Document:

EXHIBIT 10(c)

                                                               EXECUTION VERSION

            REGISTRATION  RIGHTS AGREEMENT,  dated as of December 6,
            2006   (this   "AGREEMENT"),    by   and   among   Elite
            Pharmaceuticals,   Inc.,  a  Delaware  corporation  (the
            "COMPANY"),  VGS Pharma,  a Delaware  limited  liability
            company  ("VGS")  and  Veerappan  Subramanian  ("VS" and
            together with VGS, the "INITIAL INVESTORS").
            --------------------------------------------------------

                            INTRODUCTION

      In connection with that certain Strategic Alliance Agreement,  dated as of
December 6, 2006,  by and among the parties  hereto of even date  herewith  (the
"ALLIANCE AGREEMENT"), the Company has agreed, upon the terms and subject to the
conditions  contained  therein,  to (x)  issue  and  sell  to VGS  957,396  (the
"PURCHASED  SHARES")  shares of Common  Stock,  par value  $0.01 per share  (the
"COMMON STOCK") of the Company and (y) grant to VGS a warrant (the "WARRANT") to
acquire an aggregate of 478,698  shares (the "Warrant  Shares") of Common Stock,
upon the terms and conditions and subject to the  limitations and conditions set
forth in the Warrant;

      In connection  with that certain  Advisory  Agreement,  by and between the
Company and VS of even date herewith (the "Advisory Agreement"), the Company has
agreed, upon the terms and subject to the conditions contained therein, to grant
to VS options  (the  "OPTIONS")  exercisable  for up to  1,750,000  shares  (the
"OPTION SHARES") of Common Stock, as the same may be adjusted,  pursuant to that
certain Stock Option Agreement,  dated as of the date hereof, by and between the
Company and VS (the "STOCK OPTION AGREEMENT"); and

      To induce the  Initial  Investors  to execute  and  deliver  the  Alliance
Agreement and the Advisory Agreement,  the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended,  and the rules
and regulations thereunder, or any similar successor statute (collectively,  the
"1933 ACT"), and applicable state securities laws.

                                    AGREEMENT

      NOW, THEREFORE,  in consideration of the premises and the mutual covenants
contained  herein and other good and  valuable  consideration,  the  receipt and
sufficiency  of which  are  hereby  acknowledged,  the  Company  and each of the
Initial Investors hereby agree as follows:

            1. DEFINITIONS.

                  a. As used in this  Agreement,  the following terms shall have
the following meanings:

                        (i)  "INVESTORS"  means the  Initial  Investors  and any
transferee  or assignee  who agrees to become  bound by the  provisions  of this
Agreement in accordance with Section 7 hereof.

                        (ii) "register,"  "registered," and "registration" refer
to a registration  effected by preparing and filing a Registration  Statement or
Statements  in  compliance  with the 1933 Act and pursuant to Rule 415 under the
1933 Act or any successor rule providing for offering securities on a continuous
basis ("RULE 415"), and the declaration or

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ordering of  effectiveness of such  Registration  Statement by the United States
Securities and Exchange Commission (the "SEC").

                        (iii)   "Registrable   Securities"  means  the  (w)  the
Purchased  Shares,  (x) the  Warrant  Shares  (which will be issued upon due and
proper  exercise of the  Warrant),  (y) the Option  Shares (which will be issued
upon due and  proper  exercise  of the  Options),  and (z) any shares of capital
stock issued or issuable as a dividend on or in exchange  for or otherwise  with
respect to any of the foregoing;  PROVIDED, HOWEVER, that Registrable Securities
shall not include any securities  that have been  previously  sold pursuant to a
registration  statement filed under the Act or under Rule 144 promulgated  under
the Securities Act, or which have otherwise been transferred in a transaction in
which the transferor's rights under this Agreement are not assigned,  or if such
securities are then eligible for sale under Rule 144, promulgated under the Act.

                        (iv)  "Registration   Statement"  means  a  registration
statement of the Company under the 1933 Act.

                  b.  Capitalized  terms used herein and not  otherwise  defined
herein shall have the respective  meanings set forth in the Alliance  Agreement,
the Advisory Agreement or the Stock Option Agreement.

            2. REGISTRATION.

                  a. DEMAND REGISTRATION.  Subject to Section 2(c) hereof, on or
after the initial  ninety (90) period  commencing on the date of this  Agreement
and upon the written demand of Investors holding at least  seventy-five  percent
(75%) of the Registrable  Securities (the  "REGISTRATION  DEMAND"),  the Company
shall prepare and file with the SEC a Registration Statement on Form S-3 (or, if
Form S-3 is not then  available,  on such form of  Registration  Statement as is
then available to effect a registration of the Registrable  Securities) covering
the resale of the Registrable  Securities,  which Registration Statement, to the
extent  allowable under the 1933 Act and the rules and  regulations  promulgated
thereunder  (including Rule 416), shall state that such  Registration  Statement
also covers such  indeterminate  number of additional  shares of Common Stock as
may become  issuable upon exercise of the Warrant  and/or the Options to prevent
dilution resulting from stock splits,  stock dividends or similar  transactions.
The  registration  rights of the  Investors  under this Section 2(a) may only be
exercised  on one  occasion  by the  Investors  and upon the SEC  declaring  the
Registration  Statement  covering such securities  effective,  the rights of the
Investors under this Section 2(a) shall terminate;  PROVIDED,  HOWEVER, that the
rights of the  Investors  under this  Section  2(a),  if  exercised  but delayed
pursuant to Section 2(c), shall not terminate (but shall only be delayed) by the
delay of exercise of such rights pursuant to Section 2(c).

                  b. PIGGY-BACK  REGISTRATIONS.  Subject to Section 2(c) hereof,
if at  any  time  prior  to  the  expiration  of  the  Registration  Period  (as
hereinafter  defined)  the  Company  shall  determine  to  file  with  the SEC a
Registration  Statement  relating  to an  offering  for its own  account  or the
account of others under the 1933 Act of any of its equity securities (other than
on Form S-4 or Form S-8 or their then equivalents  relating to equity securities
to be issued solely in connection with any acquisition of any entity or business
or equity securities issuable in

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connection with stock option or other BONA FIDE,  employee  benefit plans),  the
Company shall send to each Investor who is entitled to registration rights under
this Section 2(b) written  notice of such  determination  and, if within fifteen
(15) days  after the  effective  date of such  notice,  such  Investor  shall so
request in writing, the Company shall include in such Registration Statement all
or  any  part  of  the  Registrable  Securities  such  Investor  requests  to be
registered,  except that if, in connection with any underwritten public offering
for the account of the Company the managing  underwriter(s) thereof shall impose
a  limitation  on the number of shares of Common  Stock which may be included in
the Registration Statement because, in such underwriter(s)' judgment,  marketing
or other  factors  dictate such  limitation  is necessary to  facilitate  public
distribution,   then  the  Company   shall  be  obligated  to  include  in  such
Registration  Statement only such limited portion of the Registrable  Securities
with respect to which such  Investor has  requested  inclusion  hereunder as the
underwriter shall permit. Any exclusion of Registrable  Securities shall be made
pro rata  among the  Investors  seeking  to include  Registrable  Securities  in
proportion to the number of Registrable Securities sought to be included by such
Investors; PROVIDED, HOWEVER, that the Company shall not exclude any Registrable
Securities unless the Company has first excluded all outstanding securities, the
holders  of which are not  entitled  to  inclusion  of such  securities  in such
Registration  Statement  or are not  entitled  to pro  rata  inclusion  with the
Registrable  Securities;  and PROVIDED,  FURTHER,  HOWEVER,  that,  after giving
effect to the  immediately  preceding  proviso,  any  exclusion  of  Registrable
Securities  shall be made pro rata with holders of other  securities  having the
right to  include  such  securities  in the  Registration  Statement  other than
holders  of  securities  entitled  to  inclusion  of  their  securities  in such
Registration  Statement  by reason of demand  registration  rights.  No right to
registration  of  Registrable  Securities  under  this  Section  2(b)  shall  be
construed to limit any registration  required under Section 2(a) hereof,  except
as  specifically  set forth in Section 2(a) above.  If an offering in connection
with which an Investor is entitled to registration under this Section 2(b) is an
underwritten  offering,  then each Investor  whose  Registrable  Securities  are
included in such  Registration  Statement shall,  unless otherwise agreed by the
Company,  offer and sell such Registrable Securities in an underwritten offering
using the same  underwriter or  underwriters  and,  subject to the provisions of
this Agreement, on the same terms and conditions as other shares of Common Stock
included in such underwritten offering.

                  c. RESTRICTION ON REGISTRATION.  In the event that the Company
has agreed, as a condition to any sale by the Company of securities the proceeds
of which  shall,  in whole or in part,  be used to fund the  obligations  of the
Company under the Alliance Agreement (each, a "SUBSEQUENT OFFERING"),  to file a
Registration  Statement with the SEC covering the securities sold, or underlying
the securities  sold, in such Subsequent  Offering and the investors  purchasing
securities  in  such  Subsequent  Offering  require,  as  a  condition  to  such
investment,  that the  Investors'  registration  rights under this  Agreement be
delayed,  the rights of the  Investors  under the Section  2(a) and Section 2(b)
shall be delayed,  at the option of the Company,  on one or more occasions for a
total  period  not to  exceed  ninety  (90)  days,  in the  aggregate,  from the
effective date of the Registration  Statement  covering the securities issued in
the Subsequent Offering.

