Document:

EXECUTION VERSION

 

SIXTH AMENDMENT TO LOAN
AND SECURITY AGREEMENT (this “Amendment”), dated as of November 22, 2013, among OFS Capital WM, LLC (the “Borrower”),
MCF Capital Management LLC, as loan manager (in such capacity, the “Loan Manager”), Wells Fargo Bank, National
Association, as a Class A Lender (the “Class A Lender”), Wells Fargo Securities, LLC, as administrative agent
(in such capacity, the “Administrative Agent”), and Wells Fargo Delaware Trust Company, N.A., as trustee (in
such capacity, the “Trustee”).

 

WHEREAS, the Borrower,
the Loan Manager, the Administrative Agent, the Class A Lender, the other lenders party from time to time thereto and the Trustee
are party to the Loan and Security Agreement, dated as of September 28, 2010 (as amended from time to time prior to the date hereof
and as may be further amended, supplemented or otherwise modified, the “Loan and Security
Agreement”), providing, among other things, for the making and the administration of the Advances by the lenders
to the Borrower; and

 

WHEREAS, the Borrower,
the Loan Manager, the Administrative Agent, the Trustee and the Class A Lender desire to amend the Loan and Security Agreement,
in accordance with Section 13.1 of the Loan and Security Agreement and subject to the terms and conditions set forth herein.

 

NOW THEREFORE, in consideration
of the foregoing premises and the mutual agreements contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

ARTICLE
I

 

Definitions

 

SECTION 1.1. Defined
Terms. Terms used but not defined herein have the respective meanings given to such terms in the Loan and Security
Agreement.

 

ARTICLE
II

 

Amendments to Loan and Security Agreement

 

SECTION 2.1.Section
1.1 of the Loan and Security Agreement shall be amended by:

 

(a)deleting
“65%” in the definition of “Class A Advance Rate” and replacing it with “70%”;

 

(b)deleting
“December 31, 2016” in the definition of “Class A Facility Maturity Date” and replacing it with “December
31, 2018”;

 

    	 

    	 

    

 

(c)deleting
“March 31, 2013” in clause (a)(i) of the definition of “Commitment Reduction Percentage” and replacing
it with “December 31, 2014”;

 

(d)deleting
“$15,000,000” in clause (bb) of the definition of “Eligible Loan” and replacing it with “$7,500,000,
unless otherwise agreed to by the Controlling Lender”;

 

(e)deleting
clause (d) of the definition of “Reinvestment Period End Date” and replacing it with “the Scheduled Reinvestment
Period End Date”; and

 

(f)deleting
the definition of “Scheduled Reinvestment Period End Date” and replacing it with:

 

“Scheduled
Reinvestment Period End Date”: December 31, 2015.

 

SECTION 2.2.Section
6.2 of the Loan and Security Agreement shall be amended by replacing each instance of the phrase “Collateral Manager”
in clause (m) thereof with “Loan Manager”.

 

ARTICLE III

 

Representations and
Warranties

 

SECTION 3.1.The Borrower
hereby represents and warrants to the Administrative Agent, the Trustee and the Class A Lender that, as of the date first written
above, (i) with respect to the Borrower and the OFS Seller, no event has occurred and is continuing that constitutes either a Default
or an Event of Default and (ii) the representations and warranties of the Borrower contained in the Loan and Security Agreement
are true and correct in all material respects on and as of such day (other than any representation or warranty that is made as
of a specific date).

 

SECTION 3.2.The Loan
Manager hereby represents and warrants to the Administrative Agent, the Trustee and the Class A Lender that, as of the date first
written above, (i) with respect to the Loan Manager and the Madison Seller, no event has occurred that constitutes either a Default,
an Event of Default or a Loan Manager Termination Event and (ii) the representations and warranties of the Loan Manager contained
in the Loan and Security Agreement are true and correct in all material respects on and as of such day (other than any representation
or warranty that is made as of a specific date).

 

ARTICLE
IV

 

Conditions Precedent

 

SECTION 4.1.This
Amendment shall become effective upon the satisfaction of the following conditions (or until such conditions are waived in writing
by the Administrative Agent in its sole discretion):

 

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(a) the
execution and delivery of this Amendment by the Borrower, the Loan Manager, the Administrative Agent, the Trustee and the Class
A Lender;

 

(b)the
execution and delivery of the Second Amendment to Fee Letter, dated as of the date hereof, by the parties thereto;

 

(c)the
Borrower shall have paid, or caused to be paid, to the Administrative Agent for the ratable benefit of the Class A Lenders all
fees then due and payable;

 

(d)the
Administrative Agent shall have received satisfactory evidence that the Borrower has obtained all required consents and approvals
of all Persons to the execution, delivery and performance of this Amendment and the consummation of the transactions contemplated
hereby; and

 

(e)the
Administrative Agent shall have received the executed legal opinion or opinions of Dechert LLP, counsel to the Borrower, covering
authorization and enforceability of this Amendment in form and substance acceptable to the Administrative Agent in its reasonable
discretion.

