EXHIBIT 10(a)

EXECUTION VERSION

INTRODUCTION

Elite Pharmaceuticals is a specialty pharmaceutical company principally engaged in the development and manufacturing of oral controlled-release products. Elite, both independently and with selected partners, develops and in-licenses new drug products as wells as generic drug products.

VS is an expert in the formulation and development of drug products, particularly generic drug products. VGS is wholly-owned subsidiary of Kali Capital, L.P., a Delaware limited partnership which is controlled by Kali Management, LLC ("KALI"), its general partner, and Kali is controlled by Anu Subramanian, its managing member.

Elite and the VGS Parties wish to enter into a strategic alliance whereby, among other things, the parties have incorporated Novel Laboratories, Inc., a Delaware corporation ("NOVEL") as a joint venture for the research, development, manufacturing, in-licensing, out-licensing, marketing, product acquisition, and distribution of certain agreed upon pharmaceutical products.

Elite desires to have VS perform, and VS has agreed to perform, certain strategic advisory services for Elite, advising Elite on the research, development and commercialization of Elite's existing and prospective pharmaceutical products.

As a condition to the formation of Novel and the commencement of this strategic relationship, VGS desires to purchase, and Elite has agreed to sell, shares of its common stock and warrants exercisable for shares of its common stock to VGS.

AGREEMENT

In consideration of the foregoing and the mutual promises, representations, warranties, and covenants hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. SALE AND PURCHASE.

1.1 SALE AND PURCHASE OF COMMON STOCK OF ELITE AND NOVEL.

(a) SALE AND PURCHASE OF ELITE COMMON STOCK AND WARRANTS. At the Closing (as defined below), Elite shall sell and issue to VGS, and VGS shall purchase and accept from Elite (i) 957,396 shares (the "PURCHASED SHARES") of common stock, par value US$0.01 of Elite (the "COMMON STOCK"), for an aggregate purchase price of Two Million United States Dollars (US$2,000,000) (the "PURCHASE PRICE"), with the purchase price per Purchased Share

being equal to the trailing average closing price of the Common Stock as listed on the American Stock Exchange during the ten (10) trading days immediately preceding the execution of this Agreement, and (ii) a warrant (the "WARRANT", and together with the Purchased Shares, the "SECURITIES"), in substantially the form attached hereto as EXHIBIT A, to purchase 478,698 shares of Common Stock, at a purchase price per share of US$ 3.00 (the "WARRANT SHARES").

(b) SALE AND PURCHASE OF NOVEL COMMON STOCK. At the Closing,
(i) Elite shall subscribe for 49,000 shares of Class A Voting Common Stock, par value US$0.0001 per share, of Novel (collectively, the "ELITE NOVEL SHARES"), for an aggregate purchase price of US$9,800 ("ELITE NOVEL SUBSCRIPTION PRICE"); and (ii) VGS shall subscribe for 51,000 shares of Class A Voting Common Stock, par value US$0.0001 per share, of Novel (collectively, the "VGS NOVEL SHARES"), for and aggregate purchase price of US$10,200 ("VGS NOVEL SUBSCRIPTION PRICE").

1.2 CLOSING. The closing of the transactions described in Sections
1.1 (the "CLOSING") shall take place at the offices of Reitler Brown & Rosenblatt LLC, 800 Third Avenue, 21st Floor, New York, New York on December 6, 2006, or at such other time or place as Elite and VS may mutually agree.

1.3 CLOSING DELIVERIES. At the Closing:

(a) VGS shall pay to Elite or its designee, by wire transfer to the account or accounts listed on EXHIBIT B, attached hereto, the Purchase Price in immediately available funds;

(b) Elite shall deliver to VGS (i) a certificate evidencing VGS's ownership of the number of Purchased Shares purchased by VS hereunder, and
(ii) the Warrant, registered in the name of VGS, to the address set forth for VGS on the signature page hereof; and

(c) Elite shall deliver to Novel, by wire transfer of immediately available funds, the Initial Contribution (as defined below).

1.4 CONDITIONS TO OBLIGATIONS OF THE VGS PARTIES AT THE CLOSING. The obligations of the VGS Parties at the Closing are subject to the satisfaction (or waiver by VS) of each of the following conditions at or prior to the Closing:

(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and warranties made by Elite in Section 2.2 shall be true and correct in all material respects as of the Closing with the same force and effect as if they had been made as of the Closing;

(b) PERFORMANCE OF OBLIGATIONS. Elite shall have performed and complied with all agreements and covenants herein required to be performed or complied with by Elite on or prior to the Closing pursuant to this Agreement;

(c) Elite shall pay to Novel the Elite Novel Subscription Price;

(d) VGS shall pay to Novel the VGS Novel Subscription Price;

(e) Elite shall pay to Novel the Initial Contribution;

(f) DELIVERY OF SECURITIES. Elite or its transfer agent for Common Stock shall have delivered the instruments evidencing the Securities as described in Section 1.3(b) hereof;

(g) ADDITIONAL DELIVERIES. Delivery of the following executed documents and instruments (collectively with the agreement identified in Section 1.5(c)(v), the "STRATEGIC ALLIANCE Documents"):

(i) this Agreement duly executed by Elite;

(ii) that certain Advisory Agreement between VS and Elite, in substantially the form attached hereto as EXHIBIT C (the "ADVISORY AGREEMENT"), duly executed by Elite;

(iii) that certain Non-Qualified Stock Option Agreement between VS and Elite, in substantially the form attached hereto as EXHIBIT D (the "STOCK OPTION AGREEMENT"), duly executed by Elite;

(iv) that certain Employment Agreement between VS and Novel, in substantially the form attached hereto as EXHIBIT E (the "EMPLOYMENT AGREEMENT"), duly executed by Novel;

(v) that certain Subscription Agreement between VGS and Novel for the purchase by VGS of the VGS Novel Shares, in substantially the form attached hereto as EXHIBIT F-1, (the "SUBSCRIPTION AGREEMENT") duly executed by Novel;

(vi) a stock certificate of Novel evidencing VGS's ownership of the VGS Novel Shares, duly executed on behalf of Novel;

(vii) that certain Stockholders' Agreement, dated as of the date hereof, between Elite, VS, VGS and Novel, in substantially the form attached hereto as EXHIBIT G (the "STOCKHOLDERS' AGREEMENT"), duly executed by both Elite and Novel; and

(viii) the certain Registration Rights Agreement between Elite, VS and VGS, in substantially the form attached hereto as EXHIBIT H (the "REGISTRATION RIGHTS AGREEMENT"), duly executed by Elite.

(h) CONSENTS, PERMITS, AND WAIVERS. Elite shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated hereby.

1.5 CONDITIONS TO ELITE'S OBLIGATIONS AT THE CLOSING. Elite's obligations at the Closing are subject to the satisfaction (or waiver by Elite) of each of the following conditions at or prior to the Closing:

(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and warranties made by the VGS Parties in Section 2.3 shall be true and correct in all material respects as of the Closing with the same force and effect as if they had been made as of the Closing;

(b) PERFORMANCE OF OBLIGATIONS. Each VGS Party shall have performed and complied with all agreements and covenants herein required to be performed or complied with by such VGS Party on or before the Closing pursuant to this Agreement;

(c) DELIVERIES. Delivery of the following payments and executed documents and instruments:

(i) the Purchase Price;

(ii) this Agreement duly executed by VS and VGS;

(ii) the Advisory Agreement, duly executed by VS;

(iii) the Stock Option Agreement, duly executed by VS;

(iv) the Employment Agreement, duly executed by Novel and VS;

(v) that certain Subscription Agreement between Elite and Novel for the purchase by Elite of the Elite Novel Shares, in substantially the form attached hereto as EXHIBIT F-2, duly executed by Novel;

(vi) a stock certificate of Novel evidencing Elite's ownership of the Elite Novel Shares, duly executed on behalf of Novel;

(vii) the Subscription Agreement, duly executed by VGS and Novel;

(viii) the Stockholders Agreement, duly executed by VS, VGS and Novel; and

(ix) the Registration Rights Agreement, duly executed by VGS and VS.

(d) CONSENTS, PERMITS, AND WAIVERS. The VGS Parties shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated hereby.

1.6 TERMINATION. Prior to the Closing, this Agreement may be terminated by (a) the mutual written consent of Elite and VS, or (b) either Elite or VS in the event that the Closing does not occur on or prior to December 7, 2006.

2. REPRESENTATIONS AND WARRANTIES.

2.1 CONSTRUCTION. For purposes of this Section 2, a Person (as defined below) shall be deemed to have "knowledge" of a particular fact or other matter if the Person is actually aware of such fact or other matter. A Person that is a corporation, partnership or other business entity shall be deemed to have "knowledge" of a particular fact or other matter if any executive officer, a director (in the case of a corporation), a manager or managing member (in the case of a limited liability company), or a general partner (in the case of a partnership) of such Person has knowledge (as described in the preceding sentence) of such fact or other matter. For purposes of this Agreement, the term "PERSON" shall mean 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.

2.2 ELITE'S REPRESENTATIONS AND WARRANTIES. Except as set forth in the SEC Reports (as defined below) or under the corresponding section of the disclosure schedules delivered to the VGS Parties concurrently herewith (the "DISCLOSURE SCHEDULES"), which Disclosure Schedules shall be deemed a part hereof and to qualify any representation or warranty otherwise made herein to the extent of such disclosure, Elite hereby makes the following representations and warranties to the VGS Parties as of the date of this Agreement and as of the time of the Closing. For purposes of this Section 2.2, the SEC Reports shall be deemed to have been "provided" to VS:

(a) ORGANIZATION, GOOD STANDING AND QUALIFICATION. Elite is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Elite has all requisite corporate power and authority to own and operate its properties and assets, to execute and deliver the Strategic Alliance Documents to which it is a party, and to carry out the provisions of the Strategic Alliance Documents to which it is a party and to carry on its business as presently conducted and as presently proposed to be conducted. Elite is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties makes such qualification necessary, except for those jurisdictions in which failure to do so would not have or reasonably be expected to result in (i) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of Elite, or (ii) a material adverse effect on Elite's ability to perform, in any material respect, on a timely basis its obligations under the Strategic Alliance Documents to which it is a party (a "MATERIAL ADVERSE EFFECT").

(b) AUTHORIZATION; VALID AND BINDING AGREEMENT. The execution and delivery by Elite of the Strategic Alliance Documents to which it is a party, the performance by Elite of its obligations and undertakings hereunder and thereunder, and the consummation by Elite of the transactions contemplated hereby and thereby, have been duly and validly authorized by all necessary action on the part of Elite and no other proceedings on the part of Elite are necessary to authorize the execution or delivery by Elite of the Strategic Alliance Documents to which it is a party, the performance by Elite of its obligations and undertakings hereunder and thereunder or the consummation by Elite of the transactions contemplated hereby and thereby. The Strategic Alliance Documents to which it is a party have been duly executed and delivered by Elite, and constitute the valid and binding obligations of Elite, enforceable against Elite in

accordance with their terms except as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting enforcement and by general principles of equity.

