AMENDMENT AGREEMENT
Execution
Version
This
Amendment Agreement (the “Agreement”), dated as
of June 25, 2010, by and among Elite Pharmaceuticals, Inc., a Delaware
corporation (the “Company”), on the one
hand, and Epic Pharma, LLC, a Delaware limited liability company (the “Parent”), and Epic
Investments, LLC, a Delaware limited liability company (including its successors
and assigns, the “Purchaser” and
together with the Parent, the “Epic Parties”), on
the other hand.
WHEREAS,
pursuant to a Strategic Alliance Agreement, dated March 18, 2009 (as amended,
the “SAA”),
among the Company, on the one hand, and the Epic Parties, on the other hand, the
Company issued Series E Convertible Preferred Stock (the “Series E Preferred
Stock”), pursuant to a Certificate of Designation of Preferences, Rights
and Limitations of Series E Convertible Preferred Stock, filed with Secretary of
State of the State of Delaware on June 3, 2009 (the “COD” and, together
with the SAA, the “Transaction
Documents”);
WHEREAS,
the parties wish to amend certain terms of the Transaction Documents and the
amendments to the SAA shall constitute the fourth amendment
thereof.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for good and valuable consideration the receipt and adequacy of which are
hereby acknowledged, the Company and the Epic Parties agree as
follows:
ARTICLE
I
DEFINITIONS
Section
1
Definitions. Capitalized
terms not defined in this Agreement shall have the meanings ascribed to such
terms in the SAA.
ARTICLE
II
AMENDMENTS
AND OTHER AGREEMENTS
Section
2.1 Amendment to
COD. On or prior to the date hereof, the Company shall deliver
evidence of the filing of an Amendment to the Certificate of Designation, in the
form attached hereto as Exhibit A (the “Certificate of
Amendment”). Each of the Epic Parties hereby consents to the
terms and the filing of the Certificate of Amendment, including the Purchaser as
the sole holder of Series E Preferred Stock.
Section
2.2 Amendment to Section 1.1 of
the SAA. The definition of “Third Closing Date” in Section 1.1
of the SAA is hereby amended in its entirety and replaced with the
following:
““Third Closing Date”
means the date of the Third Closing, which shall occur on or before December 31,
2010, provided that all conditions precedent to (i) the Purchaser’s obligation
to purchase the Third Closing Shares have been satisfied or waived by the
Purchaser and (ii) the Company’s obligation to issue and deliver the Third
Closing Shares have been satisfied or waived by the Company.”
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Section
2.3 Amendment to Section 2.7 of
the SAA. The first sentence of Section 2.7 of the SAA is hereby amended
in its entirety and replaced with the following:
“Additional
Shares. In addition, the Company agrees to issue and sell, and
the Purchaser agrees to purchase, Sixty Two and one-half (62.5) shares of Series
E Preferred Stock on each of the following dates (each such date, an “Additional Closing
Date”): (y) on or prior to November 30, 2009 and (x) within
ten (10) Business Days following the last day of each calendar quarter,
beginning with the calendar quarter ending on September 30, 2010 and continuing
for each of the ten (10) calendar quarters thereafter, upon the terms and
subject to the conditions set forth herein.”
Section 2.4 Effect on SAA. The
foregoing consents and waivers are given solely in respect of the transactions
described herein. Except as expressly set forth herein, all of the
terms and conditions of the Transaction Documents shall continue in full force
and effect after the execution of this Agreement, and shall not be in any way
changed, modified or superseded by the terms set forth herein. This Agreement shall not
constitute a novation or
satisfaction and accord of any Transaction Document.
Section
2.5 Increase in Authorized
Shares; Reverse Split.
(i) At
its next meeting of shareholders the Company shall seek shareholder approval to
amend the Company’s certificate or articles of incorporation to increase the
number of authorized but unissued shares of Common Stock to at least 760 million
shares (the “Authorized Share
Increase”), subject to downward adjustment if the Company shall effect a
Reverse Split (as defined below), with the recommendation of the Company’s Board
of Directors that such proposal be approved, and the Company shall solicit
proxies from its shareholders in connection therewith in the same manner as all
other management proposals in such proxy statement and all management-appointed
proxyholders shall vote their proxies in favor of such proposal.
(ii) The
Purchaser hereby agrees to vote all shares of Series E Preferred Stock and
Common Stock beneficially owned by it on the applicable record date in favor of
(i) the Authorized Share Increase and (ii) a reverse stock split, in the ratio
of no greater than 50 to 1 (the “Reverse
Split”). The Company represents, warrants and covenants that
all outstanding securities of the Company (including Common Stock and Common
Stock Equivalents) will proportionally adjust as to the number of shares
issuable and the conversion or exercise prices as a result of any reverse stock
split.
