EXHIBIT 10.1

                                                                REDACTED VERSION

                                                                  EXECUTION COPY

PRODUCT DEVELOPMENT, MANUFACTURING, AND DISTRIBUTION AGREEMENT

[ * ]

This PRODUCT DEVELOPMENT, MANUFACTURING AND DISTRIBUTION AGREEMENT ("Agreement")
entered  into as of this 30th day of March 2005,  among [ * ]. ("[ * ]") located
at [ * ], a corporation  of the State of [ * ], [ * ] ("[ * ]"),  located at [ *
], a corporation of the State of [ * ], and Elite Laboratories,  Inc., ("Elite")
a wholly owned subsidiary of Elite Pharmaceuticals,  Inc., located at 165 Ludlow
Ave, Northvale, NJ 07647, a corporation of the State of New Jersey.

RECITALS

Whereas,  [ * ],  [ * ]  and  Elite  (each,  a  "Party"  and  collectively,  the
"Parties") represent and warrant to each other that the recitals, as pertains to
such Party herein are true and correct;

Whereas, Elite is in the business of research and development, and manufacturing
pharmaceutical drug products in a manner conforming with applicable  regulations
found at 21 CFR Parts 210 and 211 ("cGMPs");

Whereas,  [ * ]  is  in  the  business  of  pharmaceutical  product  formulation
development and  pharmaceutical  product  analytical test method development and
ANDA filing in a manner  conforming with applicable  regulations found at 21 CFR
Parts 210 and 211 ("cGMPs');

Whereas, [ * ] is in the business of marketing pharmaceutical drug products;

Whereas, the Parties desire that [ * ] shall be the sponsor, and the owner of
the ANDA asset; and

Whereas,  the  Parties  desire to  collaborate  to  develop,  obtain  regulatory
approval for, manufacture, and sell [ * ] (the "Product") in accordance with the
terms and conditions specified herein and in the Exhibits hereto.

Now,  therefore,  for the  consideration  and covenants  set forth  herein,  the
receipt and  sufficiency  of which are hereby  acknowledged,  the Parties hereby
agree as follows:

ARTICLE I: DEFINITIONS

The following  terms as used in this  Agreement  have the  following  respective
meanings:

1.1.     FDA:   The  term  "FDA"   means  the  United   States   Food  and  Drug
         Administration.

1.2.     MILESTONES:  The term  "Milestones"  means the project  activities  and
         performance descriptions set forth on Exhibit "A."

1.3.     ANDA: The term "ANDA" means  Abbreviated  New Drug  Application for the
         Product prepared and submitted to FDA under this Agreement.

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1.4.     DEVELOPMENT  COSTS:  The  term  "Development  Costs"  means  the  fully
         absorbed direct and indirect cost of performing the Product development
         activities  provided  for  in  Article  II of  this  Agreement  and  as
         estimated in Exhibit "A" hereto.

1.5.     PROFIT SHARE:  The term "Profit Share" means a Party's share of Profits
         as determined in accordance with Exhibit "C" to this Agreement.

1.6      BIOEQUIVALENCE  STUDY OR STUDIES:  The term  "Bioequivalence  Study" or
         "Bioequivalence   Studies"  means  a  study  conducted  to  ensure  the
         Product's  compliance  with  the  FDA  Bioequivalence   requirement  in
         accordance with 21 CFR 320.1.

1.7      FDCA: The term "FDCA" means the Federal Food, Drug and Cosmetic Act set
         forth in 21 U.S.C ss.301 et. seq.

1.8.     TRANSFER PRICE: is defined in Section 4.4.

1.9      PROPRIETARY  RIGHTS: The term "Proprietary  Rights" means, with respect
         to the Product,  all know-how,  technical  and clinical data  generated
         during the Term related to the  development of the Product  (including,
         without limitation,  inventions,  whether or not patentable and whether
         or not  tested or reduced to  practice,  any and all data,  techniques,
         discoveries,   developments,   designs,  trade  secrets,   confidential
         business  information,   know-how  and  tangible  expressions,   tests,
         reports, processes, formulae,  specifications,  improvements,  results,
         experiments,  samples,  statistics  and test  analyses  relating to the
         Product),  except to the  extent  any of the  foregoing  is based on or
         incorporates Confidential Information of any Party to this Agreement or
         of any third party.

1.10     TERRITORY:  The term "Territory" means the United States of America,
         Canada, Mexico, and Puerto Rico.

1.11     REFERENCED LISTED DRUG: The term "Reference Listed Drug" means [ * ].

ARTICLE II:  DEVELOPMENT OF PRODUCT; PROPRIETARY RIGHTS

2.1. PRODUCT DEVELOPMENT.

          A.   Elite shall be  responsible  for,  and shall  exert  commercially
               reasonable best efforts in,  developing the Product  according to
               the activity  descriptions and the timelines set forth in Exhibit
               "A". Without  limiting the foregoing,  [ * ] shall be responsible
               for,  and shall exert  commercially  reasonable  best  efforts in
               providing to Elite the initial  Product  formulation  composition
               and process,  and conducting,  through an acceptable third party,
               pilot and  pivotal  Bioequivalence  Studies  for the  Product  to
               evidence   bioequivalence   to  the  Reference   Listed  Drug  in
               accordance  with study plan protocols  agreed upon by the Parties
               to  this   Agreement,   and  compiling  an  approvable  ANDA  for
               submission to the FDA. Elite shall be responsible  for overseeing
               packaging related activities for the Product,  including, but not
               limited to subcontracting  such packaging services to a qualified
               cGMP facility.

          B.   Elite  shall be  responsible  for [ * ]  percent  ([ * ]%) of the
               Development  Costs,  including,  but not  limited  to,  packaging
               costs,  and  preparation,  submission and prosecution of the ANDA
               for the Product to the FDA, as set forth in Sections  4.1 and 5.1
               below.

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          C.   [ * ] shall  be  responsible  for [ * ]  percent  ([ * ]%) of the
               Development  Costs,  including but not limited to packaging,  and
               preparation,  submission  and  prosecution  of the  ANDA  for the
               Product to the FDA, as set forth in Sections 4.1 and 5.1 below.

2.2.     INTELLECTUAL PROPERTY

         All  rights,  title and  interest in and to all  intellectual  property
         rights  relating  to  the  Product,   including   without   limitation,
         inventions,   discoveries,   creations,   information,  data,  reports,
         results, and/or improvements to any confidential information, know-how,
         study  inventions,   regulatory  filings,  patent  rights,   processes,
         techniques,  and any improvements,  modifications,  alterations thereto
         and patents  issuing  thereon  made  during the term of this  Agreement
         (collectively,  "Intellectual  Property") are and shall, in all events,
         be the sole and  exclusive  property  of the  Party who  develops  such
         Intellectual  Property.  The other Parties may not grant any sublicense
         to such Party's Intellectual Property Rights without such Party's prior
         written  consent,  which  consent  may be granted or  withheld  in such
         Party's sole discretion.  Such Intellectual Property may be used by the
         developing  Party on other unrelated  products,  however the developing
         Party or Parties hereby grant [ * ] the exclusive  right and license to
         use  such  Intellectual   Property  in  a  commercial  manner  for  the
         production of the Product. Notwithstanding the above, in no event shall
         any of the Parties hereto use the  Intellectual  Property in connection
         with the development of any product containing the [ * ] molecule.

