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                                  EXHIBIT 10.8

                              EMPLOYMENT AGREEMENT

      This Employment Agreement ("Agreement") is entered into as of this 11th
Day of August, 2004 ("Effective Date") between Lannett Company, Inc. ("Company")
and Larry Dalesandro (Executive).

                                    RECITALS

      Company wishes to employ Executive as its Chief Financial Officer; and
Executive wishes to accept such employment under the terms and conditions set
forth in this Agreement.

      IT IS AGREED as follows:

      1. EMPLOYMENT. Company hereby employs Executive as its Chief Financial
Officer; and Executive accepts such employment.

      2. TERM. The term of employment under this Agreement shall commence on the
Effective Date and shall continue, unless otherwise terminated earlier under
Section 8, until the day before the third anniversary of the Effective Date,
i.e., June 17, 2007 (the "Term"), provided that on the day before the third
anniversary of the Effective Date and the day before the anniversary of any
one-year renewal of such Agreement, the Term shall be automatically extended for
successive additional one (1) year periods unless at least ninety (90) days
prior to such anniversary date, either Company or Executive furnishes the other
with written notice that the term is not to be so extended.

      3. DUTIES. Executive shall devote his full-time efforts to the proper and
faithful performance of all duties customarily discharged by a Chief Financial
Officer for a company doing the type of business engaged in by Company and any
additional duties assigned to him from time to time by the President and/or the
Chief Executive Officer of Company and/or the Board of Directors of Company.
Executive shall report directly to the President of the Company. Executive
agrees to use his best efforts and comply with all fiduciary and professional
standards in the performance of his duties hereunder. Executive shall provide
services to any subsidiary or affiliate of Company without additional
compensation and benefits beyond those set forth in this Agreement, and any
compensation and benefits provided to Executive for such services shall be a
credit with regard to amounts due from Company under this Agreement. Executive
represents and warrants to Company that, at all times prior to the Effective
Date when he has served as Chief Financial Officer of the Company and at all
times during the Term, he has either fulfilled or will fulfill his duty of
loyalty to Company; and he has either acted or will act in the best interests of
the Company's shareholders.

      4. BASE SALARY. Executive shall be paid a base salary of One Hundred and
Thirty Two Thousand Eight Hundred and Sixty Dollars and no cents ($132,860.00)
per annum for the Term, payable, less applicable withholdings, in proportional
monthly payments or more frequently in accordance with Company's regular
practice. Salary for a portion of any period will be prorated. The Compensation
Committee of the Board of Directors and the President will conduct an annual

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performance review of Executive and, as part of such review, will consider
adjustments to the base salary set forth herein based on the performance of both
Executive and Company.

      5. ANNUAL BONUS. Executive shall be eligible to participate in the
Management Incentive Bonus Plan (the "MIB") administered by the Compensation
Committee, or any successor annual bonus plan or arrangement generally made
available to the executive officers of Company. The MIB shall provide Executive
with a target bonus opportunity for each fiscal year of Company (i.e. July 1 to
June 30), regardless of whether or not a bonus is declared for any fiscal year,
with a minimum guarantee using the same criteria.

      6. BENEFITS.

      During the Term, Executive shall have the following benefits:

      a. Executive may participate in all Company sponsored stock option plans,
      retirement plans, 401(k) plans, life insurance plans, medical insurance
      plans, disability insurance plans, executive stock ownership plans and
      such other benefit plans generally available from time to time to other
      executive employees of Company for which he qualifies under the terms of
      the plans. Executive's participation in and benefits under any benefit
      plan shall be on the terms and subject to the conditions specified in such
      plan.

      b. Vacation days or personal time off (PTO) granted to Executive in
      accordance with the Company's published vacation or PTO policy generally
      afforded to salaried management employees.

      c. If the Company is sold during Executive's active employment, the
      majority shareholder sells his/her majority interest in the Company or a
      majority of the Company's ANDAs (Abbreviated New Drug Applications) are
      sold during Executive's active employment and the Organization that takes
      control of the Company desires to continue the employment of Executive
      with the same assignment and at the same place of business, regardless of
      whether Executive remains with the buying organization or not, Executive
      will be paid in a lump amount equal to six (6) months of Executive's then
      current base annual salary at the time of the transaction .

      7. REIMBURSEMENT OF EXPENSES. Company will reimburse Executive for the
      reasonable and necessary expenses incurred by him in the performance of
      his duties under this Agreement in accordance with Company's policies in
      effect from time to time.

      8. TERMINATION OF EMPLOYMENT.

      a. Executive's employment under this Agreement may be terminated at any
      time by the President, Chief Executive Officer and/or the Board of
      Directors of Company, with or without Cause (as defined below).
      Executive's employment is "at-will."

      b. Executive's employment under this Agreement shall terminate upon his
      resignation or death.

      c. Executive's employment under this Agreement shall terminate upon thirty
      (30) days written notice by Company to Executive of a termination due to
      Disability, provided such

