Document:

EXHIBIT 10.12

                          REGISTRATION RIGHTS AGREEMENT

         REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of October 6,
2004,  by and among Elite  Pharmaceuticals,  Inc., a Delaware  corporation  (the
"Company"),  Indigo Securities,  LLC (the "Placement Agent"), and the purchasers
listed on SCHEDULE 1 of the Securities,  as defined below (each an "Investor" or
collectively, the "Investors")

         WHEREAS,  the Company and each of the  Investors  have  entered  into a
Subscription  Agreement dated the date hereof (each a  "Subscription  Agreement"
and collectively, the "Subscription Agreements").

         WHEREAS, to induce each Investors to execute and deliver a Subscription
Agreement,  the Company has agreed to provide certain  registration rights under
the Securities  Act, and the rules and  regulations  thereunder,  or any similar
successor statute, as well as any applicable state securities laws.

         NOW,  THEREFORE,  in  consideration  of the premises,  representations,
warranties, and the mutual covenants and agreements contained herein, and in the
Subscription  Agreement,  and for other  good and  valuable  consideration,  the
receipt and  sufficiency  of which are hereby  acknowledged,  the  Company,  the
Placement Agent and the Investors,  intending to be legally bound,  hereby agree
as follows:

1.       DEFINITIONS.

         Capitalized terms defined in the Subscription Agreements shall have the
same meanings  herein as are ascribed to them therein.  In addition,  as used in
this Agreement,  the following terms shall have the following  meanings ascribed
to them below:

         "Affiliate"  means any Person that has a relationship with a designated
Person  whereby  either of such Persons  directly or  indirectly  controls or is
controlled  by or is under  common  control  with the  other.  For this  purpose
"control" means the power, direct or indirect,  of one Person to direct or cause
direction of the management and policies of another,  or any act with respect to
the securities of the Company, whether by contract, through voting securities or
otherwise.

         "Closing"  refers to that event which occurs when the Securities  shall
have been  subscribed  for, the funds  representing  the sale of the  Securities
shall have cleared, and the Company shall accept the subscriptions.

         "Common  Stock" shall be the  Company's  authorized  common  stock,  as
constituted  on the date of this  Agreement,  any stock into  which such  common
stock may thereafter be changed and any stock of the Company of any other class,
which is not preferred as to dividends or assets

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over any other class of stock of the Company  issued to the  Investors of shares
of such common stock upon any re-classification thereof.

         "Company  Registration  Expenses"  shall mean bills or invoices  (other
than Selling  Expenses)  incident to the Company's  performance of or compliance
with this Agreement including, without limitation, all registration,  filing and
NASDR fees,  fees and expenses of compliance  with  securities or blue sky laws,
word  processing,  duplicating  and printing  expenses,  messenger  and delivery
expenses,  fees and disbursements of counsel for the Company and all independent
public  accountants  including  the expenses of any audit and/or "cold  comfort"
letter, all fees and expenses in connection with the Company's obligations under
Section 3.1, if applicable, and other Persons retained by the Company.

         "Controlling  Person" shall have the meaning set forth under Section 15
of the Securities Act.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Excluded  Form"  means  a  Form  S-4  or  Form  S-8,  pursuant  to the
Securities Act or any similar or successor form then in effect.

         "Investors"  means the Investors and any  transferees  or assignees who
agree to become bound by the  provisions of this  Agreement in  accordance  with
Section 9 hereof. Investors also refers to the Placement Agent and its assignees
when referring to the offer and sale of Registrable  Securities and other rights
arising under Sections 2 and 3.

         "NASDR" means the NASD Regulation, Inc.

         "Offering" means the solicitation by the Placement Agent of Subscribers
for the purchase of the Securities.

         "Person" means a corporation,  an association, a partnership, a limited
liability  company, a joint venture,  a trust, an organization,  a business,  an
entity,  an  individual,  a  government  or political  subdivision  thereof or a
governmental body.

         "Placement Agent" shall mean Indigo Securities, LLC.

         "Placement  Agent  Agreement" shall mean the placement agent agreement,
dated as of August 12, 2004, between the Placement Agent and the Company.

         "Placement  Agent  Warrants" shall mean the warrants to purchase shares
of Common Stock issued to the Placement  Agent  pursuant to the Placement  Agent
Agreement.

         "Private  Placement"  shall mean the placement of the Securities by the
Company through the Placement Agent pursuant to the Placement Agent Agreement.

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         "Register,  registered and registration" means a registration  effected
by preparing and filing a  Registration  Statement on a form approved by the SEC
other  than an  Excluded  Form in  compliance  with the  Securities  Act and the
declaration of effectiveness  ordering the  effectiveness  of such  Registration
Statement.

         "Registrable  Securities" means Common Stock issued upon (i) conversion
of the Series A Preferred  Stock  issued at the  Closing,  (ii)  exercise of the
Warrants, (iii) exercise of the Placement Agent Warrants and (iv) any securities
issued  upon the Series A Preferred  Stock or such Common  Stock by way of stock
dividend or stock split,  penalty under  Section 2.1.2 hereof,  or in connection
with a combination,  recapitalization,  share exchange,  consolidation  or other
reorganization of the Company.  As to any Registrable  Securities,  once issued,
such securities shall cease to be Registrable Securities when (i) a Registration
Statement  with  respect  to the  sale  of such  securities  shall  have  become
effective under the Securities Act and such securities  shall have been disposed
of in accordance  with such  Registration  Statement,  (ii) they shall have been
sold to the public pursuant to Rule 144 (or any successor  provision)  under the
Securities  Act,  (iii)  they  shall  have been  otherwise  transferred  but new
certificates  for them not bearing a legend  restricting  further transfer shall
have been delivered by the Company and subsequent  disposition of them shall not
require  registration or  qualification  of them under the Securities Act or any
similar  state  law  then in  force,  or  (iv)  they  shall  have  ceased  to be
outstanding.

         "Registration  Statement" means one or more registration  statements of
the  Company  on Form  S-3  under  the  Securities  Act  registering  all of the
Registrable Securities, including any amendments or supplements thereto.

         "SEC"  means  the  Securities  and  Exchange  Commission  or any  other
governmental body at the time administering the Securities Act.

         "Securities" means (i) up to 660,000 shares of Series A Preferred Stock
(which includes a 10% over allotment option in favor of the Placement Agent) and
(ii) warrants to purchase up to 5,950,000 shares of Common Stock.

         "Securities Act" means the Securities Act of 1933, as amended.

         "Selling  Expenses" shall mean all  underwriting  discounts,  brokerage
fees and selling commissions applicable to the Registrable Securities registered
and all fees and disbursements of counsel for the Investor.

         "Series A Preferred  Stock" means  shares of Series A Preferred  Stock,
par value $0.01 per share issued by the Company.

          "Subscriber" means an "accredited  investor" as defined under Rule 501
of the Securities Act, subscribing to purchase the Securities.

         "Warrants"  means the  warrants to purchase up to  5,400,000  shares of
Common  Stock,  granted  by the  Company  at the  Closing  to the  Investors  in
connection with the closing of the Private Placement.

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2.       REGISTRATION.

         2.1  MANDATORY REGISTRATION.

              2.1.1 The Company shall file with the SEC, on the date which is on
or before forty-five (45) days after the Closing Date (the "Filing  Deadline") a
Registration  Statement on Form S-3 (or, if Form S-3 is not  available,  on such
form of Registration  Statement as is then available to effect a registration of
all of the Registrable Securities; provided, that the Company shall convert such
other form to Form S-3, or file a replacement registration statement on Form S-3
promptly after the first date on which it meets such requirement), to enable the
resale of all of the Registrable Securities which Registration Statement, to the
extent allowable under the Securities Act and the rules  promulgated  thereunder
shall state that such  Registration  Statement  also  covers such  indeterminate
number  of  additional  shares  of  Common  Stock as may  become  issuable  upon
conversion of the Series A Preferred Stock or exercise of the Warrants  pursuant
to provisions to prevent dilution  resulting from stock splits,  stock dividends
or similar transactions (the "Mandatory Registration Statement").  The Mandatory
Registration  Statement shall contain,  unless otherwise  required by applicable
law or the SEC, the "Selling Shareholders" and "Plan of Distribution" section of
the Prospectus in a form  reasonably  satisfactory  to the Investors  based upon
information  provided by the selling  shareholder.  The  Registrable  Securities
included in the Mandatory  Registration  Statement shall be registered on behalf
of the  Investors  set forth on Schedule 1 hereof.  The  Mandatory  Registration
Statement  (and each  amendment  or  supplement  thereto,  and each  request for
acceleration  of  effectiveness  thereof) shall be provided to the Investors and
their  counsel  at least  five (5)  business  days  prior to its filing or other
submission; such notice to specify the securities to be registered, the proposed
numbers and amounts  thereof and the date  thereafter  by which the Company must
receive the  Investors'  written  indication  if any  Investor  does not wish to
include their Registrable Securities in such Registration Statement and advising
the  Investors of their rights under this Section 2. The Company  shall file the
Mandatory  Registration  Statement  and use its best efforts to cause all of the
Registrable  Securities (unless an Investor has indicated otherwise with respect
to all or any portion of such Investor's  Registrable Securities pursuant to the
preceding  sentence) to be registered  under the  Securities  Act, in connection
with  the  sale  or  other  disposition  by the  Investors  of  the  Registrable
Securities  so  registered.  The Company shall use its best efforts to cause the
Mandatory  Registration  Statement,  as amended,  to become effective as soon as
practicable after the filing thereof. The Mandatory Registration Statement shall
only cover the Registrable  Securities,  the shares of Common Stock described in
Section  8(b)(iii)  below and any  stockholder of the Company that exercises any
existing  piggy-back  registration  rights as set forth on Schedule 3.3 attached
hereto.

              2.1.2  If  the  Mandatory  Registration  Statement  has  not  been
declared or ordered  effective  within  ninety (90) days after the Closing  (the
"Three Month Period"),  the Company shall pay each Investor a fee equal to 2% of
the purchase  price paid by such Investor for the Securities for any thirty (30)
days after such failure (pro rata for partial  months),  which payments shall be
payable  at the end of each  calendar  month  until  the  date  upon  which  the
Mandatory  Registration  Statement is declared  effective,  but not to exceed an
aggregate of 16%. This payment may be made,  at the election of the Company,  in
cash or in  additional  shares of Common Stock valued at the VWAP (as defined in
the Certificate of Designations, Preferences

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and Rights of Series A  Preferred  Stock of the  Company)  for such stock on the
date  immediately  prior to the date that the  payment is made.  Notwithstanding
anything set forth in this Section 2.1.2, if during the Three Month Period,  the
SEC  modifies  or amends  the rules with  respect to Form S-3 (or any  successor
form) to change the  criteria  for  availability  of Form S-3 (or any  successor
form), the result of which makes Form S-3 (or any successor form) unavailable to
the Company  (independent  of any action or omission of the Company),  the Three
Month Period for purposes of this Section 2.1.2 shall be reset and commence from
the effective date of such  modification or amendment and, with the modification
of the period,  all other provisions of this Section 2.1.2 shall reset and apply
from such date forward.

              2.1.3 In the event that the  Registration  Statement  is filed and
declared  effective but, during the  Registration  Period (as defined in Section
3.1.2  below),  shall  thereafter  cease  to be  effective  or  useable  or  the
prospectus included in the Registration Statement (the "Prospectus",  as amended
or supplemented by any prospectus supplement and by all other amendments thereto
and all material  incorporated  by reference  in such  Prospectus)  ceases to be
usable (other than as a result of any act or omission by a holder of Registrable
Securities),  in either case,  in  connection  with  resales of the  Registrable
Securities,  without such lapse being cured within ten (10)  business  days (the
"Cure  Period"),  with the maximum number of days in any Cure Periods during any
365 day period not to exceed  forty-five (45) business days, by a post-effective
amendment to the  Registration  Statement,  a supplement to the  Prospectus or a
report filed with the SEC pursuant to Section 13(a),  13(c),  14 or 15(d) of the
Exchange Act that cures such lapse,  then the Company shall pay to each Investor
(in  addition  to the rights  and  remedies  available  to each  Investor  under
applicable law and this Agreement),  for the period from and including the first
day following the  expiration of the Cure Period (or number of days in such Cure
Periods exceeding the aforementioned forty-five (45) days) until, but excluding,
the earlier of (i) the date on which such  failure is cured and (ii) the date on
which the Registration  Period expires,  at a rate equal to two percent (2%) for
every  thirty  days  after such  failure  (pro rata for  partial  months) of the
purchase price paid by such Investor for the Securities,  which payment shall be
payable at the end of each calendar month.  The Company shall have the option to
pay such amounts in cash or Common Stock as provided for in Section 2.1.2 above.

         2.2  DEMAND REGISTRATION

              2.2.1 If the Mandatory  Registration Statement shall not have been
declared or ordered effective and the Company shall receive a written request no
earlier than ninety (90) days  following the Closing but no later than 22 months
after the Closing  from  Investors  holding  more than  $500,000 in value of the
Registrable  Securities then outstanding  (the  "Initiating  Investor") that the
Company file a  registration  statement  under the  Securities  Act covering the
registration  of the  Registrable  Securities,  then the Company  shall,  within
thirty (30) days of the receipt thereof,  give written notice of such request to
all  Investors,  and subject to the  limitations  set forth herein,  effect,  as
expeditiously as reasonably possible,  the registration under the Securities Act
of all Registrable Securities that the Investors request to be registered.

              2.2.2 The Company  shall not be required to effect a  registration
pursuant to this Section 2.2 if (i) the  Mandatory  Registration  Statement  has
been  declared  or  ordered  effective,  whether  or not one or more  holders of
Registrable Securities elected not to register all of their

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respective shares in the Mandatory  Registration  Statement (ii) the Company has
previously  effected  two  registrations  pursuant to this  Section 2.2 and such
previous  registrations  has been  declared  or ordered  effective  or (iii) the
Registrable Securities covered by registrations pursuant to this Section 2.2 may
be sold  pursuant to Rule 144(k)  promulgated  under the  Securities  Act or any
successor  provision.  Subject  to  the  foregoing,  the  Company  shall  file a
registration  statement covering the Registrable Securities and other securities
so  requested  to be  registered  pursuant  to  this  Section  2.2  as  soon  as
practicable after receipt of the request or requests of the Investors.