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Section
2.6. Series D Preferred
Stock. The Epic Parties hereby consent to, and the
Company agrees to cause as a condition to the effectiveness of this Agreement,
the amendments set forth in the Series D Amendment Agreement (as defined below),
including, without limitation, the amendment (the “Series D COD
Amendment”) of the terms of the Company’s Series D Convertible Preferred
Stock (the “Series D
Preferred Stock”) issued pursuant to a Certificate of Designation of
Preferences, Rights and Limitations of Series D 8% Convertible Preferred Stock,
filed with the Secretary of State of the State of Delaware on September 15,
2008.
Section
2.6 Conditions to the Epic
Parties’ Obligations. The respective obligations of the Epic
Parties hereunder in connection with the Closing are subject to the following
conditions being met:
(a) the
accuracy in all material respects on the date of the Closing of the
representations and warranties of the Company contained herein;
(b) all
obligations, covenants and agreements of the Company required to be performed at
or prior to the Closing shall have been performed;
(c) the
execution and delivery of the Amendment Agreement, by and among the Company,
Bushido Capital Master Fund, LP and Midsummer Investment Ltd. (the “Series D Amendment
Agreement”), in substantially the form attached hereto as Exhibit B and the
receipt of all necessary consents to the Series D COD Amendment, and the receipt
by the Epic Parties of true, correct and complete copies thereof (including
evidence of the filing of the Series D COD Amendment); and
(d) the
execution and delivery of a settlement and release agreement, by and among the
Company, Bushido Capital Master Fund, LP, BCMF Trustees, LLC, Midsummer
Investment Ltd. And the Epic Parties (the “Settlement
Agreement”), in substantially the form attached hereto as Exhibit
C.
Section
2.7 Conditions to Company’s
Obligations. The obligations of the Company hereunder in
connection with the Closing are subject to the following conditions being
met:
(a) the
accuracy in all material respects on the date of the Closing of the
representations and warranties of each of the Epic Parties contained
herein;
(b) all
obligations, covenants and agreements of each of the Epic Parties required to be
performed at or prior to the Closing shall have been performed;
(c) the
execution and delivery of the Series D Amendment Agreement; and
(d) the
execution and delivery of the Settlement Agreement.
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ARTICLE
III
REPRESENTATIONS
AND WARRANTIES
Section
3.1 Representations and
Warranties of the Company. The Company hereby make the
representations and warranties set forth below to the Epic Parties that as of
the date of its execution of this Agreement:
(a) Authorization;
Enforcement. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by this
Agreement and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement by the
Company and the consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary action on the part of the Company and no
further action is required by the Company, its board of directors or its
stockholders in connection therewith. This Agreement has been duly
executed by the Company and, when delivered in accordance with the terms hereof
will constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms except (i) as limited by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.
(b) No
Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby do not and will not: (i) conflict with or violate any
provision of the Company’s certificate or articles of incorporation, bylaws or
other organizational or charter documents, or (ii) conflict with, or constitute
a default (or an event that with notice or lapse of time or both would become a
default) under, result in the creation of any lien upon any of the properties or
assets of the Company, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any material agreement, credit facility, debt or other material instrument
(evidencing Company debt or otherwise) or other material understanding to which
the Company is a party or by which any property or asset of the Company is bound
or affected, or (iii) conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company is subject (including
federal and state securities laws and regulations), or by which any property or
asset of the Company is bound or affected.
Section
3.2 Representations and
Warranties of the Epic Parties. Each Epic Party, jointly and
severally, hereby represents and warrants to the Company that, as of the date
hereof, each Epic Party has the requisite corporate, partnership and/or company
power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of this
Agreement by each Epic Party and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of each Epic Party and no further action is required by either Epic Party,
their respective board of directors (or equivalent governing body) or their
respective stockholders, members or partners in connection
therewith. This Agreement has been duly executed by each Epic Party
and, when delivered in accordance with the terms hereof will constitute the
valid and binding obligation of each Epic Party enforceable against each Epic
Party in accordance with its terms except (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable
law.
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ARTICLE
IV
MISCELLANEOUS
Section
4.1 Notices. Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be made in accordance with the provisions of the
SAA.
Section
4.2 Survival. All
warranties and representations (as of the date such warranties and
representations were made) made herein or in any certificate or other instrument
delivered by it or on its behalf under this Agreement shall be considered to
have been relied upon by the parties hereto and shall survive the execution and
delivery hereof. This Agreement shall inure to the benefit of and be binding
upon the successors and permitted assigns of each of the parties; provided
however that no party may assign this Agreement or the obligations and rights of
such party hereunder without the prior written consent of the other parties
hereto.
Section
4.3 Execution. This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by
facsimile or email transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or email signature
page were an original thereof.
Section
4.4 Severability. If
any provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the
parties will attempt to agree upon a valid and enforceable provision that is a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.
