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                                                                   EXHIBIT 10.18

                        RESIGNATION AND RELEASE AGREEMENT

                  THIS RESIGNATION AND RELEASE AGREEMENT ("Agreement") is
made and entered into by and between LEINER HEALTH PRODUCTS AND AFFILIATES
("Employer") and WILLIAM TOWNE ("Executive").

                  WHEREAS, the Employer and the Executive have determined that
it is in their best interests for Executive to resign his position with the
Employer;

                  WHEREAS, the Employer wishes to provide Executive with certain
benefits in consideration of Executive's promises and covenants as contained
herein, including the Executive's agreement to release all claims against the
Employer;

                  NOW THEREFORE, in consideration of and exchange for the
promises, covenants, and releases contained herein, the parties mutually agree
as follows:

         1.       RESIGNATION. Executive's resignation from all positions he
                  holds with the Employer shall be effective August 2, 1999.
                  ("Resignation Date").

         2.       CONSIDERATION: Provided that Executive does not revoke this
                  Agreement as provided in Paragraph Three (3), the Employer
                  shall give the following consideration:

                  (a)      Commencing on the first pay period following the
                           Effective Date of this Agreement (as defined in
                           paragraph three (3) below) and continuing for
                           Twenty-Four (24) months thereafter, pay Executive
                           Twenty-Two Thousand Nine Hundred Sixteen Dollars and
                           Sixty-Seven Cents ($22,916.67) per month, for a total
                           of Five Hundred Fifty Thousand Dollars and Eight
                           Cents ($550,000.08), less all required and customary
                           withholdings and deductions. Said payments shall be
                           made in accordance with Employer's regularly
                           scheduled payroll periods and shall be mailed to
                           Executive's residence.

                  (b)      Continue Executive's benefits through and including
                           August 1, 2001, to the same extent to which he would
                           have been eligible to participate in said benefits
                           had he remained employed by Employer and pursuant to
                           the applicable plan documents (including the 401-k
                           plan and its matching contribution in accordance with
                           the applicable plan documents); and

                  (c)      Employer shall provide Executive with executive out
                           placement assistance at the Employer's expense,
                           through an out placement assistance provider of the
                           Employer's choosing, at a total cost of no more than
                           Twenty Thousand Dollars and Zero Cents ($20,000.00).

                  (d)      Pursuant to Article 2 of the PLI Investors, Inc.
                           Stock Option Plan (the "Plan"), and notwithstanding
                           any term of any stock agreement(s) ("Stock
                           Agreement") to the contrary, which may have been
                           executed between Executive and the Company, in
                           accordance with Section 2.1 of the Plan, the stock
                           options covered by such Stock Agreement (i) shall
                           become exercisable as to all shares of Common Stock
                           (as defined in the Plan) subject thereto and


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                           vested in full on the Resignation Date and (ii) may
                           be exercised in whole or in part at any time and from
                           time to time for a period of up to ten (10) years
                           from the date of the grant of the options, provided
                           however, notwithstanding the above, all options shall
                           terminate if Executive engages in any of the
                           following activities following the Resignation Date:
                           (a) Executive makes a public disparaging statement
                           regarding the Employer, including but not limited to
                           disparaging comments related to its officers,
                           policies, practices and procedures; (b) Executive
                           becomes employed by a competitor of the Employer
                           (such as Perrigo, Wieder, Rexall Sundown, Twin Labs,
                           Granutech, PFI, Pharmavite and GNC); or (c) Executive
                           attempts to hire or hires a current or former
                           employee (an individual who was previously employed
                           by Employer within one year of becoming employed by
                           Executive or his employer) without obtaining prior
                           written permission from either the Chief Executive
                           Officer of the Employer or the Vice President of
                           Human Resources. Employer will notify Executive of
                           the accelerated termination date in the event that
                           the options shall expire pursuant to the termination
                           provisions stipulated herein. Executive agrees that
                           he will discontinue any exercise of options upon
                           notice from Employer that an event or development
                           makes amendment or supplement of any Registration
                           Statement necessary, and will not resume such
                           exercise until Employer informs Executive he may do
                           so (provided that Employer shall not require such
                           discontinuance for more than Ninety (90) days in any
                           Three Hundred and Sixty (360) day period). All
                           provisions of the Stock Agreement not inconsistent
                           herewith shall remain effective.

