ANDA OWNERSHIP TRANSFER
                          AND PRODUCT LICENSE AGREEMENT

         This license agreement (the "Agreement")  dated as of May 17, 2006 (the
"Effective Date") is entered into by and between Nostrum  Pharmaceuticals,  Inc.
("Nostrum"), a Delaware corporation, and Synovics Laboratories,  Inc. ("Synovics
Labs"), a Nevada corporation.

WHEREAS,

         A. Nostrum has  developed,  and is in the process of  developing,  time
release and other technology for pharmaceutical products.

         B. Synovics Labs is researching, developing,  manufacturing,  marketing
and selling pharmaceutical products.

         C. Synovics Labs desires to license from Nostrum the exclusive right to
develop,  manufacture,  market and sell the Product (as hereinafter  defined) in
the United  States of  America,  and  Nostrum  desires to grant such  license to
Synovics Labs, all on the terms and conditions hereinafter set forth.

         NOW,  THEREFORE,  in  consideration  of the  premises,  and the  mutual
agreements hereinafter set forth, the parties hereby agree as follows:

                             ARTICLE 1 - DEFINITIONS

         The  capitalized  terms set forth  below  (whether  in the  singular or
plural) shall have the meanings indicated for the purposes of this Agreement.

                  "Affiliate" means any Person which controls,  is controlled by
         or is under common  control with Synovics Labs or Nostrum,  as the case
         may be. The term "control" means the ownership, directly or indirectly,
         of more than fifty percent (50%) of the voting stock or equity interest
         of the subject Person, or the right to receive over fifty percent (50%)
         of the profits or earnings of such Person.  Such other  relationship as
         in fact gives a Person the power or ability to control the  management,
         business  and  affairs of the  subject  Person  shall also be deemed to
         constitute control.

                  "Biobatch"  means a  batch  suitable  for  use in the  Pivotal
         Study.

                  "cGMP" means  current  good  manufacturing  practices  for the
         methods to be used in, and the  facilities and controls to be used for,
         the manufacture,  storage and handling of the Product, all as set forth
         from  time-to-time  by the FDA pursuant to the federal  Food,  Drug and
         Cosmetic  Act and the  rules  and  regulations

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         promulgated thereunder (including  specifically,  Title 21, part 211 of
         the Code of Federal Regulations of the United States).

                  "FDA" means the United States Food and Drug  Administration or
         any successor agency of the United States government.

                  "Future  Strength"  shall mean a to be  determined  additional
         strength of extended release  metformin  formulation  using the Nostrum
         Technology  that  may be  developed  and  filed as a  separate  ANDA in
         Synovics' discretion.

                  "TRANSFERED  FILING" shall mean  Nostrum's ANDA No. 76-756 for
         the  Product  and  supplements   thereto,   including  all  pending  or
         in-process   registrations  issued  by  United  States  Food  and  Drug
         Administration related to the Products.

                  "Litigation  Expenses"  shall  mean  out-of-pocket  costs  and
         expenses  incurred by Synovics Labs (i) connection  with the defense of
         any claim,  suit or other legal action  alleging that the Product being
         marketed  and  sold  by  Synovics  Labs  hereunder  infringes  upon  or
         misappropriates  a third party  patent or other  intellectual  property
         right or (ii) in connection with the resolution of any such claim, suit
         or other legal action, including any judgment or award against Synovics
         Labs or any of its Affiliates or subcontractors and any amounts paid in
         settlement (including license fees and royalties).

                  "Nostrum  Technology"  means  all  of  Nostrum's   proprietary
         information,  know-how, materials and technology related to the Product
         (including  without  limitation,  manufacturing  information)  and  any
         related patent  applications  or patents owned or controlled by Nostrum
         or its  Affiliates  to the  extent  they cover the  Product  and Future
         Strength or any such information,  know-how, materials or technology as
         applied  to  the  Product  and  Future  Strength,  including  patent  #
         6,416,786.

                  "Net Sales" means, with respect to the Product for any period,
         the amounts  actually  received by Synovics Labs or its Affiliates from
         unaffiliated  third  parties  (whether an end-user,  a  distributor  or
         otherwise) for the sale of Products in the Territory,  and exclusive of
         intercompany transfers or sales between and among Synovics Labs and its
         Affiliates,  less the following  reasonable  and  customary  deductions
         (without duplication) from such gross amounts:

                  (i)      normal  and  customary   trade,   cash  and  quantity
                           discounts, allowances and credits;

                  (ii)     credits or  allowances  actually  granted for damaged
                           goods,   returns  or   rejections   of  Product   and
                           retroactive price reductions;

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<PAGE>

                  (iii)    sales or  similar  taxes  (including  duties or other
                           governmental charges levied on, absorbed or otherwise
                           imposed  on the sale of  Product  including,  without
                           limitation,  value added taxes or other  governmental
                           charges  otherwise  measured by the  billing  amount,
                           when included in billing); and

                  (iv)     all  charge  back  payments,  discounts  and  rebates
                           (whether  mandated or  otherwise)  granted to managed
                           health care  organizations  or to federal,  state and
                           local governments, their agencies, and purchasers and
                           reimbursers or to trade customers,  including but not
                           limited to, wholesalers and chain and pharmacy buying
                           groups  and  charge  back  payments,   discounts  and
                           rebates  (whether  mandated or otherwise)  charged by
                           national or local government; and

                  (v)      commissions  paid to third  parties and sales  agents
                           other than  Synovics  Labs sales  personnel  and sale
                           representatives.

                  (vi)     freight,  postage,   shipping,   customs  duties  and
                           insurance charges, when included in billing.

                  "Person" means any natural person, corporation, unincorporated
         organization,  partnership,  association,  joint stock  company,  joint
         venture, limited liability company, trust or government,  or any agency
         or political subdivision of any government, or any other entity.

                  "Pivotal    Study"    means   the   pivotal    pharmacokinetic
         biostudy(ies)  conducted by a fully licensed biostudy facility mutually
         satisfactory to Synovics Labs and Nostrum which is reasonably  expected
         to demonstrate,  to the  satisfaction of the FDA, the intended AB rated
         bioequivalence of the Product with the Reference Product  sufficient to
         enable Synovics Labs to submit to the FDA an acceptable Abbreviated New
         Drug  Application  ("ANDA") for the  manufacture and commercial sale of
         the Product.

                  "Prestudy" means a pharmacokinetic  biostudy which is intended
         to indicate  likelihood of demonstrating  bioequivalence of the Product
         with the Reference  Product,  typically carried out in a smaller number
         of volunteers than those required by FDA for pivotal biostudies.

                  "Product"  means  the  AB  rated,   generic  500mg  equivalent
         (Metformin ER Tablet) of the branded product Glucophage-XR,.

                  "ANDA"  shall  mean  an  abbreviated   new  drug   application
         submitted to the FDA covering the Product.

                  "Territory"  means  the  United  States  of  America  and  its
         territories, possessions and commonwealths (including Puerto Rico).

