Document:

EXHIBIT 10.1

                   Lease Termination and Release Agreement.

     Legacy Bank of Texas ("Legacy"), collateral assignee under the
 Assignment Rents and Leases (the "Assignment"), dated as of November 6, 2001
 and signed by Legacy and C-Gate Construction, Inc. ("C-Gate") of certain
 rights under that Lease Agreement dated November 6, 2001, (the "Lease")
 between C-Gate and Integrated Performance Systems, Inc. ("IPFS"), and IPFS,
 tenant under the Lease, hereby agree upon the termination of the Lease and
 mutual release of claims upon the following terms and conditions:

     1.   Effective upon timely receipt of the total payment of $500,000.00
 in cash paid ("Release Price") by IPFS to Legacy, the Lease shall be
 terminated by Legacy and IPFS and all claims arising under the Lease
 shall be released by Legacy, pursuant to and to the extent of Legacy's
 authority to release claims and terminate (by termination, cancellation
 or modification) the Lease under the Assignment and the Court Order, and
 all claims which Legacy may have against IPFS shall become released under
 paragraph 7 hereof.

     2.   The Release Price shall be paid as follows:

          a.   IPFS shall deposit with Legacy the sum of $100,000.00 by
 5:00 p.m. on June 24, 2005 to be held in escrow ("Escrow Account") pending
 approval of the release of claims and termination of the Lease by the United
 States Bankruptcy Court for the Eastern District of Texas, Sherman Division
 ("Bankruptcy Court") in C-Gate's bankruptcy case ("Bankruptcy Case").

          b.   Within three (3) business days after the entry of the
 Bankruptcy Court's order approving the release of claims and termination of
 the Lease, but in no event later than July 31, 2005, IPFS shall pay Legacy
 $400,000.00 and release all claims to the funds in the Escrow Account which
 shall there upon be applied by Legacy toward payment of the balance of the
 Release Price.

          c.   Legacy shall also apply the Release Price received from IPFS
 hereunder toward payment of its claim against C-Gate in the Bankruptcy Case.

     3.   IPFS and Legacy shall file with the Bankruptcy Court a joint
 motion (the "Motion") seeking the Court's authorization for either C-Gate or
 Legacy to agree, on behalf of the bankruptcy estate of C-Gate, to terminate
 the Lease and release IPFS from all claims arising under the Lease.  Such
 approval by the Bankruptcy Court can be in the form of an approval coupled
 with the dismissal of the Bankruptcy Case.  However, the dismissal of the
 Bankruptcy Case will not include the dismissal of the adversary proceeding
 wherein IPFS and Best Circuit Boards, Inc. are third party plaintiffs
 against various parties.

     4.   If IPFS pays the Release Payment in full as required in this
 agreement, IPFS shall be allowed until the end of the day on July 31, 2005
 to vacate the premises described by the Lease at no rent. Provided that IPFS
 provides written notice to Legacy not later than July 20, 2005, IPFS may
 extend the date to vacate the leased premises until the end of the day on
 August 31, 2005 at no rent. IPFS and Legacy (pursuant to and to the extent
 of its authority under the Assignment) shall abide by the following
 provisions of the Lease while it is in possession of the leased premises,
 notwithstanding termination of the Lease: 2.01, 3.04 - 3.10, Article 4
 (except for 4.04), 5.01, 5.02, 5.03 Article 6, 7.02(A)(1)(2) and 7.02B,
 8.05 - 8.08, and until IPFS vacates the premises, and "Event of Default"
 shall mean a default that remains uncured seven (7) days after IPFS receives
 written notice thereof from Legacy.  Legacy shall have no liability or
 obligation to IPFS with respect to its possession and use of the premises
 whatsoever at any time or under any circumstances. If IPFS does not vacate
 the premises by July 31, 2005 (unless extended to August 31, 2005 pursuant
 to this Agreement) and the Lease has been terminated, IPFS shall pay hold
 over rent of $1,000 a day to Legacy.  Legacy and its agent may show the
 premises to prospective purchasers while IPFS is in possession.

     5.   IPFS hereby ratifies and renews all of its obligations under the
 Lease and acknowledges that the Lease Modification dated as of November 1,
 2004, is null and void and does not affect the obligations of IPFS under
 the Lease agreement. IPFS also waives any rights it may have, if any,
 under the Lease Modification and all defenses related thereto or arising
 thereunder, and agrees that the Lease is in full force and effect, unamended
 by the Lease Modification.  The agreement in this paragraph is effective and
 enforceable even if the Bankruptcy Court does not grant the Motion.

     6.   IPFS hereby releases Legacy, its officers, directors,
 shareholders, employees and attorneys, from any and all claims, actions
 or causes of action arising out of or related to the Lease, the Lease
 Modification, the Bankruptcy Case, and all other claims, actions or causes
 of action which IPFS may have or assert against any of the released parties,
 except claims arising under this Agreement; IPFS warrants and represent that
 it has not assigned any claim it may have against the released parties to
 any other person, firm or corporation.  The agreement in this paragraph is
 effective and enforceable even if the Bankruptcy Court does not grant the
 Motion.

     7.   Effective upon payment of the full Release Price to Legacy as
 herein provided, Legacy (on its behalf and pursuant to and to the extent of
 Legacy's authority under the Assignment and, if authorized by the Bankruptcy
 Court, for and on behalf of the estate of C-Gate) releases IPFS, its
 officers, directors, shareholders, employees and attorneys, from any and all
 claims, actions or causes of action arising out of or related to the Lease,
 the Lease Modification, the Bankruptcy Case, and all other claims, actions
 or causes of action which Legacy or C-Gate may have or assert against any
 of the released parties, except claims arising under this Agreement; Legacy
 warrants and represent that it has not assigned any claim it may have
 against the released parties to any other person, firm or corporation;
 provided, however, this provision shall not become effective or be
 enforceable unless the full Release Payment of $500,000 is paid by IPFS to
 Legacy as required herein. The agreement in this paragraph is effective and
 enforceable even if the Bankruptcy Court does not grant the Motion.

     8.   If IPFS fails to pay the full $500,000 Release Payment to Legacy
 for any reason by July 31, 2005, Legacy may apply the $100,000 Escrow
 Account to the Lease obligations of IPFS and IPFS shall remain fully liable
 under the Lease for all payments and obligations due thereunder, un-amended
 by either this agreement or the Lease Modification.

     9.   The agreement establishing the Escrow Account will provide that
 the initial payment of the Release Price of $100,000 will be held by Legacy
 in escrow pending the approval of this Agreement by the Bankruptcy Court.
 The funds may be released to Legacy by either a subsequent written consent
 of IPFS or an Order of the Bankruptcy Court or other Court having
 jurisdiction, as provided herein.

     10.  IPFS and Legacy do not waive, reduce or release any claims of any
 kind or character (whether known or unknown, sounding in tort or contract)
 that IPFS and Legacy or either of them may have against C-Gate, its
 officers, directors, shareholders or its affiliates.

     Signed:  June 22, 2005

     Agreed and Accepted:

     /s/ Myron T. Butler
     ------------------------------------
     Legacy Bank of Texas

     By:  Myron T. Butler
          -------------------------------
     Its: Senior Vice President
          -------------------------------

     /s/ Brad J. Peters
     ------------------------------------
     Integrated Performance Systems, Inc.

