EXECUTION COPY

          FINANCIAL ADVISORY AGREEMENT (this  "AGREEMENT"),  dated as of
          July 1,  2006 (the  "EFFECTIVE  DATE")  by and  between  Elite
          Pharmaceuticals,  Inc. (the "COMPANY") and Indigo Ventures LLC
          (the "ADVISOR").
          ---------------------------------------------------------------

         Whereas,  the Company has requested  that the Advisor  provide  certain
consulting  services  to the  Company  and the  Advisor  agrees to provide  such
services for the consideration set forth below.

         In  consideration  of the mutual  covenants  contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

      1.  ENGAGEMENT  OF ADVISOR.  The Company  hereby  engages the Advisor on a
non-exclusive  basis  for the term of this  Agreement,  and the  Advisor  hereby
agrees to advise,  consult  with,  and assist the Company in various  matters as
requested  (and only to the extent  requested) by the Company which may include,
without  limitation  (i) a review  of the  Company's  business,  operations  and
financial  condition,  including  advising on  capitalization  structures;  (ii)
advice  relating  to general  capital  raising  matters;  (iii)  recommendations
relating to  specific  business  operations,  strategic  transactions  and joint
ventures;  (v)  advice  regarding  future  financings  involving  debt or equity
securities  of the Company or any affiliate of the Company;  and (v)  assistance
with  interaction  between the  Company  and its  current  and future  investors
(collectively,  the "CONSULTING SERVICES"). The Advisor agrees that any requests
for  information  from the Company  during the term of this  Agreement  shall be
directed  solely to the chief  executive  officer of the  Company and not to any
other  employee  or  officer  of the  Company.  For  purposes  of Section 6, the
immediately  preceding  sentence  shall  be  deemed  a  material  term  of  this
Agreement.

      2. COMPENSATION; EXPENSES. (a) As compensation for the Consulting Services
to be performed by the Advisor  during the term of this  Agreement,  the Company
shall  pay to the  Advisor  (i) a  one-time  cash  signing  bonus of Forty  Five
Thousand Dollars (US$45,000) within five (5) business days of the Effective Date
and (ii) a cash fee of Fifteen  Thousand  Dollars  (US$15,000) per full calendar
month (the  "CONSULTING  FEE"),  payable in arrears,  during each full  calendar
month during the term of this Agreement.

         (b)  In  addition  to the  Consulting  Fee,  the  Company  will  pay or
reimburse  the  Advisor  for all  reasonable  out-of-pocket  costs and  expenses
directly  incurred  by the  Advisor in  performing  its  obligations  under this
Agreement, which costs and expenses shall include, but not be limited to, travel
expenses  incurred  in  performing  the  Consulting  Services  requested  by the
Company, including due diligence, costs of supplies, copying and mailing and all
other expenses reasonably incurred by the Advisor. In seeking  reimbursement for
expenses,  the  Advisor  shall  provide to the  Company a written  statement  or
statements  detailing  expenses  for which  reimbursement  is sought  and,  upon
request by the Company, shall provide copies of invoices and other documentation
supporting such expenses.  Reimbursable expenses shall be payable by the Company
within  thirty  (30) days of receipt by the  Company.  Notwithstanding  anything
contained  herein,  the maximum expense  reimbursement by the Company under this
Agreement  shall be Two Hundred  Fifty  Dollars  (US$250)  per  calendar  month,
without the prior written consent of the Company.

      3. ADVISOR  WARRANT.  On the Effective  Date, the Advisor shall purchase a
common stock  purchase  warrant in  substantially  the form  attached  hereto as
EXHIBIT A (the  "ADVISOR  WARRANT")  to acquire  up to 600,000  shares of common
stock,  par value $0.01 per share,  of the Company (the  "COMMON  STOCK") for an
aggregate purchase price of One Hundred Fifty Thousand Dollars ($150,000).  Such
purchase price may be paid by Advisor, at its option,  through the issuance of a
promissory  note in the form  attached  hereto as  EXHIBIT B (the  "NOTE").  The
Advisor  Warrant (i) shall vest as follows:  50,000  Warrant  Shares  shall

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vest  quarterly  beginning on the three (3) month  anniversary  of the Effective
Date, (ii) shall expire on the fifth  anniversary of the Effective  Date,  (iii)
shall terminate,  to the extent unvested,  as of the date of termination of this
Agreement, (iv) shall fully vest upon a Change of Control (as defined below) and
(v) shall have an exercise  price of US$3.00 per share of the Common Stock.  The
shares of Common Stock  issuable upon  exercise of the Advisor  Warrant shall be
subject to an agreement  whereby (i) the holders of such shares shall provide an
irrevocable  proxy in favor of the then-current  chief executive  officer of the
Company to vote such shares in any vote put to the  shareholders  of the Company
and (ii) transfer of such shares shall be subject to the prior  written  consent
of the Company;  provided,  that the Company's  consent shall not be required in
the event that the Warrant Shares are registered, or the Warrant Shares are sold
by Advisor under Rule 144. The term "CHANGE OF CONTROL"  shall mean the earliest
to occur of the following events: (i) securities of the Company representing 50%
or more of the combined  voting power of the Company's then  outstanding  voting
securities  are acquired by a person or entity,  or group of related  persons or
entities  that  were not  shareholders  as of the  Effective  Date,  in a single
transaction,  (ii) a merger or consolidation is consummated in which the Company
is a constituent corporation,  which results in less than 50% of the outstanding
voting  securities of the surviving or resulting  entity being owned by the then
existing  stockholders  of the  Company or (iii) the sale,  transfer,  exclusive
license or other  disposition by the Company of substantially  all of its assets
to a person or an entity which is not a  wholly-owned  subsidiary of the Company
and not a shareholder of the Company as of the Effective Date.

      4. BUSINESS  PRACTICE.  The Company  recognizes that the Advisor is in the
business  of  advising  and  consulting  with  other  businesses,  some of which
businesses may be in competition with the Company.  The Advisor hereby agrees to
provide the Company with at least twenty (20) days' prior written  notice of the
engagement  of the  Advisor  or any of its  affiliates  to provide  any  advice,
consultation or other services  (including  assistance in raising  financing) to
other  business or individual  that may be in  competition,  or is likely in the
future to compete with the Company.  The Advisor shall not be required to devote
its full time and  resources  to  performing  services  on behalf of the Company
under this  Agreement,  PROVIDED,  that the Advisor  shall be required to expend
such time and  resources as are  reasonably  required to perform the  Consulting
Services and advise and assist the Company as provided for herein.

