Document:

Stock Option Agreement

	

Execution Copy 

STOCK OPTION
AGREEMENT 

        
        THIS
STOCK OPTION AGREEMENT (“Agreement”) dated as of November 9, 2004, is by
and between Valley National Bancorp, a New Jersey corporation and registered bank holding
company (“Valley”), Valley National Bank, a national banking association
and a wholly-owned subsidiary of Valley (“VNB”), and NorCrown Bank, a
commercial bank organized under the laws of the State of New Jersey
(“NorCrown”). 

BACKGROUND 

        
        WHEREAS,
Valley, VNB, NorCrown and The NorCrown Trust, the holder of over 99% of the outstanding
common stock of NorCrown (the “Trust”), as of the date hereof, are
prepared to execute a definitive agreement and plan of merger (the “Merger
Agreement”) pursuant to which NorCrown will be merged with and into VNB (the
“Merger”); and 

        
        WHEREAS,
Valley has advised NorCrown that it will not execute the Merger Agreement unless NorCrown
executes this Agreement; and 

        
        WHEREAS,
the Board of Directors of NorCrown has determined that the Merger Agreement provides
substantial benefits to the shareholders of NorCrown; and 

        
        WHEREAS,
as an inducement to Valley to enter into the Merger Agreement and in consideration for
such entry, NorCrown desires to grant to Valley an option to purchase authorized but
unissued shares of common stock of NorCrown in an amount and on the terms and conditions
hereinafter set forth. 

AGREEMENT 

        
        In
consideration of the foregoing and the mutual covenants and agreements set forth herein
and in the Merger Agreement, Valley and NorCrown, intending to be legally bound hereby,
agree: 

        
        1.       Grant
of Option. NorCrown hereby grants to Valley an option to purchase           1,049,949
shares of common stock, $2.00 par value per share, of NorCrown (the           “Common
Stock”) at a price of $20.00 per share (as the same may           be reduced in
accordance with Section 5b hereof, the “Option Price”),           on the terms
and conditions set forth herein (the “Option”).  

        
        2.       Exercise
of Option. This Option shall not be exercisable until the           occurrence of a
Triggering Event (as such term is hereinafter defined). Upon or           after the
occurrence of a Triggering Event (as such term is hereinafter           defined), Valley
may exercise the Option, in whole or in part, at any time or           from time to time,
subject to the terms and conditions set forth herein and the           termination
provisions of Section 19 of this Agreement.  

	

        
        The
term “Triggering Event” means the occurrence of any of the following
events: 

        
                   a.                      A
person or group (as such terms are defined in the Securities Exchange Act of
          1934, as amended (the “Exchange Act”), and the rules and
          regulations thereunder) other than Valley or an affiliate of Valley (a
          “third party”) acquires beneficial ownership (as such term is
          defined in Rule 13d-3 as promulgated under the Exchange Act) of at least 5% of
          the then outstanding shares of Common Stock, provided, however, that the
          continuing ownership by a person or group which as of the date hereof owns more
          than 5% of the outstanding Common Stock shall not constitute a Triggering
Event;           or  

        
                   b.                      A
third party enters into a letter of intent or an agreement, whether oral or
          written, with NorCrown or the Trust pursuant to which such third party or any
          affiliate of such third party would (i) merge or consolidate, or enter into any
          similar transaction, with NorCrown, (ii) acquire all or a significant portion
of           the assets or liabilities of NorCrown, or (iii) acquire beneficial ownership
of           securities representing, or the right to acquire beneficial ownership or to
vote           securities representing, 5% or more of the then outstanding shares of
Common           Stock; or  

        
                   c.                      A
third party makes a filing with any bank, thrift or financial holding company
          regulatory authorities with respect to or publicly announces a bona fide
          proposal (a “Proposal”) for (i) any merger with,
          consolidation with or acquisition of all or a significant portion of all the
          assets or liabilities of, NorCrown or any other business combination involving
          NorCrown, or (ii) a transaction involving the transfer of beneficial
          ownership of securities representing, or the right to acquire beneficial
          ownership or to vote securities representing, 5% or more of the outstanding
          shares of Common Stock, and in either case thereafter, if (i) such Proposal has
          not been Publicly Withdrawn (as such term is hereinafter defined) no later than
          the earlier of (A) 10 days after the public announcement and (B) a date which
is           10 days prior to the Closing Date (as such term is defined in the Merger
          Agreement), and (ii) the holders of a majority of the NorCrown common stock do
          not vote to reject the Proposal no later than the earlier of (A) 30 days after
          the public announcement, and (B) a date which is 10 days prior to the Closing
          Date (as such term is defined in the Merger Agreement); or  

        
                   d.                      A
third party makes a bona fide Proposal and thereafter, but before such           Proposal
has been Publicly Withdrawn, NorCrown or the Trust willfully or           intentionally
takes any action in any manner which would materially interfere           with its
ability to consummate the Merger or materially reduce the value of the
          transaction to Valley; or  

        
                   e.                      After
the execution of this Agreement, NorCrown, the Trust or any of its           directors,
senior executive officers, investment bankers or other person with           actual or
apparent authority to speak for the Board of Directors, willfully or
          intentionally takes any material direct or indirect action inviting,
encouraging           or soliciting any proposal (other than from Valley or an affiliate
of Valley)           which has as its purpose a tender offer for the shares of Common
Stock, a           merger, consolidation, plan of exchange, plan of acquisition or
reorganization           of NorCrown, or a sale of a significant number of shares of
Common Stock or any           significant portion of its assets or liabilities.  

        
        The
term “significant portion” means 10% of the assets or liabilities of
NorCrown. The term “significant number” means 10% of the outstanding shares of
Common Stock. 

