WARRANT EXERCISE AGREEMENT

         THIS  AGREEMENT,  dated as of December 14, 2005 (this  "AGREEMENT")  is
entered  into  by and  between  the  Elite  Pharmaceuticals,  Inc.,  a  Delaware
corporation  (the  "COMPANY")  and the holder  (the  "WARRANT  HOLDER")  of that
certain "LTW" warrant (the "LT WARRANT") and that certain "STW" warrant (the "ST
WARRANT"; and together with the LT Warrant the "INITIAL WARRANTS"),  each issued
by the Company to the Warrant Holder pursuant to Subscription Agreements,  dated
as of October 6, 2004,  October  12,  2004 or  October  26,  2004,  each for the
purchase of up to such number of shares of the common stock, $0.01 par value per
share,  of the Company (the  "COMMON  STOCK") as is set forth beside the Warrant
Holder's name on SCHEDULE 1 attached hereto (the "WARRANT SHARES").

         WHEREAS,  the Company is  entering  into a series of  agreements  on or
within thirty days of the date hereof in a form substantially  identical to this
Agreement  with other  holders of warrants to purchase  shares of the  Company's
Common Stock (the "OTHER HOLDERS");

         WHEREAS,  the Company desires to induce the Warrant Holder to exercise,
by payment of cash,  the LT Warrant  and/or the ST Warrant  with  respect to the
shares of Common Stock purchasable thereunder;

         WHEREAS, in consideration for such in cash exercise,  the Company shall
issue to the Warrant  Holder a new warrant  substantially  in the form  attached
hereto as EXHIBIT A (the "REPLACEMENT WARRANT") to purchase additional shares of
Common Stock (the "REPLACEMENT WARRANT SHARES") as set forth herein;

         WHEREAS, as further consideration for such exercise by payment of cash,
the Company is granting to the Warrant Holder certain  registration  rights with
respect to the  Replacement  Warrant Shares  pursuant to a  Registration  Rights
Agreement  by and  among the  Company  and each  Other  Holder,  which  shall be
substantially in the form attached hereto as EXHIBIT B.

         NOW,  THEREFORE,  in  consideration  of the mutual  premises and of the
respective covenants contained in this Agreement and for other good and valuable
consideration,  the  receipt  and  adequacy  of which are  hereby  acknowledged,
intending to be legally bound hereby, the parties hereto agree as follows:

         1. INDUCEMENT TO EXERCISE. The Company hereby agrees upon acceptance by
the Company to issue to the Warrant Holder a Replacement Warrant exercisable for
that number  Replacement  Warrant Shares as is equal to thirty percent (30%) the
aggregate number of LT Warrant Shares and ST Warrant Shares purchased by payment
of cash by the Warrant  Holder,  if any, upon exercise of the LT Warrant  and/or
the ST  Warrant,  each  during  the  period  beginning  on the date  hereof  and
continuing until 5:30 p.m. EST on December 14, 2005 (the "EXERCISE PERIOD"). The
Company shall deliver the Replacement  Warrant,  if applicable,  dated as of the
Closing Date (as defined below),  to the Warrant Holder at the address  provided
on the  signature  page  hereto not more than ten (10)  business  days after the
expiration of the Exercise Period (the "CLOSING DATE").

<PAGE>

         2. DELIVERIES. The parties shall make the following deliveries:

                  (a) On or prior to the expiration of the Exercise Period,  the
Warrant  Holder shall deliver to the Company (i) an executed  signature  page of
this Agreement,  (ii) the executed  Warrant  Exercise  Notice(s)  reflecting the
exercise  of LT Warrant  and/or  the ST  Warrant  by payment of cash,  (iii) the
aggregate exercise price for the Warrant Shares, by check payable to the Company
or wire transfer of  immediately  available  funds to the  Company's  account in
accordance with the wire instructions attached hereto as EXHIBIT C; and (iv) the
LT Warrant  and/or the ST Warrant for  cancellation  or, to the extent not fully
exercised or expired, reissuance; and

                  (b) The Company shall deliver or cause to be delivered to each
Investor  (i) any  deliveries  required  to be made by the  Company  upon proper
exercise of the Initial  Warrants  (as set forth  therein),  including,  without
limitation,  a certificate representing the shares of Common Stock for which any
Initial  Warrant has been exercised and (ii) within ten (10) business days after
the expiration of the Exercise Period, a Replacement  Warrant in accordance with
the terms and conditions hereof.