      5. INDEMNIFICATION;  CONFIDENTIALITY.  (a) The Company agrees to indemnify
and hold harmless the Advisor and its  affiliates,  agents,  and  advisors,  and
their respective directors,  officers, employees, agents and controlling persons
(each such person is hereinafter  referred to as an "INDEMNIFIED  PARTY"),  from
and  against any and all  losses,  claims,  damages,  liabilities  and  expenses
whatsoever,  joint or several,  to which any such  Indemnified  Party may become
subject  under  any  applicable  federal  or state law of the  United  States of
America or otherwise,  caused by,  relating to or arising out of the  engagement
evidenced hereby Notwithstanding the foregoing,  the Company shall not be liable
to any Indemnified  Party under the foregoing  indemnification  provision to the
extent that any loss, claim, damage,  liability or expense results directly from
the willful or  intentional  misconduct or gross  negligence of any  Indemnified
Party.

      (b) Neither the Advisor nor any member,  shareholder,  partner,  employee,
affiliate or agent of the Advisor,  will disclose any  Confidential  Information
(as  defined  below) of the Company to any person,  firm,  corporation,  limited
liability  company,  partnership  or other  entity  for any  reason  or  purpose
whatsoever, nor will the Advisor (or any member, shareholder, partner, employee,
affiliate or agent of the Advisor) make use of any such Confidential Information
for its own  purposes  or for the  benefit  of any  person,  firm,  corporation,
limited  liability  company,  partnership  or other  entity  except the Company.
"CONFIDENTIAL  INFORMATION"  means all information  which is or becomes known to
the  Advisor  and  relates to the  business,  operations  or  activities  or the
Company,  including without limitation,  any intellectual property,  proprietary
information, research and development activities, new or prospective products or
services, chemical compounds, and/or molecules, formulations, application filed,
or to be  filed,  with  the Food and Drug  Administration,  books  and  records,
financial data,  customer lists,  marketing  techniques,

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<PAGE>

suppliers,  purchases,  potential  licensing  transactions,  potential  business
combinations and/or partnerships,  distribution channels, services,  procedures,
pricing  information and private  processes as they may exist from time to time;
PROVIDED, that the term "CONFIDENTIAL  INFORMATION" will not include information
that is or becomes generally  available to the public (other than as a result of
a disclosure  in  violation of this  Agreement by the Advisor or by a person who
received such information from the Advisor in violation of this Agreement). Upon
the end of the term or the  termination  of this  Agreement,  the  Advisor  will
immediately return or destroy (and provide evidence of such destruction), as the
Company may direct, all documentation in any medium that contains, refers to, or
relates to the Confidential  Information (as defined above),  and will retain no
copies thereof.

      6.  TERM OF  AGREEMENT;  TERMINATION;  EFFECTS  OF  TERMINATION.  (a) This
Agreement  shall begin on the Effective Date hereof and shall  continue  through
the third  anniversary  date,  PROVIDED,  that either party can  terminate  this
Agreement, for any reason or no reason, at any time upon 30 days' written notice
(a  "TERMINATION  NOTICE"  and  such  30 day  period,  the  "TERMINATION  NOTICE
PERIOD").  Upon  termination  of this  Agreement,  neither  party shall have any
further rights or obligations to the other, except that (i) the Company shall be
obligated to pay any unpaid fees referred to in section 2(a) hereof that accrued
during the period prior to termination of this Agreement, (ii) the Company shall
be obligated to reimburse  expenses  under  section 2(b) incurred by the Advisor
during the period prior to termination of this Agreement,  and (iii) the Advisor
and the  Company  shall  continue  to be bound by the  provisions  of  Section 5
hereof.  If the Agreement is terminated  prior to the third  anniversary date of
the Effective  Date, the portion of the Advisor Warrant that had not yet vested,
in accordance with the terms of the Advisor  Warrant,  shall terminate as of the
date of the date of termination of this Agreement.

      7.  RELATIONSHIP  OF PARTIES.  The parties  agree that their  relationship
under this Agreement is an advisory  relationship only, and nothing herein shall
cause the Advisor to be partners,  agents or fiduciaries  of, or joint venturers
with, the Company or with each other.

      8. NOTICES.  All notices  required or permitted  herein must be in writing
and shall be deemed to have been duly given the first business day following the
date of service if served  personally,  on the first  business day following the
date of actual  receipt  if  delivered  by  telecopier,  telex or other  similar
communication  to the party or parties to whom notice is to be given,  or on the
third  business  day after  mailing  if mailed to the party or  parties  to whom
notice is to be given by registered or certified mail, return receipt requested,
postage  prepaid,  to the Advisor and to the Company at the  addresses set forth
below,  or to such other  addresses as either party hereto may  designate to the
other by notice from time to time for this purpose.

Advisor:             Indigo Ventures LLC
                     780 Third Avenue
                     Suite 2302
                     New York, NY  10022
                     Attention:  Eric Brachfeld
                     Facsimile: (212) 298-9933

Company:             Mr. Bernard Berk
                     Chief Executive Officer
                     Elite Pharmaceuticals, Inc.
                     150 Northvale Avenue
                     Ludlow, New Jersey 07647
                     Facsimile: (201) 750-2755

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<PAGE>

With a copy to:      Reitler Brown & Rosenblatt LLC
                     800 Third Avenue 21st Floor
                     New York, New York 10022
                     Attention: Scott H. Rosenblatt, Esq.
                     Facsimile:  (212) 371-5500

      9. PARTIES.  This  Agreement  shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and assigns.

      10.  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
conflicts of laws.

      11. ENTIRE  AGREEMENT.  This Agreement  contains the entire  understanding
between the parties hereto with respect to the subject matter hereof and may not
be modified or amended except by a writing duly signed by the party against whom
enforcement of the modification or amendment is sought.

      12.  SEVERABILITY.  If any provision of this Agreement shall be held to be
invalid or unenforceable,  such invalidity or unenforceability  shall not affect
any other provision of this Agreement.

      13. COUNTERPARTS.  This Agreement may be executed in counterparts, each of
which shall be deemed an original  agreement,  but all of which  together  shall
constitute one and the same instrument. Execution and delivery of this Agreement
by  facsimile  transmission  (including  the  delivery of documents in Adobe PDF
format)  shall  constitute  execution  and  delivery of this  Agreement  for all
purposes,  with the same  force  and  effect as  execution  and  delivery  of an
original manually signed copy hereof.


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<PAGE>

         IN WITNESS WHEREOF,  the parties have hereto executed this Agreement as
of the 12th day of July, 2006.


                                          INDIGO VENTURES LLC


                                          By:  /s/ ERIC BRACHFELD
                                               ---------------------------------
                                               Eric Brachfeld, Managing Member



                                          ELITE PHARMACEUTICALS, INC.