2.3.     STATUS MEETINGS AND MONTHLY REPORTS

         The Parties  shall  conduct  meetings to review and discuss the Product
         development progress.  These meetings will be held monthly or quarterly
         depending upon the needs of [ * ], [ * ], and Elite. The meetings shall
         be  attended  by at least one (1) member or  designee of each Party and
         may be held by telephone  conference  call at the request of any Party.
         Five (5) days prior to the meeting,  both [ * ] and Elite shall provide
         the other  Parties with a report  summarizing  its Product  development
         activities for the preceding period. At the meetings, the Parties shall
         discuss  and  review  the  development  of the  Product,  the  budgeted
         Development  Costs,  the  scheduling of Product  development,  and such
         other  information and topics relating to the Product as each Party may
         reasonably  request.  The discussions and all information  discussed at
         these meetings shall be briefly  summarized in the form of minutes. [ *
         ] and Elite will  prepare  those  portions of the  minutes  relating to
         their responsibilities. [ * ] shall prepare the balance of the minutes,
         incorporating  [ *  ]'s  and  Elite's  portions  and  distributing  the
         complete  minutes to all Parties.  Such minutes shall not be considered
         final  until they have been  received,  reviewed  and  acknowledged  as
         accepted by an  attending  representative  of each Party.  The time and
         location of such monthly  meetings shall be mutually agreed upon by the
         Parties.

2.4      FDA/[ * ] INSPECTION

          A.   [  *  ]  hereby  agrees,  and  any  third  party  conducting  the
               Bioequivalence Study shall agree, to permit  representatives of [
               * ] and/or of the FDA to examine at any  reasonable  time  during
               normal  business  hours,  and where  applicable,  make  copies of
               relevant information and facilities necessary to confirm that the
               clinical  trials (or studies)  being  conducted  pursuant to this
               Agreement  (each,  a "Study") are being  conducted in  compliance
               with the protocol, this Agreement and applicable law.

          B.   [ * ] and any such  third  party  conducting  the  Bioequivalence
               Study shall immediately  notify [ * ] and Elite if FDA schedules,
               or, without scheduling,  begins an inspection of

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               a study  site,  or [ * ].  In  addition,  [ * ] will  immediately
               provide [ * ] and Elite copies of any  correspondence  form or to
               the FDA or other regulatory  authorities  related to the clinical
               trials,  including  but not  limited  to any  FD-483s  or warning
               letters, as well as any other  correspondence with a governmental
               agency that is reasonably likely to affect the suitability of [ *
               ] or such third party to continue  conducting the  Bioequivalence
               Study.

2.5.     MARKETING OUTSIDE OF THE TERRITORY

         This Agreement sets forth the obligations,  rights and responsibilities
         of  the  Parties  for   developing,   securing   regulatory   approval,
         manufacturing,  marketing,  distributing and selling the Product in the
         Territory.  The Parties will negotiate  separate  agreements  governing
         their respective obligations, rights and responsibilities for countries
         outside of the Territory.

ARTICLE III: CONFIDENTIALITY

3.1.     CONFIDENTIALITY OBLIGATION

         [ * ], [ * ] and Elite shall keep in strictest confidence all materials
         and information provided by the other, in whatever form provided,  that
         are  confidential  or  proprietary  in  nature,  relating  to the other
         Party's    business,    operations   and   technology    ("Confidential
         Information").  Such  Confidential  Information  includes,  but  is not
         limited  to,  information  and  technology  relating  to  each  Party's
         marketing plans, research and development activities, marketing trends,
         products,  designs,  technical specifications and data for the Product,
         Proprietary  Rights,  flowcharts,  logic  diagrams'  notes,  memoranda,
         know-how,  trade  secrets and  products,  as well as any  materials and
         information  that,  from  the  circumstances  in  which  they  are made
         available  to the other  Party,  in good  faith  ought to be treated as
         confidential  or  proprietary.  Except as necessary in carrying out its
         obligations under this Agreement,  no Party shall use or disclose,  nor
         permit  its  employees,  suppliers,  customers  or  agents  to  use  or
         disclose,  any such Confidential  Information without the prior written
         consent  of  the  disclosing  Party.  The  confidentiality   obligation
         contained in this  Section 3.1 shall remain  binding on all Parties for
         five (5) years after any termination of this  Agreement,  regardless of
         the cause of such termination.

3.2.     EXCEPTION TO CONFIDENTIALITY OBLIGATION

         The obligations of each Party under this Article III shall not apply to
         information  which is: (a)  presently  available  to the public  domain
         (except as disclosed by any Party in violation of this Agreement);  (b)
         lawfully received by any Party from a third party who is not or was not
         bound in a confidential  relationship  to either [ * ], [ * ] or Elite;
         or  (c)  required  to  be  disclosed  as  a  matter  of  law  in  legal
         proceedings, and regulation or government authority, in which event the
         Party so required to disclose  the  information  shall  forthwith  give
         notice to the originating Party and duly allow it to appeal or litigate
         the required disclosure.

3.3.  RETURN OF CONFIDENTIAL INFORMATION

         Each Party shall, at the  termination of this Agreement,  return to the
         originating  Party  all  of its  Confidential  Information  and  copies
         thereof and any information  related to the development and manufacture
         of the  Product,  except to the extent the Party is  entitled to retain
         such   Confidential   Information   under  another  provision  of  this
         Agreement.


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ARTICLE IV:  OBLIGATIONS OF THE PARTIES

4.1.     PRODUCT DEVELOPMENT, BIOEQUIVALENCE STUDIES, AND REGULATORY APPROVAL TO
         MARKET PRODUCT

         A.     DEVELOPMENT.  Per Section 2.1, each of [ * ] and Elite shall use
                commercially reasonable efforts to develop the Product according
                to the activity descriptions set forth in Exhibit "A," and [ * ]
                will  pay [ * ]  percent  ([ * ]%) of the  Development  Costs in
                accordance with Section 5.1.

         B.     BIOEQUIVALENCE  STUDY. [ * ] shall have the final decision as to
                the clinical  research  organization  used for the pilot and the
                pivotal  Bioequivalence  Studies.  [  * ]  and  Elite  shall  be
                responsible for funding the pilot and the pivotal Bioequivalence
                Studies in their proportionate  allocated share of [ * ] percent
                ([ * ]%) [ * ] and [ * ] percent  ([ * ]%) Elite as set forth in
                Exhibit  "A". It is expressly  understood  and agreed that [ * ]
                shall have all rights, title and interest in the Product.

         C.     ANDA.  [ * ] shall be the  sponsor and owner of the ANDA for the
                Product Elite will provide copies of all correspondence with the
                FDA and  required  supporting  filing  (i.e.  copies  of  annual
                reports  etc.) to [ * ]  within  ten (10)  days of  filing  such
                documents  with  the  FDA.  [ * ],  Elite  and  [ * ]  shall  be
                responsible  for prosecuting and filing the ANDA. [ * ] shall be
                responsible for maintaining the ANDA after approval of the ANDA.