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        Solely
for purposes of Section 5b hereof, the date of a “Triggering Event” under clause
(a) above is the date the third party first acquires beneficial ownership of at least 5%
of the then outstanding shares of Common Stock; the date of a “Triggering Event”
under clause (b) above is the date of entry into the letter of intent or agreement; the
date of a “Triggering Event” under clause (c) above is the earlier of the
date of the filing (if any) with a bank, thrift or financial holding company regulatory
authority with respect to the Proposal or the date of public announcement of the Proposal;
the date of a “Triggering Event” under clause (d) above is the date the third
party first makes the Proposal; and the date of a “Triggering Event” under
clause (e) above is the first date on which a material direct or indirect action referred
to therein is taken. 

        
        “Publicly
Withdrawn”, for purposes of clauses (c) and (d) above, shall mean an
unconditional bona fide withdrawal of the Proposal coupled with a public announcement of
no further interest in pursuing such Proposal or in acquiring any controlling influence
over NorCrown or in soliciting or inducing any other person (other than Valley or any
affiliate) to do so. 

        
        Notwithstanding
the foregoing, the Option may not be exercised at any time (i) in the absence of any
required governmental or regulatory approval or consent necessary for NorCrown to issue
the shares of Common Stock covered by the Option (the “Option Shares”) or
Valley to exercise the Option or prior to the expiration or termination of any waiting
period required by law, or (ii) so long as any injunction or other order, decree or ruling
issued by any federal or state court of competent jurisdiction is in effect which
prohibits the sale or delivery of the Option Shares. 

        
        NorCrown
shall notify Valley promptly in writing of the occurrence of any Triggering Event known to
it, it being understood that the giving of such notice by NorCrown shall not be a
condition to the right of Valley to exercise the Option. NorCrown will not take any action
which would have the effect of preventing or disabling NorCrown from delivering the Option
Shares to Valley upon exercise of the Option or otherwise performing its obligations under
this Agreement, except to the extent required by applicable securities and banking laws
and regulations. 

        
        In
the event Valley wishes to exercise the Option, Valley shall send a written notice to
NorCrown (the date of which is hereinafter referred to as the “Notice Date”)
specifying the total number of Option Shares it wishes to purchase and a place and date
between two and ten business days inclusive from the Notice Date for the closing of such a
purchase (a “Closing”); provided, however, that a Closing
shall not occur prior to two days after the later of receipt of any necessary regulatory
approvals and the expiration of any legally required notice or waiting period, if any. 

        
        3.       Payment
and Delivery of Certificates. At any Closing hereunder           (a) Valley will
make payment to NorCrown of the aggregate price for the           Option Shares so
purchased by wire transfer of immediately available funds to an           account
designated by NorCrown; (b) NorCrown will deliver to Valley a stock           certificate
or certificates representing the number of Option Shares so           purchased, free and
clear of all liens, claims, charges and encumbrances of any           kind or nature
whatsoever created by or through NorCrown, registered in the name           of Valley or
its designee, in such denominations as were specified by Valley in           its notice
of exercise; and (c) Valley shall pay any transfer or other taxes           required by
reason of the issuance of the Option Shares so purchased.  

        
        4.       Registration
Rights. Upon or after the occurrence of a Triggering Event           and upon receipt
of a written request from Valley, NorCrown shall, if necessary           for the resale
of the Option or the Option Shares by Valley, prepare and file a           registration
statement with the Securities and Exchange Commission and any state           securities
bureau covering the Option and such number of Option Shares as Valley           shall
specify in its request, and NorCrown shall use its best efforts to cause           such
registration statement to be declared effective in order to permit the sale           or
other disposition of the Option and the Option Shares, provided that Valley
          shall in no event have the right to have more than one such registration
          statement become effective, and provided further that NorCrown shall not be
          required to prepare and file any such registration statement in connection with
          any proposed sale with respect to which counsel to NorCrown delivers to
NorCrown           and to Valley (which is reasonably acceptable to Valley) its opinion
to the           effect that no such filing is required under applicable laws and
regulations           with respect to such sale or disposition or any subsequent sale or
disposition;           provided further, however, that NorCrown may delay any
registration of Option           Shares above for a period not exceeding 90 days in the
event that NorCrown shall           in good faith determine that any such registration
would adversely effect an           on-going offering of securities by NorCrown for cash.
Valley shall provide all           information reasonable requested by NorCrown for
inclusion in any registration           statement to be filed hereunder.  

3 

	

        
        In
connection with such filing, NorCrown shall use its best efforts to cause to be delivered
to Valley such certificates, opinions, accountant’s letters and other documents as
Valley shall reasonably request and as are customarily provided in connection with
registrations of securities under the Securities Act of 1933, as amended. All expenses
incurred by NorCrown in complying with the provisions of this Section 4, including without
limitation, all registration and filing fees, printing expenses, fees and disbursements of
counsel for NorCrown and blue sky fees and expenses shall be paid by NorCrown.
Underwriting discounts and commissions to brokers and dealers relating to the Option or
Option Shares, fees and disbursements of counsel to Valley and any other expenses incurred
by Valley in connection with such registration shall be borne by Valley. In connection
with such filing, NorCrown shall indemnify and hold harmless Valley against any losses,
claims, damages or liabilities, joint or several, to which Valley may become subject,
insofar as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any preliminary or final registration statement or any
amendment or supplement thereto, or arise out of a material fact required to be stated
therein or necessary to make the statements therein not misleading; and NorCrown will
reimburse Valley for any legal or other expense reasonably incurred by Valley in
connection with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that NorCrown will not be liable in any case to
the extent that any such loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission made in
such preliminary or final registration statement or such amendment or supplement thereto
in reliance upon and in conformity with written information furnished by or on behalf of
Valley specifically for use in the preparation thereof with respect to information about
the selling stockholders or the plan of distribution. Valley will indemnify and hold
harmless NorCrown to the same extent as set forth in the immediately preceding sentence
but only with reference to written information specifically furnished by or on behalf of
Valley for use in the preparation of such preliminary or final registration statement or
such amendment or supplement thereto with respect to information about the selling
stockholders or the plan of distribution; and Valley will reimburse NorCrown for any legal
or other expense reasonably incurred by NorCrown in connection with investigating or
defending any such loss, claim, damage, liability or action. Notwithstanding anything to
the contrary herein, no indemnifying party shall be liable for any settlement effected
without its prior written consent. 