                                          By:  /s/ BERNARD BERK
                                               ---------------------------------
                                               Bernard Berk, CEO



                                       5
<PAGE>

                                    EXHIBIT A

THIS WARRANT AND THE SHARES OF COMMON STOCK  ISSUABLE UPON EXERCISE  HEREOF HAVE
NOT BEEN REGISTERED  UNDER THE FEDERAL OR APPLICABLE  STATE  SECURITIES LAWS AND
INSTEAD ARE BEING ISSUED  PURSUANT TO  EXEMPTIONS  CONTAINED IN SAID LAWS.  THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE  HEREOF MAY NOT BE
TRANSFERRED  UNLESS (1) A  REGISTRATION  STATEMENT WITH RESPECT TO SUCH WARRANTS
AND THE SHARES OF COMMON STOCK UNDERLYING SUCH WARRANTS SHALL BE EFFECTIVE UNDER
THE  SECURITIES  ACT OF 1933,  AS AMENDED  OR (2) THE  ISSUER OF THE  SECURITIES
REPRESENTED  HEREBY  SHALL  HAVE  RECEIVED  AN  OPINION  OF  COUNSEL  REASONABLY
SATISFACTORY  TO IT THAT NO VIOLATION OF SUCH ACT OR SIMILAR  STATE LAWS WILL BE
INVOLVED IN SUCH TRANSFER.

                          COMMON STOCK PURCHASE WARRANT

     To Purchase Shares of $0.01 Par Value Common Stock ("Common Stock") of

                           ELITE PHARMACEUTICALS, INC

No. [W-__ ] 600,000 Shares


         THIS  CERTIFIES  that,  for  $150,000,   Indigo   Ventures,   LLC  (the
"Purchaser"  or  "Holder")  is  entitled,  upon the  terms  and  subject  to the
conditions hereinafter set forth, at any time on or after the date hereof and on
or prior to 8:00  p.m.  New York  City  Time on the date  that is five (5) years
after the date hereof (the "Termination Date"), but not thereafter, to subscribe
for and purchase from Elite  Pharmaceuticals,  Inc., a Delaware corporation (the
"Company"), 600,000 shares of Common Stock (the "Warrant Shares") at an Exercise
Price equal to $3.00 per share (as  adjusted  from time to time  pursuant to the
terms hereof, the "Exercise Price"). The Exercise Price and the number of shares
for which the Warrant is exercisable  shall be subject to adjustment as provided
herein.  This Warrant is being issued in connection with the Financial  Advisory
Agreement (the "Advisory Agreement") dated July __, 2006 (the "Effective Date"),
entered into between the Company and  Purchaser.  Capitalized  terms used herein
and not  otherwise  defined  shall  have the  meaning  ascribed  thereto  in the
Advisory Agreement.

1.       TITLE OF  WARRANT.  Prior  to the  expiration  hereof  and  subject  to
         compliance with applicable  laws, this Warrant and all rights hereunder
         are  transferable,  in whole or in part, at the office or agency of the
         Company by the Holder hereof in person or by duly authorized  attorney,
         upon surrender of this Warrant  together with (a) the  Assignment  Form
         annexed  hereto  properly  endorsed,  and (b) any  other  documentation
         reasonably  necessary to satisfy the Company  that such  transfer is in
         compliance with all applicable securities laws. The term "Holder" shall
         refer to the Purchaser or any subsequent transferee of this Warrant.

2.       AUTHORIZATION OF SHARES;  VESTING.  (a) The Company  covenants that all
         shares of Common  Stock which may be issued upon the exercise of rights
         represented  by  this  Warrant  will,   upon  exercise  of  the  rights
         represented  by this Warrant and payment of the  Exercise  Price as set
         forth herein will be duly  authorized,  validly issued,  fully paid and
         nonassessable  and free from all taxes,  liens and charges  (other than
         liens  created by the  Holder) in respect of the issue  thereof  (other
         than taxes in respect of any transfer occurring  contemporaneously with
         such issue or otherwise specified herein).

         (b)  Holder's  right to acquire  600,000  Warrant  Shares shall vest as
         follows:  50,000 Warrant  Shares shall vest quarterly  beginning on the
         three (3) month  anniversary  of the  Effective  Date and ending on the
         three (3) year  anniversary  of the Effective  Date;  provided that the
         unvested  Warrant  Shares  shall  terminate  upon  termination  of  the
         Advisory  Agreement;  provided,  further that this Warrant  shall fully
         vest upon a Change of Control  (as  defined in 2(c)  below) that occurs
         prior to the termination of the Advisory Agreement.

<PAGE>

         (c) The term  "Change of Control"  shall mean the  earliest to occur of
         the following events: (i) securities of the Company representing 50% or
         more of the combined  voting power of the  Company's  then  outstanding
         voting  securities  are  acquired  by a person or  entity,  or group of
         related  persons  or  entities  that  were not  shareholders  as of the
         Effective Date, in a single transaction, (ii) a merger or consolidation
         is consummated in which the Company is a constituent corporation, which
         results in less than 50% of the  outstanding  voting  securities of the
         surviving  or  resulting  entity  being  owned  by  the  then  existing
         stockholders  of the  Company  or (iii) the sale,  transfer,  exclusive
         license or other disposition by the Company of substantially all of its
         assets to a person or an entity which is not a wholly-owned  subsidiary
         of the Company and not a shareholder of the Company as of the Effective
         Date.

3.       EXERCISE OF WARRANT.

(a)               (i) The Holder may exercise this Warrant, in whole or in part,
         at any time and from time to time,  by delivering to the offices of the
         Company  or any  transfer  agent for the  Common  Stock  this  Warrant,
         together  with  a  Notice  of  Exercise  in  the  form  annexed  hereto
         specifying  the number of  Warrant  Shares  with  respect to which this
         Warrant  is  being  exercised,  together  with  payment  in cash to the
         Company of the Exercise Price  therefore;  provided that the Holder may
         not exercise the Warrant,  in whole or in part, for a period of one (1)
         year from any  vesting  date;  provided,  that such  restriction  shall
         expire  immediately  upon a  Change  of  Control  and  Holder  shall be
         entitled to exercise this Warrant in whole or in part.