         3.  REPRESENTATIONS OF THE COMPANY. The Company represents and warrants
to the Warrant Holder as follows:

                  (a)   ORGANIZATION.   The  Company  is  a   corporation   duly
incorporated,  validly existing and in good standing under the laws of Delaware,
with the requisite  power and authority to own and use its properties and assets
and to carry on its business as currently conducted.

                  (b)  AUTHORITY.  The  Company  has  the  corporate  power  and
authority to enter into and perform this  Agreement,  and all  corporate  action
necessary to authorize the execution, delivery and performance of this Agreement
by the Company and the consummation of the transactions  contemplated  hereby by
the Company has been duly and validly  taken.  This  Agreement has been duly and
validly  executed and  delivered by the Company.  This  Agreement  constitutes a
valid and binding agreement of the Company,  enforceable  against the Company in
accordance with its terms,  subject to bankruptcy,  insolvency,  reorganization,
moratorium  and other  similar laws  affecting  the rights of  creditors  and to
general principles of equity.

                  (c) ISSUANCE OF SECURITIES.  The  Replacement  Warrant is duly
authorized and, when issued in accordance with this Agreement,  will be duly and
validly issued.  The Company has reserved from its duly authorized capital stock
a sufficient  number of shares of Common Stock for issuance upon exercise of the
Replacement Warrant.

         4. REPRESENTATIONS OF THE WARRANT HOLDER. The Warrant Holder represents
and warrants to the Company as follows:

                  (a)  ORGANIZATION.  If the  Warrant  Holder  is not a  natural
person, the Warrant Holder is an entity duly organized,  validly existing and in
good standing under the laws of the jurisdiction of its  organization,  with the
requisite  power and authority to own and use its  properties  and assets and to
carry on its business as currently conducted.

                                       2
<PAGE>

                  (b) AUTHORITY.  The Warrant Holder has the requisite power and
authority to enter into and perform this Agreement,  and all action necessary to
authorize  the  execution,  delivery and  performance  of this  Agreement by the
Warrant Holder and the consummation of the transactions  contemplated  hereby by
the Warrant Holder has been duly and validly taken. This Agreement has been duly
and validly  executed  and  delivered  by the  Warrant  Holder.  This  Agreement
constitutes  a valid and binding  agreement of the Warrant  Holder,  enforceable
against the Warrant Holder in accordance with its terms,  subject to bankruptcy,
insolvency,  reorganization,  moratorium  and other  similar laws  affecting the
rights of creditors and to general principles of equity.

                  (c) OWN  ACCOUNT.  The  Warrant  Holder  understands  that the
Replacement   Warrant  and  the  Replacement   Warrant  Shares  (together,   the
"SECURITIES") are "restricted securities" and have not been registered under the
Securities  Act or any  applicable  state  securities  law and is acquiring  the
Securities as principal for its own account and not with a view to  distributing
or reselling such  Securities or any part thereof,  has no present  intention of
distributing any of such Securities and has no arrangement or understanding with
any  other  persons   regarding  the   distribution  of  such  Securities  (this
representation  and warranty not limiting the Warrant Holder's right to sell the
Securities pursuant to a registration  statement or otherwise in compliance with
applicable  federal and state securities laws). The Warrant Holder does not have
any  agreement  or  understanding,  directly or  indirectly,  with any person or
entity to distribute any of the Securities.

