Document:

NOTE
                                   (Series B)

$495,000.00                                                      August 31, 2005
                                                              Newark, New Jersey

         Elite  Pharmaceuticals,   Inc.  (the  "Borrower")  acknowledges  itself
indebted to, and for value received  hereby promises to pay to the order of, the
NEW JERSEY ECONOMIC  DEVELOPMENT  AUTHORITY (the "Authority") and its successors
and assigns,  the principal sum of FOUR HUNDRED  NINETY FIVE THOUSAND and 00/100
dollars  ($495,000.00) and to pay interest on the unpaid principal amount hereof
from  the  date of this  Note  calculated  on the  same  basis  as  interest  is
calculated on the Bonds (as hereinafter  defined).  The unpaid  principal amount
hereof  shall be equal to the  outstanding  aggregate  principal  amount  of the
Bonds.  Principal and interest  hereunder shall be payable in the amounts and on
the dates set forth in the Bonds.

         This Note is issued to evidence  the  obligation  of the  Borrower  and
pursuant to, and shall be governed by and  construed  in  accordance  with,  the
terms and  conditions  of the Loan  Agreement (as  hereinafter  defined) for the
repayment  of the Loan in the amount of $495,000  made by the  Authority  to the
Borrower  thereunder  from the  proceeds of the  Authority's  $495,000  Economic
Development  Bonds  (Elite  Pharmaceuticals,  Inc.  - 2005  Project),  Federally
Taxable  Series B (the "Bonds") and the payment of interest  thereon,  including
provision for repayment of the Loan in certain cases. All capitalized  words and
terms not defined  herein  shall have the  respective  meanings and be construed
herein as provided in the Loan Agreement.

         The Authority has assigned the Loan Agreement (together with this Note)
to the  Trustee  pursuant  to the  Indenture,  reserving  certain  of its rights
thereunder.  Such  assignment  is made as security  for the payment of the Bonds
issued by the  Authority  pursuant to the  Resolution  adopted by it on July 12,
2005 and the Indenture.

         This Note is entitled to all of the  benefits  and is subject to all of
the provisions of the Loan Agreement,  which provisions are hereby  incorporated
herein by reference  thereto.  Subject to the provisions hereof, the obligations
of the  Borrower  to make or cause  the  payments  required  hereunder  shall be
absolute and unconditional  without defense or setoff as more fully set forth in
the Loan Agreement.

         This Note is subject to  prepayment  in whole or in part as provided in
the Loan Agreement.

         If an "Event of Default" occurs under the Loan Agreement, the principal
of this Note may be  declared  due and payable in the manner and with the effect
provided in the Loan Agreement.

<PAGE>

         Whenever  payment or provision  thereof has been made in respect of the
principal of, premium,  if any, and interest on all Bonds in accordance with the
Loan Agreement, this Note shall be deemed paid in full and shall be canceled and
returned to the Borrower.

         All payments of principal,  premium, if any, and interest shall be made
to the  Trustee at its  Principal  Office in such coin or currency of the United
States  of  America  as at the time of  payment  shall be legal  tender  for the
payment of public and private  debts.  All payments  shall be in the full amount
required hereunder unless and to the extent the Borrower is entitled to a credit
under the Loan Agreement or the Indenture.

         Payment of the  redemption  price of any of the Bonds  pursuant  to the
provisions  for  redemption  in  the  Indenture  shall  constitute   payment  of
principal,  or any portion  thereof,  any premium  thereon and accrued  interest
thereon due on this Note.  Any payment of interest on or principal or redemption
price  of  the  Bonds  pursuant  to  the  Loan  Agreement  shall   constitute  a
corresponding interest or principal payment on this Note.

         In case the Trustee or the  Authority  shall have  proceeded to enforce
its rights under this Note,  the Loan  Agreement  and/or the  Indenture and such
proceedings  shall have been  discontinued  or abandoned for any reason or shall
have been  determined  adversely  to the Trustee or the  Authority,  then and in
every case the  Borrower  and the  Trustee or the  Authority  shall be  restored
respectively to their respective positions and rights hereunder, and all rights,
remedies  and powers of the  Borrower  and the  Trustee or the  Authority  shall
continue as though no such proceedings had been taken.

         In case there shall be pending  proceedings  for the  bankruptcy or for
the  reorganization  of the Borrower  under the Federal  bankruptcy  laws or any
other applicable law, or in case a receiver or trustee shall have been appointed
for the  property of the Borrower or in the case of any other  similar  judicial
proceedings  relating to the  Borrower,  or to the  creditors or property of the
Borrower,  the Trustee and the  Authority  shall be entitled and  empowered,  by
intervention  in such  proceedings or otherwise,  to file and provide a claim or
claims for the amounts  owing and unpaid in respect of this Note and, in case of
any  judicial  proceedings  relative  to the  Borrower,  its  creditors,  or its
property,  and to collect and receive  any moneys or other  property  payable or
deliverable  on any such claims,  and to distribute the same after the deduction
of its charges and expenses; and any receiver, assignee or trustee in bankruptcy
or  reorganization is hereby authorized to make such payments to the Trustee and
the  Authority,  as the case may be, and to pay to the Trustee and the Authority
any amount due it for compensation and expenses, including counsel fees incurred
by it up to the date of such distribution.

         This Note shall be governed by the laws of the State of New Jersey.MORTGAGE

                                      FROM

                           ELITE PHARMACEUTICALS, INC.