                  (ii) Additionally, the Holder may exercise this Warrant by the
         exchange  of this  Warrant  in  whole  or in part  (with  the  Cashless
         Exercise subscription form in the form annexed hereto duly executed) (a
         "Cashless  Exercise")  at the address of the Company set forth  herein.
         Such presentation and exchange shall be deemed a waiver of the Holder's
         obligation  to pay the  Exercise  Price  or,  in the case of a  partial
         exercise of this  Warrant,  of the portion of the  Exercise  Price that
         would  otherwise be payable in connection  with such partial  exercise.
         Upon  presentment  of  this  Warrant  in  connection  with  a  Cashless
         Exercise, the number of Warrant Shares subject to this Warrant shall be
         reduced by the  number of  Warrant  Shares  specified  on the  Cashless
         Exercise  subscription  form,  and in exchange for such  reduction  the
         Holder shall receive the number of Warrant Shares,  as the case may be,
         specified on the Cashless  Exercise  subscription form (up to the total
         number of Warrant Shares which are subject to this Warrant)  multiplied
         by a fraction,  the  numerator of which shall be the excess of the then
         current  market  price per share of the Common  Stock over the Exercise
         Price per share, and the denominator of which shall be the then current
         market price per share of Common Stock. For purposes of any computation
         under this Section  3(a),  the then  current  market price shall be the
         average of the closing  prices for the five  trading  days  immediately
         prior  to  the  execution   and  delivery  of  the  Cashless   Exercise
         subscription form by Holder.

         In the event that the Warrant is not  exercised in full,  the number of
         Warrant  Shares shall be reduced by the number of such  Warrant  Shares
         for which this Warrant is exercised,  and the Company,  if requested by
         Holder and at the Company's expense, shall within five (5) Trading Days
         (as  defined  below)  issue and  deliver to the Holder a new Warrant of
         like tenor in the name of the Holder or as the Holder (upon  payment by
         Holder of any applicable  transfer taxes) may request,  reflecting such
         adjusted Warrant Shares.

         Certificates  for shares of Common Stock  purchased  hereunder shall be
         delivered to the Holder  hereof  within five (5) Trading Days after the
         date on which this Warrant shall have been exercised as aforesaid.  The
         Holder may  withdraw  its Notice of Exercise at any time if the Company
         fails to timely  deliver  the  relevant  certificates  to the Holder as
         provided in this  Agreement.  A Notice of Exercise shall be deemed sent
         on the date  received by the Company if received  before 5:00 p.m.  New
         York Time on such  date,  or the day  following  such date if  received
         after  5:00 p.m.  New York  Time;  provided  that the  Company  is only
         obligated to deliver  Warrant Shares  against  delivery of the Exercise
         Price  from  the  holder  hereof  and  surrender  of this  Warrant  (or
         appropriate affidavit and/or indemnity in lieu thereof).

         In lieu of delivering  physical  certificates  representing the Warrant
         Shares issuable upon conversion of this Warrant, provided the Company's
         transfer agent is participating in the Depository Trust Company ("DTC")
         Fast Automated  Securities  Transfer ("FAST") program,  upon request of
         the Holder,  the Company shall use commercially  reasonable  efforts to
         cause its transfer agent to electronically  transmit the Warrant Shares

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<PAGE>

         issuable upon  exercise to the Holder,  by crediting the account of the
         Holder's  prime  broker with DTC through its Deposit  Withdrawal  Agent
         Commission  ("DWAC")  system.  The time periods for delivery  described
         above  shall  apply to the  electronic  transmittals  through  the DWAC
         system.  The Company agrees to use commercially  reasonable  efforts to
         coordinate with DTC to accomplish this objective.

(b)      The term  "Trading  Day" means (x) if the Common Stock is not listed on
         the New York or American  Stock  Exchange but sale prices of the Common
         Stock are  reported  on Nasdaq  National  Market or  another  automated
         quotation  system,  a day on which trading is reported on the principal
         automated  quotation  system  on which  sales of the  Common  Stock are
         reported,  (y) if the  Common  Stock is  listed  on the New York  Stock
         Exchange  or the  American  Stock  Exchange,  a day on  which  there is
         trading on such stock exchange,  or (z) if the foregoing provisions are
         inapplicable,  a day on  which  quotations  are  reported  by  National
         Quotation Bureau Incorporated.

4.       NO  FRACTIONAL   SHARES  OR  SCRIP.  No  fractional   shares  or  scrip
         representing  fractional  shares  shall be issued upon the  exercise of
         this  Warrant.  In lieu of  issuance  of a  fractional  share  upon any
         exercise hereunder,  the Company,  in its sole discretion,  will either
         round up to  nearest  whole  number of shares or pay the cash  value of
         that  fractional  share,  which cash value shall be  calculated  on the
         basis of the average  closing price of the Common Stock during the five
         (5) Trading Days immediately preceding the date of exercise.

5.       CHARGES,  TAXES AND EXPENSES.  Issuance of  certificates  for shares of
         Common Stock upon the  exercise of this  Warrant  shall be made without
         charge to the  Holder  hereof  for any issue or  transfer  tax or other
         incidental expense in respect of the issuance of such certificate,  all
         of which  taxes and  expenses  shall be paid by the  Company,  and such
         certificates  shall be issued in the name of the Holder of this Warrant
         or in such  name or  names as may be  directed  by the  Holder  of this
         Warrant;  PROVIDED,  HOWEVER, that in the event certificates for shares
         of Common  Stock are to be issued in a name  other than the name of the
         Holder of this  Warrant,  this  Warrant when  surrendered  for exercise
         shall be  accompanied  by the  Assignment  Form  attached  hereto  duly
         executed by the Holder hereof;  and PROVIDED FURTHER,  that the Company
         shall not be  required  to pay any tax or taxes which may be payable in
         respect  of any  transfer  involved  in  the  issuance  of any  Warrant
         certificates or any  certificates for the Warrant Shares other than the
         issuance of a Warrant  Certificate to the Holder in connection with the
         Holder's surrender of a Warrant Certificate upon the exercise of all or
         less than all of the Warrants evidenced thereby.

6.       CLOSING  OF  BOOKS.  Subject  to  applicable  law and the  rules of the
         principal market on which the Common Stock may from time to time trade,
         the Company will at no time close its  shareholder  books or records in
         any manner which interferes with the timely exercise of this Warrant.

7.       NO RIGHTS AS SHAREHOLDER UNTIL EXERCISE.

(a)      Prior  to  exercise  of all or any  portion  of this  Warrant  and as a
         condition  to the  issuance by the Company of any Warrant  Shares,  the
         Holder  agrees to  provide  an  irrevocable  proxy in favor of the then
         current chief executive  officer of the Company to vote all such shares
         to be  issued  upon  exercise  of this  Warrant  in any vote put to the
         shareholders of the Company in the form attached hereto as ANNEX I.