                  (e)      Executive shall be entitled to a bonus for
                           Fiscal Year 2000 totaling One Hundred Twenty Five
                           Thousand Dollars and No Cents ($125,000.00), payable
                           in accordance with Employer's regular bonus
                           disbursement schedule (on or about July 1, 2000), and
                           shall be mailed to Executive's residence.

                  (f)      This Agreement shall not affect or diminish
                           Executive's ownership in the securities owned by
                           Executive at the time of the execution of this
                           Agreement, including (i) Four Thousand Eight Hundred
                           and Twelve (4,812) Delayed Delivery shares which
                           shall not be delivered until a liquidity event
                           occurs; (ii) Two Hundred and Fifty (250) shares of
                           common stock purchased by Executive; (iii) Seven
                           Hundred and Seventeen (717) Warrants issued on June
                           30, 1997; and (iv) Seven Thousand Two Hundred and
                           Seventeen (7,217) Options issued with a strike price
                           of One Hundred ($100.00) per option vesting on
                           termination.

                  (g)      In case of the death of Executive, all Consideration
                           provided in this Agreement, except the consideration
                           provided in Paragraph Two (2) section (c), which
                           shall terminate, shall become and automatically
                           accrue to the surviving spouse of Executive, Margaret
                           V. Towne.

                  (h)      Executive shall be entitled to all accrued vacation
                           pay through August 1, 1999, which shall be paid by
                           September 15, 1999.

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                  Executive acknowledges that he would not otherwise be entitled
                  to the consideration set forth in this paragraph were it not
                  for his covenants, promises, and releases set forth hereunder.

         3.       ACKNOWLEDGMENT OF RIGHTS AND WAIVER OF CLAIMS UNDER THE AGE
                  DISCRIMINATION IN EMPLOYMENT ACT ("ADEA"). Executive
                  acknowledges that he is knowingly and voluntarily waiving and
                  releasing any rights he may have under the Age Discrimination
                  in Employment Act of 1967 ("ADEA"). He also acknowledges that
                  the consideration given for the waiver and release in the
                  preceding paragraph thereof is in addition to anything of
                  value to which he was already entitled. Executive further
                  acknowledges that he has been advised by this writing, as
                  required by the Older Workers' Benefit Protection Act, that:
                  (a) his waiver and release does not apply to any rights or
                  claims that may arise after the Effective Date of this
                  Agreement; (b) he should consult with an attorney prior to
                  executing this Agreement; (c) he has at least twenty-one (21)
                  days to consider this Agreement (although he may by his own
                  choice execute this Agreement earlier); (d) he has seven (7)
                  days following the execution of the Agreement by the parties
                  to revoke the Agreement; and (e) this Agreement shall not be
                  effective until the date upon which the revocation period has
                  expired ("Effective Date"). Executive may revoke this Release
                  only by giving Employer formal, written notice of Executive's
                  revocation of this Release, to John M. Polson, Esq, Fisher &
                  Phillips, 4675 MacArthur Court, Suite 550, Newport Beach,
                  California 92660, to be received by the close of business on
                  the seventh (7th) day following Executive's execution of this
                  Release.

         4.       NO AMOUNTS OWING. Executive acknowledges that he has received
                  all wages and compensation due to him from Employer and that
                  Employer shall owe Executive nothing further once Executive
                  receives the consideration described in Paragraph Two (2).

         5.       RELEASE BY EXECUTIVE. In exchange for the consideration
                  provided by Employer, Executive agrees for Executive,
                  Executive's heirs, executors, administrators, successors and
                  assigns to forever release and discharge the Employer, Leiner
                  Health Products and Affiliates, and their subsidiaries,
                  related companies, parents, successors and assigns, officers,
                  directors, agents, executives and former executives from any
                  and all claims, debts, promises, agreements, demands, causes
                  of action, attorneys' fees, losses and expenses of every
                  nature whatsoever, known or unknown, suspected or unsuspected,
                  filed or unfiled, arising prior to the Effective Date of this
                  Agreement, or arising out of or in connection with Executive's
                  employment by and termination from the Employer or any
                  affiliate of the Employer. This total release includes, but is
                  not limited to, all claims arising directly or indirectly from
                  Executive's employment with the Employer and the termination
                  of that employment; claims or demands related to salary,
                  bonuses, commissions, stock, stock options, vacation pay,
                  fringe benefits and expense reimbursements pursuant to any
                  federal, state or local law or cause of action, including, but
                  not limited to, breach of contract, breach of the implied
                  covenant of good faith and fair dealing, infliction of
                  emotional harm, wrongful discharge, violation of public
                  policy, defamation and impairment of economic opportunity;
                  violation of the California Fair Employment and Housing Act,
                  the California Labor Code, the California Constitution; and
                  any claims for violation of the Civil Rights