4 

	

        
        5.       Adjustments
Upon Changes in Capitalization. In the event of any change in           the Common
Stock by reason of stock dividends, split-ups, mergers,           recapitalizations,
combinations, conversions, exchanges of shares or the like,           then the number and
kind of Option Shares and the Option Price shall be           appropriately adjusted.  

        
        In
the event any capital reorganization or reclassification of the Common Stock, or any
consolidation, merger or similar transaction of NorCrown with another entity, or any sale
of all or substantially all of the assets of NorCrown, shall be effected in such a way
that the holders of Common Stock shall be entitled to receive stock, securities or assets
with respect to or in exchange for Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful and adequate
provisions (in form reasonably satisfactory to the holder hereof) shall be made whereby
the holder hereof shall thereafter have the right to purchase and receive upon the basis
and upon the terms and conditions specified herein and in lieu of the Common Stock
immediately theretofore purchasable and receivable upon exercise of the rights
represented by this Option, such shares of stock, securities or assets as may be issued
or payable with respect to or in exchange for the number of shares of Common Stock
immediately theretofore purchasable and receivable upon exercise of the rights
represented by this Option had such reorganization, reclassification, consolidation,
merger or sale not taken place; provided, however, that, with regard to a
consolidation, merger or similar transaction, or any sale of all or substantially all of
the assets of NorCrown, if such transaction results in the holders of Common Stock
receiving only cash, the holder hereof shall be paid the difference between the Option
Price and such cash consideration without the need to exercise the Option.  

        
        6.       Filings
and Consents. Each of Valley and NorCrown will use its reasonable           efforts
to make all filings with, and to obtain consents of, all third parties           and
governmental authorities necessary to the consummation of the transactions
          contemplated by this Agreement.  

        
        Exercise
of the Option herein provided shall be subject to compliance with all applicable laws
including, but not limited to, in the event Valley is the holder hereof, approval of the
Board of Governors of the Federal Reserve System, the Federal Deposit Insurance
Corporation, the New Jersey Department of Banking or the Securities and Exchange
Commission, and NorCrown agrees to cooperate with and furnish to the holder hereof such
information and documents as may be reasonably required to secure such approvals.  

        
        7.       Representations
and Warranties of NorCrown. NorCrown hereby represents           and warrants to
Valley as follows:  

        
                   a.            Due
Authorization. NorCrown has full corporate power and authority to           execute,
deliver and perform this Agreement and all corporate action necessary           for
execution, delivery and performance of this Agreement has been duly taken by
          NorCrown.  

        
                   b.            Authorized
Shares. NorCrown has taken and, as long as the Option is           outstanding, will
take all necessary corporate action to authorize and reserve           for issuance all
shares of Common Stock that may be issued pursuant to any           exercise of the
Option.  

        
                   c.            No
Conflicts. Neither the execution and delivery of this Agreement nor
          consummation of the transactions contemplated hereby (assuming all appropriate
          regulatory approvals) will violate or result in any violation or default of or
          be in conflict with or constitute a default under any term of the Certificate
of           Incorporation or Bylaws of NorCrown or any agreement, instrument, judgment,
          decree or order applicable to NorCrown.  

5 

	

        
        8.       Specific
Performance. The parties hereto acknowledge that damages would           be an
inadequate remedy for a breach of this Agreement and that the obligations           of
the parties hereto shall be specifically enforceable. Notwithstanding the
          foregoing, Valley shall have the right to seek money damages against NorCrown
          for a breach of this Agreement.  

        
        9.       Entire
Agreement. This Agreement constitutes the entire agreement between           the
parties with respect to the subject matter hereof and supersedes all other
          prior agreements and understandings, both written and oral, among the parties
or           any of them with respect to the subject matter hereof.  

        
        10.       Assignment
or Transfer. Valley may not sell, assign or otherwise transfer           its rights
and obligations hereunder, in whole or in part, to any person or           group of
persons other than to VNB or another affiliate of Valley, until the           occurrence
of a Triggering Event. Valley represents that it is acquiring the           Option for
Valley’s own account and not with a view to or for sale in           connection with
any distribution of the Option or the Option Shares. After the           occurrence of a
Triggering Event, Valley may sell, assign, pledge, or otherwise           transfer its
rights and obligations hereunder, in whole or in part, to any           person, subject
to compliance with applicable law.  

        
        11.       Amendment
of Agreement. Upon mutual consent of the parties hereto, this           Agreement may
be amended in writing at any time, for the purpose of facilitating           performance
hereunder or to comply with any applicable regulation of any           governmental
authority or any applicable order of any court or for any other           purpose.  

        
        12.       Validity.
The invalidity or unenforceability of any provision of this           Agreement shall not
affect the validity or enforceability of any other           provisions of this
Agreement, which shall remain in full force and effect.  