(b)      Subject to Section 12 of this Warrant and the  provisions  of any other
         written agreement between the Company and the Purchaser,  the Purchaser
         shall not be  entitled  to vote or receive  dividends  or be deemed the
         holder of Warrant  Shares or any other  securities  of the Company that
         may at any time be issuable on the exercise hereof for any purpose, nor
         shall  anything  contained  herein  be  construed  to  confer  upon the
         Purchaser,  as such,  any of the rights of a stockholder of the Company
         or any right to vote for the  election of  directors or upon any matter
         submitted  to  stockholders  at any  meeting  thereof,  or to  give  or
         withhold   consent  to  any   corporate   action   (whether   upon  any
         recapitalization,  issuance of stock, reclassification of stock, change
         of par  value,  or  change  of  stock to no par  value,  consolidation,
         merger,  conveyance or otherwise) or to receive notice of meetings,  or
         to receive  dividends or  subscription  rights or  otherwise  until the
         Warrant shall have been exercised as provided herein.  However,  at the
         time of the exercise of this Warrant pursuant to Section 3 hereof,  the
         Warrant Shares so purchased  hereunder  shall be deemed to be issued to
         such  Holder  as the  record  owner of such  shares  as of the close of
         business on the date on which this Warrant shall have been exercised.

                                       3
<PAGE>

8.       SECURITY.  This  Warrant  and  the  Warrant  Shares  secure  all of the
         obligations  of the Holder  under the  promissory  note for One Hundred
         Fifty Thousand Dollars  ($150,000.00) in the form attached as EXHIBIT B
         to the Advisory Agreement (the "Note"), including (i) all principal of,
         and interest (including, without limitation, any interest which accrues
         after  the  commencement  of any  case,  proceeding  or  other  actions
         relating to the bankruptcy,  insolvency or reorganization of the Holder
         and any  other  amounts  owing) on the  Note,  (ii) all  other  amounts
         payable  by the Holder  under  Note  (including  expenses  incurred  in
         connection  with the enforcement of the Note) and (iii) any renewals or
         extensions of any of the foregoing.

9.       ASSIGNMENT AND TRANSFER OF WARRANT.

(a)      This  Warrant may be assigned by the  surrender of this Warrant and the
         Assignment  Form  annexed  hereto  duly  executed  at the office of the
         Company (or such other  office or agency of the Company or its transfer
         agent  as the  Company  may  designate  by  notice  in  writing  to the
         registered Holder hereof at the address of such Holder appearing on the
         books of the Company);  provided, further, that this Warrant may not be
         resold or  otherwise  transferred  except  (i) with the  prior  written
         consent of the  Company,  (ii) in a  transaction  registered  under the
         Securities  Act  of  1933,  as  amended  (the  "Act"),  or  (ii)  in  a
         transaction pursuant to an exemption,  if available,  from registration
         under the Act and whereby,  if reasonably  requested by the Company, an
         opinion of counsel  reasonably  satisfactory to the Company is obtained
         by the Holder of this Warrant to the effect that the  transaction is so
         exempt.  Subject to Section 9(b) below,  the Warrant  Shares may not be
         resold or otherwise transferred except (i) in a transaction  registered
         under  the Act,  or (ii) in a  transaction  pursuant  to the  exemption
         afforded  by  Rule  144 of the  Act,  if  available,  and  whereby,  if
         reasonably  requested by the Company,  an opinion of counsel reasonably
         satisfactory  to the Company is obtained by the Holder of this  Warrant
         to the effect that the transaction is so exempt.

(b)      Neither this Warrant nor the Warrant  Shares may be transferred so long
         as any principal and/or interest of

         the Note remains outstanding.

10.      LOSS,  THEFT,  DESTRUCTION  OR  MUTILATION  OF WARRANT;  EXCHANGE.  The
         Company represents  warrants and covenants that (a) upon receipt by the
         Company of evidence and/or indemnity  reasonably  satisfactory to it of
         the loss,  theft,  destruction  or  mutilation  of any Warrant or stock
         certificate representing the Warrant Shares, and in case of loss, theft
         or  destruction,  of indemnity  reasonably  satisfactory to it, and (b)
         upon surrender and  cancellation of such Warrant or stock  certificate,
         if mutilated,  the Company will make and deliver a new Warrant or stock
         certificate of like tenor and dated as of such cancellation, in lieu of
         this Warrant or stock  certificate,  without any charge therefor.  This
         Warrant is exchangeable  at any time for an equal  aggregate  number of
         Warrants  of  different  denominations,  as  requested  by  the  holder
         surrendering the same, or in such  denominations as may be requested by
         the Holder  following  determination  of the Exercise Price. No service
         charge  will be made for such  registration  or  transfer,  exchange or
         reissuance.

11.      SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for the
         taking of any action or the expiration of any right required or granted
         herein shall be a Saturday, Sunday or a legal holiday, then such action
         may be taken or such right may be exercised on the next  succeeding day
         not a legal holiday.

12.      EFFECT OF CERTAIN  EVENTS.  If at any time  while  this  Warrant or any
         portion   thereof  is  outstanding  and  unexpired  there  shall  be  a
         transaction  (by  merger or  otherwise)  in which  more than 50% of the
         voting  power of the Company is disposed of  (collectively,  a "Sale or
         Merger  Transaction"),  the Holder of this Warrant shall have the right
         thereafter to purchase,  by exercise of this Warrant and payment of the
         aggregate  Exercise Price in effect  immediately  prior to such action,
         the kind and amount of shares and other  securities  and property which
         it  would  have  owned or have  been  entitled  to  receive  after  the
         happening  of  such   transaction   had  this  Warrant  been  exercised
         immediately prior thereto, subject to further adjustment as provided in
         Section 12.

13.      ADJUSTMENTS  OF  EXERCISE  PRICE AND NUMBER OF WARRANT  SHARES.  In the
         event the  Company  shall  issue  additional  shares  of  Common  Stock
         pursuant to a share split or  reclassification,  concurrently  with the
         effectiveness of such event,  the Exercise Price in effect  immediately
         prior to such event shall be proportionately  decreased with the number
         of Warrant Shares purchasable upon exercise of this Warrant immediately
         prior to such event and the  number of shares  underlying  the  Warrant
         shall be proportionately

                                       4
<PAGE>

         increased. In the event the outstanding shares of Common Stock shall be
         combined  or  consolidated,  by  reclassification,   reverse  split  or
         otherwise, into a lesser number of shares of Common Stock, concurrently
         with the  effectiveness  of such event,  the  Exercise  Price in effect
         immediately prior to such event shall be proportionately  increased and
         the number of Warrant Shares  purchasable upon exercise of this Warrant
         immediately prior to such event shall be proportionately decreased.

14.      NOTICE OF  ADJUSTMENT.  Whenever the number of Warrant Shares or number
         or kind of securities or other property  purchasable  upon the exercise
         of this Warrant or the Exercise  Price is adjusted,  the Company  shall
         promptly mail to the Holder of this Warrant a notice  setting forth the
         number of Warrant Shares (and other securities or property) purchasable
         upon  the  exercise  of this  Warrant  and the  Exercise  Price of such
         Warrant Shares after such  adjustment and setting forth the computation
         of such  adjustment and a brief  statement of the facts  requiring such
         adjustment.

