LICENSE AGREEMENT 

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

 
Between
 
Elite Pharmaceuticals, Inc.
 
And
 
Precision Dose, Inc.

 
 

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

 

{***}Confidential portions of this exhibit have been redacted and filed
separately with the Commission pursuant to a confidential treatment request in
accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 
LICENSE AGREEMENT
 
This License Agreement (“Agreement”) is entered into as of the 10th day of
September, 2010 by and between PRECISION DOSE, INC., an Illinois corporation
(“PRECISION DOSE”), and ELITE PHARMACEUTICALS, INC. and ELITE LABORATORIES, INC.
(a subsidiary of Elite Pharmaceuticals, Inc.), both Delaware corporations
(collectively, “ELITE”).
 
WHEREAS, ELITE has ownership rights to products specified on Schedule A (the
“Products”) as of September 10, 2010, and PRECISION DOSE wishes to license from
ELITE the right to purchase, market and sell the Products on the terms and
conditions set forth in this Agreement;
 
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto agree as follows:
 
Article 1
GRANT OF LICENSE
 
6.1.         License.  ELITE hereby grants to PRECISION DOSE a license
(“License” or “Licensing Rights”) without the right to further sublicense, to
market and sell the Products in North America (including the United States,
Canada and Puerto Rico), including the right to reference the ANDA Number, where
appropriate, for approval to market the Product in North America.
 
6.2.         Exclusive Marketing Rights.  ELITE hereby grants to PRECISION DOSE
exclusive marketing rights (“Exclusive Marketing Rights”) to market and sell the
Products in the United States, and Puerto Rico).  ELITE agrees that it shall not
(and it shall not authorize, permit or suffer any of its affiliates to),
directly or indirectly, sell or distribute a Product in North America at any
time during the term of this agreement unless specifically authorized under the
terms of this Agreement. ELITE hereby grants to PRECISION DOSE non-exclusive
marketing rights to market and sell the Products in Canada.
 
6.3.         Trademarks. PRECISION DOSE agrees and acknowledges that it shall
not acquire by virtue of this Agreement any interest in or to any trademarks or
trade names of ELITE, except that ELITE authorizes PRECISION DOSE to place the
ELITE and PRECISION DOSE trade names and trademarks on marketing and packaging
materials of the Products during the term of this Agreement. The labeling will
incorporate the following statement: “Manufactured by Elite Laboratories, Inc.,
165 Ludlow Avenue, Northvale, NJ 07647”.
 
6.4.         Manufacturing. ELITE will only manufacture the Products at the
manufacturing site designated by Product on Schedule A. The parties agree that,
except for regulatory prohibitions or mutual agreement of the parties that a
Product is not commercially viable, ELITE will be able to manufacture and ship
all the Products to PRECISION DOSE within two years of the date of this
Agreement.
 
6.5.         Licensed Trade Secrets. The information exchanged between ELITE and
PRECISION DOSE pursuant to this Agreement is expressly subject to the Mutual
Confidentiality and Non-Disclosure Agreement entered into by the parties and
dated June 25, 2010 (the “Confidentiality Agreement”) and whose term is hereby
made coterminous with this Agreement.
 
PRECISION DOSE-ELITE License Agreement
09-10 -10
 
 

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

 

{***}Confidential portions of this exhibit have been redacted and filed
separately with the Commission pursuant to a confidential treatment request in
accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

6.6.         Improvements.  Any new information, developments, or improvements
relating to the Products subject to this Agreement, and any patent or copyright
rights arising from or related thereto (collectively, “Improvements”) will be
owned solely by ELITE but shall be automatically included in the License, and if
PRECISION DOSE develops an Improvement that may be used beyond the Products
which are the subject of this Agreement, then ELITE does now automatically grant
a worldwide, non-exclusive, irrevocable, royalty-free right for PRECISION DOSE
to use the Improvement.
 