        
        13.       Notices.
All notices, requests, consents and other communications           required or permitted
hereunder shall be in writing and shall be deemed to have           been duly given when
delivered personally, or delivered by overnight delivery           service, or by
registered or certified mail (postage prepaid, return receipt           requested) to the
respective parties as follows:  

	                
If to Valley	
	 	 		 	Valley National Bancorp	 
	 	 		 	1455 Valley Road	 
	 	 		 	Wayne, New Jersey 07470	 
	 	 		 	Attn.: Gerald H. Lipkin
           
Chairman, President and Chief Executive Officer	 

	

6

	                With a copy to:	
	 	 		 	Pitney Hardin LLP	 
	 	 		 	200 Campus Drive
Florham Park, NJ 07932-0950	 
	 	 		 	Attn.: Ronald H. Janis, Esq.	 

	          
      If to NorCrown:	
	 	 		 	NorCrown Bank	 
	 	 		 	66 West Mt. Pleasant Avenue	 
	 	 		 	Livingston, New Jersey 07039	 
	 	 		 	Attn.: Joseph Paparatto, President and Chief Executive Officer	 

	                With a copy to:	
	 	 		 	Wolff & Samson, PC	 
	 	 		 	One Boland Drive	 
	 	 		 	West Orange, NJ 07052	 
	 	 		 	Attn.: David Samson, Esq.
(as counsel to the Board of Directors of NorCrown)	 

	                	
	 	 		 	and

Sills Cummis Epstein & Gross P.C.	 
	 	 		 	The Legal Center
One Riverfront Plaza	 
	 	 		 	Newark, New Jersey 07102	 
	 	 		 	Attn.: Steven S. Radin, Esq. 
(as counsel to NorCrown)	 

	

or to such other address as the
person to whom notice is to be given may have previously furnished to the others in
writing in the manner set forth above (provided that notice of any change of address shall
be effective only upon receipt thereof). 

        
        14.       Governing
Law. This Agreement shall be governed by and construed in           accordance with
the laws of the State of New Jersey.  

        
        15.       Captions.
The captions in the Agreement are inserted for convenience and           reference
purposes, and shall not limit or otherwise affect any of the terms or
          provisions hereof.  

        
        16.       Waivers
and Extensions. The parties hereto may, by mutual consent, extend           the time
for performance of any of the obligations or acts of either party           hereto. Each
party may waive (a) compliance with any of the covenants of the           other party
contained in this Agreement and/or (b) the other party’s           performance of
any of its obligations set forth in this Agreement.  

7 

	

        
        17.       Parties
in Interest. This Agreement shall be binding upon and inure           solely to the
benefit of each party hereto, and nothing in this Agreement,           express or
implied, is intended to confer upon any other person any rights or           remedies of
any nature whatsoever under or by reason of this Agreement.  

        
        18.       Counterparts.
This Agreement may be executed in two or more counterparts,           each of which shall
be deemed to be an original, but all of which shall           constitute one and the same
agreement.  

        
        19.       Termination.
This Agreement shall terminate upon either the termination           of the Merger
Agreement as provided therein or the consummation of the           transactions
contemplated by the Merger Agreement; provided, however, that if
termination of the Merger Agreement occurs after the           occurrence of a Triggering
Event (as defined in Section 2 hereof), this           Agreement shall not terminate
until the later of 18 months following the date of           the termination of the
Merger Agreement or the consummation of any proposed           transactions which
constitute the Triggering Event; provided further,           that if the holder
has given notice of exercise of the option and the exercise           is awaiting any
necessary regulatory approval after the holder has acted           reasonably to obtain
such approval this Agreement shall not terminate until the           approvals have been
granted and reasonable time to consummate has elapsed, or           the approvals are
denied.  

8 

	

        
        IN
WITNESS WHEREOF, each of the parties hereto, pursuant to resolutions adopted by its Board
of Directors, has caused this Stock Option Agreement to be executed by its duly authorized
officer, all as of the day and year first above written. 

			VALLEY NATIONAL BANCORP

By:  GERALD H. LIPKIN
——————————————

         Gerald H. Lipkin    

         Chairman, President and

         Chief Executive Officer

			NORCROWN BANK

By:  JOSEPH PAPARATTO
——————————————

         Joseph Paparatto    

         PresidentTHE SECURITIES  REPRESENTED BY THIS WARRANT HAVE NOT BEEN  REGISTERED  UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE  "SECURITIES  ACT"), OR APPLICABLE STATE
SECURITIES  LAWS  (THE  "STATE  ACTS"),  AND  SHALL  NOT BE  SOLD  OR  OTHERWISE
TRANSFERRED  BY THE HOLDER  EXCEPT BY  REGISTRATION  OR PURSUANT TO AN EXEMPTION
FROM  REGISTRATION  UPON THE ISSUANCE TO THE COMPANY OF AN OPINION OF COUNSEL OR
OTHER  EVIDENCE  REASONABLY  SATISFACTORY  TO THE COMPANY TO THE EFFECT THAT ANY
SUCH  TRANSFER  SHALL NOT BE IN  VIOLATION OF THE  SECURITIES  ACT AND THE STATE
ACTS.

                                                             Warrant to Purchase
                                                  100,000 shares of Common Stock

                                                             Dated: June 3, 2004

                                     WARRANT

                                       TO

                              PURCHASE COMMON STOCK

                                       OF

                           ELITE PHARMACEUTICALS, INC.

       This  certifies  that,  for  good  and  valuable   consideration,   Elite
Pharmaceuticals,  Inc, a Delaware  corporation (the  "COMPANY"),  grants to D.H.
Blair Investment Banking Corp. or its registered assigns (the  "WARRANTHOLDER"),
the right to subscribe  for and purchase  from the Company One Hundred  Thousand
(100,000)  shares (the "WARRANT  SHARES") of common  stock,  par value $0.01 per
share, of the Company  ("COMMON STOCK") at the exercise price of $2.50 per share
(subject to adjustment as provided herein, the "EXERCISE  PRICE").  This Warrant
shall be exercisable from and after 9:00 A.M.,  Eastern Standard Time on June 3,
2004,  but no  later  than  June  3,  2009,  to and  including  5:00  P.M.  (the
"EXPIRATION  DATE").  The  Exercise  Price and the number of Warrant  Shares are
subject to adjustment from time to time as provided in Section 6.