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      notice is delivered during the period of Disability. The term "Disability"
      shall mean, for purposes of this Agreement, the inability of Executive,
      due to injury, illness, disease or bodily or mental infirmity to engage in
      the performance of his material duties of employment with Company as
      contemplated by Section 3 herein for (i) any period of ninety (90)
      consecutive days or (ii) a period of one hundred fifty days (150) in any
      consecutive twelve (12) months, provided that if the Executive returns to
      work in the consecutive 12 month period for a period of less than ten (10)
      consecutive business days in duration, such return to work shall not be
      deemed to interfere with a determination of consecutive absent days if the
      reason for absence before and after the interim return are the same.
      Benefits to which Executive is entitled under any disability policy or
      plan provided by Company shall reduce the base salary paid to Executive
      during any period of Disability on a dollar-for-dollar basis.

      d. Company shall have the right to terminate Executive's employment for
      Cause. For purposes of this Agreement, "Cause" shall consist of any of the
      following:

      1. Executive's willful misrepresentation in this Agreement or otherwise or
      fraud, willful dishonesty or willful breach of a fiduciary duty or duty of
      loyalty to Company which directly or indirectly results in his or any
      person's or entity's enrichment, economic or otherwise, at the expense of
      Company;

      2. Willful misconduct; provided, however, that conduct by Executive in
      good faith and/or ordinary negligence shall not be considered "Cause";

      3. Willful or reckless conduct of Executive which has an adverse impact
      (economic or otherwise) on Company;

      4. Willful violation of any law, rule or regulation relating to the
      operation of Company or any of its subsidiaries or affiliates;

      5. The order of any court or supervising governmental agency with
      jurisdiction over the affairs of Company or any subsidiary or affiliate;

      6. Executive's willful violation of any provision of this Agreement,
      including without limitation violation of Sections 9, 10, 11 or 12;

      7. Executive's conviction or no contest plea to a felony involving moral
      turpitude;

      8. Abuse of illegal drugs or other controlled substances or habitual
      intoxication; or

      9. Willful violation by Executive of Company's published business conduct
      guidelines, code of ethics, conflict of interest or other similar
      policies.

      e. If Executive's employment terminates for Cause or for any reason other
      than as set forth in Section 8(f), Company shall be obligated only to
      continue to pay Executive's salary and, to the extent earned, accrued and
      unpaid, annual cash bonus and long term incentive compensation and furnish
      the then existing benefits under Section 6 up to the date of termination
      (except as otherwise set forth in this Agreement).

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      f. If Executive's employment is terminated by Company without Cause, in
      addition to the amounts payable under Section 8(e), Executive shall be
      entitled to receive his (i) base salary for a period of eighteen (18)
      months after the termination date, (ii) insurance coverage provided to him
      equal to such coverage provided to him on the date of termination at no
      cost or, if ineligible for continued coverage under Company policies,
      reimbursement of the cost of comparable coverage for a period of eighteen
      (18) months (iii) a pro rated annual cash bonus for the then current
      fiscal year calculated as if all base targets and base goals are achieved
      (but no other incentive compensation beyond the date of termination) at
      the times and frequency regularly paid, and (iv) the Company shall cause
      all outstanding Company stock options awarded Executive prior to
      termination of his employment to be one hundred percent (100%) vested at
      termination. As a condition to the salary, insurance continuation, under
      this Section 8(f), Executive must first execute and deliver to Company, in
      a form prepared by Company, a release of all claims against Company and
      other appropriate parties, excluding Company's performance under this
      Section 8(f) and Executive's vested rights under Company sponsored
      retirement plans, 401(k) plans and stock ownership plans. The obligation
      of Company to pay Executive's salary as required by Subsection (i) of this
      Section 8(f) shall not be subject to offset for earnings from Executive's
      subsequent employment.

      g. The termination of Executive's employment with Company, for any reason
      and irrespective as to whether initiated by Executive or Company, shall be
      considered a contemporaneous resignation by Executive from the position of
      Company's Chief Financial Officer and shall be deemed a termination from
      employment with all entities related to Company.

      h. The Executive may terminate his employment hereunder at any time for
      any Reason by giving the Company prior written notice not less than thirty
      (30) days prior to such termination. Termination by the Executive pursuant
      to this Clause shall be deemed a termination entitling the Executive to
      compensation pursuant to Section 8(e) above.

      9. CONFIDENTIAL INFORMATION. During Executive's employment with Company
and at all times after the termination of such employment, regardless of the
reason for such termination, Executive shall hold all Confidential Information
relating to Company in strict confidence and in trust for Company and shall not
disclose or otherwise communicate, provide or reveal in any manner whatsoever
any of the Confidential Information to anyone other than Company without the
prior written consent of Company. "Confidential Information" includes, without
limitation, financial information, related trade secrets (including, without
limitation, Company's business plan, methods and/or practices) and other
proprietary business information of Company which may include, without
limitation, market studies, customer and client lists, referral lists and other
items relative to the business of Company. "Confidential Information" shall not
include information which is or becomes in the public domain through no action
by Executive or information which is generally disclosed by Company to third
parties without restrictions on such third parties.

