Exhibit 10.49

 

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

 

 

 

 

 

 

 

License, SUPPLY
and Distribution Agreement

 

FOR Dantrolene Capsules

 

Elite pharmaceuticals, inc.,

 

elite laboratories, inc.,

 

- and -

 

LANNETT COMPANY, Inc.

 

Dated as of April 9, 2019

 

 

 

 

 

 

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

THIS LICENSE, SUPPLY AND DISTRIBUTION AGREEMENT is made as of April 9, 2019 (the
“Effective Date”), by and between ELITE PHARMACEUTICALS, INC. a Nevada
corporation and ELITE LABORATORIES, INC., Delaware corporation located at 165
Ludlow Avenue, Northvale, New Jersey 07647 (collectively, “ELITE”), and LANNETT
COMPANY, INC., USA, a Delaware corporation located at 9000 State Road,
Philadelphia, PA 19136 and/or its Affiliates (“LANNETT”).

 

WHEREAS:

 

A.ELITE has ownership rights to Products and/or ANDAs specified in Schedule A
(the “Products”), and LANNETT wishes to license from ELITE the exclusive rights
to market and sell the Products on the terms and conditions set forth in this
Agreement.

 

B.ELITE has significant experience in developing, manufacturing and marketing
finished dosage forms of pharmaceutical products, including the Products;

 

C.LANNETT has significant experience in marketing pharmaceutical products; and

 

D.Subject to the terms and conditions of this Agreement, LANNETT desires to
engage ELITE on an exclusive basis to manufacture, supply, package and label the
Products and ELITE agrees to grant LANNETT the right under this Agreement to
commercialize the Products in the Territory on an exclusive basis.

 

NOW, THEREFORE in consideration of the mutual covenants and obligations
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereto agree as
follows:

 

ARTICLE 1 - DEFINITIONS

 

1.1In addition to terms defined elsewhere in this Agreement, the terms set forth
below shall be defined in this Agreement (including the recitals) as follows:

 

(a)“Affiliate” with respect to either Party means any Person who directly or
indirectly through one or more intermediaries controls, is controlled by, or is
under common control with such Party. The term “control” means the beneficial
(direct or indirect) ownership of more than fifty-percent (50%) of the voting or
equity interests of such Person or the power or right to direct the management
and affairs of its business, whether through the ownership of voting securities,
by contract, or otherwise.

 

(b)“Agreement” means this License, Supply and Distribution Agreement, together
with all schedules hereto.

 

(c)Analytical Specifications” has the meaning given in Article 4.1(a).

 

(d)“ANDA” means an Abbreviated New Drug Application pursuant to Section 505(j)
of the FDCA.

 

(e)“Bankruptcy Code” has the meaning given in Article 14.16.

 

1

 

 

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THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

(f)“Business Day” in relation to each Party means any day other than a Saturday,
a Sunday, or any statutory or public holiday on which banks are generally closed
for regular business in New York, New York.

 

(g)“Certificate of Analysis” means a certificate of analysis that certifies that
a given batch of Product meets the release Product Specifications.

 

(h)“Claim” means any claim, action, cause of action, or demand.

 

(i)“Commercially Reasonable Efforts” with respect to any activity means the
efforts and resources that would be used in the performance of the relevant
activity in compliance with Law by a Person (engaged in the manufacture and
supply or distribution, sale and commercialization of pharmaceutical products,
as applicable) of comparable size and resources as the applicable Party with
regard to a product at a similar stage in its product life taking into account
the following factors to the extent reasonable and relevant: issues of safety
and efficacy, product profile, market potential, competitive market conditions,
duration of exclusivity or other proprietary position of the product and the
potential profitability and economic return of the product, all as measured by
the facts and circumstances at the time such efforts are due.

 

(j)“Confidential Information” has the meaning given in Article 12.2.

 

(k)“DEA” shall mean the United States Drug Enforcement Administration or any
successor entity.

 

(l)“Debarred Entity” has the meaning given in Article 9.2(c).

 

(m)“Debarred Individual” has the meaning given in Article 9.2(c).

 

(n)“Distribution Fees” means [**] percent ([**]%) of Net Sales for all Products.

 

(o)“Effective Date” has the meaning given in the preamble.