SECTION 1.    EXERCISE OF WARRANT;  LIMITATION  ON  EXERCISE;  TAXES;  TRANSFER;
              DIVISIBILITY.

       1.1.   EXERCISE OF WARRANT.  This Warrant is immediately  exercisable and
may be exercised, in whole or in part, at any time on or prior to the Expiration
Date.  The  rights   represented  by  this  Warrant  may  be  exercised  by  the
Warrantholder  of  record,  in  whole  or in part,  from  time to  time,  by (a)
surrender of this Warrant,  accompanied by the Exercise Form annexed hereto (the
"EXERCISE FORM") duly executed by the Warrantholder of record and specifying the
number of Warrant  Shares to be  purchased  to the Company at its offices at 165
Ludlow  Avenue,  Northvale,  New Jersey 07647 (or such other office or agency of
the Company as it may designate by notice to the Warrantholder at the address of
such

<PAGE>

Warrantholder  appearing on the books of the  Company)  during  normal  business
hours on any day (a  "BUSINESS  DAY") other than a Saturday,  Sunday or a day on
which the American Stock Exchange is authorized to close or on which the Company
is otherwise  closed for business but not later than 5:00 P.M. on the Expiration
Date;  (b) payment of the Exercise  Price by (i) delivery to the Company in cash
or by certified or official bank check in New York Clearing  House Funds,  of an
amount equal to the Exercise Price for the number of Warrant Shares specified in
the  Exercise  Form or (ii)  notice  that the  Warrantholder  elects to effect a
cashless exercise as contemplated by subsection 1.5, and (c) such  documentation
as to the  identity  and  authority  of the  Warrantholder  as the  Company  may
reasonably  request.  Such  Warrant  Shares shall be deemed by the Company to be
issued to the  Warrantholder  as the record holder of such Warrant  Shares as of
the  close of  business  on the date on  which  this  Warrant  shall  have  been
surrendered  and payment made for the Warrant Shares as aforesaid.  Certificates
for the Warrant Shares  specified in the Exercise Form shall be delivered to the
Warrantholder  as promptly as practicable.  The stock  certificates so delivered
shall be in denominations as may be specified by the  Warrantholder and shall be
issued in the name of the  Warrantholder  or, if permitted by subsection 1.4 and
in  accordance  with  the  provisions  thereof,  such  other  name as  shall  be
designated in the Exercise  Form. If this Warrant shall have been exercised only
in part, the Company shall, at the time of delivery of the  certificates for the
Warrant Shares, deliver to the Warrantholder a new Warrant evidencing the rights
to purchase the remaining  Warrant Shares,  which new Warrant shall in all other
respects be identical with this Warrant.

       1.2.   LIMITATION ON EXERCISE.  If this Warrant is not exercised prior to
5:00 P.M. on the  Expiration  Date,  this  Warrant,  or any new  Warrant  issued
pursuant to subsection 1.1, shall cease to be exercisable and shall become void,
and all rights of the Warrantholder hereunder shall cease.

       1.3.   PAYMENT OF TAXES.  The issuance of certificates for Warrant Shares
shall be made  without  charge to the  Warrantholder  for any stock  transfer or
other issuance tax in respect thereto; PROVIDED, HOWEVER, that the Warrantholder
shall be  required  to pay any and all taxes  which may be payable in respect to
any  transfer  involved in the issuance  and  delivery of any  certificates  for
Warrant Shares in a name other than that of the then  Warrantholder as reflected
upon the books of the Company.

       1.4.   RESTRICTIONS  ON  TRANSFER.  Neither  this  Warrant nor any of the
Warrant Shares may be transferred or sold except in compliance  with  applicable
United States federal and state securities laws. Subject to the foregoing,  this
Warrant and all rights hereunder are  transferable,  in whole or in part, by the
Warrantholder  and any such transfer is registrable at the office of the Company
by the  holder  hereof  in  person  or by its  duly  authorized  attorney,  upon
surrender of this Warrant in accordance with Section 3 hereof.

       1.5.   CASHLESS  EXERCISE.  At  the  option  of  the  Warrantholder,  the
Warrantholder may exercise this Warrant,  without a cash payment of the Exercise
Price,  through a reduction in the number of Warrant  Shares  issuable  upon the
exercise of the Warrant.  Such reduction may be effected by designating that the
number of the shares of Common  Stock  issuable to the  Warrantholder  upon such
exercise  shall be  reduced  by the number of shares  having an  aggregate  Fair
Market  Value as of the date of  exercise  equal to the amount of the  aggregate
Exercise  Price

                                      -2-
<PAGE>

for such exercise as to the number of shares to be issued to the Warrant  holder
upon such exercise. For purposes of this Warrant, the "FAIR MARKET VALUE" of any
Common  Stock on any date in  question  shall be the  closing  sale price of the
Common Stock on the principal stock exchange or stock market on which the Common
Stock is traded on the Business Day immediately preceding such date (or if there
is not trading on such date, on the next  preceding  Business Day on which there
was trading in the Common Stock),  as quoted in THE WALL STREET JOURNAL.  If the
Common Stock is not listed or qualified for trading on a stock exchange or stock
market at such time,  then the Fair  Market  Value shall be  determined  in good
faith by the Board of Directors of the Company.  In connection with any cashless
exercise,  no cash or other  consideration  will be paid by the Warrantholder in
connection  with such exercise  other than the surrender of the Warrant  itself,
and  no  commission  or  other  remuneration  will  be  paid  or  given  by  the
Warrantholder or the Company in connection with such exercise.