                                     TO THE

                    NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY

                             DATED: AUGUST 31, 2005

Record and Return to:

John V. Cavaliere, Esq.
McMANIMON & SCOTLAND, L.L.C.
One Riverfront Plaza, 4th Floor
Newark, New Jersey  07102

<PAGE>

                                    MORTGAGE

         THIS MORTGAGE made as of August 15, 2005,  from ELITE  PHARMACEUTICALS,
INC.,  having an office or located at 165 Ludlow Avenue,  Northvale,  New Jersey
07647 (the  "Mortgagor") to the NEW JERSEY  ECONOMIC  DEVELOPMENT  AUTHORITY,  a
public body corporate and politic  constituting an  instrumentality of the State
of New Jersey,  having an office at 36 West State Street, P.O. Box 990, Trenton,
New Jersey 08625 (the "Mortgagee").

         WHEREAS,  the  Mortgagor  has entered  into a Loan  Agreement  with the
Mortgagee  dated as of  August  15,  2005  (the  "Agreement"),  under  which the
Mortgagee  has agreed to provide  the  Mortgagor  with  funds to  undertake  the
financing  and   refinancing  of  the   acquisition  of  land  and  an  existing
approximately  15,000  sq.  ft.  building,  with  renovations  thereto,  and the
acquisition  of equipment,  to be used in the  manufacturing  of  pharmaceutical
products to be located in the municipality of Northvale, County of Bergen, State
of New Jersey (the "Project"); and

         WHEREAS,  the Mortgagor is obligated  under the Agreement and two notes
of the  Mortgagor  of even  date  herewith  (collectively,  the  "Note")  in the
aggregate  principal  sum of FOUR  MILLION ONE HUNDRED  FIFTY FIVE  THOUSAND and
00/100 Dollars  ($4,155,000.00)  (collectively,  the "Loan") lawful money of the
United States with interest  thereon to be computed from the date thereof at the
rate provided for in the Agreement and the Note and this Mortgage shall serve as
security for the repayment of the Loan.

         NOW,  THEREFORE,  to secure  the  payment of the Loan and to secure the
performance  by the  Mortgagor  of all of its other  obligations  and  covenants
pursuant  to the  Agreement,  and to assure  payment of all other  indebtedness,
monetary  obligations,  liabilities  and  duties  of any kind of the  Mortgagor,
direct or indirect,  absolute or contingent,  joint or several,  due or not due,
liquidated or  unliquidated,  arising under the Agreement or this Mortgage,  the
Mortgagor has given, granted, released, assigned,  transferred and set over unto
the Mortgagee and by these presents does give, grant, release, assign, transfer,
and set over  unto the  Mortgagee,  its  successors  and  assigns  forever,  the
following described property and rights:

         ALL that  certain  lot,  piece or  parcel  of land,  together  with the
buildings,  structures  and  improvements  thereon  now or at anytime  hereafter
erected or constructed,  lying and being in the  municipality of Northvale,  the
County of Bergen and the State of New Jersey,  more  particularly  described  in
SCHEDULE A attached hereto and made a part hereof (the "Premises").

         TOGETHER  with all and singular the  tenements,  hereditaments,  woods,
waters, watercourses, liberties, privileges, rights-of-way,  easements, riparian
rights and appurtenances thereunto belonging,  or in any wise appertaining,  and
any reversion and remainders, rents, issues and profits thereof.

         TOGETHER with all right,  title and interest of the Mortgagor in and to
any streets,  roads, public places, opened or proposed,  adjoining the Premises,
and all  easements  and  rights-of-way,  public or private,  all  sidewalks  and
alleys,  now or hereafter  used in connection  with the Premises or abutting the
Premises.

         TOGETHER  with all fixtures  and  articles of personal  property now or
hereafter attached to or used in connection with, or with the operation of, said
Premises  (except  those  fixtures  and  articles  of personal  property  now or
hereafter  owned by any  tenants of the  Premises),  as to which  this  Mortgage

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constitutes a fixture filing and security agreement under the Uniform Commercial
Code of the State of New  Jersey  (in  addition  to and not in lieu of any other
security  agreement  between  the  parties),  including,  but  not  limited  to,
partitions,  elevators,  steam and hot water boilers, dynamos, kitchen cabinets,
incinerators,   plants  and  shrubbery,  furnaces,  heating,  air  conditioning,
lighting and power  plants,  coal and oil burning  apparatus,  pipes,  plumbing,
radiators,  sinks, bath tubs, water closets,  refrigerators,  gas and electrical
fixtures,  stoves, ranges, shades,  screens,  awnings,  vacuum cleaning systems,
sprinkler  systems or other  fire  prevention  or  extinguishing  apparatus  and
materials,  including  additions  thereto,  replacements  thereof  and  proceeds
therefrom,  all of which shall be deemed to be and remain and form a part of the
realty  and are  covered  by the lien of this  Mortgage.  Pursuant  to  N.J.S.A.
12A:9-402(b),  this Mortgage  shall be filed in the real estate record office in
the County of Bergen and shall be effective as a financing  statement filed as a
fixture filing from the date of its  recording.  If the lien of this Mortgage is
subject to a  conditional  bill of sale,  chattel  mortgage,  or other  security
interest covering any such property,  then all the right,  title and interest of
Mortgagor in and to such property, together with the benefits of any deposits or
payments now or hereafter made thereon,  are and shall be covered by the lien of
this Mortgage.

         TOGETHER  with  any  and  all  awards,  damages,   payments  and  other
compensation,  and any and all claims  therefor  and rights  thereto,  which may
result from  taking or injury by virtue of the  exercise of the power of eminent
domain,  or any  damage,  injury  or  destruction  in any  manner  caused to the
Premises or improvements thereon, or any part thereof;  subject, however, to the
provisions  of  the  Agreement  relating  to  damage,  destruction,   taking  or
condemnation, which provisions are incorporated herein by reference.