     By:  Brad J. Peters
          -------------------------------
     Its: CFO
          -------------------------------EXHIBIT 10.2

                                  AGREEMENT

     Legacy and IPFS have entered into the attached Agreement and agree
 that, if the Bankruptcy Court does not grant the Motion and give Legacy
 authority to terminate the Lease and release IPFS, on behalf of the C-Gate
 Estate, from all claims arising under the Lease, by July 31, 2005, IPFS
 may, at its sole option, waive such release and termination and accept such
 release and termination as Legacy may give under the Assignment, by paying
 the balance of the Release Payment to Legacy by 5:00 pm July 31, 2005.

     Legacy warrants and represents to IPFS that an Event of Default, as
 defined under the Assignment, exists and will continue to exist, unless
 Legacy notifies IPFS that it no longer exists prior to accepting payment
 the full $500,000 Release Price.

     All terms defined in the attached agreement shall have the same meaning
 herein.

     Signed:   June 22, 2005

     Agreed and Accepted:

     /s/ Myron T. Butler
     ------------------------------------
     Legacy Bank of Texas

     By:  Myron T. Butler
          -------------------------------
     Its: Senior Vice President
          -------------------------------

     /s/ Brad J. Peters
     ------------------------------------
     Integrated Performance Systems, Inc.

     By:  Brad J. Peters
          -------------------------------
     Its: CFO
          -------------------------------CONFIDENTIAL TREATMENT
                                                                REDACTED VERSION

                    PRODUCT DEVELOPMENT AND LICENSE AGREEMENT

THIS PRODUCT  DEVELOPMENT AND LICENSE AGREEMENT  (together with all exhibits and
schedules,  the "Agreement"),  dated as of June 22, 2005 ( the "Effective Date")
by and between ELITE  LABORATORIES,  INC., a corporation  organized and existing
under the laws of Delaware,  and having its  principal  place of business at 165
Ludlow  Avenue,  Northvale,  NJ 07647  ("ELITE") and PLIVA,  INC., a corporation
organized  and existing  under the laws of New Jersey,  and having its principal
place of business at 72 Eagle Rock Avenue, East Hanover, NJ 07936 ("PLIVA").

                                    RECITALS:

PLIVA is engaged in the development,  manufacturing,  marketing and distribution
of generic  pharmaceutical  products in the  Territory  (as  defined  below) and
possesses  qualified  marketing and  distribution  systems and  organizations to
enable it to effectively promote, market and distribute such products throughout
the Territory;

ELITE is the  owner  of  Know-How  (as  defined  below)  and  other  proprietary
technology relative to the Product (as defined below);

ELITE  and PLIVA  desire to  further  develop  and  market  the  Product  in the
Territory; and

Elite desires to grant to PLIVA the exclusive right to purchase, market, promote
and  distribute  the Product in the  Territory  under PLIVA's  label,  and PLIVA
desires to accept and exercise the right,  all upon such terms and conditions as
are set forth in this agreement.

ELITE and PLIVA agree as follows:

1.       DEFINITIONS

         The following  terms as used in this Agreement  shall have the meanings
         set forth in this Article:

         1.1.     "AFFILIATE" shall mean any corporation,  firm,  partnership or
                  other entity,  which owns or controls,  is owned or controlled
                  by, or is under common  control with,  PLIVA or ELITE,  as the
                  case may be. The term "control" means the ownership,  directly
                  or  indirectly,  of at least fifty percent (50%) of the equity
                  or voting power of the owned or controlled entity.

         1.2.     "APPLICABLE  LAW" shall mean the United States Food,  Drug and
                  Cosmetic Act of 1938, as may be amended from time to time, and
                  the regulations

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<PAGE>

                  and guidelines  promulgated  pursuant thereto, as amended from
                  time to time,  and all  other  laws,  regulations,  rules  and
                  guidelines  of any  governmental  authority  in the  Territory
                  pertaining  to  the   development,   manufacture,   packaging,
                  labeling, storage,  distribution,  marketing, sale or intended
                  use of the Product.

         1.3.     "CGMP" shall mean all applicable good manufacturing practices,
                  including  but not  limited  to  current  "good  manufacturing
                  practices"  and any other methods used for the  manufacturing,
                  testing, validation,  labeling,  packaging,  storage, shipment
                  and  installation  of any  and  all  pharmaceutical  products,
                  equipment  and related  materials to ensure that such products
                  and  materials  meet the legal  requirements  for  safety  and
                  effectiveness  as  established  by the United  States Food and
                  Drug   Administration   ("FDA")  or  comparable   governmental
                  authority in any country  outside the United  States where the
                  Product  is  distributed  under  this  Agreement,   including,
                  specifically,  without  limitation,  Title 21, Part 211 of the
                  United States Code of Federal Regulations.

         1.4.     "CONFIDENTIAL   INFORMATION"   shall   mean  any   information
                  pertaining to the Product from time to time communicated by or
                  on  behalf  of  the  disclosing  party,   including,   without
                  limitation,   trade   secrets,   Know-How,   pricing,   costs,
                  suppliers,  licensees,  customer  information,  patent rights,
                  scientific,   technical,   commercial   and  medical   product
                  development information, manufacturing, methods, processes and
                  production, contractual arrangements, results, discoveries and
                  inventions, procedures and forms, financial and other business
                  information,  forecasts, strategies and other data, whether of
                  a written, oral or visual nature.

         1.5.     "COST OF GOODS" shall mean (i) ELITE's fully  absorbed  direct
                  and indirect cost of manufacturing, labeling and packaging the
                  Product,  including without  limitation the cost of all active
                  pharmaceutical ingredients, materials, and components included
                  in the Product, plus (ii) [*]

         1.6.     "COMMERCIALIZATION",   "COMMERCIALIZING",  or  "COMMERCIALIZE"
                  shall mean all activities relating to manufacture,  promotion,
                  distribution,  marketing  and  sale  of  the  Product  in  the
                  Territory.

         1.7.     "ED-COSTS" shall mean the fees, costs and expenses incurred by
                  Elite in meeting its  obligations  pursuant to Section 2.1 and
                  Section  2.2(a)  plus any amount  paid to  outside  counsel by
                  ELITE in procuring the freedom to operate opinion provided for
                  in Section 4.2.

         1.8.     "FIELD" shall mean treatment of [*].

                                       2
<PAGE>

         1.9.     "KNOW-HOW"  shall  mean  all  technology,  data,  information,
                  processes and methods  necessary or useful in the  production,
                  testing, registration or marketing of the Product.

         1.10.    "LICENSEE"  shall mean the  recipient of a license  granted by
                  ELITE to  Commercialize  the Product in the  Territory.  PLIVA
                  shall be the designated and exclusive  Licensee  hereunder for
                  the Territory.

         1.11.    "MARKETING AUTHORIZATION" shall mean the final approval of all
                  regulatory  authorities  necessary  to market the Product in a
                  particular  country in the Territory,  including as applicable
                  pricing and  reimbursement  approval  and all other  approvals
                  required  in a  particular  country in the  Territory  for the
                  marketing,  distribution  and sale of the Product in the Field
                  in the normal course of business.