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                  Acts of 1866, Title VII of the Civil Rights Act of 1964, the
                  Age Discrimination in Employment Act of 1967, the Older
                  Workers' Benefit Protection Act, the Family Medical Leave
                  Act, the California Family Rights Act, and the American With
                  Disabilities Act of 1990.

         6.       RELEASE BY EMPLOYER. Employer hereby irrevocably and
                  unconditionally releases, acquits and forever discharges
                  Employee from any and all charges, complaints, claims,
                  liabilities, obligations, promises, agreements, controversies,
                  damages, actions, causes of action, suits, rights, demands,
                  costs, losses, debts and expenses (including attorneys' fees
                  and costs actually incurred) of any nature whatsoever, known
                  or unknown, suspected or unsuspected, which Employer now has,
                  owns or holds, or claims to have, own or hold, or which
                  Employer at any time heretofore had, owned or held, or claimed
                  to have, own or hold against Employee. Furthermore, this
                  Agreement shall not affect or diminish the Executive's right
                  to indemnification pursuant to Labor Code Section 2802 should
                  Executive be named in litigation arising from the course and
                  scope of his employment.

         7.       WAIVER OF SECTION 1542. Executive hereby states that it is
                  Executive's intention in executing this Agreement that the
                  same shall be effective as a bar to each and every claim,
                  demand, cause of action, obligation, damage, liability,
                  charge, attorneys fees and costs herein above released.
                  Executive hereby expressly waives and relinquishes all rights
                  and benefits, if any, arising under the provisions of Section
                  1542 of the Civil Code of the State of California which
                  provides:

                        "SECTION 1542. [CERTAIN CLAIMS NOT AFFECTED BY
                        GENERAL RELEASE.] A GENERAL RELEASE DOES NOT
                        EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
                        OR SUSPECT TO EXIST IN HER FAVOR AT THE TIME OF
                        EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST
                        HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
                        DEBTOR."

         8.       EMPLOYER DOCUMENTS. Executive hereby represents and warrants
                  that within sixty (60) days after the Effective Date, he will
                  return to the Employer all Employer documents in his
                  possession including, but not limited to, Employer files,
                  notes, records, and computer recorded information.

         9.       CONFIDENTIALITY. Executive agrees that he will keep the terms,
                  amount and fact of this Agreement completely confidential, and
                  that he will not hereafter disclose any information concerning
                  this Agreement to anyone; provided, however, that Executive
                  may make such disclosure to his immediate family, and to his
                  professional representatives (e.g., attorney, accountants,
                  auditors, tax preparers), all of whom will be informed of and
                  agree to be bound by this confidentiality clause, or other
                  such disclosures required by law.

         10.      CONFIDENTIAL INFORMATION AND TRADE SECRETS. Executive shall
                  not publish, disclose, or utilize any "trade secret" as
                  defined herein or other confidential information concerning
                  any matter related to the Employer's business that Executive
                  may have acquired by reason of his employment by the Employer.
                  Executive acknowledges and


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                  agrees that the term "trade secrets," as used in this
                  Agreement, includes, but is not limited to, the definition of
                  trade secrets in California Civil Code Section 3426.1, which
                  the parties acknowledge to include information concerning the
                  Employer's methods and processes used in the formulation and
                  manufacturing of products, ingredients, designs, formulas,
                  testing procedures and data, product specifications,
                  vendor/supplier lists, work orders, customer lists, executive
                  lists, identities of customers or vendors/suppliers, business
                  plans, and information pertaining to the marketing, selling,
                  pricing, advertising, and distribution of the Employer's
                  products. In the event that Executive has executed prior
                  agreements providing for the protection of confidential
                  information and trade secrets, the agreement that provides the
                  broadest protection to the Employer's confidential information
                  and trade secrets shall apply.