(c) CONFLICTS; CONSENTS. The execution and delivery by Elite of the Strategic Alliance Documents to which it is a party, the performance by Elite of its obligations and undertakings contemplated hereunder and thereunder, and the consummation by Elite of the transactions contemplated hereby and thereby, do not and will not conflict with, or result in any violation of, or default under or result in the creation of any mortgage, pledge, lien, encumbrance, charge or adverse claim (each, a "LIEN") on the properties or assets of Elite under, any provision of (i) the certificate of incorporation, bylaws or other charter or governance documents of Elite, each as the same has been amended to date, (ii) any contract, agreement, instrument or arrangement to which Elite is a party or by which any of Elite's properties or assets are bound, (iii) any license, franchise, permit or other similar authorization held by Elite, or (iv) to the knowledge of Elite, any judgment, order or decree, statute, law, ordinance, rule or regulation applicable to Elite or Elite's properties or assets.

(d) ISSUANCE OF THE SECURITIES. The Purchased Shares are duly authorized and, when issued and paid for in accordance with the terms and conditions hereof, will be validly issued, fully paid and non-assessable, and free and clear of all Liens imposed by Elite other than restrictions on transfer or other dispositions provided for in the Strategic Alliance Documents. The shares of Common Stock issuable upon exercise of the Warrant (the "WARRANT SHARES"), when issued in accordance with the terms of the Warrant, will be duly authorized, validly issued, fully paid and non-assessable, and free and clear of all Liens imposed by Elite other than restrictions or transfer or other dispositions provided for in the Strategic Alliance Documents. Elite has reserved from its duly authorized capital stock a number of shares of Common Stock for issuance upon the exercise of the Warrant equal to the aggregate number of Warrant Shares issuable upon exercise of the Warrant immediately following the Closing.

(e) CAPITALIZATION. Except as set forth on SCHEDULE 2.2(E) of the Disclosure Schedules attached hereto, prior to giving effect to the transaction contemplated in the Strategic Alliance Documents, the authorized capital stock of Elite immediately prior to the Closing consists of (i) 65,000,000 shares of Common Stock, of which 19,599,325 shares are issued and outstanding, and of which 7,000,000 shares are reserved for future issuance upon exercise of options granted to employees, officers, directors and consultants pursuant to Elite's 2004 Stock Option Plan, as amended, and (ii) 5,000,000 shares of preferred stock, of which 10,000 shares are designated as Series B Preferred Stock, par value U.S.$ 0.01 per share (the "SERIES B PREFERRED STOCK"), 9,695 of which are issued and outstanding. As of the Closing, Elite shall have reserved a sufficient number of shares of Common Stock for issuance upon exercise of the Warrant. Other than in connection with the offering and the sale by Elite of the Series B Preferred Stock and except as set forth in the SEC Reports or as set forth on SCHEDULE 2.2(E) of the Disclosure Schedules attached hereto, there are no preemptive rights, voting agreements, rights of first offer or refusal, options, warrants or other conversion or exchange privileges or rights presently outstanding to purchase, subscribe for or otherwise acquire any of Elite's capital stock. The Warrant, when issued against payment therefore in accordance with this Agreement, will be duly authorized and validly issued.

(f) LITIGATION. Except as set forth on SCHEDULE 2.2(F), there is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of Elite, threatened against or affecting Elite, any subsidiary of Elite (each, a "SUBSIDIARY") or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an "ACTION") which (i) adversely affects or challenges the legality, validity or enforceability of any of the Strategic Alliance Documents to which Elite is a party or the Securities, or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither Elite nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.

(g) SEC REPORTS; FINANCIAL STATEMENTS. Elite has filed all reports, schedules, forms, statements and other documents required to be filed with the Commission by it under the Securities Act of 1933, as amended (the "SECURITIES ACT") and the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), for the two years preceding the date hereof (or such shorter period as Elite was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the "SEC REPORTS") on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

2.3 PURCHASER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. Each VGS Party, jointly and severally, hereby represents, warrants and covenants to Elite as of the date of this Agreement and as of the time of Closing as follows:

(a) ORGANIZATION, GOOD STANDING AND QUALIFICATION. VGS is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. VGS has all requisite corporate power and authority to own and operate its properties and assets, to execute and deliver the Strategic Alliance Documents to which it is a party, and to carry out the provisions of the Strategic Alliance Documents to which it is a party and to carry on its business as presently conducted and as presently proposed to be conducted. VGS is duly qualified and is authorized to do business in all jurisdictions in which the nature of its activities and of its properties makes such qualification necessary, except for those jurisdictions in which failure to do so would not have or reasonably be expected to result in a Material Adverse Effect.

(b) VGS OWNERSHIP. Schedule 2.3(b) set forth a true and complete list of the holders own all of the outstanding partnership interests in VGS and each holder's type of partnership interest, percentage of voting rights as to actions to be taken by VGS and right to receive allocations of profit and losses from VGS. There are no preemptive rights, voting agreements, rights of first offer or refusal, options, warrants or other conversion or exchange

privileges or rights presently outstanding to purchase, subscribe for or otherwise acquire any of the partnership interests in VGS.

(c) AUTHORIZATION; VALID AND BINDING AGREEMENT. Such VGS Party has all requisite legal capacity, power and authority to execute and deliver the Strategic Alliance Documents to which he or it is a party, to perform their obligations and undertakings hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. The execution and delivery of the Strategic Alliance Documents to which he or it is a party, the performance of his or its obligations and undertakings hereunder and thereunder, and the consummation of the transactions contemplated hereby and thereby, have been duly and validly authorized by all necessary action on the part of such VGS Party and no other proceedings on the part of, or on behalf of, such VGS Party are necessary to authorize the execution or delivery of the Strategic Alliance Documents to which he or it is a party, the performance of its obligations and undertakings hereunder and thereunder or the consummation of the transactions contemplated hereby and thereby. The Strategic Alliance Documents to which he or it is a party have been duly executed and delivered by such VGS Party, and constitute the valid and binding obligations of such VGS Party, enforceable against him or it in accordance with their terms.

(d) CONFLICTS; CONSENTS. The execution and delivery by such VGS Party of the Strategic Alliance Documents to which he or it is a party, the performance by such VGS Party of his or its obligations and undertakings contemplated hereunder and thereunder, and the consummation by such VGS Party of the transactions contemplated hereby and thereby, do not and will not conflict with, or result in any violation of, or default under or result in the creation of any Lien on the properties or assets of such VGS Party under, any provision of (i) any contract, agreement, instrument or arrangement to which VS is a party or by which any of such VGS Party's properties or assets are bound, (ii) any license, franchise, permit or other similar authorization held by such VGS Party, or (iii) to the knowledge of such VGS Party, any judgment, order or decree, statute, law, ordinance, rule or regulation applicable to such VGS Party or his or its properties or assets.

(e) BROKERS. No Person acting on behalf of, or under the authority of, such VGS Party, is or will be entitled to any broker's or finder's fee or any other commission or similar fee directly or indirectly from any of the parties in connection with any of the transactions contemplated hereby.

(f) STRATEGIC TRANSACTION. Each of the VGS Parties acknowledges (i) the existence of certain covenants provided by Elite to purchasers of Elite's Series B Preferred Stock and (ii) that Elite is relying upon the representations and warranties of such VGS Party set forth in this
Section 2.3 in determining the applicability of such covenants to the transactions contemplated by the Strategic Alliance Documents. As of the Closing, VS operates a pharmaceutical consulting and strategic advisory business that assists drug development companies in the planning, development, manufacturing and/or regulatory approval of pharmaceutical products and that such business is, to the knowledge of VS, synergistic with the business of Elite. No VGS Party is in the primary business of investing in securities. VS shall provide actual services to Elite under the Advisory Agreement and actual services to Novel under the Employment Agreement, each of which shall be beneficial to the business of Elite.

(g) INVESTMENT REPRESENTATIONS. VGS is acquiring the Securities and the Warrant Shares (collectively, the "PURCHASED SECURITIES") solely for its own account for investment purposes only and not with a view to resale or distribution within the meaning of applicable federal and state securities laws. Neither any VGS Party nor any agent on his or its behalf has solicited or will solicit any offers to sell or has offered to sell or will offer to sell all or any part of the Purchased Securities to any Person or Persons so as to require the offer or sale of the Purchased Securities pursuant to this Agreement to be registered under the Securities Act, or any applicable state securities laws. Likewise, no VGS Party has a contract, understanding, agreement or arrangement to sell or otherwise transfer or dispose of the Purchased Securities or any portion thereof to any other Person. VGS acknowledges that, as a consequence thereof, it must bear the economic risk of holding the Purchased Securities for an indefinite period of time because the Purchased Securities cannot be resold or otherwise transferred unless subsequently registered under the Securities Act and any applicable state securities laws (which Elite is not obligated to do other than as provided in the Registration Rights Agreement), or an exemption from such registration is available. In addition, VGS and VS each hereby represents, warrants and covenants to Elite as of the date of this Agreement and as of the time of Closing as follows:

(i) He or it has received and reviewed Elite's Form 10-Q for the three (3) months ended June 30, 2006, filed with the Commission on August 11, 2006 and Elite's Form 10-K for the fiscal year ended March 31, 2006, filed on June 29, 2006; he or it has received or otherwise had access to all other SEC Reports and is familiar with and understands the business and operations of Elite and the risks inherent therein.

(ii) Such VGS Party understands and acknowledges that no independent investment banking firm, financial advisor or legal counsel has passed upon or assumed any responsibility for the accuracy, completeness or fairness of the information contained in this Agreement or Elite's Disclosure Schedule or rendered any fairness opinion with respect to the transactions contemplated hereby.

(iii) Such VGS Party acknowledges that he or it has been encouraged to rely upon the advice of his or its own independent legal counsel and accountants or other financial advisers with respect to the financial, tax and other considerations relating to the transactions contemplated hereby and has been offered, during the course of discussions concerning the transactions contemplated hereby, the opportunity to ask such questions and inspect such documents concerning Elite, as the case may be, and its business and financial affairs, as such VGS Party or his or its representatives have requested so as to understand more fully the nature of the investment and to verify the accuracy of the information supplied.

(iv) Such VGS Party is an "Accredited Investor" as defined in Rule 501 of Regulation D under the Securities Act, is experienced in evaluating and investing in securities of companies in the development stage and acknowledges that he or it can fend for himself or itself, can bear the economic risk of the purchase of the Purchased Securities including the total loss of his or its investment, and is a sophisticated investor who has sufficient knowledge and experience in financial and

business matters to evaluate the merits and risks of his or its investment in the Purchased Securities as contemplated hereby, and has the capacity to protect his or its own interests.