         2.3  PIGGYBACK RIGHTS.

              2.3.1 If the Company shall  determine to prepare and file with the
SEC a registration  statement relating to an offering for its own account or the
account  of others  under the  Securities  Act of any of its  equity  securities
(other than on an Excluded  Form),  then the Company shall send to each Investor
holding  Registrable  Securities  that have not been  covered by a  registration
statement  that has been  declared  or ordered  effective  (each,  an  "Eligible
Investor"), written notice of such determination and if, within 15 business days
after  receipt of such  notice any such  Eligible  Investor  shall so request in
writing,   the  Company  shall  include  in  such  registration   statement  the
Registrable  Securities  requested by the Eligible  Investors to be so included.
Such  written  notice  shall state the  intended  method of  disposition  of the
Registrable  Securities  by such  Eligible  Investor.  If an  Eligible  Investor
decides not to include all of its  Registrable  Securities  in any  registration
statement  thereafter  filed  by  the  Company,  such  Eligible  Investor  shall
nevertheless continue to have the right to include any Registrable Securities in
any subsequent registration statement or registration statements as may be filed
by the Company with respect to offerings of its  securities,  all upon the terms
and conditions set forth herein,  to the extent all Registrable  Securities held
by such Investor have not been covered by a registration statement that has been
declared  or  ordered  effective  by the time of such  subsequent  registration.
Notwithstanding  any provision of this  Agreement to the  contrary,  the Company
shall not file a registration statement for its account or the account of others
until the Mandatory  Registration Statement or a Registration Statement pursuant
to Section 2.2 shall have been declared and ordered effective.

              2.3.2 If the registration  statement under which the Company gives
notice under this Section 2.3 is for an underwritten offering, the Company shall
so advise the Eligible Investors of Registrable  Securities.  In such event, the
right of any such Eligible Investor to be included in a registration pursuant to
this  Section  2.3  shall  be   conditioned   upon  such   Eligible   Investor's
participation in such underwriting and the inclusion of such Eligible Investor's
Registrable  Securities in the underwriting to the extent provided  herein.  All
Eligible Investors proposing to distribute their Registrable  Securities through
such underwriting  shall enter into an underwriting  agreement in customary form
with the  underwriter  or  underwriters  selected for such  underwriting  by the
Company.   Notwithstanding  any  other  provision  of  the  Agreement,   if  the
underwriter determines in good faith that marketing factors require a limitation
of the number of shares to be  underwritten,  the  number of shares  that may be
included in the underwriting shall be allocated,  first, to the Company; second,
to any selling  shareholders  that shall have  exercised  a demand  registration
right;  third,  on a PRO RATA basis,  to the  Eligible  Investors  and any other
shareholders of the Company exercising  incidental  registration rights based on
the total number

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of Registrable  Securities  sought to be registered in such  registration by the
Eligible Investors and such other shareholder of the Company.

              2.3.3 If any  Eligible  Investor  disapproves  of the terms of any
such  underwriting,  such Eligible  Investor may elect to withdraw  therefrom by
written notice to the Company and the  underwriter,  delivered at least ten (10)
business days prior to the effective  date of the  registration  statement.  Any
Registrable  Securities  excluded or withdrawn from such  underwriting  shall be
excluded and withdrawn from the registration. For any Eligible Investor which is
a partnership,  limited liability company, or corporation, the partners, retired
partners,  members,  retired members and shareholders of such Eligible Investor,
or the estates and family members of any such partners and retired  partners and
any trusts for the benefit of any of the foregoing  person shall be deemed to be
a single  "Eligible  Investor,"  and any PRO RATA reduction with respect to such
"Eligible  Investor" shall be based upon the aggregate amount of shares carrying
registration  rights  owned by all  entities  and  individuals  included in such
"Eligible Investor," as defined in this sentence.

              2.3.4 The Company  shall have the right to  terminate  or withdraw
any  registration   initiated  by  it  under  this  Section  2.3  prior  to  the
effectiveness  of such  registration  whether or not any  Eligible  Investor has
elected to include securities in such registration.

3.       REGISTRATION PROCEDURES.

         3.1 If and whenever the Company is required by the provisions hereof to
effect  or cause  the  registration  of any  Registrable  Securities  under  the
Securities  Act as provided  herein,  the Company  shall,  as  expeditiously  as
possible:

              3.1.1  prepare  and file  with the SEC,  on or before  the  Filing
Deadline  the  Mandatory  Registration  Statement  required  by Section 2.1 or a
demand  Registration  Statement  pursuant  to Section  2.2 with  respect to such
Registrable  Securities  and use its best  efforts  to cause  such  Registration
Statement to become and remain effective (pursuant to Rule 415 of the Securities
Act) as soon as practicable  after such filing  (provided that,  before filing a
Registration  Statement or prospectus or any amendments or supplements  thereto,
the Company shall furnish to the Investors copies of all such documents proposed
to be filed);

              3.1.2  prepare  and file with the SEC such  amendments  (including
post-effective  amendments) and supplements to such  Registration  Statement and
the  prospectus  used in  connection  therewith as may be necessary to keep such
Registration  Statement  effective,  true and  correct  during the  Registration
Period. For purposes of this Agreement,  "Registration  Period" means the period
commencing  with the effective date and ending on the earlier of (i) the sale of
all  Registrable  Securities  covered  thereby,  (ii) the date  upon  which  the
Investors  may  sell  the  Registrable   Securities   pursuant  to  Rule  144(k)
promulgated  under the Securities  Act, or (iii) the expiration of the 24 months
after  Closing or such  shorter  period as shall be  necessary  to complete  the
distribution  of the securities  covered  thereby so long as the Company has not
violated  Section 7 below,  and to comply with the  provisions of the Securities
Act with respect to the sale or other disposition of all Registrable  Securities
covered by such Registration Statement during

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such  period in  accordance  with the  intended  methods of  disposition  by the
Investors in such Registration Statement;

              3.1.3 permit the Investors and their counsel to review and comment
upon  (which  comments  shall not be  unreasonably  withheld)  all  Registration
Statements  at least five (5) business days prior to its filing with the SEC and
all  amendments  and  supplements  to all  Registration  Statements  (except for
documents  incorporated by reference therein) within a reasonable number of days
prior to their filing with the SEC;

              3.1.4 submit to the SEC,  within two (2)  business  days after the
Company learns that no review of the Registration  Statement will be made by the
staff of the SEC (the "Staff") or that the Staff has no further  comments on the
Registration  Statement,  as the case  may be, a  request  for  acceleration  of
effectiveness of the Registration Statement to a time and date not later than 48
hours after the submission of such request;

              3.1.5 furnish to each Investor  whose  Registrable  Securities are
included in the Registration Statement, and to the Placement Agent's counsel and
each  underwriter of the  securities  being sold by the Investors such number of
copies of such Registration  Statement and of each such amendment and supplement
thereto  (in each case  including  all  exhibits),  such number of copies of the
prospectus included in such Registration  Statement  (including each preliminary
prospectus), in conformity with the requirements of the Securities Act, and such
other  documents,  as such counsel and  underwriter may reasonably  request,  in
substantially  the form in which they are  proposed to be filed with the SEC, in
order to  facilitate  the public sale or other  disposition  of the  Registrable
Securities owned by the participating Investors. In the case of all Registration
Statements  referred to in Section 2, the Company shall furnish to each Investor
which requests (i) a copy of any request to accelerate the  effectiveness of any
Registration  Statement or amendment thereto,  (ii) on the date of effectiveness
of the Registration  Statement or any amendment  thereto,  a notice stating that
the Registration  Statement or amendment has been declared effective,  and (iii)
such number of copies of a prospectus,  including a preliminary prospectus,  and
all amendments and supplements thereto and such other documents as such Investor
may reasonably request in order to facilitate the disposition of the Registrable
Securities  owned by such Investor.  In responding to comments from the staff of
the SEC, the Company shall cooperate with any Investor that notifies the Company
that it desires to be consulted with respect to such process. To the extent that
issues  raised  by the  staff of the SEC have an  impact  primarily  on any such
Investor rather than the Company, the Company shall give reasonable deference to
such Investor's  requests with respect to the process and substance of responses
with respect to such issues;

              3.1.6  use its  best  efforts  to (i)  register  and  qualify  the
Registrable  Securities  covered by the Registration  Statement under such other
securities or "blue sky" laws of such jurisdictions in the United States as each
Investor who holds  Registrable  Securities being offered  reasonably  requests,
(ii)  prepare  and  file  in  those  jurisdictions  such  amendments  (including
post-effective   amendments)   and   supplements  to  such   registrations   and
qualifications as may be necessary to maintain the effectiveness  thereof during
the  Registration  Period,  (iii) take such other  actions as may be  reasonably
necessary to maintain such  registrations  and  qualifications  in effect at all
times during the Registration Period, and (iv) take all other actions reasonably
necessary or advisable to qualify the  Registrable  Securities  for sale in such
jurisdictions;

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PROVIDED,  HOWEVER,  that  the  Company  shall  not be  required  in  connection
therewith  or  as  a  condition  thereto  to  qualify  to  do  business  in  any
jurisdiction  where it would not  otherwise  be required to qualify but for this
Section 3.1.6;

              3.17 subject to Section 3.1.6,  use its best efforts to cause such
Registrable  Securities covered by such Registration  Statement to be registered
with or approved by such other  governmental  agencies or  authorities as may be
reasonably  necessary to enable the  participating  Investors to consummate  the
disposition of its Registrable Securities;

              3.1.8  notify  the  participating  Investors  at any  time  when a
prospectus  relating to its  Registrable  Securities is required to be delivered
under the  Securities  Act, of the Company's  becoming aware that the prospectus
included in the related Registration  Statement,  as then in effect, includes an
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements  therein not misleading
in light of the circumstances then existing, and promptly prepare and furnish to
the  participating  Investors and each underwriter a reasonable number of copies
of a prospectus  supplemented or amended so that, as thereafter delivered to the
purchasers of such Registrable Securities,  such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements  therein not misleading in
the light of the circumstances then existing;

              3.1.9 otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC;

              3.1.10  if the  Common  Stock  is  listed  on the  American  Stock
Exchange,  another national securities exchange,  or on the Nasdaq Stock Market,
as the case may be,  the  Company  shall use its best  efforts to cause all such
Registrable  Securities  covered by such Registration  Statement to be listed on
the American Stock  Exchange,  other  national  securities  exchange,  or on the
Nasdaq Stock Market, as the case may be (if such Registrable  Securities are not
already so  listed),  if the  listing  of such  Registrable  Securities  is then
permitted under the rules of such exchange or market;

              3.1.11  provide a  transfer  agent and  registrar,  which may be a
single entity, for the Registrable  Securities not later than the effective date
of the Registration Statement;

              3.1.12  in  the  case  of an  underwritten  offering,  enable  the
Registrable  Securities to be in such denominations and registered in such names
as the  underwriters may request at least two business days prior to the sale of
the Registrable Securities;

              3.1.13   cooperate   with  the  Investors  who  hold   Registrable
Securities  being offered to facilitate the timely  preparation  and delivery of
certificates  (not bearing any  restrictive  legends)  representing  Registrable
Securities to be offered pursuant to the Registration  Statement and enable such
certificates to be in such denominations or amounts,  as the case may be, as the
Investors may  reasonably  request and registered in such names as the Investors
may request;

              3.1.14 notify the Investors of any stop order  threatened,  to the
knowledge of the Company, or issued by the SEC (and the Company shall notify the
Investors  of the  resolution  of

                                       9
<PAGE>

any issued stop order) and take all actions reasonably  necessary to prevent the
entry of such stop order or to remove it if entered;

              3.1.15 make  available  for  inspection  the  Investors  and their
representatives  and  advisors  (collectively,  the  "Inspectors")  based on the
number of shares  of Common  Stock  acquired  by the  Investors  in the  Private
Placement,  pertinent  financial  and other  records,  and  pertinent  corporate
documents and properties of the Company, as shall be reasonably deemed necessary
by each  Inspector  to enable  each  Inspector  to  exercise  its due  diligence
responsibility,  and cause the  Company's  officers,  directors and employees to
supply all information  which any Inspector may reasonably  request for purposes
of such due diligence;

              3.1.16  hold  in  confidence   and  not  make  any  disclosure  of
information concerning an Investor provided to the Company unless (i) disclosure
of such  information  is necessary  to comply with  federal or state  securities
laws, (ii) the disclosure of such information is necessary to avoid or correct a
misstatement  or omission in any  Registration  Statement,  (iii) the release of
such  information is ordered  pursuant to a subpoena or other order from a court
or governmental body of competent  jurisdiction,  (iv) such information has been
made generally  available to the public other than by disclosure in violation of
this  Agreement,  or (v) such  Investor  consents to the form and content of any
such disclosure. The Company agrees that it shall, upon learning that disclosure
of such  information  concerning  an  Investor  is  sought  in or by a court  or
governmental body of competent  jurisdiction or through other means, give prompt
notice to such Investor prior to making such disclosure, and allow the Investor,
at its expense, to undertake  appropriate action to prevent disclosure of, or to
obtain a protective order for, such information;

              3.1.17  instruct  the  Company's  transfer  agent  to  remove  the
restrictive  legend  on  the  stock  certificates  after  effectiveness  of  the
applicable  Registration  Statement  and provide.  with the  cooperation  of the
Investors, any required legal opinions at the Company's sole expense; and

              3.1.18 the Company shall use its commercially  reasonable  efforts
to (subject to applicable  law), as soon as  practicable,  (A)  incorporate in a
prospectus supplement or post-effective amendment the information provided by an
Investor  pursuant  to Section  3.2  relating  to the sale and  distribution  of
Registrable Securities, including, without limitation,  information with respect
to the number of  Registrable  Securities  being  offered or sold,  the purchase
price being paid therefor and any other terms of the offering of the Registrable
Securities to be sold in such  offering,  (B) make all required  filings of such
prospectus  supplement or  post-effective  amendment after being notified of the
matters to be  incorporated  in such  prospectus  supplement  or  post-effective
amendment and (C) supplement or make amendments to any Registration Statement if
reasonably  requested by an Investor  holding any  Registrable  Securities as it
relates to the  information  provided  by an  Investor  pursuant  to Section 3.2
relating to the sale and distribution of Registrable Securities.