SECTION 2.    RESERVATION AND LISTING OF SHARES.

       All Warrant Shares issued upon the exercise of the rights  represented by
this Warrant  shall,  upon issuance and payment of the Exercise Price in cash or
pursuant to subsection 1.5, be validly issued,  fully paid and nonassessable and
free from all taxes, liens,  security interests,  charges and other encumbrances
with respect to the issuance thereof other than taxes in respect of any transfer
occurring  contemporaneously with such issuance.  During the period within which
this Warrant may be exercised,  the Company  shall at all times have  authorized
and reserved,  and keep available and free from preemptive or similar rights,  a
sufficient  number of shares of Common Stock to provide for the exercise of this
Warrant.

SECTION 3.    EXCHANGE, LOSS OR DESTRUCTION OF WARRANT.

       If permitted by  subsection  1.4,  upon  surrender of this Warrant to the
Company with a duly executed  instrument of assignment  and funds  sufficient to
pay any transfer tax, the Company shall,  without charge,  execute and deliver a
new Warrant of like tenor in the name of the assignee  named in such  instrument
of assignment and this Warrant shall  promptly be canceled.  Upon receipt by the
Company  of  evidence  reasonably   satisfactory  to  it  of  the  loss,  theft,
destruction  or mutilation of this Warrant and, if requested by the Company,  an
agreement to indemnify the Company for any loss resulting from the Warrant to be
replaced, the Company will execute and deliver a new Warrant of like tenor.

SECTION 4.    OWNERSHIP OF WARRANT.

       The  Company  may deem and treat the  person or entity in whose name this
Warrant  is  registered  as the  holder and owner  hereof  (notwithstanding  any
notations of ownership or writing  hereon made by anyone other than the Company)
for all purposes and shall not be affected by any notice to the contrary,  until
presentation  of this  Warrant  for  registration  of  transfer  as  provided in
subsection 1.1 or in Section 3.

                                      -3-
<PAGE>

SECTION 5.    CERTAIN ADJUSTMENTS.

       The Exercise Price at which Warrant Shares may be purchased hereunder and
the number of Warrant Shares to be purchased upon exercise hereof are subject to
change or adjustment as follows:

       5.1.   NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares or the
Exercise  Price of such Warrant  Shares is  adjusted,  as herein  provided,  the
Company  shall  promptly  send by first  class  mail,  postage  prepaid,  to the
Warrantholder, notice of such adjustment.

       5.2.   PRESERVATION  OF PURCHASE  RIGHTS UPON MERGER,  CONSOLIDATION.  In
case of any  consolidation  of the Company  with or merger of the  Company  into
another  entity or in case of any sale,  transfer or lease to another  entity of
all or  substantially  all the assets,  the  Warrantholder  shall have the right
thereafter  upon payment of the Exercise  Price in effect  immediately  prior to
such  action to receive  upon  exercise  of this  Warrant the kind and amount of
shares and other securities and property which a holder of a number of shares of
Common Stock equal to the number as to which this Warrant is exercised  would be
entitled to receive after the  happening of such  consolidation,  merger,  sale,
transfer or lease had this  Warrant  been  exercised  immediately  prior to such
action,  subject to future  adjustments,  which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 5. The provisions of
this subsection 5.2 shall apply similarly to successive consolidations, mergers,
sales, transfers or leases.

       5.3.   ADJUSTMENTS.

       (a)    STOCK DIVIDENDS,  DISTRIBUTIONS OR SUBDIVISIONS.  In the event the
Company  shall  issue  additional  shares of Common  Stock  pursuant  to a stock
dividend,  stock  distribution,  subdivision,  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 increased.

       (b)    COMBINATIONS  OR  CONSOLIDATIONS.  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.

                                      -4-
<PAGE>

SECTION 6.    REGISTRATION RIGHTS.

       6.1.   PIGGYBACK  REGISTRATION.  If at any time or from time to time, the
Company shall  register the sale of any of its Common Stock under the Securities
Act of 1933 (the "SECURITIES  ACT") for its own account or the account of any of
its security  holders,  other than a registration on Form S-8 relating solely to
an employee  benefit plan or a  registration  on Form S-4  relating  solely to a
transaction under Rule 145 of the Securities Act, the Company will:

       (i)    give to the initial  Warrantholder and each other person or entity
              who holds all or any portion of this Warrant or the Warrant Shares
              (collectively  with  the  initial  Warrantholder,  the  "HOLDERS")
              written notice thereof as soon as practicable  prior to filing the
              registration statement or offering statement, but in any event not
              later than 10 days prior to such filing; and

       (ii)   on behalf of all entities  requesting  inclusion in such offering,
              include the Registrable  Securities (as defined in Section 6.2) in
              the offering and may condition  such offer on their  acceptance of
              any other reasonable conditions (including, without limitation, if
              such offering is underwritten,  that such requesting holders agree
              in writing to enter into an underwriting  agreement with customary
              terms).  If the  representative  of the  underwriter  advises  the
              Company in writing that marketing  factors require a limitation on
              the number of shares to be underwritten,  the numbers of shares to
              be included in the underwriting or registration shall be allocated
              first to the Company,  second,  to the Company's  security holders
              that triggered the instant registration (the "TRIGGERING HOLDERS")
              and  thereafter  shall be  allocated  among the  Holders and other
              security holders requesting  inclusion in the offering pro rata on
              the basis of the number of shares each requesting Holder and other
              security  holder requests to be included bears to the total number
              of shares of all requesting holders that have been requested to be
              included  in  such  offering  (to the  extent  not  included  as a
              Tiggering Holder). If a person who has requested inclusion in such
              offering as provided above does not agree to the terms of any such
              underwriting,  such person shall be excluded  therefrom by written
              notice  from the Company or the  underwriter.  The  securities  so
              excluded shall also be withdrawn from registration, if applicable.