            3. OBLIGATIONS OF THE COMPANY.

      In connection with the  registration of the  Registrable  Securities,  the
Company shall have the following obligations:

<PAGE>

                  a. The Company shall prepare  promptly,  and file with the SEC
not later than forty-five (45) days of the receipt of the Registration Demand, a
Registration  Statement  with  respect to the number of  Registrable  Securities
provided in Section  2(a),  and  thereafter  use its best  efforts to cause such
Registration Statement relating to Registrable Securities to become effective as
soon as possible after such filing and keep the Registration Statement effective
pursuant  to Rule 415 at all times  until such date as is the earlier of (i) the
date on which all of the Registrable Securities have been sold and (ii) the date
on which the  Registrable  Securities  (in the opinion of counsel to the Initial
Investors)  may be  immediately  sold  to the  public  without  registration  or
restriction under the 1933 Act (the "REGISTRATION  PERIOD"),  which Registration
Statement  (including  any amendments or  supplements  thereto and  prospectuses
contained  therein) shall not contain any untrue statement of a material fact or
omit to state a material  fact  required to be stated  therein,  or necessary to
make the statements therein not misleading.

                  b.  The  Company  shall  prepare  and  file  with the SEC such
amendments  (including   post-effective   amendments)  and  supplements  to  the
Registration   Statements  and  the  prospectus  used  in  connection  with  the
Registration  Statements as may be necessary to keep the Registration Statements
effective at all times during the Registration  Period, and, during such period,
comply with the  provisions of the 1933 Act with respect to the  disposition  of
all Registrable Securities of the Company covered by the Registration Statements
until such time as all of such  Registrable  Securities have been disposed of in
accordance  with the intended  methods of  disposition  by the seller or sellers
thereof as set forth in the Registration Statements.

                  c.  The  Company  shall   furnish  to  each   Investor   whose
Registrable  Securities are included in a  Registration  Statement and its legal
counsel (i) promptly after the same is prepared and publicly distributed,  filed
with  the  SEC,  or  received  by the  Company,  one  copy of each  Registration
Statement and any amendment thereto, each preliminary  prospectus and prospectus
and  each  amendment  or  supplement  thereto,   and  (ii)  promptly  after  the
Registration  Statement is declared  effective by the SEC, such number of copies
of a prospectus,  including a preliminary  prospectus,  and all  amendments  and
supplements  thereto and such other  documents as such  Investor may  reasonably
request in order to facilitate  the  disposition of the  Registrable  Securities
owned by such Investor. The Company will immediately notify each Investor of the
effectiveness of each Registration  Statement or any  post-effective  amendment.
The Company will promptly respond to any and all comments received from the SEC,
with a view towards causing each Registration Statement or any amendment thereto
to be declared effective by the SEC as soon as practicable,  shall promptly file
an  acceleration  request as soon as  practicable  following  the  resolution or
clearance of all SEC comments or, if applicable,  following  notification by the
SEC that any such  Registration  Statement or any amendment  thereto will not be
subject to review and shall  promptly  file with the SEC a final  prospectus  as
soon as  practicable  following  receipt by the Company from the SEC of an order
declaring the Registration Statement effective.

                  d. The Company  shall use  reasonable  efforts to (i) register
and qualify the Registrable  Securities  covered by the Registration  Statements
under such other  securities  or "BLUE  SKY" laws of such  jurisdictions  in the
United  States  as  the  Investors  who  hold  a  majority  in  interest  of the
Registrable  Securities being offered reasonably request,  (ii) prepare and file
in those jurisdictions such amendments (including post-effective amendments) and
supplements  to such  registrations  and  qualifications  as may be necessary to
maintain the effectiveness thereof

<PAGE>

during  the  Registration  Period,  (iii)  take  such  other  actions  as may be
necessary to maintain such  registrations  and  qualifications  in effect at all
times during the Registration Period, and (iv) take all other actions reasonably
necessary or advisable to qualify the  Registrable  Securities  for sale in such
jurisdictions;  PROVIDED,  HOWEVER,  that the  Company  shall not be required in
connection  therewith or as a condition thereto to (a) qualify to do business in
any  jurisdiction  where it would not  otherwise  be required to qualify but for
this  Section  3(d),  (b)  subject  itself  to  general  taxation  in  any  such
jurisdiction,  (c) file a general  consent  to  service  of  process in any such
jurisdiction,  (d) provide any undertakings that cause the Company undue expense
or burden,  or (e) make any change in its charter or bylaws,  which in each case
the Board of  Directors  of the  Company  determines  to be contrary to the best
interests of the Company and its shareholders.

                  e. As promptly as  practicable  after  becoming  aware of such
event,  the Company shall notify each Investor of the happening of any event, of
which the Company has knowledge, as a result of which the prospectus included in
any Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the  statements  therein not  misleading,  and use its best
efforts  promptly  to prepare a  supplement  or  amendment  to any  Registration
Statement to correct such untrue statement or omission,  and deliver such number
of copies of such  supplement or amendment to each Investor as such Investor may
reasonably  request;  PROVIDED  that,  the Company may delay the  disclosure  of
material non-public information concerning the Company (as well as prospectus or
Registration  Statement updating) the disclosure of which at the time is not, in
the good faith opinion of the Company,  in the best interests of the Company (an
"ALLOWED DELAY"); PROVIDED,  FURTHER, that the Company shall promptly (i) notify
the  Investors in writing of the  existence of material  non-public  information
giving  rise to an Allowed  Delay and (ii)  advise the  Investors  in writing to
cease all sales under such  Registration  Statement until the end of the Allowed
Delay. Upon expiration of the Allowed Delay, the Company shall again be bound by
the first sentence of this Section 3(e) with respect to the  information  giving
rise thereto.

                  f. The  Company  shall use its best  efforts  to  prevent  the
issuance  of  any  stop  order  or  other  suspension  of  effectiveness  of any
Registration  Statement,  and,  if  such an  order  is  issued,  to  obtain  the
withdrawal  of such order at the  earliest  possible  moment and to notify  each
Investor  who holds  Registrable  Securities  being sold (or, in the event of an
underwritten  offering, the managing underwriters) of the issuance of such order
and the resolution thereof.

                  g. The  Company  shall  cause all the  Registrable  Securities
covered by the Registration  Statement to be listed on each national  securities
exchange on which  securities  of the same class or series issued by the Company
are then listed,  if any, if the listing of such Registrable  Securities is then
permitted under the rules of such exchange.

                  h. At the request of the holders of a majority-in-interest  of
the Registrable Securities, the Company shall prepare and file with the SEC such
amendments   (including   post-effective   amendments)   and  supplements  to  a
Registration   Statement  and  any  prospectus   used  in  connection  with  the
Registration  Statement  as may be  necessary  in  order to  change  the plan of
distribution set forth in such Registration Statement.

<PAGE>

            4. OBLIGATIONS OF THE INVESTORS.

      In connection with the  registration of the  Registrable  Securities,  the
Investors shall have the following obligations:

                  a. It shall be a condition precedent to the obligations of the
Company to complete the registration  pursuant to this Agreement with respect to
the  Registrable  Securities of a particular  Investor that such Investor  shall
furnish to the  Company  such  information  regarding  itself,  the  Registrable
Securities  held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such  Registrable  Securities  and shall execute such documents in connection
with such registration as the Company may reasonably request.  The Company shall
notify each  Investor of the  information  the Company  requires  from each such
Investor.

                  b.  Each  Investor,  by  such  Investor's  acceptance  of  the
Registrable  Securities,  agrees to  cooperate  with the  Company as  reasonably
requested by the Company in connection  with the  preparation  and filing of the
Registration Statements hereunder, unless such Investor has notified the Company
in  writing  of such  Investor's  election  to  exclude  all of such  Investor's
Registrable Securities from the Registration Statements.

                  c. In the event Investors  holding a  majority-in-interest  of
the Registrable  Securities being registered determine to engage the services of
an  underwriter,  each Investor agrees to enter into and perform such Investor's
obligations  under an  underwriting  agreement,  in usual  and  customary  form,
including,  without  limitation,   customary  indemnification  and  contribution
obligations,  with the managing underwriter of such offering and take such other
actions as are  reasonably  required  in order to  expedite  or  facilitate  the
disposition of the Registrable Securities, unless such Investor has notified the
Company in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from such Registration Statement.

                  d. Each Investor  agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind  described in Section 3(e)
or 3(f), such Investor will immediately  discontinue  disposition of Registrable
Securities  pursuant to the  Registration  Statement  covering such  Registrable
Securities  until such Investor's  receipt of the copies of the  supplemented or
amended  prospectus  contemplated by Section 3(e) or 3(f) and, if so directed by
the Company,  such Investor  shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a  certificate  of  destruction)
all  copies in such  Investor's  possession,  of the  prospectus  covering  such
Registrable Securities current at the time of receipt of such notice.

                  e.  No   Investor   may   participate   in  any   underwritten
registration  hereunder  unless such Investor (i) agrees to sell such Investor's
Registrable Securities on the basis provided in any underwriting arrangements in
usual and customary form entered into by the Company, (ii)completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and
other  documents  reasonably  required  under  the  terms  of such  underwriting
arrangements,  and (iii)  agrees to pay its pro rata  share of all  underwriting
discounts and

<PAGE>

commissions and any expenses in excess of those payable by the Company  pursuant
to Section 5 below.

            5. EXPENSES OF REGISTRATION.

      All   reasonable   expenses,   other  than   underwriting   discounts  and
commissions,   incurred   in   connection   with   registrations,   filings   or
qualifications pursuant to Sections 2 and 3, including,  without limitation, all
registration,  listing and qualification fees, printers and accounting fees, and
the fees and  disbursements  of counsel  for the  Company  shall be borne by the
Company.