         3.2  In connection with the registration of the Registrable Securities,
the Investors shall have the following obligations:

              3.2.1 each participating  Investor shall furnish to the Company in
writing such information and documents  regarding it and the distribution of its
securities  as may  reasonably

                                       10
<PAGE>

be required to be  disclosed  in the  Registration  Statement in question by the
rules and  regulations  under the Securities  Act or under any other  applicable
securities  or blue sky laws of the  jurisdictions  referred to in Section 3.1.4
above, or as may otherwise be reasonably requested; and

              3.2.2 if any such  registration or comparable  statement refers to
any  participating  Investor  by  name  or  otherwise  as  the  Investor  of any
securities of the Company, but such reference to such participating  Investor by
name or otherwise is not required by the Securities  Act or any similar  federal
statute then in force, then such participating  Investor shall have the right to
require the deletion of the reference to such participating Investor.

         3.3  From and after the date of this Agreement,  the Company shall not,
and shall not agree to,  allow the holders of any  securities  of the Company to
include any of their  securities in the Mandatory  Registration  Statement under
Section 2.1 hereof or any  amendment or  supplement  thereto under Section 3.1.2
hereof  without the consent of the  Investors  of a majority in interest  (based
upon the dollars  invested) of the  Registrable  Securities,  except pursuant to
outstanding registration rights set forth on SCHEDULE 3.3 attached hereto.

4.       REGISTRATION EXPENSES.

         In connection with any registration of Registrable  Securities pursuant
to Section 2, the  Company  shall,  whether or not any such  registration  shall
become  effective,  from  time to time  promptly  pay all  Company  Registration
Expenses.  Such expenses shall not include any Selling Expenses other than up to
$10,000 of reasonable fees and expenses of one counsel selected by a majority of
the Investors solely with respect to the Mandatory Registration Statement.

5.       INDEMNIFICATION.

         5.1 The Company shall, and hereby does, indemnify and hold harmless, to
the fullest extent permitted by law, each Investor and each Placement Agent (and
their respective officers, directors, managers, members, partners, stockholders,
employees,  agents and  advisors)  and each Person who  controls any Investor or
Placement  Agent within the meaning of the Securities Act (each, an "Indemnified
Party") from and against all losses, claims, damages,  liabilities and expenses,
joint or several,  to which any such Indemnified  Party may become subject under
the Securities  Act, the Exchange Act and all rules and  regulations  under each
such act, any other federal or state statute, law or regulation at common law or
otherwise,  insofar as such losses, claims, damages, liabilities or expenses (or
actions or proceedings,  whether  commenced or threatened,  in respect  thereof)
arise  out of or are based  upon (i) any  untrue  statement  or  alleged  untrue
statement  of a material  fact  contained in any  Registration  Statement or any
amendment or  supplement  thereto or any  omission or alleged  omission to state
therein a material fact  required to be stated  therein or necessary to make the
statements  therein not misleading,  (ii) any untrue statement or alleged untrue
statement  of a material  fact  contained in any  preliminary,  final or summary
prospectus,  together with the documents  incorporated by reference  therein (as
amended or  supplemented  if the  Company  shall  have  filed with the SEC,  any
amendment thereof or supplement thereto), or any omission or alleged omission to
state  therein a material  fact  required to be stated  therein or  necessary in
order to make the statements  therein,  in the light of the circumstances  under
which they were made, not  misleading,  or (iii) any violation by the Company of
any federal,  state or common law rule or  regulation  applicable to the Company
and

                                       11
<PAGE>

relating to action of or inaction  by the  Company in  connection  with any such
registration including the failure to deliver any document required herein to be
delivered,  to an Investor  and a Placement  Agent;  and in each such case,  the
Company shall reimburse each such Indemnified  Party for any reasonable legal or
other  expenses  as such  reasonable  expenses  are  incurred  by any of them in
connection with investigating,  defending,  settling,  compromising,  proving or
defending  any  such  loss,  claim,  damage,   liability,   expense,  action  or
proceeding;  PROVIDED, HOWEVER, that the Company shall not be liable to any such
Indemnified  Party  insofar  as  such  losses,  claims,  damages,   liabilities,
expenses,  actions or proceedings are caused by any untrue  statement or alleged
untrue statement or material omission to provide information pursuant to Section
5.2 made in reliance on and in conformity with any written information furnished
to the Company by or on behalf of any  Indemnified  Party to be furnished  under
the  Section  5.2 or as a result  of the  failure  of the  Indemnified  Party to
furnish a prospectus to a purchaser.

         5.2 In connection with any Registration Statement in which any Investor
and the  Placement  Agent is  participating,  such  participating  parties shall
furnish to the  Company  in  writing  such  information  as shall be  reasonably
requested  by the  Company  for  use  in  any  such  Registration  Statement  or
prospectus and shall indemnify and hold harmless,  severally and not jointly, to
the extent permitted by law, the Company,  its officers,  directors,  employees,
agents,  advisors and each Person,  if any, who controls the Company  within the
meaning  of  Section 15 of the  Securities  Act,  against  any  losses,  claims,
damages, liabilities, expenses, actions or proceedings resulting from any untrue
statement  or alleged  untrue  statement  of a material  fact or any omission or
alleged  omission  of a  material  fact with  respect to  information  expressly
requested by the Company and required to be stated in the Registration Statement
or prospectus or preliminary  prospectus or any amendment  thereof or supplement
thereto,  or  necessary  to make  the  statements  therein  in the  light of the
circumstance  under  which  they  were  made (in the case of a  prospectus)  not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or omission  with respect to  information  expressly  requested by the
Company  is made in  reliance  on and in  conformity  with  any  information  so
furnished  in  writing  or to be  furnished  under  this  Section  5.2  by  such
participating Investor expressly for use therein. Notwithstanding the provisions
of this Section 5.2, each Investor  shall not be liable for any  indemnification
obligation  under  this  Agreement  in  excess  of the  aggregate  amount of net
proceeds  received by such Investor from the sale of the Registrable  Securities
pursuant  to  the  applicable  Registration  Statement.  In no  case  shall  the
Placement  Agent  be  liable  for  any  indemnification  obligation  under  this
Agreement in excess of the compensation received by it pursuant to the Placement
Agent Agreement.

         5.3 Any Person entitled to indemnification under the provisions of this
Section 5 shall (i) give prompt  notice to the  indemnifying  party of any claim
with respect to which it seeks indemnification but the omission to so notify the
indemnifying  party will not relieve the  indemnifying  party from any liability
which it may have pursuant to this Section 5 to the extent it is not  materially
prejudiced  as a result  of such  failure,  and (ii)  unless  in the  reasonable
judgment of counsel for such  indemnified  party a conflict of interest  between
such  indemnified and  indemnifying  parties may exist in respect of such claim,
permit such indemnifying party to assume the defense of such claim, with counsel
reasonably  satisfactory  to the  indemnified  party;  and if such defense is so
assumed, such indemnifying party shall not enter into any settlement without the
consent of the indemnified party if such settlement  attributes liability to the
indemnified  party  and such  indemnifying  party  shall not be  subject  to any
liability for any

                                       12
<PAGE>

settlement made without its consent.  In the event an  indemnifying  party shall
not be  entitled,  or  elects  not,  to  assume  the  defense  of a claim,  such
indemnifying  party shall not be  obligated to pay the fees and expenses of more
than  one law  firm  for all  parties  indemnified  by such  indemnifying  party
hereunder  in respect of such claim,  unless in the  reasonable  judgment of any
such counsel a conflict of interest may exist between such indemnified party and
any other of such indemnified  parties in respect to such claim.  Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on  behalf of any  indemnified  party and shall  survive  the  transfer  of such
securities by such indemnified party.

         5.4 If for any reason the foregoing indemnity is unavailable,  then the
indemnifying  party  shall  contribute  to the  amount  paid or  payable  by the
indemnified party as a result of such losses,  claims,  damages,  liabilities or
expenses in such  proportion as is  appropriate to reflect the relative fault of
the indemnifying  party and the indemnified  party as well as any other relevant
equitable considerations in accordance with Section 6 below. NOTWITHSTANDING THE
FOREGOING,  each of the Investors and the Placement  Agent shall not be required
to  contribute  any amount in excess of the amount such  Investor  or  Placement
Agent would have been required to pay to an  indemnified  party if the indemnity
under   Section   5.2  was   available.   No   Person   guilty   of   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.

         5.5 An indemnifying  party shall make payments of all amounts  required
to be made pursuant to the foregoing  provisions of this Section 5 to or for the
account of the  indemnified  party from time to time  promptly  upon  receipt of
bills or invoices relating thereto or when otherwise due and payable.

6.       CONTRIBUTION.

         To provide for just and equitable  contribution,  if (i) an Indemnified
Party makes a claim for indemnification pursuant to Section 5 but it is found in
a final  judicial  determination,  not  subject  to  further  appeal,  that such
indemnification  may not be  enforced in such case,  even though this  Agreement
expressly  provides  indemnification in such case, or (ii) any indemnified party
or indemnifying  party seeks contribution under the Securities Act, the Exchange
Act, or otherwise, then the Company (including for this purpose any contribution
made by or on  behalf  of any  officer,  director,  employee  or  agent  for the
Company,  or any  Controlling  Person of the Company),  on the one hand, and the
indemnified   party,  on  the  other  hand,  shall  contribute  to  the  losses,
liabilities,  claims,  damages, and expenses whatsoever to which any of them may
be subject,  in such  proportions  as are  appropriate  to reflect the  relative
benefits received by the Company, on the one hand, and the indemnified party, on
the other hand; PROVIDED,  HOWEVER,  that if applicable law does not permit such
allocation,  then other relevant equitable  considerations  such as the relative
fault of the  Company and the  indemnified  party in  connection  with the facts
which resulted in such losses, liabilities,  claims, damages, and expenses shall
also be considered. No Person liable for a fraudulent misrepresentation shall be
entitled to  contribution  from any person who is not liable for such fraudulent
misrepresentation.  Anything in this Section 6 to the contrary  notwithstanding,
no party shall be liable for contribution  with respect to the settlement of any
claim or action effected without its written consent. This Section 6 is intended
to supersede any right to  contribution  under the Securities  Act, the Exchange
Act, or otherwise unless such statute makes such right exclusive.

                                       13
<PAGE>

The Company,  the Investors  and the Placement  Agent agree that it would not be
just and equitable if  contribution  pursuant to this Section 6 were  determined
solely by pro rata  allocation or by any other method of  allocation  which does
not take account of the equitable  considerations referred to in this Section 6.
Notwithstanding  the provisions of this Section 6, each of the Investors and the
Placement  Agent shall not be required to contribute any amount in excess of the
amount such  Investor or Placement  Agent would have been  required to pay to an
indemnified  party  if the  indemnity  under  Section  5.2  was  available.  The
Investors' and the Placement Agent's  obligations to contribute pursuant to this
Section 6 are several and not joint.

7.       RULE 144.

         The Company  covenants  that it shall file the  reports  required to be
filed  under  the  Securities  Act  and the  Exchange  Act  and  the  rules  and
regulations  adopted by the SEC thereunder (or, in the event that the Company is
not required to file such reports, it shall make publicly available  information
as set forth in Rule 144(c)(2)  promulgated under the Securities Act), or to the
extent  required  from time to time to enable the  Investors  and the  Placement
Agent to sell  their  Registrable  Securities  without  registration  under  the
Securities Act within the  limitation of the exemption  provided by (i) Rule 144
under the Securities Act, as such Rule may be amended from time to time, or (ii)
any similar rule or regulation hereafter adopted by the SEC (collectively, "Rule
144").

8.       REGISTRATION RIGHTS OF OTHERS.

         (a) Subject to Section  8(b) hereof,  if the Company  shall at any time
hereafter  provide any Person any rights with respect to the registration of any
securities of the Company under the Securities Act, such rights shall not permit
any such securities to become  registered  during the period between Closing and
the date that is 180 days after the  Mandatory  Registration  Statement  becomes
effective or, in any other manner,  be superior to the rights provided herein to
the Investors and the Placement Agent.

         (b) The Investors and Placement Agent acknowledge: (i) the existence of
the  registration  rights  previously  granted  by the  Company  as set forth on
SCHEDULE 8 attached  hereto,  (ii) that the  covenant  set forth in Section 8(a)
shall not be breached or violated by the  granting  to, or the  exercise by such
holders of the rights set forth on SCHEDULE 8, and (iii) up to 1,3650,200 shares
of Common Stock, currently held by Dr. Atul Mehta and his Affiliates (the "Mehta
Holders"),  may be included in the Mandatory  Registration  Statement if some or
all of such  shares  are  purchased  from the Mehta  Holders  by third  parties.
Subject to the time  restrictions in Section 8(a), the granting of demand rights
to other parties shall not be deemed an  impairment  of the  Investors'  and the
Placement Agent's rights hereunder.

9.       REPORTING STATUS AND LISTING.

         (a) Until the date on which the Investors  shall have sold all of their
Registrable Securities,  the Company shall file all reports required to be filed
with the SEC pursuant to the Exchange  Act, and the Company  shall not terminate
its status as an issuer required to file reports

                                       14
<PAGE>

under the Exchange  Act even if the  Exchange  Act or the rules and  regulations
thereunder would otherwise permit such termination.

         (b) The Company shall use its best efforts to maintain the  eligibility
for  quotation of the Common Stock on the American  Stock  Exchange.  Subject to
applicable law, neither the Company nor any of its  Subsidiaries  shall take any
action  which  would be  reasonably  expected  to  result  in the  delisting  or
suspension of the Common Stock on the American Stock Exchange. The Company shall
pay all fees and expenses in connection with  satisfying its  obligations  under
this section.

10.      TRANSFER OF REGISTRATION RIGHTS.

         If and to the extent that any Investor or the Placement  Agent sells or
otherwise  disposes  of  Registrable  Securities  or  warrants  exercisable  for
Registrable  Securities in any  transaction  that does not require  registration
under the Securities  Act (other than a transaction  exempt under Rule 144), the
rights of the Investor or the  Placement  Agent  hereunder  with respect to such
Registrable Securities shall be assignable to any transferee of such Registrable
Securities;  PROVIDED,  HOWEVER,  that such  transferee  agrees in writing to be
bound by all the terms and conditions of this Agreement.