Article 2
COMPENSATION
 
2.1.         License Fee and Milestone Payments.  In return for the Licensing
Rights described in this Agreement, PRECISION DOSE shall pay to ELITE the
milestone payments (“Milestone Payments”) and a license fee (“License Fee”)
compensation specified in Schedule C.
 
2.2.         Records.  PRECISION DOSE shall keep complete and accurate records
of all sales of the Products and the calculation of net sales and gross profit
of the Products. ELITE shall have the right, at ELITE’s expense and after thirty
(30) days’ prior written notice to PRECISION DOSE, through an independent
certified public accountant, on a mutually agreeable date, to examine such
records at any time within one (1) year after the due date of the License Fee
payments to which such records relate, during regular business hours, during the
life of this Agreement and for twelve (12) months after expiration of ELITE’s
last production lot of Product sold to PRECISION DOSE, in order to verify the
accuracy of the reports to be made under this Agreement. If the accountant
determines that PRECISION DOSE has under-compensated ELITE, the findings shall
be shared with PRECISION DOSE. If PRECISION DOSE agrees that PRECISION DOSE has
not paid ELITE all of the compensation ELITE was entitled to receive, or it is
later determined that PRECISION DOSE did not pay all of the compensation due to
ELITE, then PRECISION DOSE shall pay the proper amount of compensation and all
costs and expenses incurred by ELITE to hire the accountant and all of the
accountant’s expenses, and all legal expenses, to obtain the appropriate
compensation. If PRECISION DOSE disputes in good faith the accuracy of the
results of such examination, the parties will retain a second independent
certified public accountant whose examination will be binding upon both parties.
The losing party will pay all of the expenses of both independent certified
public accountant examinations.
 
2.3.         Reports. PRECISION DOSE will provide Reports as stipulated in
Schedule C.
 
2.4.         Payments by PRECISION DOSE.
 
 
(a)
All Milestone Payments will be made by check and mailed to ELITE within ten (10)
days after the payment becomes due.

 
 
(b)
The License Fee shall be paid to ELITE in monthly payments based upon the
previous month’s Products that PRECISION DOSE shipped to its customers. All
License Fee payments shall be made by check and mailed to ELITE within thirty
(30) days after the end of each calendar month. A copy of the Report for the
prior month will accompany the check.

 
PRECISION DOSE-ELITE License Agreement
09-10 -10 Execution Version
 
3

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

 

{***}Confidential portions of this exhibit have been redacted and filed
separately with the Commission pursuant to a confidential treatment request in
accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 
 (c)
A late fee of 1% per month will be accrued for all payments which PRECISION DOSE
fails to pay when due.

 
Article 3
ENFORCEABILITY
 
3.1.         Manufacturing and Supply Agreement. This Agreement shall not become
enforceable until the parties have executed a separate Manufacturing and Supply
Agreement (the “Manufacturing Agreement”). Inclusive in such Manufacturing and
Supply Agreement shall be a Quality Agreement.
 
3.2.         Cost of Goods Summary. ELITE shall provide a detailed summary of
the Cost of Goods for each product on Schedule B, and the parties shall further
address the summary and price adjustments in their Manufacturing and Supply
Agreement.
 
Article 4
TERM AND TERMINATION
 
4.1.         Term.   This Agreement shall become effective as of the date hereof
and shall continue until fifteen (15) years from such date (the “Initial Term”),
unless terminated earlier by mutual agreement of the parties or by one of the
parties in accordance with this Article 4; provided further that the parties
shall have the option, by mutual agreement, to extend the Initial Term of this
Agreement for three (3) successive terms of five (5) years each (each a “Renewal
Term” and collectively with the Initial Term, the “Term”) by the parties
exchanging written notice of such election not less than six (6) months prior to
the expiration of the Initial Term or then current Renewal Term.
 
4.2.         Modification for Lack of Licensing Fees and Minimum Unit Volumes.
 
 
(a)
PRECISION DOSE hereby agrees to exert commercially reasonable efforts and shall
devote the same efforts to marketing the Products that PRECISION DOSE exerts for
its other major pharmaceutical products being marketed in the United States.