(v) Such VGS Party understands that the Purchased Securities have not been registered under the Securities Act or the securities laws of any state and are subject to substantial restrictions on resale or transfer. Such VGS Party agrees that he or it will not sell or otherwise transfer or dispose of the Purchased Securities or any portion thereof unless the Purchased Securities are registered under the Securities Act and any applicable state securities laws, or unless such VGS Party obtains an opinion of counsel which is reasonably satisfactory to Elite that such Purchased Securities may be sold in reliance on an exemption from such registration requirements.

(vi) Such VGS Party understands that Elite will place a legend on the certificate(s) representing the Purchased Securities indicating that the Purchased Securities may not be transferred except in accordance with an exemption from the Securities Act; Elite will not register a transfer not made in accordance with an exemption from the Securities Act; and such VGS Party therefore may be precluded from selling or otherwise transferring or disposing of any of the Purchased Securities or any portion thereof for an indefinite period of time or at any particular time.

(vii) Such VGS Party understands that the Purchased Securities are being offered and sold in reliance on specific exemptions or exclusions from the registration requirements of federal and state laws (including, without limitation, the Securities Act) and that Elite is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgements and understandings set forth herein in order to determine the suitability of such VGS Party to acquire the Purchased Securities.

3. OTHER AGREEMENTS.

3.1 ELECTION TO BOARD OF DIRECTORS. During such time as Elite and recipients of Permitted Transfers (as such term is defined in the Stockholders' Agreement) holds at least forty percent (40%) of the outstanding capital stock of Novel and VS is the Chairman and Chief Executive Officer of Novel, Elite shall use its best efforts to cause the members of the Board of Directors of Elite (the "BOARD") to (a) vote in favor of the election of VS to serve as a member of the Board and hold such office until the next annual meeting of the stockholders of Elite or until his respective successor shall have been duly elected and qualified or as otherwise provided in the By-Laws of Elite, and (b) include VS in each slate of directors to be presented by the Board to the stockholders of Elite at each annual and special stockholder meeting for the election of Elite directors.

3.2 BUSINESS PLANS AND OPERATIONS.

(a) DELIVERY OF DRAFT INITIAL BUSINESS PLAN. Within 45 days following the Closing, VS shall prepare and deliver to Elite a draft of a comprehensive business plan and strategy for Novel (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 Novel 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 VS, under active consideration for development by, Elite (a list of which shall be supplied to VS promptly after the Closing), (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) 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 Novel generally and (vi) 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 VS's knowledge and understanding of the pharmaceutical industry and reasonable assumptions and shall not be deemed to be a guarantee of outcome. To the extent requested by VS, Elite shall provide VS with reasonable assistance in the preparation of the Initial Business Plan, including efforts of Elite's legal counsel and accountants.

(b) REVIEW AND APPROVAL OF INITIAL BUSINESS PLAN. Promptly upon receipt of the draft Initial Business Plan, Elite shall review the draft of the Initial Business Plan and provide comments and suggested modifications and additions to VS. VS and Elite agree to use commercially reasonable efforts to agree upon the terms of the Initial Business Plan as soon as practically possible, including, without limitation, the Performance Milestones (as defined below) and the portion of the Remaining Contributions triggered by each agreed upon Performance Milestones. Elite hereby agrees to act in good faith and reasonably in its review and approval of the draft Initial Business Plan.

(c) OPERATIONS OF NOVEL IN ACCORDANCE WITH BUSINESS PLANS. VS shall cause Novel to operate in accordance with the Initial Business Plan (and all budgets set forth therein). At least 30 days prior to each subsequent fiscal year, VS shall prepare and deliver to the Board, for review and approval, an updated business plan and budget for the next fiscal year. Upon receipt of each updated business plan and corresponding budget, the Board shall review such document and, once acceptable to all members of the Board, approve such plan (each approved plan, an "ANNUAL BUSINESS PLAN"); PROVIDED, HOWEVER, that, if the Board fails to approve such Annual Business Plan and/or the all budgets set forth therein, Novel shall continue to operate in accordance with the Annual Business Plan in place from the immediately preceding year and all line items from the budget for such preceding year shall be increased by twenty percent (20%).

(d) OBLIGATION TO NEGOTIATE INITIAL BUSINESS PLAN.

Both parties acknowledge that the Initial Business Plan will form the cornerstone of Elite's future fund raising efforts to fund Novel and that such plan must be acceptable to both parties. Each of Elite and VS shall agree to negotiate the terms of the Initial Business Plan in good faith and in accordance with reasonable business judgment to resolve any differences between the parties. During the period from the Closing until Elite and VS agree to the Initial Business Plan, the use of the Initial Contribution (as defined below) by Novel shall be limited to the initial development of drug products specifically approved by the Board, on an unanimous basis.

3.3 ADDITIONAL FINANCING OF AND ASSISTANCE TO NOVEL.

(a) ADDITIONAL FINANCING BY ELITE. In addition to the purchase price paid by Elite for the Elite Novel Shares, Elite shall provide the following additional financing to Novel (collectively, the "ELITE CONTRIBUTIONS"):

(i) US$2,000,000 at the Closing ("INITIAL CONTRIBUTION") and

(ii) Up to an additional US$25,000,000 (collectively, the "REMAINING CONTRIBUTIONS"), to be funded in installments within thirty (30) days of the achievement of certain performance milestones to be mutually agreed to by Elite and VS in the Initial Business Plan, or as the same may be modified in any subsequent Annual Business Plan, (E.G., the initiation of development programs for Prospective Products, commencement and/or completion of clinical and/or bio-equivalence studies for Prospective Products, filings with the United States Food and Drug Administration of new drug or abbreviated new drug applications related to Prospective Products), to occur during the initial thirty (30) months following the Closing (collectively, the "PERFORMANCE MILESTONES"), with such Remaining Contributions being subject to acceleration with unanimous approval of the Board (a "BOARD ACCELERATION ELECTION").

Notwithstanding anything to the contrary in this Section 3.3 or in the Stockholders Agreement, Elite shall have no obligation to make a Remaining Contribution tied to Novel's achievement of a specific Performance Milestone unless and until Novel has achieved such Performance Milestone or a Board Acceleration Election has been made with respect to the relevant Remaining Contribution, and Elite's deferral of a Remaining Contribution for failure to fully achieve a Performance Milestone (in the absence of a Board Acceleration Election) shall not trigger a right to purchase Novel securities held by Elite pursuant to Section 4.2 of the Stockholders Agreement.

(b) ALTERNATIVE ADDITIONAL FINANCING OF NOVEL. In the event that (i) Elite defers, for a period in excess of ninety (90) days, payment of a Remaining Contribution for failure of Novel to timely or fully achieve a Performance Milestone, (ii) Elite fails to make payment of a Remaining Contribution following Novel timely and fully achieving a Performance Milestone, or (iii) Novel requires additional funding to take advantage of opportunities outside the scope of the Initial Business Plan or the then-operative subsequent Annual Business Plan, as the case may be, or beyond the Elite Contributions, then, Novel shall seek the necessary additional funding through additional cash contributions from Novel's existing stockholders in proportion to each stockholder's relative ownership of Novel Class A Voting Common Stock, by delivering written notice requesting such additional PRO RATA financing to all stockholders of Novel. Each Novel stockholder shall have thirty (30) days from the date of receipt of such notice to elect to make such cash contribution; PROVIDED, HOWEVER; in the event that any Novel stockholder refuses to provide its share of such PRO RATA funding, subject to the approval of the Board, Novel may instead seek additional financing from third parties and Novel stockholders, and once terms of such sale to a third party and the Novel stockholder are determined, such sale shall be subject to the rights of all existing stockholders of Novel to participate (up to and including their full PRO RATA portion, as such may be adjusted by exercise of the VGS Purchase

Right (as such term is defined in the Stockholders' Agreement) in accordance with Section 6 of the Stockholders Agreement.

(c) SEGREGATION OF FUNDS FOR ADDITIONAL NOVEL FINANCING. All financing raised by Elite for the specific purpose of funding the Elite Contributions will be segregated by Elite and held by Elite pending achievement by Novel of the pre-defined Performance Milestones; PROVIDED, that Elite shall have no obligation to segregate funds raised for general working capital purposes or generally for operations of Elite (which may include the funding of the Remaining Contributions), although such funds may be used to fund the Elite Contributions.

(d) ADDITIONAL ASSISTANCE TO NOVEL BY ELITE. Elite shall provide Novel with reasonable access to and services from Elite's employees, consultants, materials, supplies, equipment and facilities as necessary to enable Novel to operate Novel until permanent employees and personnel, supply arrangements, equipment and facilities are acquired or obtained. To the extent that Novel requests the use of and uses Elite's materials or supplies or the services of Elite's non-managerial employees or consultants, Elite shall submit to Novel monthly statements reflecting Elite's actual cost of such employees, consultants, materials or supplies (without any profit margin or overhead) and, once such aggregate amount exceeds US$700,000, such amounts in excess of US$700,000 shall be credited, on a monthly basis, as payments of the Remaining Contributions (such credits for amounts above US$700,000 shall be referred to herein as "USE CREDITS"). For the avoidance of doubt, Novel shall not recognize Use Credits for the time of Elite's managerial employees or the use by Novel of Elite's non-consumable equipment or facilities. Novel shall 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 Novel as required by Novel in order to meet its objectives on a timely basis and such employees have the skills and abilities required by Novel at competitive rates.

3.4 RESTRICTIONS ON CERTAIN COMPETITIVE ACTIVITIES.

(a) THIRD PARTY RESTRICTIONS ON VS. Elite acknowledges that it has been informed of the restrictions on the activities of VS pursuant to the Separation and Release Agreement, between Par Pharmaceuticals, Inc. and VS, and the Employment Agreement, between Par Pharmaceuticals, Inc. and VS (collectively, the "PAR AGREEMENTS"), and agrees that VS shall not be required by Elite to engage in the development of any drug product that VS has covenanted not to develop pursuant to the Par Agreements in connection with his performance of the Advisory Agreement or the Employment Agreement. VS agrees that in the course of performing his obligations under the Strategic Alliance Documents (including the identification of Prospective Products in connection with the Initial Business Plan), VS shall not engage in any activity that would violate the Par Agreements.

(b) VS RESTRICTIONS. During the term of VS's employment by Novel and continuing for a period ending on the first anniversary of termination of VS's employment with Novel or VS's resignation from employment with Novel, unless VS's employment with Novel is terminated without Cause (as defined below) by the Company or by VS's resignation from employment with Novel for Good Reason (as defined below):

(i) VS shall not, directly or indirectly, manage, control, finance, 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 (as defined below) of Novel or any of its respective subsidiaries or affiliates, or any related inventions or other intellectual property of Novel or any of its respective subsidiaries or affiliates (collectively, a "COMPETITIVE ACTIVITY"); and

(ii) Any investment (whether equity or debt) by VS, or any affiliate of VS (including VGS), in any Person engaging, or providing services or financing for, a Competitive Activity (a "COMPETITIVE COMPANY"), other than equity investments of not more than five percent (5%) of the equity interests of such Person, shall be wholly conditioned on and subject to the prior written unanimous approval of the Board or the Board of Directors of Novel (as appropriate), including any follow-on investments in any entity that, subsequent to the time of the initial investment, has become a Competitive Company.