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                          ARTICLE 2 - GRANT OF LICENSE

         2.1      LICENSE  GRANT.  Nostrum  hereby grants to Synovics  Labs, and
Synovics  Labs  accepts,  ownership  of the  Transfered  Filing and an exclusive
license under the Nostrum  Technology to develop,  make, have made, use, import,
offer  for  sale,  market  and sell the  Product  and a  Future  Product  in the
Territory.

         2.2      RETAINED  RIGHTS.  Subject to the licenses granted to Synovics
Labs  hereunder,  Nostrum shall remain the sole owner of any Nostrum  Technology
which  Nostrum  shall have  furnished to Synovics  Labs in  connection  with the
performance of Nostrum's  obligations pursuant to this Agreement.  Nostrum shall
retain all right, title and interest to use or license the Nostrum Technology in
connection with any product, formulation or process except the Product.

                          ARTICLE 3 - RESEARCH PROGRAM

         3.1      NOSTRUM'S OBLIGATIONS.

                  (a)      (i) As of the  Effective  Date,  With  respect to the
Future Strength, Nostrum has completed work necessary to develop a bioequivalent
Product (as  compared to the  Reference  Product)  suitable for use in the Pilot
Study,  and to develop a reliable and efficient  manufacturing  process suitable
for producing  commercial scale quantities of the Product meeting the applicable
specifications,  necessary  for filing an ANDA for the  Product.  Nostrum  shall
provide  to  Synovics  Labs  access  to  all of the  results  of the  Prestudies
completed by Nostrum  with  respect to the Product.  Such access shall be during
normal  business  hours and shall include the right to make copies,  at Synovics
Labs' expense, of all relevant records,  data and results of the Prestudies.  In
the event  that any  modifications  or  adjustments  to the  formulation  of the
Product are necessary to achieve  bioequivalence  for the Product as compared to
the  Reference  Product,  or to  develop  a  commercially  viable  manufacturing
process,  Nostrum  shall use  diligent  efforts  to  complete  such work and all
analysis and testing in connection therewith.

                           (ii)     As of the  Effective  date,  with respect to
the 500 mg strength, Nostrum has filed an ANDA - the Transfered Filing.

                  (b)      Nostrum  shall provide to Synovics Labs access to all
information and copies of all records relating to the Product, including without
limitation  information relating to formulation  development,  manufacturing and
scale-up  (including  procedures  and batch  records),  Product  specifications,
stability  testing,  analytical  procedures  and methods,  dissolution  testing,
preclinical  and clinical  testing  (including food effect studies) and all data
generated  by Nostrum  relating  thereto.  Such  access  shall be during  normal
business  hours and shall  include the right to make copies,  at Synovics  Labs'
expense, of all such records.

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                  (c)      Nostrum  will  cooperate  with  Synovics  Labs in all
phases  of the  work to be  performed  under  Section  3.2,  including,  without
limitation,  the scale up, any Pivotal Study,  process validation,  any ANDA and
stability testing relating to the Product performed  pursuant to this Agreement,
at any time. Until such time as Synovics Labs has received ANDA approval for the
Product in the Territory, Nostrum shall also make available to Synovics Labs the
Nostrum personnel  directly involved with the Product to advise and consult with
regard to the development and manufacture of the Product.  In addition,  Nostrum
agrees that Nostrum's President,  Dr. Nirmal Mulye, will be personally available
to consult and advise during all aspects of the  development of the ANDA for the
Product.  Synovics Labs shall reimburse Nostrum for its reasonable out-of-pocket
expenses  incurred in performance of the  obligations  set forth in this Section
3.1(c).

                  (d)      Nostrum shall use diligent efforts in the performance
of its obligations  under this Section 3.1, as well as any other  obligations to
be performed  by Nostrum on Synovics  Labs' behalf under this Article 3. Nostrum
shall  use  diligent  efforts  to comply  with all  applicable  laws,  rules and
regulations in the performance of such activities,  including without limitation
good  laboratory  practices,  good clinical  practices and cGMPs,  to the extent
applicable.

         3.2      SYNOVICS LABS' OBLIGATIONS.

                  (a)      With   respect  to  the  Future   Strength   and  any
modifications  of the  formulation  for both the strengths,  Synovics Labs shall
promptly commence and diligently  conduct all work preparatory to, and necessary
for, the performance of a Pivotal Study for the Product. Synovics Labs shall use
diligent  efforts to complete  such  Pivotal  Study as promptly as  practicable.
Synovics  Labs shall have the right,  in its sole  discretion,  to contract with
Nostrum or use third party  contractors  to conduct the Pivotal Study under this
Section 3.2(a).  Synovics Labs' obligation to conduct the Pivotal Study shall be
contingent upon successful  manufacture and release of finished  product for use
in the Pivotal Study.

                  (b)      With   respect  to  the  Future   Strength   and  any
modifications  of the formulation for both the strengths,  in the event that the
Pivotal Study demonstrates bioequivalence for the Product in accordance with FDA
regulations,  Synovics Labs in cooperation with Nostrum shall promptly  prepare,
submit and  diligently  prosecute an ANDA for such  Product.  Synovics Labs will
keep Nostrum fully informed with respect to such  activities,  and Nostrum shall
have the right to be present at all meetings with FDA regarding the Product,  at
its own expense.

                  The ownership of Transfered Filing shall be transferred to and
in the name of Synovics Labs.  Synovics Labs shall be  responsible,  at Synovics
Labs' expense,  for conducting the  post-clinical  and stability  testing of the
Product necessary for the approval thereof and for obtaining of all governmental
approvals  for  the  manufacture  and  commercial  sale  of the  Product  in the
Territory.  Synovics  Labs shall use  diligent  efforts to cause such ANDA to be
approved. Synovics Labs will have full and complete ownership thereof.

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                  (c)      Synovics Labs shall be responsible  for all costs and
expenses  incurred by it in connection  with the  performance of its obligations
under this Section 3.2.

         3.3      DILIGENCE.  Following  Synovics  Labs' receipt of FDA approval
with  respect  to the  manufacture  and  commercial  sale of the  Product in the
Territory,  Synovics  Labs shall use diligent  efforts to  manufacture,  market,
distribute and sell the Product in the Territory. Such diligent efforts shall be
commensurate with the efforts expended by Synovics Labs in the commercialization
of its other  products of similar  value,  stage of  development  and commercial
potential.

         3.4      EXCUSED   PERFORMANCE.   All  of  Synovics   Labs'   diligence
obligations with respect to the development and commercialization of the Product
under this Agreement are expressly  conditioned  upon the continuing  absence of
any  adverse  condition  or event  relating  to the  safety or  efficacy  of the
Product,   or  lack  of  regulatory   approval,   which   warrants  a  delay  in
commercialization of the Product.