         AND ALSO, all the estate, right, title, interest, property, possession,
claim and demand whatsoever of the Mortgagor,  in law and in equity,  of, in and
to the same and every part and parcel thereof with the appurtenances.

         All of the foregoing,  including the Premises, shall be known herein as
the "Mortgaged Property."

         TO HAVE AND TO HOLD  the  above  granted  Mortgaged  Property  unto the
Mortgagee,  its successors and assigns, to its and their own proper use, benefit
and behoof forever.

         PROVIDED THAT if the Mortgagor  shall well and truly pay or there shall
otherwise be paid to the Mortgagee the  indebtedness  secured hereby at the time
and in the manner provided in the Agreement and this Mortgage and shall well and
truly abide by and comply with each and every  covenant and  condition set forth
herein and in the  Agreement,  then  these  presents  and the lien and  interest
hereby  transferred  and  assigned  shall  cease,  terminate  and be  void.  The
Mortgagee  hereby  covenants to release the Mortgaged  Property and renounce any
other  rights  granted  to it  herein,  and to  execute  at the  request  of the
Mortgagor,  a "Release  of  Mortgage"  and any other  instrument  to that effect
deemed  necessary or desirable,  upon payment and performance  being made on the
indebtedness and covenants secured hereby.

                                       3
<PAGE>

I.       THE MORTGAGOR REPRESENTS, WARRANTS, COVENANTS AND AGREES WITH MORTGAGEE
         AS FOLLOWS:

         Section 1. That all words and terms not defined  herein  shall have the
respective meanings and be construed herein as provided in the Agreement.

         Section 2. That the Mortgagor  will pay the Loan at the time and in the
manner provided for in the Agreement and in this Mortgage.

         Section 3. That the Mortgagor hereby covenants to the Mortgagee that no
owner of the  Premises  shall be entitled  to any credit  against  payments  due
hereunder by reason of the payment of any taxes or assessments levied thereon.

         Section 4. That the  Mortgagor is seized of an  indefeasible  estate in
fee simple in the Mortgaged  Property,  and Mortgagor  warrants the title to the
Mortgaged Property.

         Section 5. That the Mortgaged  Property  shall be kept insured  against
loss or damage by fire and such other hazards as Mortgagee may specify,  for the
benefit  of  the  Mortgagee,  all  in  accordance  with  the  provisions  of the
Agreement.

         Section  6.  That any  buildings,  structures  and  other  improvements
erected and to be erected upon the  Premises,  including  fixtures and equipment
shall  be kept  in  good  and  substantial  repair  and  shall  not be  removed,
demolished or materially  altered  without the prior express  written consent of
the Mortgagee,  which consent shall not be unreasonably withheld or delayed. The
Mortgagor  shall not do, and shall not  permit to be done,  any act which may in
any way impair or weaken the security under this Mortgage.

         Section 7. That the Mortgagor  represents to the Mortgagee  that it has
no  knowledge  of any  offsets,  counterclaims  or  defenses  to  the  principal
indebtedness  secured hereby,  or to any part thereof,  or the interest thereon,
either at law or in  equity.  The  Mortgagor  will,  within  three (3) days upon
request in person or within ten (10) days upon  request by mail,  furnish a duly
acknowledged written statement in form reasonably  satisfactory to the Mortgagee
stating  either  that the  Mortgagor  knows of no offsets or  defenses  existing
against such indebtedness,  or if such offsets or defenses are alleged to exist,
the nature and extent  thereof,  and in either case,  such  statement  shall set
forth the amount due hereunder.

         Section 8. That the  Mortgagor  will not remove or suffer to be removed
from the Premises or the improvements thereon any fixtures as defined by the law
in New Jersey (unless such fixtures have been replaced with similar  fixtures of
equal  or  greater  utility  and  value),  presently  or  in  the  future  to be
incorporated  into,  installed  in,  annexed or affixed to the  Premises  or the
improvements;  nor will the  Mortgagor  execute  or  cause to be  executed,  any
security  interest  upon any  such  fixtures,  additions  to,  substitutions  or
replacements  thereof or upon any  fixtures  in the future to be  installed  in,
annexed or affixed to the Premises, without the prior express written consent of
the Mortgagee.

                                       4
<PAGE>

         Section 9. That the  Mortgagor  will perform and abide by the terms and
covenants herein and the terms and covenants in the Agreement  contained therein
which are made a part hereof as though set forth herein at length.

         Section  10.  That the  acceptance  by the  Mortgagee  of any  payments
hereunder,  after default,  or the failure of the Mortgagee,  in any one or more
instances to insist upon strict  performance  by the  Mortgagor of any terms and
covenants  of this  Mortgage  or to  exercise  any  option  or  election  herein
conferred,  shall not be deemed to be a waiver or relinquishment  for the future
of any such terms, covenants, elections or options.

         Section  11.  That  all the  covenants  hereof  shall be  construed  in
accordance with the laws of the State of New Jersey.

         Section 12. That the terms of this  Mortgage may not be changed  orally
but only by an agreement in writing signed by the party against whom enforcement
of any waiver, change, modification or discharge is sought.

         Section  13.  The date of this  Mortgage  shall  be for  identification
purposes  only and shall  not be  construed  to imply  that  this  Mortgage  was
executed on any date other than the respective dates of the  acknowledgments  of
the parties hereto. This Mortgage shall become effective upon its delivery.