For the purposes hereof:

"Cause" shall have the meaning assigned to such term in the Employment Agreement.

"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.

"GOOD REASON" shall have the meaning assigned to such term in the Employment Agreement

"DESIGNATED DRUG PRODUCTS" shall mean (i) all drug products currently in development, marketed or commercialized by Novel, Elite or any of their respective subsidiaries or affiliates, (ii) all drug products in-licensed by Novel, Elite or any of their respective subsidiaries or affiliates, and (iii) all prospective drug products included in the Initial Business Plan or any Annual Business Plan of Novel.

Notwithstanding anything to the contrary in this Section 3.4(b), following the termination of VS's employment with Novel, VS 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 successfully completed 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 Novel 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 Novel and should be placed on the Inactive Products List. The parties agree to review and update the Inactive Products List at least quarterly during the term of the Employment Agreement and shall agree, in good faith, on the

final version of the Inactive Products List promptly after the term of the Employment Agreement.

(c) ELITE RESTRICTIONS. Elite shall not, directly or indirectly compete anywhere in the world with the Designated Drug Products of Novel or any related inventions or other intellectual property of Novel for the later of (x) the first anniversary of the date upon which Elite holds less than ten percent (10%) of the outstanding common shares of Novel (on an issued or as-converted basis) and (y) the third anniversary of the Closing.

(d) RIGHT OF FIRST OFFER REGARDING ELITE ANDA PRODUCTS. During such time as Elite and recipients of Permitted Transfers (as such term is defined in the Stockholders' Agreement) holds at least thirty percent (30%) of the outstanding capital stock of Novel, prior to the development of any additional generic drug product ("FUTURE GENERIC PRODUCT") subject to an abbreviated new drug application (an "ANDA") with the United States Food and Drug Administration, Elite shall offer to Novel the opportunity to develop such Future Generic Product in place of Elite by providing notice to Novel in which Elite shall describe (i) the Future Generic Product, (ii) Elite's good faith estimate of the costs related to the development of such Future Generic Product, and (iii) Elite's good faith estimate of the potential market share for such Future Generic Product. Novel shall have thirty (30) days from the date of receipt of such notice to elect to develop the Future Generic Product in place of Elite. If such election is not made by Novel within such thirty (30) day period, Novel shall have waived its right to develop such product and Elite may pursue the development of the Future Generic Product, independent of Novel. Notwithstanding the foregoing, this Right of First Offer shall not apply to any generic drug product under development by Elite as of the Effective Date.

3.5 RESTRICTION ON TRANSFER OF PURCHASED SHARES OR WARRANT SHARES. VGS shall not, directly or indirectly, sell, assign, transfer, offer or otherwise dispose of any Purchased Shares or Warrant Shares on or prior to the first anniversary of the Closing, without the prior written consent of Elite; PROVIDED, HOWEVER, the restrictions set forth in this Section 3.5 shall terminate on the date which is one trading day after the daily volume weighted average price of the Common Stock on the American Stock Exchange (as reported by Bloomberg Financial L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), is less than 85% of the daily volume weighted average price of the Common Stock on the American Stock Exchange as of the Closing.

4. MISCELLANEOUS

4.1 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.

4.2 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. Novel shall be a Third Party

beneficiary of, and shall be bound by and entitled to enforce, Sections 3.2(c), 3.3(b), and 3.3(d) of this Agreement.

4.3 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 4.3 shall be void.

4.4 ENTIRE AGREEMENT. This Agreement, together with the other Strategic Alliance Documents, 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.

4.5 SEVERABILITY. 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.

4.6 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 Elite and VS which amendments, modifications, and waivers shall be binding upon all other parties hereto).

4.7 DELAYS OR OMISSIONS; REMEDIES. 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.

4.8 NOTICES. 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 Elite, VGS or VS, as the case may be, 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.

4.9 TITLES AND SUBTITLES. 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.

4.10 COUNTERPARTS. 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.

4.11 PRONOUNS. All pronouns contained herein, and any variations thereof, shall be deemed to refer to the masculine, feminine or neutral, singular or plural, as the identity of the parties may require.

4.12 GOVERNING LAW. 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).

4.13 CONSENT TO JURISDICTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF ANY FEDERAL OR STATE COURT OF NEW 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.

4.14 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 4.14.

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

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, each of the undersigned parties has caused this STRATEGIC ALLIANCE AGREEMENT to be duly executed and delivered 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, Ph.D.
------------------------------------
Veerappan S. Subramanian, Ph.D.

ADDRESS:

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

VGS PHARMA, LLC

By: /s/ Anu R. Subramanian
    --------------------------------
Name:  Anu R. Subramanian
Title: Member

ADDRESS:

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

Accepted and Agreed with respect to
Sections 3.2(c), 3.3(b), and 3.3(d) and 4.2:

NOVEL LABORATORIES, INC.

By: /s/ Veerappan S. Subramanian, Ph.D.
    ------------------------------------------
    Name:  Veerappan S. Subramanian, Ph.D.
    Title: Chairman and Chief Executive Officer

EXHIBIT A

FORM OF WARRANT

(See attached)

EXHIBIT B

WIRING INSTRUCTIONS

(See attached)

EXHIBIT C

ADVISORY AGREEMENT

(See Attached)

EXHIBIT D

STOCK OPTION AGREEMENT

(See attached)

EXHIBIT E

EMPLOYMENT AGREEMENT

(See attached)

EXHIBIT F-1

VGS SUBSCRIPTION FOR NOVEL SHARES

(See attached)

EXHIBIT F-2

ELITE SUBSCRIPTION FOR NOVEL SHARES

(See attached)

EXHIBIT G

STOCKHOLDERS' AGREEMENT

(See attached)

EXHIBIT H

REGISTRATION RIGHTS AGREEMENT

(See attached)

EXHIBIT 10(b)

EXECUTION VERSION

INTRODUCTION

Pursuant to that certain Strategic Alliance Agreement, dated as of December 6, 2006 (the "STRATEGIC ALLIANCE AGREEMENT") the Company has entered into a strategic relationship with the Advisor to assist the Company in the development of new drug products and enhance the development efforts of the Company with respect to current drug development projects.

The Advisor has substantial experience in the development of new drug products and desires to provide to the Company strategic drug development services in exchange for, INTER ALIA, options to purchase shares of common stock, par value $0.01 (the "COMMON STOCK"), of the Company, which shall vest upon the occurrence of certain future events and the right to be granted to his affiliate under the Strategic Alliance Agreement to purchase an equity interest in Novel Laboratories, Inc., a Delaware corporation ("NOVEL").

The Company and the Advisor desire to enhance the current drug development programs of the Company, as well as develop additional programs and drug products.

AGREEMENT

NOW THEREFOR IT IS HEREBY AGREED THAT:

1. SERVICES. The Advisor agrees to perform the Services (as defined herein) in a professional manner, subject to the terms and conditions of this Agreement. Subject to the limitation set forth below in Section 6, the advisory services (the "SERVICES") to be performed by the Advisor under this Agreement shall include, without limitation: (i) reviewing the current drug product development efforts of the Company; (ii) assisting with the implementation of current and new drug product development projects of the Company; (iii) reviewing the current scientific projects of the Company and advising the Company on a course of action to produce greater efficiencies and positive outcomes with respect to such projects, (iv) assisting the Company in its future fund raising efforts, (v) reviewing the Company's current research and development staff (the "R&D STAFF"); (vi) recommending modifications to the current R&D Staff (including, without limitation, assisting the Company in its recruitment of additional members to the R&D Staff, as needed); and (vii) such additional services and activities in support of, and incidental to, the Services described in clauses (i) through (vi) above. The Advisor shall (x) report to, and follow the directions of, the Board of Directors of the Company
(the "BOARD") and the Chief Executive Officer of the Company (the "CEO"), (y) perform and carry out such duties and responsibilities that are reasonably consistent with the Advisor's position and responsibilities and this Agreement, and (z) perform and discharge such additional duties and responsibilities as may be reasonably determined from time to time by the CEO and the Board, consistent with the description of the Services as set forth above.

2. COMPENSATION.

2.1. STOCK OPTIONS. The Company shall grant to the Advisor, as an inducement material to entering into this Agreement, a stock option to purchase one million seven hundred fifty thousand (1,750,000) of Common Stock, pursuant to the terms and conditions of that certain Stock Option Agreement, dated as of the date hereof (the "STOCK OPTION AGREEMENT"), a copy of which is attached hereto as EXHIBIT A.

2.2. EXPENSES. The Company shall promptly reimburse the Advisor for expenses he reasonably incurs in connection with the performance of the Services (including business travel and entertainment expenses), against receipts or other appropriate written evidence of such expenditures as required by the appropriate Internal Revenue Service regulations or by the Company; PROVIDED, HOWEVER, that, all expenses in excess of One Thousand Dollars ($1,000) per month, individually or in the aggregate, shall be approved by the CEO of the Company as a condition to reimbursement thereof.

2.3 BENEFITS. Until such time as Novel shall establish a medical insurance plan, the Advisor shall be entitled to participate in the Company's medical insurance plans, to the extent that the Advisor's participation is permitted under such medical insurance plans.

3. TERM; TERMINATION.

3.1. TERM. Unless earlier terminated, the initial term of this Agreement is one (1) year from the Effective Date (the "INITIAL TERM"). The Initial Term will automatically renew for an unlimited number of successive one-year terms (each a "RENEWAL TERM"; the Renewal Term and the Initial Term are sometimes individually referred to herein as the "TERM"); PROVIDED, HOWEVER, that in any Renewal Term, either party may terminate this Agreement by giving at least thirty (30) days' advance written notice of termination with or without Cause (as defined below) for any reason or no reason.

3.2. TERMINATION. The Company shall have the right to terminate this Agreement upon (i) the death of the Advisor; (ii) the Advisor's inability to perform the Services hereunder on account of his disability or incapacity for a period of ninety (90) or more days, whether or not consecutive, within any period of twelve (12) consecutive months; (iii) upon the Company giving written notice, at any time, to the Advisor that this Agreement is being terminated immediately for Cause; or (iv) for any reason or no reason.

For purposes of this Agreement, "CAUSE" means (i) the Advisor's breach of or default under the terms of this Agreement, which breach or default continues beyond thirty (30) days after a written demand for performance or compliance is delivered to the Advisor by the Company; (ii) violation of any securities law by the Advisor; (iii) gross negligence or willful misconduct by the Advisor, in each case that has a material adverse effect upon the Company; (iv) the Advisor's commission of, or pleading guilty or NOLO CONTENDERE to, a felony or a crime involving moral turpitude, fraud, or embezzlement; or (v) the Advisor's breach of any provision of Sections 4 or 5 of this Agreement.

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

4.1. DEFINITIONS.

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; 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 Advisor 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 Advisor'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. "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 Advisor during the Term and 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 Advisor's performance of the

Services hereunder by, 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 (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 Novel shall not be considered to be Work for Hire for purposes of this Agreement.