 

ARTICLE
V

 

Miscellaneous

 

SECTION 5.1. Governing
Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

SECTION 5.2. Severability
Clause. In case any provision in this Amendment shall be invalid, illegal or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

SECTION 5.3. Ratification.
Except as expressly amended hereby, the Loan and Security Agreement is in all respects ratified and confirmed and all the
terms, conditions and provisions thereof shall remain in full force and effect. This Amendment shall form a part of the Loan
and Security Agreement for all purposes.

SECTION 5.4. Counterparts.
The parties hereto may sign one or more copies of this Amendment in counterparts, all of which together shall constitute one
and the same agreement. Delivery of an executed signature page of this Amendment by facsimile or email transmission shall be
effective as delivery of a manually executed counterpart hereof.

 

SECTION 5.5. Headings.
The headings of the Articles and Sections in this Amendment are for convenience of reference only and shall not be deemed to
alter or affect the meaning or interpretation of any provisions hereof.

 

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the
parties hereto have caused this Amendment to be duly executed as of the date first written above.

 

	 	BORROWER:
	 	 
	 	 
	 	OFS CAPITAL WM, LLC
	 	 
	 	 
	 	By:	OFS Capital Corporation, its Administrative Manager
	 	 	 
	 	 	 
	 	By:	/s/ Robert S. Palmer
	 	 	Name: Robert S. Palmer
	 	 	Title: CFO

 

 

 

[Signature Page to Sixth Amendment to LSA]

    	 

    	 

    

 

	 	LOAN MANAGER:
	 	 
	 	 
	 	MCF CAPITAL MANAGEMENT LLC
	 	 
	 	 
	 	By:	/s/ Joshua Niedner
	 	 	Name: Joshua Niedner
	 	 	Title Managing Director

 

 

 

[Signature Page to
Sixth Amendment to LSA]

    	 

    	 

    

 

	 	THE ADMINISTRATIVE AGENT:
	 	 
	 	 
	 	WELLS FARGO SECURITIES, LLC, in its capacity as Administrative Agent
	 	 
	 	 
	 	By:	/s/ Kevin Sunday
	 	 	Name: Kevin Sunday
	 	 	Title: Director
	 	 	 
	 	 	 
	 	CLASS A LENDER:
	 	 
	 	 
	 	WELLS FARGO BANK, NATIONAL ASSOCIATION
	 	representing 100% of the aggregate Class A Commitments in effect as of

 the date hereof
	 	 
	 	 
	 	By:	/s/ Mike Romanzo
	 	 	Name: Mike Romanzo
	 	 	Title: Director
	 	 	 

 

 

 

[Signature Page to Sixth Amendment to LSA]

    	 

    	 

    

 

	 	THE TRUSTEE:
	 	 
	 	 
	 	WELLS FARGO DELAWARE TRUST COMPANY, N.A.
	 	not in its individual capacity, but solely as Trustee
	 	 
	 	 
	 	By:	/s/ Reid Denny
	 	 	Name:  Reid Denny
	 	 	Title: Vice President

 

 

 

[Signature Page to Sixth Amendment
to LSA]Execution Copy

 

NEITHER THIS CONVERTIBLE PROMISSORY NOTE
(THE “NOTE”) NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE (COLLECTIVELY, THE “SECURITIES”)
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE
TO THE COMPANY. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THE NOTE, INCLUDING SECTION 7(b) HEREOF. THE PRINCIPAL
AMOUNT OUTSTANDING UNDER THIS NOTE MAY BE LESS THAN THE AMOUNT STATED ON THE FACE HEREOF PURSUANT TO SECTION 7(b) HEREOF.

 

	Issue Date: November 21, 2013	Principal Amount: $600,000.00      

 

ELITE PHARMACEUTICALS, INC. AND ELITE
LABORATORIES, INC.

CONVERTIBLE NOTE DUE 2016

 

FOR VALUE RECEIVED, in full payment of
the principal balance due as of the date of this Convertible Note pursuant to the Treppel Loan Agreement (as defined below), ELITE
PHARMACEUTICALS, INC., a Nevada corporation (the “Company”) and its wholly-owned subsidiary, ELITE LABORATORIES,
INC., a Delaware corporation (“Elite” and, together with the Company, the “Debtors”), jointly
and severally, promise to pay to the order of JERRY TREPPEL, a resident of New Jersey (the “Holder”), the principal
sum of Six Hundred Thousand and no cents ($600,000), on the Maturity Date (as defined below), or such earlier date as the Note
is required or permitted to be repaid as provided hereunder.