11.      MISCELLANEOUS.

         11.1 The  registration  rights provided to the Investors of Registrable
Securities  hereunder  shall  terminate on the date there shall no longer be any
outstanding  Registrable  Securities;  PROVIDED,  HOWEVER that the provisions of
Section 5 hereof shall survive any termination of this Agreement.

         11.2 A Person is deemed to be an  Investor  of  Registrable  Securities
whenever such Person owns of record such Registrable Securities.  If the Company
receives conflicting instructions, notices or elections from two or more Persons
with respect to the same Registrable Securities,  the Company shall act upon the
basis of instructions,  notice or election received from the registered owner of
such Registrable Securities.

         11.3 All  notices,  offers,  acceptance  and any other  acts under this
Agreement shall be in writing,  and shall be sufficiently  given if delivered to
the  addressees in person,  by Federal  Express or similar  receipted  overnight
delivery,  or by facsimile or e-mail delivery followed by a copy sent by Federal
Express or similar receipted overnight delivery, as follows:

                  If to the Company:     Elite Pharmaceuticals, Inc.
                                         165 Ludlow Avenue
                                         Northvale, NJ 07647
                                         Facsimile No.:    (201) 750-2755
                                         Attention:  Mr. Bernard Berk
                                                     Chief Executive Officer

                                       15
<PAGE>

                  With a copy to:        Reitler Brown & Rosenblatt LLC
                                         800 Third Avenue, 21st Floor
                                         New York, NY 10022
                                         Facsimile No.: (212) 371-5500
                                         Attention:  Scott H. Rosenblatt, Esq.

If to an  Investor,  at such  address as such  Investor  shall have  provided in
writing to the  Company or such other  address  as such  Investor  furnishes  by
notice given in accordance with this Section 11.3, with a copy to:

                                         Indigo Securities, LLC
                                         780 Third Avenue, 23rd Floor
                                         New York, NY 10017
                                         Facsimile No.: (212) 298-9933
                                         Attention:  Eric Brachfeld

                   With a Copy to:       Wollmuth Maher & Deutsch LLP
                                         500 Fifth Avenue
                                         New York, New York  10110
                                         Facsimile No.:  (212) 382-0050
                                         Attention:  Rory M. Deutsch, Esq.

         11.4  Failure of any party to exercise  any right or remedy  under this
Agreement or otherwise,  or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.

         11.5 This  Agreement  shall be governed by and  construed in accordance
with the laws of the State of New York  applicable  to contracts  made and to be
performed in the State of New York.

         11.6 Each  party  agrees  that all  legal  proceedings  concerning  the
interpretations,  enforcement  and defense of the  transactions  contemplated by
this  Agreement  (whether  brought  against  a party  hereto  or its  respective
affiliates,  directors,  officers,  shareholders,  employees or agents) shall be
commenced exclusively in the state and federal courts sitting in Manhattan,  New
York. Each party hereto hereby irrevocably submits to the exclusive jurisdiction
of the  state  and  federal  courts  sitting  in  Manhattan,  New  York  for the
adjudication  of any dispute  hereunder  or in  connection  herewith or with any
transaction  contemplated  hereby or discussed herein (including with respect to
the enforcement hereof). Each party agrees not to commence a claim or proceeding
hereunder  in a court  other  than a state  court or  federal  court  sitting in
Manhattan,  New York,  except (i) if  required as a  mandatory  counterclaim  or
cross-claim in a proceeding commenced by a Person in a different jurisdiction or
(ii) if such  party has first  brought  such claim or  proceeding  in such court
sitting in Manhattan,  New York and both the state courts and the federal courts
sitting  in  Manhattan,  New York have  denied  jurisdiction  over such claim or
proceeding.  Each party hereto hereby  irrevocably  waives  personal  service of
process  and  consents  to  process  being  served in any such  suit,  action or
proceeding  by  mailing a copy  thereof  via  registered  or  certified  mail or
overnight  delivery  (with evidence of delivery) to such party at

                                       16
<PAGE>

the  address in effect for  notices to it under this  Agreement  and agrees that
such service shall constitute good and sufficient  service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner  permitted by law.  Each party hereto  (including
its affiliates,  agents,  officers,  directors and employees) hereby irrevocably
waives,  to the fullest extent permitted by applicable law, any and all right to
trial  by  jury in any  legal  proceeding  arising  out of or  relating  to this
Agreement or the transactions contemplated hereby.

         11.7 This Agreement, the Subscription Agreement and the Placement Agent
Agreement  (including all schedules and exhibits thereto)  constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
thereof. There are no restrictions,  promises, warranties or undertakings, other
than those set forth or  referred to herein and  therein.  This  Agreement,  the
Subscription  Agreement and the Placement  Agent  Agreement  supersede all prior
agreements and understandings  among the parties hereto and thereto with respect
to the subject matter hereof and thereof.

         11.8 Subject to the  requirements of Section 10 hereof,  this Agreement
shall inure to the benefit of and be binding upon the  successors and assigns of
each of the parties hereto.

         11.9 The headings in this  Agreement are for  convenience  of reference
only and shall not form part of or effect the interpretation of this Agreement.

         11.10 This Agreement may be executed in one or more counterparts,  each
of which shall be deemed an original but all of which together shall  constitute
one and the same instrument. The execution of this Agreement may be by actual or
facsimile signature.

         11.11  Each  party  shall  do and  perform,  or  cause  to be done  and
performed,  all such further acts and things,  and shall execute and deliver all
such other  agreements,  certificates,  instruments and documents,  as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

         11.12 Except as otherwise set forth herein, all consents, approvals and
other  determinations  to be made by the  Investors  pursuant to this  Agreement
shall be made by the  Investors  holding  more  than 66 2/3% of the  Registrable
Securities then held by all Investors.

         11.13  If  any  provision  of  this  Agreement   shall  be  invalid  or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or  enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.

         11.14 This  Agreement is intended for the benefit of the parties hereto
and  their  respective  permitted  successors  and  assigns,  and is not for the
benefit of, nor may any provision hereof be enforced by any other Person.

               [REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK.]

                                       17
<PAGE>

         IN WITNESS WHEREOF, the parties have set their hands and seals the date
and year first above written.

                            ELITE PHARMACEUTICALS, INC.

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

                            INVESTORS:

                            INDIGO SECURITIES,  LLC

                            By:
                                 -------------------------------------------
                                 Eric Brachfeld, Managing Partner

                            [ADDITIONAL SIGNATURE PAGES ATTACHED]

                                       18
<PAGE>

                                               INDIVIDUAL:

Dated: __________________                            ________________________
                                                     Name of Individual:

                                                     Address:
                                                     ________________________
                                                     ________________________
                                                     ________________________
                                                     ________________________
                                                     Facsimile:  ____________

Dated: __________________                      NON-INDIVIDUAL:

                                                     ________________________
                                                     Name of Entity

                                                     By:_____________________
                                                        Name:
                                                        Title:

                                                     Address:
                                                     ________________________
                                                     ________________________
                                                     ________________________
                                                     ________________________
                                                     Facsimile:  ____________

                                       19
<PAGE>

                                   SCHEDULE 1

                                       TO

                          REGISTRATION RIGHTS AGREEMENT

                                  BY AND AMONG

                           ELITE PHARMACEUTICALS, INC.

                          AND THE FOLLOWING INVESTORS:EXHIBIT 10.13

                           ELITE PHARMACEUTICALS, INC.
                            PLACEMENT AGENT AGREEMENT

         This Placement  Agent  Agreement dated as of August 12, 2004 is entered
into by and between  Elite  Pharmaceuticals,  Inc.  (the  "Company")  and Indigo
Securities,  LLC (the  "Placement  Agent").  The Company and the Placement Agent
shall  sometimes  collectively  be  referred to as the  Parties,  or singly as a
"Party."

         WHEREAS,  the  Company  desires to appoint the  Placement  Agent as its
agent to sell on a "best  efforts"  basis up to $6,000,000 in shares of Series A
Preferred Stock  convertible  into shares of Common Stock (subject to a 10% over
allotment  option in favor of the  Placement  Agent) and  warrants  to  purchase
shares of Common Stock (the  "Investor  Warrants" and together with the Series A
Preferred  Stock  the  "Securities")  pursuant  to a  Term  Sheet  and  offering
documents to be prepared by the Company; and

         WHEREAS,  the Placement Agent desires to accept such appointment on the
terms and conditions set forth below.

         NOW,  THEREFORE,  for good and valuable  consideration  the receipt and
sufficiency  of  which is  hereby  acknowledged,  the  Parties  hereby  agree as
follows:

         1.       DEFINITIONS.  The following  terms shall have the meanings set
                  forth below:

                  "Blue Sky"  means the laws of any state or other  jurisdiction
relating to the requirements for registering and offering securities for sale in
such state or other jurisdiction.

                  "Blue Sky Application" means any application or other document
executed  by  the  Company  specifically  for  the  purpose  of  qualifying  the
Securities  in any  state or other  jurisdiction  under the Blue Sky laws of any
such state or other jurisdiction.

                  "Closing"  shall  refer to that  event  which,  subject to the
terms hereof,  occurs when the Placement Agent has received and delivered to the
Company  subscriptions  which the  Company  has  agreed to accept for at least a
minimum of gross proceeds from Subscribers on or prior to the Termination  Date.
Upon the prior consent of the Company,  one or more  additional  Closings may be
held for  additional  subscriptions  accepted  by the  Company no later than the
Termination Date of the offering.

                  "Closing Date" means the date when the Closing occurs.

                  "Closing  Price"  means the  average  closing  sale price of a
share of Common Stock reported on the American  Stock  Exchange  during the five
(5) trading days ending two (2) trading days immediately preceding the Closing.

                  "Company" shall have the meaning set forth in the preface.

                  "Common  Stock" means common stock,  par value $0.01 per share
of the Company.

<PAGE>

                  "Controlling  Person"  shall have the  meaning set forth under
Section 15 of the Securities Act.

                  "Covered  Claims"  shall  refer  to the  claims  set  forth in
Section 10.1 for which a party may seek indemnification under Section 10.

                  "Exchange Act" means the Securities Exchange Act of 1934.

                  "Financial   Statements"   means  the   audited   consolidated
financial  statements  of the Company for the fiscal  years ended March 31, 2004
and  2003,   including   balance  sheets  and  related   statements  of  income,
stockholders' equity and cash flows, together with the related notes, audited by
the Company's  independent  certified  public  accountants as the same have been
filed with the SEC as part of the SEC Documents  and the unaudited  consolidated
financial  statements  of the Company for the  quarters  ended June 30, 2004 and
2003,  including balance sheets and related statements of income,  stockholders'
equity  and cash  flows as the same have been  filed with the SEC as part of the
SEC Documents.

                  "Holder"  or  "Holders"  means the  holder  of any  Securities
and/or  any  Placement  Agent  Warrant,  and the  securities  contained  in, and
underlying each of, the foregoing securities.

                  "Indemnified  Party"  refers  to a party  who is  entitled  to
indemnification  under  Section 10 and shall refer  either to (i) the  Placement
Agent,  or (ii) the  Company,  as the case may be,  and (iii)  their  respective
stockholders, directors, officers, employees, and Controlling Persons.

                  "Indemnifying  Party"  means a party who has agreed to provide
indemnification under Section 10.

                  "Intellectual  Property  Rights"  means  all  patents,  patent
applications, trademarks, service marks, copyrights, trade secrets, processes or
formulations  used or proposed to be used in the conduct of the  business of the
Company and any Subsidiaries.

                  "Investor  Warrants" means the LT Warrants and the ST Warrants
to purchase  shares of Common Stock of the Company to be issued to the Investors
in connection with the Offering.

                  "Knowledge"  shall  mean the  actual  knowledge  of the  Chief
Executive Officer and the Financial Officer of the Company.

                  "License" or "Licenses" means all licenses,  permits and other
governmental  certificates,  authorizations  and permits,  and  approvals of the
Company or any Subsidiary.

                  "LT Warrants"  means the warrants to purchase shares of Common
Stock to be issued to the Investors in connection with the Offering which expire
on the fifth anniversary of the Closing.

                                      -2-
<PAGE>

                  "Material  Adverse  Effect" means any change or effect that is
materially adverse to the business, results of operations,  financial condition,
or material proprietary rights of the Company or any Subsidiary.

                  "Most   Recent   Balance   Sheet  Date"  shall  refer  to  the
consolidated  balance sheet of the Company dated as of June 30, 2004 as the same
has been filed with the SEC as part of the SEC Documents.

                  "NASDR" means the NASD Regulation, Inc.

                  "NOBO List" means the list of non-objecting  beneficial owners
of the Company's publicly traded securities.

                  "Offering"  means the  solicitation  by the Placement Agent of
Subscribers for the purchase of Securities pursuant to this Agreement,  the Term
Sheet and applicable law.

                  "Offering  Documents"  shall  refer to the Term  Sheet and all
attachments  and exhibits  thereto,  including but not limited to Elite's Annual
Report on Form 10-K for the year ended March 31, 2004 and Elite Quarterly Report
on Form 10-Q for the period ended June 30, 2004, the form of Registration Rights
Agreement, and Subscription Agreement.

                  "Offering  Period"  shall refer to the period during which the
Offering may occur as more particularly described in Section 3.1 hereof.

                  "Placement  Agent"  shall  have the  meaning  set forth in the
preface.

                  "Placement  Agent Warrants" shall refer to the warrants issued
to the  Placement  Agent  as  part of its  compensation  for  services  rendered
hereunder in the form attached hereto as EXHIBIT A.

                  "Private   Placement"  shall  mean  the  placement  of  up  to
$6,000,000 in shares of Series A Preferred  Stock  (subject to an over allotment
option in favor of the  Placement  Agent) and  Investor  Warrants  to purchase a
number of shares of Common  Stock by the  Company  through the  Placement  Agent
pursuant to this Agreement and the Term Sheet.

                  "Registration  Rights Agreement" shall refer to that agreement
by and between the Company,  on one hand and the Placement  Agent and Holders on
the other hand.

                  "SEC" refers to the Securities and Exchange Commission.

                  "SEC Documents" means any registration statement,  reports and
documents filed with the SEC by the Company.

                  "Securities" shall have the meaning set forth in the preface.

                                      -3-
<PAGE>

                  "Securities  Act" means the U.S.  Securities  Act of 1933,  as
amended.

                  "Selected  Dealer"  means a person or entity which is a member
of the NASDR and which is  selected  by the  Placement  Agent  pursuant  to this
Placement Agent Agreement to assist the Placement Agent in the Offering.

