article XIII or any other provision of this Agreement, all
rights and obligations which were incurred or which matured prior to the
effective date of termination or expiration, including accrued Additional
Consideration and any cause of action for breach of contract, shall survive
termination and be subject to enforcement under the terms of this Agreement.
Termination of this Agreement shall not affect any duty of PPI or SANO existing
prior to the effective date of termination or expiration and which is, whether
or not by expressed terms, intended to survive termination. Without limiting the
generality of the foregoing, termination shall not affect any duty to keep
confidential any Confidential Information (within the meaning of Section 14.4
hereof) disclosed by one party to the other (or its Affiliate) as contemplated
in Section 14.4 hereof, but rather such Confidential Information shall be held
by the receiving party subject to such restrictions on use and disclosure as
provided in the said Section.

                                       44
<PAGE>

         13.10 Upon termination of this Agreement by PPI pursuant to Section
13.2 or 13.7 or pursuant to Section 13.4 as a result of SANO's inability to
perform its obligations hereunder or becoming an Ineligible Person or the
termination of this Agreement by SANO pursuant to Section 13.5 hereof, SANO
shall, at the request of PPI, repurchase all Licensed Products then in the
possession, custody or control of PPI and available for sale (and which have not
been adulterated since they were made available for pick up by PPI) and all
packaging material in the possession, custody or control of PPI which were
specifically acquired by PPI for these Licensed Products and which cannot be
used by PPI or its Affiliates for any other products sold by any of them, at the
price originally paid by PPI therefor plus all transportation costs previously
incurred (even if not yet paid) by PPI payable in cash on delivery by PPI to
SANO. SANO shall pay all transportation costs associated with shipping the
repurchased Licensed Product to SANO or to such other places SANO may require.

         13.11 In the event that this Agreement is terminated pursuant to the
provisions of Section 13.4 hereof as a result of a party (herein referred to as
the "Prohibited Party") being unable to perform its obligations hereunder as
therein contemplated or having become (or its Affiliate having become) an
Ineligible Person and within twelve (12) months of the effective date of
termination of this Agreement the Prohibited Party is again able to perform its
obligations hereunder or has ceased (or its Affiliate has ceased) to be an
Ineligible Person, then the Prohibited Party shall, by notice in writing, advise
the other party (herein referred to as the "Receiving Party") that it is no
longer legally prohibited from performing its duties and obligations hereunder
or that it has ceased (or that its Affiliate has ceased) to be an Ineligible
Person and the Receiving Party shall have the right, to be exercised by notice
in writing given to the Prohibited Party within thirty (30) days of receipt of
the aforesaid notice from Prohibited


                                       45
<PAGE>

        CONFIDENTIAL INFORMATION OMMITTED AND FILED SEPARATELY WITH THE
                       SECURITIES AND EXCHANGE COMMISSION
                         ASTERIKS DENOTE SUCH OMMISSION

Party, to reinstate this Agreement; provided, however, that if the Prohibited
Party is PPI then SANO shall have the right to reinstate this Agreement as if a
proper notice had been given pursuant to Section 13.8 of this Agreement and PPI
shall be reinstated on a non-exclusive basis, but only to the extent that such
reinstatement will not violate the provisions of any agreement SANO shall have
entered into during the period PPI was a Prohibited Party.

         13.12 If SANO terminates this Agreement pursuant to Section 13.2,
13.3 and 13.7 hereof then PPI shall not and shall cause its Affiliates not to,
for a period of twelve (12) months following the effective date of termination,
sell in the United States any Competitive Product.

         13.13 In the event that SANO terminates this Agreement in respect of
a Specific Product pursuant to Section 13.5 hereof, SANO shall, at the request
of PPI, make available to PPI within a reasonable period of time of such
termination, such number of units of such Specific Product as shall be equal to
the net number of units of such Specific Product sold by PPI during the entire
contract year immediately preceding the year in which this Agreement is so
terminated or such lesser number of units of each such Specific Product as PPI
shall advise SANO in writing within ten business days of such termination. Such
Specific Product shall be made available to PPI in accordance with the
provisions of this Agreement and the provisions of this Agreement shall apply to
all such Specific Product as if such Specific Product had been supplied by SANO
during the term of this Agreement.

               13.14 (a) If SANO has not received an approval of an ANDA
for Licensed Product A prior to the later of [*****] PPI may terminate this
Agreement with respect to Licensed Product A by providing SANO with written
notice of such termination and neither party shall have any obligation hereunder
with respect to Licensed Product A other than applicable


                                       46
<PAGE>

        CONFIDENTIAL INFORMATION OMMITTED AND FILED SEPARATELY WITH THE
                       SECURITIES AND EXCHANGE COMMISSION
                         ASTERIKS DENOTE SUCH OMMISSION

confidentiality provisions and the payment by SANO described in the following
sentence. In the event of such termination, SANO shall pay PPI the sum of (i)
[*****] and (ii) the amount paid by PPI in respect of Licensed Product A
pursuant to Section 7.1 and Section 7.4 hereof, with half of such sum payable
three (3) months after SANO's receipt of notice of such termination and half of
such sum payable fifteen (15) months after SANO's receipt of notice of such
termination.

                  (b) If SANO has not received an approval of an ANDA for
Licensed Product B prior to the later of [*****] PPI may terminate this
Agreement with respect to Licensed Product B by providing SANO with written
notice of such termination and neither party shall have any obligation hereunder
with respect to Licensed Product B other than applicable confidentiality
provisions and the payment by SANO described in the following sentence. In the
event of such termination, SANO shall pay PPI the sum of (i) [*****] and (ii)
the amount paid by PPI in respect of Licensed Product B pursuant to Section 7.4
hereof, with half of such sum payable three (3) months after SANO's receipt of
notice of such termination and half of such sum payable fifteen (15) months
after SANO's receipt of notice of such termination.