4.2.     ASSIGNMENTS, TRANSFER, SALE OR LICENSE OF PRODUCT

         A.     At any time  prior to  filing  the ANDA  with the FDA,  if [ * ]
                wishes to  terminate  for any reason,  it shall  comply with the
                provisions of Sec. 9.1 of this Agreement.

         B.     Following  approval of the ANDA by the FDA,  should [ * ] desire
                to assign,  transfer,  sell or license the Product or any of its
                Proprietary Rights:

                a.  [ * ] shall notify [ * ] and Elite in writing  within ninety
                    (90) days of the decision.

                b.  [ * ] shall have the right of first  negotiation  to acquire
                    such Product or Proprietary Rights as [ * ] may transfer.

                c.  If  [ * ]  declines  the  opportunity  to  enter  into  such
                    negotiations,  or if the  Parties  are not able to  conclude
                    such  negotiations  and reach an agreement within sixty (60)
                    days   after   beginning   negotiations   (subject   to  the
                    negotiations  commencing  within ten (10) days of the end of
                    the ninety  (90) day notice  period,  [ * ] then shall enter
                    into negotiations with Elite.

                d.  If Elite thereafter,  declines the opportunity to enter into
                    such  negotiations,  or if  the  Parties  are  not  able  to
                    conclude  such  negotiations  and reach an agreement  within
                    sixty (60) days after  beginning  negotiations  (subject  to
                    negotiations commencing), [ * ] is free to assign, transfer,
                    sell or  license  the  Product  and its  Proprietary  Rights
                    within thirty (30) days on terms no less  favorable to [ * ]
                    than those offered to [ * ] and Elite.

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                e.  If [ * ] fails to consummate such assignment, transfer, sale
                    or license of the  Product and the  Proprietary  Rights to a
                    third  party  within such  30-day  period,  then the license
                    rights  shall once  again be subject to [ * ]'s and  Elite's
                    right of first negotiation as set forth above.

                f.  [ * ] shall pay for all Product ordered by [ * ] through the
                    date of assignment,  transfer,  and sale or licensing. [ * ]
                    may not transfer  any of its rights to the Product,  whether
                    to [ * ], Elite,  or a third  party,  unless the  transferee
                    agrees in  writing to be bound by [ * ]'  obligations  under
                    this  Agreement,   including  without   limitation  [  *  ]'
                    obligations  to market the  Product  and pay [ * ] and Elite
                    their Profit Shares.

         C. If Elite desires to sell its manufacturing facility:

                a.  Elite shall inform [ * ] of its intent to sell within ninety
                    (90) days of the decision.

                b.  [ * ] would prefer the right to continue to have the product
                    manufactured  at the Elite facility under the same terms and
                    conditions granted under this Agreement. If the successor to
                    Elite's  facility elects not to continue  manufacturing  and
                    supplying the Product under this Agreement,  Elite must give
                    nine (9) months notice to [ * ] prior to terminating Elite's
                    obligations  under this Agreement.  Elite and [ * ] shall in
                    good faith and with due  diligence,  use its best efforts to
                    assist  in  the  transfer  of  the   manufacturing   process
                    (including the transfer of any and all documentation related
                    to the Product and/or the ANDA) to another facility.

                c.  If [ * ] elects  to  transfer  the  Product  manufacture  to
                    another  facility,  Elite  shall  provide  all  information,
                    including but not limited to the documentation and technical
                    support  necessary to transfer the Product  manufacture to a
                    manufacturing facility designated by [ * ] within sixty (60)
                    days of such election.

                D.  Upon the sale of all or  substantially  all of [ * ]' assets
                    to a third party  entity,  [ * ] shall inform Elite of their
                    intended  change of control  within  ninety (90) days of the
                    decision.  Elite  shall  have the  option of  continuing  to
                    manufacture  the Product under the same terms and conditions
                    granted under this Agreement (and the acquiring  entity of [
                    * ] then shall assume all of [ * ]'  obligations  under this
                    Agreement),   or  of  terminating  this  Agreement.  If  the
                    successor  to [ * ] does  not  wish  manufacturing  of  this
                    Product to be  continued at the Elite  facility,  [ * ] must
                    give nine (9) months notice to Elite.

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4.3.     MANUFACTURING, PACKAGING & DELIVERY

         Following  ANDA  approval,  Elite  shall  manufacture  the  Product  in
         accordance  with  the  terms  and  conditions  of  this  Agreement.  In
         connection  with its  manufacturing  obligations  under this Agreement,
         Elite shall be responsible  for overseeing the packaging of the Product
         at a cGMP facility in its retail  package,  preparing the Master Label,
         including final printed labeling, text and printing the required labels
         and  inserts for the Product  under a  designated  [ * ] label or [ * ]
         designated  private  label,  all in  accordance  with the  ANDA  review
         process  and  the  ANDA  and  all  applicable  laws  and   regulations,
         including,  but not limited to the laws and regulations enforced by the
         FDA. [ * ], Elite and [ * ] shall  review and  approve  the form of the
         label and insert before final printing. Notwithstanding any such review
         and approval by them,  Elite shall be  responsible  for  manufacturing,
         storing and  overseeing  the  labeling,  packaging  and shipping of the
         Product  in  a  manner  that   complies  with  all   applicable   legal
         requirements,  including,  but not limited to the laws and  regulations
         enforced  by the FDA.  It is  expressly  understood  and  agreed by the
         Parties that Elite shall not assign or transfer its  responsibility  to
         manufacture the Product under this Agreement  without the prior written
         consent of [ * ], which consent may be withheld by [ * ] for any reason
         in its sole discretion.

4.4.     PURCHASE AND DISTRIBUTION

            A.  [ * ] shall  purchase  finished  (ready to market)  Product from
                Elite at the  Transfer  Price  established  in Exhibit  "B" (the
                "Transfer Price"), subject to Elite's (including any third party
                supplier's)  compliance  with the terms and  conditions  of this
                Agreement.

            B.  [ * ] shall distribute Product in a commercially  prudent manner
                and in a manner consistent with its status as a generic drug and
                in compliance  with all applicable laws and  regulations.  [ * ]
                shall diligently market and promote the Product in the Territory
                using commercially  reasonable efforts to maximize Product sales
                and Profit Share. [ * ] shall devote such  marketing  efforts to
                the  Product  as its  competitors  customarily  would  exert for
                generic   products  with  comparable   market  size  and  profit
                potential under  comparable  competitive  conditions.  Following
                approval of the ANDA by the FDA, [ * ] shall,  at least once per
                calendar  quarter,  provide to Elite and [ * ], in  writing,  an
                outline  of  [  *  ]'  commercial   plans,   planned   marketing
                activities,  and  sales  expectations  for the  Product  for the
                upcoming three (3) calendar quarters.

            C.  [ * ]  shall  file  all  labeling,  marketing,  advertising  and
                promotional  materials  to the  regulatory  agency.  [ * ] shall
                store,  transport,  sell,  market and  distribute the Product in
                compliance  with  all  applicable  laws  and   regulations.   If
                requested by [ * ], [ * ] shall make any  additional  regulatory
                filings as [ * ]' agent under the ANDA filing for advertising as
                well as any additional scientific questions.