         Section 14. The  Mortgagor  shall  prepare and timely file all Federal,
state and local tax  returns  required  to be filed by it and  promptly  pay and
discharge or cause to be promptly paid and  discharged  all taxes,  assessments,
municipal or governmental rates, charges, impositions, liens and water and sewer
rents or any part thereof, heretofore or hereafter imposed upon it or in respect
of any of its  property and assets  before the same shall become in default,  as
well as all lawful claims which,  if unpaid,  might become a lien or charge upon
such  property  and  assets  or  any  part  thereof,  except  for  those  taxes,
assessments and other governmental charges then being contested in good faith by
the Mortgagor by appropriate  proceedings  (provided that such contest shall not
result in a new lien being placed on any of the Mortgagor's properties or assets
or result in any of the  Mortgagor's  properties or assets being subject to loss
or forfeiture as a result of the nonpayment of such items during the continuance
of said contest) and for which the Mortgagor has maintained adequate reserves or
accrued the estimated  liability on the  Mortgagor's  balance sheets for payment
thereof.  The Mortgagor  shall submit to the Mortgagee  receipted  bills showing
payment of all  taxes,  assessments,  governmental  charges or levies and lawful
claims which, if unpaid,  would become a lien or claim on the Premises,  as same
shall be paid.

         Section  15.  During  the term of the  Agreement,  in the  event of the
passage  after the date of this  Mortgage of any law of the State of New Jersey,
or any other governmental entity,  changing in any way the laws now in force for
the  taxation  of  mortgages,  or  debts  secured  thereby,  for  state or local
purposes,  or the manner of the operation of any such taxes, so as to affect the
interest of the Mortgagee,  then and in such event, the Mortgagor shall bear and
pay the full amount of such taxes,

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<PAGE>

provided  that if for any  reason  payment by the  Mortgagor  of any such new or
additional  taxes would be unlawful or if the payment  thereof would  constitute
usury or render the Loan or  indebtedness  secured  hereby  wholly or  partially
usurious  under  any of the  terms  or  provisions  of  the  obligation  secured
hereunder, or this Mortgage, or otherwise, the Mortgagee may, at the Mortgagee's
option,  declare the whole sum secured by this Mortgage,  with interest thereon,
to be  immediately  due and  payable  and  Mortgagor  shall have one hundred and
twenty (120) days to pay such Mortgage, or the Mortgagee may, at the Mortgagee's
option,  pay  that  amount  or  portion  of such  taxes as  renders  the Loan or
indebtedness  secured hereby unlawful or usurious,  in which event the Mortgagor
shall concurrently therewith pay the remaining lawful and nonusurious portion or
balance of said taxes.

         Section  16.  The  Mortgagor  agrees  to comply  with all laws,  rules,
regulations  and ordinances  made or promulgated by lawful  authority and now or
hereafter  applicable  to the  Mortgaged  Property  within  such  time as may be
required  by law.  The  Mortgagor  shall have the right to contest any such law,
rule, regulation or the like as long as it is contesting the same in good faith.

         Section  17. That if any action or  proceeding  be  commenced  to which
action or proceeding the holder of this Mortgage is made a party, or in which it
becomes necessary to defend or uphold the lien of this Mortgage,  the expense of
any  litigation  to  prosecute  or defend the  rights  and lien  created by this
Mortgage (including reasonable attorney's fees), shall be paid by the Mortgagor,
and any  such sum and the  interest  thereon  shall  be a lien on the  Mortgaged
Property,  prior  to any  right,  or title  to,  interest  in or claim  upon the
Mortgaged  Property  attaching  or  accruing  subsequent  to the  lien  of  this
Mortgage,  and shall be deemed to be secured by this Mortgage.  In any action or
proceeding to foreclose this Mortgage, or to recover or collect the debt secured
hereby,  the provisions of law  respecting the recovery of costs,  disbursements
and allowance shall prevail unaffected by this covenant.

         Section 18. The  Mortgagor  has  assigned to the  Mortgagee  the rents,
issues  and  profits  arising  out of or from the above  described  Premises  as
further security for the payment of the debt secured hereby, as set forth in the
Assignment of Leases from the Mortgagor to the Mortgagee of even date herewith.

         Section 19. That upon default by the Mortgagor in the compliance  with,
or performance of, any of the terms,  covenants,  or conditions of this Mortgage
or the  Agreement  (and upon the lapse of the  applicable  grace  periods as set
forth  herein and  therein),  the  Mortgagee  may,  at its  option,  remedy such
default;  that all  payments  made by the  Mortgagee  to remedy a default by the
Mortgagor (including reasonable attorneys' fees) and the total of any payment or
payments due from the Mortgagor to the  Mortgagee and in default,  together with
interest  thereon  at the rate  equal to the rate of  interest  set forth in the
Agreement (such interest to be calculated  from the date of such  advancement to
the date of payment thereof by Mortgagor), shall be added to the debt secured by
this Mortgage  until paid and the  Mortgagor  covenants to repay the same to the
Mortgagee on the next  payment date on the Note.  Any such sums and the interest
thereon shall be a lien on the Premises  prior to any other lien attaching to or
accruing subsequent to the lien of this Mortgage.

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<PAGE>

         Section 20. (i) To the best of the Mortgagor's knowledge and other than
as  disclosed in the offering  statement,  after due inquiry and  investigation,
none of the real property owned and/or  occupied by the Mortgagor and located in
the State of New Jersey, including,  without limitation,  the Mortgaged Premises
has ever been used by  previous  owners  and/or  operators  to refine,  produce,
store,  handle,  transfer,   process  or  transport  "Hazardous  Substances"  or
"Hazardous  Wastes",  as such terms are defined in the Applicable  Environmental
Laws except for substances resulting from the prior operation of the Premises as
a farm,  and (b) the Mortgagor has not used in the past,  nor does the Mortgagor
intend to use in the future, said real property,  including, without limitation,
the  Mortgaged  Premises,  for the  purpose  of  refining,  producing,  storing,
handling,  transferring,  processing or transporting said "Hazardous Substances"
or "Hazardous  Wastes" except as are normally used in the  construction of homes
and in such case in compliance with the Applicable Environmental Laws.

