EXHIBIT 10.6

TERMS OF EMPLOYMENT AGREEMENT WITH KEVIN SMITH
EFFECTIVE JANUARY 4, 2002

Your salary for this position (Vice President of Sales and Marketing) will be paid at the rate of $2,980.77 per pay period (which is equivalent to an annual base salary of $155,000 per year), in accordance with the weekly payment schedule now being used by the Company. At the end of each calendar year, the Board of Directors, or its designee, may, in their sole discretion, award you a bonus based upon your individual performance and the Company's performance during the immediately preceding calendar year.

You will be eligible upon the inception of your employment to participate in the employee benefit plans that the Company offers to other full-time employees, including its health and dental insurance plans, subject to the same cost-sharing and co-payment provisions, where applicable. Descriptions of the benefit plans currently being offered are available in our Human Resources Department. These plans may, from time to time, be amended or terminated by the Company in its sole discretion with or without prior notice. Lannett also will provide you during your employment with a laptop computer, and a $750 net monthly allowance for a car. Lannett currently has an Incentive Stock Option Plan in place for its employees. At this time, you will be offered stock options representing 10,000 shares of Lannett's common stock (the only class of stock). The options will be granted to you on the date of hire. The terms of the option grant will include a tiered vesting schedule of 3 years. One third of the options will be vested after one year of employment, another third after two years, and the final third after three years. The exercise price of the grant will be the Fair Market Value of the stock at the time of the grant. The process for granting additional options under the Plan is currently under review, and we anticipate that this review will be completed within the next several months. The revised Plan feature will allow for additional option shares to be granted to all employees annually if certain operational and financial gains are made. At such time as this review is completed, you will be eligible to participate in it through the exercise of those options that the Board of Directors of Lannett, in its sole discretion, grants to you. Your participation, in terms of the number of shares granted, will be commensurate with what other department directors and executives receive. Your vesting and exercise rights as to such options, including your rights upon the termination of your employment, will be governed by the terms of the Lannett stock option plan then in effect or as subsequently amended from time to time.

Should Lannett terminate your employment other than "for cause" (as defined below), you will be eligible for severance compensation in an amount to be determined by Lannett, but not less than six (6) months of your base salary at the time of termination, which will be no less than six (6) months of your original base salary of $155,000. Lannett will cause any successor or assignee to honor this severance provision. For purposes hereof, "for cause" is defined to include engaging in business practices which create a conflict of interest, fraud, malfeasance, criminal behavior, and willful conduct in violation of Lannett's Non-Harassment Policy. If the Company is sold during your employment, and the organization that takes control of the Board of Directors terminates your employment, you will be eligible for severance compensation in an amount equal to one year of your current base salary at the time of termination, which will be no less than your original base salary of $155,000. In this scenario, you will also be eligible to continue your participation in the Company's medical benefit plans, at no cost to you, for up to one year. Additionally, all option grants issued to you, whether they are vested or unvested, will become immediately vested for your benefit. If the Company is sold during your employment, and the organization that takes control of the Board of Directors desires to continue your employment, regardless of whether you remain with the buying organization or not, you will be paid an amount equal to six months of your current base salary at the time of the sale transaction for the Company, which will be no less than six (6) months of your original base salary of $155,000.

It is understood that you are not being offered employment for a definite period of time and that either you or the Company may terminate the employment relationship at any time and for any reason without prior notice. Nothing in the Company's offer to you of compensation (including salary and bonus), stock options or benefits should be interpreted as creating anything other than an at-will employment relationship. In addition, the Company reserves the right to periodically review the salary, bonus and benefits it offers to you and to adjust them from time to time in its sole discretion.

