July 26, 2004

Mr. Brian Bradley
19 Shy Creek Road
Pittstown, New Jersey 08867

Dear Brian:

          This letter (the "Agreement") will confirm the terms and conditions
under which we offer you the position of Executive Vice President of Sales and
Marketing of Pharmaceutical Formulations, Inc. (the "Company"). You agree that
this is a full-time position and that you will devote your full-time efforts to
your responsibilities to the Company and undertake no other employment without
the written consent of the Company. You agree to adhere to all of the Company
policies, as set forth in the Company’s employment manual.

          The term of your employment shall be from a starting date of August 2,
2004 until your employment ceases as described in Paragraph 4 of this Agreement.

          You will report to me, and be a member of our Executive Management
Team.

1. Compensation and Benefits:

          You shall receive the following:

(a) A starting salary of $185,000 (One hundred and eighty-five thousand dollars)
per year, which shall be reviewed on August 1, 2005 and thereafter annually in
accordance with the Company's prevailing practice.

(b) You may be entitled to a performance bonus as the Board of Directors, in its
sole discretion, may elect to pay based upon the Company's results and its
qualitative assessment of your contribution to the Company. An outline of the
bonus program is attached.

(c) You shall receive a stock grant of 50,000 (fifty thousand) shares of
restricted stock under the Company's current Stock Incentive Plan. The sole
condition to this grant is that you are (i) an employee in good standing of the
Company on February 1, 2005 and (ii) have not given notice of termination of
your employment.

(d) On your starting date, you will receive a qualified stock option for 100,000
(one hundred thousand) shares of the Company's Common Stock in accordance with
the Company's qualified stock option plan currently in effect, at the current
market price of such stock as of the date of the grant of the option,
exercisable in accordance with the terms of the Company's 2004 Qualified Stock
Option plan.

(e) Auto allowance at $600 per month.

(f) The Company has a 401(k) plan, which you may join when eligible.

(g) Other benefits, including Company-paid medical and dental insurance, life
insurance, short-term and long-term disability, and travel accident coverage,
are offered when you become eligible in accordance with the Company's normal
benefit programs.

(h) Three (3) weeks vacation which you shall be eligible to take annually,
beginning on August 1, 2005. Beginning on August 1, 2009, you shall be eligible
to take four (4) weeks vacation annually.

2. Confidential Information:

          You agree that you will not, without specific written authorization by
the Board of Directors of the Company, at any time during or after the term of
your employment, use any confidential information, including technical expertise
or know-how of the Company or companies affiliated with the Company, for your
own benefit or the benefit of any other persons or organization, and you will
not, directly or indirectly, reveal, divulge, disclose or communicate such
information to any person, firm, corporation or other entity not authorized by
the Board of Directors of the Company to know same, except as may be required by
law, in which case, notice and sufficient opportunity to obtain a protective
order shall be given by you to the Company. It is specifically understood that
any breach or threatened breach of any provision of this clause would cause the
Company or its affiliates irreparable harm for which the Company will have no
adequate remedy at law, and therefore, the Company shall be entitled to all
legal remedies, including but not limited to injunctive relief. Upon termination
of your employment, you agree to deliver to the Company or its affiliates all
records, writings, papers or other data relative to the Company’s business of
the Company or its affiliates, recognizing that such materials are the property
of the Company or its affiliates.

3. Non-Compete and Solicitation of Employment of Other Company Employees:

          During the term of your employment you agree not to engage, directly
or indirectly, in any commercial activities that compete with the business of
the Company or companies affiliated with the Company, or have any business
association, business contact, investment or participation in any company that
competes with the business of the Company or companies affiliated with the
Company. For a period of 91 days after the termination of your employment, you
agree not to participate, directly or indirectly, in any transaction involving
the same products, the same suppliers or customers with whom the Company and/or
its affiliated companies has engaged in business as of the date of this
Agreement and/or during the term of your employment. Business which you can
provide evidence was developed by you prior to joining the Company shall be
excluded from the 91 day non-compete restriction after leaving the employ of the
Company. However, the Company may at its sole option, choose to continue your
compensation payments for up to 91 days after the term of your employment, in
which case, there shall during this period be no exceptions to the
non-competition restriction. You shall not during the period of your employment
be an officer, director, employee or shareholder of the capital stock or other
equity interest in any company which competes with the business conducted by the
Company, or receive any financial or other benefit from any such company.

          You also agree during the term of your employment and for a period of
one (1) year thereafter not to influence or seek to influence any employee of
the Company to terminate his or her employment with the Company.

          It is specifically understood that any breach or threatened breach of
any provision of this clause would cause the Company irreparable harm for which
the Company will have no adequate remedy at law, and therefore, the Company
shall be entitled to all legal remedies, including but not limited to injunctive
relief.

4. Termination:

          The Company may terminate this agreement "for cause" at any time. The
term "for cause" shall mean:

(a) the willful and continued failure by you to substantially perform your
duties with the Company (other than any such failure resulting from your
incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to you by the Company, or

(b) the willful engaging by you in misconduct materially and demonstrably
injurious to the Company. For the purposes of this paragraph 4, no act, or
failure to act on the part of you shall be considered "willful" unless done, or
omitted to be done, by you in bad faith and without reasonable belief that your
action or omission was in the best interest of the Company.

          The Company may immediately terminate this agreement for any reason
other than "for cause" upon six (6) months’ notice in writing to you. If the
Company terminates the agreement other than "for cause", the Company may at its
sole option require you to cease your employment activities at any time during
the six (6) month period. You will, however, continue to receive compensation
for the six (6) month period. You may terminate this agreement upon three (3)
months’ notice in writing to the Company. Upon receipt of your notice of
termination, the Company may cease your employment at any time. However, the
Company will continue to pay your compensation for the full three (3) month
period.

5. Miscellaneous:

          This agreement supersedes any prior agreements or understandings
between the parties and may not be changed or terminated orally, and no change,
termination or attempted waiver of any of the provisions hereof is binding on
the parties unless in writing and signed by the party against whom the same is
sought to be enforced.

          Your employment is contingent upon successful completion of:
employment and reference checks, a pre-employment physical, which includes a
drug screen and verification that you are eligible to work in the United States
under INS rules.

          Please sign and return the enclosed copy of this letter to me by
Monday, August 2, 2004. We are looking forward to you joining PFI’s Management
Team as we grow profitably into the future.

Very truly yours,

/s/ Michael A. Zeher

Michael A. Zeher
President & Chief Operating Officer
Pharmaceutical Formulations, Inc.

ACCEPTED AND AGREED TO:

/s/ Brian Bradley                     
Brian Bradley                                 
Date

PHARMACEUTICAL FORMULATIONS, INC. BONUS PROGRAM
Effective for the Year Ending December 31, 2003

* The Pharmaceutical Formulations, Inc. (PFI) bonus pool will be calculated on
the basis of pre-tax income, excluding the bonus accrual.

* The pool will consist of 12% (twelve percent) of the consolidated pretax
income of PFI.

* The program will cover all non-union employees of PFI.

* Distribution of the pool shall be recommended by the President and Chairman of
the Board of PFI, and reviewed and approved by the Compensation Committee.

* The program will be valid for calendar years 2003 through 2005.