         1.12.    "NET PROFIT" shall mean the Price LESS the Cost of Goods.

         1.13.    "PD-COSTS" shall mean the fees, costs and expenses incurred by
                  PLIVA in  connection  with  the  Studies  plus the  milestones
                  actually paid to ELITE pursuant to Section 5.2 plus any amount
                  paid to outside  counsel by PLIVA in procuring  the freedom to
                  operate opinion provided for in Section 4.2.

         1.14.    "PRICE"  shall mean the sales  price paid by third  parties to
                  PLIVA for Product,  less only the following  deductions to the
                  extent  actually  incurred,  all determined in accordance with
                  generally accepted accounting principles:

                  (1)      customs and excise  duties or other sales taxes (but,
                           for the avoidance of doubt not income or  corporation
                           tax), directly related to the sale of the Product;

                  (2)      costs  incurred  by PLIVA in  respect  of  transport,
                           shipping and insurance costs;  and industry  standard
                           or mandatory discounts or rebates related to the sale
                           of the Product,  including,  without limitation,  any
                           credit in respect of any  Federal or state  Medicaid,
                           Medicare or similar program; and

                  (3)      amounts repaid or credited by PLIVA,  consistent with
                           its  ordinary or  customary  business  practices  for
                           similar  products,  by  reason  of the  rejection  or
                           return  of goods  and  allowances,  including  trade,
                           quantity   and   cash   discounts   and   any   other
                           adjustments,  including  those  granted on account of
                           price or shelf  stock  adjustments,  billing  errors,
                           rejected  goods,  damaged  goods,  recalls,  returns,
                           rebates,   chargebacks,    reimbursements,    similar
                           payments  granted  or given to  wholesalers  or other
                           distributors,  buying  groups,  health care insurance
                           carriers or other institutions.

                                       3
<PAGE>

         1.15.    "PRODUCT"  shall mean [*] that is  approved by FDA as AB rated
                  as bioequivalent to [*] (the  "REFERENCED  DRUG"),  for use in
                  the Field and which meets the  specifications set forth in the
                  ANDA   to  be   filed   pursuant   to  this   Agreement   (the
                  "SPECIFICATIONS").

         1.16.    "TERM" shall have the meaning set forth in Section 12 hereof.

         1.17.    "TERRITORY" shall mean the [*].

2.       PRODUCT DEVELOPMENT

         2.1.     ELITE shall be responsible  for Product  formulation,  methods
                  development and validation.

         2.2.     ELITE shall obtain and submit to PLIVA, for PLIVA's review and
                  approval  (such  approval  not  to be  unreasonably  withheld,
                  conditioned  or delayed),  a proposal or proposals,  including
                  costs,  from a  third  party  to  conduct  pilot  and  pivotal
                  bioequivalence   studies   for   the   Product   to   evidence
                  bioequivalence to the Referenced Drug in accordance with study
                  plan  protocols  to be  agreed  to by  ELITE  and  PLIVA  (the
                  "STUDIES").  Following its  approval,  PLIVA shall engage such
                  third  party  to  conduct  the  Studies,  and the  cost of all
                  Studies shall be borne by PLIVA.

                  (a)      ELITE shall complete any additional formulation work,
                           if  necessary,   complete  process   development  and
                           scale-up,   including  in-process  controls  and  all
                           necessary  stability  studies  with  respect  to  the
                           Product,    and   manufacture    Product   biobatches
                           reasonably required to conduct such Studies.

         2.3.     Each of ELITE and PLIVA agrees that,  during the Term,  except
                  for the Studies contemplated hereunder,  neither it nor any of
                  its  Affiliates  will conduct  clinical  studies for any other
                  generic version of [*], whether for itself or any third party,
                  for distribution or sale in the Territory.

         2.4.     ELITE and PLIVA shall each have the right to  discontinue  the
                  Studies at any time prior to  completion  of such Studies upon
                  three (3) days' prior  written  notice to the other party,  if
                  ELITE or PLIVA, as the case may be,  reasonably  believes that
                  health and safety issues may arise.

         2.5.     ELITE  shall  inform  PLIVA  of any  changes  in  the  Product
                  development  plan.  ELITE  shall use  commercially  reasonable
                  efforts to assure PLIVA

                                       4
<PAGE>

                  that the Product  shall be available to PLIVA to market at the
                  time agreed to by ELITE and PLIVA in writing  pursuant to this
                  Agreement.

         2.6.     ELITE  shall  perform  its  obligations  in this  Section 2 in
                  accordance with Applicable Laws.

3.       REGULATORY FILINGS

         Following  successful  completion  of  the  pivotal  biostudy  for  the
         Product,  ELITE shall be responsible  for the  preparation,  filing and
         prosecution  with  the  FDA  of an  abbreviated  New  Drug  Application
         ("ANDA") for the Product. The ANDA shall be in the name of ELITE. ELITE
         shall bear the cost of the ANDA  preparation,  filing and  prosecution.
         Each  party  shall  reasonably   cooperate  with  the  other  party  in
         connection  with the preparation of the ANDA. Each party shall have the
         right to review and comment upon any and all prepared  applications and
         filings prior to submission to the relevant governmental authorities.

4.       INTELLECTUAL PROPERTY OWNERSHIP, MAINTENANCE AND DEFENSE

         4.1.     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
                  hereof  whether  in  connection  with the  Study or  otherwise
                  ("Intellectual Property Rights") are and shall, in all events,
                  be the sole and exclusive  property of ELITE. PLIVA shall take
                  such actions,  and execute and deliver such documents,  as may
                  be reasonably requested from time to time by ELITE, at ELITE's
                  expense,  to perfect  ELITE's  Intellectual  Property  Rights.
                  ELITE grants to PLIVA and PLIVA  accepts,  during the Term, an
                  exclusive,  non-transferable  license to ELITE's  Intellectual
                  Property  Rights to allow  PLIVA to offer for sale the Product
                  in the  Territory.  PLIVA  may not  grant  any  sublicense  to
                  ELITE's  Intellectual  Property  Rights without  ELITE's prior
                  written  consent,  which consent may be granted or withheld in
                  ELITE's sole discretion.

         4.2.     FREEDOM  TO  OPERATE.  PLIVA  and ELITE  shall,  under a joint
                  defense  agreement,  obtain,  within 120 days of the effective
                  date, a "freedom to operate" opinion from outside counsel with
                  respect  to the  manufacture,  use and sale of the  Product in
                  each  country in the  Territory.  Either  party shall have the
                  right to terminate this Agreement with respect to a country if
                  not  satisfied   with  the  opinion(s)  for  such  country  by
                  notifying the other party in writing within 30 days of receipt
                  of the  opinion.  The  obligations  of each  party  accrued to
                  through the Effective  Date of any such notice,

                                       5
<PAGE>

                  including  the  obligation  to reimburse  for costs  incurred,
                  shall survive termination of this Agreement.

         4.3.     DEFENSE OF PRODUCT.  PLIVA and ELITE shall be responsible for,
                  and shall share equally the cost of, defending the Product and
                  the parties hereto against any lawsuits in accordance with the
                  terms and conditions of Article 7.