                  (c) If SANO has not received an approval of an ANDA for
Licensed Product C prior to the later of [*****] PPI may terminate this
Agreement with respect to Licensed Product C by providing SANO with written
notice of such termination and neither party shall have any obligation hereunder
with respect to Licensed Product C other than applicable confidentiality
provisions and the payment by SANO described in the following sentence. In the
event of such termination, SANO shall pay PPI the sum of (i) [*****] and (ii)
the amount paid by PPI in respect of Licensed Product C pursuant to Section 7.1
and Section 7.4 hereof, with half of such


                                       47
<PAGE>

sum payable three (3) months after SANO's receipt of such termination and half
of such sum payable fifteen (15) months after SANO's receipt of notice of such
termination.

                  (d) For the purposes of this Section 13.14, the dates on which
ANDAs were filed for the respective Licensed Products shall be as set forth on
Exhibit E attached hereto.

                                   ARTICLE XIV

               RECALLS, ADMINISTRATIVE MATTERS AND CONFIDENTIALITY

         14.1 RECALLS. In the event that it becomes necessary to conduct a
recall, market withdrawal or field correction (hereafter collectively referred
to as "recall") of any Licensed Product manufactured by SANO and sold by PPI or
its Affiliates the following provisions shall govern such a recall:

                  (a) After consulting with SANO, and on terms and conditions
reasonably satisfactory to SANO, PPI shall conduct (and shall cause its
Affiliate to conduct) the recall and shall have primary responsibility therefore
and SANO and PPI shall each cooperate with the other in recalling any affected
Licensed Product(s). PPI covenants and agrees to maintain and to cause its
Affiliates to maintain such records of all sales of the Licensed Products made
by PPI or its Affiliates as are required by the FDA or as are reasonably
appropriate for a distributor of pharmaceutical products to maintain so as to
enable a recall to be properly completed.

                  (b) Irrespective of whether the recall is initiated by PPI or
by SANO:

                           (i) If it is later demonstrated that the reason for
         the recall was due primarily to acts or omissions of SANO (or the
         safety or efficacy of the Licensed Product other than as a result of
         acts or omissions of PPI or its Affiliates), then SANO shall pay or
         reimburse, as the case may be, all reasonable direct out-of-pocket
         expenses, including but not limited to reasonable attorney's fees and
         expenses and credits and recall expenses


                                       48
<PAGE>

         claimed by and paid to customers, incurred by PPI or SANO in connection
         with performing any such recall, provided that expenses incurred by PPI
         shall be in accordance with the terms and conditions of the recall
         approved by SANO; or

                           (ii) If it is later determined that the reason for
         the recall was due primarily to the acts or omissions of PPI or its
         Affiliates, then PPI shall pay or reimburse, as the case may be, all
         direct out-of-pocket expenses, including but not limited to reasonable
         attorney's fees and expenses and credits and recall expenses claimed by
         and paid to customers, incurred by PPI or SANO in connection with
         performing any such recall; or

                           (iii) If the parties are unable to agree that the
         cause of the recall was due primarily to the act or omission of one of
         the parties (or its Affiliates, as the case may be) within sixty days
         of the initiation of the recall and have not commenced arbitration
         proceedings to resolve such dispute within such sixty day period then
         all direct out-of-pocket costs incurred by PPI and SANO, including but
         not limited to reasonable attorney's fees and expenses and credits and
         recall expenses claimed by and paid to customers, shall be shared by
         the parties in proportion to their sharing of Gross Profits in respect
         of the Licensed Products recalled.

Each of the parties shall use its reasonable best efforts to minimize the
expenses of recall which it incurs. It is understood and agreed that the direct
out-of-pocket costs and expenses of the recall contemplated in Paragraphs (i),
(ii) and (iii) above shall not include the invoice price charged by PRI or its
Affiliates to the customers for the Products recalled, which amount shall be
dealt with in accordance with the provisions of Section 9 hereof and shall also
not include any excess re-procurement costs (within the meaning of Paragraph
14.3 hereof) and related penalties


                                       49
<PAGE>

and assessments, which costs, penalties and assessments shall be an expense of
PPI except to the extent that it is an expense of SANO pursuant to Section 14.3
hereof (provided that where the provisions of Paragraph (iii) above apply, the
excess reprocurement costs and related penalties and assessments incurred
pursuant to Approved Contracts [as that term is defined in Section 14.3 hereof]
shall be shared by the parties in the proportion in which Gross Profits are
shared in respect of the recalled Products sold pursuant to such Approved
Contracts).

                  (c) All Licensed Products recalled pursuant to this Section
14.1 shall be treated as Licensed Products returned to PPI by its customers and
the provisions of Section 9 shall apply thereto.

                  (d) The party initiating the recall shall inform FDA of the
proposed recall; however, nothing contained herein shall preclude either party
from informing FDA of any proposed or actual recall by either party should the
recalling party fail to inform FDA of that recall within ten (10) days of a
written request by the non-recalling party to so inform FDA.

                  (e) For greater certainty, in the event of a recall, neither
party or its Affiliates shall profit from any out-of-pocket expenses incurred by
it in connection with the recall and for which it is reimbursed by the other
party and, except where the recall relates directly to an intentional breach of
a representation or warranty contained in this Agreement or arises directly out
of a willful material breach by a party of any of its duties or obligations
hereunder (in each case, as contemplated in Section 10.1 hereof), neither party
shall have a claim against the other party for any damages, losses or expenses
which it suffers or incurs as a result thereof except to the extent permitted or
contemplated in this Section 14.

                                       50
<PAGE>

                  (f) Each party shall provide reasonable evidence to the
other of the out-of-pocket expenses being claimed by it and the rights of SANO
pursuant to Section 11.4 and the rights of PPI pursuant to Section 11.8 shall
apply thereto.

         14.2 ANDA-RELATED FDA CORRESPONDENCE. Each of the parties shall
provide the other with a copy of any correspondence or notices received by such
party from FDA relating or referring to the Licensed Product(s) within ten (10)
days of receipt. Each party shall also provide the other with copies of any
responses to any such correspondence or notices within ten (10) days of making
the response.