15.      AUTHORIZED  SHARES.  The Company  covenants  that during the period the
         Warrant  is  outstanding  and  exercisable,  it will  reserve  from its
         authorized and unissued  Common Stock a sufficient  number of shares to
         provide for the issuance of the Warrant Shares upon the exercise of any
         and all  purchase  rights  under  this  Warrant.  The  Company  further
         covenants  that its  issuance of this  Warrant  shall  constitute  full
         authority  to its  officers  who are charged with the duty of executing
         stock certificates to execute and issue the necessary  certificates for
         the Warrant Shares upon the exercise of the purchase  rights under this
         Warrant.  The Company  will take all such  reasonable  action as may be
         necessary to assure that such Warrant  Shares may be issued as provided
         herein without violation of any applicable law, regulation,  or rule of
         any applicable market or exchange.

16.      COMPLIANCE  WITH  SECURITIES  LAWS. (a) The Holder hereof  acknowledges
         that the Warrant Shares acquired upon the exercise of this Warrant,  if
         not registered (or if no exemption from registration exists), will have
         restrictions upon resale imposed by state and federal  securities laws.
         Each  certificate  representing the Warrant Shares issued to the Holder
         upon exercise (if not  registered,  for resale or  otherwise,  or if no
         exemption  from  registration   exists)  will  bear  substantially  the
         following legend:

          THE  SECURITIES   REPRESENTED  BY  THIS   CERTIFICATE  HAVE  NOT  BEEN
         REGISTERED  UNDER THE FEDERAL OR APPLICABLE  STATE  SECURITIES LAWS AND
         INSTEAD ARE BEING ISSUED PURSUANT TO EXEMPTIONS CONTAINED IN SAID LAWS.
         THIS  WARRANT AND THE SHARES OF COMMON  STOCK  ISSUABLE  UPON  EXERCISE
         HEREOF MAY NOT BE TRANSFERRED UNLESS (1) A REGISTRATION  STATEMENT WITH
         RESPECT TO SUCH SECURITIES  SHALL BE EFFECTIVE UNDER THE SECURITIES ACT
         OF 1933,  AS AMENDED OR (2) THE  ISSUER OF THE  SECURITIES  REPRESENTED
         HEREBY   SHALL  HAVE   RECEIVED   AN  OPINION  OF  COUNSEL   REASONABLY
         SATISFACTORY  TO IT THAT NO VIOLATION OF SUCH ACT OR SIMILAR STATE LAWS
         WILL BE INVOLVED IN SUCH TRANSFER.

(b)      Without limiting the Purchaser's right to transfer, assign or otherwise
         convey the Warrant or Warrant Shares in compliance  with all applicable
         securities  laws,  the Holder of this Warrant,  by  acceptance  hereof,
         acknowledges that this Warrant and the Warrant Shares to be issued upon
         exercise  hereof  are being  acquired  solely for the  Purchaser's  own
         account  and not as a  nominee  for  any  other  party,  and  that  the
         Purchaser will not offer,  sell or otherwise dispose of this Warrant or
         any  Warrant  Shares to be issued upon  exercise  hereof  except  under
         circumstances that will not result in a violation of applicable federal
         and state securities laws.

17.      MISCELLANEOUS.

(a)      ISSUE DATE; CHOICE OF LAW; VENUE; JURISDICTION.  The provisions of this
         Warrant shall be construed and shall be given effect in all respects as
         if it had been issued and  delivered by the Company on the date hereof.
         This  Warrant  shall be binding upon any  successors  or assigns of the
         Company. This Warrant will be construed and enforced in accordance with
         and  governed by the laws of the State of New York,  except for matters
         arising under the Act, without  reference to principles of conflicts of
         law. Each of the parties consents to the exclusive  jurisdiction of the
         Federal and State Courts sitting in the County of New York in

                                       5
<PAGE>

         the State of New York in connection with any dispute arising under this
         Warrant and hereby waives,  to the maximum extent permitted by law, any
         objection,  including  any objection  based on FORUM non  CONVENIENS or
         venue,  to the bringing of any such  proceeding  in such  jurisdiction.
         EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY.


(b)      MODIFICATION AND WAIVER.  This Warrant and any provisions hereof may be
         changed,  waived,  discharged  or  terminated  only by an instrument in
         writing  signed by the party against which  enforcement  of the same is
         sought.  Any amendment effected in accordance with this paragraph shall
         be binding upon the  Purchaser,  each future holder of this Warrant and
         the Company.  No waivers of, or exceptions  to, any term,  condition or
         provision  of this  Warrant,  in any one or more  instances,  shall  be
         deemed to be, or construed  as, a further or  continuing  waiver of any
         such term, condition or provision.

(c)      NOTICES. Any notice or other communication  required or permitted to be
         given  hereunder  shall be in writing by  facsimile,  mail or  personal
         delivery and shall be effective upon actual receipt of such notice. The
         addresses for such communications shall be to the addresses as shown on
         the books of the  Company or to the Company at the address set forth in
         the  Advisory  Agreement.  A party  may from  time to time  change  the
         address to which notices to it are to be delivered or mailed  hereunder
         by notice in accordance with the provisions of this Section 17(c).

(d)      SEVERABILITY.  Whenever possible,  each provision of this Warrant shall
         be  interpreted  in such  manner as to be  effective  and  valid  under
         applicable  law,  but if any  provision  of this  Warrant is held to be
         invalid,  illegal or  unenforceable in any respect under any applicable
         law or  rule  in  any  jurisdiction,  such  invalidity,  illegality  or
         unenforceability   shall  not  affect   the   validity,   legality   or
         enforceability   of  any  other  provision  of  this  Warrant  in  such
         jurisdiction or affect the validity,  legality or enforceability of any
         provision  in  any  other  jurisdiction,  but  this  Warrant  shall  be
         reformed,  construed  and  enforced  in  such  jurisdiction  as if such
         invalid,  illegal or  unenforceable  provision had never been contained
         herein.

(e)      SPECIFIC ENFORCEMENT.  The Company and the Holder acknowledge and agree
         that  irreparable  damage  would  occur  in the  event  that any of the
         provisions of this Warrant were not performed in accordance  with their
         specific terms or were  otherwise  breached.  It is accordingly  agreed
         that the parties shall be entitled to an injunction or  injunctions  to
         prevent or cure  breaches  of the  provisions  of this  Warrant  and to
         enforce  specifically  the terms and provisions  hereof,  this being in
         addition to any other remedy to which either of them may be entitled by
         law or equity.