4.5.     EXCLUSIVITY

         During the term of this Agreement, except as otherwise provided in this
         Agreement,  each of [ * ] and Elite agrees that, unless directed by [ *
         ], it will not  develop or  manufacture  the  Product for itself or any
         other  party  other than [ * ] and [ * ] agrees not to have the Product
         developed  or  manufactured  for sale by any party other than [ * ] and
         Elite,  subject to and in accordance  with the terms and  conditions of
         this  Agreement.  It is the intent of this  Agreement  that,  except as
         otherwise  provided  in this  Agreement,  [ * ] shall be the  exclusive
         distributor of the Product, Elite will be the exclusive manufacturer of
         the Product, Elite will supply [ * ] with all of [ * ]' requirements of
         the Product for  distribution and sale by [ * ], in the Territory and [
         * ] will  purchase  all  of its  requirements  of  the  Product  in the
         Territory from

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          Elite,  subject to and in accordance  with the terms and conditions of
          this Agreement and in all events following regulatory authorization to
          market the Product in that country.  Notwithstanding the above, if FDA
          regulatory  action limits or precludes  Elite's ability to produce the
          Product,  [ * ] and [ * ] shall  have the  option to have the  Product
          manufactured  at an alternate  manufacturing  site and by an alternate
          manufacturer,  subject to [ * ]'  ongoing  obligation  to pay  Elite's
          Profit  Share  for  all  such  Product  (regardless  of  the  site  of
          manufacture),  and subject to the  alternate  manufacturer's  entering
          into confidentiality obligations running to Elite safeguarding Elite's
          Confidential Information.

ARTICLE V:  DEVELOPMENT COSTS, MANUFACTURING COSTS AND SALES

5.1. DEVELOPMENT COSTS.

          A.   The Parties have  developed an agreed upon budget  setting  forth
               the projected  Development Costs, by Activity,  which is attached
               hereto as Exhibit "A." [ * ] will be responsible for payment of [
               * ]% of the Development Costs.  Elite, shall be responsible for [
               * ]% of the Development  Costs. No Party shall be responsible for
               Development  Costs in  excess  of [ * ]  percent  ([ * ]%) of the
               estimated  costs of the  development  as per  Exhibit  "A" hereto
               incurred  without such Party's prior written  consent.  It is the
               belief of the Parties  that only one (1)  pivotal  Bioequivalence
               Study will be  required to obtain the  approval  of both  Product
               strengths because they will be dose-proportional.

          B.   [ * ] or  Elite,  as the  designated  Party  responsible  for the
               Activity,  shall issue invoices for the actual  Development Costs
               of the Product,  including costs of the validation  batches on an
               Activity basis, and on a monthly basis.  With each invoice,  they
               shall provide an accounting detail supporting the actual time and
               costs   associated   with  each  Activity   (including   but  not
               all-inclusive  of experiments  and lab records).  [ * ] shall pay
               its respective share of such Development Costs within thirty (30)
               days  after  receipt  of such  invoice.  [ * ] has the  right  to
               terminate   this   Agreement   in  its   entirety   if  a   pilot
               Bioequivalence  Study has not been successfully  completed within
               nine (9) months of the date of this Agreement as per Exhibit A.

5.2. MANUFACTURING COSTS AND SALES; PROFIT SHARE.

         A.     All parties shall agree as to the timing to make the  validation
                batches, giving Elite ninety (90) days advance notice.

         B.     Upon  FDA  approval  of the  ANDA  for the  Product  under  this
                Agreement,  if any  validation  batch of Product is not saleable
                due to short dating, Elite shall be entitled to payment from [ *
                ], for the costs of such validation  batches,  including but not
                limited to all raw materials  costs,  as part of its Development
                Costs.

         C.     Upon  FDA  approval  of the  ANDA  for the  Product  under  this
                Agreement,  if any  validation  batch of Product is not saleable
                due to failure of such batch to meet Product  specifications  of
                the ANDA (other  than  relating  to expiry  dating),  then Elite
                shall be responsible for the costs of such  validation  batches,
                including but not limited to all raw materials costs.

         D.     [ * ] shall  pay Elite [ * ]  percent  ([ * ]%) of the  Transfer
                Price for a given shipment of Product within thirty (30) days of
                the date of the invoice.

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         E.     During the term of this  Agreement,  on a quarterly basis within
                thirty days of the calendar  quarter then ended, [ * ] shall pay
                each of Elite  and [ * ] its  respective  Profit  Share for such
                calendar quarter,  along with a detailed statement setting forth
                the calculation of Profit Share.

5.3.     AUDIT; INSPECTION

         Within  one  hundred  eighty  (180)  days  following  the close of each
         calendar  year  during the term of this  Agreement  and for a period of
         twelve (12) months following  expiration or earlier termination of this
         Agreement,  upon the request of a Party ("Requesting  Party") the other
         Party shall provide the Requesting Party's  accountants,  at Requesting
         Party's sole cost and expense,  with access,  during  regular  business
         hours and upon  reasonable  prior  written  notice,  and subject to the
         confidentiality  obligations  set forth  herein,  to the other  Party's
         books and records  relating to the Product in the Territory  solely for
         purposes of verifying costs and expenses and Profit Share in connection
         with this Agreement, and for verifying the accuracy of the calculations
         hereunder for the calendar year then ended and for the two (2) calendar
         years prior thereto. If any such verification shows any underpayment or
         overpayment,  a  correcting  payment or a refund  shall be made  within
         thirty (30) days of completion of such  verification  and submission of
         the results thereof, with details of the calculations included therein.

ARTICLE VI:  PRODUCT DEVELOPMENT FEES AND INTELLECTUAL PROPERTY
6.1.     It is agreed  between [ * ] and [ * ], that upon the  execution of this
         Agreement, [ * ] shall pay [ * ] a fee of $[ * ] for the identification
         and  development  of the Product  opportunity  and the oversight of the
         formulation development work to be completed at Elite and/or [ * ]. [ *
         ] agrees that  documentation of this process shall be provided to [ * ]
         on a monthly basis.

6.2.     It is  agreed  between  [ * ], [ * ], and  Elite  that if,  during  any
         process of Product  development  (including  but not all  inclusive  to
         packaging   and   marketing),   if  any  Parties   develop   patentable
         manufacturing not currently available in the market place:

          A.   The developing  Party shall be the sole owner of the intellectual
               property  and may seek to protect this process as either a "trade
               secret" or patent the process.

          B.   If Elite and/or [ * ] develops such intellectual  property,  they
               shall be required  to license  the use of such "trade  secret" or
               patentable  technology to [ * ] or Elite (as  applicable),  on an
               exclusive basis for the manufacture of the Product,  for a fee of
               $[ * ] per year of each  year in which  there  are a full  twelve
               (12)  months  sales  of the  Product,  for  use by  Elite  in the
               manufacture  and [ * ] in the  sales of the  Product  under  this
               Agreement.

          C.   Such "trade  secret" or patentable  technology may be used by the
               developing Party on other unrelated products, however [ * ] shall
               have  the  right  of  first  refusal  to use  such  process  in a
               commercial manner for the production of the Product.