      10. SOLICITATION OF CUSTOMERS. During his employment with Company and for
a period of eighteen (18) months after the termination of Executive's
employment, regardless of the reason for the termination (the "Non-Competition
Period"), Executive shall not, whether directly or indirectly, for his own
benefit or for the benefit of any other person or entity, or as a partner,

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stockholder, member, manager, officer, director, proprietor, employee,
consultant, representative, agent of any entity other than Company, solicit,
directly or indirectly, any customer of Company, or induce any customer of
Company to terminate any association with Company, in connection with those
certain products being offered for sale by Company or in its research and
development pipeline on the date of termination of Executive's employment (The
"Restricted Products") or otherwise attempt to provide services to any customer
of Company in connection with the Restricted Products. Executive shall prevent
such solicitation to the extent he has authority to prevent same and otherwise
shall not interfere with the relationship between Company and its customers.
This provision shall not be interpreted to prohibit, prevent or otherwise impair
the Executive's ability and right to seek and obtain employment from a
competitor of the Company, even if said competitor is currently selling products
to the Company's customers that are the same as Company's products. While the
Executive shall be unrestricted in seeking to sell products to the Company's
customers that are different than the Company's products, it is the intent of
this paragraph to preclude the Executive from having said competitor replace the
Company as a supplier of a product or otherwise take existing sales from the
Company for the period in question.

      11. SOLICITATION OF EXECUTIVES AND OTHERS. During his employment with
Company and during the Non-Competition Period, Executive shall not, whether
directly or indirectly, for his own benefit or for the benefit of any other
person or entity, or as a partner, stockholder, member, manager, officer,
director, proprietor, employee, consultant, representative, agent of any entity
other than Company, solicit, for purposes of employment or association, any
Executive or agent of Company ("Solicited Person"), or induce any Solicited
Person to terminate such employment or association for purposes of becoming
employed or associated elsewhere, or hire or otherwise engage any Solicited
Person as an Executive or agent of an entity with whom Executive may be
affiliated or permit such, or otherwise interfere with the relationship between
Company and its employees and agents. For purposes of this Agreement, an
employee or agent of Company shall mean an individual employed or retained by
Company during the Term and/or who terminates such association with Company
within a period of six (6) months after the termination of Executive's
employment with Company.

      12. NON-COMPETITION. Without the written consent of the President or the
Chief Executive Officer, during his employment with Company and during the
Non-Competition Period, Executive shall not directly or indirectly, as an
officer, director, shareholder, member, partner, joint venturer, Executive,
independent contractor, consultant, or in any other capacity:

      a. Engage, own or have any interest in;

      b. Manage, operate, join, participate in, accept employment with, render
         advice to, or become interested in or be connected with;

      c. Furnish consultation or advice to; or

      d. Permit his name to be used in connection with;

Any person or entity engaged in a business in the United States or Canada which
is engaged in the manufacture, distribution or sale of the Restricted Products
or which otherwise competes with the business of Company as it exists from time
to time and, in the case of termination of this Agreement, as it exists on the
termination date. Notwithstanding the foregoing, holding one

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percent (1%) or less of an interest in the equity, stock options or debt of any
publicly traded company shall not be considered a violation of this Section 12.

      13. DISCLOSURE AND OWNERSHIP OF WORK PRODUCT AND INFORMATION.

      (a)   Executive agrees to disclose promptly to Company all ideas,
      inventions (whether patentable or not), improvements, copyrightable works
      of original authorship (including but not limited to computer programs,
      compilations of information, generation of data, graphic works,
      audio-visual materials, technical reports and the like), trademarks,
      know-how, trade secrets, processes and other intellectual property,
      developed or discovered by Executive in the course of his employment
      relating to the business of Company, or to the prospective business of
      Company, or which utilizes Company's information or staff services
      (collectively, "Work product").

      (b)   Work product created by Executive within the scope of Executive's
      employment, on Company time, or using Company resources (including but not
      limited to facilities, staff, Information, time and funding), belongs to
      Company and is not owned by Executive individually. Executive agrees that
      all works of original authorship created during his employment are "works
      made for hire" as that term is used in connection with the U.S. Copyright
      Act. To the extent that, by operation of law, you retain any intellectual
      property rights in any Work product, Executive hereby assigns to Company
      all right, title and interest in all such Work product, including
      copyrights, patents, trade secrets, trademarks and know-how.

      (c)   Executive agrees to cooperate with Company, at Company's expense, in
      the protection of Company's information and the securing of Company's
      proprietary rights, including signing any documents necessary to secure
      such rights, whether during or after your employment with Company, and
      regardless of the fact of any employment with a new company.

      14. ENFORCEMENT OF AGREEMENT; INJUNCTIVE RELIEF; ATTORNEYS' FEES AND
EXPENSES. Executive acknowledges that violation of this Agreement will cause
immediate and irreparable damage to Company, entitling it to injunctive relief.
Executive specifically consents to the issuance of temporary, preliminary, and
permanent injunctive relief to enforce the terms of this Agreement. In addition
to injunctive relief, Company is entitled to all money damages available under
the law. If Executive violates this Agreement, in addition to all other remedies
available to Company at law, in equity, and under contract, Executive agrees
that Executive is obligated to pay all Company's costs of enforcement of this
Agreement, including attorneys' fees and expenses. Company acknowledges that
violation of this Agreement will cause immediate and irreparable damage to
Executive, entitling him to injunctive relief. Company specifically consents to
the issuance of temporary, preliminary, and permanent injunctive relief to
enforce the terms of this Agreement. In addition to injunctive relief, Executive
is entitled to all money damages available under the law. If Company violates
this Agreement, in addition to all other remedies available to Executive at law,
in equity, and under contract, Company agrees that Company is obligated to pay
all Executive's costs of enforcement of this Agreement, including attorneys'
fees and expenses.