 
 
(b)
If after twelve (12) months of a Product’s launch, the Gross Profit declines for
any Product to the point that the License Fee paid to ELITE is less than {***}
for a six (6) month period for that Product, other than through the fault of
ELITE, then ELITE may terminate the Exclusive Marketing Rights granted hereunder
to PRECISION DOSE as it relates to that individual Product.  If ELITE desires to
terminate the Exclusive Marketing Rights granted hereunder, then ELITE shall
give PRECISION DOSE ninety (90) days written notice that it will no longer have
the Exclusive Marketing Rights to sell the particular Product.

 
 
(c)
If PRECISION DOSE’s unit volume sales of an API specific group of Products (“
Product Group”), (initially defined as Hydromorphone, Naltrexone, or
{***}Product Groups), does not meet its minimum annual unit volume forecast for
that Product Group in the initial launch year, or does not meet its subsequent
minimum annual unit volume forecast (as defined in Schedule D) for a Product
Group, then PRECISION DOSE shall have the following six (6) months to achieve
one-half of the prior year’s minimum annual unit volume forecast and if
PRECISION DOSE still fails to meet such volume minimum during the six months
described, then PRECISION DOSE shall lose its Exclusive Marketing Rights of such
Product Group.

 
PRECISION DOSE-ELITE License Agreement
09-10 -10 Execution Version

 
4

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

 

{***}Confidential portions of this exhibit have been redacted and filed
separately with the Commission pursuant to a confidential treatment request in
accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 
 (d)
If PRECISION DOSE loses its Exclusive Marketing Rights on any Product or Product
Group, Precision Dose may at its option continue to market the Product or
Product Group under the License according to the terms of this Agreement and
other agreements between the parties, but without Exclusive Marketing Rights to
such Product or Product Group.

 
4.3.         Termination by Mutual Agreement.  The parties may terminate this
Agreement any time by mutual written agreement.
 
4.4.         Termination by Breach.  Upon the breach or default in the
performance or observance of any of the material provisions of this Agreement by
either Party, when such breach or default is not cured by the responsible Party
within sixty (60) days after written notice by the other Party, the other Party
may terminate this Agreement upon an additional thirty (30) days written notice
to the other Party. Termination will be without prejudice to either Party to
recover any and all damages to which it may be entitled, or to exercise any
other remedies.
 
4.5.         Termination by ELITE Upon Bankruptcy or Reorganization of PRECISION
DOSE. If PRECISION DOSE enters into any proceeding (whether voluntary or
otherwise) in bankruptcy, reorganization or arrangement for the appointment of a
receiver or trustee to take possession of its assets, or any other proceeding
under any law for the relief of creditors or makes an arrangement for the
benefit of its creditors, and remains in such proceeding for 30 days, then ELITE
shall retain its rights to the Products and may terminate this Agreement without
further payment to PRECISION DOSE.
 
4.6.         Licensing Rights upon Termination.  Except as otherwise provided in
this Agreement, upon termination of this Agreement: all rights, privileges, and
licenses will terminate and revert to ELITE, and PRECISION DOSE must not
thereafter make any use whatsoever of any trade secrets, except that it is
agreed that upon termination notwithstanding any other terms of this Agreement,
PRECISION DOSE may retain one archival copy to have sufficient information
solely to respond to state and federal regulatory inquiries regarding the
Products.
 
4.7.         Accrued Rights.  Expiration or termination of this Agreement shall
be without prejudice to the right of either Party to receive all payments
accrued and unpaid at the effective date of such expiration or termination,
without prejudice to the remedy of either Party in respect to any previous
breach of the representations, warranties or covenants herein contained, without
prejudice to any rights to indemnification set forth herein and without
prejudice to any other provision hereof which expressly or necessarily calls for
performance after such expiration or termination. PRECISION DOSE expressly
retains the right to sell Product on-hand after termination of this Agreement
and shall remain bound to pay ELITE the Licensing Fee as provided in this
Agreement.
 