                  "Series A Preferred  Stock"  means a newly  created  series of
preferred stock designated by the Company as Series A Preferred Stock, par value
$0.01 per share, of the Company.

                  "ST Warrants"  means the warrants to purchase shares of Common
Stock to be issued to the Investors in connection with the Offering which expire
180 days after the date upon which a registration  statement covering the shares
of Common Stock issuable upon exercise of such warrants is declared effective by
the SEC.

                  "Subscriber" or "Subscribers" means an "accredited  investor,"
as  defined  under  Rule 501 of the  Securities  Act,  subscribing  to  purchase
Securities.

                  "Subscription  Agreement"  means  the  agreement  between  the
Company and a Subscriber for the purchase of one or more Securities, pursuant to
the Term Sheet.

                  "Termination Date" means the date set forth in Section 3.1.

                  "Term Sheet" means the document  prepared by the Company which
sets forth the terms and conditions of the Offering.

Capitalized terms used herein, not otherwise expressly defined above, shall have
the same  meanings  provided  in the  Offering  Documents  unless a contrary  or
differing meaning is provided herein.

                                      -4-
<PAGE>

         2.  NATURE OF OFFERING.

         2.1 BEST  EFFORTS.  The  Placement  Agent  shall  offer  to  accredited
investors,  as defined by Rule 501 under the Securities  Act, on a "best efforts
basis" during the Offering  Period (a) a minimum of $4,000,000  and a maximum of
$6,600,000  of  Series A  Preferred  Stock at a price  per  share  equal  (i) 10
multiplied  by (ii) the Closing  Price,  (b) LT Warrants to purchase a number of
shares  of Common  Stock  equal to 50% of the  number of shares of Common  Stock
issuable at the Closing  upon the  conversion  in full of all shares of Series A
Preferred  Stock at an exercise price equal to 125% of the Closing Price and (c)
ST  Warrants  to  purchase a number of shares of Common  Stock  issuable  at the
Closing upon the conversion in full of all shares of Series A Preferred Stock at
an exercise price equal to 125% of the Closing Price.  The Company and Placement
Agent shall take all necessary  steps to insure that the Offering is exempt from
registration   under  Section  4(2)  under  the  Securities  Act  and  Rule  506
thereunder.  The Offering  shall be made solely to prospective  investors  which
qualify  as  "accredited  investors"  as  defined  in  Rule  501(a)  of  Reg.  D
promulgated  under the  Securities  Act.  The Company has prepared a Term Sheet,
acceptable to the Placement  Agent,  containing  the terms and conditions of the
Offering.

         2.2 SUBSCRIPTION  PROCEEDS.  All subscriptions shall be deposited in an
escrow account at Bank of New York reference: Elite Pharmaceuticals, Inc for the
benefit of customers  established  under  Exchange  Act Rule 15c2-4  pending the
Closing or termination  of the Offering.  Prior to the Closing or termination of
the Offering,  the Company will notify the Placement  Agent as to which, if any,
subscriptions it will not accept;  provided that proceeds for  subscriptions not
accepted will be promptly returned without interest following termination of the
Offering. The Company may not accept subscriptions if the aggregate subscription
do not equal or exceed $4,000,000 or if the Closing Price is less than $1.40.

         2.3 SUBSCRIPTION  DOCUMENTS.  Each prospective  investor who desires to
purchase  Securities shall be required to deliver to a Placement Agent, one copy
of  an  executed   Subscription   Agreement,   including   applicable   investor
questionnaire,  one copy of the  Registration  Rights  Agreement,  and any other
documents  required  by the  Company  in  connection  with the  purchase  of the
Securities.

         3.   APPOINTMENT OF PLACEMENT AGENT.

         3.1  APPOINTMENT.  The Company hereby  appoints the Placement Agent its
exclusive agent (subject to Section 3.3 hereof), for the purposes of placing the
Securities with qualified Subscribers during the Offering Period pursuant to the
Offering as  described  in the Offering  Documents.  The  Offering  Period shall
commence  on the day the  Offering  Documents  are first made  available  by the
Company to the Placement  Agent for delivery in connection  with the offering of
Securities  for sale and such  appointment  shall continue until the earliest to
occur of (i) the  closing  of the sale of  $6,600,000  of the  Securities,  (ii)
September  [___],  2004(1), or (iii) the date the parties agree to terminate the
Offering (the "Termination Date").

---------------------------------------
(1) To be 30 days after the Offering Materials are complete.

                                      -5-
<PAGE>

         3.2 ACCEPTANCE OF AGENCY.  Subject to the performance by the Company of
all of its  obligations  to be performed  under this  Agreement and to the other
terms  contained in this  Agreement,  the  Placement  Agent hereby  accepts such
agency and agrees to use its best  efforts to assist the  Company in placing the
Securities with qualified  Subscribers pursuant to the Offering described in the
Offering Documents.  It is understood that the Placement Agent has no commitment
to sell any Securities.

         3.3 SELECTED  DEALERS.  The  Placement  Agent may engage other  persons
selected by the Placement  Agent and approved by the Company that are members of
NASDR,  and that have executed a selected dealer agreement in a form approved by
or  acceptable  to the  Placement  Agent to assist  the  Placement  Agent in the
Offering.  The  Placement  Agent  may  allow  such  persons  such  part  of  the
compensation and payment of expenses payable to the Placement Agent hereunder as
it shall  determine.  No compensation or other  obligation  shall be due to such
Selected Dealers by the Company. Each Selected Dealer shall be required to agree
in writing to comply with the  provisions  of, and to make the  representations,
warranties and covenants  contained in this Agreement  applicable to the sale of
Securities.

         3.4   SUBSCRIPTION   AGREEMENTS  FOR  SECURITIES.   Subscriptions   for
Securities  shall be evidenced by the execution by Subscribers of a Subscription
Agreement in the form of Exhibit B hereto.  No  Subscription  Agreement shall be
effective unless and until it is accepted by the Company.

         3.5  RIGHT OF FIRST  OFFER TO  SUBSEQUENT  OFFERINGS.  If,  during  the
eighteen  (18)  month  period  immediately  following  the final  closing of the
Offering  (the "FO Period"),  the Company  seeks to engage a placement  agent or
finder to assist  the  Company in the  placement  of any  equity  securities  or
securities  convertible  into equity  securities  of the Company  (other than an
underwritten public offering) to any party that is not an affiliate at such time
or  shareholder  of the  Company as of the date of this  Agreement,  the Company
shall  provide to the  Placement  Agent a written  summary of the terms for such
offering  (a " Offering  Notice").  During  the ten (10) day period  immediately
following  the delivery of the Offering  Notice,  the Company and the  Placement
Agent shall  negotiate in good faith, on an exclusive  basis,  the terms of such
offering. If, at the end of such ten (10) day period, the Placement Agent elects
to assist in such  offering,  the Placement  Agent shall (i) provide the Company
with written  notice of its election to  participate  (a "Election  Notice") and
include in such notice the agreed upon terms of such  offering  and (ii) provide
to the Company  evidence  of  commitments  for at least the minimum  prospective
offering  within thirty (30) days after  delivery to the Company of the Election
Notice.  If either  of the  conditions  set  forth in clause  (i) or (ii) of the
previous  sentence  is not  satisfied  with  respect  to an  prospective  equity
financing  during  the FO  Period,  the  Company  may  enter  into  a  placement
arrangement with any third party or directly with prospective investors on terms
no more favorable to the prospective investors or placement agent than the terms
contained in the Offering Notice.

         4.   REPRESENTATIONS  AND  WARRANTIES  OF  THE  COMPANY.   The  Company
represents and warrants to the Placement Agent and each Selected Dealer, if any,
which  representations  and  warranties  which are true and correct and shall be
true and correct as of the time of the Closing, as follows:

                                      -6-
<PAGE>

         4.1 SECURITIES LAW COMPLIANCE. The Offering Documents shall not contain
any untrue  statement  of a  material  fact or omit to state any  material  fact
necessary in order to make the statements therein, in light of the circumstances
in which they were made, not misleading.  If at any time prior to the completion
of the Offering or other  termination of this Agreement any event shall occur as
a result of which it might become  necessary to amend or supplement the Offering
Documents so that they do not include any untrue  statement of any material fact
or omit to state any material  fact  necessary  in order to make the  statements
therein,  in light of the  circumstances  then  existing,  not  misleading,  the
Company shall promptly notify the Placement Agent and shall supply the Placement
Agent with amendments or supplements  correcting such statement or omission. The
Company shall also provide the Placement  Agent for delivery to all offerees and
their representatives,  if any, any information, documents and instruments which
the  Placement  Agent and the Company  deem  necessary  to comply with state and
federal law applicable to the offering.

         4.2 ORGANIZATION.  The Company is a corporation duly organized, validly
existing  and in good  standing  under the laws of the State of Delaware and has
all requisite power and authority to own and lease its  properties,  to carry on
its business as currently  conducted,  to execute and deliver this Agreement and
to carry out the  transactions  contemplated by this Agreement,  as appropriate,
and is duly  licensed or  qualified to do business as a foreign  corporation  in
each  jurisdiction  in which the conduct of its business or ownership or leasing
of is properties requires it to be so qualified,  except where the failure to be
so qualified would not have a Material Adverse Effect.

         4.3  CAPITALIZATION.  The authorized,  issued and  outstanding  capital
stock of the Company prior to the consummation of the transactions  contemplated
hereby is as set forth in the  Offering  Documents  and the SEC  Documents.  All
issued and outstanding shares of common stock of the Company are validly issued,
fully  paid and  nonassessable  and have not been  issued  in  violation  of the
preemptive  rights  of any  stockholder  of the  Company.  All  prior  sales  of
securities of the Company were either  registered  under the  Securities Act and
applicable state securities laws or exempt from such registration.

         4.4 DERIVATIVE SECURITIES;  RIGHTS. Except as disclosed on SCHEDULE 4.4
hereof or as set forth in the most  recent  Form 10-Q or Form 10-K  filed by the
Company, there are not, nor shall there be immediately prior to the Closing, any
outstanding warrants, options,  agreements,  convertible securities,  preemptive
rights to subscribe  for or other  commitments  pursuant to which the Company or
any of its Subsidiaries is, or may become,  obligated to issue any shares of its
capital stock or other  securities  of the Company and this  Offering  shall not
cause any anti-dilution adjustments to such securities or commitments. Since the
most recent Form 10-Q or Form 10-K filed by the Company,  there has not been any
additional re-pricing of any outstanding,  warrants, options or other securities
of the Company.

         4.5  SUBSIDIARIES  AND  INVESTMENTS.  SCHEDULE 4.5 sets forth as of the
date hereof for each Subsidiary of the Company (i) its name and  jurisdiction of
incorporation;  (ii) the number of shares of  authorized  capital  stock of each
class of its capital stock; (iii) the number of issued and outstanding shares of
each class of its capital stock, all of which is owned by the Company;  and (iv)
its directors and officers.  Each  Subsidiary is a corporation  duly  organized,
validly existing, and in
in

                                      -7-
<PAGE>

good standing  under the laws of the  jurisdiction  of its  incorporation.  Each
Subsidiary is duly authorized to conduct  business and is in good standing under
the laws of each jurisdiction where such qualification is required, except where
the failure shall not have a Material  Adverse Effect.  Each Subsidiary has full
power and authority and all licenses,  permits, and authorizations  necessary to
carry on the businesses in which it is engaged andwhich it presently proposes to
engage and to own and use the properties  owned and used by it, except where the
failure shall not have a Material Adverse Effect. The Company has made available
to the Placement  Agent correct and complete copies of the charter and bylaws of
each Subsidiary (as amended to date).  All of the issued and outstanding  shares
of capital stock of each  Subsidiary  has been duly  authorized  and are validly
issued,  fully paid,  and  nonassessable.  The Company  holds of record and owns
beneficially all of the outstanding shares of each Subsidiary, free and clear of
any restrictions on transfer (other than  restrictions  under the Securities Act
and state  securities  laws),  taxes,  security  interests,  options,  warrants,
purchase rights, contracts,  commitments,  equities,  claims, and demands. There
are  no  outstanding  or  authorized   options,   warrants,   purchase   rights,
subscription rights,  conversion rights,  exchange rights, or other contracts or
commitments  that could  require any of the Company or any  Subsidiary  to sell,
transfer,  or otherwise  dispose of any capital  stock of any of a Subsidiary or
that could require any Subsidiary to issue,  sell, or otherwise  cause to become
outstanding  any of its  own  capital  stock.  There  are no  outstanding  stock
appreciation,  phantom  stock,  profit  participation,  or similar  rights  with
respect  to any  Subsidiary.  There  are no  voting  trusts,  proxies,  or other
agreements or understandings  with respect to the voting of any capital stock of
any  Subsidiary.  The minute  books  (containing  the records of meetings of the
stockholders,  the  board  of  directors,  and any  committees  of the  board of
directors),  the stock  certificate  books,  and the stock  record books of each
Subsidiary  are correct and complete.  None of the  Subsidiaries  are in default
under or in violation of any provision of their  respective  charters or bylaws.
Neither the Company nor any Subsidiary controls,  directly or indirectly, or has
any direct or indirect equity  participation  in any  corporation,  partnership,
trust, or other business association which is not a Subsidiary.

         4.6  FINANCIAL  STATEMENTS.  The Financial  Statements  included in the
Offering  Documents are: (i) in accordance with all books,  records and accounts
of the  Company;  (ii) are true,  correct  and  complete;  and  (iii)  have been
prepared  in  accordance   with  generally   accepted   accounting   principles,
consistently  applied.  The Financial Statements fairly present, in all material
respects,  the results of operations and cash flow for the periods covered.  The
Company has no material  liabilities,  contingent or otherwise,  other than: (a)
liabilities reflected on the Most Recent Balance Sheet; (b) liabilities incurred
in the  ordinary  course of business  subsequent  to the date of such  Financial
Statements;  and (c) obligations under contracts and commitments incurred in the
ordinary course of business and not required under generally accepted accounting
principles to be reflected in such Financial Statements.