 

This Note is interest free. 

 

Payments of principal shall be made in
lawful money of the United States of America to the Holder at its address as provided in Section 13 or by wire transfer to such
account specified from time to time by the Holder hereof for such purpose by notice as provided in Section 13.

 

		1.	Definitions. In addition to the terms defined elsewhere in this Note,

		a.	capitalized terms that are not otherwise defined herein have the meanings given to such terms in
the Loan Agreement by and between Holder and Elite of June 12, 2012, as amended on December 5, 2012 and August 2, 2013 (the “Treppel
Loan Agreement”), and,

		b.	the following terms have the meanings indicated:

 

“Bankruptcy Event”
means any of the following events: (a) any of the Debtors commences a case or other proceeding under any bankruptcy, reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating
to such Debtor; (b) there is commenced against any of the Debtors any such case or proceeding that is not dismissed within 60 days
after commencement; (c) any of the Debtors is adjudicated insolvent or bankrupt or any order of relief or other order approving
any such case or proceeding is entered; (d) any of the Debtors suffers any appointment of any custodian or the like for it or any
substantial part of its property that is not discharged or stayed within 60 days; (e) any of the Debtors makes a general assignment
for the benefit of creditors; (f) any of the Debtors calls a meeting of its creditors with a view to arranging a composition, adjustment
or restructuring of its debts; or (g) any of the Debtors, by any act or failure to act, expressly indicates its consent to, approval
of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.

 

    	 

    	 

    

 

Execution Copy

 

“Common Stock”
means shares of the Company’s common stock, $0.001 par value.

 

“Common Stock Deemed
Outstanding” means, at any given time, the sum of (a) the number of shares of Common Stock actually outstanding at such
time, plus (b) the number of shares of Common Stock issuable upon exercise of options outstanding at such time, plus (c) the number
of shares of Common Stock issuable upon conversion or exchange of Convertible Securities actually outstanding at such time (treating
as outstanding any Convertible Securities issuable upon exercise of options outstanding at such time), in each case, regardless
of whether the options or Convertible Securities are actually exercisable at such time; provided, that Common Stock Deemed Outstanding
at any given time shall not include shares owned or held by or for the account of the Company or any of its wholly owned subsidiaries.

 

“Conversion Date”
means the date any Conversion Notice is delivered to the Company together with the Conversion Schedule pursuant to Section
6(a).

 

“Conversion Notice”
means a written notice in the form attached hereto as Schedule 1.

 

“Conversion Price”
means $0.099, subject to adjustment from time to time pursuant to Section 10.

 

“Conversion Shares”
means shares of Common Stock issuable to holder upon Conversion.

 

“Convertible Securities”
means any convertible securities, preferred stock, warrants, options or other rights to subscribe for or to purchase or exchange
for, shares of Common Stock.

 

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“Excluded Stock”
means the issuance of (a) shares of Common Stock or options to employees, consultants, officers or directors of the Company pursuant
to (i) any stock or option plan duly adopted by a majority of the non-employee members of the Board of Directors of the Company
or a majority of the members of a committee of non-employee directors established for such purpose or (ii) employment agreements
with Company employees, (b) securities upon the exercise or exchange of or conversion of Convertible Securities outstanding as
of the date of this Note, provided that such securities are not amended subsequent to the date of this Note to increase the number
of such securities or to decrease the exercise, exchange or conversion price of any such securities, (c) securities issued pursuant
to acquisitions or strategic transactions approved by a majority of the disinterested directors, provided any such issuance shall
only be to a Person which is, itself or through its subsidiaries, an operating company in, or an individual that operates, a business
synergistic with the business of the Company and in which the Company receives benefits in addition to the investment of funds,
but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or
to an entity whose primary business is investing in securities, (d) up to a maximum of 5,000,000 shares of Common Stock or Common
Stock equivalents in any rolling 12 month period issued to consultants, vendors, financial institutions or lessors in connection
with services provided by such Persons referred to in this clause (d), but shall not include a transaction in which the Company
is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities,
and provided that none of such shares may be registered for sale or resale by any of such holders; (e) securities issued as dividends
payable upon any shares of Company Preferred Stock issued and outstanding as of the Original Issue Date; (f) securities issued
pursuant to the terms of any of the Transaction Documents and (g) securities issued in connection with any stock split, stock dividend
or recapitalization of the Common Stock.

 

“Issuable Maximum”
means: (a) for purposes of Section 6(b)(i) a number of shares of Common Stock equal to 19.99% of the of the Company's outstanding
shares on the Original Issue Date; and (b) for purposes of Section 6(b)(ii) and (iii) the balance of authorized shares of Common
Stock that are not issued, outstanding or reserved for issuance.