5.       FINANCIAL TERMS

         5.1.     PAYMENTS.  For  all  Product  supplied  to  PLIVA  under  this
                  Agreement  ELITE  shall  invoice  PLIVA,  referencing  in each
                  invoice the  purchase  order(s),  if any, to which the invoice
                  relates,  the  Cost of  Goods  and the  quantity  of  units of
                  Product  shipped.  PLIVA shall pay each  invoice  within forty
                  five (45)  days of the  invoice  date.  Any late  payments  or
                  underpayments  under this Agreement shall bear interest at the
                  prime rate from the initial due date until payment in full.

         5.2.     MILESTONES.  PLIVA shall pay to Elite the following milestones
                  payments:

                  a)       [*] simultaneously with the execution and delivery of
                           this  Agreement,  or, if later,  on the thirtieth day
                           following  delivery  by  ELITE of the  legal  opinion
                           described  in Section 4.2 of this  Agreement  (unless
                           the Agreement has theretofore  been terminated  under
                           Section 4.2).

                  b)       [*]  upon  (i)  completion  of a  successful  pivotal
                           bioequivalence  study where the Product meets the FDA
                           guidelines for bioequivalence, and (ii) submission to
                           and  acceptance  by  the  FDA  of the  ANDA  for  the
                           Product.

                  c)       [*] upon FDA approval of the Product.

         5.3      PROFIT SHARE.

   (a)   Within forty five (45) days following the end of each calendar  quarter
         during the Term  following  the first  commercial  sale of the  Product
         hereunder, PLIVA shall provide ELITE with a detailed statement for such
         period  showing  for all Product  sold by PLIVA  during such period the
         number of units sold, the Price for those units, and the Net Profit for
         such period.  PLIVA shall pay to ELITE a  percentage  of the Net Profit
         for such period  within  fifteen  (15) days of delivery to ELITE of the
         statement showing such calculation.

   (b)   The percentage payable to ELITE shall be determined as follows.

         (1)      Within thirty (30) days of FDA approval of the Product,  ELITE
                  shall  provide to PLIVA a detailed  statement  of the ED-Costs
                  and PLIVA shall  provide to ELITE a detailed  statement of the
                  PD-Costs.

                                       6
<PAGE>

         (2)      If the  ED-Costs  exceed the  PD-Costs,  then  ELITE  shall be
                  entitled  to recover the amount by which the  ED-Costs  exceed
                  the PD-Costs.

         (3)      If the  PD-Costs  exceed the  ED-Costs,  then  PLIVA  shall be
                  entitled  to recover the amount by which the  PD-Costs  exceed
                  the PD-Costs.

         (4)      The Party  entitled  to recover  the amount of the  difference
                  shall  receive or  retain,  as the case may be, [*] of the Net
                  Profit until such amount is recovered. Thereafter, the Parties
                  shall [*].

         5.4      AUDIT;  INSPECTION.  Within  one  hundred  eighty  (180)  days
                  following  the close of each calendar year during the Term and
                  for a period of twenty four  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  undertakings  contained in Section 10 of this
                  Agreement,  to the other party's books and records relating to
                  the Product in the Field in the Territory  solely for purposes
                  of verifying  costs and expenses and Net Profit in  connection
                  with this  Agreement,  and for  verifying  the accuracy of the
                  calculations  hereunder  for the calendar  year then ended and
                  for  the  two  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.  In the event such verification shows an underpayment
                  of more than [*] was made by the Requesting Party to the other
                  party,  the other  party will be required to pay for the costs
                  reasonably incurred by Requesting Party in connection with its
                  inspection.

6.       MANUFACTURE, SUPPLY AND COMMERCIALIZATION OF PRODUCT

         6.1      During  the  Term,  and  on  and  subject  to  the  terms  and
                  conditions  of this  Agreement,  ELITE shall  manufacture  and
                  supply or, with PLIVA's  prior  written  consent (such consent
                  not to be  unreasonably  withheld,  conditioned  or  delayed),
                  subcontract  the manufacture and supply of, the Product in the
                  Territory  exclusively  to PLIVA  for  resale  by PLIVA in the
                  Territory,  in  such  quantities  and  at  such  times  as are
                  specified in the purchase  orders placed by PLIVA  pursuant to
                  this  Agreement.  PLIVA shall  purchase  its  requirements  of
                  Product for resale in the Territory exclusively from ELITE.

         6.2      ELITE will  supply  the  Product  to PLIVA in  finished  form,
                  labeled in accordance  with the ANDA,  and packaged  ready for
                  resale in accordance with Section 6.5 (d) hereof.  ELITE shall
                  manufacture,  store and ship the  PRODUCT to PLIVA,  and PLIVA
                  shall store,  ship,  market and  distribute the PRODUCT in

                                       7
<PAGE>

                  the Territory,  in accordance with cGMPs, Applicable Laws, the
                  Specifications,   and  the  terms  and   conditions   of  this
                  Agreement.

         6.3      The Product to be supplied by ELITE to PLIVA  hereunder  shall
                  bear PLIVA's  label.  ELITE shall provide to PLIVA a sample of
                  the printed labeling and packaging for the Product for PLIVA's
                  approval.  ELITE  shall  label  and  package  all  Product  in
                  accordance   with  the  ANDA,   cGMPs,   and  the   applicable
                  requirements  of the FDA.  PLIVA  grants  to  ELITE a  limited
                  license to use PLIVA's  trademarks  for  purposes of packaging
                  and labeling Product as described in this section.

         6.4      PLIVA shall  diligently  market and promote the Product in the
                  Territory,  using  such  commercially  reasonable  efforts  to
                  maximize Product sales and Net  Manufacturing  Profits.  PLIVA
                  shall devote such marketing efforts to the Product as it would
                  exert for products of its own with comparable  market size and
                  profit potential under comparable competitive  conditions.  At
                  least once per calendar  quarter PLIVA shall provide to ELITE,
                  in writing,  an outline of PLIVA's sales  expectations for the
                  Product for the upcoming three calendar quarters.

         6.5      (a)      At least one hundred  twenty  (120) days prior to the
                           anticipated   launch  date  of  the  Product  in  the
                           Territory,  and thereafter at least thirty days prior
                           to each calendar quarter during the Term, PLIVA shall
                           provide  ELITE  with a written  forecast  of  PLIVA's
                           estimated  Product   requirements  for  each  of  the
                           following four calendar quarters.  The forecasts will
                           be non-binding, except as provided below.

                  (b)      PLIVA shall make all Product  purchases  hereunder by
                           submitting firm purchase  orders to ELITE.  Each such
                           purchase  order shall be in writing and shall specify
                           the  quantity of Product  ordered  (which shall be in
                           batch size,  or multiples  thereof) and the requested
                           delivery date(s).  Purchase orders shall be placed at
                           least ninety days before the desired  delivery  date.
                           Each  purchase  order  shall be  subject  to  ELITE's
                           acceptance,  in whole or in part.  In the  event of a
                           conflict  between  the  terms and  conditions  of any
                           purchase  order  and this  Agreement,  the  terms and
                           conditions of this Agreement shall prevail.

                  (c)      In each calendar quarter, PLIVA shall be obligated to
                           place  purchase  orders  for a  quantity  of  Product
                           constituting  at least  seventy  five  percent of the
                           estimated  quantity  for that quarter as contained in
                           the forecast provided in the previous quarter.