ARTICLE VII: DELIVERY, GUARANTEE,  INSURANCE,  INDEMNITY AND RELATIONSHIP OF THE
PARTIES

7.1.     ORDERING AND DELIVERY

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<PAGE>

          A.   Elite will deliver to [ * ] or shall cause the  finished  Product
               to be delivered  to [ * ] in bottles  packed in cases and stacked
               on pallets as specified by [ * ] under Section  7.1(c) below. [ *
               ] shall order  Product in multiples of Elite's batch size for the
               Product.

          B.   [ * ] will provide to Elite on a monthly  basis a forecast of its
               expected  supply needs for the Product for the then following six
               (6) months,  along with requested shipment dates for the Product.
               Each monthly forecast shall be deemed to be a firm purchase order
               as to the  Product,  binding  upon [ * ] and  subject  to Elite's
               acceptance or rejection,  in whole or in part,  scheduled for the
               first three (3) months of the forecast, and non-binding as to the
               last  three (3)  months of the  forecast.  If a monthly  forecast
               increases  the monthly  quantity of Product by more than 25% over
               the  quantity  scheduled  in  the  immediately   preceding  month
               forecast, Elite shall not be required to manufacture and ship the
               quantity of Product that exceeds a 25%  increase.  At the time of
               each quarterly forecast, the Parties will agree on shipment dates
               for the Product  scheduled  for the first three (3) months of the
               forecast,  to the extent they have not already agreed,  and Elite
               will  make  shipments,  or  cause  all  shipments  to  occur,  in
               accordance with the agreed dates. If a monthly forecast increases
               the quantity of any Product  over the  quantity  scheduled in the
               immediately preceding monthly forecast, the Parties will agree on
               an equitable adjustment in the shipment dates.

          C.   In  addition  to monthly  forecasts,  at least  thirty  (30) days
               before the shipment date agreed upon for any Product, [ * ] shall
               provide Elite with specific written  instructions  concerning the
               packaging,  labeling (unless under a private label other than [ *
               ],  which will  require  60 days prior  notice to Elite and [ * ]
               shall ensure that Elite has sufficient  inventory of such private
               labels at least thirty days before the desired  shipment  date of
               Product), and shipping of such Product.

          D.   Elite  will  ship,   or  shall   ensure   that  any  third  party
               labeler/packager  ships,  the  Product in  accordance  with [ * ]
               shipping and delivery  instructions.  Elite shall pay the cost to
               ship the bulk packaged Product to a third party  labeler/packager
               and [ * ] shall pay the  shipping  cost of the  finished  Product
               shipped from a pre-approved cGMP facility under Section 4.3, to [
               * ]'  desired  location.  Each  shipment  shall be made to arrive
               within five (5) days of the shipping date.  Upon shipment,  Elite
               shall  invoice [ * ] in writing  for the  Transfer  Price.  [ * ]
               shall pay Elite the Transfer Price within thirty (30) days of the
               date of the invoice as in accordance with Section  5.2(c).  Elite
               shall be deemed to have  delivered  the Product to [ * ] when the
               Product has been  tendered to the shipper,  and title and risk of
               loss of the  Product  shall be  deemed to pass to [ * ] upon such
               tender.

7.2.     GUARANTEE

         Elite  guarantees  that the Product  delivered to [ * ] will not be, on
         the date of delivery,  adulterated or misbranded  within the meaning of
         the FDCA or an article which may not,  under the provisions of Sections
         404, 505 or 512 of the FDCA, be introduced  into  interstate  commerce.
         Elite further  guarantees  that the Product will be manufactured in all
         respects in  accordance  with the ANDA and will conform in all respects
         with cGMPs.  Elite agrees to comply with and be bound by all reasonable
         [ * ] quality standards that may be agreed to by the Parties in writing
         and  appended  to this  Agreement.  If any  Product is found to fail to
         conform to the  specifications  of the ANDA or is not  manufactured  in
         accordance with current good manufacturing  practices, and such failure
         is due to acts or omissions  of Elite,  then [ * ] shall have the right
         to reject such  nonconforming  shipment of Product or the

                                       10
<PAGE>

         nonconforming  portion  thereof,  as the case may be. [ * ] shall  give
         written notice to Elite of its rejection  within fifteen (15) days of [
         * ]' receipt of the Product, specifying the grounds for such rejection.
         The  nonconforming  Product shall be held for Elite's  disposition,  or
         shall  be  returned  to  Elite,   as  directed  by  Elite  in  writing.
         Nonconforming  packaged  Product  shall be returned to Elite within ten
         (10)  business  days of Elite's so  directing.  Elite will  replace the
         Product at no cost to [ * ]. Elite will bear the cost of any Recall (as
         defined  below) of any Product due to acts or omissions of Elite. [ * ]
         will  bear  the  cost  of any  Recall  of any  Product  due to  acts or
         omissions  of [ * ]. In all  other  events,  the  costs of any  Product
         Recall  shall  be  allocated  [ * ]  percent  ([ * ]%)  to [ * ], [ * ]
         percent ([ * ]%) to Elite.

7.3.     OTHER REPRESENTATIONS AND WARRANTIES

          A.   Elite  represents  and  warrants  that it will  use  commercially
               reasonable efforts to ensure that any third party supplier of the
               Active  Pharmaceutical  Ingredient  ("API") for the Product shall
               have an active  Drug  Master  File with the FDA,  shall have been
               qualified  by FDA to supply  the API  under  the ANDA,  and is in
               compliance with the obligations imposed by the FDCA.

          B.   Elite  represents  and  warrants  that it will  use  commercially
               reasonable    efforts   to   ensure    that   any   third   party
               packager/labeler  it  subcontracts  with  pursuant to Section 4.4
               shall  perform its  packaging,  storing,  labeling  and  shipping
               services  in  a  manner  which  comports  with  all   obligations
               hereunder,  and is in compliance with the obligations  imposed by
               the FDCA.

          C.   Each  of [ * ] and  Elite  represents  that  performance  of  its
               obligations  set  forth  in  this  Agreement  (whether  performed
               directly by Elite or through a supplier, such as provision of API
               from  a  third  party   supplier)   shall  not  infringe  on  the
               intellectual  property  rights,  including but not limited to any
               patent rights,  of any third party. [ * ] further  represents and
               warrants  that none of [ * ] or any of its  officers,  directors,
               employees  or  shareholders  is  bound  by  any  restrictions  or
               obligations  (of  confidentiality,  nondisclosure  or  otherwise)
               owing  to any  third  party  with  respect  to the  formulations,
               technology, know-how or information to be provided by [ * ] under
               this Agreement.

          D.   [ * ] represents and warrants that its sale and  distribution  of
               the Product  will not violate any  agreement or order to which it
               is a party or by which it is bound.  The Parties will immediately
               notify each other of, and assist each other in answering customer
               or regulatory inquiries and complaints concerning the Product.

          E.   DISCLAIMER OF WARRANTIES: EXCEPT AS SPECIFICALLY PROVIDED HEREIN,
               ELITE  EXPRESSLY  DISCLAIMS  ANY AND ALL OTHER  WARRANTIES OF ANY
               KIND,  EXPRESS  OR  IMPLIED,  INCLUDING  WITHOUT  LIMITATION  THE
               WARRANTIES  OF  MERCHANTABILITY  AND  FITNESS  FOR  A  PARTICULAR
               PURPOSE.