         14.3 EXCESS RE-PROCUREMENT COSTS.

                  (a) In the event that a recall occurs which recall was
necessitated primarily by any act or omission of SANO and SANO does not supply
PPI with replacement Licensed Product on a timely basis or if SANO, in breach of
its obligations under this Agreement, fails to make Licensed Product(s)
available to PPI, SANO shall, in addition to any reimbursement required under
Section 14.1, pay any excess re-procurement costs and/or related penalties or
assessments incurred by, or assessed on, PPI by a customer of PPI pursuant to an
Approved Contract (as that term is defined below) due to PPI's inability to
supply Licensed Product(s) to such customer due to the aforesaid acts, omissions
or breaches of SANO.

                  (b) SANO shall cooperate with PPI with respect to any legal
or administrative proceedings that arise pursuant to the Approved Contracts as a
result of PPI's inability to supply Licensed Product(s) to such customer due to
the aforesaid acts, omissions or breaches by SANO. The foregoing shall be
without prejudice to any other damages, expense or costs that PPI may have
suffered in connection with SANO's inability to supply the Licensed Product as
aforesaid, subject to the limitations and other provisions set forth in this
Agreement.

                                       51
<PAGE>

                  (c) For purposes hereof the term "Approved Contract" shall
mean a contract entered into by PPI on or after the Execution Date with one of
its customers:

                           (i) pursuant to which PPI agrees to supply such
         customer with pharmaceutical products which include the Licensed
         Products (or any of them), and which provides that if PPI fails to
         supply such customer with the Licensed Product in accordance with
         specified terms and conditions therein set forth then such customer
         shall have the right to procure a comparable replacement product for
         the Licensed Product in substitution for the Licensed Products that PPI
         has failed to supply to such customer in accordance with the provisions
         of its agreement and to charge back to PPI any costs and expenses
         incurred by such customer to acquire such comparable replacement
         product in excess of the price which was to have been charged by PPI to
         the customer for the Licensed Products which it failed to provide (such
         excess costs and expenses being the excess re-procurement costs
         contemplated in Section 14.1 and in this Section 14.3);

                           (ii) which has a term of twelve (12) months or less;
         and

                           (iii) which provides for the supply of the
         relevant Licensed Product in an amount not greater than the amount
         forecast by PPI pursuant to Section 6.2 hereof, taking into account all
         other sales of the Licensed Product in the relevant period; or

                           (iv) where the contract has a term of more than 12
         months, or provides for an amount greater than that contemplated by
         Paragraph (iii) above, SANO has approved or has been deemed to have
         approved such contract in accordance with the provisions of Section
         14.3(v) hereof; or

                           (v) if the approval of SANO as contemplated in
         Paragraph (iv) above is requested, PPI shall have provided to SANO, in
         accordance with the provisions of this


                                       52
<PAGE>

         paragraph, a complete copy of the proposed final agreement between PPI
         and its customer prior to entering into such contract. A copy of any
         contract to be provided to SANO as contemplated in this Paragraph (v)
         shall be forwarded to SANO in the manner contemplated in Section 15.4
         hereof. SANO shall have a period of ten business days from the date
         upon which copies of such contract are actually received by it as
         aforesaid to notify PPI in writing that it does not approve of the
         contract and failing such notice from SANO within such ten business day
         period SANO shall be deemed to have approved of such contract.

         14.4 CONFIDENTIALITY.

                  (a) The parties agree that, without the prior written
consent of the other party (such consent not to be unreasonably withheld) or
except as may be required under law or court order, the provisions of the
Agreement shall remain confidential and shall not be disclosed to any Person not
affiliated with any of the parties.

                  (b) PPI and SANO hereby agree not to reveal or disclose any
Confidential Information (as defined below) to any Person without first
obtaining the written consent of the disclosing party, except as may be
necessary in regulatory proceedings or litigation. For purposes hereof
Confidential Information shall mean all information, in whatever form, which is
or was disclosed by one party to another or to an Affiliate of the other prior
to or during the term of this Agreement and which relates in any way to the
Products or to the business of the disclosing party, including, without
limitation information relating to customers and pricing. Confidential
Information shall not include information that a party can demonstrate by
written evidence:

                                       53
<PAGE>

                           (i) is in the public domain (provided that
         information in the public domain has not and does not come into the
         public domain as a result of the disclosure by the receiving party or
         any of its Affiliates);

                           (ii) is known to the receiving party or any of its
         Affiliates prior to the disclosure by the other party: or

                           (iii) becomes available to the party on a
         non-confidential basis from a source other than an Affiliate of that
         party or the disclosing party and PPI covenants and agrees to cause its
         Affiliates to comply with the provisions of this Section 14.4.

                                   ARTICLE XV

                          GENERAL TERMS AND CONDITIONS

         15.1 FORCE MAJEURE CLAUSES. Neither party shall be considered to be
in default in respect of any obligation hereunder, other than the obligation of
a party to make payment of amounts due to the other party under or pursuant to
this Agreement, if failure of performance shall be due to Force Majeure. If
either party is affected by a Force Majeure event, such party shall, within 20
days of its occurrence, give notice to the other party stating the nature of the
event, its anticipated duration and any action being taken to avoid or minimize
its effect. The suspension of performance shall be of no greater scope and not
longer duration than is required and the non-performing party shall use its
reasonable best efforts to remedy its inability to perform. The obligation to
pay money in a timely manner is absolute and shall not be subject to the Force
Majeure provisions, except to the extent prohibited by governmental rule or
regulations other than rules or regulations incident to bankruptcy or insolvency
proceedings of a party. Force Majeure shall mean an unforeseeable or unavoidable
cause beyond the control and without


                                       54
<PAGE>

the fault or negligence of a party (and, where the party is PPI, beyond the
control and without the fault or negligence of any of its Affiliates) including,
but not limited to, explosion, flood, war (whether declared or otherwise),
accident, labor strike, or other labor disturbance, sabotage, acts of God, newly
enacted legislation, newly issued orders or decrees of any Court or of any
governmental agency. Notwithstanding anything in this Section to the contrary,
the party to whom performance is owed but to whom it is not rendered because of
any event of Force Majeure as contemplated in this Section 15.1 shall, after the
passage of one hundred and twenty days, have the option to terminate this
Agreement on thirty days prior written notice to the other party hereto. For
greater certainty, the inability or failure of PPI to cause any of its
respective Affiliates to comply with any of the provisions of this Agreement
expressed to be applicable to its Affiliates or which require such party to
cause the Affiliate to do or not to do something shall not be considered Force
Majeure unless the Affiliate in question is unable to comply by reason of
unforeseeable or unavoidable causes beyond the control and without the fault or
negligence of such Affiliate.