PRECISION DOSE-ELITE License Agreement
09-10 -10 Execution Version
 
5

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

 

{***}Confidential portions of this exhibit have been redacted and filed
separately with the Commission pursuant to a confidential treatment request in
accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
 
Article 5
REPRESENTATIONS, WARRANTIES AND COMPETITION, COOPERATION UPON
BANKRUPTCY OF ELITE
 
5.1.     PRECISION DOSE Representations.  PRECISION DOSE hereby represents and
warrants to ELITE that (a) it has obtained all necessary licenses,
authorizations and approvals required by applicable Law, including those
required by the FDA, DEA or any other applicable regulatory agency to enter into
this Agreement and perform its obligations hereunder; (b) the execution,
delivery and performance of this Agreement by PRECISION DOSE does not conflict
with or constitute a breach of any order, judgment, agreement, or instrument to
which it is a party; (c) the execution, delivery and performance of this
Agreement by PRECISION DOSE does not require the consent of any person; and (d)
none of its officers or directors has ever been convicted of a felony under the
laws of the United States for conduct relating to the development or approval of
a drug product or relating to the marketing or sale of a drug product
 
5.2.     ELITE Representations. ELITE hereby represents and warrants to
PRECISION DOSE that (a) it has obtained all necessary licenses, authorizations
and approvals required by applicable Law, including those required by the FDA,
DEA or any other applicable regulatory agency to enter into this Agreement and
perform its obligations hereunder; (b) the execution, delivery and performance
of this Agreement by ELITE does not conflict with or constitute a breach of any
order, judgment, agreement, or instrument to which it is a party; (c) the
execution, delivery and performance of this Agreement by ELITE does not require
the consent of any person; and (d) none of its officers or directors has ever
been convicted of a felony under the laws of the United States for conduct
relating to the development or approval of a drug product or relating to the
marketing or sale of a drug product.
 
5.3.     Non-competition by PRECISION DOSE. PRECISION DOSE hereby covenants and
agrees that without the prior written consent of ELITE during the Term of this
Agreement, and for 1 year after the last shipment of Product by PRECISION DOSE
if the agreement is terminated due to breach of the Agreement by PRECISION DOSE,
PRECISION DOSE will not directly or indirectly market any of the Products
Licensed to PRECISION DOSE by ELITE pursuant to this Agreement. This section is
not intended to prohibit PRECISION DOSE from marketing and selling a product
which addresses the same therapeutic indication as a Product, as long as that
other product does not contain the same API as the Product(s) in this Agreement.
 
5.4.     Cooperation Upon Bankruptcy Event of ELITE. ELITE shall use, and cause
its representatives and affiliates to use, best efforts to make all necessary
arrangements and take all required actions to permit PRECISION DOSE to retain
all rights licensed hereunder with respect to the Products in the event that
ELITE (i) is dissolved or liquidated, (ii) commences a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law, (iii)
is subject to an involuntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to ELITE and an order for relief
entered or such proceeding has not be dismissed or discharged within sixty (60)
days of commencement, (v) has made an assignment for the benefit of creditors,
or (vi) otherwise ceases to conduct business during the Term (each, an
“Extraordinary Event”). If ELITE breaches its obligations under the
Manufacturing Agreement as a result of an Extraordinary Event (a “Manufacturing
Breach”), then PRECISION DOSE will have the right to enter into a manufacturing
arrangement with a manufacturer other than ELITE in order to continue the
manufacturing of the Products. Without limitation of the foregoing, ELITE
covenants and agrees that:
 
PRECISION DOSE-ELITE License Agreement
09-10 -10 Execution Version
 
6

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

 

