INDIGO SECURITIES, LLC

                                          November 9, 2005


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

Ladies and Gentlemen

         Pursuant to our ongoing  relationship,  we are writing to confirm  with
you the arrangements under which Indigo Securities,  LLC ("INDIGO") has acted as
financial advisor to Elite Pharmaceuticals, Inc. (the "COMPANY") with respect to
the Transactions (as defined below).  This letter agreement shall be referred to
herein as the "AGREEMENT" and the "EFFECTIVE  DATE" shall mean November 9, 2005.
Each of Indigo and the  Company  may be  referred  to herein  individually  as a
"PARTY" and collectively as the "PARTIES".

1.       THE ENGAGEMENT; WARRANT TRANSACTION.

         In connection  with the Engagement,  the Company has requested Indigo's
assistance in facilitating  (i) the exercise of warrants (the "OLD WARRANTS") by
investors ("EXCHANGING HOLDERS") who received warrants to purchase shares of the
Company's  common  stock in  connection  with the  Company's  private  placement
transaction dated as of October, 2004 (such exercise shall be referred to as the
"WARRANT TRANSACTION"); and (ii) the issuance of new warrants by the Company (as
described in the term sheet attached hereto as Exhibit A) to Exchanging  Holders
participating in the Warrant Transaction (the "NEW WARRANTS"; and such issuance,
together with the Warrant Transaction,  the "TRANSACTIONS").  It is contemplated
that the New Warrants issued in the  Transactions  will be issued by the Company
in a  private  placement  transaction  (the  "PRIVATE  PLACEMENT")  exempt  from
registration  under the U. S. Securities Act of 1933 (the "SECURITIES ACT"), and
otherwise  in  compliance  with  the  applicable  laws  and  regulations  of any
jurisdiction in which the Securities are offered. Indigo shall only be obligated
to  assist  the  Company  with the  Transactions  on a "best  efforts"  basis as
described above.

2.       THE PRIVATE PLACEMENT.

         The Company and Indigo will each reasonably  believe at the time of the
Private Placement that each Exchanging  Holder will be an "accredited  investor"
as defined in Rule 501 of  Regulation D of the  Securities  Act and will satisfy
any private placement requirements applicable in any non-U.S. jurisdiction where
the New Warrants may be offered.  The Company will file in a timely  manner with
the U.S. Securities and Exchange Commission (the "SEC") any notices with respect
to the  Securities  required  by Rule 503 of  Regulation  D and will  furnish to
Indigo promptly thereafter a signed copy of each such notice.


<PAGE>

Elite Pharmaceuticals, Inc.
November 9, 2005
Page 2


3.       INFORMATION SUPPLIED; REPRESENTATIONS.

         The Company will furnish to Indigo such  information as Indigo believes
appropriate to its engagement  hereunder.  In addition,  the representations and
warranties of the Company made in the Exchange Agreement are hereby incorporated
herein by  reference  in their  entirety  with the same legal  effect as if such
representations  and warranties  were set forth herein.  This Agreement has been
duly and  validly  authorized  by the  Company and Indigo is a valid and binding
agreement of the Company and Indigo, enforceable in accordance with its terms.

4.       FEES AND EXPENSES.

         (a)  Simultaneous  with  payment of the  exercise  price  under the Old
Warrants and the delivery of the New Warrants, at the Closing, the Company shall
pay the  Placement  Agent a commission  equal to (i) seven and one-half  percent
(7.5%) of the gross cash  proceeds  received by the Company from the exercise of
the Old Warrants  (the "CASH  FEE"),  and (ii) New  Warrants  exercisable  for a
number of shares of the Company's  common stock equal to the Cash Fee divided by
the exercise  price of the New Warrants (the  "PLACEMENT  AGENT  WARRANT").  The
Placement Agent Warrant shall include a "cashless exercise" provision. Placement
Agent shall be reimbursed  at Closing for its  reasonable  expenses  incurred in
connection with the Engagement including,  without limitation, legal fees of the
Placement Agent's counsel and disbursements of Placement Agent's counsel,  in an
amount not to exceed $20,000;  provided, that Placement Agent's counsel presents
a copy of the bill at Closing documenting such fees and disbursements.

         (b) If the Company conducts a separate private  placement of securities
to any  investor(s)  introduced  to the  Company  by the  Placement  Agent  ("PA
INVESTORS")  at any time during the  eighteen  (18) month period  following  the
Termination  Date, then the Company will pay to the Placement Agent a commission
equal to seven and on-half percent (7.5%) of the gross cash proceeds received by
the Company  from the PA Investors  in such new private  placement  ("SUBSEQUENT
CASH FEE"), and, in addition  thereto,  issue to the Placement Agent warrants to
purchase a number of shares common stock of the Company equal to the  Subsequent
Cash Fee divided by the per share purchase  price of the Company's  common stock
in such  private  placement,  or such  other  fee as  mutually  agreed to by the
Parties.