         3.5      OWNERSHIP  OF RESULTS.  Subject to the  provisions  of Section
9.5,  all data and  results  obtained  or  generated  by or on  behalf of either
Nostrum or Synovics Labs in  performance  of the Prestudy,  the Pivotal Study or
other development  activities related to the Product to be performed pursuant to
this  Agreement  (the  "Results")  shall be the sole and  exclusive  property of
Synovics Labs and shall be treated as Synovics  Labs'  Confidential  Information
pursuant  to Article 5 hereof.  Nostrum  undertakes  to execute,  without  undue
delay,  any and all  documents  deemed  necessary to perfect  this right,  on an
as-needed, as-requested basis.

         3.6      MANUFACTURE/SUPPLY.  Synovics  Labs  shall  have the  right to
contract directly with a suitable third party to manufacture and supply Synovics
Labs'  requirements  for  commercial  supplies  of the  Product.  Alternatively,
Synovics Labs may elect to have the Product  manufactured and supplied by itself
or  one  of its  Affiliates;  provided  that  the  cost  of  goods  for  Product
manufactured by Synovics Labs or such Affiliate is competitive  with the cost of
goods for the Product as manufactured  by a qualified third party  manufacturer.
Upon request,  Nostrum shall  cooperate with Synovics Labs in  transferring  and
implementing the Nostrum  Technology  related to manufacture of the Product from
one site of  manufacture  for the  Product  to another  in  accordance  with FDA
guidelines  applicable to the proposed  transfer.  Synovics Labs shall reimburse
Nostrum  within  thirty  (30)  days  of  Synovics  Labs'  receipt  of  Nostrum's
invoice(s) for all reasonable  out-of-pocket expenses which Nostrum may incur in
connection with the performance of its obligations pursuant to this Section 3.6.

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                              ARTICLE 4 - PAYMENTS

         4.1      INITIAL PAYMENT. In partial consideration for the transfer of
ownership  of the  Transfered  Filing  and  license  granted  to  Synovics  Labs
hereunder,  Synovics  Labs shall pay  Nostrum  One  hundred  and fifty  thousand
dollars ($150,000) USD within fifteen (15) days of the Effective Date.

         4.2      MILESTONE PAYMENTS.  In further  consideration for the license
granted to  Synovics  Labs  hereunder,  Synovics  Labs  hereby  agrees to pay to
Nostrum One hundred and fifty thousand  dollars  ($150,000) USD upon the receipt
of  approval  for  Transfered  Filing  by the FDA  within  thirty  (30)  days of
achieving the indicated milestone

         4.3      ROYALTIES. Synovics Labs agrees to pay to Nostrum royalties on
Net Sales of Product in the Territory equal to Twenty Percent (20%) of Net sales
up to a maximum of One million five hundred thousand ($1,500,000).

         4.4      MANNER OF  PAYMENT.  Within  thirty  (30) days after the first
commercial sale of the Product in the Territory by Synovics Labs,  Synovics Labs
shall provide Nostrum with written notice to that effect.  Thereafter,  Synovics
Labs shall furnish to Nostrum within sixty (60) days following the close of each
calendar  quarter,  a written  report for the calendar  quarter  showing the Net
Sales and Gross  Profits from the sale of the Product sold by Synovics  Labs and
its Affiliates in the Territory  during such calendar  quarter and the royalties
payable under this Agreement for such calendar quarter.  Simultaneously with the
submission of such written report,  Synovics Labs shall pay to Nostrum,  for the
account of Synovics Labs or the applicable Affiliate,  as the case may be, a sum
equal to the  aggregate  royalty due for such  calendar  quarter  calculated  in
accordance  with this Agreement  (reconciled  for any previous  overpayments  or
underpayments). All payments to Nostrum hereunder shall be made by wire transfer
of immediately available funds to the account designated in writing by Nostrum.

         4.5      RECORDKEEPING/AUDITS.

                  (a)      Synovics  Labs,  and to  the  extent  applicable  its
Affiliates,  shall keep complete and accurate  records in  sufficient  detail to
enable the  royalties  payable  hereunder  to be  determined.  Upon the  written
request of Nostrum and not more than twice in each calendar year, Synovics Labs,
and to the extent responsible for the manufacture of the Product its Affiliates,
shall permit an  independent  certified  public  accounting  firm of  nationally
recognized standing,  which is bound by a confidentiality  agreement in favor of
Synovics Labs to have access, at Nostrum's expense, during normal business hours
to such  records  of  Synovics  Labs and such  Affiliates  as may be  reasonably
necessary to verify the accuracy of the royalty reports hereunder for any twelve
(12) month  period(s).  Nostrum  shall  provide such notice at least thirty (30)
days prior to the intended audit.  Nostrum shall have no right to audit any such
records  with  respect to any twelve  (12) month  period  which  ended more than
ninety-six  (96) months prior to the date of such request.  The accounting  firm
shall only disclose to Nostrum the relevant Net Sales, Gross Profits and cost of
goods sold  information and whether the royalty reports are correct or incorrect
and the specific  details  concerning any  discrepancies.  No other  information
shall be shared by the  accounting  firm with

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Nostrum.  Nostrum's  audit  rights  under this  Section  4.5 shall  survive  the
expiration or termination of this Agreement for a period of one (1) year.

                  (b)      The cost of each audit  conducted  under this Section
4.5 shall be borne by  Nostrum  unless  such  audit  correctly  determines  that
Synovics Labs underpaid the royalties due to Nostrum hereunder by more than five
percent (5% ) in any five month period in which case, Synovics Labs shall pay to
Nostrum the  deficiency  (as Synovics  Labs is required to do  regardless of the
amount  thereof or the  results,  requirement  or pendency of any audit)  within
fifteen  (15) days of the date that a final  audit  report is issued,  and shall
also bear the cost of such audit.  In the event that such audit  determines that
Synovics Labs  overpaid the  royalties  due to Nostrum,  Nostrum shall refund to
Synovics  Labs the amount of such  overpayment  within  fifteen (15) days of the
date that a final audit report is issued.

                  (c)      Nostrum shall treat all financial information subject
to review under this Agreement in accordance with the confidentiality provisions
of this  Agreement,  and  shall  cause  its  accounting  firm to  enter  into an
acceptable  confidentiality agreement with Synovics Labs obligating it to retain
all such financial  information in confidence  pursuant to such  confidentiality
agreement.

         Section 4.6    WITHHOLDING. If at any time, any jurisdiction within the
Territory  requires the  withholding of income taxes or other taxes imposed upon
payments set forth in this Article 4, Synovics Labs shall make such  withholding
payments as required and subtract  such  withholding  payments from the payments
set forth in this Article 4 or if  applicable,  Nostrum will promptly  reimburse
Synovics Labs or its  designee(s) of the amount of such payments.  Synovics Labs
shall provide Nostrum with  documentation of such  withholding and payment.  Any
withholdings  paid when due  hereunder  shall be for the  account of Nostrum and
shall not be  included  in the  calculation  of Net Sales or Gross  Profits,  as
applicable.  In addition, if any deficiency in the amount or failure to make any
such withholding  payment is caused,  in whole or in part, by any intentional or
negligent action or inaction on the part of Nostrum, Nostrum shall be liable for
any fine, assessment or penalty imposed by any taxing authority in the Territory
for such  deficiency  in the amount of any such  withholding  or such failure to
make such  withholding  payment.  If  Synovics  Labs is required to pay any such
deficiency, or any fine, assessment or penalty for any such deficiency,  Nostrum
shall promptly  reimburse  Synovics Labs for any such payments for which Nostrum
is liable in accordance with this Section 4.6, which  reimbursement shall not be
included in the calculation of Net Sales or Gross Profits.