{***}Confidential portions of this exhibit have been redacted and filed
separately with the Commission pursuant to a confidential treatment request in
accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 
 (a)
this Agreement involves intellectual property rights and PRECISION DOSE shall be
entitled to all benefits and protections afforded by Section 365(n) of the
United States Bankruptcy Code and any successor or similar statutes, including
the right to elect to retain the rights under this Agreement and, upon a
Manufacturing Breach, to receive, without additional cost, a licensed copy of
all embodiments of the Products (but subject to any restrictions on ELITE’S
right to disclose any such embodiments which are not proprietary to ELITE),
including, without limitation, technical information necessary for the continued
manufacture of the Products by a third party (collectively, the “Product
Materials”);

 
 
(b)
Product Materials received by PRECISION DOSE pursuant to subsection (a) above
shall be used by PRECISION DOSE and its affiliates and contractors solely to
enable the manufacture of the Products upon a Manufacturing Breach and to
continue to market, enhance and improve the Products in accordance with this
Agreement; and

 
 
(c)
PRECISION DOSE shall hold any Product Materials in the strictest confidence and
treat such Product Materials as proprietary and confidential information of
ELITE in accordance with the Confidentiality Agreement.

 
Article 6
MISCELLANEOUS
 
6.1.         Waiver; Remedies and Amendment. Any waiver by any party hereto of a
breach of any provisions of this Agreement will not be implied and will not be
valid unless such waiver is recited in writing and signed by such party. Failure
of any party to require, in one or more instances, performance by the other
party or parties in strict accordance with the terms and conditions of this
Agreement will not be deemed a waiver or relinquishment of the future
performance of any such terms or conditions or of any other terms and conditions
of this Agreement. A waiver by any party of any term or condition of this
Agreement, including this Section 6.1, shall be valid only if in writing and
will not be deemed or construed to be a waiver of such term or condition for any
other term. All rights, remedies, undertakings, obligations and agreements
contained in this Agreement will be cumulative and none of them will be a
limitation of any other remedy, right, undertaking, obligation or agreement of
any party. This Agreement may not be amended except in a writing signed by all
parties.
 
6.2.         Affiliates, Assignment, No Inconsistent Agreements. The parties
agree that PRECISION DOSE may exercise its rights under this Agreement through
its wholly owned subsidiary TAGI PHARMA, INC. (“TAGI”), and references herein to
PRECISION DOSE shall include TAGI. PRECISION DOSE may not otherwise assign its
rights and obligations hereunder without the prior written consent of ELITE.
Neither PRECISION DOSE nor ELITE will enter into any agreement that is
inconsistent with its obligations hereunder.
 
PRECISION DOSE-ELITE License Agreement
09-10 -10 Execution Version
 
7

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

 

{***}Confidential portions of this exhibit have been redacted and filed
separately with the Commission pursuant to a confidential treatment request in
accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

6.3.         Counterparts.  This Agreement may be executed in any number of
counterparts, each of which when so executed will be deemed to be an original
and all of which when taken together will constitute this Agreement.
 
6.4.         Governing Law; Dispute Resolution; Venue.  This Agreement will be
governed by and construed in accordance with the laws of the state of New York
without regard to conflict of law or choice of law rules. Any controversy or
claim pursuant to this Agreement or the breach thereof shall be referred for
decision forthwith to a senior executive of each Party not directly involved in
the dispute. If no agreement is reached within thirty (30) days of the request
by one Party to the other to refer the same to such senior executive, then such
controversy or claim shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association; such
arbitration to be held in Rockford, Illinois on an expedited basis. Judgment
upon the award rendered by the Arbitrator(s) may be entered in any court having
jurisdiction thereof.
 
6.5.         Headings.  The headings set forth at the beginning of the various
sections of this Agreement are for convenience and form no part of the Agreement
between the parties.
 