Section
4.5 Governing
Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined pursuant to
the Governing Law provision of the SAA.
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Section
4.6 Entire
Agreement. The Agreement, together with the exhibits and
schedules thereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and
schedules.
Section
4.7 Construction. The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party.
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
ELITE PHARMACEUTICALS, INC. | |||
By:
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Name: | |||
Title: |
EPIC PHARMA, LLC | |||
By:
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Name: | |||
Title: |
EPIC
INVESTMENTS, LLC
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By:
EPIC PHARMA LLC, its Managing Member
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By:
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Name: | |||
Title: |
7
EXHIBIT
A
FORM OF
CERTIFICATE OF AMENDMENT TO THE SERIES E CERTIFICATE OF DESIGNATION
1. (a) The
following definitions shall be added to Section 1 of the Certificate of
Designation in the correct alphabetical order:
““Adjusted Convertible
Outstanding Amount” means, for purposes of determining the adjustment to
the Conversion Price under Section 7(i) hereof, as of the time of such
determination, the sum of (i) the number of outstanding shares of Common Stock
(assuming, solely for purposes of such calculation, that all shares of Series D
Preferred Stock which have converted after the date of the Series D Amendment
Agreement shall have converted at the Adjusted Series D Conversion Price), (ii)
the number of shares of Common Stock into which all Series B Preferred Stock are
then convertible at the Original Series B Preferred Stock Conversion Price,
(iii) the number of shares of Common Stock into which all Series C Preferred
Stock are then convertible at the Original Series C Preferred Stock Conversion
Price, and (iv) the number of shares of Common Stock into which all Series D
Preferred Stock are then convertible at the Original Series D Preferred Stock
Conversion Price. For the avoidance of doubt, the Adjusted
Convertible Outstanding Amount shall not include any
shares of Common Stock into which the Series E Preferred Stock is
convertible.
““Adjusted Series D Conversion
Price” means the conversion price of the Series D Preferred Stock under
the Series D Certificate, as in effect immediately after the date of
the Series D Certificate Amendment (without any future adjustment
under the Series D Certificate other than adjustment under Section 7(a)
thereof), which initially was $0.07.”
““Original Series B Conversion
Price” means $1.56, representing the conversion price of the Series B
Preferred Stock under the Series B Certificate in effect immediately prior to
the date of the Series D Amendment Agreement (subject only to adjustment under
Section 7(a) of the Series B Certificate).”
““Original Series C Conversion
Price” means $1.61, representing the conversion price of the Series C
Preferred Stock under the Series C Certificate in effect immediately prior to
the date of the Series D Amendment Agreement (subject only to adjustment under
Section 7(a) of the Series C Certificate).”
““Original Series D Conversion
Price” means $0.20, representing the conversion price of the Series D
Preferred Stock under the Series D Certificate in effect immediately prior to
the date of the Series D Certificate Amendment (subject only to
adjustment under Section 7(a) of the Series D Certificate).”
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““Series D Amendment
Agreement” means the certain Amendment Agreement, dated as of June 25,
2010, by and among the Corporation, Bushido Capital Master Fund, LP and
Midsummer Investment Ltd.”
““Series D Certificate
Amendment” means the Series D Certificate of Amendment to
Certificate of Designation filed with the Secretary of State of the State of
Delaware on June __, 2010.”
““Series D Warrants”
means the common stock warrant, as amended, issued to the purchasers of the
Series D Preferred Stock pursuant to a certain Securities Purchase Agreement,
dated September 15, 2008, as amended, among the Corporation and the investors
signatory thereto.”
(b) The
following definitions set forth in Section 1 of the Certificate of Designation
shall be amended to read as follows:
““Existing Preferred
Stock” means, as of any date of determination, the then issued and
outstanding shares of Series B Preferred Stock, Series C Preferred Stock and
Series D Preferred Stock.”
““Series D
Certificate” means the
Certificate of Designation of Preferences, Rights and Limitations of the Series
D 8% Convertible Preferred Stock, filed with the Secretary of State of the State
of Delaware on September 15, 2008, as amended by the Series D Certificate
Amendment.”
2. The
first sentence of Section 6(a) of the Certificate of Designation is hereby
amended in its entirety and replaced with the following:
“Conversions at Option of the
Holder. Subject to Section 6(c) below, each share of Series E Preferred
Stock shall be convertible at the option of the Holder, at any time and from
time to time from and after the Original Issue Date into that number of shares
of Common Stock determined by dividing the Stated Value of such share
of Series E Preferred Stock by the Conversion Price.”