                           ARTICLE 5. CONFIDENTIALITY.

         5.1      CONFIDENTIALITY.  During the term of this  Agreement and for a
period of ten (10) years after its expiration or  termination,  each party shall
maintain as confidential the Nostrum  Technology,  any know-how  relating to the
Product,   the  Results  and  any  other  proprietary,   technical  or  business
information   received  from  the  other  party   pursuant  to  this   Agreement
("Confidential Information") and shall only use such Confidential

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Information  in  furtherance  of this  Agreement.  Both  parties  agree that any
employees provided or given access to the other party's Confidential Information
shall be bound by confidentiality  obligations essentially the same as those set
forth herein. The foregoing  obligations of confidentiality and use restrictions
shall not apply, however, to the extent that such Confidential Information:

         (i)      was known to the receiving  party, as evidenced by its written
                  records, prior to receipt from the other party;

         (ii)     is in the public  domain at time of  receipt  or  subsequently
                  enters the public domain  through no breach of this  Agreement
                  by the receiving party;

         (iii)    after  the date of  receipt  from  the  disclosing  party,  is
                  received without secrecy obligations from a third party with a
                  bona fide right to disclose it without  violating any right of
                  the disclosing party;

         (iv)     is independently  developed by the receiving party without the
                  aid,  application  or use of  any  of the  disclosing  party's
                  Confidential Information (and such independent development can
                  be properly documented by the receiving party);

         (v)      is disclosed to governmental or other  regulatory  agencies in
                  order  to  obtain  patents  or to  gain  approval  to  conduct
                  clinical  trials or to market  the  Product  pursuant  to this
                  Agreement,  but  such  disclosure  may be only  to the  extent
                  reasonably necessary to obtain such patents or authorizations;

         (vi)     is  necessary   to  be   disclosed  to  agents,   consultants,
                  Affiliates  and/or  other third  parties  for the  developing,
                  making,  using,  selling or  importing of Product (or for such
                  third parties to determine  their interest in performing  such
                  activities) in accordance with this Agreement on the condition
                  that such third parties  agree to be bound by  confidentiality
                  obligations  and use  restrictions  at least as restrictive as
                  those contained in this Agreement; or

         (vii)    is required to be disclosed  by law or court  order,  provided
                  that notice is promptly  delivered to the disclosing  party in
                  order to provide the disclosing party  sufficient  opportunity
                  to seek a protective order or other similar order with respect
                  to  such  Confidential  Information  and the  receiving  party
                  thereafter  discloses only the minimum information required to
                  be disclosed  in order to comply with the request,  whether or
                  not a protective  order or other  similar order is obtained by
                  the disclosing party.

         5.2      NO PUBLICITY; DISCLOSURE OF AGREEMENT TERMS. Neither party may
use  the  name  of the  other  party  or its  Affiliates  in  any  publicity  or
advertising without the prior written permission of such party.  Notwithstanding
the  provisions  of Section 5.1 and this Section 5.2,  either party may disclose
the terms

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of this Agreement to the extent necessary to (a) actual or potential  lenders or
investors;  (b) the party's agents,  consultants,  Affiliates and/or other third
parties  necessary to facilitate  such a loan or investment;  or (c) the party's
accountants,  consultants and attorneys,  for other corporate  transactions  and
business, on a need to know basis.

                               ARTICLE 6 - PATENTS

         6.1      INFRINGEMENT AND THIRD PARTY LICENSES.

                  (a)      In the event that Synovics  Labs', or its Affiliates'
making,  having made, using, offering for sale, selling or importing the Product
infringes or misappropriates, will infringe or misappropriate or is alleged by a
third party to  infringe  or  misappropriate  a third  party's  patents or other
intellectual  property  rights,  the party hereto  becoming  aware of same shall
promptly notify the other. The parties shall thereafter  attempt to agree upon a
course of action with respect thereto.

                  (b)      Synovics Labs shall be responsible, at Synovics Labs'
expense, for the defense of any claims, demands,  actions or proceedings arising
from allegations that  development,  making,  having made,  using,  offering for
sale,  selling or importing  the Product  infringes or  misappropriates  or will
infringe  or  misappropriate  a third  party's  patents  or  other  intellectual
property  rights.  Upon  Synovics  Labs'  request  and  expense,  Nostrum  shall
cooperate with Synovics Labs in such defense;  provided that Synovics Labs shall
promptly  reimburse  Nostrum for  reasonable  out-of-pocket  costs and  expenses
incurred by Nostrum in providing such cooperation.

         6.2      INFRINGEMENT  OF NOSTRUM'S  INTELLECTUAL  PROPERTY RIGHTS BY A
THIRD PARTY.  Synovics Labs and Nostrum shall promptly  notify each other of any
infringement of the patent rights included in the Nostrum  Technology as applied
to the Product,  and/or any  misappropriation  or unauthorized use of any of the
Nostrum Technology as applied to the Product, in the Territory which may come to
their attention.  The parties shall thereafter attempt to agree upon a course of
action  with  respect  thereto.  If  Nostrum  declines  to  participate  in  the
prosecution of legal proceedings to prevent such infringement,  misappropriation
or misuse of the Nostrum Technology,  Synovics Labs may do so at its own expense
using counsel of its choice.

                   ARTICLE 7 - REPRESENTATIONS AND WARRANTIES

         7.1      REPRESENTATIONS  AND  WARRANTIES  BY  BOTH  PARTIES.  Each  of
Synovics  Labs and Nostrum  hereby  represents  and  warrants to the other party
that:

         (i)      it is a corporation  duly organized and validly existing under
                  the laws of the state or other  jurisdiction of  incorporation
                  or formation;

                                       10
<PAGE>

         (ii)     the execution,  delivery and  performance of this Agreement by
                  such party has been duly authorized by all requisite corporate
                  action;

         (iii)    it has all  requisite  power  and  authority  to  execute  and
                  deliver  this   Agreement  and  to  perform  its   obligations
                  hereunder;

         (iv)     the execution,  delivery and performance by such party of this
                  Agreement  and its  compliance  with the terms and  provisions
                  hereof  does not and will not  conflict  with or  result  in a
                  breach of any of the terms and  provisions  of or constitute a
                  default  under  (i)  a  loan  agreement,  guaranty,  financing
                  agreement, agreement affecting a product or other agreement or
                  instrument  binding or affecting it or its property;  (ii) the
                  provisions  of its charter  documents or bylaws;  or (iii) any
                  order, writ, injunction or decree of any court or governmental
                  authority  entered  against it or by which any of its property
                  is bound;