            6. INDEMNIFICATION.

      In the event any  Registrable  Securities  are included in a  Registration
Statement under this Agreement:

                  a. To the extent permitted by law, the Company will indemnify,
hold  harmless  and  defend  (i)  each  Investor  who  holds  such   Registrable
Securities, (ii) the directors,  officers, partners,  employees, agents and each
person who  controls  any  Investor  within  the  meaning of the 1933 Act or the
Securities  Exchange Act of 1934, as amended (the "1934 ACT"), if any, (iii) any
underwriter  (as  defined  in the  1933  Act)  for the  Investors,  and (iv) the
directors,  officers,  partners, employees and each person who controls any such
underwriter within the meaning of the 1933 Act or the 1934 Act, if any (each, an
"INDEMNIFIED  PERSON"),  against any joint or several losses,  claims,  damages,
liabilities  or expenses  (collectively,  together with actions,  proceedings or
inquiries by any regulatory or self-regulatory  organization,  whether commenced
or  threatened,  in respect  thereof,  "CLAIMS") to which any of them may become
subject  insofar as such Claims  arise out of or are based upon:  (i) any untrue
statement  or alleged  untrue  statement  of a material  fact in a  Registration
Statement or the omission or alleged  omission to state  therein a material fact
required  to  be  stated  or  necessary  to  make  the  statements  therein  not
misleading;  (ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus if used prior to the effective date
of such Registration Statement, or contained in the final prospectus (as amended
or  supplemented,  if the  Company  files any  amendment  thereof or  supplement
thereto with the SEC) or the omission or alleged  omission to state  therein any
material fact  necessary to make the  statements  made therein,  in light of the
circumstances  under which the statements therein were made, not misleading;  or
(iii) any  violation  or alleged  violation  by the Company of the 1933 Act, the
1934 Act, any other law,  including,  without  limitation,  any state securities
law, or any rule or regulation  thereunder  relating to the offer or sale of the
Registrable  Securities (the matters in the foregoing  clauses (i) through (iii)
being,  collectively,  "VIOLATIONS").  Notwithstanding  anything to the contrary
contained herein, the indemnification  agreement contained in this Section 6(a):
(i) shall not apply to a Claim  arising out of or based upon a  Violation  which
occurs in reliance upon and in conformity with information  furnished in writing
to the Company by any  Indemnified  Person or underwriter  for such  Indemnified
Person expressly for use in connection with the preparation of such Registration
Statement  or  any  such  amendment  thereof  or  supplement  thereto,  if  such
prospectus  was timely made  available  by the Company  pursuant to Section 3(c)
hereof;  (ii) shall not apply to amounts paid in settlement of any Claim if such
settlement is effected  without the prior written consent of the Company,  which
consent  shall not be  unreasonably  withheld;  and (iii)  with  respect  to any
preliminary prospectus, shall not inure to the benefit of any Indemnified

<PAGE>

Person if the untrue  statement  or omission of material  fact  contained in the
preliminary  prospectus  was corrected on a timely basis in the  prospectus,  as
then  amended  or  supplemented,  such  corrected  prospectus  was  timely  made
available by the Company  pursuant to Section 3(c) hereof,  and the  Indemnified
Person was promptly advised in writing not to use the incorrect prospectus prior
to  the  use  giving  rise  to  a  Violation   and  such   Indemnified   Person,
notwithstanding  such advice, used it. Such indemnity shall remain in full force
and  effect  regardless  of  any  investigation  made  by or on  behalf  of  the
Indemnified Person and shall survive the transfer of the Registrable  Securities
by the Investors pursuant to Section 7.

                  b. In connection with any  Registration  Statement in which an
Investor is  participating,  each such Investor agrees severally and not jointly
to  indemnify,  hold  harmless  and  defend,  to the same extent and in the same
manner set forth in Section 6(a), the Company,  each of its  directors,  each of
its  officers who signs the  Registration  Statement,  each person,  if any, who
controls  the Company  within the  meaning of the 1933 Act or the 1934 Act,  any
underwriter  and  any  other  shareholder  selling  securities  pursuant  to the
Registration  Statement  or any of its  directors  or officers or any person who
controls such  shareholder or underwriter  within the meaning of the 1933 Act or
the  1934  Act  (collectively  and  together  with  an  Indemnified  Person,  an
"INDEMNIFIED PARTY"), against any Claim to which any of them may become subject,
under the 1933 Act, the 1934 Act or otherwise,  insofar as such Claim arises out
of or is based upon any Violation by such  Investor,  in each case to the extent
(and only to the extent)  that such  Violation  occurs in  reliance  upon and in
conformity  with written  information  furnished to the Company by such Investor
expressly for use in connection with such Registration Statement; and subject to
Section 6(c) such Investor will reimburse any legal or other expenses  (promptly
as such  expenses are incurred and are due and payable)  reasonably  incurred by
them in connection  with  investigating  or defending any such Claim;  PROVIDED,
HOWEVER,  that the indemnity  agreement contained in this Section 6(b) shall not
apply to amounts paid in settlement of any Claim if such  settlement is effected
without the prior written  consent of such Investor,  which consent shall not be
unreasonably withheld;  PROVIDED,  FURTHER,  HOWEVER, that the Investor shall be
liable under this Agreement (including this Section 6(b) and Section 7) for only
that amount as does not exceed the net proceeds to such  Investor as a result of
the sale of Registrable Securities pursuant to such Registration Statement. Such
indemnity shall remain in full force and effect  regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive the transfer of
the   Registrable   Securities   by  the   Investors   pursuant  to  Section  7.
Notwithstanding  anything to the contrary contained herein, the  indemnification
agreement  contained  in this  Section  6(b)  with  respect  to any  preliminary
prospectus shall not inure to the benefit of any Indemnified Party if the untrue
statement or omission of material fact contained in the  preliminary  prospectus
was  corrected  on a  timely  basis  in  the  prospectus,  as  then  amended  or
supplemented.

                  c.  Promptly  after  receipt  by  an  Indemnified   Person  or
Indemnified  Party  under this  Section 6 of notice of the  commencement  of any
action  (including  any  governmental   action),   such  Indemnified  Person  or
Indemnified Party shall, if a Claim in respect thereof is to be made against any
indemnifying  party under this  Section 6, deliver to the  indemnifying  party a
written notice of the commencement  thereof,  and the  indemnifying  party shall
have the right to participate in, and, to the extent the  indemnifying  party so
desires,  jointly with any other indemnifying party similarly noticed, to assume
control  of the  defense  thereof  with  counsel  mutually  satisfactory  to the
indemnifying  party and the Indemnified  Person or the Indemnified Party, as the
case may be. The failure to deliver  written  notice to the  indemnifying  party
within a

<PAGE>

reasonable  time of the  commencement  of any such action shall not relieve such
indemnifying  party of any liability to the  Indemnified  Person or  Indemnified
Party under this Section 6, except to the extent that the indemnifying  party is
actually prejudiced in its ability to defend such action.

            7. ASSIGNMENT OF REGISTRATION RIGHTS.

      The rights under this Agreement shall be  automatically  assignable by the
Investors to any transferee of all or any portion of Registrable  Securities if:
(i) the  Investor  agrees in writing with the  transferee  or assignee to assign
such rights,  and a copy of such  agreement is furnished to the Company within a
reasonable time after such assignment,  (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (a) the
name and address of such  transferee or assignee,  and (b) the  securities  with
respect to which such  registration  rights are being  transferred  or assigned,
(iii)  following  such transfer or assignment,  the further  disposition of such
securities by the  transferee  or assignee is restricted  under the 1933 Act and
applicable  state  securities  laws,  (iv) at or  before  the time  the  Company
receives the written notice  contemplated  by clause (ii) of this sentence,  the
transferee or assignee  agrees in writing with the Company to be bound by all of
the  provisions  contained  herein,  (v) such  transfer  shall have been made in
accordance with the applicable  requirements  of the Alliance  Agreement and the
Stock  Option  Agreement,  and (vi)  such  transferee  shall  be an  "ACCREDITED
INVESTOR" as that term defined in Rule 501 of Regulation D promulgated under the
1933 Act.

            8. AMENDMENT OF REGISTRATION RIGHTS.

      Provisions of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or  prospectively),  only with written  consent of the Company and Investors who
hold a majority interest of the Registrable Securities.  Any amendment or waiver
effected in  accordance  with this Section 8 shall be binding upon each Investor
and the Company.

            9. MISCELLANEOUS.

                  a. A person or entity is deemed to be a holder of  Registrable
Securities  whenever  such  person or entity  owns of  record  such  Registrable
Securities.  If  the  Company  receives  conflicting  instructions,  notices  or
elections  from  two or more  persons  or  entities  with  respect  to the  same
Registrable  Securities,  the Company shall act upon the basis of  instructions,
notice  or  election  received  from the  registered  owner of such  Registrable
Securities.

                  b. All notices  required or  permitted  hereunder  shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed facsimile if sent during normal
business hours of the recipient, if not, then on the next business day, (c) five
(5) days after having been sent by registered or certified mail,  return receipt
requested,  postage prepaid,  or (d) one (1) day after deposit with a nationally
recognized  overnight  courier,  specifying  next  day  delivery,  with  written
verification of receipt.  All communications  shall be sent to a party hereto at
the  address  set forth for such party on the  signature  page hereof or at such
other  address  as such party may  designate  by ten (10) days  advance  written
notice to the other party hereto.

