[LETTERHEAD OF GOLDMAN & GITTELMAN, P.C.]
January 26, 1998
Dr. Atul Mehta, CEO
Elite Pharmaceuticals, Inc. and Subsidiary
230 West Passaic Street
Maywood, NJ 07607
RE: PROPOSAL FOR SERVICES
Dear Dr. Mehta:
In light of our recent discussions, you have expressed an interest in retaining
our firm as internal accountants and financial and management consultants. It is
our mutual understanding that our services will be an integral part of Elite
Pharmaceuticals, Inc. and Subsidiaries going forward and after its registration
of shares with the Securities and Exchange Commission.
Should Elite require the audit services of our firm in the future, after the
necessary waiting period required by SEC regulations and the SECPS Practice
Section of the AICPA, we will relinquish all services that impair our
independence and will refer all duties to Elite's designated financial officer.
If the foregoing proposal is acceptable, we would relinquish our position as
independent auditors for Elite and we would no longer be independent with
respect to Elite under the Code of Ethics, as promulgated by the American
Institute of Certified Public Accountants, and the Securities and Exchange
Practice Section.
The following services will be rendered by Goldman & Gittelman, P.C. on behalf
of Elite (this list is not intended to be all inclusive):
o Monthly compilation of Elite Labs and Elite Pharmaceuticals.
o Installation of computer accounting system in conjunction with
outside computer hardware and software vendors.
o Training and coordination of bookkeeping and/or controller when
hired.
Dr. Atul Mehta, CEO
Elite Pharmaceuticals, Inc. and Subsidiary
Page 2
January 26,1998
o Financial consulting including:
1. Cash investment management.
2. Review and negotiations of all lease agreements.
3. Negotiation and maintenance of bank financing and credit
facilities.
o Recommendation of independent auditors, subject to approval by the
Company's Board of Directors and its audit committee and SEC Legal
Counsel, and preparation of all schedules and information necessary
during the audit.
o Coordination of audit fieldwork and review of audited financial
statements for final approval by the Board of Directors and its
audit committee.
o Preparation of 10K and 10Q reports to be filed with the Securities
and Exchange Commission, in coordination with the Company's outside
auditors and SEC Legal Counsel.
o Preparation of consolidated corporation tax returns and tax planning
issues.
o Attendance at Board of Directors meetings as required.
o Any other services requested by the Company.
Rates charged for the above services will be discounted by 25% of our firm's
standard hourly rates. My current rate at January 1, 1998 will be $147 per hour.
The rate charged to Elite will be $110 per hour. The average rate for my staff,
after discount, will be $75 per hour. We agreed to maintain this rate through
December 31, 1998 and will discuss any rate increases at that time.
Initially, we expect to budget 24 hours per month for the year ended December
31, 1998, or 288 hours annually. However, all hours will be billed as incurred.
Dr. Atul Mehta, CEO
Elite Pharmaceuticals, Inc. and Subsidiary
Page 3
January 26, 1998
Based on our budget, the total annual fee is projected at $28,800 plus
disbursements. We are proposing a monthly retainer fee of $2,400 to be set off
against actual hours incurred. On a quarterly basis (April 1, July 1, October 1
and January 1) we will present you with a reconciliation of actual hours
incurred, including a detailed analysis of these services, as reduced by the
monthly retainer fee. Should the actual hours incurred exceed the retainer
payments, Elite will make payment on this excess, based on the hourly rates
specified above, within 30 days of invoice presentation.
On a quarterly basis, should the retainer payments exceed the actual hours
incurred, Elite will receive a credit against the subsequent monthly retainer
payments until the overpayment is fully offset. All disbursements and
out-of-pocket costs will be billed monthly along with the retainer fee.
This proposal has already been reviewed by Elite's SEC legal counsel and has
been approved by the Board of Directors.
We believe the above arrangement will be beneficial to all parties and will
provide Elite with the level of service it will require over the coming years.
Goldman & Gittelman, P.C. has enjoyed a fine relationship with Elite since its
inception and we look forward to continuing our relationship well into the next
millennium.
Very truly yours,
GOLDMAN & GITTELMAN, P.C.
/s/ Mark I. Gittelman
Mark I. Gittelman, CPA
MIG/vr
The above constitutes our contract together which can be terminated by either
party subject to 30 days written notice. I have read it and understand its terms
and provisions.
Accepted by: /s/ Atul M. Mehta January 29, 1998
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Dr. Atul Mehta, President and CEO Date
Elite Pharmaceuticals, Inc. and Subsidiary