         (v)      except for the governmental and regulatory  approvals required
                  to  market  the  Product  in  the  Territory,  the  execution,
                  delivery and  performance of this Agreement by such party does
                  not require the  consent,  approval  or  authorization  of, or
                  notice,   declaration,   filing  or  registration   with,  any
                  governmental  or  regulatory   authority  and  the  execution,
                  delivery or performance of this Agreement will not violate any
                  law, rule or regulation applicable to such party;

         (vi)     this  Agreement  constitutes  such  party's  legal,  valid and
                  binding obligation  enforceable  against it in accordance with
                  its  terms  subject,   as  to   enforcement,   to  bankruptcy,
                  insolvency,   reorganization   and  other   laws  of   general
                  applicability  relating to or affecting  creditors' rights and
                  to the  availability  of  particular  remedies  under  general
                  equity principles; and

         (vii)    it shall comply with all applicable  material laws,  rules and
                  regulations  relating to the  performance  of its  obligations
                  relating to the Product under this Agreement.

         7.2      REPRESENTATIONS  AND  WARRANTIES  BY NOSTRUM.  Nostrum  hereby
represents and warrants to Synovics Labs that:

         (i)      it owns all right,  title and  interest  in and to the Nostrum
                  Technology  as applied to the  Product,  free and clear of all
                  liens,   charges,   encumbrances   and  to  Nostrum's   actual
                  knowledge, other adverse claims;

         (ii)     to Nostrum's  actual  knowledge as of the Effective  Date, (1)
                  the  Nostrum  Technology  as applied to the Product and Future
                  Product does not, and (2) the use of the Nostrum Technology as
                  applied to the Product and Future Product,  will not, infringe
                  on or  misappropriation  the  existing  intellectual  property
                  rights of any other party;

                                       11
<PAGE>

         (iii)    there are no adverse actions,  suits or claims pending against
                  Nostrum  or any of its  Affiliates  in or before  any court or
                  governmental  or  regulatory  authority  with  respect  to the
                  Product  and/or  the  Nostrum  Technology  as  applied  to the
                  Product,  and no such  actions,  suits  or  claims  have  been
                  threatened against Nostrum or any of its Affiliates;

         (iv)     to  the  best  of  Nostrum's  knowledge,  all  data  summaries
                  provided  in writing to Synovics  Labs by Nostrum  relating to
                  the Pre-study  accurately  represent  the raw data  underlying
                  such summaries;

         (v)      as of the Effective Date, to the best of Nostrum's  knowledge,
                  there is no reason  (e.g.,  debarment  under the Federal Food,
                  Drug, and Cosmetic Act) that would prevent  Synovics Labs from
                  using data and  information  supplied by  Nostrum,  as part of
                  Synovics Labs' regulatory submissions for the Product.

         7.3      CONTINUING REPRESENTATIONS. The representations and warranties
of each party  contained in Sections 7.1 and 7.2 shall  survive the execution of
this Agreement.

         7.4      NO INCONSISTENT AGREEMENTS.  As of the Effective Date, neither
Party has entered  into,  and during the term of this  Agreement,  neither party
shall enter into,  any oral or written  agreement or  arrangement  that would be
inconsistent with its obligations under this Agreement.

         7.5      NO WARRANTY AS TO REGULATORY APPROVAL. Nothing herein shall be
construed as a  representation  or warranty by either party that the  applicable
health regulatory  authorities within the Territory will consider the Product to
be safe and effective,  or will grant regulatory approval to market and sell the
Product in the Territory even if any  additional  studies are conducted by or on
behalf of Synovics Labs or its Affiliates.

                           ARTICLE 8 - INDEMNIFICATION

         8.1      INDEMNIFICATION  BY NOSTRUM.  Nostrum shall,  at its sole cost
and  expense,  defend,  indemnify  and  hold  harmless  Synovics  Labs  and  its
Affiliate(s),  and their respective  officers,  directors,  agents and employees
from and against all claims, liens, demands, damages, liability, actions, causes
of action,  losses,  judgments,  amounts paid in settlement,  costs and expenses
(including,  without  limitation,   reasonable  attorneys'  fees)  (collectively
"Claim(s)") to the extent such Claims arise out of or in connection with, result
from,  or are caused by:  (i) any  breach by Nostrum of its  representations  or
warranties contained in Sections 7.1 or 7.2 of this Agreement; or (ii) the gross
negligence  or  willful   misconduct  of  Nostrum  in  the  performance  of  its
obligations under this Agreement;  PROVIDED, HOWEVER, that Nostrum shall have no
liability or indemnification  obligations hereunder to the extent any such Claim
is caused by the gross  negligence or

                                       12
<PAGE>

willful  misconduct  of  Synovics  Labs,  its  Affiliates  or  their  respective
officers, directors, agents and employees.

         8.2      INDEMNIFICATION BY SYNOVICS LABS.  Synovics Labs shall, at its
sole cost and  expense,  defend,  indemnify  and hold  harmless  Nostrum and its
Affiliate(s),  and their respective  officers,  directors,  agents and employees
from and  against  all  Claims  to the  extent  such  Claims  arise out of or in
connection with,  result from, or are caused by: (i) any breach by Synovics Labs
of its representations or warranties contained in Section 7.1 of this Agreement;
(ii)  the  gross  negligence  or  willful  misconduct  of  Synovics  Labs or its
Affiliates in the performance of its or their  obligations under this Agreement;
(iii) the marketing, manufacture, use or sale of the Product in the Territory by
or on behalf of Synovics Labs or its Affiliates;  or (iv)  allegations  that the
manufacture,  use or sale of the  Product  in the  Territory  by or on behalf of
Synovics Labs or its Affiliates infringes third party patents or misappropriates
the other intellectual  property rights of any third party;  PROVIDED,  HOWEVER,
that  Synovics  Labs  shall have no  liability  or  indemnification  obligations
hereunder  to the  extent any such  Claim is caused by the gross  negligence  or
willful  misconduct of Nostrum,  its  Affiliates or their  respective  officers,
directors, agents and employees.

         8.3      CONDITIONS  TO   INDEMNIFICATION.   The   obligations  of  the
indemnifying  party under Articles 8.1 and 8.2 are conditioned upon the delivery
of written  notice to the  indemnifying  party of any potential  Claim  promptly
after the indemnified party becomes aware of such potential Claim. The foregoing
notwithstanding,   the  parties  acknowledge  and  agree  that  failure  of  the
indemnified party to promptly notify the indemnifying party of a potential Claim
shall not  constitute a waiver of, or result in the loss of, such party's  right
to  indemnification  under  Articles 8.1 or 8.2, as  appropriate,  except to the
extent  that the  indemnifying  party's  rights,  and/or  its  ability to defend
against such liability are materially  prejudiced by such failure to notify. The
indemnifying  party is hereby  authorized to carry out the sole  management  and
defense of such potential  Claim, and shall have the right to assume the defense
of any suit or claim related to the Claim if it has assumed  responsibility  for
the Claim in writing.  However, if in the reasonable judgment of the indemnified
party,  such Claim  involves an issue or matter  which  could have a  materially
adverse effect on the business  operations or assets of the  indemnified  party,
the indemnified party may waive its rights to indemnity under this Agreement and
control the defense or settlement thereof. If the indemnifying party defends the
suit or claim,  the  indemnified  party may participate in (but not control) the
defense thereof at its sole cost and expense.