<PAGE>

                  c. It is agreed  that no delay or  omission  to  exercise  any
right,  power or remedy  accruing  to any  party,  upon any  breach,  default or
noncompliance by any other party,  shall impair any such right, power or remedy,
nor  shall  it be  construed  to be a  waiver  of any such  breach,  default  or
noncompliance,  or any  acquiescence  therein,  or of or in any similar  breach,
default or noncompliance thereafter occurring.

                  d. In case any provision of this Agreement, or portion hereof,
shall  be  invalid,  illegal  or  unenforceable,   the  validity,  legality  and
enforceability  of the remaining  provisions shall not in any way be affected or
impaired thereby.

                  e. This Agreement,  together with the other Strategic Alliance
Documents (as defined in the Alliance Agreement), constitute the full and entire
understanding  and  agreement  between  the  parties  with regard to the subject
matters  hereof and  thereof  and,  except as  otherwise  specifically  provided
therein,  no party  shall be liable  or bound to any other in any  manner by any
other representations,  warranties, covenants or agreements with respect to such
subject matters.

                  f. Except as otherwise  expressly  provided herein and subject
to the  requirements of Section 7 hereof,  the provisions  hereof shall inure to
the benefit of, be binding upon, and be  enforceable  by, the parties hereto and
their respective successors and assigns.

                  g.  The  titles  of  the  sections  and  subsections  of  this
Agreement are for  convenience of reference only and are not to be considered in
construing this Agreement.

                  h.  This   Agreement   may  be   executed  in  any  number  of
counterparts,  each of which  shall be an  original,  but all of which  together
shall constitute one agreement.

                  i. Each of the parties hereto shall, at any time and from time
to time after the date  hereof,  at the request and expense of the other  party,
(i)  promptly and duly  execute and  deliver,  or cause to be duly  executed and
delivered to the requested  person,  all such further documents and instruments,
and (ii) take or cause to be taken all such other and further  actions,  in each
case as may be  reasonably  requested by the other party to implement and effect
the terms of this Agreement.

                  j. Except as otherwise provided herein, all consents and other
determinations  to be made by the Investors  pursuant to this Agreement shall be
made by Investors holding a majority of the Registrable  Securities,  determined
as if all of the Warrants and Options then  outstanding have been converted into
for Registrable Securities.

                  k.  The  Company  acknowledges  that  a  breach  by it of  its
obligations  hereunder will cause irreparable harm to each Investor by vitiating
the intent and purpose of the transactions contemplated hereby. Accordingly, the
Company  acknowledges that the remedy at law for breach of its obligations under
this  Agreement  will be  inadequate  and  agrees,  in the  event of a breach or
threatened  breach by the Company of any of the provisions under this Agreement,
that each  Investor  shall be  entitled,  in  addition  to all  other  available
remedies  in law or in  equity,  and in  addition  to the  penalties  assessable
herein,  to an injunction or injunctions  restraining,  preventing or curing any
breach of this Agreement and to enforce specifically the terms and

<PAGE>

provisions  hereof,  without the necessity of showing  economic loss and without
any bond or other security being required.

                  l. The language  used in this  Agreement  will be deemed to be
the language chosen by the parties to express their mutual intent,  and no rules
of strict construction will be applied against any party.

                  m.  THIS  AGREEMENT  SHALL BE  GOVERNED  BY AND  CONSTRUED  IN
ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ANY
CHOICE OR  CONFLICT  OF LAWS  PROVISIONS).  EACH OF THE  PARTIES  HERETO  HEREBY
IRREVOCABLY AND  UNCONDITIONALLY  SUBMITS TO THE  JURISDICTION OF ANY FEDERAL OR
STATE COURT OF NEW YORK SITTING IN NEW YORK CITY AND IRREVOCABLY AGREES THAT ALL
ACTIONS OR  PROCEEDINGS  ARISING  OUT OF OR RELATING  TO THIS  AGREEMENT  OR THE
TRANSACTIONS  CONTEMPLATED HEREBY SHALL BE LITIGATED EXCLUSIVELY IN SUCH COURTS.
EACH OF THE PARTIES HERETO AGREES NOT TO COMMENCE ANY LEGAL  PROCEEDING  RELATED
HERETO EXCEPT IN SUCH COURT. EACH OF THE PARTIES HERETO  IRREVOCABLY  WAIVES ANY
OBJECTION  WHICH IT MAY NOW OR HEREAFTER  HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH   PROCEEDING  IN  ANY  SUCH  COURT  AND  HEREBY  FURTHER   IRREVOCABLY  AND
UNCONDITIONALLY  WAIVES  AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT
ANY SUCH ACTION,  SUIT OR PROCEEDING  BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN  INCONVENIENT  FORUM.  EACH OF THE PARTIES  HERETO HEREBY  WAIVES,  TO THE
FULLEST EXTENT  PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION  DIRECTLY OR INDIRECTLY  ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS  AGREEMENT.  EACH OF THE PARTIES HERETO (A) CERTIFIES
THAT NO  REPRESENTATIVE,  AGENT OR ATTORNEY OF THE OTHER PARTY HAS  REPRESENTED,
EXPRESSLY  OR  OTHERWISE,  THAT THE  OTHER  PARTY  WOULD  NOT,  IN THE  EVENT OF
LITIGATION,  SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT BOTH
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS  AGREEMENT,  BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9(m).

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

      IN WITNESS WHEREOF, the Company and the undersigned Initial Investors have
caused this Agreement to be duly executed as of the date first above written.

                                              ELITE PHARMACEUTICALS, INC.

                                              By: /s/ Bernard Berk
                                                  ------------------------------
                                                  Name:  Bernard Berk
                                                  Title: Chief Executive Officer

                                              ADDRESS:

                                              Elite Pharmaceuticals, Inc.
                                              165 Ludlow Avenue
                                              Northvale, New Jersey 07647
                                              Attention: Chief Executive Officer
                                              Facsimile: (201) 391-7693

                                              /s/ Veerappan S. Subramanian
                                              ----------------------------------
                                              Veerappan S. Subramanian

                                              ADDRESS:

                                              475 Bernardsville Road
                                              Mendham, New Jersey 07945
                                              Facsimile: (908) 766-4006

                                              VGS Pharma, LLC

                                              By: /s/ Anu R. Subramanian
                                                  ------------------------------
                                                  Anu R. Subramanian, Manager

                                              ADDRESS:

                                              475 Bernardsville Road
                                              Mendham, New Jersey 07945
                                              Facsimile: (908) 766-4006EXHIBIT 10(d)

                                                               EXECUTION VERSION

            EMPLOYMENT  AGREEMENT  (the  "AGREEMENT"),  dated  as of
            December 6, 2006 (the "EFFECTIVE  DATE"), by and between
            Novel  Laboratories,  Inc., a Delaware  corporation (the
            "COMPANY")   and   Veerappan   S.    Subramanian    (the
            "EXECUTIVE").
            --------------------------------------------------------

                                  INTRODUCTION

      The  Company  and the  Executive  each  desires  the Company to employ the
Executive as the Company's Chairman and Chief Executive Officer.

                                    AGREEMENT

      The parties hereby agree as follows:

      1. EMPLOYMENT.

                  1.1.  TITLE  AND  DUTIES.  Commencing  on  the  date  of  this
Agreement, the Company shall employ the Executive, and the Executive shall serve
the Company,  as Chief Executive Officer of the Company.  In such capacities (a)
the  Executive  shall  report to, and  follow  the  directions  of, the Board of
Directors of the Company (the "BOARD"), (b) perform the duties and discharge the
responsibilities  set forth on EXHIBIT A to this Agreement,  and (c) perform and
discharge  such  additional  duties  and  responsibilities  that are  reasonably
consistent  with his titles as may be determined from time to time by the Board.
All of the  Executive's  duties and  responsibilities  shall be  performed  in a
diligent and  professional  manner,  consistent with his fiduciary  duties as an
executive officer of the Company.

                  1.2.  WORKING TIME. The Executive  shall devote  substantially
all of his business  time,  attention  and skills to the business and affairs of
the Company and the  performance  of his duties and  responsibilities  hereunder
during three (3) full business days per week.  Nothing in this  Agreement  shall
prevent the Executive from devoting  reasonable  time and attention to personal,
public and charitable  affairs, as long as such activities do not interfere with
the  effective  performance  of his duties  hereunder.  The  provisions  of this
Agreement shall not be deemed to prohibit or restrict  Executive from performing
services  pursuant to the Advisory  Agreement,  of even date  herewith,  between
Executive and Elite Pharmaceutical, Inc. ("ELITE").

      2. COMPENSATION; EXPENSES; BENEFITS.

                  2.1.  SALARY.  The Company shall pay a salary to the Executive
at a rate of US$220,000 per calendar year  (pro-rated for periods of less than a
full calendar year). The Executive's salary shall be paid in approximately equal
installments in accordance with the Company's  customary payroll practices.  The
Executive's  salary  shall be  subject  to annual  review  for  increase  at the
discretion of the Board.

                  2.2. DISCRETIONARY ANNUAL BONUS. At the sole discretion of the
Board,  the  Executive may receive an annual bonus in an amount to be determined
by the unanimous written consent of the Board.

<PAGE>

                  2.3  DISCRETIONARY  STOCK  OPTIONS.  The Company,  in its sole
discretion,  may grant to  Executive  stock  options  (the "STOCK  OPTIONS")  to
purchase  shares of the  Company's  common  stock,  par value $0.01 (the "COMMON
STOCK"),  pursuant to the  Company's  2006 Stock Option Plan (the  "PLAN").  The
Stock Options shall (i) to the maximum extent  permitted  under  applicable law,
qualify as "incentive  stock  options"  within the meaning of Section 422 of the
Internal  Revenue Code, (ii) have a per share exercise price equal the then fair
market value of a share of Common Stock, (iii) vest, as determined by the Board,
in its sole discretion and (iv) be subject to the terms and conditions set forth
in the Company's customary stock option agreement and the Plan. All such options
shall  vest  and be  exercisable,  as  determined  by  the  Board,  in its  sole
discretion.