5.       NOTICES.

         All communications hereunder shall be in writing and shall be mailed or
delivered (a) to the Company,  at its offices at 165 Northvale  Avenue,  Ludlow,
New Jersey 07647, and (b) to Indigo,  at its offices at 780 Third Avenue,  Suite
2302, New York, NY 10017, Attention: Eric Brachfeld.

6.       INDEMNIFICATION.

         (a) The Company  agrees to  indemnify  and hold  harmless  Indigo,  its
employees  and  representatives  and each person who controls  Indigo within the
meaning of Section 15 of the Securities Act against any and all losses,  claims,
damages  or  liabilities,  joint or  several,  to which  they or any of them may
become subject under the Securities Act or any other statute or at common law in
connection with the performance of its duties  described herein and to reimburse
persons  indemnified as above for any legal or other expense (including the cost
of any  investigation  and preparation)  incurred by them in connection with any
litigation whether or not resulting in any liability,  provided,  however,  that
the  indemnity  agreement  contained  in this  Section  6(a)  shall not

<PAGE>

Elite Pharmaceuticals, Inc.
November 9, 2005
Page 3


apply to amounts paid in settlement of any such litigation if such settlement is
effected without the consent of the Company, nor shall it apply to Indigo or any
person controlling  Indigo in respect of any such losses,  claims,  damages,  or
liabilities  arising out of, or based upon, any such untrue statement or alleged
untrue statement, or any such omission or alleged omission, if such statement or
omission  was made in  reliance  upon  information  furnished  in writing to the
Company  by Indigo.  Indigo  agrees  within ten days after the  receipt by it of
written  notice of the  commencement  of any action  against  it or against  any
person controlling it as aforesaid,  in respect of which indemnity may be sought
from the Company on account of the indemnity agreement contained in this Section
6(a), to notify the Company in writing of the commencement thereof. The omission
of Indigo so to notify the  Company of any such  action  shall not  relieve  the
Company from any liability which it may have to Indigo or any person controlling
it as  aforesaid  on  account  of the  indemnity  agreement  contained  in  this
subsection.  In case any such action shall be brought against Indigo or any such
controlling  person and Indigo  shall  notify  the  Company of the  commencement
thereof,  the Company  shall be entitled to  participate  in (and, to the extent
that it shall wish,  to direct) the defense  thereof at its own expense but such
defense  shall be conducted  by counsel of  recognized  standing and  reasonably
satisfactory  to Indigo or such  controlling  person or  persons,  defendant  or
defendants in the litigation;  provided,  that the Company shall not be required
to pay for more than one firm of counsel for all indemnified parties, which firm
shall be designated by Indigo.  The Company agrees to notify Indigo  promptly of
the  commencement  of any  litigation or proceeding  against it or in connection
with the issue and sale of any of its  securities  and to furnish to Indigo,  at
its request, copies of all pleadings therein and permit Indigo to be an observer
therein and apprise  Indigo of all  developments  therein,  all at the Company's
expense.

         (b) Indigo  agrees,  in the same  manner and to the same  extent as set
forth in Section  6(a) of this  Agreement,  to indemnify  and hold  harmless the
Company and each person,  if any, who controls the Company within the meaning of
Section 15 of the  Securities  Act, with respect to any statement in or omission
from the  information  provided to investors  any  amendments  thereto,  if such
statement or omission was made in reliance upon information furnished in writing
to the Company by Indigo, on its behalf, specifically for use in connection with
the  preparation  of  documents to be provided to  prospective  investors or any
amendment  thereof  or  supplement  thereto  or by  reason of  improper  selling
practices  (including  failure to comply  with,  or a  violation  of, any law or
regulation by Indigo, its officers,  directors and registered placement agents).
Indigo shall not be liable for amounts paid in settlement of any such litigation
if such settlement was effected without its consent.  In case of commencement of
any action,  in respect of which  indemnity may be sought from Indigo on account
of the indemnity agreement contained in this Section 6(b), each person agreed to
be  indemnified  by Indigo shall have the same  obligation  to notify  Indigo as
Indigo has toward the Company in Section 6(a) of this Agreement,  subject to the
same loss of indemnity  in the event such notice is not given,  and Indigo shall
have the same right to  participate in (and to the extent that it shall wish, to
direct) the defense of such action at its own expense, but such defense shall be
conducted by one firm of counsel of recognized  standing and satisfactory to the
Company. Indigo agrees to notify the Company promptly of the commencement of any
litigation or proceeding  against it or against any such controlling  person, of
which it may be  advised,  in  connection  with the issue and sale of any of the
securities of the Company,  and to furnish the Company at its request  copies of
all  pleadings  therein  and permit the  Company to be an  observer  therein and
apprise it of all developments therein, all at Indigo's expense.