6.6.         Notices.  All notices, requests, instructions, consents and other
communications to be given pursuant to this Agreement shall be in writing and
shall be deemed received (a) on the same day if delivered in person, by same-day
courier or by facsimile, electronic mail or other electronic transmission, (b)
on the next day if delivered by overnight mail or courier, or (c) on the date
indicated on the return receipt, or if there is no such receipt, on the third
calendar day (excluding Sundays) if delivered by certified or registered mail,
postage prepaid, to the party for whom intended to the following addresses:
 
If to PRECISION DOSE:

PRECISION DOSE
722 Progressive Lane
South Beloit, IL  61080
Attn:  President

With a copy to:
Reilly Law Offices
6801 Spring Creek Rd., Ste 2D
Rockford, IL  61114
Attn: William A. Reilly II

If to ELITE:

ELITE PHARMACEUTICALS, Inc.
165 Ludlow Avenue
Northvale, New Jersey 07647
Attention:  President and CEO

With a copy to:
Richardson & Patel
Murdock Plaza
 
PRECISION DOSE-ELITE License Agreement
09-10 -10 Execution Version
 
8

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{***}Confidential portions of this exhibit have been redacted and filed
separately with the Commission pursuant to a confidential treatment request in
accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

10900 Wilshire Boulevard
Suite 500
Los Angeles, California  90024
Attention: Kevin Friedmann
 
6.7.         Each party may by written notice given to the other in accordance
with this Agreement change the address to which notices to such party are to be
delivered.
 
6.8.         Severability.  If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid or unenforceable, it will be
modified, if possible, to the minimum extent necessary to make it valid and
enforceable or, if such modification is not possible, it will be stricken and
the remaining provisions will remain in full force and effect.
 
6.9.         Survival.  The rights and obligations which accrue to a party
during the term of this agreement shall survive the termination of this
Agreement.
 
6.10.       Force Majeure.  No party to this Agreement will be liable for
failure or delay in the performance of any of its obligations hereunder, if such
failure or delay is due to causes beyond its reasonable control including,
without limitation, acts of God, earthquakes, fires, strikes, acts of war, or
intervention of any governmental authority, but any such delay or failure will
be remedied by such party as soon as possible after the removal of the cause of
such failure or delay.
 
6.11.       Entire Understanding.  This Agreement, including the schedules
attached hereto, contains the entire understanding relative to the matters
addressed herein, and supersedes all prior and collateral communications,
reports, and understandings, if any, between the parties regarding the matters
addressed herein.
 
6.12.       Drafting.  The parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement. .
 
6.13.       Not a Joint Venture.  This Agreement does not constitute or create
(and the Parties do not intend to create hereby) a joint venture, pooling
arrangement, Partnership, or formal business organization of any kind between
and among any of the Parties, and the rights and obligations of the Parties
shall be only those expressly set forth herein. The relationship hereby
established between PRECISION DOSE and ELITE is solely that of licensee and
licensor, each is an independent contractor engaged in the operation of its own
respective business. Neither Party shall be considered to be an agent of the
other for any purpose whatsoever. Each Party shall be responsible for providing
its own personnel and workers compensation, medical coverage or similar benefits
and shall be solely responsible for the payment of social security benefits,
unemployment insurance, pension benefits, withholding any required amounts for
income and other employment-related taxes and benefits of its own employees, and
shall make its own arrangements for injury, illness or other insurance coverage
to protect itself, its Affiliates, its subcontractors and personnel from any
damages, loss and/or liability arising out of the performance of this Agreement.
Neither Party has the power or authority to act for, represent or bind the other
(or its Affiliates) in any manner.
 
PRECISION DOSE-ELITE License Agreement
09-10 -10 Execution Version
 
9

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{***}Confidential portions of this exhibit have been redacted and filed
separately with the Commission pursuant to a confidential treatment request in
accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
set forth above.
 
ELITE PHARMACEUTICALS, INC.
 
PRECISION DOSE, INC.
     