 

“Market Price”
means the average closing price of a share of Common Stock on the principal Trading Market on which such shares are then trading
for the 10 Trading Days immediately preceding the Mandatory Conversion Date.

 

“Maturity Date”
means the third anniversary of the Original Issue Date.

 

“Original Issue Date”
means the date of the first issuance of this Note, regardless of the number of transfers of any particular Note.

 

“Person”
means any individual, corporation, partnership, limited liability company, joint venture, trust, business association, organization,
Governmental Entity or other entity.

 

“Shareholder
Approval” means (a) for purposes of Section 6(b)(i), the vote of Company shareholders, if and as may be required by the
applicable rules and regulations of the Company’s Trading Market (or any successor entity) to approve the issuance of shares
of Common Stock in excess of the Issuable Maximum; and (b) for purposes of Section 6(b)(iii), the vote of Company shareholders,
as may be required by Nevada law to approve the issuance of shares of Common Stock in excess of the Issuable Maximum.

 

“Trading Day”
means any day that the Trading Market upon which the Common Stock trades or is quoted is open.

 

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Execution Copy

 

“Trading Market”
means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question:
(a) the following National Markets: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select
Market, the New York Stock Exchange or (b) the OTC Bulletin Board (or any successors to any of the foregoing).

 

“Transaction Documents”
means, collectively, this Note, the Treppel Loan Agreement, and the schedules and exhibits hereto and thereto, if any.

 

“Triggering Event”
means any of the following events: (a) the Common Stock is not listed or quoted, or is suspended from trading, on a Trading Market
for a period of five or more Trading Days (which need not be consecutive Trading Days); (b) subject to subsection c below, the
Company fails to have available a sufficient number of authorized but unissued and otherwise unreserved shares of Common Stock
available to issue the Conversion Shares upon any conversion of this Note; (c) if at any time commencing 30 Trading Days after
the Shareholder Approval, any Common Stock issuable pursuant to the Transaction Documents is not listed on a Trading Market; (d)
if Shareholder Approval is required, the Company shall have failed to receive the Shareholder Approval within four (4) months of
the requirement to obtain such Shareholder Approval; (e) any of the Debtors fails to make any cash payment required under the Transaction
Documents and such failure is not cured within fifteen (15) calendar days after notice of such default is first given to such Debtor
by the Holder; or (f) any of the Debtors defaults in the timely performance of any other obligation under the Transaction Documents
and such default continues uncured for a period of thirty (30) calendar days after the date on which notice of such default is
first given to such Debtor by the Holder (it being understood that no prior notice need be given in the case of a default that
cannot reasonably be cured within such thirty (30) days).

 

		2.	Payment of Principal.

		a.	Principal Payment at Maturity. The Company shall pay the outstanding principal balance of
this Note to the Holder on the Maturity Date.

 

		3.	Covenants.

		a.	Except to the extent that Shareholder Approval is required by Section 6(b), the Company covenants
that it will at all times reserve and keep available out of its authorized but unissued and otherwise unreserved Common Stock,
solely for the purpose of enabling it to issue Conversion Shares as required hereunder, the number of Conversion Shares which are
then issuable and deliverable upon the conversion of (and otherwise in respect of) this entire Note (taking into account the adjustments
set forth in Section 10), free from preemptive rights or any other contingent purchase rights of Persons other than the Holder.
The Company covenants that all Conversion Shares so issuable and deliverable shall, upon issuance in accordance with the terms
hereof, be duly and validly authorized and issued and fully paid and nonassessable.

 

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Execution Copy

 

		4.	Registration of Notes.

		a.	The Debtors shall register the Note upon records to be maintained by the Debtors for that purpose
(the “Note Register”) in the name of the record holder thereof from time to time. The Debtors may deem and treat
the registered Holder of this Note as the absolute owner hereof for the purpose of any conversion hereof or any payment of principal
hereon, and for all other purposes, absent actual notice to the contrary.

 

		5.	Transfers; Registration thereof. 

		a.	The Holder is not permitted to transfer this Note or any of its rights thereunder; except to its
sole member or any other entity wholly-owned by its sole member; provided that the transferee of any such permitted transfer agrees
to be bound by this and any other restrictions of Holder under the Note.

 

		b.	The Debtors shall register the transfer of any portion of this Note in the Note Register upon surrender
of this Note to the Debtors at its address for notice set forth herein. Upon any such registration or transfer, a new Note, in
substantially the form of this Note (any such new Note, a “New Note”), evidencing the portion of this Note so
transferred shall be issued to the transferee and a New Note evidencing the remaining portion of this Note not so transferred,
if any, shall be issued to the transferring Holder. The acceptance of the New Note by the transferee thereof shall be deemed the
acceptance by such transferee of all of the rights and obligations of a holder of a Note. No service charge or other fee will be
imposed in connection with any such registration of transfer or exchange.