                  2.4 COMPANY PLANS.  Executive shall be entitled to participate
in such employee benefit and welfare plans and programs as Company may from time
to time generally offer or provide to senior executive  officers of Company,  to
the extent that the  Executive's  participation  is permitted  under such plans,
including  participation in life insurance,  health and accident,  medical plans
and programs,  and profit sharing and retirement plans. Nothing in the foregoing
shall limit or restrict the Company's  discretion to amend,  revise or terminate
any benefit or plan without notice to or consent of the Executive.

                  2.5 VACATION. Executive shall be entitled to five (5) weeks of
paid vacation per Fiscal Year,  pro rated for periods of less than a full Fiscal
Year;  PROVIDED,  that the timing and duration of any particular  vacation shall
not interfere  with the business of the Company or the effective  performance of
Executive's  duties  hereunder,  as  reasonably  determined in good faith by the
Board.

                  2.6 AUTOMOBILE  ALLOWANCE.  During the Term, the Company shall
pay the Executive a monthly automobile  allowance in the amount of Seven Hundred
Dollars ($700).

                  2.7 LIFE  INSURANCE.  The  Company  will  obtain and  maintain
during  the Term a term  life  insurance  policy in the  amount  of One  Million
Dollars  ($1,000,000) on the life of the Executive  payable to the estate of the
Executive  in the event of the  Executive's  death  during  the Term;  PROVIDED,
HOWEVER,  that the annual premium to be paid in order to maintain such term life
insurance policy shall not exceed Six Thousand Dollars ($6,000) per year.

                  2.4.   EXPENSES.   The   Executive   shall  be   entitled   to
reimbursement  by the  Company for all  reasonable  travel,  lodging,  and other
expenses  actually  incurred by the Executive in connection with the performance
of his duties,  against receipts or other  appropriate  written evidence of such
expenditures as required by the appropriate Internal Revenue Service regulations
or by the Company.

      3. TERMINATION OF EMPLOYMENT.

                  3.1.   TERMINATION  FOR  DEATH.  The  Executive's   employment
pursuant to this Agreement shall terminate automatically, without requirement of
further action by the Company or the Executive, upon the death of the Executive.

                                       2
<PAGE>

                  3.2.  TERMINATION BY THE COMPANY FOR CAUSE OR DISABILITY.  The
Company shall have the right to terminate the  Executive's  employment for Cause
(as defined below) or Disability (as defined below) and such  termination of the
Executive's employment shall be made by, and effective upon, delivery of written
notice of such termination to the Executive.

For the purposes hereof:

      An  "AFFILIATE"  of a party  shall have the  meaning  ascribed to the term
      "affiliate" in the Stockholders' Agreement (as defined below).

      "CAUSE" means,  as such term is determined in accordance  with Section 2.4
      of the Stockholders'  Agreement,  (i) the Executive's breach of or default
      under the terms of this  Agreement  (including  a failure to  perform  his
      duties and responsibilities with respect to the Company),  which breach or
      default  continues  beyond  thirty  (30) days  after a written  demand for
      performance  or  compliance  is delivered to the Executive by the Company;
      (ii)  violation  of  any  securities  law by the  Executive;  (iii)  gross
      negligence or willful misconduct by the Executive, in each case that has a
      material adverse effect upon the Company; (iv) the Executive's  commission
      of,  or  pleading  guilty  or NOLO  CONTENDERE  to,  a  felony  or a crime
      involving moral turpitude, fraud, or embezzlement;  or (v) the Executive's
      willful breach of any provision of Sections 4 or 5 of this Agreement.

      "CHANGE  OF  CONTROL  EVENT"  means,  in any  one  or  series  of  related
      transactions, (i) a merger or consolidation in which securities possessing
      more than fifty  percent (50%) of the total  combined  voting power of the
      Company's  outstanding  securities are  transferred to a person or persons
      different from the persons holding those securities  immediately  prior to
      such transaction;  (ii) the sale,  transfer or other disposition of all or
      substantially all of the Company's assets; (iii) the sale of securities by
      the Company to a third party which  securities  constitute more than fifty
      percent  (50%)  of the  total  combined  voting  power  of  the  Company's
      outstanding  securities immediately following such transaction or (iv) the
      consummation of a strategic combination as a result of which new directors
      to the  Board of  Directors  are  appointed  by  stockholders  who are not
      stockholders  of the Company prior to the  consummation  of such Change of
      Control  Event,   such  that  the  directors   immediately  prior  to  the
      consummation  of such  transaction  and the  directors  appointed  by them
      constitute  less  than  50%  of the  members  of the  Board  of  Directors
      immediately following such transaction.

      "DISABILITY"  means  any  physical  or mental  illness  that  renders  the
      Executive  unable to  perform  his duties or  responsibilities  under this
      Agreement for either (i) a period of 90 consecutive days, or (ii) 120 days
      during any period of 12 consecutive months.

      "GOOD  REASON"  shall  mean,  during (and only  during)  any VGS  Minority
      Period,  (x)(i)  a  material  reduction  in the  nature  or  scope  of the
      authorities,   powers,  functions,   duties  or  responsibilities  of  the
      Executive  set forth in  Section 1 of this  Agreement  or fails to pay the
      Executive's  Base Salary when due and such failure is not remedied  within
      five (5) days of  receipt  of  written  notice  of such  failure  from the
      Executive setting forth in

                                       3
<PAGE>

      reasonable  detail  the  circumstances  alleged  to be the  basis for Good
      Reason  termination,  (ii)  a  material  breach  by  the  Company  of  its
      obligations  pursuant to this Agreement  which breach the Company fails to
      remedy within thirty (30) days of receipt of written  notice  thereof from
      the Executive setting forth in reasonable detail the circumstances alleged
      to be the  basis  for Good  Reason  termination,  or (iii)  relocates  its
      principal  executive  offices outside of New Jersey or New York, or (y) an
      election by the  Executive  to  terminate  his  Employment  for any reason
      within ninety (90) days  following  the  occurrence of a Change of Control
      Event in which the  affirmative  vote of the VGS Designee (as such term is
      defined in the  Stockholders'  Agreement) was requested in connection with
      the  approval of such Change of Control  Event and VGS (and its  permitted
      assignees) did not provide an  affirmative  vote to approve such Change of
      Control Event.

      "STOCKHOLDERS'  AGREEMENT" means the Stockholders' Agreement,  dated as of
      the date hereof, among the Company, the Executive and VGS.

      "VGS  MINORITY  PERIOD"  means any period of time during which (i) the VGS
      Designee  represents less than 50% of the membership of the board and (ii)
      Board, as then constituted, may cause the Company, without the affirmative
      vote of the VGS Designee,  to take actions which results in the occurrence
      of an event that constitutes Good Reason.  For the avoidance of doubt, the
      Board,  as constituted  on the Effective  Date, may not take actions which
      results in the occurrence of an event that constitutes Good Reason.

      "VGS" means VGS Pharma, LLC, a Delaware limited liability company.

                  3.3. TERMINATION BY EXECUTIVE. The Executive may terminate his
employment  pursuant to this  Agreement  upon not less than thirty (30) business
days' prior written notice of such termination to the Company.

                  3.4. CESSATION OF ACTIVITIES.  Notwithstanding anything to the
contrary in this  Agreement,  upon delivery of written  notice of termination of
the Executive's  employment  hereunder by either party,  the Company may relieve
the  Executive of the  Executive's  duties,  responsibilities  and  authority on
behalf of the  Company  and  require the  Executive  to  immediately  vacate the
Company's premises.

                  3.5.  TERMINATION OF  COMPENSATION.  The Executive's  right to
compensation  pursuant to this Agreement shall terminate upon termination of his
employment  pursuant  to  this  Agreement,   except  as  otherwise  required  by
non-waivable  provisions of applicable law or with respect to amounts which have
accrued  and are payable as of the  termination  of the  Executive's  employment
pursuant to this Agreement.

            4.  PROTECTION  OF  CONFIDENTIAL   INFORMATION  AND  TRADE  SECRETS;
ASSIGNMENT OF INTELLECTUAL PROPERTY; NON-SOLICITATION.

                  4.1. DEFINITIONS.

                                       4
<PAGE>

                        4.1.1. "CONFIDENTIAL INFORMATION" DEFINED. "CONFIDENTIAL
INFORMATION"  means any and all  information  (oral or written)  relating to the
Company or any entity  controlling,  controlled by, or under common control with
the Company,  including  information  relating to:  technology,  Inventions  (as
defined  in  Section  4.1.2.  below),  intellectual  property,   research,  test
procedures  and  results;  machinery  and  equipment;  manufacturing  processes;
financial  information;  products;  identity and  description  of materials  and
services used; purchasing; costs; pricing; customers and prospects; advertising,
promotion and marketing;  sales approaches;  sales material;  training material;
and  selling,   servicing  and  information   pertaining  to  any   governmental
investigation,  except such  information  that becomes  public,  other than as a
result of a breach of the provisions of Section 4.2.  hereof.  Without  limiting
the  foregoing,  Confidential  Information  shall also  include all  information
related to  products  targeted  for  development  by the  Company,  subjects  of
research and  development,  projected  launch dates, the protocols of the United
States Food and Drug Administration (the "FDA"),  projected dates for regulatory
filings, consumer studies, market research,  clinical research,  business plans,
planned   expenditures,   profit  margins,   strategic   evaluation   plans  and
initiatives,  and those  commissioned  by the Company through outside vendors or
consultants,  and the content of all business and strategic  planning  conducted
with or through third parties. For purposes of this Agreement, "PERSON" means an
individual,   corporation,   partnership,   trust,  limited  liability  company,
unincorporated organization, joint stock corporation, joint venture, association
or other  entity,  or any  government,  or any agency or  political  subdivision
thereof or any branch of any legal entity.