By:
   
By:
           
Name: 
Chris Dick
 
Name: 
Robert Koopman
         
Title:
President
 
Title:
President
         
Date:
   
Date:
 

PRECISION DOSE-ELITE License Agreement
09-10 -10 Execution Version
 
10

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{***}Confidential portions of this exhibit have been redacted and filed
separately with the Commission pursuant to a confidential treatment request in
accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

SCHEDULE A
 
Product List
 
Products Manufactured by ELITE:
 
Name
 
ANDA #
 
Approved  Manufacturing Site
         
Hydromorphone 8mg, 4mg and 2mg Tablets, 100’s and 500’s
 
76-723 (8 mg)
 
ELITE – 135 and 165 Ludlow Avenue, Northvale, NJ 07647
         
Naltrexone 50mg Tablets, 30’s and 100’s
 
75-274
 
ELITE – 135 and 165 Ludlow Avenue, Northvale, NJ 07647
         
{***}Tablets, 100’s and 1,000’s
 
{***}
 
ELITE – 135 and 165 Ludlow Avenue, Northvale, NJ 07647
         
{***}Capsules, 100,s and 1000’s
 
Product not yet approved
 
ELITE – 135 and 165 Ludlow Avenue, Northvale, NJ 07647

 
Note:  Temporary packaging (defined as less than twelve (12) months) of these
products may be done at the Epic Pharma, LLC facility located at 227-16 N.
Conduit Avenue, Laurelton, N.Y. 11413, unless Precision Dose consents to extend
the timeframe beyond twelve (12) months, with such consent not to be
unreasonably withheld.
 
PRECISION DOSE-ELITE License Agreement
09-10-10
 
11

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{***}Confidential portions of this exhibit have been redacted and filed
separately with the Commission pursuant to a confidential treatment request in
accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

SCHEDULE B
 
Standard Manufacturing Costs (FOB, Northvale facility)
 

           
Bottles
           
Batch
 
Bottle
 
Per
 
Batch
 
Cost/
ITEM
 
Size
 
Size
 
Batch
 
Cost
 
Bottle 
Hydromorphone
                                         
8mg
 
{***}
 
100’s
 
{***}
 
{***}
 
{***}
       
500’s
 
{***}
 
{***}
 
{***}
                     
4mg
 
{***}
 
100’s
 
{***}
 
{***}
 
{***}
       
500’s
 
{***}
 
{***}
 
{***}
                     
2mg
 
{***}
 
100’s
 
{***}
 
{***}
 
{***}
       
500’s
 
{***}
 
{***}
 
{***}
Naltrexone
                                         
50mg
 
{***}
 
30’s
 
{***}
 
{***}
 
{***}
   
{***}
 
100’s
 
{***}
 
{***}
 
{***}
{***}
                   
{***}Tablets
 
{***}
 
100’s
 
{***}
 
{***}
 
{***}
   
{***}
 
1,000’s
 
{***}
 
{***}
 
{***}
                     
{***} Capsules
 
{***}
 
100’s
 
{***}
 
{***}
 
{***}
   
{***}
 
1,000’s
 
{***}
 
{***}
 
{***}
                     
{***} Capsules
 
{***}
 
100’s
 
{***}
 
{***}
 
{***}
 
  
{***}
  
1,000’s
  
{***}
  
{***}
  
{***}

 
NOTE: Includes all Product manufacturing and packaging costs, quality assurance
and batch quality control testing. Stability testing will be at an additional
cost.

* {***}

 
PRECISION DOSE-ELITE License Agreement
09-10-10
 
12

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{***}Confidential portions of this exhibit have been redacted and filed
separately with the Commission pursuant to a confidential treatment request in
accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

SCHEDULE C
 
Compensation for Licensing Rights

Milestone Payments

PRECISION DOSE will pay to ELITE Milestone Payments totaling {***}, according to
the following schedule:
 
·
$200,000 shall be paid to ELITE upon signing of this enforceable License
Agreement

 
·
${***} shall be paid to ELITE upon FDA approval and initial shipment of the
“Products” to PRECISION DOSE according to the following schedule:

 
§
Hydromorphone 8mg — ${***}

 
§
Hydromorphone 4mg and 2mg — ${***}

 
§
Naltrexone 50mg — ${***}

 
§
{***}tablet — ${***}

 
§
{***} Capsules (All) — ${***}

License Fee

PRECISION DOSE will pay to ELITE a License Fee that is a percentage of the
product gross profit (“Product Gross Profit”) of PRECISION DOSE, as defined
below, generated on Products sold and shipped to its customers by PRECISION DOSE
according to the following schedule:

 
·
Hydromorphone 8mg, 4mg, and 2mg Tablets — @ {***}% of Product Gross Profit

 
·
Naltrexone 50mg Tablets — @ {***}% of Product Gross Profit

 
·
{***}mg Tablets , {***}mg Capsules and {***}mg Capsules — @ {***}% of Product
Gross Profit

Product Gross Profit is defined as:  Net Sales - Cost of Goods = Product Gross
Profit.

 
§
Net Sales is defined as:  Net Invoice Price less the following: Charge backs,
Buying Groups/Wholesaler Administrative Fees/Rebates, Allowances, Medicaid and
Returns.

 
§
Cost of Goods is defined as:  The total number of units sold and included in Net
Sales multiplied by the Standard Manufacturing Cost ( “$/Bottle Cost”) set forth
on Schedule B plus Quality Assurance and Quality Control (including Testing and
Stability Costs) and Warehouse/Distribution (including inbound and outbound) of
ELITE and PRECISION DOSE, also known as Unit Cost .

The calculation of Product Gross Profit and the Licensing Fee shall be performed
by Precision Dose and presented to Elite as a report (“Report”) which shall
include the following information:

PRECISION DOSE-ELITE License Agreement
09-10 -10 Execution Version
 
13

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{***}Confidential portions of this exhibit have been redacted and filed
separately with the Commission pursuant to a confidential treatment request in
accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

REPORT ITEMS
   
Gross Invoice Sales
Total Sales for Month
Cash Discount
Cash Discount
   
Net Invoice Sales
Total Sales - Cash Discount
   
Deductions
Allowances (including wholesale service fees; customer admin. fees; Medicaid
rebate; state program rebates; administration fees)  price adjustments; returns;
charge backs.
 
Net Sales
Net Invoice Sales – Deductions
   
Cost of Goods
Total Units x Unit Cost
       
Gross Profit
Net Sales less Cost of Goods
 
Margin %
Margin Percentage (Gross Profit divided by Gross Invoice Sales)
   
Amount Due
Gross Profit $ 
x {***}%: Hydromorphone
   
x {***}%: Naltrexone
   
x {***}%: {***}

 
Whenever possible, the Report will be made using actual sales, charge backs,
administrative fees/rebates, price adjustments, and returns; however, in some
cases estimated numbers may be required because of timing of CBs, fees, returns,
etc. A true up Report will be completed and presented to ELITE within 60 days
after the end of each calendar year.

PRECISION DOSE-ELITE License Agreement
09-10 -10 Execution Version
 
14

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{***}Confidential portions of this exhibit have been redacted and filed
separately with the Commission pursuant to a confidential treatment request in
accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

SCHEDULE D
 
Minimum Annual Unit Forecast for Each Product Group
(As of August 27, 2010)

   
Year 1
 
Year 2
 
Year 3
 
Year 4
 
Year 5
(Units in 000 — Tablets)
                   
Hydromorphone 8mg
 
{***}
 
{***}
 
{***}
 
{***}
 
{***}
Naltrexone 50mg
 
{***}
 
{***}
 
{***}
 
{***}
 
{***}
{***} {***}mg Tabs
  
{***}
  
{***}
  
{***}
  
{***}
  
{***}

NOTE: The above committed unit volumes are {***}% of the unit volumes in the
Target Financial Forecasts previously provided for Profit Split calculations.

For purposes of this Provision, the minimum annual forecast will be reviewed
annually for any changes in the competitive environment, and revised by the
Parties as mutually agreed. As the additional products become available, the
combined Product Group minimum annual quantities will be reassessed according to
the then current market conditions.

PRECISION DOSE-ELITE License Agreement
09-10 -10 Execution Version
 
15

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