          F.   Elite  and  [  *  ]  each  agrees  to  notify  the  other  within
               twenty-four  (24) hours of any  serious  and  unexpected  adverse
               reactions  reported to either of them  resulting  from the use of
               the Product  (whether inside or outside of the Territory).  Elite
               and [ * ] shall  each  notify  the  other  promptly  of any other
               complaints or adverse  reactions  from third parties  reported to
               either of them  resulting  from use of the Product sold under [ *
               ]' label.

                                       11
<PAGE>

          G.   In the event either party believes it may be necessary to conduct
               a recall, field correction, market withdrawal, stock recovery, or
               other similar action with respect to any Product sold by Elite to
               [ * ] under this  Agreement (a  "Recall"),  Elite and [ * ] shall
               consult  with  each  other  as to how best to  proceed,  it being
               understood and agreed that the final decision as to any Recall of
               any Product shall be made by Elite; provided, however, that [ * ]
               shall not be prohibited  hereunder from taking any action that it
               is required to take by applicable law.

7.4.     COMPLIANCE WITH LAW

         The Parties  herein  represent and warrant that they will perform their
         respective obligations hereunder in accordance with all applicable law.

7.5      LIMITATION OF LIABILITY

         EXCEPT  WITH  RESPECT  TO (x)  CONSEQUENTIAL  DAMAGES  AWARDED TO THIRD
         PARTIES FOR PRODUCT  LIABILITY  CLAIMS  COVERED BY THE  INDEMNIFICATION
         OBLIGATIONS  SET  FORTH IN  SECTION  7.7(A)  OF THIS  AGREEMENT,  ELITE
         INFRINGEMENT  CLAIMS AND [ * ] INFRINGEMENT  CLAIMS COVERED BY SECTIONS
         7.7(B)  and  7.7(C)  OF  THIS  AGREEMENT,  AND (y)  ANY  BREACH  OF THE
         CONFIDENTIALITY OBLIGATIONS SET FORTH IN ARTICLE III OF THIS AGREEMENT,
         NO PARTY  TO THIS  AGREEMENT  SHALL BE  LIABLE  FOR ANY  OTHER  PARTY'S
         CONSEQUENTIAL,  INCIDENTAL,  SPECIAL OR  PUNITIVE  DAMAGES,  OR LOSS OF
         PROFITS.

7.6.     INSURANCE

          A.   Elite  represents  and  warrants  that it has  product  liability
               insurance  in the  amount  of at least  $1,000,000  per claim and
               $5,000,000  in the  aggregate  covering  the  Product  developed,
               manufactured,  packaged  and labeled  hereunder  and shall ensure
               that any third party supplier  hired by Elite in connection  with
               its obligations hereunder shall carry product liability insurance
               in the same amounts.  Elite will provide evidence of his coverage
               to [ * ] on an annual  basis or  whenever  any  change is made by
               Elite or any third-party supplier in such policy of insurance.

          B.   [ * ]  represents  and  warrants  that it has  product  liability
               insurance  in the  amount  of at least  $1,000,000  per claim and
               $5,000,000 in the aggregate  including  products covering Product
               distributed  from its  facility.  [ * ] will provide  evidence of
               this  coverage to Elite on an annual basis or whenever any change
               is made by [ * ] in such policy of insurance.

7.7.     INDEMNIFICATION

          A.   Elite and [ * ] agree to indemnify  and hold  harmless [ * ], its
               directors,  officers,  employees and agents(collectively,  "[ * ]
               Indemnified Parties"),  from any liability or expense,  including
               reasonable  fees and costs of defense,  they incur arising out of
               or in  connection  with  third  party  claims  relating  to:  (i)
               Elite's,   or  any  third  party  supplier  engaged  by  Elite's,
               negligence with respect to the manufacturing, storage, packaging,
               labeling or  shipment of the  Product;  (ii)  personal  injury or
               death  resulting  from  use of  Product  that  was  manufactured,
               stored,  or shipped by Elite, or any third party supplier engaged
               by Elite,  in a manner  that does not  comply  with the terms and
               conditions of this Agreement (a "Product  Liability  Claim");  or
               (iii)  any  breach  of  Elite's  or [ *  ]'s

                                       12
<PAGE>

               representations  or  warranties  set  forth  in  this  Agreement,
               including but not limited to those set forth in Sections 7.2, 7.3
               (but  specifically   excluding  Section  7.3(C)),  and  7.4;  all
               provided  that the  liability or expense  which is the subject of
               the third party claim is not related in any way to [ * ]', or any
               third party supplier  engaged by [ * ]',  negligence,  fault,  or
               other act or omission. [ * ] agrees to indemnify, defend and hold
               harmless Elite, [ * ], and their respective directors,  officers,
               employees and agents  (individually,  "Elite Indemnified Parties"
               and "[ * ] Indemnified Parties"),  from any liability or expense,
               including  reasonable  fees and  costs  of  defense,  they  incur
               arising out of or in connection  with third party claims relating
               to:  (i) a breach of [ * ]'  representations  or  warranties  set
               forth in this Agreement; (ii) [ * ]', or any third party supplier
               engaged by [ * ]',  negligence with respect to the  transporting,
               storing,  sale,  marketing,  promotion or distribution of Product
               hereunder;  or (iii) any third party  supplier  engaged by [ * ]'
               packaging, labeling or shipment of Product in accordance with the
               terms and  conditions  of this  Agreement;  all provided that the
               liability  or  expense  which is the  subject of the claim is not
               related  in any way to  Elite's  or [ * ]'s (or any  third  party
               supplier engaged by Elite or [ * ]'s) negligence, fault, or other
               act or omission.

          B.   Elite shall indemnify, defend and hold harmless [ * ] Indemnified
               Parties and [ * ] Indemnified Parties from the costs and expenses
               of settling,  paying or defending any and all claims,  actions or
               proceedings resulting from an assertion against [ * ] Indemnified
               Parties or [ * ]  Indemnified  Parties that Elite's  Intellectual
               Property  infringes  upon a third party's  intellectual  property
               rights ("Elite Infringement Claims"); provided however that Elite
               shall not be responsible for any  Infringement  Claim relating to
               Intellectual  Property  provided  by [ * ], [ * ],  or any  third
               party.

          C.   [ * ] shall indemnify, defend and hold harmless [ * ] Indemnified
               Parties  and  Elite  Indemnified  Parties  and pay all  costs and
               expenses of  settling,  paying or  defending  any and all claims,
               actions or proceedings  resulting from an assertion against Elite
               Indemnified  Parties or [ * ]  Indemnified  Parties  that [ * ]'s
               Intellectual Property infringes upon a third party's intellectual
               property rights ("[ * ] Infringement  Claims");  provided however
               that [ * ] shall not be responsible  for any  Infringement  Claim
               relating to  Intellectual  Property  provided by Elite, [ * ], or
               any third party.

          D.   Except  with  respect to Product  Liability  Claims,  breaches of
               confidentiality  obligations, and Elite Infringement Claims and [
               * ] Infringement Claims, in no event shall a Party's liability to
               indemnify  under  this  Section  7.7  or  otherwise   exceed  the
               aggregate Profit Share payments  received by such Party as of the
               date of the claim for indemnity hereunder.