         15.2 ARBITRATION. All disputes arising out of, or in relation to,
this Agreement (other than disputes arising out of any claim by a third party in
an action commenced against a party), shall be referred for decision forthwith
to a senior executive of each party not involved in the dispute. If no agreement
can be reached through this process within thirty days of request by one party
to the other to nominate a senior executive for dispute resolution, then either
party hereto shall be entitled to refer such dispute to a single arbitrator for
arbitration under Florida law, such arbitration to be held in Miami, Florida on
an expedited basis in accordance with the rules and regulations of the American
Arbitration Association. Any party demanding arbitration shall with service of
its demand for arbitration propose a neutral arbitrator selected by it. In the
event that


                                       55
<PAGE>

the parties cannot agree upon a neutral arbitrator within thirty (30) days after
the demand for arbitration, an arbitrator shall be appointed by the American
Arbitration Association who shall be a partner in a Miami, Florida law firm
having at least ten (10) partners.

         15.3 ASSIGNMENT. This Agreement may not be assigned nor can the
performance of any duties hereunder be delegated by PPI or by SANO without the
prior written consent of the other parties, which consent shall not be
unreasonably withheld; provided that any such assignment shall not relieve the
assignor from any of its obligations hereunder or under any other document or
agreement delivered by such party pursuant to, or delivered (or acknowledged to
have been delivered) contemporaneously with or in connection with the execution
of, this Agreement, which shall continue to be binding upon such party
notwithstanding such assignment. Notwithstanding the foregoing, PPI may delegate
from time to time some of its duties hereunder to any of its Affiliates provided
that, prior to any such delegation, it gives written notice thereof to SANO
(indicating the duties being so delegated and the duration of such delegation);
provided that no such delegation shall relieve PPI from any of its obligations
hereunder in respect of the duties being delegated or otherwise.

         15.4 NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficiently given if in writing and delivered by registered
or certified mail (return receipt requested), facsimile (with confirmation of
transmittal), overnight courier (with confirmation of delivery), or hand
delivery to the appropriate party at the address set forth below, or to such
other address as such party may from time to time specify for that purpose in a
notice similarly given:

                                       56
<PAGE>

                    If to SANO:

                            SANO Corporation
                            3250 Commerce Parkway
                            Miramar, Florida 33025
                            Attn: President
                            Fax: (954) 430-3390

                    with a copy to (other than regularly prepared notices,
                    reports, etc. required to be delivered hereunder):

                            Greenberg, Traurig, Hoffman,
                            Lipoff, Rosen & Quentel, P.A.
                            1221 Brickell Avenue
                            Miami, Florida 33131
                            Attn: Gary Epstein, Esq.
                            Fax: 305-579-0717

                    If to PRI

                            c/o PRI Distributors, Ltd.
                            One Ram Ridge Road
                            Spring Valley, NY 10977
                            Attn: President
                            Fax: 914-425-7922

                    with a copy to (other than regularly prepared notices,
                    reports, etc. required to be delivered hereunder):

                            Hertzog, Calamari & Gleason
                            100 Park Avenue
                            New York, New York 10017
                            Attn:  Stephen A. Ollendorff, Esq.
                            Fax:  (212) 213-1199

Any such notice shall be effective (i) if sent by mail, as aforesaid, five
business days after mailing, (ii) if sent by facsimile, as aforesaid, when sent,
and (iii) if sent by courier or hand delivered, as aforesaid, when received.
Provided that if any such notice shall have been sent by mail and if on the date
of mailing thereof or during the period prior to the expiry of the third
business day following the date of mailing there shall be a general postal
disruption (whether as a


                                       57
<PAGE>

result of rotating strikes or otherwise) in the United States then such notice
shall not become effective until the fifth business day following the date of
resumption of normal mail service.

         15.5 GOVERNING LAW AND CONSENT TO JURISDICTION.

                  (a) Except as otherwise provided herein, this Agreement
shall be deemed to have been made under, and shall be governed by, the laws of
the State of Florida in all respects including matters of construction, validity
and performance, but without giving effect to Florida's choice of law
provisions.

                  (b) In connection with any action commenced hereunder, each
of the undersigned consent to the exclusive jurisdiction of the state and
federal courts located in Miami, Florida. Notwithstanding the foregoing, each
party also agrees to the jurisdiction of any court which a third party claim has
been brought.

         15.6 BINDING AGREEMENT. This Agreement shall be binding upon the
parties hereto, and their respective successors and permitted assigns.

         15.7 ENTIRE AGREEMENT. This Agreement and all other documents and
instruments delivered by any of the parties or their Affiliates pursuant hereto
or in connection with the execution and delivery of this Agreement contain the
entire agreement and understanding of the parties with respect to the subject
matter hereof and thereof and supersedes all negotiations, prior discussions and
agreements relating to the Licensed Products or the Right. This Agreement may
not be amended or modified except by a written instrument signed by all of the
parties hereto.

         15.8 HEADINGS. The headings to the various articles and paragraphs of
this Agreement have been inserted for convenience only and shall not affect the
meaning of the language contained in this Agreement.

                                       58
<PAGE>

         15.9 WAIVER. The waiver by any party of any breach by another party
of any term or condition of this Agreement shall not constitute a waiver of any
subsequent breach or nullify the effectiveness of that term or condition.