      15. SEVERABILITY AND SAVINGS. Each provision in this Agreement is
separate. If necessary to effectuate the purpose of a particular provision, the
Agreement shall survive the termination of

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Executive's employment with Company. If any provision of this Agreement, in
whole or in part, is held to be invalid or unenforceable, the parties agree that
any such provision shall be deemed modified to make such provision enforceable
to the maximum extent permitted by applicable law. As to any provision held to
be invalid or unenforceable, the remaining provisions of this Agreement shall
remain in effect.

      16. BINDING EFFECT. This Agreement shall be binding upon and shall inure
to the benefit of Company and its successors and assigns. This Agreement shall
be binding upon and inure to the benefit of Executive, his heirs and personal
representatives. This Agreement is not assignable by Executive.

      17. STATUTE OF LIMITATIONS. Executive agrees not to initiate any action or
suit relating directly or indirectly to employment with Company or the
termination of such employment more than one (1) year after the effective date
of termination of employment. Executive expressly waives any other longer
statute of limitations. However, Executive agrees that any shorter statute(s) of
limitations remain in effect.

      18. INDEMNIFICATION. To the fullest extent permitted by applicable law,
the Company shall indemnify, defend and hold harmless the Executive from and
against any and all claims, demands, actions, causes of action, liabilities,
losses, judgments, fines, costs and expenses (including reasonable attorneys'
fees and settlement expenses) arising from or relating to his service or status
as an officer, director, employee, agent or representative of the Company or any
affiliate of the Company or in any other capacity in which the Executive serves
or has served at the request of, or for the benefit of, the Company or its
affiliates. The Company's obligations under this section shall be in addition
to, and not in derogation of, any other rights the Executive may have against
the Company to indemnification or advancement of expenses, whether by statute,
contract or otherwise, and the Company's obligations pursuant to tins Section 18
shall survive termination of the Executive's employment.

      19. MISCELLANEOUS.

      a. No provision of this Agreement may be modified, waived or discharged
      unless such waiver, modification or discharge is agreed to in writing and
      signed by Company and Executive. The waiver or nonenforcement by Company
      of a breach by Executive of any provision of this Agreement shall not be
      construed as a waiver of any subsequent breach by Executive. This
      Agreement is the parties' entire agreement relating to the subject matter
      hereof and any and all prior agreements, representations or promises, oral
      or otherwise, express or implied, are superseded by and/or merged into
      this Agreement.

      b. Notices and all other communications provided for in this Agreement
      shall be in writing and shall be delivered personally or sent by
      registered or certified mail, return receipt requested, postage prepaid,
      or sent by facsimile or prepaid overnight courier to the parties at the
      addresses set forth below (or such other addresses as shall be specified
      by the parties by like notice): To Company, Lannett Company, Inc., 9000
      State Road, Philadelphia, PA 19136 Attn.: President; To the Executive:
      Larry Dalesandro, 3858 Kipling Place, Philadelphia, PA 19154. All notices
      shall be deemed effective upon receipt. The failure to accept mail
      forwarded through the U.S. Postal Service, certified,

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      return receipt requested, shall be deemed received as of the earlier of
      the first date such delivery is refused or, alternatively, if notices are
      provided of attempts to deliver, the date on which said first notice was
      provided to the Company.

      c. This Agreement shall be governed by the laws of the State of
      Pennsylvania.

      d. Although this Agreement was drafted by Company, the parties agree that
      it accurately reflects the intent and understanding of each party and
      should not be construed against Company for the sole reason that it was
      the drafter if there is any dispute over the meaning or intent of any
      provisions.

      e. Executive agrees that this Agreement is confidential and Executive will
      not disclose the terms and conditions of this Agreement to any Company
      employee or other third party, other than Executive's attorney,
      accountant, professional advisors and members of his immediate family,
      except as may be permitted by applicable law.

      f. This Agreement may be executed in counterparts, which together shall
      constitute one Agreement.

      g. Executive agrees that this Agreement is the sole Employment Agreement
      between Company and Executive and supersedes any and all prior Employment
      Agreements, Letters of Understandings, Verbal understandings or
      commitments.

      h. By their signatures below, the parties acknowledge that they have had
      sufficient opportunity to read and consider, and that they have carefully
      read and considered, each provision of this Agreement and that they are
      voluntarily signing this Agreement.

The parties have executed this Agreement as of the Effective Date.

WITNESS:

/s/ Jamie Holt                              /s/ Larry Dalesandro
----------------------------                ----------------------------
Jamie Holt                                  Larry Dalesandro

                                            LANNETT COMPANY, INC.

                                            By /s/ Arthur Bedrosian
                                               ------------------------
                                            Arthur Bedrosian
                                            Its: President

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                                                                    EXHIBIT 10.1

     EMPLOYMENT AGREEMENT BETWEEN LANNETT COMPANY, INC. AND ARTHUR BEDROSIAN

This Employment Agreement ("Agreement") is entered into as of April 1, 2004
("Effective Date") between Lannett Company, Inc. ("Company") and Arthur P.
Bedrosian ("Executive").