 

(p)“Facility” means the ELITE FDA-approved manufacturing site located at 135/165
Ludlow Avenue, Northvale, NJ, USA 07647.

 

(q)“FDA” means the United States Food and Drug Administration or any successor
government agency.

 

(r)“FDCA” means the Federal Food, Drug, and Cosmetic Act.

 

(s)“Force Majeure Event” has the meaning given in Article 14.5.

 

(t)“ELITE” has the meaning given in the preamble.

 

(u)“GMP” means current good manufacturing practices for the manufacture of
finished pharmaceutical products in effect within the Territory from time to
time during the Term of this Agreement, which set minimum standards to ensure
that pharmaceutical products meet established requirements for identity,
strength, quality and purity, as established under the Laws of the Territory,
including 21 C.F.R. Parts 210 and 211.

 

2

 

 

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THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

(v)“Gross Sales” means the gross amount invoiced by LANNETT or its Affiliates or
sublicensees for sales of the Product to Third Parties in the Territory.

 

(w)“Indemnitee” has the meaning given in Article 11.3.

 

(x)“Indemnitor” has the meaning given in Article 11.3.

 

(y)“Intellectual Property Rights” means any patent, trademark, copyright, trade
secret, right in unpatented know-how, right of confidence and any other
intellectual or industrial property right of any nature whatsoever in any part
of the world, whether registered or unregistered.

 

(z)“LANNETT” has the meaning given in the preamble.

 

(aa)“Law” means any federal, state, provincial and local laws, statutes,
regulations, rules, guidelines, orders, ordinances, and any other requirements
of any government or Regulatory Authority in the Territory applicable to the
development, registration, manufacturing, testing, packaging, storing, shipping,
marketing, distribution and sale of pharmaceutical products or as otherwise
applicable to the Parties respective obligations under this Agreement, including
the FDCA.

 

(bb)“Losses” means any damages, liabilities, obligations, costs, expenses or
losses, including reasonable legal fees and expenses, court costs, penalties,
fines, costs of investigation and amounts paid in settlement of claims.

 

(cc)“Major Change” shall mean a change that has the potential to adversely
impact quality, identity, purity or stability of the Products or the compliance
and validity of the Products Marketing Authorizations, as these factors may
relate the safety or efficacy of the Product and as defined in the FDA
regulations and guidance.

 

(dd)“Marketing Authorization” means all approvals, licenses, registrations or
authorizations of any Regulatory Authority, necessary for the manufacturing,
use, storage, import, transport, marketing, promotion and sale of the Product in
the Territory, together with pricing or reimbursement approval in countries
where governmental approval is required for pricing or for the Product to be
reimbursed by national health insurance.

 

(ee)“Net Sales” shall mean with respect to the Product, Gross Sales less the
following items (whether or not separately stated on such invoice but only to
the extent included in Gross Sales):

 

(i)Any and all promotional allowances, rebates, charge backs, quantity and cash
discounts, and other usual and customary discounts to customers;

 

3

 

 

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

(ii)Amounts refunded, repaid or credited by reason of rejections, returns or
recalls of goods;

 

(iii)Any sales, excise, turnover, inventory, value-added, and similar taxes and
duties assessed on applicable sales;

 

(iv)Failure to Supply penalties (in the case if Article 4.4 (i) and (ii)),
Non-affiliate third party administrative fees granted, Medicaid and state and/or
governmental rebates, and shelf stock adjustments and retroactive price
reductions.

 

Components of Net Sales shall be determined using the accrual method of
accounting in accordance with US GAAP or an equivalent stipulated method of
accounting in the Territory.

 

(ff)“Net Profits” is calculated as listed in Schedule C and means the Net Sales
of a Product, minus the sum of (i) the Distribution Fee, (ii) Transfer Price of
Product and (iii) shipping costs from the Facility.

 

(gg)“Non-Conforming Product” has the meaning given in Article 4.8(b).

 

(hh)“Original Agreement” has the meaning given in Recital A.

 

(ii)“Packaging” means all material used to prepare fully packaged Products,
including labeling, containers, closures, cartons, and shipping cases, as
applicable.

 

(jj)“Parties” means the parties to this Agreement referred to collectively, and
“Party” means either party to this Agreement referred to individually.