         15.10 COUNTERPARTS. This Agreement may be executed in identical
duplicate copies. The parties agree to execute at least two identical original
copies of the Agreement. Each identical counterpart shall be deemed an original,
but all of which together shall constitute one and the same instrument.

         15.11 SEVERABILITY OF PROVISIONS. If, for any reason whatsoever, any
term, covenant or condition of this Agreement or of any other document or
instrument executed and delivered by either PPI or SANO pursuant hereto or in
connection with the completion of the transaction contemplated herein, or the
application thereof to any party or circumstance is to any extent held or
rendered invalid, unenforceable or illegal, then such term, covenant or
condition:

                           (i) is deemed to be independent of the remainder of
         such document and to be severable and divisible therefrom and its
         validity, unenforceability or illegality does not affect, impair or
         invalidate the remainder of such document or any part thereof; and

                           (ii) continue to be applicable and enforceable to
         the fullest extent permitted by law against any party and circumstances
         other than those as to which it has been held or rendered invalid,
         unenforceable or illegal.

         15.12 PUBLICITY. Neither party shall issue any press release or other
public statement regarding, or disclosing the existence of, this Agreement
without the prior written consent of the other party; provided, however, that
neither party shall be prevented from complying with any


                                       59
<PAGE>

disclosure obligation it may have under applicable law. The parties shall use
their best efforts to agree on the form and content of any such public
statement.

                                   ARTICLE XVI

                                GUARANTEE OF PRI

         16.1 GUARANTEE. PRI does hereby unconditionally guarantee to SANO the
full and prompt payment and performance by PPI of all of the obligations of
every nature whatsoever to be performed by PPI under this Agreement (the
"Guaranteed Obligations") as and when required to be paid or performed under
this Agreement. The guarantee set forth in the preceding sentence (this
"Guarantee") is an absolute, unconditional and continuing guarantee of the full
and punctual payment and performance of the Guaranteed Obligations and is in no
way conditioned upon any requirement that SANO first attempt to enforce any of
the Guaranteed Obligations against PPI, any other guarantor of the Guaranteed
Obligations or any other Person or resort to any other means of obtaining
performance of any of the Guaranteed Obligations. This Guarantee shall continue
in full force and effect until PPI shall have satisfactorily performed or fully
discharged all of the Guaranteed Obligations. No performance or payment made by
PPI, PRI, any other guarantor or any other Person, or received or collected by
SANO from PPI, PRI, any other guarantor or any other Person in performance of or
in payment of the Guaranteed Obligations shall be deemed to modify, reduce
(except to the extent that any such performance or payment shall reduce the
Guaranteed Obligations), release or otherwise affect the liability of PRI under
this Guarantee which shall, notwithstanding any such payment or performance
other than those made by PRI in respect of the Guaranteed Obligations or those
received or collected from PRI in respect of the Guaranteed Obligations, remain
liable for the amount of the Guaranteed Obligations, until the Guaranteed
Obligations are paid and performed in full.

                                       60
<PAGE>

         16.2 NO SUBROGATION. Notwithstanding any payment or performance by
PRI, PRI shall not be entitled to be subrogated to any of the rights of SANO or
any other guarantor or any collateral security held by SANO against PPI or any
other guarantor or any collateral security for the payment of the Guaranteed
Obligations, nor shall PRI seek or be entitled to seek any contribution or
reimbursement from PPI or any other guarantor in respect of payments made by PRI
under this Guarantee. PRI HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND
ALL RIGHTS AND CLAIMS WHICH PRI MAY NOW HAVE OR HEREAFTER ACQUIRE TO BE
SUBROGATED TO ANY SUCH RIGHTS OF SANO AND TO SEEK OR BE ENTITLED TO SEEK ANY
SUCH CONTRIBUTION OR REIMBURSEMENT FROM PPI OR ANY OTHER GUARANTOR. THE
OBLIGATIONS OF AND WAIVERS BY PRI SET FORTH IN THIS SECTION 16.2 SHALL SURVIVE
THE TERMINATION OF THIS GUARANTEE AND THE PAYMENT, PERFORMANCE AND SATISFACTION
IN FULL OF ALL OF THE GUARANTEED OBLIGATIONS.

         16.3 AMENDMENTS, ETC. WITH RESPECT TO GUARANTEED OBLIGATIONS; WAIVER
OF RIGHTS. PRI shall remain obligated under this Guarantee notwithstanding that,
without any reservation of rights against PRI and without notice to or further
assent by PRI, any demand for payment or performance of any of the Guaranteed
Obligations made by SANO may be rescinded by SANO and any of the Guaranteed
Obligations continued, and the Guaranteed Obligations, or the liability of any
other Person upon or for any part thereof, or any collateral security (or
guarantee therefor may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or
released by SANO and this Agreement, any collateral security document or other
guarantee or document in connection herewith may be amended, modified,
supplemented or terminated, in whole or in part, as SANO may deem


                                       61
<PAGE>

advisable from time to time, and any collateral security or guarantee at any
time held by SANO for the payment or performance of the Guaranteed Obligations
may be sold, exchanged, waived, surrendered or released. SANO shall not have any
obligation to protect, secure, perfect or insure any lien at any time held by it
as security for the Guaranteed Obligations or for this Guarantee or any property
subject thereto. When making any demand hereunder against PRI, SANO may, but
shall be under no obligation to, make a similar demand on PPI or any other
guarantor, and any failure by SANO to make any such demand or to collect any
payments from PPI or any such other guarantor or any release of PPI or such
other guarantor shall not relieve PRI of its obligations or liabilities under
this Guarantee, and shall not impair or affect the rights and remedies, express
or implied, or as a matter of law, of SANO against PRI.