RECITALS

Company wishes to employ Executive as its President and Executive wishes to
accept such employment under the terms and conditions set forth in this
Agreement

IT IS AGREED as follows:

1. Employment. Company hereby employs Executive as its President and Executive
accepts such employment.

2. Term. The term of employment under this Agreement shall commence on the
Effective Date and shall continue, unless otherwise terminated earlier under
Section 8, until the day before the third anniversary of the Effective Date,
i.e., March 31, 2007 (the "Term"), provided that on the day before each yearly
anniversary of the Effective Date, the Term shall be automatically extended for
successive additional one (1) year periods unless at least ninety (90) days
prior to such anniversary date, either Company or Executive furnishes the other
with written notice that the term is not to be so extended.

3. Duties. Executive shall devote his full-time efforts to the proper and
faithful performance of all duties customarily discharged by a president for a
company doing the type of business engaged in by Company, as well as having
responsibility for the day to day management of the Company, and any additional
duties assigned to him from time to time by the Chief Executive Officer of
Company and/or the Board of Directors of Company, consistent with the provisions
of this Section 3. Executive shall report directly to the Chief Executive
Officer of Company. Executive agrees to use his best efforts and comply with all
fiduciary and professional standards in the performance of his duties hereunder.
To the extent that any additional duties assigned to the Executive include the
provision of services to any subsidiary or affiliate of Company, such services
shall be provided without additional compensation and benefits beyond those set
forth in this Agreement, and any compensation and benefits provided to Executive
for such services shall be a credit with regard to amounts due from Company
under this Agreement. Company, to the best of its knowledge, and Executive
acknowledge that prior to the effective date of this Agreement, Executive has
fulfilled his duties and responsibilities as set forth in this Section 3.
Executive represents and warrants to Company that, at all times during the term
of this Agreement, he will continue to fulfill his duty of loyalty to Company
and will act in the best interest of Company's shareholders. (a) The Executive
has been engaged in the pharmaceutical business for in excess of thirty-five
(35) years and has disclosed to the Company his ownership interests in
Pharmeral, Inc.* and Pharmaceutical Ventures, Ltd., as well as his interest as a
creditor of Liquipharm, Inc. His involvement with respect to these companies has
been disclosed, including but not limited to the sale or licensing of various
products, which transactions have in the past included the Company. The
Executive further agrees to disclose any significant change in his association
with said entities or in the nature of their business

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operations if there comes a time when underlying circumstances which have been
represented to the Company are materially altered. The Executive maintains a
personal investment portfolio which includes various pharmaceutical holdings. In
the event Executive's holdings in any one individual company exceeds one percent
(1%) of his net worth, said holding will be disclosed in writing to the Company.

4. Base Salary. Executive shall be paid a base salary of Two Hundred Twenty-Five
Thousand Dollars ($225,000.00) per annum for the Term payable, less applicable
withholding, in equal monthly payments or more frequently in accordance with
Company's regular practice. Salary for a portion of any period will be prorated.
The Compensation Committee of the Company's Board of Directors (the Compensation
Committee") will conduct an annual performance review of Executive and, as part
of such review, will consider adjustments to the base salary set forth herein
based on the performance of both Executive and Company.

5. Annual Bonus. Executive shall be eligible to participate in the Management
Incentive Bonus Plan (the "MIB") administered by the Compensation Committee, or
any successor annual bonus plan or arrangement generally made available to the
executive officers of Company. The MIB shall provide Executive with a target
bonus opportunity for each fiscal year of Company (i.e. July 1 to June 30),
regardless of whether or not a bonus is declared for any fiscal year, with a
minimum guarantee using the same criteria.

6. Benefits. During the Term Executive shall have the following benefits:

      -     Executive may participate in all Company sponsored stock option
            plans, retirement plans, 401(k) plans, life insurance plans, medical
            insurance plans, disability insurance plans, executive stock
            ownership plans and such other benefit plans generally available
            from time to time to other executive employees of Company for which
            he qualifies under the terms of the plans. Executive's participation
            in and benefits under any benefit plan shall be on the terms and
            subject to the conditions specified in such plan.

      -     Executive will receive four (4) weeks of paid vacation in each
            calendar year, prorated for periods less than one (1) year.

      -     Through December 31, 2005 or, if earlier, the date Executive
            relocates his primary residence, the Executive shall be entitled to
            reimbursement for temporary housing expenses, travel and other
            out-of-pocket travel expenses in connection with commuting from his
            residence in the Pomona, New York area. This reimbursement shall
            include reasonable expenses for family travel related to searching
            for a new residence, including but not limited to, expenses incurred
            in the sale and purchase of a substitute residence, excluding the
            price of the residence itself. Additionally, if Executive has an
            apartment lease in the Philadelphia, Pennsylvania area that extends
            beyond December 31, 2005, Company will pay the cost of such lease
            through the balance of its term. All such reimbursements shall be
            subject to Executive's presentation of supporting documentation of
            such expenses as may be reasonably required by Company.

      -     Company agrees that it will cooperate with Executive in the
            establishment of a deferred compensation plan with terms that are
            mutually agreeable to both parties

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            to defer until a future date payment of such portion of the
            Executive's annual compensation as he may elect to defer.

7.    Reimbursement of Expenses. Company will reimburse Executive for the
reasonable and necessary expenses incurred by him in the performance of his
duties under this Agreement in accordance with Company's policies in effect from
time to time.