 

		6.	Conversion.

		a.	At the Option of the Holder. All or any portion of the principal of this Note shall be convertible
into shares of Common Stock (subject to the limitations set forth in Section 6(b)), at the option of the Holder, at any time, and
from time to time, from and after the first anniversary of the Original Issue Date. The number of Conversion Shares issuable upon
any conversion hereunder shall equal the outstanding principal amount of this Note to be converted, divided by the Conversion Price.
The Holder shall effect conversions under this Section 6(a) by delivering to the Company a Conversion Notice together with a schedule
in the form of Schedule 2 attached hereto (the “Conversion Schedule”). If the Holder is converting less than
all of the principal amount of this Note, or if a conversion hereunder may not be effected in full due to the application of Section
6(b), the Company shall honor such conversion to the extent permissible hereunder and shall promptly deliver to the Holder a Conversion
Schedule indicating the principal amount which has not been converted.

 

		b.	Conversion Restrictions. Anything set forth herein to the contrary notwithstanding:

		i.	If the Company is listed on a Trading Market that is a National Market and the Company has not
previously obtained Shareholder Approval, and such National Market requires Shareholder Approval then the Company may not issue
in excess of the Issuable Maximum upon conversions of the Notes. If on any Conversion Date: (A) the aggregate number of shares
of Common Stock that would then be issuable upon conversion in full of the then outstanding principal amount of Note would exceed
the Issuable Maximum, and (B) the Company shall not have previously obtained Shareholder Approval, then the Company shall issue
to the converting Holder a number of shares of Common Stock up to the Issuable Maximum. The Company and the Holder understand and
agree that shares of Common Stock issued to and then held by the Holder as a result of conversions of the Note shall not be entitled
to cast votes on any resolution to obtain Shareholder Approval pursuant hereto.

 

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		ii.	If, upon any Conversion Date prior to the second anniversary of the Original Issue Date, there
is not a sufficient number of authorized shares of Common Stock (that are not issued, outstanding or reserved for issuance) available
to effect the entire Conversion, such conversion shall not exceed the Issuable Maximum.

 

		iii.	If, upon any Conversion Date on or after the second anniversary of the Original Issue Date, there
is not a sufficient number of authorized shares of Common Stock (that are not issued, outstanding or reserved for issuance) available
to effect the entire Conversion, such conversion shall not exceed the Issuable Maximum; however, the Company shall use its best
efforts to obtain Shareholder Approval within four (4) months of such Conversion Date to permit the balance of the conversion.

 

		c.	Mandatory Conversion. Notwithstanding any other provision of this Note to the contrary,
if, on the date (the “Mandatory Conversion Date”) any payment under this Note is due and payable whether on
the date on which the obligations under the Note mature or by acceleration, redemption, prepayment or otherwise other than as a
result of a Bankruptcy Event (a “Payment”), the Market Price of the Common Stock is below $0.15 (as adjusted
for any stock split, stock dividend or recapitalization of the Common Stock), any such Payment shall automatically be converted
into Common Stock at the Conversion Price. If there is not a sufficient number of authorized shares of Common Stock that are not
issued, outstanding or reserved for issuance to permit full conversion of the payment under this Subsection 6(c) (such insufficient
number of shares of Common Stock, the “Balance Shares”), the Company shall issue to the Holder, in lieu of the
Balance Shares a one year option to acquire the Balance Shares in exchange for the portion of the Payment represented by the Balance
Shares. Should the Company not increase its authorized number of shares of Common Stock to permit exercise of such option within
four (4) months of the date of the issuance of such options, the Company shall be required to redeem such option for the portion
of the Payment represented by the Balance Shares.

 

		7.	Mechanics of Conversion.

		a.	Upon conversion of this Note, the Company shall promptly (i) issue or cause to be issued and cause
to be delivered to or upon the written order of the Holder and in the name of the Holder a certificate for the Conversion Shares
issuable upon such conversion or (ii) instruct the Company’s transfer agent to issue such Conversion Shares in book entry
form and promptly notify Holder of same. Such Shares shall be restricted securities, not transferable unless registered under the
Securities Act or such transfer is permitted pursuant to an exemption from such registration under the Securities Act. The Holder
shall be deemed to have become holder of record of such Conversion Shares as of the Conversion Date.

 

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		b.	The Holder shall not be required to deliver the original Note in order to effect a conversion hereunder.
Execution and delivery of the Conversion Notice shall have the same effect as cancellation of the original Note and issuance of
a New Note representing the remaining outstanding principal amount. Upon surrender of this Note following one or more partial conversions,
the Debtors shall promptly deliver to the Holder a New Note representing the remaining outstanding principal amount.