                        4.1.2. "INVENTIONS" DEFINED.  "INVENTIONS" means any and
all inventions, discoveries, improvements, patent, copyrights, sales approaches,
sales materials, training material, and/or other property rights, whether or not
patented or patentable made, conceived,  created, developed or contributed to by
the Executive  during the Term which are (i) directly or  indirectly  related to
the business, operations or activities of the Company or any of its subsidiaries
or  affiliates,   (ii)  directly  or  indirectly   related  to  the  Executive's
performance  of  the  Services  hereunder,  or  performance  of  other  services
(including as a director,  manager,  officer,  advisor,  agent,  representative,
consultant  or other  independent  contractor)  for,  the  Company or any of its
subsidiaries or affiliates, or (ii) based upon Confidential Information. For the
avoidance of doubt, inventions,  discoveries,  improvements, patents, copyrights
and/or property rights not related to "Designated  Drug Products" of the Company
(as defined below) shall not be considered to be Inventions for purposes of this
Agreement.

                        4.1.3.   "TERM"  means  the  period   beginning  on  the
commencement  of the  Executive's  employment  by the  Company  (whether  or not
pursuant  to this  Agreement)  and  ending on the  latest  date  upon  which the
Executive is employed by the Company pursuant to this Agreement.

                        4.1.4.  "WORK FOR HIRE"  DEFINED.  "WORK FOR HIRE" means
any and all  sales  approaches,  sales  material,  training  material,  computer
software,  documentation,  other  copyrightable  works or any other intellectual
property  (including,  but not limited  to,  materials  or  services  subject to
trademark  or  service  mark  registration,   but  excluding  Inventions)  made,
conceived, created, developed or contributed to by the Executive during the Term
and which are

                                       5
<PAGE>

(i) directly or indirectly related to the business,  operations or activities of
the  Company  or  any  of its  subsidiaries  or  affiliates,  (ii)  directly  or
indirectly related to the Executive's  performance of the Services hereunder by,
or  performance of other services  (including as a director,  manager,  officer,
Executive,  agent,  representative,  consultant or other independent contractor)
for, the Company or any of its  subsidiaries or affiliates,  or (iii) based upon
Confidential  Information.  For the avoidance of doubt, sales approaches,  sales
material,   training   material,   computer   software,   documentation,   other
copyrightable  works or any  other  intellectual  property  not  related  to the
business  of the  Company  shall  not be  considered  to be  Works  for Hire for
purposes of this Agreement.

                  4.2. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. The Executive
agrees that he shall not use or disclose,  either during the Term or at any time
thereafter,  (except to the extent  necessary during the Term in connection with
the necessary and proper  performance of the Executive's duties on behalf of the
Company and in good faith, or as required by law or governmental  authority) any
Confidential Information.

                  4.3. COVENANT NOT TO COMPETE AND NON-SOLICITATION.

                        4.3.1.  During  the  Term  and  continuing  for a period
ending on the first  anniversary  of the  termination  of this  Agreement by the
Company  or the  resignation  from  employment  by the  Executive,  unless  this
Agreement is terminated  without Cause by the Company or by the resignation from
employment by the Executive for Good Reason:

                        (x) The  Executive  shall not,  directly or  indirectly,
manage,  control,  consult with, or engage (as either an employee or consultant)
in any business or activity  anywhere in the world involving a drug product that
is  Competitive  (as defined  below) with any  Designated  Drug  Products of the
Company or any of its  respective  subsidiaries  or  affiliates,  or any related
inventions  or  other  intellectual  property  of  the  Company  or  any  of its
respective subsidiaries or affiliates (collectively,  a "COMPETITIVE ACTIVITY");
and

                        (y) Any  investment  (whether  equity  or  debt)  by the
Executive,  any  affiliate of the Executive or VGS, in any Person  engaging,  or
providing  services or financing  for, a  Competitive  Activity (a  "COMPETITIVE
COMPANY")  shall be wholly  conditioned  on and  subject  to the  prior  written
unanimous  approval of the Board,  including  any follow-on  investments  in any
entity  that,  subsequent  to the time of the initial  investment,  has become a
Competitive  Company.  The foregoing  restriction shall not apply to investments
for equity interests not exceeding five percent (5%) of a Competitive Company or
financing  provided to a subsidiary or affiliate of a Competitive  Company which
is not itself engaged in a Competitive Activity.

For the purposes hereof:

"COMPETITIVE"  shall mean a drug  product  that is based upon the same  chemical
molecule,  utilizes  the  same  route of  administration,  and  treats  the same
indications as a Designated Drug Product, regardless of dosage strength.

                                       6
<PAGE>

"DESIGNATED  DRUG  PRODUCTS"  shall  mean (i) all  drug  products  currently  in
development,   marketed  or   commercialized  by  the  Company  or  any  of  its
subsidiaries or affiliates, (ii) all drug products in-licensed by the Company or
any of its  subsidiaries or affiliates,  and (iii) all prospective drug products
included in the Initial  Business  Plan (as such term is defined in that certain
Strategic Alliance  Agreement,  dated as of the date hereof,  among the Company,
the Executive,  Elite and VGS Pharma,  LLC, a Delaware limited liability company
(the "STRATEGIC ALLIANCE  AGREEMENT")) or any Annual Business Plan (as such term
is defined in the Strategic Alliance Agreement) of the Company.

Notwithstanding  anything to the  contrary in this Section  4.3,  following  the
termination  of this  Agreement,  the  Executive  shall not be  prohibited  from
engaging in Competitive Activities with respect to drug products included in the
Initial  Business Plan or any Annual  Business Plan that either (a) are included
on the Inactive  Products List (as defined  below) or (b) have not yet completed
successful stability testing on exhibit batches of such drug products.

"INACTIVE  PRODUCT LIST" means a list of drug  products  included in the Initial
Business Plan or any Annual Business Plan of the Company that the Elite Designee
(as such term is defined in the  Stockholders'  Agreement)  and the VGS Designee
(as such term is defined in the  Stockholders'  Agreement)  reasonably  agree by
mutual written consent will not be developed (or prior development efforts shall
be  terminated)  by or on  behalf  of the  Company  and  should be placed on the
Inactive  Products List. The Inactive Product List shall be reviewed and updated
at  least  quarterly  pursuant  to  Section  3.4(b)  of the  Strategic  Alliance
Agreement and shall agree,  in good faith,  on the final version of the Inactive
Products List promptly after the term of this Agreement.

                        4.3.2. Prior to the second anniversary of the end of the
Term,  the  Executive  shall not directly or  indirectly  solicit,  recruit,  or
induce,  or attempt to solicit,  recruit,  or induce any Persons (i) employed by
the Company or (ii) retained as consultants or other independent  contractors by
the Company and  dedicating  at least 80% of such  consultant's  or  independent
contractor's  work time to the Company,  or encourage any such Persons described
in clauses (i), or (ii) above to terminate or adversely alter their relationship
with the Company.

                                       7
<PAGE>

                  4.4. ASSIGNMENT OF INTELLECTUAL PROPERTY.

                        4.4.1.  The  Executive  shall  promptly  disclose to the
Company any and all Inventions.  The Executive shall promptly communicate to the
Company all  information,  details and data pertaining to any Inventions in such
form as the Company  requests.  The  Executive  agrees that  Inventions  are the
property of the Company,  and any and all rights,  titles or interests in and to
Inventions,  and any patents or patent  applications  related  thereto which the
Executive may have in any and every  jurisdiction  are hereby  assigned in full.
Whenever the Executive is requested to do so by the Company, during or after the
Term,  the Executive  shall,  at the Company's  sole cost and expense,  promptly
execute and deliver any and all applications,  assignments or other documents or
instruments reasonably deemed necessary or advisable by the Company to apply for
and obtain  Letters  Patent of the United  States or any  foreign  country or to
otherwise  protect,  confirm  or  establish  the  Company's  full and  exclusive
interests in any  Inventions.  The  obligations  set forth in this Section 4.4.1
shall be binding upon the successors,  assigns,  executors,  administrators  and
other legal representatives of the Executive.

                        4.4.2.  Any and all Works for Hire  shall be  considered
"works made for hire" under the copyright  laws of the United States or property
of the Company under applicable federal, state, local and foreign trademark laws
(as  appropriate).  The Executive shall promptly  communicate to the Company any
and all Works for Hire, and any and all information, details and data pertaining
to any Works for Hire, in such form as the Company requests.  To the extent that
Works for Hire fail to qualify as (A) "works made for hire" under the  copyright
laws of the  United  States or any other  jurisdiction  or (B)  property  of the
Company under applicable  federal,  state,  local or foreign trademark laws, the
Executive  hereby  assigns each Work for Hire and all right,  title and interest
therein in any and every jurisdiction to the Company.  Whenever the Executive is
requested to do so by the Company, during or after the Term, the Executive shall
promptly  execute  and deliver any and all  applications,  assignments  or other
documents or instruments  deemed  necessary or advisable by the Company to apply
for and confirm and effectuate full and exclusive ownership of Works for Hire in
the Company,  including, but not limited to, ownership of any moral rights under
the  copyright  law of any nation,  or any other rights  under the  intellectual
property  laws of any nation.  The  obligations  set forth in this Section 4.4.2
shall be binding upon the successors,  assigns,  executors,  administrators  and
other legal representatives of the Executive.