8.    Termination of Employment.

      a.    Executive's employment under this Agreement may be terminated at any
            time by the Chief Executive Officer and/or the Board of Directors of
            Company, with or without Cause (as defined below).

      b.    Executive's employment is "at-will." Executive's employment under
            this Agreement shall terminate upon expiration of the Term.

      c.    Executive's employment under this Agreement shall terminate upon his
            resignation or death.

      d.    Executive's employment under this Agreement shall terminate upon
            thirty (30) days written notice by Company to Executive of a
            termination due to Disability, provided such notice is delivered
            during the period of Disability. The term "Disability" shall mean,
            for purposes of this Agreement, the inability of Executive, due to
            injury, illness, disease or bodily or mental infirmity to engage in
            the performance of his material duties of employment with Company as
            contemplated by Section 3 herein for (i) any period of ninety (90)
            consecutive days or (ii) a period of one hundred fifty days (150) in
            any consecutive twelve (12) months, provided that interim returns to
            work of less than ten (10) consecutive business days in duration
            shall not be deemed to interfere with a determination of consecutive
            absent days if the reason for absence before and after the interim
            return are the same. Benefits to which Executive is entitled under
            any disability policy or plan provided by Company shall reduce the
            base salary paid to Executive during any period of Disability on a
            dollar-for-dollar basis.

      e.    Company shall have the right to terminate Executive's employment for
            Cause. For purposes of this Agreement, "Cause" shall consist of any
            of the following:

            i.    Executive's willful misrepresentation in this Agreement,
                  fraud, willful dishonesty or willful breach of a fiduciary
                  duty or duty of loyalty to Company which directly or
                  indirectly results, in his enrichment, economic or otherwise,
                  at the expense of Company;

            ii.   willful misconduct; provided, however, that conduct by
                  Executive in good faith and/or ordinary negligence shall not
                  be considered "Cause" under paragraph (8)(ii) or (iii);

            iii.  Willful or reckless conduct of Executive which has an adverse
                  impact (economic or otherwise) on Company;

            iv.   Failure to perform Executive's duties or failure to follow any
                  written policy or directive of the Chief Executive Officer
                  and/or the Board of Directors of Company consistent with such
                  duties which is not remedied by Executive after receipt by him
                  of a written notice from Company's Chief Executive Officer
                  and/or the Board of Directors of Company specifying the
                  required action and a

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<PAGE>

                  reasonable time period within which the action must be taken,
                  which period shall not be less than three (3) business days;

            v.    Willful violation of any law, rule or regulation relating to
                  the operation of Company or any of its subsidiaries or
                  affiliates;

            vi.   The order of any court or supervising governmental agency with
                  jurisdiction over the affairs of Company or any subsidiary or
                  affiliate;

            vii.  Executive's willful violation of any provision of this
                  Agreement, including without limitation violation of Sections
                  9,10,11 or 12;

            viii. Executive's conviction or no contest plea to a felony or crime
                  involving moral turpitude;

            ix.   Abuse of illegal drugs or other controlled substances or
                  habitual intoxication; or

            x.    Willful violation by Executive of Company's published business
                  conduct guidelines, code of ethics, conflict of interest or
                  other similar policies.

f.    If Executive's employment terminates pursuant to paragraphs (b), (c), (d)
      or (i) of this Section 8 or for Cause, Company shall be obligated only to
      continue to pay Executive's salary and, to the extent earned, accrued and
      unpaid, annual cash bonus and long term incentive compensation and furnish
      the then existing benefits under Section 6 up to the date of termination.

g.    If Executive's employment is terminated by Company without Cause, in
      addition to the amounts payable under Section 8(f), Executive shall be
      entitled to receive (i) Six Hundred and Seventy-Five Thousand Dollars
      ($675,000) in a lump sum no later than thirty (30) days following the
      termination date, (ii) insurance coverage provided to him on the date of
      termination or, if ineligible for continued coverage under Company
      policies, reimbursement of the cost of comparable coverage for a period of
      eighteen (18) months (iii) a pro rated annual cash bonus for the then
      current calendar year calculated as if all targets and goals are achieved
      (but no other incentive compensation beyond the date of termination) at
      the times and frequency regularly paid, and (iv) the Company shall cause
      all outstanding Company stock options awarded Executive prior to
      termination of his employment to be one hundred percent (100%) vested at
      termination. As a condition to the receipt of the payments, insurance
      coverage continuation under this Section 8(g), Executive must first
      execute and deliver to Company, in a form prepared by Company, a release
      of all claims against Company and other appropriate parties, excluding
      Company's performance under this Section 8(g) and Executive's vested
      rights under Company sponsored retirement plans, 401 (k) plans and stock
      ownership plans, and the Company's indemnification obligations pursuant to
      Section 18 below.

h.    The termination of Executive's employment with Company, for any reason and
      irrespective as to whether initiated by Executive or Company, shall be
      considered a contemporaneous resignation by Executive from the position of
      Company's President Company and shall be deemed a termination from
      employment with all entities related to Company.

i.    The Executive may terminate his employment hereunder at any time for any
      reason by giving the Company prior written notice not less than thirty
      (30) days prior to such termination. Termination by the Executive pursuant
      to this clause shall be deemed a termination entitling the Executive to
      compensation pursuant to Section 8(f) above.