4.2. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. The Advisor 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 Advisor'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. During the Term and continuing for a period ending on the first anniversary of the termination of this Agreement by either party, unless this Agreement is terminated by the Company without Cause or by the Advisor for Good Reason (as defined below):

4.3.1. The Advisor 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 (as defined below) 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

4.3.2. Any investment (whether equity or debt) by the Advisor, any affiliate of the Advisor or VGS Pharma, LLC ("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 or the Board of Directors of Novel (as appropriate), 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:

An "AFFILIATE" of a party shall have the meaning ascribed to the term "affiliate" in that certain Stockholders' Agreement, dated as of the date hereof, among Novel, the Company, the Advisor, and VGS (the "STOCKHOLDERS' AGREEMENT").

"COMPETITIVE" shall mean a drug product that is based upon the same chemical entity by the same route of administration and for the same indication as a Designated Drug Product, regardless of dosage strength.

"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 (a list of which shall be

supplied to the Advisor promptly following the execution of this Agreement), and
(ii) all drug products in-licensed by the Company or any of its subsidiaries or affiliates. For purposes of the definition of "Designated Drug Products", the Company shall not be deemed an affiliate of Novel.

Notwithstanding anything to the contrary in this Section 4.3, following the termination of the Advisor's services under this Agreement, the Advisor shall not be prohibited from engaging in Competitive Activities with respect to any drug products described in clauses (i) or (ii) in the preceding paragraph that either (a) are included on the Inactive Products List (as defined below) or (b) have not yet successfully completed stability testing on exhibit batches of such drug products; PROVIDED, HOWEVER, that during the Term and post-Term non-competition period the Advisor shall not engage in any Competitive Activities with respect to opioid analgesics that are currently under development, marketed or commercialized by the Company (or any of its subsidiaries or affiliates) or in the past have been developed, marketed or commercialized by the Company (or any of its subsidiaries of affiliates), regardless of current status of such drug products.

"INACTIVE PRODUCT LIST" means a list of drug products that the Company and the Advisor 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 parties agree to review and update the Inactive Products List at least quarterly during the term of this Agreement and shall agree, in good faith, on the final version of the Inactive Products List promptly after the term of this Agreement.

"GOOD REASON" means a material breach by the Company of its obligations pursuant to this Agreement or the Stock Option Agreement which breach the Company fails to remedy within thirty (30) days of receipt of written notice thereof from the Advisor setting forth in reasonable detail the circumstances alleged to be the basis for Good Reason termination.

4.3.3. Prior to the second anniversary of the end of the Term, the Advisor 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.

4.4. ASSIGNMENT OF INTELLECTUAL PROPERTY.

4.4.1. The Advisor shall promptly disclose to the Company any and all Inventions. The Advisor shall promptly communicate to the Company all information, details and data pertaining to any Inventions in such form as the Company reasonably requests. The Advisor agrees that Inventions, patents and patent applications are the property of the Company, and any and all rights, titles or interests in and to Inventions, patents or patent applications which the Advisor may have in any and every jurisdiction are hereby assigned in full. Whenever the Advisor is requested to do so by the Company, during or after the Term, the Advisor shall, at the Company's sole 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 Advisor.

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 Advisor 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 Advisor hereby assigns each Work for Hire and all right, title and interest therein in any and every jurisdiction to the Company. Whenever the Advisor is requested to do so by the Company, during or after the Term, the Advisor 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 Advisor.

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 Advisor 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 Advisor for itself and its successors and assigns forever, all of the Advisor's right, title and interest in and to the Inventions in any and every jurisdiction. The Advisor 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 Advisor. The Advisor hereby represents and warrants to the Company that the Advisor 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 Advisor acknowledges and admits that a breach of any of the covenants contained in this Section 4 will cause the Company irreparable harm. The Advisor 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 Advisor further agree to waive any requirement for securing or posting of any bond in connection with such remedy. The Advisor 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 Advisor 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 Advisor shall, during and after the expiration or termination of this Agreement for any reason, at the Company's sole expense (including, after the Term, compensation of Advisor at a daily rate of Two Thousand Dollars ($2,000)), cooperate fully with the Company's reasonable requests 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 Advisor's business activities. The Advisor 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 Advisor 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 Advisor's possession, care or control, regardless of whether such materials were created or prepared by the Advisor and regardless of the form of, or medium containing, such information, documents, including without limitation, all computers and hard

drives, employee 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 Advisor 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 Advisor 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 Advisor 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 Advisor contained in Sections 4 and 5 hereof are in addition to, and not in lieu of, any obligations that the Advisor 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 Advisor pursuant to the Separation and Release Agreement, between Par Pharmaceuticals, Inc. and the Advisor, and the Employment Agreement, between Par Pharmaceuticals, Inc. and the Advisor (collectively, the "PAR AGREEMENTS"), and agrees that the Advisor shall not be required by the Company to engage in the development of any drug product that the Advisor has covenanted not to develop pursuant to the Par Agreements in connection with his performance of the Services hereunder. The Advisor agrees that in the course of performing his obligations hereunder, the Advisor shall not engage in any activity that would violate the Par Agreements.

7. MISCELLANEOUS PROVISIONS.

7.1 ADVISOR NOT AN EMPLOYEE. The relationship of the Advisor to the Company shall be that of an independent contractor and not as an employee or agent of the Company or any of its affiliates. Nothing herein shall be construed to constitute the parties as partners or joint venturers, or as employees or agents of the other. Except as expressly set forth herein, neither party has any express or implied right or authority to assume or create any obligations on behalf or in the name of the other. Personnel and subcontractors supplied by the Advisor are not the Company's personnel or agents, and the Advisor assumes full responsibility for their acts.

7.2. CAPACITY, ETC. Each of the Advisor 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.

7.3. ADVICE OF COUNSEL. The Advisor 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.

7.4. 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.

7.5 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.

7.6 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 7.6 shall be void.

7.7. 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.

7.8. ENTIRE AGREEMENT. This Agreement, together with the other Strategic Alliance Documents (as such term is defined in that certain Strategic Alliance Agreement, dated as of the date hereof, between the Company, the Advisor, and VGS Capital, LP), 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.

7.9. 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 Advisor which amendments, modifications, and waivers shall be binding upon all other parties hereto).

7.10. 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:

Elite Pharmaceuticals, 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 Advisor, to:

Veerappan S. Subramanian
475 Bernardsville Road
Mendham, NJ 07945

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.

7.11. 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.

7.12. 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.

7.13. 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).

7.14. 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 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.

7.15. 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 7.15.

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

[SIGNATURE PAGE FOLLOWS]

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

COMPANY:

Elite Pharmaceuticals, Inc.

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

ADVISOR:

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

EXHIBIT A

STOCK OPTION AGREEMENT

EXHIBIT 10(c)

EXECUTION VERSION

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

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

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:

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

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.

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

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

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

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.

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

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]

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) 766-4006

EXHIBIT 10(d)

EXECUTION VERSION

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.

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.

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

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.

4.1.1. "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

(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.

"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.

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

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

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.

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

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

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

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]

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

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.

EXHIBIT 10(e)

EXECUTION VERSION

INTRODUCTION

In connection with that certain Strategic Alliance Agreement, dated as of the date hereof (the "STRATEGIC ALLIANCE AGREEMENT"), among Elite, VGS and Subramanian and the transactions contemplated thereby, the parties hereto are entering into this Agreement;

In connection with Subramanian's potential acquisition of shares of the Company's capital stock pursuant to any Stock Option Plan (as defined below), he is being made a party to this Agreement;

The Strategic Alliance Agreement states that as a condition to its effectiveness, the Company and the Stockholders shall enter into this Agreement; and

The Stockholders and the Company desire to promote their mutual interests by agreeing to certain matters relating to, among other things, the governance of the Company and the disposition of shares of capital stock of the Company, held, or hereafter acquired, by the Stockholders.

IN CONSIDERATION of the foregoing and the covenants and obligations set forth below, the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE I

INTERPRETATION OF THIS AGREEMENT

1.1. CERTAIN DEFINITIONS. As used herein, the following terms shall have the following meanings:

"AFFILIATE" means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person. A Person shall be deemed to "CONTROL" another Person if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of such other Person, whether through the ownership of voting securities, by contract or otherwise. For the avoidance of doubt, the Company is not considered an Affiliate of Elite at the time this Agreement is executed.

"BANKRUPTCY EVENT" means, with respect to any affected holder of Shares (a) the initiation of a voluntary case or other proceeding seeking liquidation, reorganization or other relief under any bankruptcy, insolvency or other similar law; (b) the commencement of an involuntary case or other proceeding against such holder seeking liquidation, reorganization or

other relief under the bankruptcy, insolvency or other similar laws, and is not dismissed within ninety (90) days; or (c) the entry of an order for relief against such holder under the federal bankruptcy laws as now or hereafter in effect.

"BOARD" means the Board of Directors of the Company.

"BUSINESS PLAN" means either of the Initial Business Plan and each Annual Business Plan, as each such term is defined in the Strategic Alliance Agreement.

"BY-LAWS" means the By-Laws of the Company, as amended from time to time.

"CERTIFICATE OF INCORPORATION" means the Certificate of Incorporation of the Company, as amended from time to time.

"CHANGE OF CONTROL" means, with respect to any Stockholder that holds at least ten percent (10%) of the outstanding shares of capital stock of the Company (other than a Permitted Transfer pursuant to Section 3.1(ii)), a change in the ownership of fifty percent (50%) or more of the equity or partnership interests (or economic benefit thereof) in a Person, or the acquisition, directly or indirectly, of the fifty percent (50%) or more of the equity or partnership interests (or economic benefit thereof) in a person.

"CLASS A COMMON STOCK" means the Class A Common Stock, par value $0.0001 per share, of the Company.

"CLASS B COMMON STOCK" means the Class B Common Stock, par value $0.0001 per share, of the Company.

"DIRECTOR" means a member of the Board.

"DIVESTITURE EVENT" means the occurrence of any of the following events with respect to a holder of Shares: (i) liquidation, dissolution or winding up; (ii) the occurrence of a Bankruptcy Event; or (iii) a Change of Control.

"ELITE CONTRIBUTIONS" shall have the meaning ascribed to such term in the Strategic Alliance Agreement.

"FAMILY MEMBER" means any parent, spouse, child, brother, sister or any other relative with a relationship (by blood, marriage or adoption) not more remote than first cousin.

"GOOD REASON" shall have the meaning assigned to such term in the Subramanian Employment Agreement.