                  (d)      All Product  supplied under this  Agreement  shall be
                           delivered FOB ELITE's manufacturing site. PLIVA shall
                           pay  all  freight,   insurance   and  other   charges
                           applicable  to the sale and  transport of the Product
                           to  PLIVA's  facilities.  Title  and risk of loss and
                           damages to Product  shall pass to PLIVA upon delivery
                           to PLIVA's designated carrier.

                                       8
<PAGE>

                  (e)      If a shipment of Product of any portion thereof fails
                           to conform  to the  applicable  Specifications,  then
                           PLIVA   shall   have  the   right  to   reject   such
                           nonconforming    shipment    of    Product   or   the
                           nonconforming  portion  thereof,  as the case may be.
                           PLIVA  shall  give  written  notice  to  ELITE of its
                           rejection  within fifteen days of PLIVA's  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
                           Product  shall be returned  to ELITE  within ten (10)
                           business  days of ELITE's so  directing.  ELITE shall
                           replace each  nonconforming  shipment of Product,  or
                           the  nonconforming  portion thereof,  with conforming
                           Product  as  soon  as  reasonably  practicable  after
                           receipt  of notice  or  rejection  thereof.  If ELITE
                           disputes any claim of  nonconforming  Product and the
                           parties  cannot  resolve  the dispute  within  thirty
                           days,  then  the  dispute  shall  be  subject  to the
                           dispute resolution provisions of Section 17 hereof.

                  (f)      ELITE and PLIVA each agree 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 PLIVA 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 PLIVA's label.

                  (g)      (i) 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
                           PLIVA under this  Agreement (a  "RECALL"),  ELITE and
                           PLIVA 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 PLIVA shall
                           not be  prohibited  hereunder  from taking any action
                           that it is required to take by  applicable  law. (ii)
                           In the event the Recall of the Product is solely as a
                           result of (1) the manufacture,  supply,  storage,  or
                           distribution  by ELITE of  Product;  (2) a breach  by
                           ELITE   of   its   representations,   warranties   or
                           obligations under this Agreement;  or (3) the grossly
                           negligent or  intentionally  wrongful act of ELITE or
                           its representatives,  then ELITE shall bear all costs
                           and  expenses  of  such  Recall,  including,  without
                           limitation  expenses  related to  communications  and
                           meetings  with  all  required  regulatory   agencies,
                           expenses   of   replacement   stock  (not   including
                           backorder  reimbursement),   the  cost  of  notifying
                           customers  and  costs  associated  with  shipment  of
                           Product being recalled from customers and shipment of
                           an  equal  amount  of  replacement  Product  to those
                           customers  (collectively,  "RECALL  COSTS").  In  all
                           other  events,  PLIVA  shall  bear all of the  Recall
                           Costs.

7.       INDEMNIFICATION

         7.1      INFRINGEMENT   CLAIMS.   ELITE  and  PLIVA  shall  be  jointly
                  responsible  for  searching,   reviewing  and  evaluating  any
                  patents or published  patent  applications  pertaining  to the
                  manufacture,  use and sale of Product  in each  country in the

                                       9
<PAGE>

                  Territory,  including without  limitation,  relating to active
                  pharmaceutical ingredients and Product formulation.  PLIVA and
                  ELITE jointly shall investigate and defend any and all claims,
                  actions and  proceedings  resulting from an assertion  against
                  ELITE or PLIVA (or a Licensee  if ELITE and PLIVA have  agreed
                  to indemnify such Licensee) that the Product  infringes upon a
                  third  party's  intellectual  property  rights  ("INFRINGEMENT
                  CLAIM").  PLIVA and ELITE shall be jointly responsible for the
                  cost and expenses of the defense, including without limitation
                  damages,  awards,  and  settlement  costs.  The parties  shall
                  provide  such  assistance  as the other party may from time to
                  time reasonably  request in connection with the evaluation and
                  defense of any potential or actual Infringement Claim.

         7.2      ENFORCEMENT  PROCEEDINGS.  ELITE and PLIVA shall jointly bring
                  enforcement  proceeding  against  any third party if ELITE and
                  PLIVA   determine   jointly  that  a  third-party   is  likely
                  infringing  upon the rights of ELITE,  PLIVA or a Licensee  of
                  the Product.  PLIVA and ELITE shall be jointly responsible for
                  the  cost  and   expenses   arising   from  such   enforcement
                  proceeding,  including without limitation damages, awards, and
                  settlement  costs.  All  such  costs  and  expenses  shall  be
                  allocated  equally  between  ELITE and PLIVA.  ELITE and PLIVA
                  shall share equally all amounts awarded in connection with any
                  such enforcement proceeding.

         7.3      INDEMNIFICATION OBLIGATIONS OF THE PARTIES.

                  (a)      Each party shall indemnify,  defend and hold harmless
                           the other party and its  Affiliates  from and against
                           any and all  losses,  costs,  expenses,  liabilities,
                           claims, actions, damages, personal injury, or loss of
                           life,   including  without   limitation,   reasonable
                           attorney's  fees  (collectively,  "Losses"),  arising
                           directly from such party's (i) grossly negligent acts
                           or  omissions  or  willful  misconduct;  and/or  (ii)
                           breach of this Agreement.

                  (b)      ELITE  and PLIVA  shall  jointly  defend  any and all
                           claims,  actions and proceedings brought by any third
                           party relating to the Product.  PLIVA and ELITE shall
                           be jointly  responsible  for the cost and expenses of
                           defense, including without limitation damages, awards
                           and settlement costs, except for Losses for which one
                           party is entitled to  indemnification  from the other
                           party under  Section  7.3 (a) above.  ELITE and PLIVA
                           shall  jointly  select  counsel  for any such  claim,
                           action or  proceeding.  Neither  party may  settle or
                           consent to judgment  in any such  action  without the
                           other party's  consent if such settlement or judgment
                           would impose any obligation,  financial or otherwise,
                           on the  non-settling  party  that  would not be fully
                           covered by the settling party's indemnification under
                           this Agreement.

         7.4      NOTWITHSTANDING  ANY  PROVISION TO THE  CONTRARY  CONTAINED IN
                  THIS  AGREEMENT,  IN NO EVENT SHALL  EITHER PARTY BE LIABLE TO
                  THE  OTHER  PARTY  OR  A  LICENSEE   FOR  ANY   CONSEQUENTIAL,
                  INCIDENTAL,  OR PUNITATIVE DAMAGES (INCLUDING LOSS OF PROFITS,
                  LOSS OF ENTERPRISE,

                                       10
<PAGE>

                  AND LOSS OF OPPORTUNITY) , REGARDLESS OF WHETHER FOR BREACH OF
                  WARRANTY,   CONTRACT,  TORT  (INCLUDING  NEGLIGENCE),   STRICT
                  LIABILITY OR OTHERWISE,  EVEN IF ADVISED OF THE POSSIBILITY OF
                  SUCH DAMAGES.

8.       INSURANCE

         Each  party  agrees to  maintain  in force,  during  the Term and for a
         period of 24 months thereafter, product liability insurance coverage in
         minimum  limits of  $5,000,000  each.  Each party  shall  instruct  its
         insurance carrier to notify the other party of any change, modification
         or  cancellation  of  insurance  thirty  days  prior  to  such  change,
         modification or cancellation taking effect.