7.8      RELATIONSHIP OF THE PARTIES

         It is expressly  understood  and agreed that [ * ], Elite and [ * ] are
         independent  contractors  and that  the  relationship  between  them by
         virtue of this  Agreement  shall not constitute a partnership or agency
         of any kind.  No Party to this  Agreement  shall have the  authority to
         make any statements,  representations or commitments of any kind, or to
         take any action,  which shall be binding on the other Party without the
         prior  written  authorization  of  that  other  Party.  It  is  further
         understood that [ * ] is not a tenant of Elite or its Lessee or Lessor,
         and shall not be responsible for any rent or lease expense  incurred by
         Elite.

ARTICLE VIII; DISPUTE RESOLUTION/ARBITRATION

8.1.      In the  event  that a  dispute  arising  out of or  relating  to  this
          Agreement cannot be resolved through

                                       13
<PAGE>

          negotiation  between the Parties,  the Parties  hereto agree to submit
          the  dispute  to  mediation  and  will  jointly   appoint  a  mutually
          acceptable  mediator,  seeking  assistance in such regard from the CPR
          Institute of Dispute  Resolution  (366 Madison  Avenue,  New York,  NY
          10017,  telephone number  212-949-6490) if they are unable to promptly
          agree upon such  appointment.  Mediation must commence  within fifteen
          (15)  days  after  either  Party  hereto  serves a  written  notice of
          mediation upon the other and the Parties hereto shall bear equally the
          cost of the mediation.  The Parties agree to participate in good faith
          in the  mediation  and related  negotiations  for a period of five [5]
          days.  If the  Parties are not  successful  in  resolving  the dispute
          through  mediation,  the parties may then  arbitrate.  This  Agreement
          shall be governed by and construed in accordance  with the laws of the
          State of [ * ] without regard to conflicts of laws provisions.

8.2.     ARBITRATION:  In the event a dispute  cannot be resolved in  accordance
         with  Section  8.1,  all  controversies  or  claims  arising  out of or
         relating to this Agreement, or of a breach of it, shall be submitted to
         binding  arbitration  pursuant  to Section  682.01 et seq, of the [ * ]
         Statutes ([ * ] Arbitration  Code) as amended from time to time and not
         under the rules of the American Arbitration Association.

         A.     The  arbitration  shall be  before  one (1)  arbitrator.  If the
                Parties fail to agree on the sole arbitrator within fifteen (15)
                days of  written  notice  from  either  Party of a dispute to be
                submitted  to  arbitration,  either  Party may apply to have the
                arbitrator  appointed  by  a  court  of  competent  jurisdiction
                pursuant  to Section  682.04,  [ * ] Statutes.  All  arbitration
                proceedings shall be held in [ * ].

         B.     The  arbitration  hearing shall be held within  forty-five  (45)
                days from the date of the arbitrator's  acceptance of his or her
                duties,  unless otherwise agreed by all Parties,  or extended by
                the arbitrator on good cause shown.

         C.     The fees and costs of the  arbitration  shall be equally divided
                so that each Party shall pay one third.  If a Party fails to pay
                the fees of the  arbitrator as requested  from time to time, the
                other Party may  advance any such fees,  which shall be due with
                interest at the  maximum  legal rate  permitted  by law from the
                date  of  advancement,  and  shall  be  part  of  the  award  in
                arbitration.

         D.     The Parties agree that the Arbitrator shall be granted the power
                to award reasonable attorneys' to the prevailing Party.

         E.     Any award  rendered  in the  arbitration  shall be  binding  and
                conclusive upon the Parties and shall not be subject to retrying
                or appeal before any court.  The arbitrator shall have the right
                to decree specific performance. Judgment upon the award rendered
                in  the   arbitration   may  be  entered  in  any  court  having
                jurisdiction.


ARTICLE IX:  TERM AND TERMINATION OF AGREEMENT

This Agreement shall continue in effect as of the Effective Date for a period of
ten (10) years from the first  shipment of commercial  production  quantities of
the Product under this Agreement (the "Initial  Term").  After the Initial Term,
this Agreement  shall continue for successive  terms of five (5) years each (the
"Additional Terms"), unless either [ * ] or Elite provides written notice to the
other Party at least  forty-five  (45) days  before the end of the  then-current
Term that such Party desires

                                       14
<PAGE>

to  terminate  this  Agreement  (the  Additional  Terms and Initial  Terms being
referred to herein  collectively as the "Term").  Notwithstanding the foregoing,
this Agreement may be terminated in accordance with the following provisions:

9.1.     TERMINATION WITHOUT CAUSE DURING DEVELOPMENT

         Before the FDA approves the ANDA with respect to the Product,  if [ * ]
         wishes to terminate for any reason:

         A.     [ * ] shall give thirty (30) days notice in writing to [ * ] and
                Elite.

         B.     All of [ * ]' rights to the  Product  and the ANDA shall  revert
                back to [ * ] upon  repayment  to [ * ] by [ * ] of the one time
                Product  development fee of $[ * ]. If [ * ] does not pay the $[
                * ] to [ * ] within  thirty  (30) days of [ * ]'  notice,  Elite
                shall have the right to all of [ * ]' rights upon  payment of $[
                * ] to [ * ].

         C.     [ * ]  shall  pay  [  *  ]  and  Elite  its  prorated  share  of
                Development Costs through the date of notice and as set forth on
                Exhibit "A".

9.2. TERMINATION WITHOUT CAUSE AFTER DEVELOPMENT.

          After  eighteen  (18) months of launch of the Product into the market,
          either [ * ] or Elite may terminate  this Agreement on six (6) months'
          written  notice to the other if the  Profit  Share to the  terminating
          party for the twelve (12) month period preceding the date of notice of
          termination is less than [ * ]($[ * ]). If the Agreement is terminated
          under  this  section  by [ * ], [ * ]  agrees  to pay for all  Product
          ordered by it.

          If the  Agreement  is  terminated  under this  section by [ * ], [ * ]
          shall have the option to transfer  and sell the ANDA and its rights to
          the  Product to [ * ] and [ * ] shall take such  actions,  and execute
          and deliver such documents,  as [ * ] may from time to time reasonably
          request to effectuate the transfer of the ANDA to [ * ] hereunder.  If
          [ * ] does not accept rights and does not request transfer of the ANDA
          in writing  within thirty (30) days of the notice,  Elite may elect to
          accept the  transfer  of the ANDA its rights to the  Product and [ * ]
          shall take such actions,  and execute and deliver such  documents,  as
          Elite may from  time to time  reasonably  request  to  effectuate  the
          transfer of the ANDA to Elite  hereunder.  The  accepting  party shall
          have all of [ * ]' rights and obligations for the Product.

          If the  Agreement is  terminated  under this  section by Elite,  Elite
          agrees, at the request of [ * ], to transfer the Product manufacturing
          to another  facility and shall  provide all  information  necessary to
          transfer  the  Product  manufacturing  to  a  manufacturing   facility
          designated by [ * ] within sixty (60) days of such termination notice.
          Any such  termination by Elite shall be effective upon FDA approval of
          the new manufacturing  facility,  or if earlier,  on nine months' from
          the date of Elite's notice of termination.

9.3. TERMINATION FOR CAUSE

          This Agreement may be terminated by either Elite or [ * ] in the event
          of a material  breach or default by a Party which is not cured  within
          thirty (30) days after receipt of written notice  detailing the breach
          or default.