"NEW SECURITIES" except as set forth below, shall mean any shares of capital stock of the Company issued after the date hereof, including Class A Common Stock, Class B Common Stock, whether now authorized or not, and rights, options, or warrants to purchase such common stock, and securities of any type whatsoever that are, directly or indirectly, convertible into said common stock. Notwithstanding the foregoing, the term New Securities does not include (i) registered securities offered to the public pursuant to a registration statement filed and

declared effective by the SEC pursuant to the Act, (ii) Class B Common Stock or warrants or options exercisable for Class B Common Stock, or other capital stock or warrants or options exercisable for other capital stock, issued or granted to employees, consultants, officers and directors of the Company, pursuant to the Stock Option Plan, as amended from time to time, and any successor plan thereto,
(iii) stock issued in connection with any stock split, stock dividend, distribution, reclassification or recapitalization by the Company, (iv) stock issued in respect of any warrant, option or upon conversion or exchange of convertible or exchangeable securities outstanding as of the date of this Agreement, and (v) securities of the Company issued after the date hereof in connection with the Company's entering into an acquisition or strategic partnership, or issued to lenders, lessors or vendors of the Company, in each case approved by the Board.

"ORIGINAL ELITE SHARES" means the shares of Class A Common Stock held by Elite as of the Effective Date of this Agreement, and all capital stock or other securities of the Company representing a dividend on any such shares of Class A Common Stock, or representing a distribution or return of capital upon or in respect of such shares of Class A Common Stock, or resulting from a stock split, revision, reclassification or other exchange therefor, and any subscriptions, warrants, rights or options issued to Elite or its permitted transferee, or otherwise in respect of, such shares of Class A Common Stock, without regard to Transfers made subsequent to the Effective Date hereof.

"ORIGINAL VGS SHARES" means the shares of Class A Common Stock held by VGS as of the Effective Date of this Agreement, and all capital stock or other securities of the Company representing a dividend on any such shares of Class A Common Stock, or representing a distribution or return of capital upon or in respect of such shares of Class A Common Stock, or resulting from a stock split, revision, reclassification or other exchange therefor, and any subscriptions, warrants, rights or options issued to VGS or its permitted transferee, or otherwise in respect of, such shares of Class A Common Stock, without regard to Transfers made subsequent to the Effective Date hereof.

"PERFORMANCE MILESTONE" shall have the meaning ascribed to such term in the Strategic Alliance Agreement.

"PERMITTED TRANSFER" shall have the meaning ascribed to such term in
Section 3.3 hereof.

"PERSON" means any individual, partnership, joint venture, firm, corporation, limited liability company, association, trust, unincorporated organization or other enterprise or any government or political subdivision or any agency, department or instrumentality thereof.

"PUBLICLY TRADED" means (i) the initial public offering of any class of equity securities of the Company pursuant to an effective registration statement under the Securities Act of 1933 (excluding registration statements on Form S-4 and Form S-8 and similar limited purpose forms); (ii) any class of equity securities of the Company become eligible to be traded in any public securities market; or (iii) the Company becomes subject to the reporting requirements of the Securities and Exchange Act of 1934, as amended.

"REMAINING CONTRIBUTIONS" shall have the meaning ascribed to such term in the Strategic Alliance Agreement.

"SHARES" means all capital stock and equity securities of the Company.

"STRATEGIC ALLIANCE DOCUMENTS" shall have the meaning ascribed to such term in the Strategic Alliance Agreement.

"STOCK OPTION PLAN" means the Company's 2006 Stock Option Plan.

"SUBRAMANIAN EMPLOYMENT AGREEMENT" means that certain Employment Agreement, dated as of the date hereof, between the Company and Subramanian.

"TRANSFER" means, as to any Share, to directly or indirectly sell, assign, transfer, offer, grant a participation in, mortgage, pledge, hypothecate, create a security interest in or lien upon, encumber, donate, contribute, place in trust, enter into any voting agreement in respect of, or otherwise dispose of, such Share.

1.2. DIRECTLY OR INDIRECTLY. Where any provision in this Agreement refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person.

ARTICLE II

CORPORATE GOVERNANCE

2.1. BOARD OF DIRECTORS AND BY-LAWS.

(a) At each election of Directors during the term of this Agreement, the Stockholders shall vote their Shares, and otherwise use commercially reasonable efforts as stockholders of the Company,

(i) to cause and maintain the election to the Board comprised of:

(x) for so long as Elite and its Affiliates, collectively, are holders of at least ten percent (10%) of the issued and outstanding capital stock of the Company, one (1) designee of Elite (the "ELITE DESIGNEE"); and

(y) for so long as VGS and its Affiliates, collectively,

are  holders of at least ten percent  (10%) of the issued and  outstanding
capital  stock  of  the  Company,  one  (1)  designee  of  VGS  (the  "VGS
DESIGNEE");

(ii) to remove, reappoint and replace any such designee in accordance with the direction of the relevant Stockholder.

For so long as Elite is the holder of at least ten percent (10%) of the issued and outstanding capital stock of the Company, VGS shall only designate Subramanian pursuant to the terms of this Section 2.1(a) and may only designate another person as the VGS Designee (A) upon

Subramanian's death or disability, (B) upon Subramanian's retirement after his sixty-fifth (65th) birthday, or (C) with the prior written consent of Elite.

(b) The number of Directors shall be (2) voting members.

(c) At each election of Directors during the term of this Agreement, the Stockholders shall vote their respective Shares and otherwise use commercially reasonable efforts as stockholders of the Company, to prevent any amendment of the Certificate of Incorporation or By-Laws of the Company inconsistent with this Agreement.

2.2. PROTECTIVE PROVISIONS. The affirmative consent of each of the Elite Designee (so long as Elite is a holder of at least ten percent (10%) of the issued and outstanding capital stock of the Company) and the VGS Designee (so long as Elite is a holder of at least ten percent (10%) of the issued and outstanding capital stock of the Company) shall be required for the following actions to the taken by the Board or any officer of the Company with respect to the Company or its subsidiaries:

(i) any amendment to the Certificate of Incorporation, By-Laws or other governance documents;

(ii) spin-off or public offering of equity securities;

(iii) liquidation, dissolution, winding-up, recapitalization, reorganization, merger, consolidation or sale;

(iv) any sale, exclusive lease or out-license, exchange, transfer or other disposition, of any Material (as defined below) asset or Material drug product, other than sales of products in the ordinary course of business;

(v) authorization, creation, designation or issuance of any additional equity or debt securities, including under the Stock Option Plan;

(vi) declaration or payment of dividends or distributions;

(vii) except as expressly provided in the Strategic Alliance Documents, any repurchase or redemption of securities;

(viii) commencement of any voluntary bankruptcy proceeding, liquidation, reorganization, dissolution, conservation, delinquency or receivership proceeding, or a proceeding similar to any of the foregoing or permitting any involuntary bankruptcy, liquidation, reorganization, dissolution, conservation, delinquency or receivership proceeding to remain unstayed for more than thirty
(30) days from the date of the petition therefore or commencement thereof;

(ix) a Material change in the nature or focus of the business or any Business Plan;

(x) approval of each Business Plan, and the yearly operating budget;

(xi) incurrence of indebtedness in excess of amounts approved in the Business Plan, or the grant or creation of any security interest in or other encumbrance on any Material asset;

(xii) capital expenditures and investments (including creation of a subsidiary) in excess of, in the case of capital expenditures, one hundred ten percent (110%) of the amounts approved in the Business Plan and, in the case of investments, the amounts approved in the Business Plan;

(xiii) approval of any transaction with any executive officer, director or equity holder or any affiliate of an executive officer, director or equity holder (including Family Members), including the award of bonuses to Subramanian;

(xiv) entering into any agreement restricting the ability of the Company to compete, in any Material respect, in any area of business;

(xv) commencement or settlement of any Material litigation or proceeding, or threatened litigation or proceeding;

(xvi) removal, replacement or appointment of the Company's independent accountants (other than Weiser LLP, which the parties hereto agree shall be the Company's initial independent accounts);

(xvii) increasing or decreasing the size of the Board;

(xviii) the purchase or license of Material products from third parties;

(xix) entry into Material joint ventures, licensing, marketing, distribution and similar Material arrangements;

(xx) any public offering of securities of the Company, or any registration for sale to the public of securities of the Company; and

(xxi) any investment (whether equity or debt) by Subramanian, or any Affiliate of Subramanian, in any Competitive Company (as defined in the Strategic Alliance Agreement).

For purposes of this Section 2.2, shall "MATERIAL" mean material to the business, assets, operations, properties, financial position, results of operations, liabilities or prospects of the Company as a whole.

2.3. CONFIDENTIALITY REQUIREMENTS. Each Stockholder agrees that all financial or other information about the Company, or other information of the Company of a confidential or proprietary nature, disclosed to them at any time, in connection with this Agreement or otherwise, shall be kept confidential by them and shall not be directly or indirectly disclosed to any Person (other than, as necessary, to such Stockholder's agents, employees or lenders) or used by such Stockholder except: (i) with the prior written consent of the Company;
(ii) as may be required by applicable law, court process or other obligations pursuant to any listing agreement with any national securities exchange (including the Nasdaq Stock Market); or (iii) such information which is or becomes generally available other than as a result of a violation of this provision.

2.4 TERMINATION FOR CAUSE UNDER THE SUBRAMANIAN EMPLOYMENT AGREEMENT; BINDING ARBITRATION.

(a) Notwithstanding anything in this Agreement to the contrary, the determination of the existence of "Cause" or "Disability" as a basis for the termination of Subramanian under Subramanian Employment Agreement shall be made solely in the reasonable

discretion of the Elite Designee, not the Board, in good faith, and upon receipt of written notice from the Elite Designee setting forth the basis of "Cause" or "Disability" for such termination, the Company shall take all requisite steps to terminate Subramanian for "Cause" or "Disability" in accordance with the terms of the Subramanian Employment Agreement.

(b) Any action, claim, dispute or controversy arising out of or in connection with the determination of the existence of "Cause" or "Disability" (each, a "DISPUTE") shall be determined by binding arbitration in New York, New York, before a single JAMS arbitrator who is an expert in the subject matter in dispute and reasonably acceptable to each party, and administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures ("ARBITRATION"). Either party may initiate Arbitration with respect to a Dispute by filing a written demand for Arbitration with JAMS. The parties acknowledge and agree that judgment on the award in any Arbitration shall be binding upon the parties hereto and may be entered and enforced in any court having jurisdiction. Each party acknowledges and agrees that all Disputes shall be decided in accordance with this Section 2.4(b) and hereby waives any rights to have those matters litigated in a court and/or by jury trial. Each party acknowledges and agrees that the provisions of this Section 2.4(b) are binding upon such party and may be enforced by any court of competent jurisdiction. Each party further irrevocably consents to service of process in any Dispute in the manner provided for notices in Section 9.9. Nothing in this Agreement will affect the right of any party to serve process in any other manner permitted by law or by Arbitration rules.

ARTICLE III

TRANSFERS OF SHARES

3.1. GENERAL PROHIBITION ON TRANSFER. No Stockholder may Transfer any of its Shares without the prior written consent of the other Stockholder(s), except in the case of: (i) a Permitted Transfer (as defined in Section 3.3);
(ii) a Transfer by VGS to its members or a Family Member of any of its members or to a trust wholly controlled by, or for the sole benefit of, its members or a Family Member of any of its members, provided that all Shares transferred remain subject to the terms of this Agreement, including, without limitation, Article III, Section 4.1, Article V, Article VIII and Article IX; or (iii) a Transfer by Elite, due to a restructuring of, or a sale of substantially all of the assets of, Elite.