9.       REPRESENTATIONS AND WARRANTIES

         9.1      ELITE  represents  and warrants to PLIVA,  as of the Effective
                  Date, as follows:

                  (1)      ELITE has the legal  right and full  corporate  power
                           and  authority  to enter into this  Agreement  and to
                           perform the same;

                  (2)      the   Agreement   constitutes   valid   and   binding
                           obligations  on ELITE in  accordance  with its  terms
                           except   as   limited   by   applicable   bankruptcy,
                           insolvency,  reorganization and other laws of general
                           application  affecting the  enforcement of creditors'
                           rights generally, and except as enforcement of rights
                           to  indemnity  and  contribution   hereunder  may  be
                           limited by principles of public policy;

                  (3)      ELITE has taken all corporate  action  required by it
                           to  authorize  it to enter  into and to  perform  the
                           Agreement;

                  (4)      ELITE has the right to disclose  Know-How to PLIVA as
                           is  necessary  for PLIVA to perform  its  obligations
                           hereunder;

                  (5)      to  ELITE's  knowledge,  there  are  no  infringement
                           proceedings  pending against ELITE in connection with
                           the Product;

                  (6)      there are no  agreements  between ELITE and any third
                           party that conflict with this Agreement;

                  (7)      no consent or approval of any third  party,  court or
                           governmental  agency is required in  connection  with
                           the execution and  performance  of this  Agreement by
                           ELITE;

                  (8)      ELITE will manufacture all Product in accordance with
                           cGMPs and all Applicable Laws;

                                       11
<PAGE>

                  (9)      ELITE is not enjoined from manufacturing nor is ELITE
                           currently  sanctioned  by  the  FDA  pursuant  to any
                           issued 483 inspection reports;

                  (10)     ELITE's  employees  and  agents  are not and have not
                           been  debarred  by FDA  pursuant  to 21  USC  Section
                           335(a) or involved in any investigation or proceeding
                           which could lead to debarment;

                  (11)     ELITE does not and will not  knowingly  employ or use
                           the  services  of any  individual  or entity that has
                           been  debarred  or  convicted  of a felony  or who is
                           currently under investigation for such conviction;

                  (12)     all laboratory,  scientific,  technical or commercial
                           information that is submitted by ELITE to PLIVA or to
                           any  regulatory  health  authority  relating  to  the
                           Product  should  be  complete,   true,  accurate  and
                           correct  and shall not contain  any  knowingly  false
                           information, misrepresentation and/or omission; and

                  (13)     ELITE will perform all  necessary  record  keeping as
                           required  under  applicable  federal  and state  laws
                           regarding   the    manufacture    of   the   Product,
                           environmental  impact  of the  manufacturing  and all
                           potential or adverse product defects.

                  ELITE MAKES NO OTHER WARRANTY OF ANY KIND, EXPRESS OR IMPLIED,
                  EXCEPT  THOSE  EXPRESSLY  MADE  HEREIN.   ELITE   SPECIFICALLY
                  DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING,
                  WITHOUT   LIMITATION,   ANY   WARRANTY   OF   MERCHANTABILITY,
                  NON-INFRINGEMENT, OR FITNESS FOR A PARTICULAR PURPOSE.

         9.2      PLIVA  represents  and warrants to ELITE,  as of the Effective
                  Date, as follows:

                  (1)      PLIVA has the legal  right and full  corporate  power
                           and  authority  to enter into this  Agreement  and to
                           perform the same;

                  (2)      the   Agreement   constitutes   valid   and   binding
                           obligations  on PLIVA in  accordance  with its  terms
                           except   as   limited   by   applicable   bankruptcy,
                           insolvency,  reorganization and other laws of general
                           application  affecting the  enforcement of creditors'
                           rights generally, and except as enforcement of rights
                           to  indemnity  and  contribution   hereunder  may  be
                           limited by principles of public policy;

                  (3)      PLIVA  has taken or will  have  taken  all  corporate
                           action  required by it to  authorize it to enter into
                           and to perform the Agreement;

                                       12
<PAGE>

                  (4)      there are no  agreements  between PLIVA and any third
                           party that conflict with this Agreement;

                  (5)      no consent or approval of any third  party,  court or
                           governmental  agency is required in  connection  with
                           the execution and  performance  of this  Agreement by
                           PLIVA;

                  (6)      PLIVA  will  transport,  store,  handle,  distribute,
                           market and sell all Product in accordance  with cGMPs
                           and all Applicable Laws;

                  (7)      PLIVA's  employees  and  agents  are not and have not
                           been  debarred  by  the  FDA  pursuant  to 21  U.S.C.
                           Section  335(a) or involved in any  investigation  or
                           proceedings which could lead to debarment;

                  (8)      in the  performance  of its  obligations  under  this
                           Agreement,  PLIVA  does not and  will  not  knowingly
                           employ  or use  the  services  of any  individual  or
                           entity that has been debarred,  convicted of a felony
                           or who is  currently  under  investigation  for  such
                           conviction; and

                  (9)      PLIVA will perform all  necessary  record  keeping as
                           required  under  applicable  federal  and state  laws
                           regarding  the  transport,   handling,   storage  and
                           distribution of the Product,  environmental impact of
                           the   manufacturing  and  all  potential  or  adverse
                           product defects.

         PLIVA MAKES NO OTHER WARRANTY OF ANY KIND,  EXPRESS OR IMPLIED,  EXCEPT
         THOSE  EXPRESSLY MADE HEREIN.  PLIVA  SPECIFICALLY  DISCLAIMS ALL OTHER
         WARRANTIES,  EXPRESS OR IMPLIED,  INCLUDING,  WITHOUT  LIMITATION,  ANY
         WARRANTY  OF  MERCHANTABILITY,   NON-INFRINGEMENT,  OR  FITNESS  FOR  A
         PARTICULAR PURPOSE.

10.      OBLIGATION OF CONFIDENTIALITY

         10.1     All Confidential Information disclosed by a party ("Disclosing
                  Party")  shall  be  treated  by the  other  party  ("Receiving
                  Party") as confidential and shall not be disclosed or revealed
                  to any third party and shall be used solely in connection with
                  the performance of this  Agreement;  provided,  however,  that
                  Confidential  Information  shall not include  information that
                  the Receiving Party can document as having been:

                  (1)      public  knowledge prior to the  disclosure,  or which
                           hereafter  becomes public knowledge  through no fault
                           of the Receiving Party;

                                       13
<PAGE>

                  (2)      lawfully in the Receiving Party's possession prior to
                           the time of disclosure by Receiving Party;

                  (3)      received, after the time of disclosure,  from a third
                           party   not   under   a   similar    obligation    of
                           confidentiality to Disclosing Party; or

                  (4)      independently    developed   by   Receiving   Party's
                           employees   without  access  to  Disclosing   Party's
                           Confidential Information.

         10.2     The  Receiving  Party  shall take all such  precautions  as it
                  normally takes with its own Confidential  Information,  but in
                  no event less than reasonable precautions, to prevent improper
                  disclosure;  provided,  however, that Confidential Information
                  may be disclosed  within the limits required (A) to obtain any
                  authorization  from  the FDA or any  other  United  States  or
                  foreign  governmental or regulatory  agency or, with the prior
                  written consent of the Disclosing  Party;  (B) to be disclosed
                  pursuant to (i) any order of any court having jurisdiction and
                  power to order such information to be released or made public;
                  or (ii) any  lawful  action of a  governmental  or  regulatory
                  agency.