                                       15
<PAGE>

9.4.     RIGHTS UPON TERMINATION

         Subject  to  Sections  9.1(B)  and  9.2,  or  upon  termination  of the
         Agreement due to a material  breach by [ * ], upon the  termination  or
         expiration  of  this  Agreement,  [ * ]  shall  continue  to  have  the
         ownership rights to the ANDA,  including the right to license,  sell or
         transfer the ANDA.

9.5      ACTS OF INSOLVENCY

         Either  Elite or [ * ] may  terminate  this  Agreement  for  default by
         written  notice if the other Party becomes  insolvent,  makes a general
         assignment for the benefit of creditors,  files a voluntary petition of
         bankruptcy,  suffers or permits the  appointment  of a receiver for its
         business  assets,  or  becomes  subject  to any  proceeding  under  any
         bankruptcy or insolvency law, whether domestic or foreign, or has wound
         up or  liquidated,  voluntarily  or  otherwise.  A Party  hereto  shall
         immediately  notify  the other  Party  upon an  occurrence  of any such
         event.

9.6      FORCE MAJEURE

         Either Party, Elite or [ * ] or [ * ], shall be excused from failure to
         perform any of its obligations  hereunder to the extent such failure is
         caused by acts of God, fires, floods, war, sabotage,  unavailability of
         raw  materials,  governmental  laws  or  regulations,  labor  disputes,
         strikes or similar  occurrences,  where such Party is without  fault or
         negligence  (a  "Force  Majeure  Event"),  provided  such  Party  gives
         immediate  notice of such Force Majeure  Event to the other Party,  and
         exercises due diligence to remove the cause as soon as practicable.  As
         applicable due to natural disaster,  Elite will make reasonable efforts
         to assist [ * ] to find/establish  another approved cGMP  manufacturing
         site.

ARTICLE X:  MISCELLANEOUS

10.1     ASSIGNMENT

         Neither this  Agreement  nor any interest  therein may be assigned,  in
         whole or in part, by either Party, Elite or [ * ] or [ * ], without the
         prior written consent of the other, except that either Party may assign
         its rights and obligations to an affiliate,  division,  subsidiary,  or
         parent  company,  or to a successor  approved by (i) Elite, if [ * ] is
         the assignor,  (ii) [ * ], if Elite is the assignor, or (iii) Elite and
         [ * ], if [ * ] is the assignor (such  approval not to be  unreasonably
         withheld),  in which event such assignee or successor  shall assume the
         respective  Party's rights and  obligations  hereunder.  Subject to the
         foregoing,  this  Agreement  shall be  binding  upon  and  inure to the
         benefit of the Parties  hereto,  and their  respective  successors  and
         assigns.

10.2.    NO WAIVER

         No delay or omission by any Party hereto to exercise any right of power
         occurring  upon any  noncompliance  or  default  by the other  Party or
         Parties with respect to any of the terms of this Agreement shall impair
         any  such  right or power or be  construed  to be a waiver  thereof.  A
         waiver  by  any  of  the  Parties  hereto  of  any  of  the  covenants,
         conditions,  or  agreements  to be  performed by the other shall not be
         construed  to be a  waiver  of any  succeeding  breach  thereof  of any
         covenant,  condition,  or agreement  herein  contained.  Unless  stated
         otherwise,  all  remedies  provided  for in  this  Agreement  shall  be
         cumulative  and in  addition  to and not in lieu of any other  remedies
         available to any Party at law, in equity, or otherwise.

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<PAGE>

10.3.    ENTIRE AGREEMENT; MODIFICATIONS TO THE AGREEMENT

         This Agreement, including all Exhibits attached hereto, constitutes the
         entire  agreement  between  the  Parties.  All  prior   contemporaneous
         agreements,  proposals,   understandings,   whether  oral  or  written,
         relating to the subject  matter  hereto are hereby  superceded  by this
         Agreement,  except of the  Confidentiality  Agreement dated December 1,
         2004, among [ * ], [ * ], and Elite, which shall continue in full force
         and effect.  No modification or waiver of any of the provisions of this
         Agreement shall be valid unless it is provided in writing and signed by
         [ * ] and Elite and, if and to the extent such  modification  or waiver
         modifies [ * ]'s rights or obligations, by [ * ], too.

10.4.    GOVERNING LAW

         This  Agreement  shall be  governed  by the laws of the  State of [ * ]
         United States of America.

10.5.    NOTICES

         All  communications  required  or  permitted  hereunder,  shall  be  in
         writing,  and shall be effective  upon  delivery to the above  provided
         addresses.

10.6.    AUTHORITY

         Each person signing on behalf of a Party to this Agreement below herein
         represents  and warrants  that it has the legal right and  authority to
         enter  into  this  Agreement,  and to  fully  perform  its  obligations
         hereunder,  and that  none has made nor will  make any  commitments  in
         conflict with its respective obligations hereunder.

10.7.    HEADINGS

         The headings  and  subheadings  utilized  herein are not a part of this
         Agreement,  but are merely  guides or labels to assist in locating  and
         reading the provisions hereof.

10.8.    SURVIVAL

         The following provisions in this Agreement shall survive termination or
         expiration  of this  Agreement  for any reason:  Article I,  Article II
         Section 2.2, Article III,  Sections 7.2, 7.3(A),  (B) (C) (D), (E), (F)
         and (G), 7.5, and 7.7, Article VIII, Article IX, and Article X

10.9     SEVERABILITY

         It is not the  intention  of any Party  hereto to  violate  any  public
         policy  statutory  or  common  laws,  rules,  regulations,  treaty,  or
         decisions of any  government  agency or  executive  body thereof of any
         country or community or  association  of countries.  Should one or more
         provisions of this Agreement be or become invalid or  unenforceable  by
         reason of such a violation,  then the Parties hereto shall  substitute,
         by mutual consent, valid provisions for such invalid provisions,  which
         valid  provisions in their economic effect come so close to the invalid
         provisions  that it can be  reasonably  assumed that the Parties  would
         have contracted this Agreement with those new provisions.  In case such
         provisions cannot be found, the invalidity of one or more provisions of
         the  Agreement  shall not affect the  validity  for the  Agreement as a
         whole,  unless the invalid provisions are of such essential  importance
         for this Agreement that it is to be reasonably assumed that the Parties
         would  not  have   contracted   this  Agreement   without  the  invalid
         provisions.

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         IN WITNESS  WHEREOF,  each of [ * ], [ * ] and Elite have executed this
         Product Development, Manufacturing, and Distribution Agreement by their
         duly authorized officers as of the Effective Date.

ELITE LABORATORIES, INC.

---------------------
Bernard J. Berk, President


[ * ]

------------------------------
[ * ]


[ * ]

-------------------------
[ * ]

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ATTACHMENTS

EXHIBIT A: Product development activity schedule

EXHIBIT B: Transfer price for [ * ]

EXHIBIT C: Profit Sharing Calculation

EXHIBIT D: Example of Profit Sharing Calculation

ELITE LABORATORIES, INC.


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EXHIBIT A: [ * ]

EXHIBIT B  [ * ]

EXHIBIT C  [ * ]

EXHIBIT D  [ * ]


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