 

		8.	Events of Default.

		a.	“Event of Default” means any one of the following events (whatever the reason
and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of
any court, or any order, rule or regulation of any administrative or governmental body):

 

		i.	any default in the payment of principal in respect of the Note, as and when the same becomes due
and payable (whether on the date on which the obligations under the Note mature or by acceleration, redemption, prepayment or otherwise)
and such default continues for a period of fifteen (15) Trading Days;

 

		ii.	a material breach by any of the Debtors of its covenants, representations or warranties hereunder
or in any other Transaction Document that remains uncured for a period of thirty (30) days following receipt by the Debtors of
written notice of such breach;

 

		iii.	the occurrence of a Triggering Event;

 

		iv.	any Debtor, which is a partnership, limited liability company, limited partnership or a corporation,
dissolves, suspends or discontinues doing business (other than a consolidation or similar transaction between the Debtors); or

 

		v.	the occurrence of a Bankruptcy Event.

 

		b.	At any time or times following the occurrence of an Event of Default, all amounts due and owing
under this Note shall become immediately due and payable.

 

		c.	Upon the occurrence of any Bankruptcy Event, all amounts due and owing under this Note shall immediately
become due and payable in full in cash and not in Common Stock, without any further action by the Holder.

 

		d.	In connection with any Event of Default, the Holder need not provide and the Debtors hereby waive
any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace
period enforce any and all of its rights and remedies hereunder, under any of the Transaction Documents and all other remedies
available to it under applicable law. Any such declaration may be rescinded and annulled by the Holder at any time prior to payment
hereunder. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereto.
The remedies under this Note and any other Transaction Document or available under applicable law shall be cumulative.

 

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		9.	Charges, Taxes and Expenses. Issuance of certificates for Conversion Shares
upon conversion of (or otherwise in respect of) this Note shall be made without charge to the Holder for any issue or transfer
tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such certificate, all
of which taxes and expenses shall be paid by the Company. The Holder shall be responsible for all other tax liability that may
arise as a result of holding or transferring this Note or receiving Conversion Shares in respect hereof.

 

		10.	Certain Adjustments. The Conversion Price is subject to adjustment from time to time
as set forth in this Section 10.

		a.	Stock Dividends and Splits. If the Company, at any time while this Note is outstanding, (i) pays
a stock dividend on its Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares
of Common Stock (other than regular dividends on shares of the Company’s shares of preferred stock issued and outstanding
as of the Original Issue Date), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, or (iii) combines
outstanding shares of Common Stock into a smaller number of shares, then in each such case the Conversion Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and
of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment
made pursuant to clause (i) of this Section 10(a) shall become effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this
Section 10(a) shall become effective immediately after the effective date of such subdivision or combination.

 

		b.	Pro Rata Distributions. If the Company, at any time while this Note is outstanding, distributes
to all holders of Common Stock (i) evidences of its indebtedness, (ii) any security (other than a distribution of Common Stock
described in Section 10(c)), (iii) rights or warrants to subscribe for or purchase any security, or (iv) cash or any other asset
(in each case, “Distributed Property”), then, at the request of the Holder delivered before the 90th day after
the record date fixed for determination of stockholders entitled to receive such distribution, the Company will deliver to the
Holder, within five (5) Trading Days after such request (or, if later, on the effective date of such distribution), the Distributed
Property that the Holder would have been entitled to receive in respect of the Conversion Shares for which this Note could have
been converted immediately prior to such record date. If such Distributed Property is not delivered to the Holder pursuant to the
preceding sentence, upon any conversion of this Note that occurs after such record date, the Holder shall be entitled to receive,
in addition to the Conversion Shares otherwise issuable upon such conversion, the Distributed Property that the Holder would have
been entitled to receive in respect of such number of Conversion Shares had the Holder been the record holder of such Conversion
Shares immediately prior to such record date.

 

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Execution Copy

 

		c.	Fundamental Changes. If, at any time while this Note is outstanding, (i) the Company effects
any merger or consolidation of the Company with or into another Person, (ii) any Debtor effects any sale of all or substantially
all of its assets in one or more transactions, (iii) any tender offer or exchange offer (whether by the Company or another Person)
is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash
or property, or (iv) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to
which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other than as a result
of a subdivision or combination of shares of Common Stock described in Section 10(a)) (in any such case, a “Fundamental
Change”), then upon any subsequent conversion of this Note, the Holder shall have the right to receive, for each Conversion
Share that would have been issuable upon such conversion absent such Fundamental Change, the same kind and amount of securities,
cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Change if it had been, immediately
prior to such Fundamental Change, the holder of one share of Common Stock (the “Alternate Consideration”). If
holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Change, then
the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Note following
such Fundamental Change. In the event of a Fundamental Change, the Debtors or the successor or purchasing Person, as the case may
be, shall execute with the Holder a written agreement providing that:

 

		i.	This Note shall thereafter entitle the Holder to purchase the Alternate Consideration, and

 

		ii.	In the case of any such successor or purchasing Person, upon such consolidation, merger, statutory
exchange, combination, sale or conveyance such successor or purchasing Person shall be jointly and severally liable with the Debtors
for the performance of all of the Debtors’ obligations under this Note and the other Transaction Documents.