3.2. RESTRICTIONS ON TRANSFERS TO COMPETITORS. Notwithstanding anything in this Agreement to the contrary, no Stockholder may Transfer any Shares to any Person who or which is (i) a competitor of the Company or any of its subsidiaries; (ii) a competitor of Elite or any of its subsidiaries; or
(iii) a shareholder or other security holder of any Person referred to in sub-clause (i) or sub-clause (ii).

3.3. PERMITTED TRANSFERS. A "PERMITTED TRANSFER" shall be a Transfer that complies with each of the following conditions:

(a) the non-transferring Stockholder(s) shall have provided prior written consent to the Transfer to such proposed transferee; PROVIDED that such consent may not be unreasonably withheld, conditioned or delayed (it being acknowledged and agreed among the parties hereto

that withholding consent to a proposed transferee that is a financial investor with no business operations in the pharmaceutical industry is presumed to be unreasonable);

(b) such Transfer, when combined with any prior Transfers by such transferring Stockholder, does not cause all such Transfers by such Stockholder to exceed thirty-three and one third percent (33 1/3%) of the Shares held by such transferring Stockholder on the Effective Date of this Agreement;

(c) such transferring Stockholder shall have first provided a written offer to purchase the Shares proposed to be Transferred (the "OFFER NOTICE") to the other Stockholder(s) stating the number of Shares to be Transferred, the price and the material terms concerning the Transfer as to which the non-transferring Stockholder shall have at least thirty (30) days (the "NOTICE PERIOD") to elect to purchase the Shares contained in the Offer Notice at such price and upon such terms contained in the Offer Notice, PROVIDED, if such non-transferring Stockholder(s) elects to purchase any such Shares, the closing shall take place within sixty (60) days of the date the Offer Notice is given; PROVIDED FURTHER, if such non-transferring Stockholder elects not to purchase any such Shares, then such transferring Stockholder may, during the ninety (90) day period following the expiration of the Notice Period, offer and sell the Shares to any Person or Persons at a price not less than, and upon terms no more favorable to the terms specified in the Offer Notice (following such ninety (90) day period, the right contained in this Section 3.3(c) shall be deemed revived); and

(d) the transferee shall not be conferred with any right to representation of the Company's Board nor any other special rights, powers or privileges not otherwise provided under Delaware law.

3.4. TRANSFER MECHANICS. (a) Notwithstanding anything to the contrary in this Agreement, no Transfer shall be deemed effective unless and until (i) the relevant transferee (other than the Company or an existing Stockholder) executes and delivers to the Company, an agreement, in the form of EXHIBIT I, attached hereto, to be bound by all of the terms and conditions of this Agreement applicable to the relevant transferor, (ii) such Transfer is in compliance with the Federal securities laws, all applicable state securities laws and all applicable foreign securities laws, and upon its request, the Company shall have received satisfactory evidence of such compliance (including an opinion of counsel to the transferor), and (iii) upon its request, the Company is indemnified for any costs and expenses reasonably incurred by the Company in connection with such Transfer; and

(b) Any Transfer or purported Transfer made in violation of this Article III shall be null and void and of no effect, and the Company shall not register any such Transfer on its stock ledger or transfer books.

ARTICLE IV

PURCHASE RIGHTS

4.1. ELITE PURCHASE RIGHT. (a) Subject to the limitations set forth in Section 4.1(b) below, Elite shall have the right (the "ELITE PURCHASE RIGHT") to purchase from the holder(s) of the Original VGS Shares up to seventy-five percent (75%) of the Original VGS

Shares upon (i) Subramanian's resignation from the Company for other than Good Reason, (ii) the Company's termination of Subramanian for Cause, or (iii) Subramanian's death or Disability (as such term is defined in the Subramanian Employment Agreement), in each case, at a price per share equal to $10,200 divided by the aggregate number of Original VGS Shares.

(b) The number of Original VGS Shares that Elite shall be entitled to purchase pursuant to the Elite Purchase Right shall:

(i) be reduced to fifty percent 50% of the Original VGS Shares upon the first anniversary of the Effective Date;

(ii) be reduced to 25% of the Original VGS Shares upon the second anniversary of the Effective Date; and

(iii) be reduced to 0% of the Original VGS Shares, and such right shall terminate in its entirety, upon the third anniversary of the Effective Date.

(c) Upon Subramanian's death or Disability, the Elite Purchase Right shall be adjusted, PRO RATA, for partial vesting with respect to the period from the prior decrease, if any, through the date of the termination of the Subramanian such death or Disability.

(d) The purchase price paid for the Original VGS Shares purchasable pursuant to the Elite Purchase Right shall be paid in cash and the closing of such purchase shall take place at the time and the place agreed to among the parties, PROVIDED, such closing shall occur on the date designated by Elite but not later than ninety (90) days after the event triggering the Elite Purchase Right. VGS acknowledges and agrees, for itself and each transferee permitted pursuant to this Agreement, that the Original VGS Shares shall remain subject to the Elite Purchase Right pursuant to the terms of this Section 4.1, whether such Shares are held by VGS or its permitted transferee at the time of the exercise of such right.

4.2. VGS PURCHASE RIGHT. (a) In the event Elite fails to fund all or a portion of the Remaining Contribution pursuant to Section 3.3(b)(ii) of the Strategic Alliance Agreement, VGS shall have the right to purchase from Elite (the "VGS PURCHASE RIGHT") that number of Original Elite Shares required to reduce Elite's ownership of outstanding Class A Common Stock to the following amount (at a price per share equal to $9,800 divided by the aggregate number of Original Elite Shares):

X = Original Elite Shares * ( Y / Z )

Wherein:

X = the number of Shares owned by Elite after giving full effect to the VGS Purchase Right;

Y = Amount of Remaining Contributions actually funded by Elite in cash or through Use Credits (as defined in the Strategic Alliance Agreement); and

Z = $25,000,000.

The VGS Purchase Right granted to VGS pursuant to the terms of this Section 4.2 shall constitute the sole and exclusive remedy of VGS in the event Elite fails to fund all or a portion of the Remaining Contribution pursuant to the Strategic Alliance Agreement or under the Initial Business Plan that results in the event triggering the VGS Purchase Right.

(b) The purchase price paid for the Original Elite Shares purchasable pursuant to the VGS Purchase Right shall be paid in cash and the closing of such purchase shall take place at the time and place agreed to among the parties, PROVIDED, such closing shall occur on the date designated by VGS but not later than ninety (90) days after the event triggering the VGS Purchase Right. Elite acknowledges and agrees, for itself and each transferee permitted pursuant to this Agreement, that the Original Elite Shares shall remain subject to the VGS Purchase Right pursuant to the terms of this Section 4.2, whether such Shares are held by Elite or a permitted transferee at the time of the exercise of such right.

(c) Notwithstanding anything to the contrary in this Section 4.2 or
Section 3.3 of the Strategic Alliance Agreement, Elite shall have no obligation to make a Remaining Contribution tied to the Company's achievement of a specific Performance Milestone unless and until the Company has achieved such Performance Milestone and Elite has been presented written and verifiable evidence of such achievement, and Elite's deferral of a Remaining Contribution for failure to timely or fully achieve a Performance Milestone shall not trigger the VGS Purchase Right.

ARTICLE V

DIVESTITURE EVENT

5.1. ELITE DIVESTITURE EVENT. If Elite or its Permitted Transferees are affected by a Divestiture Event, the Company (or if not exercised by the Company, which exercise shall be in the sole discretion of VGS, then VGS or its respective designee(s)), shall have the option to purchase all or any portion of the Shares held by the affected holder for a price equal to the then applicable fair market value of the Company, multiplied by a fraction (i) the numerator of which is equal to the number of Shares held by the affected holder, and (ii) the denominator of which is equal to the aggregate number of Shares held by all stockholders of the Company. The fair market value of the Company shall in the first instance be determined in good faith by negotiations between VGS and Elite. In the event that such parties cannot agree upon a fair market value within thirty (30) days of the Divestiture Event, then Elite and VGS shall each promptly appoint as an appraiser a nationally-recognized investment banking firm. Each appraiser shall, within thirty (30) days of appointment, separately investigate the value of the Company as of the proposed purchase date and shall submit a notice of an appraisal of that value to each interested party. If the appraised values rendered by the two initial appraisers chosen by Elite and VGS (the "EARLIER APPRAISALS"), vary by less than 10%, the average of the two appraisals shall be controlling as to the value of the Company for purposes of this Section 5.1. If the appraised values vary by more than 10%, the appraisers, within the ten (10) days of the submission of the Earlier Appraisals, shall appoint a third appraiser which shall be a nationally recognized investment banking firm unaffiliated with the two initial appraisers chosen by Elite and VGS. The third appraiser shall, within thirty (30) days of its appointment, appraise the value

of the Company as of the date of the Divestiture Event and submit a notice of his appraisal to each interested party. The value determined by the third appraiser shall be controlling as to the value of the Company for purposes of this Section 5.1 unless the value is greater than the two Earlier Appraisals, in which case the higher of the two Earlier Appraisals will control, and unless that value is lower than the two Earlier Appraisals, in which case the lower of the two Earlier Appraisals will control. If any party fails to appoint an appraiser or if one of the two initial appraisers fails after appointment to submit its appraisal within the required period, the appraisal submitted by the remaining appraiser shall be controlling. Elite and VGS shall each bear the cost of their respective appointed appraiser. The cost of the third appraisal shall be shared equally between Elite and VGS.

5.2. VGS DIVESTITURE EVENT. To the extent the Original VSG Shares are not subject to the Elite Purchase Right, or to the extent that the Elite Purchase Right was exercised for fewer than the maximum allowable Original VGS Shares, if VGS or any of its transferees is affected by a Divestiture Event, the Company (or if not exercised by the Company, which exercise shall be in the sole discretion of Elite, then Elite or its respective designee(s)) shall have the option to purchase all or any portion of the Shares held by such affected holder for a price equal to the then applicable fair market value of the Company, multiplied by a fraction (i) the numerator of which is equal to the number of Shares held by the affected holder, and (ii) the denominator of which is equal to the aggregate number of Shares held by all holders. The fair market value of the Company shall in the first instance be determined in good faith by negotiations amongst VGS and Elite. In the event that such parties cannot agree upon a fair market value within thirty (30) days of the Divestiture Event, then the appraisal procedure set forth in Section 5.1 shall apply.