         4.7 ABSENCE OF CHANGES.  Since the Most Recent  Balance  Sheet,  to the
Company's Knowledge, neither the Company nor any Subsidiary has (i) incurred any
liabilities or obligations,  direct or contingent, not in the ordinary course of
business,  (ii)  entered  into any  transaction  not in the  ordinary  course of
business, which is material to the business of the Company or any Subsidiary, or
(iii) incurred any adverse change or any  development  involving,  so far as the
Company or any Subsidiary can now reasonably foresee which would have a Material
Adverse  Effect,  and neither the Company nor any  Subsidiary has become a party
to, and neither the business  nor the property of the Company or any  Subsidiary
has become the subject of, any litigation,

                                      -8-
<PAGE>

whether or not in the ordinary course of their  respective  businesses.  Nor has
there been any change in the capital  stock of, or any  incurrence  of long-term
debt by the Company or any Subsidiary,  or any issuance of options,  warrants or
other rights to purchase the capital stock of the Company or any Subsidiary.

         4.8 TITLE.  Except as  disclosed on SCHEDULE 4.8 hereto or as set forth
in the SEC  Documents,  each of the  Company and the  Subsidiaries  has good and
marketable  title to their respective  properties and assets,  free and clear of
all liens,  charges,  encumbrances or restrictions,  which would have a Material
Adverse  Effect;  all of the leases and subleases under which the Company or any
Subsidiary is the lessor or sublessor of properties or assets or under which the
Company or any Subsidiary  holds properties or assets as lessee or sublessee are
in full force and effect,  and neither the Company  (nor any  Subsidiary)  is in
default in any material  respect with respect to any of the terms or  provisions
of any of such leases or subleases,  and no material  claim has been asserted by
anyone adverse to rights of the Company or any Subsidiary as lessor,  sublessor,
lessee or sublessee  under any of the leases or subleases  mentioned  above,  or
affecting or questioning the right of the Company or any Subsidiary to continued
possession of the leased or subleased premises or assets under any such lease or
sublease.  To its Knowledge,  the Company and each Subsidiary owns or leases all
such  properties  as  are  necessary  to  their  respective  operations  as  now
conducted.

         4.9 LITIGATION.  Except as set forth in the SEC Documents,  there is no
action, suit, investigation,  inquiry or similar governmental proceeding,  claim
or  proceeding  at law or in equity by or before  any  arbitrator,  governmental
instrumentality  or other agency now pending or, to the  Knowledge of any of the
Company or its  Subsidiaries,  threatened  against the Company or any Subsidiary
(or basis  therefore known to the Company or any Subsidiary) the adverse outcome
of which  would have a Material  Adverse  Effect.  Neither  the  Company nor any
Subsidiary is subject to any judgment,  order, writ, injunction or decree of any
federal,  state,  municipal or other governmental  instrumentality,  commission,
board, bureau, agency or instrumentality, domestic or foreign which would have a
Material Adverse Effect.

         4.10 NON-DEFAULT; NON-CONTRAVENTION. Neither the Company nor any of the
Subsidiaries is in breach of, or in default under,  any term or provision of any
indenture, mortgage, deed of trust, lease, note, loan or credit agreement or any
other  agreement or instrument  evidencing an obligation for borrowed  money, or
any other  agreement or  instrument to which it is a party or by which it or any
of its properties  may be bound or affected.  Neither the Company nor any of the
Subsidiaries  is in  violation  of any  provision of its charter or Bylaws or in
violation of any franchise,  license, permit,  judgment,  decree or order, or in
violation of any statute,  rule or regulation that would  individually or in the
aggregate have a Material Adverse Effect.  Neither the execution and delivery of
this  Agreement,  the  Subscription  Agreements,  nor the  issuance  and sale or
delivery of the securities  comprising  the  Securities and the Placement  Agent
Warrants, nor the consummation of any of the transactions contemplated herein or
in the  Subscription  Agreements,  or the Term Sheet,  nor the compliance by the
Company with the terms and provisions hereof or thereof,  has conflicted with or
will conflict with, or has resulted in or will result in a breach of, any of the
material  terms and  provisions  of, or has  constituted  or will  constitute  a
default  under,  or has resulted in or will result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the Company or
any of the  Subsidiaries  or pursuant to the terms of any  indenture,  mortgage,
deed of  trust,  note,  loan or  credit  agreement  or any  other  agreement  or
instrument  evidencing an obligation for borrowed  money, or any other agreement
or instrument to which the Company or any of the

                                      -9-
<PAGE>

Subsidiaries  may be bound or to which  any of the  property  or  assets  of the
Company or any of the  Subsidiaries  is subject;  nor will such action result in
any  violation of the  provisions of the charter or the Bylaws of the Company or
any of the  Subsidiaries or, assuming the due performance by the Placement Agent
of its  obligations  hereunder,  any  statute or any order,  rule or  regulation
applicable  to the  Company  or any of the  Subsidiaries  of any court or of any
foreign,  federal,  state or other regulatory authority or other government body
having jurisdiction over the Company or any of the Subsidiaries.

         4.11 TAXES. Each of the Company and its Subsidiaries has filed all U.S.
federal,  state, local and foreign tax returns which are required to be filed by
each of them and all such returns are true and correct in all material respects.
The Company and each  Subsidiary  has paid all taxes pursuant to such returns or
pursuant to any assessments  received by any of them or by which any of them are
obligated to withhold  from  amounts  owing to any  employee,  creditor or third
party.  The Company and each Subsidiary has properly  accrued all taxes required
to be accrued  and/or paid,  except where the failure  would not have a Material
Adverse  Effect.  The tax returns of the Company  and its  Subsidiaries  are not
currently being audited by any state, local or federal authorities.  Neither the
Company nor any Subsidiary has waived any statute of limitations with respect to
taxes or agreed to any  extension of time with respect to any tax  assessment or
deficiency.

         4.12 COMPLIANCE WITH LAWS, LICENSES,  ETC. To the best of the Company's
Knowledge,  neither the Company nor any  Subsidiary  has received  notice of any
violation of or noncompliance with any federal,  state, local or foreign,  laws,
ordinances, regulations and orders applicable to its business (including but not
limited to all  applicable  laws and  regulations  relating to the protection of
human health and safety,  the  environment  or hazardous or toxic  substances or
wastes, pollutants or contaminants), which has not been cured, the violation of,
or noncompliance  with which would have a Material  Adverse Effect.  The Company
and each Subsidiary has all Licenses required by every federal,  state and local
government  or  regulatory  body for the  operation of its business as currently
conducted and the use of its properties, except where the failure to be licensed
would not have a Material  Adverse  Effect.  The  Licenses are in full force and
effect and no violations are or have been recorded in respect of any License and
no proceeding is pending or threatened to revoke, modify or limit any thereof.

         4.13  AUTHORIZATION  OF AGREEMENT,  ETC.  This  Agreement has been duly
executed  and  delivered  by  the  Company  and  the  execution,   delivery  and
performance  by the Company of this  Agreement,  the Offering  Documents and the
Placement  Agent  Warrants have been duly  authorized by the Company's  board of
directors and no further consent or  authorization  of its board of directors or
its stockholders is required by the Company and constitute the legal,  valid and
binding  obligations  of the  Company,  enforceable  in  accordance  with  their
respective terms,  except as enforceability  may be limited by general equitable
principles,  bankruptcy,  insolvency,  reorganization,  moratorium or other laws
affecting creditors' rights generally.

         4.14  AUTHORIZATION  OF SECURITIES AND PLACEMENT  AGENT  WARRANTS.  The
Securities  and the  Placement  Agent  Warrants,  when issued and  delivered  in
accordance with this Agreement, and the

                                      -10-
<PAGE>

shares of common stock underlying the Placement Agent Warrants,  when issued and
delivered upon exercise of the Placement Agent Warrants shall be validly issued,
fully  paid,  and  nonassessable  and shall not be  issued in  violation  of any
preemptive rights of stockholders.

         4.15  EXEMPTION  FROM  REGISTRATION.  Assuming  (i) the accuracy of the
information   provided  by  the  respective   Subscribers  in  the  Subscription
Documents,  and (ii) that each Placement Agent shall comply in all respects with
the  provisions of Rule 506 Regulation D promulgated  under the Securities  Act,
the offer and sale of the  Securities and Placement  Agent Warrants  pursuant to
the terms of this Agreement shall be exempt from the  registration  requirements
of the Securities Act and the rules and regulations promulgated thereunder.  The
Company is not  disqualified  from the exemption under Regulation D by virtue of
the disqualifications contained in Rule 507 promulgated thereunder.

         4.16 BROKERS.  Neither the Company nor any of its officers,  directors,
employees or  stockholders  has employed any broker or finder in connection with
the transactions contemplated by this Agreement other than the Placement Agent.

         4.17  TITLE  TO  SECURITIES  AND  PLACEMENT  AGENT  WARRANTS.  When the
certificates  representing  the Securities and the Placement Agent Warrants have
been duly  delivered  and payment  shall have been made  therefor by the Holders
and/or the Placement Agent as the case may be (i) the Subscribers  shall receive
good title to the  Securities,  and the Placement Agent shall receive good title
to the Placement Agent Warrants,  (and the underlying common stock upon exercise
of the Investor  Warrants or Placement Agent Warrants).  All such title shall be
free and clear of all liens, security interests, pledges, charges, encumbrances,
stockholders' agreement, and voting trusts (with the exception of claims arising
or through the acts of the Holders and except as arising from applicable federal
and  securities  laws),  and the Company  shall have paid all taxes,  if any, in
respect of the original issuance thereof. .

         4.18  RIGHTS  OF  FIRST  REFUSAL.  Except  for  rights  granted  to the
Placement Agent pursuant to Section 7.3 hereof,  no other person,  firm or other
business entity is a party to any agreement, contract or understanding,  written
or oral  entitling  such  party to a right  of first  refusal  with  respect  to
securities to be issued by the Company.

         4.19  INTELLECTUAL  PROPERTY.  The Company owns or possesses  valid and
binding  licenses or other  rights to use,  whether or not  registered,  all its
Intellectual   Property.  The  Intellectual  Property  constitutes  all  of  the
intellectual  property  necessary to operate the Company's business as presently
conducted. Neither the Company nor any Subsidiary has received any notice of any
claims, nor do any of them have any Knowledge of any threatened claims, and none
of them know of any facts which  would form the basis of any claim,  asserted by
any person to the effect that the sale or use of any product or process now used
or offered by the Company or any Subsidiary or proposed to be used or offered by
the  Company  or any  Subsidiary  infringes  upon the use of any  such  patents,
trademarks,  copyrights,  technology,  know-how, processes or other intellectual
property of another person. To the best of the Company's Knowledge, no person is
infringing  upon the  Intellectual  Property.  The Company has taken  reasonable
security  measures  to protect  the  secrecy,  confidentiality  and value of the
Intellectual  Property.  No  person,  other  than the  Company,  owns or has any
proprietary,  financial or other  interest,  direct or indirect,  in whole or in
part, in any Intellectual Property.

                                      -11-
<PAGE>

         4.20 FOREIGN CORRUPT PRACTICES. To the best of the Company's Knowledge,
neither the  Company nor any  Subsidiary  nor to the  Knowledge  of any of their
respective  directors,  officers,  agents,  employees or other persons acting on
their behalf, in the course of their actions for, or on behalf of the Company or
any Subsidiary,  used any corporate  funds,  which would have a Material Adverse
Effect for any unlawful  contribution,  gift,  entertainment  or other  unlawful
expenses  relating to political  activity;  made any direct or indirect unlawful
payment  to any  foreign  or  domestic  government  official  or  employee  from
corporate  funds;  violated or is in violation  of any  provision of the Foreign
Corrupt Practices Act of 1977, as amended;  or made any bribe,  rebate,  payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.

         4.21  FILINGS  WITH THE SEC.  The Company has made all filings with the
SEC that it has been required to make under the  Securities Act and the Exchange
Act. All documents  required to be filed as exhibits to the SEC  Documents  have
been so filed, and all material contracts so filed as exhibits are in full force
and effect,  except those which have expired in accordance with their terms, and
neither the Company nor any of its  subsidiaries is in material default of these
material  contracts.  Each of the  Company's  SEC  Documents has complied in all
material  respects with the  Securities Act and the Exchange Act in effect as of
their  respective  dates of filing.  None of the Company's SEC Documents,  as of
their respective filing dates, contained any untrue statement of a material fact
or omitted to state a material fact  required to be stated  therein or necessary
in order to make the  statements  made  therein,  in light of the  circumstances
under which they were made, not misleading.

         5.  REPRESENTATIONS  AND WARRANTIES OF PLACEMENT  AGENT.  The Placement
Agent represents, warrants and covenants to the Company that:

         5.1 The Placement Agent is a member in good standing of the NASDR., and
is duly registered as a broker-dealer under the Exchange Act, and under the laws
of each  state in which we propose to offer the  Securities,  except  where such
registration would not be required by law.

         5.2  Each  purchaser  of  Securities  will  execute  the   Subscription
Agreement  in the form  attached as Exhibit B to the Term Sheet.  The  Placement
Agent will have no reason to believe that the persons  executing  such Agreement
do not have the qualifications set forth therein.

         5.3 This Agreement when accepted and approved will be duly  authorized,
executed  and  delivered  by the  Placement  Agent  and is a valid  and  binding
agreement on its part in accordance with its terms, except as enforceability may
be  limited   by   general   equitable   principles,   bankruptcy,   insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally.

         5.4 The consummation of the transactions contemplated by the Term Sheet
related  to the  offering  will not  result  in any beach of any of the terms or
conditions of or constitute a default  under any  indenture,  agreement or other
instrument  to which  the  Placement  Agent is a party,  or  violate  any  order
applicable to the  Placement  Agent of any federal or state  regulatory  body or
administrative agency having jurisdiction over it or its property.

                                      -12-
<PAGE>

         5.5 Until the termination of this Agreement, if any event affecting the
Company or the Placement  Agent shall occur which,  in the opinion of counsel to
the Company, should be set forth in a supplement or amendment to the Term Sheet,
the  Placement  Agent agrees to distribute  each  supplement or amendment to the
Term Sheet to each person who has  previously  received a copy of the Term Sheet
from the  Company or the  Placement  Agent and  further  agrees to include  each
supplement or amendment in all future deliveries of the Term Sheet.

         5.6      In recommending to an investor the purchase of the Securities,
                  the Placement Agent shall:

         (a)      have   reasonable   grounds  to  believe,   on  the  basis  of
                  information   obtained  from  the  investor   concerning   his
                  investment objectives, other investments,  financial situation
                  and needs, any and other information known by it, that:

                  (1)      the  investor is or will be in a  financial  position
                           appropriate to enable him to realize to a significant
                           extent the benefits described in the Term Sheet.