         (ii) None of the real property  owned and/or  occupied by the Mortgagor
and  located in the State of New  Jersey,  including,  without  limitation,  the
Mortgaged Premises, has or is now being used as a "Major Facility", as such term
is defined  in  N.J.S.A.  58:10-23.11b(l),  and said real  property,  including,
without  limitation,  the  Mortgaged  Premises,  will  not be used  as a  "Major
Facility"  without the prior  express  written  consent of Mortgagee  but if the
Mortgagor  ever  becomes  such an owner or operator,  then the  Mortgagor  shall
furnish  the New Jersey  Department  of  Environmental  Protection  with all the
information required by N.J.S.A. 58:10-23.11d.

         (iii)  Should the  Mortgagor  or any other  Person  cause or permit any
intentional  or  unintentional  action or omission  resulting in the  releasing,
spilling, leaking, pumping, pouring, emitting, emptying or dumping of "Hazardous
Substances" or "Hazardous  Wastes",  as such terms are defined in the Applicable
Environmental  Laws,  into  the  waters  or onto the  lands of the  State of New
Jersey,  or into the waters outside the  jurisdiction of the State of New Jersey
resulting in damage to the lands, waters, fish, shellfish,  wildlife, biota, air
or other resources  owned,  managed or held in trust or otherwise  controlled by
the  State  of New  Jersey,  without  having  obtained  a permit  issued  by the
appropriate governmental authorities, the Mortgagor shall promptly clean up such
spill,  leak,  etc.,  in  accordance  with  the  provisions  of  the  Applicable
Environmental Laws.

         (iv)  To the  best  of the  Mortgagor's  knowledge  and  other  than as
disclosed in the Placement Memorandum,  after due inquiry and investigation,  no
lien has been attached to any revenues or any real or personal property owned by
the  Mortgagor  and  located  in the  State of New  Jersey,  including,  without
limitation,  the Mortgaged Premises, as a result of the administrator of the New
Jersey  Spill  Compensation  Fund  expending  monies  from  said fund to pay for
"Damages", as such term is described in N.J.S.A.  58:10-23.11(g) and/or "Cleanup
and Removal Costs", as such term is defined in N.J.S.A. 58:10-23.11b(d), arising
from an intentional or unintentional  action or omission of the Mortgagor or any
previous  owner  and/or  operator  of said  real  property,  including,  without
limitation,  the  Mortgaged  Premises,  resulting  in the  releasing,  spilling,
pumping,  pouring,  emitting,  emptying or dumping of "Hazardous  Substances" or
"Hazardous  Wastes",  as such terms are defined in the Applicable  Environmental
Laws,  into the  waters or onto the lands of the  State of New  Jersey,  or into
waters outside the jurisdiction of the State of New Jersey where damage may have
resulted to the lands, waters, fish, shellfish,  wildlife,  biota, air and other
resources owned,  managed, held in trust

                                       7
<PAGE>

or otherwise controlled by the State of New Jersey.

         (v) The Mortgagor is not, and has not been, required to furnish the New
Jersey  Department of  Environmental  Protection  with  information  required by
N.J.S.A.  58:10-23.11d with respect to the Mortgaged Premises and any other real
property owned and/or  operated by Mortgagor and located in New Jersey,  if any,
which  is used as a  "Major  Facility",  as such  term is  defined  in  N.J.S.A.
58:10-23.11b(l).

         (vi) The  Mortgagor  has not received a summons,  citation,  directive,
letter or other  communication,  written or oral, from the New Jersey Department
of Environmental  Protection  concerning any intentional or unintentional action
or  omission on the  Mortgagor's  part  resulting  in the  releasing,  spilling,
leaking,  pumping,  pouring,   emitting,   emptying  or  dumping  of  "Hazardous
Substances" or "Hazardous  Wastes",  as such terms are defined in the Applicable
Environmental  Laws,  into  the  waters  or onto the  lands of the  State of New
Jersey,  or into the waters outside the  jurisdiction of the State of New Jersey
resulting in damage to the land, waters, fish, shellfish,  wildlife,  biota, air
and other resources owned, managed, held in trust or otherwise controlled by the
State of New Jersey.

         (vii) In  connection  with the  purchase of the  Mortgaged  Premises if
acquired by the Mortgagor on or after February 1, 1984, such acquisition was not
subject to compliance  with,  or the Mortgagor  required that the seller of said
real property,  including the Mortgaged Premises,  comply with the provisions of
the New Jersey  Environmental  Cleanup  Responsibility Act (N.J.S.A.  13:1K-6 ET
SEQ.) as amended by the Industrial  Site Recovery Act, and the seller did comply
therewith.

         (viii) The Mortgagor shall not cause or permit to exist, as a result of
an intentional or unintentional action or omission on the part of the Mortgagor,
a releasing,  spilling, leaking, pumping, emitting, pouring, emptying or dumping
of a "Hazardous  Substance" or "Hazardous  Wastes", as such terms are defined in
the Applicable Environmental Laws, into waters or onto the lands of the State of
New Jersey,  or into waters outside the jurisdiction of the State of New Jersey,
where damage may result to the lands, waters, fish, shellfish,  wildlife, biota,
air and other resources owned, managed, held in trust or otherwise controlled by
the State of New Jersey, unless said release,  spill, leak, etc., is pursuant to
and in compliance  with the  conditions  of a permit  issued by the  appropriate
federal or state governmental authorities.