       6.2.   REGISTRABLE  SECURITIES.  For the  purposes of this Section 6, the
term  "REGISTRABLE  SECURITIES" shall mean any Warrant Shares issued or issuable
to a Holder upon exercise of its Warrant, any shares of Common Stock issued to a
Holder as a dividend on its Warrant Shares, and any other shares of Common Stock
distributable on, with respect to, or in replacement of or substitution for such
Registrable Securities,  including those that have been transferred as permitted
under this Warrant, except for those that have been sold or transferred pursuant
to an  effective  registration  statement  or as may be resold  pursuant to Rule
144(k) under the Securities Act.

       6.3.   OBLIGATIONS  OF A HOLDER  AND OTHERS IN A  REGISTRATION.  (a) Each
Holder agrees to timely furnish such  information  regarding such person and the
securities  sought to be registered and to take such other action as the Company
may  reasonably  request,  including  the entering  into of  agreements  and the
providing of documents,  in connection with the

                                      -5-
<PAGE>

registration or qualification  of such securities  and/or the compliance of such
registration  statement with all applicable  laws. Such Holders  severally agree
that, in connection with any offering undertaken pursuant to subsection 6.1, the
Company  shall  have the right to, if it deems an  underwriter  or  underwriters
necessary or appropriate,  designate such  underwriter(s).  If the  registration
involves an underwriter,  each participating  Holder agrees, upon the request of
such underwriter,  not to sell any unregistered  securities of the Company for a
period  of up to 180  days  following  the  effective  date of the  registration
statement for such offering (provided that all executive officers, directors and
holders of greater  than 5% of the fully  diluted  capital  stock of the Company
shall be subject  to a similar  restriction)  and to enter into an  underwriting
agreement with such underwriters containing customary terms and provisions.

       (b)    If at any time after  giving  written  notice of its  intention to
register any  Registrable  Securities  and prior to the  effective  date of such
registration  statement,  the  Company  shall  determine  for any  reason not to
register or to delay  registration of such Registrable  Securities,  the Company
may, at its election,  give written notice of such  determination to each Holder
and in the case of a  determination  not to  register,  shall be relieved of its
obligation  to register  any  Registrable  Securities  in  connection  with such
registration,  without  prejudice  as to a Holder's  rights with  respect to any
future registration.

       6.4.   INDEMNIFICATION.

       (a)    Subject to applicable law, the Company will indemnify each Holder,
each underwriter and each person controlling such Holder or underwriter  against
all claims, losses, damages and liabilities,  including legal and other expenses
reasonably incurred,  arising out of any untrue or allegedly untrue statement of
a material  fact  contained in the  registration  statement,  or any omission or
alleged  omission  to  state  a  material  fact  required  to be  stated  in the
registration   statement  or  necessary  to  make  any  statements  therein  not
misleading,  or arising out of any  violation  by the Company of the  Securities
Act,  any  state  securities  or  "blue  sky"  laws  or any  applicable  rule or
regulation,  except with respect to an untrue statement or omission contained in
any information or affidavit furnished in writing by the Holder for inclusion in
such registration statement.

       (b)    Subject to applicable law, each Holder, severally and not jointly,
will indemnify the Company, and each person controlling the Company, against all
claims,  losses,  damages and  liabilities,  including  legal and other expenses
reasonably incurred,  arising out of any untrue or allegedly untrue statement of
a material  fact  contained  in the  registration  statement,  or required to be
stated  in the  registration  statement  or  necessary  to make  the  statements
contained therein not misleading,  to the extent,  but only to the extent,  that
such untrue  statement or omission is contained in any  information or affidavit
furnished in writing by such Holder to the Company specifically for inclusion in
such registration statement.

                                      -6-
<PAGE>

       6.5.   TRANSFER OF  REGISTRATION  RIGHTS.  The  registration  rights of a
Holder  under  Section  6  hereof  shall  automatically  be  transferred  to any
transferee  of this  Warrant,  or any  portion  thereof,  or of any  Registrable
Securities,  without any notice or other  action by the  transferring  Holder of
such transferee.  Any such transferee will be deemed to be a Holder for purposes
of this Section 6, and as a condition precedent to such transferee's exercise of
its rights  hereunder,  such  transferee  must agree to be bound by the terms of
this Section 6.

       6.6.   EXPENSES OF REGISTRATION. The expenses incurred in connection with
registrations  pursuant to this Section 6, namely all registration fees, federal
and  state  filing  and  qualification   fees,   printing  expenses,   fees  and
disbursements  of counsel for the Company and expenses of any special  audits of
the  Company's   financial   statements   incidental  to  or  required  by  such
registration,  shall be borne by the Company,  except that the Company shall not
be  required  to pay the fees and  disbursements  of  counsel  for the Holder or
Holders or  underwriters'  discounts  or  commissions  relating  to  Registrable
Securities being sold by any Holders.

SECTION 7.    MISCELLANEOUS.

       7.1.   ENTIRE  AGREEMENT.  This Warrant  constitutes the entire agreement
between the Company and the  Warrantholder  with respect to this Warrant and the
Warrant Shares.

       7.2.   BINDING EFFECTS; BENEFITS. This Warrant shall inure to the benefit
of and  shall be  binding  upon the  Company  and the  Warrantholder  and  their
respective heirs, legal representatives, successors and assigns. Nothing in this
Warrant,  expressed or implied,  is intended to or shall confer on any person or
entity other than the Company,  the  Warrantholder  and their respective  heirs,
legal representatives,  successors or assigns, any rights, remedies, obligations
or liabilities under or by reason of this Warrant.