                  (2)      the  investor is an  accredited  investor and able to
                           sustain the risks  inherent in the  investment in the
                           Securities,  including loss of investment and lack of
                           liquidity; and

                  (3)      the   investment   is  otherwise   suitable  for  the
                           investor; and

         (b)      maintain in the  Placement  Agent's  files for a period of six
                  years  following the Closing  documents  disclosing  the basis
                  upon which the  determination of suitability was reached as to
                  each investor.

         5.7 The Placement Agent shall not execute any  transaction  relating to
the Company in a  discretionary  account  without prior written  approval of the
transaction by the customer.

         5.8 The Placement  Agent has  reasonable  grounds to believe,  based on
information  made available to it by the Company through the Term Sheet or other
materials,  that all material facts are adequately and accurately  disclosed and
provide a basis for evaluating the Company.

         5.9 Prior to executing a purchase transaction the Placement Agent shall
inform the prospective investor of all pertinent facts relating to the liquidity
and marketability of the Securities during the term of the investment.

         6. CLOSING; CONDITIONS OF CLOSING.

         6.1 CLOSING.  The Closing  shall be subject to this Section 6 and shall
take  place at such  place  as the  parties  shall  mutually  agree,  as soon as
practicable.  At the Closing,  payment for the Securities issued and sold by the
Company shall be made against delivery of the Securities.  In addition,  a final
Closing (if applicable) shall occur as soon as practicable following termination
of the Offering.

                                      -13-
<PAGE>

         6.2 CONDITIONS TO PLACEMENT AGENT'S OBLIGATIONS. The obligations of the
Placement Agent hereunder shall be subject to the representations and warranties
of the Company and each  Subsidiary  contained  herein being true and correct in
all material  respects as of the date hereof and as of the Closing  Date, to the
performance  by the Company of its  obligations  hereunder  and to the following
additional conditions:

              6.2.1 NO MATERIAL  MISSTATEMENTS.  The  Placement  Agent shall not
have  notified  the Company  that the Blue Sky  qualification  materials  or the
Offering Documents, or any supplement thereto, contains an untrue statement of a
fact which in its opinion is  material,  or omits to state a fact,  which in its
opinion is material and is necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.

              6.2.2 RECEIPT OF CONFIDENTIALITY AGREEMENTS FROM SUBSCRIBERS.  The
Company shall have received  from each  Subscriber  prior to the delivery of the
Offering  Documents to any  Subscriber,  a  confidentiality  agreement from such
Subscriber in form and substance satisfactory to the Company and its counsel and
which  confidentiality  agreement  shall meet the  requirements of Regulation FD
under the Exchange Act.

              6.2.3 COMPLIANCE WITH AGREEMENTS.  The Company shall have complied
in all material respects with this Agreement and satisfied all conditions on its
part to be performed or satisfied hereunder at or prior to the Closing.

              6.2.4 CORPORATE ACTION. The Company shall have taken all necessary
corporate action, including,  without limitation,  obtaining the approval of the
Company's board of directors,  for the execution and delivery of this Agreement,
the performance by the Company of its obligations  hereunder and the offering of
the Securities and Placement Agent Warrants.

              6.2.5   CERTIFICATES.   The   Placement   Agent  shall  receive  a
certificate of the Company,  signed by the President and Chief Financial Officer
thereof,  that the representations and warranties  contained in Section 4 hereof
are true and  accurate in all  respects  at the Closing  with the same effect as
though expressly made at the Closing.

              6.2.6 BRING-DOWN CERTIFICATES.  If there is more than one Closing,
then at each such  Closing  there  shall be  delivered  to the  Placement  Agent
updated certificates as described in Section 6.2.5 above.

              6.2.7  EXECUTION OF  AGREEMENTS.  The Company shall have delivered
duly  executed  counterparts  of  the  Registration  Rights  Agreement  and  the
Placement Agent Warrants.

              6.2.8 OPINION OF COUNSEL. On the Closing Date, the Placement Agent
shall  receive  the  opinion  of either  the  Company's  general  counsel or the
Company's  securities  counsel,  in  substantially  the form attached  hereto as
EXHIBIT 6.2.8.

              6.2.9.  SUPPORTING DOCUMENTS. On or prior to the Closing Date, the
Placement

                                      -14-
<PAGE>

Agent and its counsel shall have been furnished such documents, certificates and
opinions as they may  reasonably  request  for the  purpose of enabling  them to
review or pass upon the  matters  referred to in Section  6.2.8,  or in order to
evidence   the   accuracy,   completeness   or   satisfaction   of  any  of  the
representations, warranties or conditions herein contained.

              6.2.10.  NO ADVERSE  CHANGES.  On and prior to the  Closing  Date,
there shall have been no  transaction,  not in the ordinary  course of business,
entered  into by the  Company  from the  latest  date as of which the  financial
condition  of the  Company  is set  forth  in the  Offering  Documents  which is
material to the Company which has not been  disclosed to the Placement  Agent in
writing;  (ii) the Company  shall not be in default  under any  provision of any
instrument  relating  to any  outstanding  indebtedness;  (iii) no assets of the
Company  shall have been pledged or  mortgaged as of the date hereof,  except as
disclosed in this  Agreement or as  indicated  or  contemplated  in the Offering
Documents;  and (iv) no action, suit or proceeding,  at law or in equity,  shall
have been  pending or  threatened  against the Company or  affecting  any of its
respective  properties or businesses  before or by any court of federal or state
commission,   board  or  other  administrative  agency  wherein  an  unfavorable
decision,  ruling or finding  could  materially  adversely  affect the  business
operations,  prospects,  financial condition or income of the Company, except as
set forth in the Offering Documents.

         6.3  CONDITIONS TO THE COMPANY'S  OBLIGATIONS.  The  obligations of the
Company hereunder shall be subject to the  representations and warranties of the
Placement  Agent  contained  herein being true and correct in all respects as of
the date hereof and as of the Closing Date, to the  performance by the Placement
Agent of its obligations hereunder and to the following additional conditions:

              6.3.1 DUE QUALIFICATION OR EXEMPTION. The Offering contemplated by
this   Agreement  and  the  Placement   Agent  Warrants  shall  be  exempt  from
registration  under Section 4(2) of the  Securities  Act and Rule 506 thereunder
and from  registration  or  qualification  under the applicable Blue Sky laws as
provided in Section 7 hereof not later than the Closing,  all  required  filings
shall have been made with the SEC and  applicable  Blue Sky  administrators  not
applicable to a private placement.

              6.3.2 RECEIPT OF CONFIDENTIALITY AGREEMENTS FROM SUBSCRIBERS.  The
Company shall have received  from each  Subscriber  prior to the delivery of the
Offering  Documents to any  Subscriber,  a  confidentiality  agreement from each
Subscriber in form and substance satisfactory to the Company and its counsel and
which  confidentiality  agreement  shall meet the  requirements of Regulation FD
under the Exchange Act.

              6.3.3 COMPLIANCE WITH  AGREEMENTS.  The Placement Agent shall have
complied with all  agreements  and  satisfied  all  conditions on its part to be
performed or satisfied hereunder at or prior to the Closing.

         7. BLUE SKY.  Prior to the Closing,  a summary Blue Sky survey shall be
prepared by counsel to the  Placement  Agent for the states listed on SCHEDULE 7
(as  it  may  be  supplemented,   summarizing  the  pre-filing  and  post-filing
requirements of each such state in which the Securities are to be offered and it
is understood that such survey may be based on or rely upon the

                                      -15-
<PAGE>

representations  and warranties of the Subscribers as to their  qualification as
accredited investors.

         8. PLACEMENT AGENT  COMPENSATION.  Upon the Closing,  the Company shall
pay to the Placement Agent the following compensation:

         8.1  COMMISSIONS.  Simultaneous  with  payment for and  delivery of the
Securities,  at the Closing as provided in Section 6.1 above,  the Company shall
pay the Placement Agent an aggregate commission of 10% percent of the gross cash
proceeds of the  subscription  for Securities  accepted by the Company as of the
Closing.

         8.2 EXPENSES.  The Company shall pay the actual  reasonable  legal fees
and expenses of the counsel to the Placement Agent in an aggregate amount not to
exceed  (i) if the  Offering  closes  $75,000 or (ii) if the  Offering  does not
close, $40,000, in each case, upon provision of reasonable evidence of such fees
and expenses.

         8.3 BLUE SKY EXPENSES.  The Placement  Agent's  attorneys shall prepare
all forms to be filed with state  securities  regulators in connection with this
Offering.  The Company shall advance the Blue Sky filing fees as incurred and at
the Closing of the Offering,  the Company shall pay all related  attorneys  fees
and expenses of Placement  Agent's  counsel  incurred as in connection with Blue
Sky filings up to a maximum of [$5,000].

         8.4 PLACEMENT  AGENT  WARRANTS.  At the Closing of this  Offering,  the
Company  shall grant to the  Placement  Agent (or their  respective  designees),
Placement Agent Warrants to purchase a number of shares of Common Stock equal to
10% of the  total  number of shares of  Common  Stock  into  which the  Series A
Preferred  Stock sold in the Offering is  convertible as of the Closing (but not
any of the Investor Warrants). The Placement Agent Warrants shall be exercisable
at a price equal to 100% of the Closing Price.

         9. COVENANTS OF THE COMPANY.

         9.1 USE OF PROCEEDS. The Company shall not use any of the proceeds from
the  Offering to repay any  indebtedness  to any current  executive  officers or
directors of the Company.

         9.2 EXPENSES OF OFFERING.  Whether or not the transactions contemplated
hereunder are  consummated,  the Company shall be responsible for, and shall pay
all costs and expenses  directly  incurred by it in connection with the proposed
Offering including,  but not limited to, its legal fees, the costs of preparing,
printing or  photocopying  and  binding,  filing and  distributing  the Offering
Documents and all amendments,  supplements and exhibits thereto,  and the filing
fees in connection with Blue Sky Applications.

         9.3  NOTIFICATION.   The  Company  shall  notify  the  Placement  Agent
immediately,  and in writing (i) when any event shall have  occurred  during the
period  commencing  on the date hereof and ending on the later of the Closing or
the Termination  Date as a result of which the Offering  Documents would include
any untrue  statement  of a  material  fact or omit to state any  material  fact
necessary to make the statements therein not misleading,  (ii) whenever it files
any report or other document with the SEC or it receives  notice that any person
or entity has filed any Schedule 13D or

                                      -16-
<PAGE>

other  documents  with the SEC  relating  to the  Company,  and/or  (iii) of the
receipt  of any  notification  with  respect  to the  modification,  rescission,
withdrawal,  suspension of any exemption from registration or qualification,  in
any jurisdiction. The Company shall use its best efforts to prevent the issuance
of any such modification, rescission, withdrawal, or suspension and, if any such
modification, rescission, withdrawal, stop order or suspension is issued and you
so request, to obtain the lifting thereof as promptly as possible.

         9.4 BLUE SKY.  The  Company  shall use its best  efforts  to qualify or
register  the  shares  of  common  stock  contained  in the  Securities  and the
Placement  Agent Warrants for offering and sale under, or establish an exemption
from such  qualification or registration  under, the securities or Blue Sky laws
of such jurisdictions as the Placement Agent may reasonably  request;  PROVIDED,
HOWEVER  that the  Company  shall  not be  obligated  to  qualify  as a  foreign
corporation or as a dealer in securities in any  jurisdiction in which it is not
so  qualified.  The Company shall not  consummate  any sale of Securities or the
Placement Agent Warrants in any  jurisdiction in which it is not so qualified or
in any manner in which such sale may not be lawfully  made.  The  Company  shall
file such consents to service of process or other  documents as may be requested
by the  Placement  Agent and which,  in the  opinion of the  Placement  Agent or
counsel to the  Placement  Agent,  are necessary or advisable in order to effect
such registration or qualification and continue the same in effect for so long a
period as may be necessary to complete the distribution,  PROVIDED,  HOWEVER, in
each  jurisdiction  where the Securities or Placement  Agent Warrants shall have
been  registered  or  qualified as above,  the Company  shall make and file such
statements  and  reports  as are or may be  required  under  the  laws  of  such
jurisdiction  to continue such  qualification  in effect for so long a period as
the Offering in such jurisdiction is in effect.

         9.5 FORM D FILING.  The  Company  shall file five copies of a Notice of
Sales of  Securities  on Form D with the SEC prior to the Closing and shall file
promptly such amendments  thereto on Form D as shall become necessary.  It shall
also  comply  with any  filing  requirement  imposed by the laws of any state or
jurisdiction  in which offers and sales of  Securities  or the  Placement  Agent
Warrants are made prior to the Closing.  The Company shall furnish the Placement
Agent with copies of all such filings.

         9.6 REPORTS.  The Company shall furnish to the Placement Agent,  during
the period ending three YEARS from the  Termination  Date, that number of copies
of such  of the  following  documents  as the  Placement  Agent  may  reasonably
request: (i) as soon as they are available, a copy of all communications sent to
holders of the Company's  securities other than reports filed with SEC; and (ii)
such other  information of a public nature as a Placement Agent may from time to
time reasonably request.

         9.7 NO  ADDITIONAL  OFFERS  OR  SALES.  Until  the  termination  of the
Offering,  the  Company  shall not  without  the prior  written  consent  of the
Placement Agent,  offer, issue, sell, contract to sell, grant any option for the
sale of, or otherwise  dispose of, directly or indirectly,  any shares of common
stock, preferred stock or warrants (or any security or other instrument which by
its terms is convertible  into,  exercisable  for, or exchangeable for shares of
common stock) except as permitted or  authorized by this  Agreement,  except for
shares of common  stock  issuable  upon  exercise  of a  previously  outstanding
warrant or option or the granting of options under the Stock Option Plan.

                                      -17-
<PAGE>

         9.8 TRANSFER OF THE PLACEMENT  AGENT  WARRANTS.  The Company shall upon
the Closing or promptly  following the  Termination  Date,  cancel the Placement
Agent Warrants upon  presentment and transfer them to persons  designated by the
Placement Agent as instructed by the Placement Agent in writing.