<PAGE>

Elite Pharmaceuticals, Inc.
November 9, 2005
Page 4


         (c) The respective  indemnity agreements between Indigo and the Company
contained in Sections 6(a) and 6(b) of this Agreement,  and the  representations
and  warranties  of the Company set forth  elsewhere  in this  Agreement,  shall
remain operative and in full force and effect,  regardless of any  investigation
made by or on behalf of Indigo or by or on behalf of any  controlling  person of
Indigo or the Company any controlling  person of the Company,  shall survive the
delivery  of the  Units.  Any  successor  of the  Company  and  Indigo or of any
controlling  person of  Indigo,  as the case may be,  shall be  entitled  to the
benefits of the respective indemnity agreements.

         (d) In order to provide for just and equitable  contribution  under the
Securities Act in any case in which (i) any person  entitled to  indemnification
under this Section 6 makes claim for  indemnification  pursuant hereto but it is
judicially  determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding  the fact that this  Section 6 provides for  indemnification  in
such case, or (ii) contribution  under the Securities Act may be required on the
part of any such person in circumstances for which  indemnification  is provided
under this Section 6, then,  and in each such case, the Company and Indigo shall
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after any contribution  from others) in such proportions so that
Indigo is responsible  for the proportion that the fees provided for herein bear
to the purchase price of the Securities,  and the Company is responsible for the
remaining  portion;  provided,  that,  in any such case,  no person  guilty of a
fraudulent  misrepresentation  (within  the  meaning  of  Section  11(f)  of the
Securities  Act) shall be entitled to  contribution  from any person who was not
guilty of such fraudulent misrepresentation.

         Within ten days after receipt by any party to this  Agreement of notice
of the  commencement  of any action,  suit or proceeding,  such party will, if a
claim for  contribution  in respect  thereof is to be made against another party
(the "CONTRIBUTING  PARTY"),  notify the contributing  party, in writing, of the
commencement  thereof, but the omission so to notify the contributing party will
not  relieve it from any  liability  which it may have to any other  party other
than for contribution  hereunder. In case any such action, suit or proceeding is
brought  against any party,  and such party so notifies a contributing  party or
his or its Placement Agent of the commencement  thereof within the aforesaid ten
days, the  contributing  party will be entitled to participate  therein with the
notifying party and any other  contributing party similarly  notified.  Any such
contributing  party  shall not be liable to any party  seeking  contribution  on
account of any  settlement of any claim,  action or proceeding  effected by such
party  seeking  contribution  without the written  consent of such  contributing
party. The contribution provisions contained in Section 6 are in addition to any
other rights or remedies  which either party hereto may have with respect to the
other or hereunder.

7.       MISCELLANEOUS.

         (a) No waiver,  amendment or other modification of this Agreement shall
be  effective  unless in  writing  and  signed by each  party to be bound.  This
Agreement  shall inure to the benefit of and be binding on the  Company,  Indigo
and their respective successors.

         (b) In case any  provision of this letter  agreement  shall be invalid,
illegal or  unenforceable,  the  validity,  legality and  enforceability  of the
remaining  provisions of this letter  agreement shall not in any way be affected
or impaired thereby.

<PAGE>

Elite Pharmaceuticals, Inc.
November 9, 2005
Page 5


         (c)  The  Company  has  retained   Indigo  to  act  as  an  independent
contractor, and any duties of Indigo arising out of its engagement shall be owed
solely to the Company and to no other party.

         (d) This letter  agreement  shall be  governed  by, and  construed  and
interpreted in accordance with, the laws of the State of New York.

         (e) Each of Indigo  and the  Company  (on its own  behalf  and,  to the
extent  permitted by applicable law, on behalf of its  shareholders)  waives all
right to trial by jury in any action,  proceeding or counterclaim (whether based
upon  contract,  tort or  otherwise)  related to or arising  out of this  letter
agreement.

         Please confirm that the foregoing correctly sets forth our agreement by
signing and returning to Indigo the enclosed  duplicate copy of this  Agreement.
We are delighted to participate in this engagement and have enjoyed working with
you on the assignment.

                                            Very truly yours,

                                            INDIGO SECURITIES LLC


                                            By:  /s/ Eric Brachfeld
                                            Print Name:  Eric Brachfeld
                                            Title:  Managing Partner



ACCEPTED AS OF THE DATE FIRST WRITTEN ABOVE:

ELITE PHARMACEUTICALS, INC.



By:  /s/ Bernard Berk
Print Name: Bernard Berk
Title:  CEO