5.3 PUT RIGHT. In the event that a purchase has been made under the purchase rights set forth in either Section 5.1 or 5.2 hereof, and as a result of such purchase, the party affected by the Divesture Event (together with its Permitted Transferees) (collectively, the "Affected Party"), after giving effect to the purchase, owns less than ten percent (10%) of the shares of the Company purchased on the Effective Date, such Affected Party shall have the right, but not the obligation, to require the party that effected the purchase as a result of the Divestiture Event to purchase from the Affected Party all remaining shares of the Company held by such Affected Party.

ARTICLE VI

SUBSCRIPTION RIGHT

6. SUBSCRIPTION RIGHT ON ISSUANCES BY THE COMPANY. (a) The Company hereby grants each Stockholder the right of first offer to purchase, PRO RATA, all or any part of New Securities that the Company may, from time to time, propose to sell or issue. Each Stockholder's pro rata share of any issuance of New Securities shall be determined by multiplying the number of shares of New Securities the Company proposes to issue by a fraction, the numerator of which is the number of shares of Class A Common Stock then owned by such Stockholder and the denominator of which is the aggregate number of shares of Class A Common Stock then owned by all holders of the Company's Class A Common Stock.

(b) REQUIRED NOTICES. In the event the Company proposes to undertake an issuance of New Securities, it shall give each Stockholder written notice of its intention, describing the type and amount of New Securities, the price and the general terms upon which the Company proposes to issue the same. Each Stockholder shall have sixty (60) days from the date of receipt of any such notice to agree to purchase up to its PRO RATA share of such New Securities for the price and upon the general terms specified in the Company's notice by giving written notice to the Company and stating therein the quantity of New Securities to be purchased. The closing of the purchase and sale of the New Securities, if any, the Stockholders elect to acquire pursuant to any exercise of the right of first offer granted under this Section 6 shall be at least thirty (30) days after the expiration of the sixty (60) day period described above.

(c) COMPANY'S RIGHT TO SELL. To the extent that the Stockholders fail to exercise the right of first refusal for all New Securities within said sixty (60) day period, the Company shall have ninety (90) days thereafter to sell or enter into an agreement (pursuant to which the sale of New Securities covered thereby shall be closed, if at all, within thirty (30) days from the date of said agreement) to sell the New Securities not elected to be purchased by the Stockholders at the price and upon general terms no more favorable to the purchasers of such securities than specified in the Company's notice. In the event the Company has not sold within said ninety (90) day period or entered into an agreement to sell New Securities within said ninety (90) day period (or sold and issued New Securities in accordance with the foregoing within thirty
(30) days from the date of said agreement), the Company shall not thereafter issue or sell any New Securities, without first offering such securities to the Stockholders in the manner provided above.

(d) NEW SECURITIES SOLD SUBJECT TO AGREEMENT. In the event of any sale of New Securities by the Company to persons not parties to this Agreement accomplished in accordance with the provisions of this Agreement, the Company shall make such sale subject to this Agreement, the purchaser shall receive and hold any and all Shares so purchased subject to the terms and provisions of this Agreement and subject to the obligations of a Stockholder hereunder, as applicable, and shall forthwith execute an Additional Signature Page in the form of EXHIBIT I, attached hereto.

(e) ASSIGNMENT. The right of first offer set forth in this Section 6 may be assigned by each Stockholder to any Person that acquires such Stockholder's Shares in a Transfer permitted by this Agreement.

ARTICLE VII

ADDITIONAL AGREEMENTS AND RESTRICTIONS

7. LEGENDS. (a) Each certificate evidencing Shares will bear legends substantially to the following effect:

"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER APPLICABLE FEDERAL OR STATE SECURITIES LAWS AND INSTEAD ARE BEING ISSUED PURSUANT TO EXEMPTIONS CONTAINED IN SAID LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES SHALL BE EFFECTIVE UNDER THE SECURITIES ACT OF 1933 (2) SUCH SECURITIES ARE TRANSFERRED PURSUANT TO RULE 144, OR ANY SUCCESSOR RULE, UNDER SUCH ACT OR (3) THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT NO VIOLATION OF SUCH ACT OR SIMILAR STATE ACTS WILL RESULT FROM SUCH TRANSFER.

THE SECURITIES EVIDENCED HEREBY ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND VOTING UNDER THAT CERTAIN STOCKHOLDERS' AGREEMENT, DATED AS OF DECEMBER 6, 2006 AS SUCH AGREEMENT MAY BE AMENDED FROM TIME TO TIME, BY AND AMONG THE ISSUER AND THE HOLDERS OF THE COMPANY'S SECURITIES SIGNATORIES THERETO. A COPY OF SUCH AGREEMENT IS ON FILE WITH THE ISSUER AND IS AVAILABLE UPON REQUEST."

(b) The Company agrees that any certificates, agreements or instruments evidencing any Shares which are issued after the date hereof to any Person who, is or, in conjunction with such issuance, becomes, a party to this Agreement, shall bear the legends set forth in Section 7(a).

(c) DIRECTORS AND OFFICERS INSURANCE. The Company shall cause to be maintained director's and officer's liability insurance covering the directors and officers of the Company on customary terms and conditions.

ARTICLE VIII

TERMINATION

8. The Agreement shall terminate on the earliest to occur of:

(a) the day on which any Shares become Publicly Traded;

(b) the consummation of a Transfer of all of the issued and outstanding capital stock of the Company; or

(c) the written consent of Stockholders holding not less than eighty percent (80%) of the aggregate number of shares of Class A Common Stock held by all Stockholders.

ARTICLE IX

MISCELLANEOUS

9.1. SPECIFIC PERFORMANCE; INJUNCTION; PAYMENT OF COSTS. (a) The parties agree that it is impossible to determine the monetary damages which would accrue to the Company or any Stockholder or its personal representative by reason of the failure of any other Stockholder or the Company to perform any of his or its obligations under this Agreement requiring the performance of an act other than the payment of money only, including, without limitation, any obligation under Article II, Article III, Article IV, Article V or Article VI hereof. The Company and each Stockholder shall be entitled to enforce their respective rights under this Agreement specifically and to exercise all other rights existing in his or its favor. Because the Shares cannot be readily purchased or sold in the open market, the parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement, and are not an adequate remedy with respect to any provisions of Article II, Article III, Article IV, Article V or Article VI hereof, and that they may be irreparably damaged in the event that this Agreement is not specifically enforced, and therefore, each party may, in its sole discretion, apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief (without posting a bond or other security) in order to enforce or prevent any violation of the provisions of this Agreement.

(b) In the event of a breach or threatened breach by a Stockholder of any of the provisions of this Agreement, the Company, and the remaining Stockholder(s) shall be entitled to an injunction restraining such Stockholder from any such breach. The availability of these remedies shall not prohibit the Company or any other Stockholder from pursuing any other remedies available at law or in equity for such breach or threatened breach, including the recovery of damages from the breaching Stockholder.

9.2. AMENDMENTS AND WAIVERS. This Agreement may only be modified, amended or restated with the written consent of the Company and Stockholders holding at least eighty percent (80%) of the issued and outstanding shares of Class A Common Stock, as determined as of the date of such proposed amendment; PROVIDED, HOWEVER, that the Board may, in its sole discretion, modify or amend this Agreement if such modifications or amendments are:

(a) of an inconsequential nature, as reasonably determined by the Board, (b) contemplated by this Agreement including, without limitation, adding the signature pages of new Stockholders and removing the signature pages of former Stockholders, or (c) for the purposes of reflecting changes to the information set forth on any exhibits hereto. Any such modification, amendment or restatement of all or any part of this Agreement shall be adhered to and have the same effect from and after its effective date, and be binding upon all parties to this Agreement, as if the same had originally been embodied in, and formed a part of, this Agreement. The Board shall give written notice to all Stockholders promptly after any amendment made unilaterally by the Board has become effective. Any amendment to this Agreement must be in writing. No provision of this Agreement may be waived except with the prior written consent of the party by whom such waiver is intended to be given or with respect to whom such waiver is intended to be enforceable.

9.3. SURVIVAL. Notwithstanding anything to the contrary in this Agreement, regardless of the manner in which this Agreement is terminated, the terms of Sections 2.3, Article VII and Article IX shall survive until, by their respective terms, they are no longer operative.

9.4. 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.

9.5. 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.

9.6. 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 9.6 shall be void.

9.7. SEVERABILITY. 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.

9.8. ENTIRE AGREEMENT. This Agreement, together with the other Strategic Alliance Documents, 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.

9.9. NOTICES. All notices, requests and other communications to any party hereunder shall be in writing and sufficient if delivered personally or sent by telecopy (with confirmation of receipt) or by registered or certified mail, postage prepaid, return receipt requested, to the appropriate addresses listed below or, if applicable, on the signature page of the relevant Stockholder to this Agreement, attached hereto:

If to the Company:          Novel Laboratories, Inc.
                            c/o Elite Pharmaceuticals, Inc.
                            165 Ludlow Avenue
                            Northvale, New Jersey 07647
                            Attention: Chief Executive Officer
                            Telephone: (201) 750-2646
                            Facsimile: (201) 750-2755

or to such other address or telecopy number as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith. Each such notice, request or communication shall be effective when received or, if given by mail, when delivered at the address specified in this Section 9.9 or on the fifth business day following the date on which such communication is posted, whichever occurs first.

9.10. ENFORCEABILITY. It is the desire and intent of the parties hereto that the provisions of this Agreement shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated to be invalid or unenforceable, such provision shall be deemed amended to delete therefrom the portion thus adjudicated to be invalid or unenforceable, such deletion to apply only with respect to the operation of such provision in the particular jurisdiction in which such adjudication is made.

9.11. 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.

9.12. 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.

9.13. GOVERNING LAW. 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).

9.14. CONSENT TO JURISDICTION. 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.

9.15. 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 9.15.

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

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IN WITNESS WHEREOF, the parties hereto have executed, or caused their duly authorized representatives to execute, this Stockholders' Agreement as of the date first above written.

NOVEL LABORATORIES, INC.

By: /s/ Veerappan Subramanian
    -------------------------------
    Name:  Veerappan Subramanian
    Title: Chairman and Chief
           Executive Officer

STOCKHOLDER(S):

ELITE PHARMACEUTICALS, INC.:

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

c/o Elite Pharmaceuticals, Inc. 165 Ludlow Avenue Northvale, New Jersey 07647 Attention: Bernard Berk Telephone: (201) 750-2646 Facsimile: (201) 750-2755

VGS Pharma, LLC

By: /s/ Anu R. Subramanian
    -------------------------------
Name:  Anu R. Subramanian
Title: Manager

ADDRESS:

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

[Stockholders' Agreement Signature Page]

Dated: ________________________          INDIVIDUAL(S):

                                         _______________________________________
                                         Name:

                                         _______________________________________
                                         Name:

                                         NON-INDIVIDUAL:

                                         _______________________________________
                                         Name of Entity

                                         By:____________________________________
                                            Name:
                                            Title:

                                         ADDRESS:
                                         _______________________________________
                                         _______________________________________
                                         _______________________________________
                                         Attention:_____________________________
                                         Telecopy:______________________________

[Additional Signature Page and Agreement To Be Bound]