                  (d) WARRANT HOLDER STATUS.  At the time the Warrant Holder was
offered the  Securities,  it was, and at the date hereof it is, and on each date
on  which  it  exercises  the  Replacement  Warrant  it will be  either:  (i) an
"accredited  investor" as defined in Rule 501(a)(1),  (a)(2),  (a)(3), (a)(7) or
(a)(8) under the  Securities  Act or (ii) a "qualified  institutional  buyer" as
defined in Rule 144A(a) under the Securities Act.

                  (e)  EXPERIENCE  OF THE WARRANT  HOLDER.  The Warrant  Holder,
either  alone  or  together  with  its  representatives,   has  such  knowledge,
sophistication  and  experience  in business and  financial  matters so as to be
capable of evaluating the merits and risks of the prospective  investment in the
Securities,  and has so evaluated the merits and risks of such  investment.  The
Warrant Holder  acknowledges and agrees that in making the decision to invest in
the Securities, the Warrant Holder has relied on his, her or its own examination
of the Company and the terms of the offering,  including  the merits,  risks and
tax and other  considerations  involved.  The Warrant Holder is able to bear the
economic risk of an investment  in the  Securities  and, at the present time, is
able to afford a complete loss of such investment.

                  (f) GENERAL SOLICITATION. The Warrant Holder is not purchasing
the  Securities  as a result  of any  advertisement,  article,  notice  or other
communication  regarding the Securities published in any newspaper,  magazine or
similar media or broadcast over  television or radio or presented at any seminar
or any other general solicitation or general advertisement.

                  (g) TITLE. The Warrant Holder has good and marketable title to
the LT Warrant,  free and clear of any liens, claims,  encumbrances,  charges or
restrictions  of any kind,  other than  those that may be imposed by  securities
laws generally.

                                       3
<PAGE>

         5. MISCELLANEOUS.

                  (a) ASSIGNMENT.  This Agreement and the rights and obligations
evidenced  hereby  shall  inure  to  the  benefit  of and be  binding  upon  the
successors of the Company and the successors of the Warrant Holder.

                  (b) HEADINGS.  The headings used in this Agreement are for the
convenience of reference  only and shall not, for any purpose,  be deemed a part
of this Agreement.

                  (c)  GOVERNING  LAW.  This  Agreement  shall be  construed  in
accordance  with,  and governed  by, the laws of the State of New York  (without
giving effect to its conflict of laws principles).

                  (d) CONSENT TO  JURISDICTION  AND SERVICE OF PROCESS.  Each of
the parties hereby irrevocably and  unconditionally  submits to the jurisdiction
of the courts of the State of New York and of the Federal  courts sitting in the
State of New York in any action or proceeding directly or indirectly arising out
of or relating to this  Agreement  or the  transactions  contemplated  hereby or
thereby (whether based in contract,  tort, equity or any other theory).  Each of
the parties agrees that all actions or proceedings arising out of or relating to
this agreement must be litigated exclusively in any such State or, to the extent
permitted  by law,  Federal  court  that sits in the  County  of New  York,  and
accordingly,  each party  irrevocably  waives any objection  which it may now or
hereafter  have to the laying of the venue of any such action or  proceeding  in
any such court. Each party further irrevocably consents to service of process in
the manner provided for notices in Section 5(f).  Nothing in this Agreement will
affect the right of any party to this  Agreement  to serve  process in any other
manner permitted by law.

                  (e) WAIVER OF JURY TRIAL.  Each party  waives any right it may
have to a trial by jury in any  action  or  proceeding  directly  or  indirectly
arising out of or relating to this  Agreement or the  transactions  contemplated
hereby or thereby (whether based on contract, tort, equity or any other theory).
Each of the parties (i) certifies that no  representative,  agent or attorney of
any other party has represented,  expressly or otherwise,  that such other party
would not, in the event of litigation,  seek to enforce the foregoing waiver and
(ii)  acknowledges  that it and the other  parties  hereto have been  induced to
enter into this  agreement  by,  among  other  things,  the mutual  waivers  and
certifications in this Section 5(e).