         16.4 EXTENT OF LIABILITY AND WAIVERS. PRI understands and agrees that
the obligation of guarantee of PRI pursuant to Section 16.1 are intended to
render PRI liable hereunder in each instance where PPI would be liable under
this Agreement, and no more, and except that the obligations of PRI hereunder
shall not be discharged by any bankruptcy or similar proceeding which may
discharge PPI herefrom. Accordingly, PRI acknowledges that it will not assert,
and hereby waives to the fullest extent permitted by law, any rights to avoid
performance hereunder available to it as guarantor which are not also available
to PPI. PRI waives any and all notice of the creation, renewal, extension or
accrual of any of the Guaranteed Obligations and notice of or proof of reliance
by SANO upon this Guarantee or acceptance of this Guarantee; the Guaranteed
Obligations, and any of them, shall conclusively be deemed to have been created,
contracted or incurred, or renewed, extended, amended or waived, in reliance
upon this Guarantee; and all dealings between PPI or PRI, on the one hand, and
SANO on the other, pursuant to this Agreement shall likewise be conclusively
presumed to have been had or consummated in


                                       62
<PAGE>

reliance upon this Guarantee. PRI waives diligence, presentment, protest, demand
for payment and notice of default or nonpayment or nonperformance to or upon PPI
or any other guarantors with respect to the Guaranteed Obligations. When
pursuing its rights and remedies hereunder against PRI, SANO may, but shall be
under no obligation to, pursue such rights and remedies as it may have against
PPI or any other Person or against any collateral security or guarantee for the
Guaranteed Obligations, and any failure by PRI to pursue such other rights or
remedies or to collect any payments from PPI or any such other Person or to
realize upon any such collateral security or guarantee, or any release of PPI or
any such other Person or any such collateral security or guarantee, shall not
relieve PRI of any liability hereunder and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of law, of SANO
against PRI. This Guarantee shall remain in full force and effect and be binding
upon PRI and its successors and assigns and shall inure to the benefit of SANO
and its successors and assigns, until all the Guaranteed Obligations shall have
been satisfied by payment and performance in full.

         16.5 REINSTATEMENT. This Guarantee shall continue to be effective, or
be reinstated, as the case may be, if at any time payment or performance, or any
part thereof, of any of the Guaranteed Obligations is rescinded or must
otherwise be restored or returned by SANO upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of PPI or PRI, or upon or as a result
of the appointment of a receiver, intervenor or conservator of, or trustee or
similar officer for, PPI or PRI, or any substantial part of its or their
property, or otherwise, all as though such payments had not been made.

         16.6 NO WAIVER; CUMULATIVE REMEDIES. SANO shall not by any act
(except by a written instrument pursuant to Section 15.7), delay, indulgence,
omission or otherwise be


                                       63
<PAGE>

deemed to have waived any right or remedy hereunder or to have acquiesced in any
breach of any of the terms and conditions of this Agreement. No failure to
exercise, nor any delay in exercising, on the part of SANO, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by SANO of any right or remedy hereunder on any one occasion shall not
be construed as a bar to any right or remedy which the SANO would otherwise have
on any future occasion. The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and are not exclusive of any rights or
remedies provided by law.

         16.7 AFFILIATES. To the extent that PPI or PRI is obligated hereunder
to cause its Affiliates to do or refrain from doing anything, PRI will do all
things that it may lawfully and reasonably do to cause such Affiliate to comply.

         IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the Execution Date.

                                SANO CORPORATION

                                       By: /s/ REGINALD HARDY
                                           ------------------------------------
                                                    (Signature)

                                       Name:  Reginald Hardy

                                       Title: President

                                       PHARMACEUTICAL RESOURCES, INC.
                                       By: /s/ KENNETH I. SAWYER
                                           ------------------------------------
                                                     (Signature)

                                       Name:  Kenneth I. Sawyer

                                       64
<PAGE>

                                  Title: President & Chief Executive Officer

                                  PAR PHARMACEUTICAL, INC.

                                  By: /s/ KENNETH I. SAWYER
                                      -------------------------------------
                                                (Signature)

                                   Name:  Kenneth I. Sawyer

                                   Title: President & Chief Executive Officer

                                       65
<PAGE>
        CONFIDENTIAL INFORMATION OMMITTED AND FILED SEPARATELY WITH THE
                       SECURITIES AND EXCHANGE COMMISSION
                         ASTERIKS DENOTE SUCH OMMISSION

                                    EXHIBIT A

                                LICENSED PRODUCTS

         PRODUCT "A"

       DRUG NAME                 ANDA#       SANO FILING    FDA ACCEPTED
                                                DATE            DATE
--------------------------------------------------------------------------------
Nitroglycerin Transdermal
System [*****]*              [             *****                 ]
--------------------------------------------------------------------------------
Nitroglycerin Transdermal
System [*****]*              [             *****                 ]
--------------------------------------------------------------------------------
Nitroglycerin Transdermal
System [*****]*              [             *****                 ]
--------------------------------------------------------------------------------
Nitroglycerin Transdermal
System [*****]*              [             *****                 ]
--------------------------------------------------------------------------------
Nitroglycerin Transdermal
System [*****]*              [             *****                 ]
--------------------------------------------------------------------------------
Nitroglycerin Transdermal
System [*****]*              [             *****                 ]
--------------------------------------------------------------------------------
*Generically equivalent to such strengths in Nitro Dur/registered/.


        PRODUCT "B"

       DRUG NAME                 ANDA#       SANO FILING    FDA ACCEPTED
                                                DATE            DATE
--------------------------------------------------------------------------------
Nicotine Transdermal System
[*****]*                      [             *****                ]
--------------------------------------------------------------------------------
Nicotine Transdermal System
[*****]*                      [             *****                ]
--------------------------------------------------------------------------------
Nicotine Transdermal System
[*****]*                      [             *****                ]
--------------------------------------------------------------------------------
*Generically equivalent to such strengths in Habitrol/registered/.