         10.3     In  addition  to  and  without  limiting  any  other  remedies
                  available  to a  Receiving  Party  at  law or in  equity,  the
                  Receiving  Party  shall  also be  entitled  to seek  immediate
                  injunctive  relief  in any  court to  restrain  any  breach or
                  threatened  breach of a  Receiving  Party and to  enforce  the
                  provisions  of this  Section 10. Each party  acknowledges  and
                  agrees  that there is may be no  adequate  remedy at law or in
                  equity for any such  breach or  threatened  breach and, in the
                  event  that  any  proceeding  is  brought  seeking  injunctive
                  relief, the Receiving Party shall not use as a defense thereto
                  that there is an adequate remedy at law.

         10.4     The Receiving Party may disclose  Confidential  Information of
                  the  Disclosing  Party  to the  Receiving  Party's  employees,
                  consultants,     licensees,    prospective    licensees    and
                  subcontractors  on a need-to-know  basis;  provided,  however,
                  that  (i)  any  such   disclosure   shall   be   pursuant   to
                  confidentiality   undertakings   with   terms   at   least  as
                  restrictive as those specified herein;  and (ii) any violation
                  of this  Agreement by such persons shall be deemed a breach of
                  the Receiving  Party.  Any of the persons  mentioned above who
                  are provided with access to Confidential  Information shall be
                  informed  by the  Receiving  Party  of the  Receiving  Party's
                  obligations hereunder.

         10.5     The  confidentiality  obligations  of each  party  under  this
                  Section 10 shall survive the expiration or earlier termination
                  of this Agreement, howsoever terminated.

         10.6     The  parties  shall   cooperate  and  agree  upon  any  public
                  statement concerning the existence, subject matter or any term
                  of this  Agreement  by or on behalf of any Party  prior to any
                  issuance,  dissemination or release.  Subject to

                                       14
<PAGE>

                  Section 10.2, neither party may issue,  disseminate or release
                  any such public  statement  without the prior written approval
                  of the other parties,  which consent shall not be unreasonably
                  withheld or delayed.

         10.7     The confidentiality  obligations  contained in this Article 10
                  are  in   addition  to  and  not  in   substitution   for  any
                  confidentiality obligations of the parties undertaken pursuant
                  to the Non-Disclosure  Agreement between ELITE and PLIVA dated
                  June 22, 2004 (which  agreement  shall  continue in full force
                  and effect as therein provided).

11.      TERM OF AGREEMENT

         This Agreement shall become Effective Date and shall continue in force,
         in with respect to any particular  country in the Territory,  for a ten
         (10) year period from the date the Product is first  commercially  sold
         in that country by PLIVA ("Initial Term"),  unless  terminated  earlier
         under  Article  12.  Upon  expiration  of the  Initial  Term,  and  any
         extension term as hereafter  provided ("Renewal Term" and together with
         the Initial Term, the "Term"),  the Term shall automatically be renewed
         for additional  periods of three (3) years each,  unless written notice
         is given by either  party to the  other at least one (1) year  prior to
         the end of the Initial  Term or any of the Renewal Term of such party's
         decision not to extend the term of the Agreement upon expiration of the
         then existing term.

12.      TERMINATION

         12.1     This Agreement may be terminated by a party:

                  (1)      upon  breach of this  Agreement  by the  other  party
                           (including, without limitation, the failure to timely
                           perform any  obligation  under this  Agreement),  and
                           after  sixty  (60) days prior  written  notice to the
                           breaching  party,  the notice to become  effective at
                           the end of the  sixty  (60)  day  period  unless  the
                           breach is sooner cured by the breaching party;

                  (2)      if a successful  pivotal biostudy  demonstrating  the
                           Product meets FDA  guidelines for  bioequivalence  is
                           not completed  within one (1) year from the Effective
                           Date,   or  if  the  parties  are  unable  to  obtain
                           Marketing  Authorization from FDA within the later of
                           (i) two (2) years from the  completion of the Studies
                           or (ii) five (5) years of the Effective Date;

                  (3)      if  there  are no  patents  which  present  a risk of
                           infringement   in  the   Territory   and  the   first
                           commercial  launch of the  Product  in the  Territory
                           under this Agreement does not occur within sixty (60)
                           days of the date a  Marketing  Authorization  for the
                           Territory is obtained;

                                       15
<PAGE>

                  (4)      upon the other party's insolvency or voluntary filing
                           of a petition for  bankruptcy,  or the placing of the
                           business  of  the  other  party  in  the  hand  of  a
                           receiver; or

                  (5)      if the Net Profit  received  by that party in respect
                           of the Product is less than [*] for any calendar year
                           after  the first  full  calendar  year of  commercial
                           sales hereunder.

         12.2     EFFECT OF  TERMINATION.  Termination of this Agreement for any
                  reason shall be without prejudice to:

                  (1)      ELITE's  and  PLIVA's  right to receive  all  amounts
                           accrued and unpaid under Sections 2, 3 or 5 up to the
                           date of such termination;

                  (2)      any provisions  clearly meant to survive  termination
                           or expiration of this  Agreement,  including  without
                           limitation        representations,        warranties,
                           indemnification  and  confidentiality  obligations as
                           well as Sections 1, 4, 7, 8, 9, 10, 12, and 14, shall
                           remain in full force and effect.

                  (3)      the rights of inspection and audit set out in Section
                           5.4 shall  continue  in force as  required  under the
                           terms of this Agreement; and

                  (4)      any other  remedies  which  either  party may then or
                           thereafter have hereunder or otherwise.

         12.3     RIGHTS TO ANDAS.  Without  limiting  any other right or remedy
                  available to PLIVA,  on ELITE's  breach of this  Agreement (if
                  such breach is not cured  within the time  period  provided in
                  Section 12.1 (1) above),  then at PLIVA's request ELITE shall,
                  within the  Territory,  transfer to PLIVA,  at no charge,  the
                  ANDA (or  comparable  Marketing  Authorization  outside of the
                  United States) for the Product,  and ELITE promptly shall take
                  such other actions as reasonably  requested by PLIVA from time
                  to time to evidence  PLIVA's  exclusive  rights to the ANDA or
                  comparable   Marketing   Authorization   and  all  information
                  contained   therein,   subject  to  PLIVA  having  theretofore
                  reimbursed  ELITE in full for the  Elite  Product  Development
                  Costs.