                  (f) NOTICES.  Any and all notices or other  communications  or
deliveries  required or permitted to be provided  hereunder  shall be in writing
and  shall be deemed  given and  effective  on the  earliest  of (a) the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  number set forth on the signature pages attached hereto prior to 5:30
p.m.,  EST,  on a  business  day,  (b) the next  business  day after the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  number set forth on the signature pages attached hereto on a day that
is not a business day or later than 5:30 p.m., EST, on any business day, (c) the
second  business day following the date of mailing,  if sent by U.S.  nationally
recognized overnight courier service, or (d) upon actual receipt by the party to
whom such  notice is required  to be given.  The  address  for such  notices and
communications shall be as follows:

                                       4
<PAGE>

                           If to the Company:

                           Elite Pharmaceuticals, Inc.
                           165 Ludlow Avenue
                           Northvale, New Jersey 07647
                           Attention:  Chief Executive Officer
                           Fax:  (201) 750-2755

                           with a copy to:

                           Reitler Brown & Rosenblatt LLC
                           800 Third Avenue, 21st Floor
                           New York, New York 10022
                           Attention:  Scott H. Rosenblatt
                           Fax:  (212) 371-5500

                           If to the Warrant Holder, at the address specified on
                           the signature page hereto.

                  (g)  AMENDMENT.  This  Agreement may be modified or amended or
the  provisions  hereof  waived with the written  consent of the Company and the
Warrant Holder.

                  (h) SEVERABILITY.  Wherever  possible,  each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under  applicable law, such provision shall be ineffective to the extent
of such  prohibition or invalidity,  without  invalidating the remainder of such
provisions or the remaining provisions of this Agreement.

                            (SIGNATURE PAGE FOLLOWS)


                                       5
<PAGE>

         IN WITNESS  WHEREOF,  the parties  hereto have  executed or have caused
this Agreement to be duly executed by their respective authorized officers as of
the date first above written.

                                      ELITE PHARMACEUTICALS, INC.




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

WARRANT HOLDER:



By:
    ---------------------------------
    Name:
    Title:
    Address:


                                       6
<PAGE>

                                                                      SCHEDULE 1

                           SCHEDULE OF WARRANT HOLDERS



ELITE PHARMACEUTICALS, INC.
Analysis of Series A Financing

<TABLE>
<CAPTION>
                                           COMMON     COMMON  WARRANT                           TOTAL         $ TO        $ TO
                                           SHARES     SHARES   SHARES       ST        LT        SHARES      EXERCISE     EXERCISE
INVESTOR                       INVESTMENT   BASIS      OWNED    BASIS    WARRANTS   WARRANT   REGISTERED   ST WARRANTS  LT WARRANTS
------------------------------------------------------------------------------------------------------------------------------------

<S>                              <C>        <C>      <C>        <C>       <C>       <C>         <C>       <C>           <C>
Martin Fund II, LP                $69,999   $1.23     56,910    $1.54      28,455    28,455     113,820    $43,749.55    $43,749.56
Martin Fund Offshore, LDC         $50,000   $1.23     40,650    $1.54      20,325    20,325      81,300    $31,249.69    $31,249.69
Martin Fund Offshore, Ltd.       $500,007   $1.23    406,510    $1.54     203,255   203,255     813,020   $312,504.56   $312,504.56
Martin Fund, LP                  $379,996   $1.23    308,940    $1.54     154,470   154,470     617,880   $237,497.63   $237,497.63
------------------------------                                                                            -----------   -----------
   Total                                                                                                  $625,001.44   $625,001.44