 

If, in the case of any Fundamental
Change, the Alternate Consideration includes shares of stock, other securities, other property or assets of a Person other than
the Company or any such successor or purchasing Person, as the case may be, in such Fundamental Change, then such written agreement
shall also be executed by such other Person and shall contain such additional provisions to protect the interests of the Holder
as the Board of Directors of the Company shall reasonably consider necessary by reason of the foregoing. At the Holder’s
request, any successor to any of the Debtors or surviving Person in such Fundamental Change shall issue to the Holder a new Note
consistent with the foregoing provisions and evidencing the Holder’s right to convert such Note into Alternate Consideration.
The terms of any agreement pursuant to which a Fundamental Change is effected shall include terms requiring any such successor
or surviving Person to comply with the provisions of this Section 10(c) and insuring that this Note (or any such replacement security)
will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Change.

 

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		d.	Antidilution Adjustment of Conversion Price upon Issuance of Common Stock. If at any time
this Note is outstanding, the Company issues or sells, or in accordance with this Section 10(d) is deemed to have issued or sold,
any shares of Common Stock, with the exception of Excluded Stock, for a consideration per share less than the Conversion Price
in effect immediately prior to such time (each such sale or issuance, a “Dilutive Issuance”), then concurrent
with such Dilutive Issuance, the Conversion Price then in effect shall be reduced to a price (rounded to the nearest cent) equal
to the product of (A) the Conversion Price in effect immediately prior to such Dilutive Issuance and (B) the quotient determined
by dividing (1) the sum of (I) the product derived by multiplying the Conversion Price in effect immediately prior to such Dilutive
Issuance and the number of shares of Common Stock Deemed Outstanding immediately prior to such Dilutive Issuance plus (II) the
consideration, if any, received by the Company upon such Dilutive Issuance, by (2) the product derived by multiplying (I) the Conversion
Price in effect immediately prior to such Dilutive Issuance by (II) the number of shares of Common Stock Deemed Outstanding immediately
after such Dilutive Issuance.

 

		e.	Calculations. All calculations under this Section 10 shall be made to the nearest cent or
the nearest 1/100th of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue
or sale of Common Stock.

 

		f.	Notice of Adjustments. Upon the occurrence of each adjustment pursuant to this Section 10,
the Company at its expense will promptly compute such adjustment in accordance with the terms hereof and prepare and deliver to
the Holder a certificate describing in reasonable detail such adjustment and the transactions giving rise thereto, including all
facts upon which such adjustment is based.

 

		g.	Notice of Corporate Events. If the Company (i) declares a dividend or any other distribution
of cash, securities or other property in respect of its Common Stock, including without limitation any granting of rights or warrants
to subscribe for or purchase any capital stock of the Company or any Subsidiary, (ii) authorizes or approves, enters into any agreement
contemplating, or solicits stockholder approval for, any Fundamental Change or (iii) authorizes the voluntary dissolution, liquidation
or winding up of the affairs of the Company, then the Company shall deliver to the Holder a notice describing the material terms
and conditions of such transaction, at least twenty (20) Trading Days prior to the applicable record or effective date on which
a Person would need to hold Common Stock in order to participate in or vote with respect to such transaction, and the Company will
take all steps reasonably necessary in order to insure that the Holder is given the practical opportunity to convert this Note
prior to such time so as to participate in or vote with respect to such transaction; provided, however, that the failure to deliver
such notice or any defect therein shall not affect the validity of the corporate action required to be described in such notice.

 

		11.	No Fractional Shares. The Company shall not issue or cause to be issued fractional
Conversion Shares on conversion of this Note. If any fraction of an Conversion Share would, except for the provisions of this Section
11, be issuable upon conversion of this Note, the number of Conversion Shares to be issued will be rounded up to the nearest whole
share.

 

		12.	Intentionally left blank.

 

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Execution Copy

 

		13.	Notices. Any and all notices or other communications or deliveries hereunder (including
any Conversion Notice) shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile number specified in this Section 13 prior to 5:30 p.m.
(New York City time) on a Trading Day, (ii) the next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number specified in this Section 13 on a day that is not a Trading Day or later than
5:30 p.m. (New York City time) on any Trading Day, (iii) the Trading Day following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The addresses
for such communications shall be: (i) if to any of the Debtors, care of Elite as set forth in the Treppel Loan Agreement, or (ii)
if to the Holder, as set forth in the Treppel Loan Agreement.