         PRODUCT "C"

       DRUG NAME                 ANDA#       SANO FILING    FDA ACCEPTED
                                                DATE            DATE
--------------------------------------------------------------------------------
Nitroglycerin Transdermal
System [*****]*               [             *****                ]
--------------------------------------------------------------------------------
Nitroglycerin Transdermal
System [*****]*               [             *****                ]
--------------------------------------------------------------------------------
Nitroglycerin Transdermal
System [*****]*               [             *****                ]
--------------------------------------------------------------------------------
Nitroglycerin Transdermal
System [*****]*               [             *****                ]
--------------------------------------------------------------------------------
*Generically equivalent to such strengths in Transderm-Nitro/registered/.
<PAGE>

        CONFIDENTIAL INFORMATION OMMITTED AND FILED SEPARATELY WITH THE
                       SECURITIES AND EXCHANGE COMMISSION
                         ASTERIKS DENOTE SUCH OMMISSION

                                    EXHIBIT B

         As used herein, the term "Net Sales" shall mean the gross amount
invoiced for sales of Licensed Product(s) made by PRI or its Affiliates to
independent third parties, reduced by the following to the extent that they are
properly allocable to the quantity of Licensed Product(s) so sold: all trade,
quantity and cash discounts allowed; credits or allowances actually granted on
account of rejections; returns, billing errors and retroactive price reductions
(including, without limitation, shelf stock adjustments); credits, rebates,
chargeback rebates, fees, reimbursements or similar payments granted or given to
wholesalers and other distributors, buying groups, health care insurance
carriers, governmental agencies and other institutions in respect of the
purchase price; freight, transportation, insurance or other delivery charges;
and all taxes (except income taxes), tariffs, duties and other similar
governmental charges paid by the seller on sales of the Licensed Product(s) and
not reimbursed by the purchaser. "Gross Profit" shall mean the difference
between Net Sales for any amount of Licensed Product(s) and the price paid to
SANO pursuant to Section 7.2 hereof in respect of such Licensed Product(s).

         Product A. During the term of the Agreement, the Additional 
Consideration payable to SANO with respect to Product A shall be [*****} of
Gross Profit, until aggregate Gross Profit with respect to that Licensed Product
shall have reached [*****], and [*****] of all Gross Profit thereafter. Payment
of Additional Consideration is to be made in respect of the third preceding
month, as set forth in Section 11.1.

         The following illustrates payments to SANO under the foregoing formula,
assuming that sales of Product A commenced in January 1998:
<TABLE>
<CAPTION>

             JAN.    FEB.,     MARCH     APRIL     MAY       JUNE     JULY     AUGUST    SEPT.   OCT.    NOV.      DEC.
             1998     1998      1998     1998      1998      1998     1998      1998     1998    1998    1998      1998
           -----------------------------------------------------------------------------------------------------------------
<S>         <C>       <C>      <C>     <C>       <C>       <C>       <C>       <C>       <C>     <C>     <C>       <C>
NET SALES   [*****    *****    *****   *****     *****     *****     *****     *****     *****]

PRICE TO    [*****    *****    *****   *****     *****     *****     *****     *****     *****]
PRI        -----------------------------------------------------------------------------------------------------------------

GROSS       [*****    *****    *****   *****     *****     *****     *****     *****     *****   *****   *****     *****]
PROFIT     -----------------------------------------------------------------------------------------------------------------

PAYMENT     [*****    *****    *****   *****     *****     *****     *****     *****     *****   *****   *****     *****]
TO SANO

RETAINED    [*****    *****    *****   *****     *****     *****     *****     *****     *****   *****   *****     *****]
BY PPI

15%         [*****    *****    *****   *****     *****     *****     *****     *****     *****   *****   *****     *****]
INCREMENT
</TABLE>
----------------------------
* [*****]% of [*****]; [*****]% of [*****]. (total increment--[*****])

<PAGE>

        CONFIDENTIAL INFORMATION OMMITTED AND FILED SEPARATELY WITH THE
                       SECURITIES AND EXCHANGE COMMISSION
                         ASTERIKS DENOTE SUCH OMMISSION

         Product B. During the term of the Agreement, the Additional
Consideration payable to SANO with respect to Product B shall be [*****]% of all
Gross Profit. Payment of Additional Consideration is to be made in respect of
the third preceding month, as set forth in Section 11.1. The following
illustrates payments to SANO under the foregoing formula, assuming that sales of
Product B commenced in January 1998:
<TABLE>
<CAPTION>

                   JAN.    FEB.,    MARCH    APRIL     MAY       JUNE         JULY    AUGUST    SEPT.    OCT.      NOV.
                   1998     1998     1998     1998     1998      1998         1998     1998     1998     1998      1998 
                 -------------------------------------------------------------------------------------------------------
<S>               <C>       <C>     <C>     <C>      <C>        <C>      <C>        <C>         <C>     <C>        <C>

NET SALES        [*****    *****    *****   *****     *****     *****     *****     *****]
PRICE TO PRI     [*****    *****    *****   *****     *****     *****     *****     *****]
                 -----------------------------------------------------------------------------------------------------------------
GROSS PROFIT     [*****    *****    *****   *****     *****     *****     *****     *****]
                 -----------------------------------------------------------------------------------------------------------------
PAYMENT TO SANO  [*****    *****    *****   *****     *****     *****     *****     *****     *****   *****   *****     *****]
RETAINED BY PPI  [*****    *****    *****   *****     *****     *****     *****     *****     *****   *****   *****     *****]
15% INCREMENT    [*****    *****    *****   *****     *****     *****     *****     *****     *****   *****   *****     *****]
</TABLE>



         Product C. During the term of the Agreement, the Additional
Consideration payable to SANO with respect to Product C shall be [*****] of
Gross Profit, until aggregate Gross Profit with respect to that Licensed Product
shall have reached [*****], and [*****] of all Gross Profit thereafter. Payment
of Additional Consideration is to be made in respect of the third preceding
month, as set forth in Section 11.1.