         8.4      SETTLEMENTS.  Neither  party  may  settle  a claim  or  action
related to a Claim  without the consent of the other party,  if such  settlement
would  impose any  monetary  obligation  on the other party or require the other
party to submit to an  injunction or otherwise  limit the other  party's  rights
under this  Agreement.  Any payment  made by a party to settle any such claim or
action shall be at its own cost and expense.

         8.5      LIMITATION  OF  LIABILITY.  With  respect  to any claim by one
party against the other arising out of the performance or failure of performance
of the other party under

                                       13
<PAGE>

this Agreement,  the parties expressly agree that the liability of such party to
the other  party for such  breach  shall be  limited  under  this  Agreement  or
otherwise at law or equity to compensatory  damages only and in no event shall a
party be liable for punitive or exemplary damages. The foregoing limitation will
not prevent a party entitled to indemnification  pursuant to this Agreement from
recovering  all  components  of any judgment or award against such a party by an
unaffiliated party.

         8.6      INSURANCE.  During the term of this  Agreement  Synovics  Labs
shall maintain adequate insurance and/or a self-insurance  program for liability
insurance, including products liability insurance,  adequately covering Synovics
Labs' obligations under this Agreement. Synovics Labs shall provide Nostrum with
evidence of such insurance and/or self-insurance upon request.

                        ARTICLE 9 - TERM AND TERMINATION

         9.1      TERM AND  EXPIRATION.  This Agreement shall be effective as of
the  Effective  Date and unless  terminated  earlier  pursuant to this Article 9
shall  continue  in effect for the longer of a period of ten (10) years from the
first  commercial  sale of the Product by or on behalf of  Synovics  Labs in the
Territory,  or until such time as the  commercial  sale of the  Product by or on
behalf of Synovics Labs in the Territory is discontinued.

         9.2      RIGHTS OF SYNOVICS LABS TO TERMINATE.

     a)  With respect to the Future Product, in the event that (i) Synovics Labs
         determines  that the  results of the  Pivotal  Study do not  adequately
         demonstrate  bioequivalence  of the Future  Strength with the Reference
         Product,  or (ii)  Synovics Labs fails to obtain FDA approval to market
         and sell the Product in the  Territory,  then  Synovics Labs shall have
         the right to terminate this  Agreement by notifying  Nostrum in writing
         to that effect.

     b)  With  respect to the  Product,  Synovics  Labs shall have the option to
         terminate  this  Agreement in the event that Synovics Labs  determines,
         based on the actual results of manufacturing,  distribution and sale of
         the Product,  that the profitability or market size of the Product does
         not equal or exceed the profitability or market size, as applicable, of
         other Synovics Labs products of similar market size and cost structure.

         9.3      TERMINATION  FOR CAUSE.  Either  party shall have the right to
terminate  this  Agreement  upon sixty (60) days written notice in the event the
other party is in breach of one or more of its material  obligations  under this
Agreement;  provided that the breaching party shall have the opportunity to cure
any  alleged  breach  during  such sixty  (60) day  period.  To assist  with the
interpretation  of this Agreement,  the parties agree that: a breach by Synovics
Labs of the provisions of any of Sections 3.1(c),  3.2(a),  3.2(b), 3.2(c),

                                       14
<PAGE>

3.3, 4.1, 4.2, 4.3 and 4.5 shall be a material  breach;  and a breach by Nostrum
of the provisions of any of Sections 3.1(a),  3.1(b), 3.1(c) and 3.1(d) shall be
a material breach. For avoidance of doubt, the provisions listed in this Section
9.3 do not constitute an exhaustive list of those provisions the breach of which
may be material.

         9.4      BANKRUPTCY  OR  INSOLVENCY.  Either party shall be entitled to
immediately   terminate  this  Agreement  upon  the  filing  or  institution  of
bankruptcy,  reorganization (in connection with any insolvency),  liquidation or
receivership proceedings,  or upon an assignment of a substantial portion of the
assets  for the  benefit  of  creditors  by the other  party,  or in the event a
receiver or custodian  is appointed  for such other  party's  business,  or if a
substantial  portion of such other party's  business is subject to attachment or
similar  process;  PROVIDED,  HOWEVER,  that  in the  case  of  any  involuntary
bankruptcy  proceeding or the  attachment of a substantial  portion of a party's
assets such right to terminate shall only become  effective if the proceeding or
attachment is not dismissed within sixty (60) days after the filing thereof.

         9.5      EFFECT OF  TERMINATION.  In the event that this  Agreement  is
terminated,  the  license  granted  to  Synovics  Labs under  Section  2.1 shall
terminate,  Synovics  Labs shall  transfer to Nostrum  all of the  formulations,
processes and other technology,  approvals,  applications and records related to
the  development  and  commercialization  of  the  Product,  and  Nostrum  shall
thereafter have the right to develop,  manufacture  and otherwise  commercialize
the  Product  in the  Territory,  together  with all other  countries  and their
territories, possessions and commonwealths.

         9.6      SURVIVING  TERMS.  The  provisions  of  Section  9.5,  and  of
Articles 5, 8 and 11,  Nostrum's  audit rights under Section 4.5, and such other
provisions of this Agreement  which by their expressed terms are to be performed
or complied with  subsequent to the termination or expiration of this Agreement,
shall survive such  termination  or expiration  and shall continue in full force
and effect in accordance with their respective terms.

                            ARTICLE 10. FORCE MAJEURE

                  (a)      No  failure  or   omission  by  the  parties  in  the
performance  of any  obligation  according to this  Agreement  shall be deemed a
breach of this  Agreement  or create any  liability if the same shall arise from
any cause or causes beyond the control of the party, including,  but not limited
to, strikes, riots, war, acts of God, invasion,  fire, explosion,  floods, delay
of carrier,  energy shortages and acts of government or governmental agencies or
instrumentalities.

                  (b)      In the event that due to force  majeure  either party
hereto shall be delayed or hindered in or prevented from the  performance of its
duties or doing acts required under the terms of this Agreement, the performance
of such act,  except for the obligation to pay amounts due under this Agreement,
shall be excused for the period of delay.  Notwithstanding  the  aforementioned,
the party subject to force majeure shall promptly take all  reasonable  steps to
resolve the condition(s) forming the basis of force

                                       15
<PAGE>

majeure;  provided,  however,  that nothing  contained  herein shall require any
party to settle on terms  unsatisfactory  to such party any strike,  lock-out or
other labor difficulty, any investigation or proceeding by any public authority,
or any litigation by any third party. If a condition  constituting force majeure
as defined herein exists for more than ninety (90) consecutive days, the parties
shall meet to negotiate a mutually  satisfactory  resolution to the problem,  if
practicable.