3. Section
6(c) of the Certificate of Designation is hereby amended in its entirety and
replaced with the following:
“Authorized Share
Limitations. Notwithstanding anything herein to the contrary,
the Holder’s ability to convert Series E Preferred Stock into Conversion Shares
shall be limited to a number of Conversion Shares equal to the difference
between (a) the Company’s total authorized shares of Common Stock as of the
applicable Conversion Date, minus (b) as of the applicable Conversion Date, the
sum of (i) the Company’s total issued and outstanding Common Stock and (ii) the
total number of shares of Common Stock reserved for issuance upon the exercise
or conversion, as applicable, of outstanding Common Stock Equivalents
(including, without limitation, the Warrants, the Series D Preferred Stock and
the Series D Warrants), after giving effect to the Series D Amendment Agreement.
The portion of the Series E Preferred Stock which may not be converted as a
result of this Section 6(c) shall thereafter be unconvertible to such extent
until and unless approval by the Corporation’s stockholders of an increase in
the number of authorized shares of Common Stock of the Corporation is
subsequently obtained; provided, however, the rights and preferences of the
Series E Preferred Stock otherwise set forth in this Certificate of Designation
shall otherwise remain in full force and effect. For the avoidance of doubt, the
voting rights of the Holder under Section 4(a) shall not be affected by the
restrictions of this Section 6(c).”
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4. The
first sentence of Section 7(c) of the Certificate of Designation is hereby
amended in its entirety and replaced with the following:
“Subsequent Dividend
Issuances. If the Corporation, at any time while the Series E
Preferred Stock is outstanding, shall issue shares of Common Stock or shares of
Series D Preferred Stock in lieu of cash in satisfaction of its dividend
obligations on shares of outstanding Existing Preferred Stock in accordance with
the Series B Certificate, Series C Certificate and/or Series D Certificate, as
applicable (any such issuance, a “Dividend Issuance”),
then the then applicable Conversion Price shall be reduced to a price equal to
(i) the aggregate Stated Value of Series E Preferred Stock then outstanding
divided by (ii) the product of (x) aggregate number of Conversion Shares
issuable upon conversion of the then outstanding Series E Preferred Stock
immediately prior to Dividend Issuance multiplied by (y) the sum of one plus a
fraction with: (A) a numerator equal to (I) the number of outstanding shares of
Common Stock immediately after giving effect to the Dividend Issuance (assuming
conversion of all Existing Preferred Stock in accordance with the Series B
Certificate, Series C Certificate and/or Series D Certificate, as applicable,
but not the Series E Preferred Stock) minus (II) the number of outstanding
shares of Common Stock immediately prior to the Dividend Issuance (assuming
conversion of all Existing Preferred Stock in accordance with the
Series B Certificate, Series C Certificate and/or Series D Certificate, as
applicable, but not the Series E Preferred Stock); and (B) a denominator equal
to the number of outstanding shares of Common Stock immediately prior to the
Dividend Issuance (assuming conversion of all Existing Preferred Stock in
accordance with the Series B Certificate, Series C Certificate and/or Series D
Certificate, as applicable, but not the Series E Preferred Stock).
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5. The
following is hereby added to the Certificate of Designation as new Section
7(i):
“Special
Adjustment relating to Series D Preferred Stock. If the Corporation, at
any time while the Series E Preferred Stock is outstanding, shall issue shares
of Common Stock in conversion of shares of outstanding Series D Preferred Stock
in accordance with the Series D Certificate (any such issuance, a “Series D
Conversion Issuance”),
then the then applicable Series E Conversion Price shall be reduced to a
price equal to (i) the aggregate Stated Value of Series E Preferred Stock then
outstanding divided by (ii) the product of (x) the aggregate number of
Conversion Shares issuable upon conversion of the then outstanding Series E
Preferred Stock immediately prior to the Series D Conversion Issuance multiplied
by (y) the sum of one plus a fraction with: (A) a numerator equal to (I) the
Adjusted Convertible Outstanding Amount immediately after giving effect to such
Series D Conversion Issuance minus (II) the Adjusted Convertible Outstanding
Amount immediately prior to such Series D Conversion Issuance; and (B) a
denominator equal to the Adjusted Convertible Outstanding Amount immediately
prior to such Series D Conversion Issuance. The Corporation shall notify the
Holder in writing on a quarterly basis of all Series D Conversions which shall
have occurred during the preceding calendar quarter, indicating therein the
number of shares of Series D Preferred Stock as to which a Series D Conversion
shall have occurred and the calculation of such adjusted Conversion Price (such
notice, the “Series D
Conversion Adjustment Notice”). Such Series D
Conversion Adjustment Notice shall be given by the Corporation to the Holder in
accordance with Section 10(a). For purposes of clarification, whether or not the
Corporation provides a Series D Conversion Adjustment Notice pursuant to this
Section 7(c), upon the occurrence of any Series D Conversion, the Holder is
entitled to receive a number of Conversion Shares based upon the adjusted
Conversion Price on or after the date of such Series D Conversion, regardless of
whether the Holder accurately refers to the adjusted Conversion Price in the
Notice of Conversion.”
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