         10.  INDEMNIFICATION.

         10.1 The Company  agrees to indemnify  and hold  harmless the Placement
Agent  and  each  Selected  Dealer,  if any  (collectively,  referred  to as the
Placement  Agent in this Section 10.1) and  Indemnified  Parties against any and
all  losses,  liabilities,  claims,  damages  and  expenses  whatsoever,  and to
reimburse the Placement Agent for reasonable  legal fees and related expenses as
incurred, arising out of the following Covered Claims: (i) any breach or alleged
breach of any  representation or warranty of the Company under this Agreement or
the Offering Documents; (ii) any untrue statement or alleged untrue statement of
a material fact contained in the Offering  Documents,  or under any Blue Sky law
or in any Blue Sky  Application;  or (iii)  the  omission  or  alleged  omission
therefrom of a material fact necessary in order to make the statements  therein,
in light of the circumstances under which they were made, not misleading.

         10.2 Each  Placement  Agent agrees to indemnify  and hold  harmless the
Company  and each  Indemnified  Party of the  Company to the same  extent as the
indemnity  from the Company to such  Placement  Agent,  pursuant to Section 10.1
hereof,  but only  with  respect  to (i) any  breach  or  alleged  breach of any
representation  or warranty of such Placement Agent in this  Agreement;  or (ii)
any untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon or in conformity with written information relating to such
Placement  Agent  offering  furnished by such  Placement  Agent or on its behalf
expressly  for use in  connection  with the  Offering  Documents or any Blue Sky
Application as each may be amended or supplemented.

         10.3  Promptly  after receipt by a person  entitled to  indemnification
pursuant to the foregoing Section 10.1 or 10.2, as applicable,  of notice of the
commencement of any action,  the Indemnified  Party shall, if a claim in respect
thereof is to be or has been made against an  Indemnifying  Party under  Section
10.1 or 10.2, as applicable,  promptly notify in writing the Indemnifying  Party
of the  commencement  thereof;  but the  omission so to notify the  Indemnifying
Party  shall  not  relieve  it  from  any  liability  which  it may  have to the
Indemnified  Party except to the extent the Indemnifying  Party is prejudiced by
the delay or failure to notify it. In case any such action is brought against an
Indemnified  Party, and it notifies the  Indemnifying  Party of the commencement
thereof, the Indemnifying Party shall be entitled to participate in, and, to the
extent that it may wish,  jointly with any other  Indemnifying  Party  similarly
notified,  to assume  the  defense  thereof,  subject to the  provisions  herein
stated, with counsel reasonably satisfactory to the Indemnified Party, and after
notice from the Indemnifying  Party to the Indemnified  Party of its election so
to assume the defense thereof, the Indemnifying Party shall not be liable to the
Indemnified  Party  under  this  Section  10 for any  legal  or  other  expenses
subsequently  incurred by the  Indemnified  Party in connection with the defense
thereof other than reasonable  costs of  investigation.  The  Indemnified  Party
shall  have the right to  employ  separate  counsel  in any such  action  and to
participate  in the defense  thereof,  but the fees and expenses of such counsel
shall not be at the expense of the Indemnifying  Party if the Indemnifying Party
has assumed the defense of the action with counsel  reasonably  satisfactory  to
the Indemnified Party; provided that the fees and

                                      -18-
<PAGE>

expenses of such counsel  shall be at the expense of the  Indemnifying  Party if
(i) the employment of such counsel has been  specifically  authorized in writing
by the  Indemnifying  Party,  or (ii)  the  named  parties  to any  such  action
(including any impleaded  parties) include both the Indemnified Party or parties
and the  Indemnifying  Party and, in the judgment of counsel for the Indemnified
Party, it is advisable  because of conflicts of their  respective  interests for
the Indemnified Party or parties to be represented by separate counsel, in which
case the  Indemnifying  Party  shall not have the right to assume the defense of
such action on behalf of the Indemnified Party or parties,  it being understood,
however,  that the Indemnifying Party shall not, in connection with any one such
action or  separate  but  substantially  similar or related  actions in the same
jurisdiction  arising out of the same general  allegations or circumstances,  be
liable for the  reasonable  fees and expenses of more than one separate  firm of
attorneys  for the  Indemnified  Party or parties.  No  settlement of any action
against  an  Indemnified  Party  shall  be  made  without  the  consent  of  the
Indemnified  Party,  which  shall not be  unreasonably  withheld in light of all
factors of importance to the Indemnified Party.

         11.   CONTRIBUTION.

         11.1  To  provide  for  just  and  equitable  contribution,  if  (i) an
Indemnified Party makes a claim for  indemnification  pursuant to Section 10 but
it is found in a final judicial  determination,  not subject to further  appeal,
that such  indemnification  may not be enforced  in such case,  even though this
Agreement  expressly  provides   indemnification  in  such  case,  or  (ii)  any
Indemnified or Indemnifying  Party seeks  contribution under the Securities Act,
the Exchange Act or otherwise,  then the Indemnifying  Party (including for this
purpose any contribution made by or on behalf of any officer, director, employee
or agent for an Indemnifying Party, or any Controlling Person of an Indemnifying
Party),  on the one hand, and the Indemnified  Party (including for this purpose
any contribution by or on behalf of any other  Indemnified  Party), on the other
hand, shall contribute to the losses, liabilities, claims, damages, and expenses
whatsoever  to which  any of them may be  subject,  in such  proportions  as are
appropriate to reflect the relative benefits received by the Indemnifying Party,
on the one  hand,  and the  Indemnifying  Party,  on the other  hand;  PROVIDED,
HOWEVER,  that if  applicable  law does not permit such  allocation,  then other
relevant equitable  considerations such as the relative fault of an Indemnifying
Party in connection  with the facts which resulted in such losses,  liabilities,
claims,  damages,  and expenses  shall also be considered.  Notwithstanding  the
foregoing,  in no case shall the Placement Agent, a Selected Dealer of either or
any  Controlling  Person  be  responsible  for a  portion  of  the  contribution
obligation  in excess of the  compensation  received by the  Placement  Agent or
Selected Dealer  pursuant to Section 8 hereof or the Selected Dealer  Agreement,
as the case may be. No person liable for a fraudulent misrepresentation shall be
entitled to  contribution  from any person who is not liable for such fraudulent
misrepresentation.

         11.2 For purpose of this Section 11, each Person,  if any, who controls
the Placement Agent or a Selected Dealer within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act and each officer,  director,
stockholder,  employee and agent of the  Placement  Agent or a Selected  Dealer,
shall  have  the same  rights  to  contribution  as the  Placement  Agent or the
Selected  Dealer,  and each person,  if any who controls the Company  within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act
and each officer,  director,  employee and agent of the Company,  shall have the
same  rights  to  contribution  as the  Company,  subject  in  each  case to the
provisions of this Section 11.  Notwithstanding,  anything in this Section 11 to
the

                                      -19-
<PAGE>

contrary,  no  party  shall be  liable  for  contribution  with  respect  to the
settlement of any claim or action  effected  without its written  consent.  This
Section  11 is  intended  to  supersede  any  right to  contribution  under  the
Securities Act, the Exchange Act, or otherwise.

         11.3 Notwithstanding any of the other provisions of this Agreement, the
aggregate  indemnification or contribution  obligations of a Placement Agent for
or on account of any  losses,  claims,  damages,  liabilities  or actions  under
Section 10, this Section 11 or other applicable section of this Agreement, shall
not exceed the amount of cash  commissions  actually  received by the  Placement
Agent.

         12.  TERMINATION.

         12.1 This  Agreement may be  terminated  by the Placement  Agent at any
time prior to the Termination  Date, if (i) the Company  sustains a loss that is
material to the Company,  whether or not insured, by reason of fire, earthquake,
flood,  accident  or other  calamity,  or from  any  labor  dispute  or court or
government action,  order or decree;  (ii) the Company shall fail to meet any of
the closing conditions set forth in this Agreement;  (iii) trading in securities
on the New York or American  Stock  Exchange or the Nasdaq Stock Market has been
suspended or limited; (iv) material governmental  restrictions have been imposed
on trading in securities  generally (not in force and effect on the date of this
Agreement);  (v) a banking  moratorium  has been declared by federal or New York
state authorities;  (vi) an outbreak of major international hostilities or other
national or international calamity has occurred;  (vii) any action,  proceeding,
investigation  or inquiry  has been  instituted  against  (or  relating  to) the
Company  (or any  subsidiary  thereof)  or by any  federal,  state or  municipal
commission,  board or agency  wherein  any  unfavorable  decision  would  have a
Material  Adverse Effect,  regardless of whether the  possibility  thereof shall
have been  disclosed  in the  Offering  Documents;  or (viii) the passage by the
Congress of the United States or by any state  legislative body of any action or
measure, or the adoption of any orders, rules or regulations by any governmental
body or any authoritative  accounting  institute,  or board, or any governmental
executive,  which is  reasonably  likely to have a  Material  Adverse  Effect or
materially affects the marketing of the Securities.

         12.2 This  Agreement may be terminated by the Company on written notice
to the Placement Agent on or after the Termination Date.

         13. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY.  Except as the
context   otherwise   requires,   the   respective   indemnities,    agreements,
representations, warranties, and other statements of the Company set forth in or
made pursuant to this Agreement  regardless of any  investigation  made by or on
behalf of the Placement Agent or any Controlling  Person thereof,  shall survive
delivery of, and payment for, the Securities and the Placement  Agent  Warrants.
PROVIDED,  HOWEVER, no claim or indemnification shall be brought by or on behalf
of the Placement Agent more than two years after the Closing.

         14. SEVERABILITY. In the event any parts of this Agreement are found to
be void,  the  remaining  provisions of this  Agreement  shall  nevertheless  be
binding with the same effect as though the void parts were deleted.

                                      -20-
<PAGE>

         15.  COUNTERPARTS.  This  Agreement  may be  executed  in  one or  more
counterparts,  each of  which  shall  be  deemed  an  original  but all of which
together  shall  constitute one and the same  instrument.  The execution of this
Agreement may be by actual or facsimile signature.

         16.  ARBITRATION.  Any controversy,  dispute or claim arising out of or
relating to this Agreement, or its interpretation,  application, implementation,
breach or  enforcement  which  the  Parties  are  unable  to  resolve  by mutual
agreement,  shall be settled by submission  by either party of the  controversy,
claim or dispute to binding arbitration in New York County, New York (unless the
Parties agree in writing to a different location),  in accordance with the rules
of the NASDR then in effect.  In any such  arbitration  proceeding  the  Parties
agree to provide all discovery deemed necessary by the arbitrators. The decision
and award made by the arbitrator  shall be final,  binding and conclusive on all
Parties  hereto for all  purposes,  and judgment  may be entered  thereon in any
court having jurisdiction thereof.

         17.  BENEFIT.  This  Agreement  shall be binding  upon and inure to the
benefit of the Parties  hereto and their legal  representatives,  successors and
assigns.

         18.  NOTICES AND  ADDRESSES.  All notices,  offers,  acceptance and any
other acts under this Agreement (except payment) shall be in writing,  and shall
be  sufficiently  given if  delivered  to the  addresses  in person,  by Federal
Express or similar receipted delivery, or by facsimile delivery as follows:

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

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

         the Placement Agent:   Indigo Securities, LLC
                                780 Third Avenue
                                Suite 2302
                                New York, NY 10017
                                Facsimile: (212) 298-9933
                                Attention: Eric Brachfeld

         with a copy to:        Wollmuth Maher & Deutsch LLP
                                500 Fifth Avenue
                                New York, New York 10110
                                Facsimile: (212) 382-0050
                                Attention: Rory M. Deutsch, Esq.

                                      -21-
<PAGE>

or to such other address as either of them, by notice to the other may designate
from time to time.  The  transmission  confirmation  receipt  from the  sender's
facsimile machine shall be evidence of successful facsimile delivery. Time shall
be  counted  to,  or from,  as the case may be,  the  delivery  in  person or by
mailing.

         19.  ATTORNEY'S  FEES.  In the event that there is any  controversy  or
claim arising out of or relating to this  Agreement,  or to the  interpretation,
breach or  enforcement  thereof,  and any  action  or  proceeding  including  an
arbitration proceeding is commenced to enforce the provisions of this Agreement,
the  prevailing  party shall be entitled to an award by the court or arbitrator,
as appropriate, of reasonable attorney's fees, costs and expenses.

         20.  GOVERNING  LAW. This Agreement and any dispute,  disagreement,  or
issue of construction or  interpretation  arising  hereunder whether relating to
its execution,  its validity,  the  obligations  provided  herein or performance
shall be governed or interpreted  according to the internal laws of the State of
New York without regard to choice of law considerations.

         21. ENTIRE AGREEMENT.  This Agreement  constitutes the entire Agreement
between the Parties and supersedes all prior oral and written agreements between
the Parties  hereto with  respect to the subject  matter  hereof.  Neither  this
Agreement  nor any  provision  hereof  may be  changed,  waived,  discharged  or
terminated  orally,  except by a  statement  in  writing  signed by the Party or
Parties against which enforcement or the change, waiver discharge or termination
is sought.

         22.  ADDITIONAL  DOCUMENTS.  The  Parties  hereto  shall  execute  such
additional  instruments as may be reasonably  required by their counsel in order
to carry  out the  purpose  and  intent of this  Agreement  and to  fulfill  the
obligations of the Parties hereunder.

         23. SECTION OR PARAGRAPH  HEADINGS.  Section  headings herein have been
inserted  for  reference  only and shall  not be  deemed  to limit or  otherwise
affect,  in any matter, or be deemed to interpret in whole or in part any of the
terms or provisions of this Agreement.

                [REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK.]

                                      -22-
<PAGE>

         IN  WITNESS  WHEREOF,  the  Parties  hereto  have  duly  executed  this
Agreement that date and year first above written.

Witnesses:                                  ELITE PHARMACEUTICALS, INC.

------------------------                    By:  /s/ Bernard J. Berk
                                                 -------------------------------
                                                 Bernard J. Berk
                                                 Chief Executive Officer
------------------------

                                            INDIGO SECURITIES, LLC

------------------------                    By:  /s/ Erich Brachfeld
                                                 -------------------------------
                                                 Erich Brachfeld
                                                 Managing Partner

                                      -23-
<PAGE>

                                    EXHIBIT A

                        FORM OF PLACEMENT AGENT WARRANTS

                                      -24-

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