 

(kk)“Person” includes any individual, partnership, corporation, unincorporated
organization or association, joint venture, limited liability company, trust or
any other form of entity.

 

(ll)“Safety Data Exchange Agreement or SDEA” means the pharmacovigilance
agreement to be entered into by the Parties which shall set forth the safety
data exchange procedures to be followed by the Parties for the collection,
investigation, reporting and exchange of information concerning adverse events.

 

(mm)“Products” means the finished pharmaceutical products in commercially
saleable form, as manufactured by ELITE exclusively supplied to LANNETT pursuant
to this Agreement as set forth on Schedule A.

 

(nn)“Purchase Order” means a written, binding purchase order for a certain
quantity of Product properly issued by LANNETT in accordance with the terms of
this Agreement.

 

(oo)“Quality Agreement” means a quality agreement to be entered into by the
Parties which will set forth certain obligations of the Parties in relation to
the manufacture, packaging, quality control and testing of the Products in
accordance with GMP.

 

4

 

 

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

(pp)“Recall” shall mean a recall, removal, market withdrawal, seizure, or field
correction of Product.

 

(qq)“Regulatory Authorities” means any federal, state, local or international
regulatory agency, department, bureau or other governmental entity responsible
for regulating the manufacture, use, storage, importation, transportation,
distribution marketing, promotion and sale of pharmaceutical products in the
Territory, including the FDA and DEA.

 

(rr)“Regulatory Approval” means all approvals or authorizations granted by the
FDA for marketing the Products in the Territory.

 

(ss)“Specifications” means the written methods, formulae, procedures,
specifications, tests (and testing protocols) and standards pertaining to the
Products as approved by FDA in the Product’s ANDA and attached herein as
Schedule B, which may be amended from time-to-time by the written agreement of
the Parties.

 

(tt)“Term” has the meaning given in Article 8.1.

 

(uu)“Territory” means the United States of America and its possessions,
territories, protectorates, military bases and commonwealths.

 

(vv)“Third Party” means any Person other than LANNETT or ELITE, or any of their
respective Affiliates.

 

(ww)“Trademarks” has the meaning given in Article 4.3(a).

 

(xx)“Transfer Price” is listed and defined in Schedule A.

 

1.2Interpretation of “Include”. Where the words “include”, “includes” or
“including” are used in this Agreement, they shall mean, respectively, “include
without limitation”, “includes without limitation”, “including but not limited
to”, or “including without limitation”.

 

ARTICLE 2 - MARKETING AUTHORIZATIONS

 

2.1Subject to the terms of this Agreement, ELITE shall exclusively manufacture,
supply, package and label the Products for LANNETT, and LANNETT shall have the
right to promote, market, store, distribute and sell the Products in the
Territory. ELITE hereby grants to LANNETT and its Affiliates an exclusive right
to fully commercialize the Products in the Territory. LANNETT agrees to
exclusively purchase Products it requires from ELITE.

 

2.2ELITE shall, at their expense, maintain and update the Marketing
Authorizations for the Products as may be required for the Parties to perform
their obligations hereunder. ELITE shall be solely responsible for all
communications with the Regulatory Authorities in the Territory relating to any
Marketing Authorizations for the Products. ELITE shall provide LANNETT with
timely notice of any communications from the Regulatory Authorities which may
affect ELITE’s right or ability to supply LANNETT with the Products.

 

5

 

 

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

ARTICLE 3 - PAYMENT TERMS

 

3.1Transfer Price. ELITE shall sell each Product to LANNETT at the prices set
forth in Schedule A, which Transfer price shall be inclusive of all costs and
expenses associated with the manufacture, supply, packaging, labeling of the
Product to LANNETT.

 

3.2Upon delivery of the Products to LANNETT, ELITE shall submit invoices
therefore to LANNETT. LANNETT shall pay each undisputed invoice in full within
thirty (30) days of its receipt in full of the Products reflected in the invoice
and the Certificate of Analysis, which Certificate is in a form sufficient for
release of the Products. A late payment fee of one percent (1%) per month may be
imposed upon LANNETT for payments past due, unless Products therein are subject
to a quality dispute. In the event of any inconsistency between an invoice and
this Agreement, the terms of this Agreement shall control.