EXHIBIT 10.7

TERMS OF EMPLOYMENT AGREEMENT WITH ARTHUR BEDROSIAN

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

RECITALS

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

IT IS AGREED as follows:

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

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

3. Duties. Executive shall devote his full-time efforts to the proper and faithful performance of all duties customarily discharged by a president for a company doing the type of business engaged in by Company, as well as having responsibility for the day to day management of the Company, and any additional duties assigned to him from time to time by the Chief Executive Officer of Company and/or the Board of Directors of Company, consistent with the provisions of this Section 3. Executive shall report directly to the Chief Executive Officer of Company. Executive agrees to use his best efforts and comply with all fiduciary and professional standards in the performance of his duties hereunder. To the extent that any additional duties assigned to the Executive include the provision of services to any subsidiary or affiliate of Company, such services shall be provided without additional compensation and benefits beyond those set forth in this Agreement, and any compensation and benefits provided to Executive for such services shall be a credit with regard to amounts due from Company under this Agreement. Company, to the best of its knowledge, and Executive acknowledge that prior to the effective date of this Agreement, Executive has fulfilled his duties and responsibilities as set forth in this Section 3. Executive represents and warrants to Company that, at all times during the term of this Agreement, he will continue to fulfill his duty of loyalty to Company and will act in the best interest of Company's shareholders.

(a) The Executive has been engaged in the pharmaceutical business for in excess of thirty-five (35) years and has disclosed to the Company his ownership interests in Pharmeral, Inc.* and Pharmaceutical Ventures, Ltd., as well as his interest as a creditor of Liquipharm, Inc. His involvement with respect to these companies has been disclosed, including but not limited to the sale or licensing of various products, which transactions have in the past included the Company. The Executive further agrees to disclose any significant change in his association with said entities or in the nature of their business operations if there comes a time when underlying circumstances which have been represented to the Company are materially altered. The Executive maintains a personal investment portfolio which includes various pharmaceutical holdings. In the event

Executive's holdings in any one individual company exceeds one percent (1%) of his net worth, said holding will be disclosed in writing to the Company.

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

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

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

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

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

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

- Company agrees that it will cooperate with Executive in the establishment of a deferred compensation plan with terms that are mutually agreeable to both parties to defer until a future date payment of such portion of the Executive's annual compensation as he may elect to defer.

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

8. Termination of Employment.

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

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

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

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

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

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

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

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

iv. Failure to perform Executive's duties or failure to follow any written policy or directive of the Chief Executive Officer and/or the Board of Directors of Company consistent with such duties which is not remedied by Executive after receipt by him of a written notice from Company's Chief Executive Officer and/or the Board of Directors of Company specifying the required action and a reasonable time period within which the action must be taken, which period shall not be less than three (3) business days;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

19. Miscellaneous.

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

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

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

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

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

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

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

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

Lannett Company, Inc.

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

EXHIBIT 10.8

TERMS OF EMPLOYMENT AGREEMENT WITH LARRY DALESANDRO
EFFECTIVE MAY 3, 2002

Should Lannett terminate your employment other than "for cause" (as defined below), you will be eligible for severance compensation in an amount to be determined by Lannett, but not less than six (6) months of your base salary at the time of termination. You will also be eligible to continue your participation in the Company's medical benefit plans for six (6) months, at no cost to you. For purposes hereof, "for cause" is defined to include engaging in unethical business practices or conduct which creates a conflict of interest, fraud, malfeasance, criminal behavior, and willful conduct in violation of Lannett's Non-Harassment Policy or Corporate Handbook. If the Company is sold or a majority of the Company's ANDAs (Abbreviated New Drug Applications) are sold during your employment, and the Company or new organization terminates your employment, you will be eligible for severance compensation in an amount equal to one year of your current base salary at the time of termination. In this scenario, you will also be eligible to continue your participation in the Company's medical benefit plans, at no cost to you, for up to one year. Additionally, all option grants issued to you, whether they are vested or unvested, will become immediately vested for your benefit. If the Company is sold during your employment, and the organization that takes control of the Board of Directors desires to continue your employment with the same assignment and place of business, regardless of whether you remain with the buying organization or not, you will be paid an amount equal to six months of your then current base salary at the time of the sale transaction for the Company.