       7.3.   AMENDMENTS.  This Warrant may not be modified or amended except by
a written instrument signed by the Company and the Warrantholder.

       7.4.   SECTION  AND  OTHER  HEADINGS.  The  section  and  other  headings
contained  in this  Warrant  are for  reference  purposes  only and shall not be
deemed to be a part of this  Warrant or to affect the meaning or  interpretation
of this Warrant.

       7.5.   FURTHER  ASSURANCES.  Each of the  Company  and the  Warrantholder
shall do and  perform all such  further  acts and things and execute and deliver
all such other  certificates,  instruments  and/or documents as any party hereto
may reasonably  request in connection  with the performance of the provisions of
this Warrant.

       7.6.   NOTICES. All demands,  requests,  notices and other communications
required or permitted to be given under this Warrant  shall be writing and shall
be deemed to have been duly given if  delivered  personally,  sent by  confirmed
facsimile or sent by United  States  certified or  registered  first class mail,
postage  prepaid,  to the parties  hereto at the following  addresses or at such
other address as any party hereto shall hereafter specify by notice to the other
party hereto:

       (a)    if to the Company, addressed to:

                                      -7-
<PAGE>

                       Elite Pharmaceuticals, Inc.
                       165 Ludlow Avenue
                       Northvale, New Jersey 07647
                       Attention: Chief Executive Officer

       (b)    If to the  Warrantholder,  addressed to the address of such person
              appearing on the books of the Company.

       Except as otherwise provided herein, all such demands,  requests, notices
and other  communications  shall be deemed to have been  received on the date of
personal delivery thereof,  the sending of confirmed facsimile thereof or on the
third Business Day after the mailing thereof.

       7.7.   SEPARABILITY.  Any  term or  provision  of this  Warrant  which is
invalid  or  unenforceable  in any  jurisdiction  shall be  ineffective  in such
jurisdiction  to the  extent  of such  invalidity  or  unenforceability  without
rendering  invalid or unenforceable  any other term or provision of this Warrant
or affecting the validity or enforceability of any of the terms or provisions of
this Warrant in any other jurisdiction.

       7.8.   FRACTIONAL  SHARES.  No  fractional  shares or scrip  representing
fractional  shares  shall be issued  upon the  exercise  of this  Warrant.  With
respect to any  fraction of a share  called for upon any  exercise  hereof,  the
Company shall pay to the  Warrantholder an amount in cash equal to such fraction
multiplied by the Fair Market Value of a share of Common Stock as of the date of
such exercise.

       7.9.   GOVERNING  LAW. This Warrant shall be  interpreted  and the rights
and liabilities of the parties hereto  determined in accordance with the laws of
the United States  applicable  thereto and the internal laws of the State of New
York (other than its choice of law rules). The Company and Warrantholder consent
that all  service of process  may be made by  registered  mail  directed to such
party at its address set forth in subsection 7.6 above.

       7.10.  COUNTERPARTS.   This  Warrant  may  be   separately   executed  in
counterparts and by the different parties hereto in separate counterparts,  each
of  which  when so  executed  shall be  deemed  to  constitute  one and the same
Warrant.

                                      -8-
<PAGE>

IN WITNESS WHEREOF,  the Company and the initial  Warrantholder have caused this
Warrant  to be signed by their  duly  authorized  officers  as of the 3rd day of
June, 2004.

                                       ELITE PHARMACEUTICALS, INC.

                                       By:
                                           -------------------------------------
                                           Bernard Berk, Chief Executive Officer

Acknowledged and Agreed
this ___ day of June, 2004:

D.H. BLAIR INVESTMENT BANKING CORP.

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

                                      -9-
<PAGE>

                           ELITE PHARMACEUTICALS, INC.

                              WARRANT EXERCISE FORM

                     (To be executed upon exercise Warrant)

              The  undersigned,  the  record  holder  of  this  Warrant,  hereby
irrevocably  elects to  exercise  the right,  represented  by this  Warrant,  to
purchase _________ of the Warrant Shares and herewith pays the Exercise Price in
accordance with the terms of this Warrant by (check one):

       [_]    tendering  payment for such  Warrant  Shares to the order of ELITE
PHARMACEUTICALS, INC. in the amount of $______________.

       [_]    surrendering  the  undersigned's  purchase  rights with respect to
______ Warrant  Shares,  having an aggregate Fair Market Value as of the date of
this  exercise  of  $________________,  which  equals or exceeds  the  aggregate
Exercise Price of the Warrant Shares being purchased, as permitted by subsection
1.5 of the Warrant.

       The undersigned  requests that a certificate for the Warrant Shares being
purchased  be  registered  in  the  name  of  ________________   and  that  such
certificate be delivered to _____________.

Date _____________                            Signature ________________________

<PAGE>

                               FORM OF ASSIGNMENT

       FOR VALUE RECEIVED,  the undersigned hereby sells,  assigns and transfers
all of the rights of the undersigned  under the within Warrant,  with respect to
the number of shares of Common Stock covered thereby set forth below, to:

           Name of Assignee           Address           No. of Shares
           ----------------------------------------------------------

and hereby irrevocable  constitutes and appoints  ________________  as agent and
attorney-in-fact to transfer said Warrant on the books of Elite Pharmaceuticals,
Inc., with full power of substitution in the premises.

Dated
     --------------------

In the presence of

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

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

                                     Signature:
                                               ---------------------------------
                                     Title of Signing Offer or Agent (if any):

                                     Address:
                                              ----------------------------------

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

                                     Note: The above signature should correspond
                                           with  the  name  on the  face  of the
                                           within Warrant.

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