         (ix) So long as the  Mortgagor  shall own or operate any real  property
located in the State of New Jersey, which is used as a "Major Facility", as such
term is defined in N.J.S.A.  58:10-23.  11b(1), the Mortgagor shall duly file or
cause to be duly filed with the  Director of the Division of Taxation in the New
Jersey Department of the Treasury,  a tax report or return and shall pay or make
provision for the payment of all taxes due therewith, all in accordance with and
pursuant to N.J.S.A. 58:10-23.11h.

         (x) In the event that there shall be filed a lien against the Mortgaged
Premises by the New Jersey  Department of Environmental  Protection  pursuant to
and in accordance with the provisions of

                                       8
<PAGE>

N.J.S.A.  58:10-23.11f(f)  as a result of the  administrator  of the New  Jersey
Spill  Compensation  Fund  having  expended  monies  from  said  fund to pay for
"Damages", as such term is described in N.J.S.A.  58:10-23.11g,  and/or "Cleanup
and Removal Costs", as such term is defined in N.J.S.A. 58:10-23.11b(d), arising
from an intentional or  unintentional  action or omission of the Mortgagor,  any
tenant of the Mortgaged Premises or any other Person resulting in the releasing,
spilling,   pumping,  pouring,  emitting,  emptying  or  dumping  of  "Hazardous
Substances" or "Hazardous  Wastes",  as such terms are defined in the Applicable
Environmental Laws, into the waters or onto the lands of the State of New Jersey
or into waters outside the  jurisdiction of the State of New Jersey where damage
resulted to the lands,  waters,  or natural resources within the jurisdiction of
the State of New Jersey,  then the Mortgagor shall, within thirty (30) days from
the  date  that the  Mortgagor  is given  notice  that the lien has been  placed
against the  Mortgaged  Premises or within  such  shorter  period of time in the
event that the State of New Jersey has  commenced  steps to cause the  Mortgaged
Premises to be sold  pursuant  to the lien,  either (a) pay the claim and remove
the lien from the Mortgaged Premises,  or (b) furnish (1) a bond satisfactory to
Commonwealth Land Title Insurance Company and the Mortgagee in the amount of the
claim out of which the lien  arises,  (2) a cash  deposit  in the  amount of the
claim  out  of  which  the  lien  arises,  or  (3)  other  security   reasonably
satisfactory to the Mortgagee in an amount sufficient to discharge the claim out
of which the lien arises (subject to the  Mortgagee's  agreement which agreement
shall  not  be  unreasonably   withheld  or  delayed,  that  the  commitment  of
Commonwealth Land Title Insurance  Company to affirmatively  insure over or omit
such claim shall constitute such reasonably satisfactory security).

         (xi) The Mortgagor  hereby  agrees that in the event the  provisions of
the New  Jersey  Environmental  Cleanup  Responsibility  Act,  as amended by the
Industrial  Site Recovery  Act,  become  applicable  to the  Mortgaged  Premises
subsequent to the date hereof,  the Mortgagor  shall give prompt  written notice
thereof to the Mortgagee  and shall take  immediate  requisite  action to insure
full compliance with such Act.

         (xii) The Mortgagor  agrees that the Mortgagee  shall have the right to
conduct or have  conducted  by its  agents or  contractors,  such  environmental
inspections as the Mortgagee  shall  reasonably deem necessary or advisable from
time to time at the sole cost and expense of the Mortgagor. Mortgagor shall, and
shall  cause each  tenant of the  Mortgaged  Premises  to,  cooperate  with such
inspection  efforts;   such  cooperation  shall  include,   without  limitation,
supplying such information  concerning the operations conducted,  and "Hazardous
Substances" or "Hazardous  Wastes",  as such terms are defined in the Applicable
Environmental Laws, located at the Mortgaged Premises.

         (xiii)  To the best of the  Mortgagor's  knowledge  and  other  than as
disclosed in the Placement Memorandum,  after due inquiry and investigation,  no
lien has been attached to any real  property  owned by the Mortgagor and located
within the State of New Jersey,  including,  without  limitation,  the Mortgaged
Premises,  as a result of the  Administrator of the United States  Environmental
Protection  Agency expending monies from the Hazardous  Substance  Superfund for
"Damages"  and/or  "Response  Action  Costs" as such terms are  described  in 42
U.S.C.  ss.9607(a),  arising  from an  intentional  or  unintentional  action or
omission of the  Mortgagor  or any previous  owner and/or

                                       9
<PAGE>

operator of said real property,  including,  without  limitation,  the Mortgaged
Premises,  resulting  in any  spilling,  leaking,  pumping,  pouring,  emitting,
emptying,  discharging,  injecting,  escaping, leaching, dumping or disposing of
any "Hazardous  Substance" or "Hazardous  Wastes",  as such terms are defined in
the Applicable  Environmental Laws, into the navigable waters, the waters of the
contiguous  zone,  or the ocean waters of which the natural  resources are under
exclusive  managing  authority of the United  States under the Magnuson  Fishery
Conservation  and  Management  Act (16  U.S.C.  ss.1801  ET SEQ.),  or any other
surface water,  ground water,  drinking water supply, land surface or subsurface
strata, or ambient air within the United States or under the jurisdiction of the
United States when damage may have resulted to the land, fish, wildlife,  biota,
air,  water,  ground water,  drinking water  supplies,  and other such resources
belonging  to,  managed  by,  held in trust  by,  appertaining  to or  otherwise
controlled by the United States and any State or local government.