It is understood that these benefit terms are not being offered for a definite period of time and that either you or the Company may terminate the employment relationship at any time and for any reason without prior notice. Nothing in this letter to you of compensation, stock options or benefits should be interpreted as creating anything other than an at-will employment relationship. In addition, the Company reserves the right to periodically review the salary, bonus and benefits it offers to you and to adjust them from time to time in its sole discretion but in no case will the salary be adjusted below your current base salary.

EXHIBIT 10.9

AGREEMENT BETWEEN LANNETT COMPANY, INC. AND SIEGFRIED (USA), INC.

DATED: October 31, 2002

Siegfried (USA), INC. of 33 Industrial Park Road, Pennsville, NJ 08070 ("Seller") will sell and LANNETT COMPANY INC. of Philadelphia, Pennsylvania 19136 ("Buyer") will buy the Product on the terms and conditions contained herein. The terms of this Agreement and any signed addenda attached to this Agreement constitute the entire Agreement between the Seller and Buyer and supersede any existing sales contract relating to the Product. This Agreement must be signed and returned by Buyer within 30 days from the date first specified above and will not bind Seller unless signed by an authorized representative of Seller. The Agreement does not bind the Buyer unless it receives the Agreement signed by an authorized representative of the Seller on or before the date specified above. Subject to the terms and conditions of this Agreement, Seller shall sell to Buyer, and Buyer shall purchase exclusively from Seller, the Product.

PRODUCT:                Primidone USP

CONTRACT TERM:          The initial term of this Agreement shall be for a period
                        of Twelve (12) months from the date first specified
                        above.

QUANTITY:               100 Percent (100%) of Buyer's yearly requirements for
                        Product.

FOB (INCOTERMS 2000):   Pennsville, New Jersey

BASE PRICE:             [CONFIDENTIAL TREATMENT - INFORMATION FILED SEPARATELY
                        WITH THE COMMISSION] US Dollars per Kilogram
                        ($[CONFIDENTIAL TREATMENT - INFORMATION FILED SEPARATELY
                        WITH THE COMMISSION] USD per kg) for all quantities
                        provided total requirements exceed [CONFIDENTIAL
                        TREATMENT - INFORMATION FILED SEPARATELY WITH THE
                        COMMISSION] Kilogram ([CONFIDENTIAL TREATMENT -
                        INFORMATION FILED SEPARATELY WITH THE COMMISSION] kg)
                        during a period of Twelve (12) months.

                        [CONFIDENTIAL TREATMENT - INFORMATION FILED SEPARATELY
                        WITH THE COMMISSION] US Dollars per Kilogram
                        ($[CONFIDENTIAL TREATMENT - INFORMATION FILED SEPARATELY
                        WITH THE COMMISSION] USD per kg) for all quantities if
                        total purchases do not exceed [CONFIDENTIAL TREATMENT -
                        INFORMATION FILED SEPARATELY WITH THE COMMISSION]
                        Kilogram ([CONFIDENTIAL TREATMENT - INFORMATION FILED
                        SEPARATELY WITH THE COMMISSION] kg) during a period of
                        Twelve (12) months.

SHIP TO:                Lannett Company, Inc.
                        9000 State Road
                        Philadelphia, PA 19136

STANDARD TERMS AND CONDITIONS OF SALE

1. WARRANTY. Seller warrants that the Product will conform in all material respects to the attached SPECIFICATIONS (see Exhibit A).

2. DISCLAIMER OF FURTHER WARRANTIES. EXCEPT AS SET FORTH ABOVE, SELLER MAKES NO WARRANTY, REPRESENTATION OR CONDITION OFANY KIND, EXPRESS OR IMPLIED (INCLUDING NO WARRANTY OF MERCHANTABILITY OR FITNESS OF THE PRODUCT FOR ANY USE CONTEMPLATED BY BUYER) CONCERNING THE PRODUCT OR CONTAINERS IN, WHICH THE PRODUCT IS SHIPPED.