         The following illustrates payments to SANO under the foregoing formula,
assuming that sales of Product C commenced in January 1998:
<TABLE>
<CAPTION>

                JAN.    FEB.,     MARCH    APRIL     MAY       JUNE     JULY     AUGUST      SEPT.     OCT.     NOV.     DEC.
                1998     1998      1998    1998      1998      1998     1998      1998       1998      1998     1998     1998
              ------------------------------------------------------------------------------------------------------------------
<S>            <C>       <C>      <C>     <C>       <C>       <C>       <C>       <C>       <C>       <C>      <C>      <C>
NET SALES      [*****    *****    *****   *****     *****     *****     *****     *****     *****]
PRICE TO PRI   [*****    *****    *****   *****     *****     *****     *****     *****     *****]
              ------------------------------------------------------------------------------------------------------------------
GROSS PROFIT   [*****    *****    *****   *****     *****     *****     *****     *****     *****]
              ------------------------------------------------------------------------------------------------------------------
PAYMENT TO     [*****    *****    *****   *****     *****     *****     *****     *****     *****   *****   *****     *****]
SANO

RETAINED BY    [*****    *****    *****   *****     *****     *****     *****     *****     *****   *****   *****     *****]
PPI

15% INCREMENT  [*****    *****    *****   *****     *****     *****     *****     *****     *****   *****   *****     *****]
</TABLE>
----------------------------
* [*****]% of [*****]; [*****]% of [*****]. (total increment--[*****])

<PAGE>

        CONFIDENTIAL INFORMATION OMMITTED AND FILED SEPARATELY WITH THE
                       SECURITIES AND EXCHANGE COMMISSION
                         ASTERIKS DENOTE SUCH OMMISSION

                                    EXHIBIT C

                                 PROMISSORY NOTE

$ [*****]                                                         July 28, 1997

         FOR VALUE RECEIVED, SANO CORPORATION, a Florida corporation (the
"Maker"), hereby unconditionally promises to pay to Par Pharmaceutical, Inc., a
New Jersey corporation (the "Payee"), at its offices located at One Ram Ridge
Road, Spring Valley, New York 10977 or at such other address as the Payee may
from time to time designate in writing to the Maker, the principal amount of
[*****], together with interest on the principal amount outstanding from time to
time at the rate per annum announced from time to time by Citibank N.A. as its
"Prime Rate." The principal amount of this Note, together with interest accrued
thereon, shall be due and payable on September 30, 1998.

         This Promissory Note is delivered pursuant to that certain Amended and
Restated Distribution Agreement dated the 28th day of July, 1997 by and
among Maker, Payee and Pharmaceutical Resources, Inc., (the "Agreement").

         This Promissory Note may be prepaid in whole or in part at any time and
from time to time prior to maturity without premium or penalty and shall be
prepaid as and to the extent set forth in the Agreement.

         If any of the following events of default shall occur, the outstanding
principal amount of this Note, together with interest accrued and unpaid
thereon, shall become immediately due and payable:

         (1) Maker shall default in the payment of principal of or interest on
this Note when and as due and payable; and

<PAGE>

         (2) Maker (a) generally shall not pay its debts as they become due,
shall become insolvent, shall suspend its usual business or shall cease to
exist; (b) shall enter into an agreement with its creditors to reduce its
obligations to them or to defer their fulfillment, make a general assignment for
the benefit of its creditors, commence any proceeding relating to it under any
Chapter of Title 11 of the United States Code or seek discharge or reduction of
its debts, an arrangement, composition, reorganization or any other form of
relief from its creditors or from a court or governmental agency pursuant to any
bankruptcy, reorganization, arrangement, readjustment of debt, receivership,
dissolution, or liquidation law, statute or procedure of any jurisdiction
(federal, state or foreign) for the relief of financially distressed debtors
(each of the foregoing a "Debtor Relief Procedure"): (c) shall have instituted,
initiated or commenced against it a Debtor Relief Procedure and, if under Title
11 of the United States Code, an order for relief is entered or the petition is
controverted but is not dismissed within 30 days after the commencement of the
case or, if under another Debtor Relief Procedure, the substantial equivalent
occurs or the Debtor Relief Procedure is not dismissed or otherwise terminated
within 30 days of its commencement; or (d) shall take any action to effect any
event described in clauses (a), (b) or (c) above.

         In the event that the Maker shall default in payment of this Promissory
Note when due, simple interest shall accrue on the then unpaid principal amount
hereof, from the date of any such default until the date the unpaid principal
amount hereof is paid in full, at the rate of ten percent (10%) per annum and
the Maker shall pay all reasonable costs of collection, paid or incurred by the
Payee, whether paid or incurred in connection with collection by suit or
otherwise.

<PAGE>

         The Maker of this Promissory Note hereby waives demand, protest, notice
of dishonor and notice of maturity, non-payment or protest and any and all
requirements necessary to hold it liable as a maker of this Promissory Note.

         All payments of principal, interest and any other amounts due hereunder
shall be made in the amounts required hereby without any reduction or set off of
any kind whatsoever, including, without limitation, any reduction or set off
with respect to any claim, counterclaim, defense or other right which Maker may
have against the Payee.

         The waiver by the Payee of the Maker's prompt and complete performance
of, or default under, any provision of this Promissory Note shall not operate
nor be construed as a waiver of any subsequent breach or default, and the
failure by the Payee to exercise any right or remedy which it may possess
hereunder shall not operate nor be construed as a bar to the exercise of any
such right or remedy upon the occurrence of any subsequent breach or default.

         This Promissory Note shall be governed by and construed in accordance
with the laws of the State of Florida.

         This Promissory Note may not be modified, amended or terminated, except
in a writing executed by the Maker and the Payee.

         IN WITNESS WHEREOF, the Maker, by and through its undersigned office
thereunto duly  authorized, has executed and delivered this Promissory Note the
28th day of July, 1997.

Attested By:                                   Sano Corporation

/s/ [illegible]                                By: /s/ REGINALD L. HARDY
--------------------------                         -----------------------------
Asst. Secretary                                     Reginald L. Hardy, President

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                                    EXHIBIT D

                              [SALES SUMMARY FORM]