         11.      ARBITRATION. The parties agree that any controversy or claim
                  arising out of or relating to this Agreement, or any dispute
                  arising out of the interpretation or application of this
                  Agreement, shall be resolved by binding arbitration before a
                  retired Superior Court Judge and shall be conducted in
                  accordance with the provisions of the California Arbitration
                  Act and the California Code of Civil Procedure.
                  Notwithstanding the foregoing, Employer shall have the right
                  to obtain a temporary restraining order or preliminary
                  injunction in order to enforce its rights under Paragraphs
                  Seven (7), Eight (8), and Nine (9) of the Agreement in order
                  to protect its rights until such time as an arbitrator makes a
                  final decision.

         12.      ENTIRE AGREEMENT. This Agreement embodies the entire agreement
                  of all the parties hereto who have executed it and supersedes
                  any and all other agreements, understandings, negotiations, or
                  discussions, either oral or in writing, express or implied,
                  between the parties to this Agreement. The parties to this
                  Agreement each acknowledge that no representations,
                  inducements, promises, agreements or warranties, oral or
                  otherwise, have been made by them, or anyone acting on their
                  behalf, which are not embodied in this Agreement; that they
                  have not executed this Agreement in reliance on any
                  representation, inducement, promise, agreements, warranty,
                  fact or circumstances, not expressly set forth in this
                  Agreement; and that no representation, inducement, promise,
                  agreement or warranty not contained in this Agreement
                  including, but not limited to, any purported settlements,
                  modifications, waivers or terminations of this Agreement,
                  shall be valid or binding, unless executed in writing by all
                  of the parties to this Agreement. This Agreement may be
                  amended, and any provision herein waived, but only in writing,
                  signed by the party against whom such an amendment or waiver
                  is sought to be enforced.

         13.      BINDING NATURE. This Agreement, and all terms and provisions
                  contained herein, shall bind the heirs, personal
                  representatives, successors and assigns of each party, and
                  inure to the benefit of each party, its agents, directors,
                  officers, executives, servants, successors, and assigns.

         14.      CONSTRUCTION. This Agreement shall not be construed in favor
                  of one party or against the other.

         15.      PARTIAL INVALIDITY. Should any portion, word, clause, phrase,
                  sentence or paragraph of this Agreement be declared void or
                  unenforceable, such portion shall be considered


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                  independent and severable from the remainder, the validity of
                  which shall remain unaffected.

         16.      COMPLIANCE WITH TERMS. The failure to insist upon compliance
                  with any term, covenant or condition contained in this
                  Agreement shall not be deemed a waiver of that term, covenant
                  or condition, nor shall any waiver or relinquishment of any
                  right or power contained in this Agreement at any one time or
                  more times be deemed a waiver or relinquishment of any right
                  or power at any other time or times.

         17.      ENFORCEMENT COSTS. Executive agrees that in the event
                  Executive breaches any provision of this Agreement, Executive
                  shall pay all costs and attorney's fees incurred in
                  conjunction with enforcement of this Agreement (to the extent
                  permitted by law).

         18.      GOVERNING LAW AND JURISDICTION. This Agreement shall be
                  interpreted under the law of the State of California, both as
                  to interpretation and performance.

         19.      SECTION HEADINGS. The section and paragraph headings contained
                  in this Agreement are for reference purposes only and shall
                  not affect in any way the meaning or interpretation of this
                  Agreement.

         20.      COUNTERPARTS. This Agreement may be executed in two
                  counterparts, each of which shall be deemed an original, all
                  of which together shall constitute one and the same
                  instrument.

         21.      NO ADMISSIONS. It is understood and agreed by the parties that
                  this Agreement represents a compromise and settlement for
                  various matters and that the promises and payments and
                  consideration of this Agreement shall not be construed to be
                  an admission of any liability or obligation by either party to
                  the other party or any other person.

         22.      Voluntary and Knowing. This Agreement is executed voluntarily
                  and without any duress or undue influence on the part or
                  behalf of the parties hereto.

                    IN WITNESS WHEREOF, the parties have executed this Agreement
on the respective dates set forth below.

Dated:       8/26/99                    LEINER HEALTH PRODUCTS AND AFFILIATES
      -----------------------
                                        By: /s/ JOHN L. KELLY
                                           ------------------------------------
                                           Senior Vice President-Human Resources

                                        Name: /s/JOHN L. KELLY
                                           ------------------------------------
Dated:       8/26/99
      -----------------------           WILLIAM TOWNE


                                        /s/WILLIAM B. TOWNE
                                        ---------------------------------------
                                        (Signature)