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<PAGE>

9. Confidential Information. During Executive's employment with Company and at
all times after the termination of such employment, regardless of the reason for
such termination, Executive shall hold all Confidential Information relating to
Company in strict confidence and in trust for Company and shall not disclose or
otherwise communicate, provide or reveal in any manner whatsoever any of the
Confidential Information to anyone other than Company without the prior written
consent of Company. "Confidential Information" includes, without limitation,
financial information, related trade secrets (including, without limitation,
Company's business plan, methods and/or practices) and other proprietary
business information of Company which may include, without limitation, market
studies, customer and client lists, referral lists and other items relative to
the business of Company. "Confidential Information" shall not include
information which is or becomes in the public domain through no action by
Executive or information which is generally disclosed by Company to third
parties without restrictions on such third parties.

10. Solicitation of Customers. During his employment with Company and for a
period of three (3) years after the termination of Executive's employment,
regardless of the reason for the termination (the "Non-Competition Period"),
Executive shall not, whether directly or indirectly, for his own benefit or for
the benefit of any other person or entity, or as a partner, stockholder, member,
manager, officer, director, proprietor, employee, consultant, representative,
agent of any entity other than Company, solicit, directly or indirectly, any
customer of Company, or induce any customer of Company to terminate any
association with Company, in connection with those certain products being
offered for sale by Company or in its research and development pipeline on the
date of termination of Executive's employment (the "Restricted Products") or
otherwise attempt to provide services to any customer of Company in connection
with the Restricted Products. Executive shall prevent such solicitation to the
extent he has authority to prevent same and otherwise shall not interfere with
the relationship between Company and its customers. This provision shall not be
interpreted to prohibit, prevent or otherwise impair the Executive's ability and
right to seek and obtain employment from a competitor of the Company, even if
said competitor is currently selling products to the Company's customers, which
products are similar or identical to the Company's. While the Executive shall be
unrestricted in seeking to sell products to the Company's customers that are
different, it is the intent of this paragraph to preclude the Executive from
having said competitor replace the Company as a supplier of a product or
otherwise take existing sales from the Company for the period in question.

11. Solicitation of Executives and Others. During his employment with Company
and during the Non-Competition Period, Executive shall not, whether directly or
indirectly, for his own benefit or for the benefit of any other person or
entity, or as a partner, stockholder, member, manager, officer, director,
proprietor, employee, consultant, representative, agent of any entity other than
Company, solicit, for purposes of employment or association, any Executive or
agent of Company ("Solicited Person"), or induce any Solicited Person to
terminate such employment or association for purposes of becoming employed or
associated elsewhere, or hire or otherwise engage any Solicited Person as an
Executive or agent of an entity with whom Executive may be affiliated or permit
such, or otherwise interfere with the relationship between Company and its
employees and agents. For purposes of this Agreement, an employee or agent of
Company shall mean an individual employed or retained by Company during the Term
and/or who terminates such association with Company within a period of six (6)
months after the termination of Executive's employment with Company.

                                       32
<PAGE>

12. Non-Competition. Without the written consent of the Chief Executive Officer,
during his employment with Company, Executive shall not directly or indirectly,
as an officer, director, shareholder, member, partner, joint venturer,
Executive, independent contractor, consultant, or in any other capacity: Engage,
own or have any interest in, manage, operate, join, participate in, accept
employment with, render advice to, or become interest in or be connected with;
Furnish consultation or advice to; or permit his name to be used in connection
with; any person or entity engaged in a business in the United States or Canada
which is engaged in the manufacture distribution or sale of the Restricted
Products or which otherwise competes with the business of Company as it exists
from time to time and, in the case of termination of this Agreement, as it
exists on the termination date. Notwithstanding the foregoing, holding one
percent (1%) or less of an interest in the equity, stock options or debt of any
publicly traded company shall not be considered a violation of this Section 12.

13. Disclosure and Ownership of Workproduct and Information. Executive agrees to
disclose promptly to Company all ideas, inventions (whether patentable or not),
improvements, copyrightable works of original authorship (including but not
limited to computer programs, compilations of information, generation of data,
graphic works, audio-visual materials, technical reports and the like),
trademarks, know- how, trade secrets, processes and other intellectual property,
developed or discovered by Executive in the course of his employment relating to
the business of Company, or to the prospective business of Company, or which
utilizes Company's information or staff services (collectively, "Workproduct").
Work product created by Executive within the scope of Executive's employment, on
Company time, or using Company resources (including but not limited to
facilities, staff, Information, time and funding), belongs to Company and is not
owned by Executive individually. Executive agrees that all works of original
authorship created during his employment are "works made for hire" as that term
is used in connection with the U.S. Copyright Act. To the extent that, by
operation of law, you retain any intellectual property rights in any
Workproduct, Executive hereby assigns to Company all right, title and interest
in all such Workproduct, including copyrights, patents, trade secrets,
trademarks and know-how. Executive agrees to cooperate with Company, at
Company's expense, in the protection of Company's information and the securing
of Company's proprietary rights, including signing any documents necessary to
secure such rights, whether during or after your employment with Company, and
regardless of the fact of any employment with a new company.