                            [Signature Page Follows]



                                       6
<PAGE>

         IN WITNESS WHEREOF,  the Company has caused this Warrant to be executed
by its officers thereunto duly authorized.


Dated:  July  __, 2006

                                              ELITE PHARMACEUTICALS, INC.


                                              By:
                                                  ------------------------------
                                              Name: Bernard J. Berk
                                              Title: Chief Executive Officer



                                       7
<PAGE>

                                  PURCHASE FORM

SUBSCRIPTION (CASH)

The undersigned,  ___________________ (the "Holder"), pursuant to the provisions
of the Warrant of ELITE  PHARMACEUTICALS,  INC. ("the  Company")  granted to the
Holder (or its assignor) dated _____ (the "Warrant"), hereby agrees to subscribe
for and  purchase  ____________________  shares of the Common  Stock,  par value
$0.01 per share,  of the  Company  covered  by the  Warrant,  and makes  payment
therefor in full at the price per share provided by the Warrant.

Dated:                                      Signature:
      ----------------                                --------------------------


SUBSCRIPTION (CASHLESS EXERCISE)

The undersigned  Holder  ___________________,  pursuant to the provisions of the
Warrant,  hereby  elects  to  exchange  its  Warrant,  in whole  or in part,  as
appropriate,  for ______ shares of Common Stock, stated value $___ per share, of
the Company,  pursuant to the cashless  exercise  provisions of Section 3 of the
Warrant.

Dated:                                      Signature:
      ----------------                                --------------------------


INSTRUCTIONS FOR REGISTRATION OF STOCK:

                  Name
                      -------------------------------------------------
                            (please type or print in block letters)

                  Address
                         ----------------------------------------------

                  Address
                         ----------------------------------------------


<PAGE>

                    FORM OF ASSIGNMENT OR PARTIAL ASSIGNMENT


FOR VALUE RECEIVED _________________________ (the "Holder) hereby sells, assigns
and transfers unto

Name
    ------------------------------------------------------------------------
                    (please typewrite or print in block letters)


Address
       ---------------------------------------------------------------------


the right to purchase Common Stock,  as appropriate,  to the extent of _________
shares as to which such right is  exercisable  pursuant to this Warrant of ELITE
PHARMACEUTICALS,  INC. ("the Company") dated _____ granted to the Holder (or its
assignor),    and   does    hereby    irrevocably    constitute    and   appoint
_____________________,  attorney,  to transfer  same on the books of the Company
with full power of substitution in the premises.

NOTE: THE SIGNATURE TO THIS  ASSIGNMENT FORM MUST CORRESPOND WITH THE NAME AS IT
APPEARS ON THE FACE OF THE WARRANT,  WITHOUT  ALTERATION OR  ENLARGEMENT  OR ANY
CHANGE WHATSOEVER,  AND MUST BE GUARANTEED BY A BANK OR TRUST COMPANY.  OFFICERS
OF CORPORATIONS AND THOSE ACTING IN A FIDUCIARY OR OTHER REPRESENTATIVE CAPACITY
SHOULD FILE PROPER EVIDENCE OF AUTHORITY TO ASSIGN THE FOREGOING WARRANT.


<PAGE>

                                     ANNEX I

                                IRREVOCABLE PROXY

                           ELITE PHARMACEUTICALS, INC.

From and after the date hereof, the undersigned, as record holder of the _______
shares of common  stock,  par  value  $0.01 per share of Elite  Pharmaceuticals,
Inc., a Delaware corporation (the "COMPANY"), hereby irrevocably (to the fullest
extent  permitted  by  law)  authorizes,   empowers,  appoints  and  constitutes
________,  the Company's current chief executive  officer,  as the undersigned's
proxy to (1) attend the any meeting of the  stockholders of the Company (and any
adjournments  thereof)  (each a  "STOCKHOLDER  MEETING"),  and  (2) to vote  (or
abstain from voting) the Shares (as defined below) of the Company, on any matter
submitted at any time at any  Stockholder  Meeting or via written consent to the
stockholders of the Company in their capacity as such and not pursuant to rights
granted by  contract,  in each case with the same  effect as if the  undersigned
were personally present at the Stockholder  Meeting or voting such securities or
personally  acting on any matters  submitted to the  stockholders of the Company
for approval or consent at any Stockholder  Meeting.  Upon the execution hereof,
all prior proxies given by the undersigned with respect to any of the Shares are
hereby  revoked,  and the  undersigned  agrees  that  during the term  hereof no
subsequent proxies will be given with respect to any of the Shares.

This proxy is irrevocable, is coupled with an interest, and in all of the Shares
held of record or by the undersigned.

For the purposes of this proxy,  "SHARES" means ________  shares of Common Stock
held of record by the  undersigned,  and all  voting  equity  securities  of the
Company  issued upon  conversion or exchange of, or in respect of, the foregoing
securities held of record by the  undersigned  and all voting  securities of the
Company issued to the undersigned in the future.

This proxy shall exist for so long as the undersigned owns any Shares.

If any  provision of this proxy or any part of any such  provision is held under
any circumstances to be invalid or unenforceable in any  jurisdiction,  then (a)
such provision or part thereof shall, with respect to such  circumstances and in
such  jurisdiction,  be deemed amended to conform to applicable laws so as to be
valid and  enforceable  to the fullest  possible  extent,  (b) the invalidity or
unenforceability  of such provision or part thereof under such circumstances and
in such  jurisdiction  shall not affect the validity or  enforceability  of such
provision  or  part  thereof  under  any  other  circumstances  or in any  other
jurisdiction, and (c) the invalidity or enforceability of such provision or part
thereof shall not affect the validity or  enforceability  of any other provision
of this  proxy.  Each  provision  of this proxy is  separable  from every  other
provision  of this  proxy,  and each  part of each  provision  of this  proxy is
separable from every other part of such provision.

This  proxy  shall be  governed  by the laws of the State of  Delaware,  without
giving effect to its choice or conflicts of laws provisions.

This proxy shall be filed with the Secretary of the Company.

THIS PROXY SHALL BE SIGNED EXACTLY AS THE STOCKHOLDER'S NAME APPEARS ON HIS, HER
OR ITS STOCK  CERTIFICATE(S).  JOINT  STOCKHOLDERS MUST EACH SIGN THIS PROXY. IF
SIGNED BY AN ATTORNEY IN FACT, THE POWER OF ATTORNEY MUST BE ATTACHED.


Dated as of                             INDIVIDUAL:
            ---------

                                        ----------------------------------------
                                        Name:


                                        ADDRESS:

                                        ----------------------------------------

                                        ----------------------------------------


                                       2
<PAGE>

                                   EXHIBIT B

THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE  SECURITIES OR STATE "BLUE
SKY"  LAWS.  THIS NOTE MAY NOT BE SOLD OR  TRANSFERRED  IN THE  ABSENCE  OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT OR LAWS.