3. LIMITATION OF REMEDIES AND LIABILITY. IN NO EVENTWILL BUYER'S DAMAGES OR OTHER RECOVERY FROM SELLER IN ANY CAUSE OF ACTION, WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER THEORY, EXCEED THE PRICE PAID BY BUYER FOR THE SPECIFIC PRODUCT AS TO WHICH THE CLAIM IS MADE. SELLER SHALL NOT BE LIABLE, AND BUYER WAIVES ALL CLAIMS AGAINST SELLER, FOR PROSPECTIVE PROFITS OR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES BASED UPON NEGLIGENCE, BREACH OF WARRANTY, STRICT LIABILITY IN TORT OR ANY OTHER CAUSE OF ACTION. Seller's total, complete and exclusive liability hereunder shall be limited to the remedies contained in this Section 3. Seller will not be liable to Buyer for any contribution to or indemnity against all or any part of any loss, damage or injury to persons or property resulting from Buyer's handling, storage, transportation, resale or use of the Goods in manufacturing processes, or in combination with other substances, or otherwise. All technical advice, recommendations and services provided by Seller are intended for use by persons having skill, at their own risk, and Seller assumes no responsibility, and Buyer hereby waives all claims against Seller, for results obtained or damages incurred from the use of Seller's advice, recommendations or services. Buyer will indemnify and hold Seller harmless from and against all damages, costs and expenses resulting from special marking of the Product or containers in accordance with Buyer's requests, Buyer's purchase, use, marketing, manufacturing or sale of the Product or Buyer's failure to recall finished product.

In the event Buyer rejects a lot pursuant to Section 9, Buyer may return to Seller, at Seller's shipping expense and risk, any Product sold by Seller to Buyer which does not conform to the Specifications, for credit or replacement, at the election of Seller within sixty (60) days of receipt. Credit for properly returned items will be given when Seller receives such Product. No such return may be made unless Buyer first receives written authorization for the return from Seller and such return is made in accordance with such authorization. Shipping costs for shipment of replacement Product by Seller back to Buyer via ground transportation shall be paid by Seller. Seller shall have no obligation to grant credit for or replace any Product sold hereunder which has been subject to misuse, mishandling, neglect, accident, abuse or has been subjected to alteration or modifications unauthorized by the Seller.

4. FORCE MAJEURE. Failure of any party to perform its obligations under this Agreement (except the obligation to make payments when properly due) shall not subject such party to any liability or place them in breach of any term or condition of this Agreement to the other party if such failure is due to any cause beyond the reasonable control of such non-performing party ("force majeure"), unless conclusive evidence to the contrary is provided.

Causes of non-performance constituting force majeure shall include, without limitation, acts of God, fire, explosion, flood, drought, war, riot, sabotage, embargo, strikes or other labor trouble, failure in whole or in part of suppliers to deliver on schedule materials, equipment or machinery, interruption of or delay in transportation or energy, a national health emergency or compliance with any order or regulation of any government entity acting with color of right. The party affected shall within 5 (five) business days notify the other party of the condition constituting force majeure as defined herein and shall exert reasonable commercially efforts to eliminate, cure and overcome any such causes and to resume performance of its obligations with all possible speed; provided that nothing herein shall obligate a party to settle on terms unsatisfactory to such party any strike, lockout or other labor difficulty, any investigation or other proceeding by any public authority or any litigation by any third party. If a condition constituting force majeure as defined herein exists for more than thirty (30) consecutive days, the parties shall meet to negotiate a mutually satisfactory resolution to the problem, if practicable.