                  4.5. If a court  declares  that any term or  provision of this
Section 4 is invalid or unenforceable,  the parties to this Agreement agree that
the court making the determination of invalidity or unenforceability  shall have
the power to reduce the scope,  duration  or area of the term or  provision,  to
delete  specific  words or phrases,  or to replace any invalid or  unenforceable
term or provision  with a term or provision  that is valid and  enforceable  and
that comes closest to expressing  the intention of the invalid or  unenforceable
term or provision, and this Agreement shall be enforceable as so modified.

                  4.6. The Executive hereby transfers,  assigns, conveys, grants
and sets over to the Company and its  successors  and assigns  forever,  and the
Company hereby  accepts,  assumes and acquires from the Executive for itself and
its successors and assigns forever, all of

                                       8
<PAGE>

the  Executive's  right,  title and interest in and to the Inventions in any and
every jurisdiction.  The Executive hereby covenants and agrees that, at any time
and from time to time after the date  hereof,  at the  request of the Company or
its successors or assigns, he will (i) promptly and duly execute and deliver, or
cause to be executed and  delivered to the Company,  all such further  documents
and  instruments,  and (ii) promptly take all such other and further action,  as
may be requested by the Company to more effectively  transfer,  assign,  convey,
grant, set over, vest, protect,  confirm and establish full and exclusive right,
title and interest in and to all of the Inventions in and to the Company and its
successors and assigns forever in any and every jurisdiction, including, without
limitation,  any  and  all  applications,  assignments  or  other  documents  or
instruments deemed necessary or advisable by the Company to apply for and obtain
Letters Patent of the United States or any foreign jurisdiction. The obligations
set forth in this  Section 4.6 shall be binding  upon the  successors,  assigns,
executors,  administrators and other legal representatives of the Executive. The
Executive  hereby  represents and warrants to the Company that the Executive has
not  transferred  any right,  title or interest in or to the  Inventions  to any
other Person as of the date of the  execution of this  Agreement  and, as of the
date of the execution of this  Agreement,  has not entered into any agreement to
do so.

                  4.7. The  Executive  acknowledges  and admits that a breach of
any of the  covenants  contained  in  this  Section  4 will  cause  the  Company
irreparable harm. The Executive further acknowledges and admits that the damages
resulting  from such a breach will be difficult or impossible to ascertain,  and
will be of the sort that cannot be compensated  by money or other  damages,  and
that the Company in addition to all other  remedies  available at law or equity,
shall be  entitled to  equitable  relief,  including  specific  performance  and
injunctive relief as remedies for any such breach and that the Executive further
agree to waive any requirement for securing or posting of any bond in connection
with such remedy. The Executive therefore waives (and is estopped from asserting
in a court of law or equity) any argument that the breach, or threatened breach,
of any of  the  covenants  contained  in  this  Section  4 does  not  constitute
irreparable  harm for which an adequate  remedy at law is  unavailable.  Nothing
contained in this Section 4 or elsewhere in this Agreement shall be construed as
prohibiting the Company from pursuing any other remedies  available at law or in
equity  for a breach,  or  threatened  breach,  by the  Executive  of any of the
covenants contained in this Section 4.

                  4.8  The  parties  hereby   acknowledge  that  the  provisions
contained in this Section 4 are essential terms of this Agreement.

            5.  CONTINUED   COOPERATION;   RETURN  OF  DOCUMENTS  AND  PROPERTY;
INJUNCTIVE RELIEF; NON-EXCLUSIVITY AND SURVIVAL.

                  5.1. CONTINUED  COOPERATION.  The Executive shall,  during and
after the Executive's  employment  pursuant to this Agreement for any reason, at
the Company's sole expense (including, after the Term, compensation of Executive
at a daily rate of Two  Thousand  Dollars  ($2,000)),  cooperate  fully with the
Company's  reasonable request with respect to any internal or external agency or
legal investigation  (whether conducted by the FDA, the United States Securities
and Exchange  Commission or otherwise),  lawsuits,  financial  reports,  or with
respect to other  matters  within his  knowledge,  responsibilities  or purview;
PROVIDED,  HOWEVER,  that such requests do not  unreasonably  interfere with the
Executive's business activities. The

                                       9
<PAGE>

Executive  shall  execute  all lawful  documents  reasonably  necessary  for the
Company to secure or maintain any Confidential Information.

                  5.2.  RETURN OF DOCUMENTS  AND  PROPERTY.  Upon the end of the
Term, or upon the earlier request of the Company, the Executive and his legal or
personal  representatives  will  promptly  return  to the  Company  any  and all
information, documents or other materials relating to or containing Confidential
Information  which are, and any and all other  property of the Company which is,
in the  Executive's  possession,  care or control,  regardless  of whether  such
materials  were created or prepared by the Executive and  regardless of the form
of,  or  medium  containing,  such  information,  documents,  including  without
limitation,  all  computers  and hard drives,  Executive  identification  cards,
Company credit cards, keys and any other physical property of the Company.

                  5.3.  INJUNCTIVE  RELIEF.  The parties hereby  acknowledge and
agree that (a) the Company will be irreparably  injured in the event of a breach
by the Executive of any of his  obligations  under Sections 4 and 5 hereof;  (b)
monetary  damages will not be an adequate  remedy for any such  breach;  (c) the
Company will be entitled to injunctive relief, in addition to any other remedies
that it may have, in the event of any such breach;  and (d) the existence of any
claims that the  Executive  may have  against the  Company,  whether  under this
Agreement or otherwise,  will not be a defense to the enforcement by the Company
of any  of  its  rights  under  Sections  4 and 5  hereof.  All of the  parties'
covenants and the Company's rights to specific  enforcement,  injunctive  relief
and other remedies as set forth herein shall apply in the event of any breach or
threatened breach by the Executive of any of the provisions of Sections 4 and/or
5 hereof.  The  parties  further  agree that any action  concerning  any alleged
breach(es)  of Sections 4 and/or 5 hereof  shall not be brought or  addressed in
arbitration,  and the existence of any demand for arbitration or pendency of any
dispute in  arbitration  under this  Agreement  shall not be a basis to delay or
defer adjudication by a court of any demand for specific performance, injunctive
relief or other  remedies in relation  to any alleged  breach(es)  of Sections 4
and/or 5 hereof.

                  5.4.  NON-EXCLUSIVITY  AND  SURVIVAL.  The  covenants  of  the
Executive  contained  in Sections 4 and 5 hereof are in addition  to, and not in
lieu of, any obligations that the Executive may have with respect to the subject
matter hereof,  whether by contract,  as a matter of law or otherwise,  and such
covenants and their  enforceability  shall survive any expiration or termination
of the Term by either  party and any  investigation  made  with  respect  to the
breach thereof by the Company at any time.

                  6.  LIMITATION ON CERTAIN  DEVELOPMENT  PROJECTS.  The Company
acknowledges  that it has been informed of the restrictions on the activities of
the Executive  pursuant to the  Separation  and Release  Agreement,  between Par
Pharmaceuticals,  Inc. and the Executive, and the Employment Agreement,  between
Par   Pharmaceuticals,   Inc.  and  the   Executive   (collectively,   the  "PAR
AGREEMENTS"), and agrees that the Executive shall not be required by the Company
to  engage  in the  development  of any  drug  product  that the  Executive  has
covenanted not to develop  pursuant to the Par Agreements in connection with his
performance of the Services  hereunder.  The Executive agrees that in the course
of performing his obligations  hereunder,  the Executive shall not engage in any
activity that would violate the Par Agreements.

                                       10
<PAGE>

            7. MISCELLANEOUS PROVISIONS.

                  7.1.  CAPACITY,  ETC.  Each of the  Executive  and the Company
hereby  represents and warrants to the other that, as the case may be: (a) he or
it has full power,  authority and capacity to execute and deliver this Agreement
and to perform his or its obligations  hereunder;  (b) such execution,  delivery
and  performance  shall not (and  with the  giving of notice or lapse of time or
both would not) result in the breach of any  agreements or other  obligations to
which he or it is a party or he or it is otherwise bound or violate any law; and
(c) this  Agreement is his or its valid and binding  obligation  enforceable  in
accordance with its terms.

                  7.2. ADVICE OF COUNSEL.  The Executive represents and warrants
that  he  has  had  full  opportunity  to  seek  advice  and  representation  by
independent  counsel of his own choosing in connection with the  interpretation,
negotiation and execution of this Agreement.

                  7.3. FURTHER ASSURANCES.  Each of the parties hereto shall, at
any time and from time to time after the date hereof, at the request and expense
of the other party,  (i)  promptly and duly execute and deliver,  or cause to be
duly executed and delivered to the requested Person,  all such further documents
and  instruments,  and (ii) take or cause to be taken all such other and further
actions,  in each case as may be  reasonably  requested  by the  other  party to
implement and effect the terms of this Agreement.

                  7.4.  BENEFITS OF  AGREEMENT.  Except as  otherwise  expressly
provided herein, the provisions hereof shall inure to the benefit of, be binding
upon, and be enforceable by, the parties hereto and their respective  successors
and  assigns.  Elite shall be a third party  beneficiary  under this  Agreement,
entitled  to enforce  the  provisions  of this  Agreement  and also  explore the
Company's rights pursuant hereto.

                  7.5. ASSIGNMENT. This Agreement and the rights and obligations
hereunder  shall not be assignable or  transferable  by either party without the
prior written consent of the other party.  Any instrument  purporting to make an
assignment in violation of this Section 7.5 shall be void.