                                 PROMISSORY NOTE

$150,000.00                                                   New York, New York
("Original Principal Amount")                                      July __, 2006

                  FOR  VALUE   RECEIVED,   the   adequacy  of  which  is  hereby
acknowledged,  the  undersigned,  Indigo  Ventures  LLC  (the  "Maker"),  hereby
promises to pay to ELITE PHARMACEUTICALS,  INC. (the "Payee"),  whose address is
150 Northvale Avenue, Ludlow, New Jersey 07647, the principal sum of ONE HUNDRED
AND FIFTY THOUSAND DOLLARS ($150,000.00), together with interest, commencing one
hundred  eighty  (180) days from the date  hereof,  at a rate of 5.06% per annum
compounded  annually.  This Note shall be due and  payable on the earlier of (i)
June 1, 2011 and (ii) the date that the  Maker (or any of its  assignees)  first
exercises  all or a part of the Warrant (as defined  below),  whether by cash or
cashless exercise (the "Maturity  Date").  Interest on this Note shall accrue as
provided for above until, and be payable  (together with the Original  Principal
Amount hereof), on the Maturity Date.

                  Payments  due  hereunder  shall be paid in lawful money of the
United States of America (or by wire transfer or certified check payable in such
money) at Payee's  address  (as given  above) or at such other place as Payee or
any other  holder of this  Note may from time to time have  designated  by prior
written notice to Maker.

                  1. PREPAYMENT. The Maker may at any time prepay in whole or in
part the  principal  amount of this Note,  together  with any accrued but unpaid
interest on the prepaid principal amount, without penalty or premium.

                  2.  ALLOCATION.   All  payments  made  hereunder  (whether  in
prepayment  or otherwise)  shall first be applied  against any interest then due
hereunder and shall then be applied against principal.

                  3. SECURITY.  All amounts due under this Note shall be secured
by Maker's  warrant for 600,000 shares of Payee's  common stock (the  "Warrant")
and the shares of Common Stock, par value $0.01 per share of the Payee, issuable
upon  exercise of the Warrant (the  "Warrant  Shares").  Following  any Event of
Default and  foreclosure,  Payee shall have an absolute  right to dispose of the
Warrant in any manner it chooses  (including  cancellation of the Warrant and if
the Warrant has been previously exercised, in whole or in part, then Payee shall
have the  absolute  right to  dispose  of the  Warrant  Shares in any  manner it
chooses) in order to satisfy Maker's obligation hereunder.

                  4. RECOURSE.  As provided in Section 3 above,  one hundred per
cent (100%) of the Original  Principal  Amount and any interest  payable on this
Note shall be secured by the Warrant. In addition,  ten per cent (10%), and only
ten per cent (10%), of the Original  Principal  Amount shall be full recourse to
the Maker.  Ninety per cent (90%) of the  principal  amount of this Note and all
interest hereon shall be non-recourse to the Maker and Payee's sole recourse for
payment of such principal and interest shall be to the Warrant.

                  5.  ADJUSTMENTS.  In the  event  that the  Financial  Advisory
Agreement by and between  Elite  Pharmaceuticals,  Inc. and Indigo  Ventures LLC
dated as of July __, 2006 (the "Advisory  Agreement") is terminated  pursuant to
the terms of such Advisory  Agreement,  the total outstanding amount on the Note
shall be reduced to an amount equal to the outstanding principal and interest on
the Note  multiplied  by a  fraction,  the  numerator  of which is the number of
vested Warrant  Shares as of the date that the Advisory  Agreement is terminated
and the denominator of which is 600,000.

                                       3
<PAGE>

                  6. EVENT OF DEFAULT. It shall be a Default if Maker shall fail
to pay the principal or interest due under this Note on the Maturity  Date,  and
such failure to pay  principal  or interest  shall be an Event of Default if not
cured  within  twenty (20) days of receipt of a written  Notice of Default  from
Payee.  No other  event,  action or  circumstance  shall be an Event of  Default
hereunder.

                  If an Event of Default should occur, Payee, at its option, may
declare the outstanding principal balance of and all accrued but unpaid interest
on this Note to be  immediately  due and payable  without  presentment,  demand,
protest, or notice of any kind, all of which are hereby expressly waived.

                  7.   NOTICES.   All  notices,   requests,   demands  or  other
communications required or permitted hereunder shall be in writing, addressed to
the appropriate party as follows:

                           (i)    IF TO MAKER, to:

                                  Indigo Ventures LLC
                                  780 Third Avenue, 23rd Floor
                                  New York, New York 10017
                                  Attention: Eric Brachfeld
                                  Telephone (212) 972-0900
                                  Facsimile (212) 298-9933

                           (ii)   IF TO PAYEE, TO:

                                   Mr. Bernard Berk
                                   Chief Executive Officer
                                   Elite Pharmaceuticals, Inc.
                                   150 Northvale Avenue
                                   Ludlow, New Jersey 07647
                                   Telephone:
                                   Facsimile

or to such other address as may have been  designated  in prior notice.  Notices
may be sent by (a) nationally recognized overnight courier, or (b) registered or
certified mail, postage prepaid,  return receipt requested;  and shall be deemed
given (i) in the case of overnight courier,  the next business day after the day
sent,  and (ii) in the case of  mailing,  three (3)  business  days after  being
mailed by registered or certified mail, and otherwise notices shall be deemed to
have been given when received.

                  8.  ASSIGNMENT.  Any  attempt by Maker to assign its rights or
delegate its duties under this Note without the prior  written  consent of Payee
will be void.

                  9. BINDING EFFECT. The terms and provisions of this Note shall
be binding upon Maker and its successors and permitted assigns,  and shall inure
to the benefit of Payee.

                  10.  GOVERNING  LAW.  This  Note  shall  be  governed  by  and
construed in accordance  with the laws of the State of New York,  without regard
for the conflicts of laws principles thereof.

                  11. HEADINGS.  The section headings contained in this Note are
intended solely for convenience of reference and do not themselves  constitute a
part of this Note.

                  12.  SEVERABILITY.  If  any  provision  of  this  Note  or the
application thereof to any person or circumstance  should, for any reason and to
any extent,  be invalid or  unenforceable,  the  remainder  of this Note and the
application  of such  provision to other persons or  circumstances  shall not be
affected thereby,  but rather shall be enforced to the greatest extent permitted
by law.

                                       4
<PAGE>

         IN WITNESS  WHEREOF,  Maker has executed this Note as of the date first
above written.

                                            INDIGO VENTURES LLC


                                            By:
                                               ---------------------------
                                                 Eric Brachfeld
                                                 Managing Member




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