5. FORECASTS.

a. On or prior to the 15th business day of the month preceding each quarter of this term (i.e. December 15, March 15, June 15, and September 15), Buyer shall provide Seller with a rolling eighteen month forecast of its estimated requirements for the Product. Each quarterly Forecast will provide the amount of Product required as well as the desired delivery dates. The forecasts provided pursuant to this Section 5 are hereafter referred to individually as a "Forecast" and collectively as the "Forecasts." Buyer may amend its Forecasts, provided that such changes to the Forecasts shall not affect Product delivery dates and quantities that are within ninety (90) days after the date of such change. The binding forecast, the current calendar quarter, automatically becomes a purchase order for the quantity and delivery dates requested upon acceptance by Seller pursuant to Section 5(b).

b. Exhibit B contains the Forecast for the first Eighteen (18) months of this Agreement and the Seller warrants that it has the production capacity to manufacture the Product taking into account its other commitments and obligations in the quantities and delivery dates set out in the Forecast.

c. Within ten (10) business days of receiving a Forecast the Seller will notify the Buyer whether or not it has the production capacity to manufacture the quantities of the Product as forecasted and to deliver the Product on the requested delivery date. If the seller confirms the quantity and delivery dates, the quantity becomes the Deliverable Quantity and the delivery dates become the Confirmed Delivery Dates. If the Seller cannot meet the quantity and delivery date requirements, the Seller and Buyer shall agree on the quantities and delivery dates that are acceptable. Buyer may obtain, at its own expense, any quantity that the Seller cannot supply on the requested delivery date(s), but only for the period of time that the Seller is unable to supply the quantity requested. Buyer may deduct the amount of the Product obtained by an alternate source from the Quantity specified in this Agreement, without affecting the Price.

d. Seller shall be under no obligation to supply Product to Buyer in excess of the Quantity specified in this Agreement, unless otherwise agreed upon in accordance with this Section 5.

e. In the event the Seller is unable to supply Buyer with all or part of the Deliverable Quantity within fourteen days following the Confirmed Delivery Date or unable to supply the agreed upon quantities, by force majeure under Section 15, or otherwise, Seller will reconfirm the Deliverable Quantity and New Delivery Date. If acceptable to the Buyer, the new Quantity becomes the Deliverable Quantity and the new Date becomes the Confirmed Delivery date. If Seller has to change the Deliverable Quantity and Confirmed Delivery and such new dates are not acceptable to Buyer on more than three occasions in a calendar year, the Buyer may terminate this Agreement in accordance Section 15, Termination for Cause provision. If the new Deliverable Quantity and Confirmed Delivery Dates are not acceptable, the Buyer may purchase at its own expense from another source such portion of Deliverable Quantity, which Seller cannot supply, but only for the period of time that Seller is unable to supply the Deliverable Quantity. Buyer may deduct any quantity not shipped to Seller because of any such shortage of materials from the Quantity specified in this Agreement, without affecting the Price.

6. SHORTAGES. If for any reason a shortage occurs in Seller's supply of the materials necessary to produce the Product, Seller shall have the right to satisfy its own requirements, and the requirements of its or its parent's divisions, subsidiaries and affiliates for such materials, whether or not any of such materials are allocated to the production of Product. Seller will make best efforts to provide Buyer with the maximum allocation of product should the situation exist because of any such shortage of materials.

7. HARDSHIP. If, during the term of the Agreement, performance of the Agreement should lead to unreasonable hardship for one or other party, taking the interests of both parties into account, both parties shall endeavor to agree amicably to amend the Agreement in the light of the change in circumstances. This includes but is not limited to: extra production costs exceeding ten percent (10%) incurred by the Seller and not in their immediate control; a decreased demand exceeding ten percent (10%) of the minimum requirements for Buyer's Products; any competitive disadvantage for Seller or Buyer which may arise under this Agreement.

8. PAYMENT TERMS. Seller shall invoice Buyer upon shipment. Payment is due thirty (30) days from date of invoice. The date of the invoice shall be no sooner than the date of shipment. Buyer shall have the right in the case of a shipment of Product which the Buyer has determined in good faith does not conform to the Specifications to withhold payment until such time as the Product's conformity to the Specifications is determined in accordance with Section 11 hereof.