Treppel, Jerry                   $250,000   $1.23    203,252    $1.54     101,625   101,625     406,502   $156,248.44   $156,248.44
Wheaten HealthCare
Partners, LP                     $250,000   $1.23    203,252    $1.54     101,625   101,625     406,502   $156,248.44   $156,248.44
Valor Capital Management, LP     $750,000   $1.23    609,756    $1.54     304,880   304,880   1,219,516   $468,753.00   $468,753.00
SAV HealthCo Partners          $1,000,000   $1.23    813,008    $1.54     406,505   406,505   1,626,018   $625,001.44   $625,001.44
------------------------------
Bushido Capital                  $250,000   $1.23    203,252    $1.54     101,625   101,625     406,502   $156,248.44   $156,248.44
                                                                                                    n/a
------------------------------
Myron Neugeboren                  $25,000   $1.23     20,325    $1.54      10,163    10,163      40,650    $15,624.84    $15,624.84
Edward Neugeboren                 $25,000   $1.23     20,325    $1.54      10,163    10,163      40,650    $15,624.84    $15,624.84
Charon Behl                      $246,000   $1.23    200,000    $1.54     100,000   100,000     400,000   $153,750.00   $153,750.00
Christopher Dick                  $20,000   $1.23     16,260    $1.54       8,130     8,130      32,520    $12,499.88    $12,499.88
Shirley Rae Sullivan              $25,000   $1.23     20,325    $1.54      10,165    10,165      40,655    $15,628.69    $15,628.69
William Austin Lewis IV          $123,000   $1.23    100,000    $1.54      50,000    50,000     200,000    $76,875.00    $76,875.00
------------------------------                                          ---------
Trade Winds                       $86,715   $1.23     70,500    $1.54      35,250    35,250     141,000                  $54,196.88
                                                                          (35,250)                  n/a
------------------------------                                          ---------
Little Wing                      $413,280   $1.23    336,000    $1.54     168,000   168,000     672,000                 $258,300.00
                                                                         (168,000)                  n/a
------------------------------                                          ---------
Greg Osborn                       $12,300   $1.23     10,000    $1.54       5,000     5,000      20,000     $7,687.50     $7,687.50
Eric Brachfeld                    $12,300   $1.23     10,000    $1.54       5,000     5,000      20,000     $7,687.50     $7,687.50
Periscope Partners LP            $150,000   $1.23    121,951    $1.54      60,975    60,975     243,901    $93,749.06    $93,749,06
------------------------------                                          ---------
Keith Barksdale                   $24,600   $1.23     20,000    $1.54      10,000    10,000      40,000                  $15,375.00
                                                                          (10,000)
------------------------------                                          ---------
Jess Morgan & Co.              $1,122,000   $1.40    801,429    $1.75     400,715   400,715   1,602,859   $701,251,25   $701,251,25
RC----                           $150,000   $1.40    107,143    $1.75      53,570    53,570     214,283    $93,747.50    $93,747.50
Amy Daly                         $100,000   $1.40     71,429    $1.75      35,715    35,715     142,859    $62,501.25    $62,501.25
Peter S. Rosemary O'Gorman        $66,000   $1.40     47,143    $1.75      23,570    23,570      94,283    $41,247.50    $41,247.50
Fineman Revocable Trust          $100,000   $1.40     71,429    $1.75      35,715    35,715     142,859    $62,501.25    $62,501.25
Neil V. Moddy Revocable Trust    $132,000   $1.40     94,286    $1.75      47,145    47,145     188,576    $82,503,75    $82,503,75
------------------------------                                          ---------
Sunrise Capital                  $266,803   $1.47    181,498    $1.84      90,750    90,750     362,998
</TABLE>



                                       7
<PAGE>

                                                                       EXHIBIT A

                           FORM OF REPLACEMENT WARRANT

                                 (SEE ATTACHED)












                                       8
<PAGE>

                                                                       EXHIBIT B

                      FORM OF REGISTRATION RIGHTS AGREEMENT

                                 (SEE ATTACHED)












                                       9
<PAGE>

                                                                       EXHIBIT C

                                WIRE INSTRUCTIONS


Bank Name:            BANK OF AMERICA

Bank Address:         300 Garden State Plaza
                      Route 4 & 17
                      Paramus, NJ 07652
                      Telephone: (201) 845-5450

Account Title:        ELITE PHARMACEUTICALS, INC.
                      PRIVATE PLACEMENT ACCOUNT NO.: 9420365795
                      BANK ROUTING NUMBER: 021200339


                                       10