                  7.6.  SEVERABILITY.  Except as  otherwise  provided in Section
4.5, if, in any  jurisdiction,  any term or provision hereof is determined to be
invalid or unenforceable, (a) the remaining terms and provisions hereof shall be
unimpaired;  (b) any such  invalidity or  unenforceability  in any  jurisdiction
shall not invalidate or render unenforceable such term or provision in any other
jurisdiction;  and (c) the invalid or unenforceable term or provision shall, for
purposes of such jurisdiction, be deemed replaced by a term or provision that is
valid and  enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision.

                  7.7. ENTIRE AGREEMENT. This Agreement, together with the other
Strategic  Alliance  Documents (as such term is defined the  Strategic  Alliance
Agreement),  constitute the full and entire  understanding and agreement between
the parties with regard to the subject matters hereof and thereof and, except as
otherwise specifically provided therein, no

                                       11
<PAGE>

party  shall be  liable  or  bound  to any  other  in any  manner  by any  other
representations,  warranties,  covenants  or  agreements  with  respect  to such
subject matters.

                  7.8.  AMENDMENT AND WAIVER.  This  Agreement and any provision
hereof or right or obligation hereunder may be amended,  modified or waived only
with  the  prior  written  consent  of  the  Company  and  the  Executive  which
amendments,  modifications,  and waivers shall be binding upon all other parties
hereto).

                  7.9.  NOTICES.  All  notices,   requests,  demands  and  other
communications hereunder shall be in writing and shall be deemed duly given upon
receipt when delivered by hand,  overnight delivery or facsimile (with confirmed
delivery),  or  three  (3)  business  days  after  posting,  when  delivered  by
registered or certified mail or private courier service, postage prepaid, return
receipt requested, as follows:

         If to the Company, to:

                  Novel Laboratories, Inc.
                  165 Ludlow Avenue
                  Northvale, New Jersey
                  Facsimile No.: (201) 391-7693
                  Attn: Chief Executive Officer

         With a copy (which shall not constitute notice) to:

                  Reitler Brown & Rosenblatt LLC
                  800 Third Avenue
                  21st Floor
                  New York, NY 10022
                  Facsimile No.: (212) 371-5500
                  Attn: Scott H. Rosenblatt, Esq.

         If to the Executive, to:

                  Veerappan S. Subramanian
                  475 Bernardsville Road
                  Mendham, NJ 07945

                                       12
<PAGE>

         With a copy (which shall not constitute notice) to:

                  Cohen Tauber Spievack & Wagner LLP
                  420 Lexington Avenue
                  New York, NY 10070
                  Facsimile No.: (212) 586-5095
                  Attn:  Larry Tauber, Esq.

or to such other  address(es)  as a party hereto shall have  designated  by like
notice to the other parties hereto in accordance with this Section 7.9.

                  7.10.  DESCRIPTIVE  HEADINGS;  CERTAIN  INTERPRETATIONS.   (a)
Descriptive  headings are for  convenience  only and shall not control or affect
the meaning or construction of any term or provision of this Agreement.

            (b) The following rules of  interpretation  apply to this Agreement:
(i) wherever it appears appropriate from the context, each term stated in either
the singular or plural shall  include the singular and the plural,  and pronouns
stated in either the masculine,  feminine or neuter shall include the masculine,
feminine and neuter;  (ii) "or" and "any" are not  exclusive  and  "include" and
"including"  are not  limiting;  and (iii) a reference to any agreement or other
contract includes permitted supplements and amendments.

                  7.11.  EXECUTION  IN  COUNTERPARTS.   This  Agreement  may  be
executed in one or more counterparts,  and by the two parties hereto in separate
counterparts,  each of which shall be deemed to be an original  and all of which
taken together  shall  constitute one and the same agreement (and all signatures
need not  appear  on any one  counterpart),  and  this  Agreement  shall  become
effective when one or more  counterparts  has been signed by each of the parties
hereto and delivered to each of the other parties hereto.

                  7.12.  GOVERNING LAW. THIS AGREEMENT  SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY (WITHOUT GIVING
EFFECT TO ANY CHOICE OR CONFLICT OF LAWS PROVISIONS).

                  7.13.  CONSENT TO  JURISDICTION.  EACH OF THE  PARTIES  HERETO
HEREBY  IRREVOCABLY  AND  UNCONDITIONALLY  SUBMITS  TO THE  JURISDICTION  OF ANY
FEDERAL  OR STATE  COURT OF NEW JERSEY  SITTING  IN NEW  JERSEY AND  IRREVOCABLY
AGREES  THAT ALL  ACTIONS OR  PROCEEDINGS  ARISING  OUT OF OR  RELATING  TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE LITIGATED EXCLUSIVELY
IN SUCH  COURTS.  EACH OF THE PARTIES  HERETO  AGREES NOT TO COMMENCE  ANY LEGAL
PROCEEDING  RELATED  HERETO  EXCEPT IN SUCH COURT.  EACH OF THE  PARTIES  HERETO
IRREVOCABLY  WAIVES  ANY  OBJECTION  WHICH IT MAY NOW OR  HEREAFTER  HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH  PROCEEDING IN ANY SUCH COURT AND HEREBY FURTHER
IRREVOCABLY AND

                                       13
<PAGE>

UNCONDITIONALLY  WAIVES  AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT
ANY SUCH ACTION,  SUIT OR PROCEEDING  BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.

                  7.14.  WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION  DIRECTLY OR INDIRECTLY  ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS  AGREEMENT.  EACH OF THE PARTIES HERETO
(A) CERTIFIES THAT NO  REPRESENTATIVE,  AGENT OR ATTORNEY OF THE OTHER PARTY HAS
REPRESENTED,  EXPRESSLY  OR  OTHERWISE,  THAT THE OTHER  PARTY WOULD NOT, IN THE
EVENT OF LITIGATION,  SEEK TO ENFORCE THE FOREGOING  WAIVER AND (B) ACKNOWLEDGES
THAT BOTH  PARTIES  HERETO HAVE BEEN INDUCED TO ENTER INTO THIS  AGREEMENT,  BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.14.

                  7.15.  GENERAL.  All  exhibits  to this  Agreement  are hereby
incorporated by reference and made part of this Agreement.

                            [SIGNATURE PAGE FOLLOWS]

                                       14
<PAGE>

            IN WITNESS WHEREOF,  this Employment Agreement has been executed and
delivered by the parties hereto as of the date first above written.

                                            COMPANY:

                                            Novel Laboratories, Inc.

                                            By: /s/ Bernard Berk
                                                --------------------------------
                                                Name:  Bernard Berk
                                                Title: Director

                                            EXECUTIVE:

                                            /s/ Veerappan S. Subramanian
                                            ------------------------------------
                                            Veerappan S. Subramanian

                                       15
<PAGE>

                                                                       EXHIBIT A

                                     DUTIES

The Executive's duties and responsibilities shall include:

      o     Managing the day-to-day operations of the Company;

      o     Initiating,  managing and implementing the efforts of the Company to
            develop drug products subject to FDA approval pursuant to ANDA's and
            NDA's (including 505(b)(2) applications;

      o     Within 45 days following the date of this  Agreement,  the Executive
            shall  prepare  and  deliver  to the  Board  and  Elite a draft of a
            comprehensive  business  plan  and  strategy  for the  Company  (the
            "INITIAL BUSINESS PLAN"),  which Initial Business Plan shall include
            (i) a selection of branded drug products  currently on the market to
            serve  as  initial  targets  of  the  Company  for  development  and
            commercialization   of  generic  alternatives   (collectively,   the
            "PROSPECTIVE  PRODUCTS"),   which  Prospective  Products  shall  not
            include products currently under development by, or, to knowledge of
            the Executive, under active consideration for development by, Elite,
            (ii) estimated  market shares of such  Prospective  Products,  (iii)
            estimated  time  to  market  of  such  Prospective  Products,   (iv)
            estimated sales projections for such Prospective Products, (v) known
            and  anticipated   competitors  with  respect  to  such  Prospective
            Products, (vi) future performance milestones and requisite financing
            requirements  with respect to the development and  commercialization
            of each  Prospective  Products and with respect to the business plan
            of the Company  generally and (vii) related funding,  facilities and
            personnel  requirements.  The inclusion of the foregoing information
            in any Business Plan shall be a reasonable good faith  determination
            based  upon  the  Executive's  knowledge  and  understanding  of the
            pharmaceutical  industry and reasonable assumptions and shall not be
            deemed to be a guarantee of outcome. The Initial Business Plan shall
            be subject to revision and/or approval by the Board;

      o     Within 30 days prior to the commencement of each successive calendar
            year, the Executive shall prepare and deliver to the Board and Elite
            a draft of a comprehensive  business plan and strategy with detailed
            budget (which shall include such information  substantially  similar
            in nature to the  information  provided for in the Initial  Business
            Plan) for the Company for such upcoming  calendar  year,  which plan
            shall be subject to revision  and/or approval by the Board (each, an
            "ANNUAL BUSINESS PLAN");

      o     The Executive  shall cause the Company to operate in accordance with
            the Initial  Business  Plan and each Annual  Business  Plan (and all
            budgets  set forth in each),  each of which shall be prepared by the
            Executive and approved by the Board; and

      o     The Executive  shall cause the Company to utilize  available time of
            Elite's employees,  rather than engage new employees,  to the extent
            Elite  employees  shall have adequate  available time for service to
            the  Company  as  required  by the  Company  in  order  to meet  its
            objectives on a timely basis and such  employees have the skills and
            abilities required by the Company at competitive rates.

                                       16

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