9. CLAIMS. Seller will provide a Certificate of Analysis (C of A) for each lot of Product shipped to Buyer. Buyer shall analyze each lot of Product within Thirty (30) business days of receipt. If Product fails to meet SPECIFICATIONS based on such tests, Buyer shall have the option of accepting or rejecting such lot. If Buyer accepts such lot, Seller shall have no further liability. If Buyer rejects such lot, Seller's liability, if any, shall be as set forth in Section 1 and 2 above. Acceptance or Rejection shall be made within forty-five (45) business days of receipt and shall be sent in writing to Seller. Failure to test or failure to reject within the time frames set forth above shall constitute an acceptance and Seller shall have no further liability with respect thereto.

10. NOTICES. All notices under this Contract must be in writing and mailed or delivered to the attention of the General Plant Manager and the appropriate address set forth in the beginning of this Contract.

11. CHANGE IN PROCESS. Seller shall notify Buyer prior to making any significant change in process reaction conditions for manufacture of Product. Following such a change, Seller will submit samples from finished lots to Buyer for their evaluation and approval of process change.

12. TERMINATION FOR CAUSE. In the event one party is in material default of an obligation under this Contract (the Defaulting Party) the other party (the Non-defaulting Party) may terminate this agreement provided that (i) the Non-Defaulting Party has received notice in writing specifying the nature of the default (the Default Notice); and (ii) the Defaulting Party has not rectified the default within thirty (30) days after receipt from the Non-Defaulting Party. In the event of such termination, Buyer shall remain obligated to purchase and pay for and Seller shall be obligated to sell, all Deliverable Qualities. The Contract may also be terminated by either party if the other shall at any time (i) institute or have instituted against it any proceeding in bankruptcy or reorganization; (ii) enter into any composition or other arrangement with its creditors; or (iii) enter into liquidation.

13. MISCELLANEOUS. No modification, waiver, or discharge of this Contract shall bind either party unless signed by its authorized representative. If either party assigns this Contract (other than to an affiliate) by operation of law or otherwise, without the consent of the other party, the assignment shall be null and void. New Jersey law will govern the validity, performance, construction and effect of this Contract. Seller may assign this contract without consent to a purchaser of all or substantially all of its assets or business.

14. SEVERABILITY. Each and every sentence, and each and every paragraph and provision of this Agreement shall be severable, and in the event any one or more of them is/are declared invalid or unenforceable, the others shall survive.

15. RESOLUTION OF DISPUTE; CONTROLLING LAW. Any dispute arising out of or relating to this Agreement shall first be submitted to mediation in accordance with the CPR Mediation Procedure of the CPR Institute. Unless otherwise agreed, the parties will select a mediator from the CPR Panels of Distinguished Neutrals. Any such dispute arising out of or relating to this Agreement which has not been resolved by non-binding procedure as provided hereunder within thirty (30) days of the appointment of a mediator, shall be settled by arbitration; provided, however, that if a mediator is not selected within ten (10) days of submission of the dispute for mediation, or if either party will not participate in a non-binding procedure, the other party may initiate arbitration before expiration of the thirty (30) day period. The Federal Arbitration Act, 9 U.S.C. Sections 1-16, shall govern the arbitration and any court having jurisdiction thereof may enter judgment upon the award rendered by the arbitrator. The place of arbitration shall be in the State of New Jersey. The arbitrator shall make his determination within thirty (30) days after the parties submit briefings with respect thereto. The award rendered by the arbitrator shall be in writing.

16. HEADINGS. Headings used in this Agreement are for reference purposes only.

WHEREOF, the parties have executed this Contract as of the day and year first above written.

LANNETT COMPANY, INC.

By: /s/ Larry Dalesandro
    -----------------------------
Name: Larry Dalesandro

Title: Chief Operating Officer

Date:   October 28, 2002
SIEGFRIED (USA), INC.

By: /s/ Dennis P. Bauer
    -----------------------------
Name: Dennis P. Bauer

Title: VP Business Areas USA
Date: October 28, 2002