 

3.3License Fees. Within forty-five (45) days of the end of each calendar
quarter, LANNETT shall pay to ELITE a License Fee from the date of
commercialization of the Products through June 30, 2020, of [**] percent ([**]%)
of the Net Profits received from sales of each Product. For the year July 1,
2020 through June 30, 2021 and each year thereafter, Lannett shall pay to Elite
a License Fee of either (a) [**] percent ([**]%) of the Net Profits received
from sales of each Product; or (b) if LANNETT receives [**] dollars ($[**]) or
more in Net Profits during such year, [**] percent ([**]%) of the Net Profits
received from sales of each Product, with such higher percentage being paid on
only such amount exceeding the [**] dollars ($[**]). Such payment shall
additionally include a sales summary for each Product generally in the format as
provided in Schedule C. In no case shall the License Fee for any calendar
quarter be negative; provided, however in the event of a loss in any calendar
quarter, subject to ELITE’s written approval of any Product pricing by LANNETT
that leads to quarterly losses and subject to the loss carryover clause that
follows, the amount of that loss shall be carried forward to subsequent calendar
quarters until the amount of such loss has been fully absorbed. In the event
that Net Profits for calendar quarter are negative, LANNETT shall carry over the
applicable License Fee percentage set forth above multiplied by the value by
which the Net Profits are negative in such calendar quarter and deduct this
amount from the calculation of Net Sales for the following calendar quarter. If
Net Profits are negative in two (2) or more consecutive calendar quarters,
LANNETT shall invoice ELITE the applicable License Fee percentage set forth
above multiplied by the value by which the Net Profits are negative for the
previous calendar quarter and carry over the applicable License Fee percentage
set forth above multiplied by the value by which Net Profits are negative for
the current calendar quarter and deduct this amount from the calculation of Net
Sales for the following calendar quarter. For the avoidance of doubt, if Net
Profits are negative in subsequent calendar quarters, the amounts will be
similarly carried over or reimbursed as per the terms set forth in this Section
3.3 until Net Profits are positive. Reimbursement of negative Net Profits owed
by ELITE in this Section 3.3 shall be payable to LANNETT within forty-five (45)
days after receipt of an invoice from LANNETT.

 

ARTICLE 4 - MANUFACTURING AND SUPPLY; COMMERCIALIZATION

 

4.1Supply of Products.

 

(a)During the Term of this Agreement, ELITE shall use Commercially Reasonable
Efforts to manufacture, timely supply, package and label for delivery to LANNETT
the Products in accordance with any Purchase Orders issued by LANNETT under the
terms of this Agreement. Purchase Orders shall include the shipping instructions
in accordance with Schedule D hereto ELITE shall manufacture, supply, package
and label the Products in compliance with all Laws, including the GMPs, the
Marketing Authorization, the Quality Agreement, and the Specifications
(“Analytical Specifications”).

 

6

 

 

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

(b)ELITE shall manufacture the Products in the Facility and use Commercially
Reasonable Efforts to maintain access to sufficient supplies of raw materials,
components and other required resources to perform its obligations under this
Agreement, and meet LANNETT’s supply requirements for the Products. ELITE shall
not manufacture the Products at a site other than the Facility without first
obtaining LANNETT’s prior written consent, which consent shall not be
unreasonably withheld. ELITE shall be solely responsible for all costs and
expenses incurred in connection with the manufacture of the Products hereunder,
including without limitation costs and expenses of personnel, quality control,
testing, manufacturing, facilities, equipment, materials, FDA product fees, FDA
establishment fees and government sales, use, excise, property or similar taxes
or excises.

 

(c)ELITE shall have procedures in place to ensure that the oldest approved
inventory of the Products is distributed first. In addition, each Party shall
maintain a tracking system by which the distribution of each lot of the Products
may be readily determined to facilitate its Recall if necessary.