14. Enforcement of Agreement; Injunctive Relief; Attorneys' Fees and Expenses.
Executive acknowledges that violation of this Agreement will cause immediate and
irreparable damage to Company, entitling it to injunctive relief. Executive
specifically consents to the issuance of temporary, preliminary, and permanent
injunctive relief to enforce the terms of this Agreement. In addition to
injunctive relief, Company is entitled to all money damages available under the
law. If Executive violates this Agreement, in addition to all other remedies
available to Company at law, in equity, and under contract, Executive agrees
that Executive is obligated to pay all Company's costs of enforcement of this
Agreement, including attorneys' fees and expenses. Company acknowledges that
violation of this Agreement will cause immediate and irreparable damage to
Executive, entitling him to injunctive relief. Company specifically consents to
the issuance of temporary, preliminary, and permanent injunctive relief to
enforce the terms of this Agreement. In addition to injunctive relief, Executive
is entitled to all money damages available under the law. If Company violates
this Agreement, in addition to all other remedies available to Executive at law,
in equity, and under contract, Company agrees that Company is

                                       33
<PAGE>

obligated to pay all Executive's costs of enforcement of this Agreement,
including attorneys' fees and expenses.

15. Severability and Savings. Each provision in this Agreement is separate. If
necessary to effectuate the purpose of a particular provision, the Agreement
shall survive the termination of Executive's employment with Company. If any
provision of this Agreement, in whole or in part, is held to be invalid or
unenforceable, the parties agree that any such provision shall be deemed
modified to make such provision enforceable to the maximum extent permitted by
applicable law. As to any provision held to be invalid or unenforceable, the
remaining provisions of this Agreement shall remain in effect.

16. Binding Effect. This Agreement shall be binding upon and shall inure to the
benefit of Company and its successors and assigns. This Agreement shall be
binding upon and inure to the benefit of Executive, his heirs and personal
representatives. This Agreement is not assignable by Executive.

17. Statute of Limitations. Executive agrees not to initiate any action or suit
relating directly or indirectly to employment with Company or the termination of
such employment more man one (1) year after the effective date of termination of
employment. Executive expressly waives any other longer statute of limitations.
However, Executive agrees that any shorter statute(s) of limitations remain in
effect.

18. Indemnification. To the fullest extent permitted by applicable law, the
Company shall indemnify, defend and hold harmless the Executive from and against
any and all claims, demands, actions, causes of action, liabilities, losses,
judgments, fines, costs and expenses (including reasonable attorneys' fees and
settlement expenses) arising from or relating to his service or status as an
officer, director, employee, agent or representative of the Company or any
affiliate of the Company or in any other capacity in which the Executive serves
or has served at the request of, or for the benefit of, the Company or its
affiliates. The Company's obligations under this section shall be in addition
to, and not in derogation of, any other rights the Executive may have against
the Company to indemnification or advancement of expenses, whether by statute,
contract or otherwise, and the Company's obligations pursuant to tins Section 18
shall survive termination of the Executive's employment.

19. Miscellaneous.

The Company agrees to pay any and all reasonable costs and counsel fees incurred
by the Executive in connection with the negotiation, preparation and entry into
the within agreement up to a total of Ten Thousand Dollars ($10,000). No
provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing and signed by Company
and Executive. The waiver or nonenforcement by Company of a breach by Executive
of any provision of this Agreement shall not be construed as a waiver of any
subsequent breach by Executive. This Agreement is the parties' entire agreement
relating to the subject matter hereof and any and all prior agreements,
representations or promises, oral or otherwise, express or implied, are
superseded by and/or merged into this Agreement.

Notices and all other communications provided for in this Agreement shall be in
writing and shall be delivered personally or sent by registered or certified
mail, return receipt requested, postage prepaid, or

                                       34
<PAGE>

sent by facsimile or prepaid overnight courier to the parties at the addresses
set forth below (or such other addresses as shall be specified by the parties by
like notice): To Company: Lannett Company, Inc., 9000 State Road, Philadelphia,
PA 19136 Attn.: Chairman of the Board; To the Executive: Arthur P. Bedrosian,
JD, P O Box D1400, Pomona, NY 10970 with a copy to Steven L. Davis, Schiffman,
Berger, Abraham, Kaufman & Ritter PC, Three University Plaza, P.O. Box 568,
Hackensack, NJ 07602-0568. All notices shall be deemed effective upon receipt.
The failure to accept mail forwarded through the U.S. Postal Service, certified,
return receipt requested, shall be deemed received as of the earlier of the
first date such delivery is refused or, alternatively, if notices are provided
of attempts to deliver, the date on which said first notice was provided to the
Company.

This Agreement shall be governed by the laws of the State of Pennsylvania.

Although this Agreement was drafted by Company, the parties agree that it
accurately reflects the intent and understanding of each party and should not be
construed against Company for the sole reason that it was the drafter if there
is any dispute over the meaning or intent of any provisions. Executive agrees
that this Agreement is confidential and Executive will not disclose the terms
and conditions of this Agreement to any Company employee or other third party,
other than Executive's attorney, accountant, professional advisors and members
of his immediate family, except as may be permitted by applicable law.

This Agreement may be executed in counterparts, which together shall constitute
one Agreement.

By their signatures below, the parties acknowledge that they have had sufficient
opportunity to read and consider, and that they have carefully read and
considered, each provision of this Agreement and that they are voluntarily
signing this Agreement.

The parties have executed this Agreement as of the Effective Date.

/s/Arthur P. Bedrosian
----------------------------------
Arthur P. Bedrosian

Lannett Company, Inc.

/s/William Farber
----------------------------------
William Farber
----------------------------------
Its: Chairman of the Board

                                       35

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