         (xiv)  In the  event  that  there  shall be  filed a lien  against  the
Mortgaged Premises by the United States Environmental Protection Agency pursuant
to and in accordance with the provisions of 42 U.S.C. ss.9607(1), as a result of
the  Administrator of the Hazardous  Substance  Superfund having expended monies
from said fund to pay for "Damages" and "Response  Action Costs",  as such terms
are  described  in  42   U.S.C.ss.9607(a),   arising  from  an   intentional  or
unintentional  action of the  Mortgagor,  resulting  in any  spilling,  leaking,
pumping,  pouring,  emitting,  emptying,   discharging,   injecting,   escaping,
leaching,  dumping or  disposing  of any  "Hazardous  Substance"  or  "Hazardous
Wastes",  as such terms are defined in the Applicable  Environmental  Laws, into
the navigable waters,  the waters of the contiguous zone, or the ocean waters of
which the natural resources are under exclusive managing authority of the United
States under the Magnuson  Fishery  Conservation  and  Management Act (16 U.S.C.
ss.1801 ET SEQ.),  or any other  surface  water,  ground water,  drinking  water
supply,  land  surface or  subsurface  strata or  ambient  air within the United
States or under the  jurisdiction  of the United States where damage resulted to
the lands, waters, or natural resources of the United States, then the Mortgagor
shall,  within thirty (30) days from the date that the Mortgagor is given notice
that the lien has been placed  against the  Mortgaged  Premises,  or within such
shorter  period of time in the  event  that the  United  States  Government  has
commenced steps to cause the Mortgaged Premises to be sold pursuant to the lien,
either (a) pay the claim and remove the lien from the Mortgaged Premises, or (b)
furnish (1) a bond  satisfactory  to Mortgagee in the amount of the claim out of
which the lien  arises,  (2) a cash  deposit  in the  amount of the claim out of
which  the  lien  arises,  or (3)  other  security  reasonably  satisfactory  to
Mortgagee in an amount  sufficient  to discharge the claim out of which the lien
arises  (subject to the  Mortgagee's  agreement,  which  agreement  shall not be
unreasonably  withheld  or delayed,  that the  commitment  of a title  insurance
company reasonably  acceptable to Mortgagee to affirmatively insure over or omit
such claim shall constitute such reasonably satisfactory security).

         (xv) The Mortgagor  represents  and warrants that neither the Mortgagor
nor the  Mortgaged  Premises  are in  violation  of or subject to any  existing,
pending or threatened  investigation  or inquiry by any  governmental  authority
pertaining  to any  Applicable  Environmental  Law (other than as to  monitoring
currently  in effect).  The  Mortgagor  shall not cause or permit the  Mortgaged
Premises to be in violation of, or do anything which would subject the Mortgaged
Premises to any remedial  obligations  under, any Applicable  Environmental Law,
and shall promptly notify the Mortgagee, in

                                       10
<PAGE>

writing, of any existing,  pending or threatened investigation or inquiry by any
governmental authority in connection with any Applicable Environmental Law.

II.      THE MORTGAGOR  SHALL BE IN DEFAULT OF THIS MORTGAGE UPON THE OCCURRENCE
         OF ANY OF THE FOLLOWING EVENTS:

         Section 1. The  occurrence of any Event of Default under the Agreement,
after the expiration of any applicable notice and/or grace period.

         Section  2.  Other  than  Permitted  Encumbrances  (as  defined  in the
Agreement),  in the event of a subsequent  encumbrance of the Premises or, other
than to an entity which is owned by the Mortgagor or is owned by at least 80% of
the owners of the Mortgagor, any change in the ownership of the Premises.

         Section  3. In the event  that the  Mortgagor  shall  have  encumbered,
mortgaged or given a security  interest in any fixture or fixtures  which is not
removed, satisfied or discharged within ninety (90) days, or shall have, without
the consent of the  Mortgagee,  removed or replaced any fixtures  other than for
replacement of fixtures in the ordinary course of business.

         Section  4.  In the  event  of  default  as to,  or in the  event  that
proceedings  be  instituted  for  foreclosure  or  collection  of, any mortgage,
judgment, or lien affecting the Premises.

         Section 5. In the event that the Mortgagor shall be unable to retain an
insurance company authorized to do business in the State of New Jersey to insure
the Premises in the form of policy  approved by the Mortgagee for a sum equal to
the full amount of the Loan.

         Section 6. The  Mortgagor  shall have  caused or  permitted  a security
interest,  perfected or otherwise, other than the security interest specifically
provided  for or  permitted  hereunder,  to be created  in any of the  Mortgaged
Property,  or shall have failed to take any action requested by the Mortgagee to
perfect or protect the security interest provided for herein.

III.     SHOULD ANY DEFAULT BE MADE BY THE MORTGAGOR, THE MORTGAGEE MAY TAKE ANY
         OR ALL OF THE FOLLOWING ACTIONS, AT THE SAME OR AT DIFFERENT TIMES:

         Section 1. Declare the entire  amount of unpaid  principal  and accrued
interest and other money due under this  Mortgage,  the  Agreement  and the Note
immediately due and payable.

         Section 2. Enter upon, and take possession of, the Mortgaged  Property,
and to lease and let the said Mortgaged Property,  and to receive all the rents,
issues and profits thereof which are overdue, due or to become due, and to apply
the same, after payment of all necessary charges and expenses, on account of the
amounts hereby secured and the holder of this Mortgage is given and granted full
power and authority to do any act or thing in connection with the management and

                                       11
<PAGE>

operation of the Premises.  This remedy becomes effective either with or without
any action brought to foreclose  this Mortgage and without  applying at any time
for a receiver of such rents.  Should said rents or any part thereof be assigned
without the consent of the holder of this Mortgage,  then the Note shall, at the
option of the holder hereof, become due and payable immediately, anything herein
contained to the contrary notwithstanding.