                           ARTICLE 11 - MISCELLANEOUS

         11.1     ASSIGNMENT.  (a) Neither this  Agreement nor any or all of the
rights and obligations of a party hereunder shall be assigned,  delegated, sold,
transferred,  sublicensed  (except as  otherwise  provided  herein) or otherwise
disposed of, by operation of law or  otherwise,  to any third party  without the
prior written consent of the other party. Any attempted assignment,  delegation,
sale,  transfer,  sublicense  or  other  disposition,  by  operation  of  law or
otherwise,  of this Agreement or of any rights or obligations hereunder contrary
to this  Article  11.1  shall be a  material  breach  of this  Agreement  by the
attempting party, and shall be void and without force or effect. Notwithstanding
the foregoing,  either party may, without the consent of the other party, assign
the Agreement and its rights and obligations hereunder (i) to an Affiliate; (ii)
in  connection  with the  transfer  or sale of all or  substantially  all of its
assets related to the subject division or the subject business;  or (iii) in the
event of its merger or consolidation.

                  (b)      Any  assignment,  sublicense  or  other  transfer  by
either  party  permitted  by this Section 11.1 shall not operate to release such
party from its responsibilities under this Agreement.

         11.2     NO  WAIVER.  No  failure  by a party to  exercise  any  rights
hereunder in the event of a breach or violation  hereof by the other party shall
constitute a waiver of any such rights.  No waiver by any party of any breach or
violation hereof by the other party,  shall constitute a waiver of any rights in
respect of any other or subsequent breach or violation.

         11.3     NOTICES. All notices required to be given under this Agreement
shall be in writing  and given by  personal  delivery,  facsimile  transmission,
nationally  recognized  overnight  courier  (prepaid) or registered or certified
mail, postage prepaid with return receipt requested. Notices shall be addressed:

                  if to Nostrum, at

                           10 Erin Ct.
                           Kendall Park, New Jersey   08824
                           Attn: Nirmal Mulye, Ph.D.
                           Fax: (732) 422-0416

                                       16
<PAGE>

                  if to Synovics Labs, at

                           Synovics Laboratories, Inc.
                           505 Thornhall Street, Suite 304
                           Edison, New Jersey 08837
                           Attention:  Theodore Miro
                           Fax:  (732) 635-0042

A party may change its address by written notice in accordance with this Section
11.3

         11.4     GOVERNING  LAW/DISPUTES.  This Agreement  shall be governed by
and  construed  in  accordance  with the laws of the  State of New York  without
regard to the conflict of laws provisions  thereof.  In the event of any dispute
hereunder or otherwise arising out of or relating to this Agreement, the parties
hereto  agree  that  such  dispute  will  be  resolved  only by  arbitration  in
accordance with the terms set forth in Article 12, attached hereto.

         11.5     INDEPENDENT  CONTRACTOR.   The  parties  shall  be  considered
independent  contractors,  and  neither  the  making of this  Agreement  nor the
performance  of any of the  provisions  hereof shall be construed to make either
party an agent,  employee or legal  representative  of the other, nor shall this
Agreement be deemed to establish a joint venture or partnership.

         11.6     SEVERABILITY.  Should any section, or portion thereof, of this
Agreement be held invalid by reason of any law,  statute or regulation  existing
now or in the future in any jurisdiction by any court of competent  authority or
by a legally  enforceable  directive of any governmental body, then such section
or portion thereof shall be validly  reformed so as to approximate the intent of
the  parties  as  nearly  as  possible  and,  if  unreformable,  shall be deemed
divisible and deleted with respect to such jurisdiction and this Agreement shall
not otherwise be affected.

         11.7     EFFECT OF ASSIGNMENT.  This  Agreement  shall be binding upon,
and inure to the  benefit  of,  each  party  and its  permitted  successors  and
permitted assigns.  Each party shall be responsible for the compliance by any of
its permitted assignees with the terms and conditions of this Agreement.

         11.8     RECORDING.  Each party shall have the right,  at any time,  to
record, register, or otherwise notify this Agreement in appropriate governmental
or regulatory  offices anywhere in the Territory,  and Nostrum or Synovics Labs,
as the  case  may be,  shall  provide  reasonable  assistance  to the  other  in
effecting such recording, registering or notifying.

                                       17
<PAGE>

         11.9     FURTHER ACTIONS. Each party agrees to execute, acknowledge and
deliver  such  further  instruments  and to do all such  other  acts,  as may be
necessary or  appropriate  in order to carry out the purposes and intent of this
Agreement.

         11.10    COUNTERPARTS. This Agreement shall become binding when any one
or more  counterparts  hereof,  individually or taken  together,  shall bear the
signatures of each of the parties  hereto and is delivered to the other party in
accordance  with Section 11.3.  This  Agreement may be executed in any number of
counterparts,  each of which shall be an original as against  either party whose
signature appears thereon,  but all of which taken together shall constitute but
one and the same instrument.

         11.11    ENTIRE AGREEMENT.  This Agreement,  together with the attached
schedule,  represents the entire  agreement  between the parties with respect to
the subject matter hereof and  supersedes and replaces all prior  agreements and
understandings,  whether  written  or  oral.  No  terms  or  provisions  of this
Agreement shall be varied or modified and no subsequent  alteration,  amendment,
change or addition to this  Agreement  shall be binding upon the parties  unless
reduced to writing and signed by an authorized officer of each party.

                                   ARTICLE 12
                          DISPUTE RESOLUTION PROCEDURES

         12.1     Except as otherwise set forth in the  Agreement,  any dispute,
controversy  or claim arising out of or relating to the validity,  construction,
enforceability or performance of this Agreement,  including disputes relating to
an alleged breach or termination of this Agreement,  shall be settled by binding
arbitration in the manner set forth below in this Article 12; provided, however,
that the neutral  referred to below shall give effect to the  provisions of this
Agreement and shall not adjust,  modify or change the effects of  termination as
set forth in Article 9 of this Agreement  Notwithstanding the foregoing,  in the
event of a claim,  action,  suit or  proceeding  against or involving  any party
entitled to indemnification  pursuant to this Agreement brought or asserted by a
third party that is not affiliated with either party to this Agreement, then the
entitled to the indemnification will have the option to include the indemnifying
party to such claim, action suit or proceeding notwithstanding the provisions of
this Article 12.

         12.2     If a party  intends  to  begin an  arbitration  to  resolve  a
dispute, such party shall provide written notice (the "Request") by certified or
registered  mail or properly  documented  overnight  delivery to the other party
informing such other party of such intention and the issues to be resolved.  The
notice  shall  explain  the nature of the  complaint  and refer to any  relevant
Articles of the  Agreement  upon which the complaint is based.  The  complaining
party  shall also set forth a proposed  solution  to the  problem,  including  a
suggested time frame within which the parties must act.