13.      NOTICES

         13.1     Any  notice  provided  for herein  shall be in writing  and is
                  effective upon receipt:  (i) when delivered by hand with proof
                  of   delivery;   (ii)   when  sent  by   facsimile   with  fax
                  confirmation, provided same is sent all by regular mail within
                  forty-eight (48) hours; (iii) three (3) days following deposit
                  for  mailing by first  class  registered  or  certified  mail,
                  return receipt  requested;  one day following deposit for mail
                  with an  overnight  carrier;  or  (iv)  when  received  by the
                  addressee,  by delivery

                                       16
<PAGE>

                  service (return receipt requested). Notices shall be delivered
                  to the addresses set forth below:

                           If to ELITE:      165 Ludlow Avenue
                                             Northvale, New Jersey 07647
                                             Attention: Chief Executive Officer
                                             Telephone: (201) 750-2646
                                             Facsimile: (201) 750-2755

                           If to PLIVA:      72 Eagle Rock Avenue
                                             East Hanover, NJ 07936
                                             Attention: General Counsel
                                             Telephone: 973-599-4181
                                             Facsimile: 973-599-4164

14.      MISCELLANEOUS

         14.1     Neither  party  shall be liable for any  failure to deliver or
                  receive or any delay to perform its obligations hereunder when
                  such failure or delay shall be caused (directly or indirectly)
                  by fire; flood;  accident;  explosion;  equipment or machinery
                  breakdown;   sabotage;   strike,   or  any  labor  disturbance
                  (regardless  of the  reasonableness  of the demands of labor);
                  civil commotions;  riots; invasions; wars (present or future);
                  acts, restraints, requisitions,  regulations, or directions of
                  any  governmental  entity;  voluntary or mandatory  compliance
                  with any request of any  governmental  entity;  facility  shut
                  down;  voluntary or mandatory  compliance with any request for
                  material  represented  to be  for  purposes  of  (directly  or
                  indirectly)   producing   articles  for  national  defense  or
                  national defense facilities; shortage of labor, fuel, power or
                  raw materials;  inability to obtain raw materials or supplies;
                  failures of normal sources of supplies; inability to obtain or
                  delays of transportation  facilities;  any act of God; any act
                  of  the  other  party;  or  any  cause  (whether   similar  or
                  dissimilar to the foregoing) beyond the reasonable  control of
                  such party (each cause a "Force Majeure Event").

         14.2     Either party  hereto may assign this  Agreement in whole or in
                  part to any Affiliate or Affiliates  who shall be  substituted
                  directly  in  whole  or in part  for it  hereunder,  provided,
                  however,  that the assignor shall guarantee the performance of
                  its Affiliate  assignee  hereunder.  This Agreement  shall not
                  otherwise  be  assignable  by either  party  without the prior
                  written consent of the other party, which consent shall not be
                  unreasonably withheld, conditioned or delayed.

         14.3     This  Agreement  shall  be  governed  by  and  interpreted  in
                  accordance  with the laws of the State of New  Jersey,  United
                  States  of  America  without  regard to its  conflict  of laws
                  principles,  and  should  legal  action  become  necessary  to

                                       17
<PAGE>

                  enforce its terms,  the prevailing  party shall be entitled to
                  reasonable costs and attorneys' fees.

         14.4     In connection  with any  litigation  out of or relating to the
                  subject matter of this  Agreement,  each of the parties hereto
                  (a)   irrevocably   consents  and  submits  to  the  exclusive
                  jurisdiction  of the state and federal  courts  located in New
                  Jersey,  and  (b)  agrees  that  service  of  process  may  be
                  effected,  in  addition to any other  means  permitted  by the
                  applicable  rules of court, by mailing such process  certified
                  mail,  return  receipt  requested  or by  reputable  overnight
                  courier   provided  a  receipt   against   delivery  at  their
                  respective addresses set forth above is obtained.

         14.5     The  terms  and   provisions   contained  in  this   Agreement
                  constitute  the entire  Agreement  between  the  parties  and,
                  except as provided in Section 11.7 hereof, shall supersede all
                  previous   communications,   representations,   agreements  or
                  understandings,  either oral or  written,  between the parties
                  hereto  with  respect  to the  subject  matter  hereof  and no
                  agreement  or   understanding   varying  or  extending   these
                  Agreements  shall be binding upon either party hereto,  unless
                  in writing which specifically refers to the Agreement,  signed
                  by  fully  authorized   officers  or  representatives  of  the
                  respective  parties and the provisions of these Agreements not
                  specifically  amended  thereby  shall remain in full force and
                  effect.

         14.6     Any waiver  must be  explicit  and in  writing.  The waiver by
                  either of the parties to this  Agreement  of any breach of any
                  provision  hereof by the other party shall not be construed to
                  be a waiver of any  succeeding  breach of such  provision or a
                  waiver of the provision itself.

         14.7     If and to the extent that any court or  tribunal of  competent
                  jurisdiction holds any of the terms,  provisions or conditions
                  or part thereof of this Agreement,  or the application  hereof
                  of any circumstances,  to be invalid or to be unenforceable in
                  a final non-appealable  order, the remainder of this Agreement
                  and the  application  of such term,  provision or condition or
                  part thereof to circumstances  other than those as to which it
                  is  held  invalid  or  unenforceable  shall  not  be  affected
                  thereof,   and  each  of  the  other  terms,   provisions  and
                  conditions of this Agreement shall be valid and enforceable to
                  the fullest extent of the laws.

         14.8     The  relationship  of ELITE and PLIVA under this  Agreement is
                  that of independent contractors. Neither party shall be deemed
                  to be the agent of the other nor authorized to take any action
                  binding upon the other.

         14.9     This Agreement may be executed in counterparts,  each of which
                  shall be deemed to be an original  and all  together  shall be
                  deemed to be one and the same Agreement.  All headings in this
                  Agreement are inserted for  convenience  of reference only and
                  shall not affect its meaning or interpretation.

                                       18
<PAGE>

15.      AGREEMENT TO PERFORM NECESSARY ACTS

         Each party to this  Agreement  agrees to perform any  further  acts and
         execute and deliver any documents  that may be reasonably  necessary to
         carry out the provisions of this Agreement.

16.      DISPUTE RESOLUTION

         16.1     Should any dispute or difference arise between ELITE and PLIVA
                  or the  Committee  during  the  Term of this  Agreement,  then
                  either party may forthwith give notice to the other party that
                  it wishes  such  dispute or  difference  to be  referred  to a
                  designated senior officer of each of ELITE and PLIVA.

         16.2     If designated senior officers of each of ELITE and PLIVA agree
                  upon a resolution  or  disposition  of the matter,  they shall
                  each  sign a  statement  which  sets  out the  terms  of their
                  agreement.   If,  however,   the  parties'  designated  senior
                  officers are still unable to resolve their differences  within
                  60 days of its being referred to them, either party may pursue
                  any legal remedy  available to it.  Nothing  contained  herein
                  shall be  deemed to limit or  restrict  a party  from  seeking
                  equitable  remedies,   such  as  a  preliminary  or  permanent
                  injunction,   if   necessary,   from  a  court  of   competent
                  jurisdiction located in the State of New Jersey.

17.      QUALITY AGREEMENT

         17.1     PLIVA and ELITE shall enter into an agreement  with respect to
                  quality  and  regulatory  issues  (the  "Quality   Agreement")
                  substantially in the form attached hereto as Exhibit A.

         17.2     If any term in this agreement is inconsistent with any term in
                  the Quality Agreement, the term in the Quality agreement shall
                  control.

                                       19
<PAGE>

IN WITNESS WHEREOF, ELITE and PLIVA have executed this Agreement in duplicate as
of the day and year first above written.

                           ELITE LABORATORIES, INC.

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

                           Its
                               -------------------------------------------------

                           PLIVA, INC.

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

                           Its
                               -------------------------------------------------

                                       20

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