         Section 3. Institute an action of mortgage  foreclosure,  or take other
action as the law may allow,  at law or in equity,  for the  enforcement of this
Mortgage,  and proceed  thereon to final  judgment  and  execution of the entire
unpaid  balance of the Loan,  including  costs of suit,  interest and reasonable
attorney's  fees.  In case of any sale of the  Mortgaged  Property  by virtue of
judicial proceedings, the Mortgaged Property may be sold in one parcel and as an
entirety  or in such  parcels,  manner  or order as the  Mortgagee,  in its sole
discretion,  may elect.  The failure to make any tenants parties  defendant to a
foreclosure proceeding and to foreclose their rights will not be asserted by the
Mortgagor as a defense in any proceeding  instituted by the Mortgagee to collect
the  obligations  secured  hereby or any deficiency  remaining  unpaid after the
foreclosure sale of the Premises.

         Section 4.  Appoint a receiver of the rents,  issues and profits of the
Mortgaged  Property  without the necessity of proving either the depreciation or
the  inadequacy of the value of the security or the  insolvency of the Mortgagor
or any  person  who may be legally  or  equitably  liable to pay moneys  secured
hereby and the  Mortgagor  and each such person  waive such proof and consent to
the appointment of a receiver.

         Section 5. If the  Mortgagor or any  subsequent  owner is occupying the
Premises or any part thereof,  it is hereby agreed that the said occupants shall
pay such reasonable  rental monthly in advance as the Mortgagee shall demand for
the Premises or the part so occupied,  and for the use of the Mortgaged Property
covered by this Mortgage or any chattel mortgage.

         Section 6. Apply on account of the unpaid indebtedness and the interest
thereon or on account of any  arrearages of interest  thereon,  or on account of
any balance  due to the  Mortgagee  after a  foreclosure  sale of the  Mortgaged
Property  whether or not a  deficiency  action shall have been  instituted,  any
unexpended  moneys  still  retained  by the  Mortgagee  that  were  paid  by the
Mortgagor to the Mortgagee for the payment of, or as security for the payment of
taxes,  assessments,  municipal or  governmental  rates,  charges,  impositions,
liens,  water or sewer  rents,  or  insurance  premiums,  if any, or in order to
secure the performance of some act by the Mortgagor.

IV.      MISCELLANEOUS:

         Section 1. The rights and remedies herein  expressed to be vested in or
conferred upon the Mortgagee shall be cumulative and shall be in addition to and
not in substitution for or in derogation of the rights and remedies conferred by
any applicable  law. The failure,  at any one or more times, of the Mortgagee to
assert the right to declare the  principal  indebtedness  due or the granting of
any  extension  or  extensions  of time of  payment  of the Loan  either  to the
Mortgagor or to any other person, or taking of other or additional  security for
the payment thereof, or releasing any security,  or

                                       12
<PAGE>

changing  any of the terms of the within  Mortgage  or the  Agreement,  or other
obligation  accompanying this Mortgage,  or waiver of or failure to exercise any
right under any covenant or stipulation  herein  contained  shall not in any way
affect this Mortgage nor the rights of the Mortgagee  hereunder nor operate as a
release from any personal  liability  upon the Loan or  obligation  accompanying
this Mortgage, nor upon any covenant or stipulation therein contained, nor under
any agreement assuming the payment of said Loan or obligation.

         Section  2.  All  notices  to be  given  hereunder  shall  be  given by
certified  mail directed to the Mortgagor or to the Mortgagee at the  respective
addresses shown at the head of this Mortgage, or to such other address as either
party may notify the other.

         Section  3. All of the  terms,  covenants,  provisions  and  conditions
herein  contained  shall be for the  benefit  of,  apply to, and bind the heirs,
executors,  administrators,  successors  and  assigns of the  Mortgagor  and the
Mortgagee,  and are intended and shall be held to be real covenants running with
the land,  and the term  "Mortgagor"  shall also include any and all  subsequent
owners and successors in title of the Premises.

         Section 4. When such  interpretation is appropriate,  any word denoting
gender used herein shall include all persons,  natural or artificial,  and words
used in the singular shall include the plural.

         Section 5. This  Mortgage is the Mortgage  referred to in the Agreement
and is subject to all the terms and  provisions  of said  Agreement.  Should any
provision of the Agreement be inconsistent or contrary to the provisions of this
Mortgage, the provisions of the Agreement shall control. The Agreement is hereby
incorporated  by  reference  as though  fully set forth  herein  and made a part
hereof, and is on file for inspection at the offices of the Mortgagee.

            {THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK}

                                       13
<PAGE>

         IN WITNESS  WHEREOF,  the  Mortgagor  has caused  these  presents to be
signed by its proper  officers the day and year contained in the  acknowledgment
hereof.

ATTEST:                             ELITE PHARMACEUTICALS, INC.

/s/ Mark I. Gittelman              By: /s/ Bernard J. Berk
-----------------------------          -------------------------------------
Mark I. Gittelman                       Bernard J. Berk
Secretary                               Chief Executive Officer and Chairman

STATE OF NEW JERSEY        :
                           :  SS.:
COUNTY OF ESSEX            :

         BE IT REMEMBERED,  that on August 29, 2005,  before me, the subscriber,
an  Attorney-at-Law  of New  Jersey,  and I  hereby  certify  that I am  such an
Attorney-at-Law as witness my hand,  personally  appeared Bernard J. Berk, Chief
Executive  Officer  and  Chairman  of Elite  Pharmaceuticals,  Inc.,  who,  I am
satisfied is the person who executed the foregoing  Instrument on behalf of said
corporation  and who thereupon  acknowledged  that he signed and delivered  said
Instrument as the voluntary act and deed of said corporation.

                        Michael L. Messer
                        An Attorney at Law of New Jersey

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