         12.3     The  non-complaining  party must  respond  in  writing  within
thirty (30) calendar  days of receiving  notice with an  explanation,  including
references  to the relevant

                                       18
<PAGE>

provisions  of the  Agreement  and a  response  to  the  proposed  solution  and
suggested time frame for action.  The  non-complaining  party may add additional
issues to be resolved.

         12.4     Within ten (10)  business days of receipt of the response from
the  non-complaining  party,  the  parties  shall meet and  discuss  options for
resolving the dispute. Each party shall make available all appropriate personnel
to meet and confer with the other party within the ten (10)  business day period
following the complaining party's receipt of the response by the non-complaining
party.

         12.5     Any and all  disputes  that  cannot be  resolved  pursuant  to
Paragraphs  (b), (c) and (d) above shall be submitted to an arbitrator  selected
by mutual  agreement of the parties.  If the parties are unable to agree upon an
arbitrator,  then  the  arbitrator  shall be  selected  in  accordance  with the
procedures of the American Arbitration  Association.  The arbitrator shall be an
individual who shall preside over and resolve any disputes  between the parties.
The arbitrator  selected shall be a former judge of a state or federal court and
shall not be an employee,  director or  shareholder  of, or  otherwise  have any
current  or  previous   relationship   with,  either  party  or  its  respective
Affiliates. The arbitration shall be conducted in accordance with the commercial
arbitration  rules  of the  American  Arbitration  Association  then in  effect,
subject  to the time  periods  and other  provisions  of this  Article  12 or as
otherwise set forth in the Agreement.

         12.6     Consistent  with the time  schedule  established  pursuant  to
Paragraphs  (g) and (h) below,  the  arbitrator  shall hold a hearing to resolve
each of the issues  identified  by the  parties  and shall  render a decision as
expeditiously  as possible but in no event more than thirty (30)  calendar  days
after the close of hearings. In rendering the decision the arbitrator shall rule
on each disputed  issue and shall adopt in whole or in part the proposed  ruling
of one of the parties on each disputed issue.

         12.7     During the meeting  referred to in  Paragraph  (d) above,  the
parties  shall  negotiate  in good faith the scope and  schedule  of  discovery,
relating to depositions, document production and other discovery devices, taking
into account the nature of the dispute submitted for resolution.  If the parties
are unable to reach  agreement  as to the scope and schedule of  discovery,  the
arbitrator may order such discovery as the arbitrator  deems  necessary.  To the
extent  practicable  taking into account the nature of the dispute submitted for
resolution,  such discovery  shall be completed  within sixty (60) calendar days
from the date of the selection of the  arbitrator.  At the hearing,  which shall
commence within twenty (20) business days after  completion of discovery  unless
the arbitrator  otherwise orders, the parties may present testimony (either live
witness or deposition), subject to cross-examination,  and documentary evidence.
To the  extent  practicable  taking  into  account  the  nature  of the  dispute
submitted for resolution and the  availability  of the  arbitrator,  the hearing
shall be conducted over a period not to exceed thirty (30) consecutive  business
days, with each party entitled to approximately half of the allotted time unless
otherwise ordered by the arbitrator.  The hearing shall be held in New York, New
York at such place as may be agreed upon by the parties.  The  arbitrator  shall
have sole  discretion with regard to the  admissibility  of any evidence and all
other matters relating to the conduct of the hearing.  The arbitrator  shall, in
rendering  its

                                       19
<PAGE>

decision, apply the substantive laws of the State of New York (regardless of its
or any other  jurisdiction's  choice of law  principles).  The  decision  of the
arbitrator shall be final and not appealable, except in the case of fraud or bad
faith on the part of the arbitrator or any party to the  arbitration  proceeding
in connection with the conduct of such  proceedings;  manifest  disregard of the
law by the  arbitrator  concerning a material issue in rendering the decision or
upon any other  ground for vacating or  modifying  the decision  pursuant to the
Federal Arbitration Act, as amended..

         12.8     At least ten (10)  business days prior to the date set for the
hearing,  each party shall submit to each other party and the  arbitrator a list
of all  documents  on which  such  party  intends to rely in any oral or written
presentation  to the arbitrator and a list of all witnesses,  if any, such party
intends to call at such hearing and a brief summary of each witness'  testimony.
At least five (5) business days prior to the hearing,  each party must submit to
the  arbitrator  and serve on each other  party a proposed  findings of fact and
conclusions  of law on  each  issue  to be  resolved.  Following  the  close  of
hearings,  the  parties  shall  each  submit  such  post-hearing  briefs  to the
arbitrator  addressing the evidence and issues to be resolved as may be required
or permitted by the arbitrator.

         12.9     Except as otherwise set forth  herein,  the  arbitrator  shall
determine  the  proportion  in which the parties shall pay the costs and fees of
the  arbitration,  and each party  shall pay its own costs  (including,  without
limitation,  reasonable  attorneys'  fees) and expenses in connection  with such
arbitration;  provided,  however,  that if the  arbitrator  determines  that the
action of any party was arbitrary, frivolous or in bad faith, the arbitrator may
award such costs and expenses to the prevailing party.

         12.10    The arbitration  proceeding shall be confidential  and, except
as required by law,  neither  party shall make (or  instruct the  arbitrator  to
make) any public announcement with respect to the proceedings or decision of the
arbitrator  without the prior written consent of the other party.  The existence
of any dispute submitted for arbitration, and the award of the arbitrator, shall
be kept in confidence by the parties and the  arbitrator,  except as required in
connection  with the  enforcement  of such  award or as  otherwise  required  by
applicable law.

         12.11    Judgment  upon any award  rendered  by the  Arbitrator  may be
entered in any court having jurisdiction thereof.

         12.12    Nothing  contained  herein  shall be  construed  to permit the
arbitrator or any court or any other forum to award  punitive,  exemplary or any
similar  damages.  By entering  into this  Agreement to  arbitrate,  the parties
expressly waive any claim for punitive,  exemplary or any similar  damages.  The
only damages  recoverable  under this Agreement are  compensatory  damages.  The
foregoing  limitation  will not  prevent  a party  entitled  to  indemnification
pursuant to this  Agreement  from  recovering  all components or any judgment or
award against such party by an unaffiliated third party.

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<PAGE>

         12.13    The procedures  specified in this Article 12 shall be the sole
and exclusive  procedures  for the  resolution  of disputes  between the parties
which are expressly  identified for  resolution in accordance  with this Article
12.




         IN WITNESS WHEREOF,  the parties have executed this Agreement as of the
date set forth above.

NOSTRUM PHARMACEUTICALS, INC.                 SYNOVICS LABORATORIES, INC.


By:                                           By:
    ------------------------------                ------------------------------

Name:  Nirmal Mulye, Ph.D.                    Name: Ronald Howard Lane. Ph.D.
Title: President                              Title: President

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