 

		14.	Miscellaneous.

		a.	This Note shall be binding on and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. The Debtors shall not be permitted to assign this Note and the Holder shall not be permitted
to assign this Note other than pursuant to Section 5.

 

		b.	Subject to Section 14(a), nothing in this Note shall be construed to give to any person or corporation
other than the Debtors and the Holder any legal or equitable right, remedy or cause under this Note.

 

		c.	Governing Law; Venue; Waiver Of Jury Trial. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY,
ENFORCEMENT AND INTERPRETATION OF THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS
OF THE STATE OF NEW JERSEY, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. EACH PARTY HEREBY IRREVOCABLY SUBMITS
TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL COURTS SITTING IN THE COUNTY OF ESSEX, CITY OF NEWARK AND OF THE STATE COURTS SITTING
IN THE COUNTY OF BERGEN, CITY OF HACKENSACK, 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 OF ANY OF THE TRANSACTION DOCUMENTS),
AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY
SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY 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 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. THE BORROWERS HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY.

 

		d.	The headings herein are for convenience only, do not constitute a part of this Note and shall not
be deemed to limit or affect any of the provisions hereof.

 

		e.	In case any one or more of the provisions of this Note shall be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions of this Note shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially
reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Note.

 

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Execution Copy

 

		f.	No provision of this Note may be waived or amended except in a written instrument signed, in the
case of an amendment, by the Debtors and the Holder or, or, in the case of a waiver, by the Holder. No waiver of any default with
respect to any provision, condition or requirement of this Note shall be deemed to be a continuing waiver in the future or a waiver
of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission
of either party to exercise any right hereunder in any manner impair the exercise of any such right.

 

		g.	Each Party and its counsel have participated fully in the review and revision of this Note and
the Transaction Documents. Any rule of construction to the effect that ambiguities are to be resolved against the drafting party
shall not apply in interpreting this Agreement. The language in this Note and the Transaction Documents shall be interpreted as
to its fair meaning and not strictly for or against any Party.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT
BLANK

SIGNATURE PAGE FOLLOWS]

 

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Execution Copy

 

IN WITNESS WHEREOF, the Debtors
have caused this Note to be duly executed by a duly authorized officer as of the date first above indicated.

 

ELITE PHARMACEUTICALS, INC

 

	By:	s/ Nasrat Hakim	 

Name: Nasrat Hakim

Title: Chief Executive Officer and President

 

ELITE LABORATORIES, INC.

 

	By:	s/ Nasrat Hakim  	 

Name: Nasrat Hakim

Title: Chief Executive Officer and President

 

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Execution Copy

 

Schedule 1

FORM OF CONVERSION NOTICE

(To be executed by the registered Holder

in order to convert a Convertible Note)

 

		TO:	ELITE PHARMACEUTICALS, INC.

Re:        Convertible
Note due 2016 (this “Note”) issued by Elite Pharmaceuticals, Inc. and Elite Laboratories, Inc. to Jerry Treppel on
or about November 21, 2013 in the original principal amount of $600,000.00

 

The undersigned hereby elects to convert
the aggregate principal amount indicated below of this Note into shares of common stock, par value $0.001 per share (the “Common
Stock”), of Elite Pharmaceuticals, Inc., a Nevada corporation (the “Corporation”), according to the conditions
hereof, as of the date written below.

 

	Date of Conversion	:	 
	 	 	 
	Aggregate Principal Amount of Note Being Converted	:	 
	 	 	 
	Number of Shares of Common Stock to be Issued	:	 
	 	 	 
	Applicable Conversion Price	:	 
	 	 	 
	Authorization By:	:	 
	 	 	 
	Name	:	 
	 	 	 
	Dated	:	 

 

ACKNOWLEDGEMENT

 

The Corporation hereby acknowledges this
Conversion Notice and hereby directs American Stock Transfer & Trust Company to issue the above indicated number of shares
of Common Stock.

 

 

	 	ELITE PHARMACEUTICALS, INC.
	 	 
	 	By:	 
	 	 	 
	 	Name: 	 
	 	 	 
	 	Title:	 

 

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Execution Copy

 

Schedule 2

 

CONVERSION SCHEDULE

 

This Conversion Schedule reflects conversions
of the Convertible Note Due 2016 issued by Elite Pharmaceuticals, Inc. and Elite Laboratories, Inc.

 

	Date of Conversion	Amount of Conversion	Aggregate Principal Amount

Remaining Subsequent to

Conversion
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

 

    	15

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