 

(d)Transfer Price Adjustments. The Transfer Prices for the Products under
Schedule A are valid through December 31, 2019. After December 31, 2019, the
Transfer Price for Products may be adjusted for any increase in the cost of
active pharmaceutical ingredients, annual Generic Drug User Fees (GDUFA fees)
proportional allocation, and other material government mandated requirements.
ELITE shall provide at least thirty (30) days written notice to LANNETT for any
such Transfer Price adjustments with justifications for any increase. ELITE
shall use commercially reasonable efforts to reduce its manufacturing expenses
for the Products. At either Party’s written request, the Parties will discuss in
good faith the revision of the Transfer Price (and any subsequently agreed
prices) to take into account adverse market conditions resulting in
unsatisfactory returns for LANNETT or changes in the manufacturing costs for the
Products. The revised Transfer Price shall be laid down in writing and inserted
as an amended Schedule A to this Agreement. Confirmed orders are excluded from
Transfer Price negotiations. If, after good faith negotiations, the Parties are
unable to reach agreement on an adjustment to the Transfer Pricing for the
Products, then LANNETT shall be entitled to terminate this Agreement, effective
upon at least sixty (60) days’ prior written notice to ELITE.

 

(e)The Parties shall enter into a Safety Data Exchange Agreement and Quality
Agreement. The respective roles and responsibilities for quality assurance
personnel of the Parties in carrying out the transactions pursuant to this
Agreement shall be defined and stipulated in the Quality Agreement. The fully
executed SDEA (SDEA) and Quality Agreement are hereby incorporated and made a
part of this Agreement by reference. In the event of any inconsistency between
the provisions of the SDEA and the provisions of this Agreement, the wording of
the SDEA shall govern any and all patient safety matters and this Agreement
shall govern all other matters. The Parties hereby acknowledge and agree that in
the event of any conflict between the terms of this Agreement and the terms of
the Quality Agreement, this Agreement shall control with respect to all issues
(other than with respect to all quality matters), and the Quality Agreement
shall control with respect to all quality matters.

 

7

 

 

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

4.2Master Production Plan and Purchase Orders. On or before fifteen (15) days
prior to the end of each calendar quarter during the Term, LANNETT shall deliver
to ELITE a master production plan which covers a twelve (12) month period, which
includes three (3) months binding purchase order, and nine (9) months
non-binding forecast (the “Master Production Plan”). The first three months
(beginning with the first month following the month in which the Master
Production Plan is due) of each Master Production Plan shall be deemed to be a
binding purchase order (the “Binding Forecast”). Months four (4) through twelve
(12) of the Master Production Plan shall be LANNETT’s non-binding, good faith
estimate of such requirements based on forecasted trade and LANNETT shall have
the ability to adjust the quantities forecast. Unless the Parties otherwise
agree in writing, all firm orders for Product (the “Purchase Order”) placed
shall specify: (i) the type of Product being ordered; (ii) the amount of such
Product being requested (which shall be in whole batch size quantities); and
(iii) the requested delivery date which, unless otherwise agreed by ELITE in
writing, shall be not less than ninety (90) days after receipt of the Purchase
Order. Each Master Production Plan and accompanying binding Purchase Order shall
be deemed to be automatically accepted unless ELITE notifies LANNETT of its
rejection of the same within four (4) Business Days of receipt. ELITE may only
reject a Purchase Order if a Purchase Order is not consistent with the terms of
this Article 4.2 or is not timely delivered. Once a Purchase Order is accepted
by ELITE, ELITE shall be obligated to timely manufacture, supply, package,
label, and have ready for delivery the full quantities of Products set forth in
the Purchase Order by the required delivery date at the Facility. In the event
that the terms of any Purchase Order are not consistent with, or attempt to
modify, the terms of this Agreement, the terms of this Agreement shall prevail.
If LANNETT requests changes to any Purchase Order after receipt thereof by
ELITE, ELITE shall use Commercially Reasonable Efforts to comply with such
changes. ELITE shall use commercially reasonable efforts to supply up to one
hundred twenty-five percent (125%) of LANNETT’S requirement forecast of Products
for the applicable period.

 

4.3Delivery Terms.

 

(a)LANNETT shall provide ELITE packaging specifications and related materials
that comply with FDA requirements and the Parties will finalize all packaging by
the time of the first Purchase Order. If requested by LANNETT, ELITE shall affix
on the Product and/or on the label and/or the packages certain proprietary or
registered marks, logos or insignia relating to the Product in accordance with
the directions and specifications given by LANNETT, along with any other marks,
logos or insignia, as LANNETT may stipulate from time to time (collectively,
“Trademark”). Pursuant to the aforesaid, LANNETT hereby grants to ELITE, a
non-exclusive, non-transferable, non-assignable and non-sublicensable right to
the Trademarks, solely for the purpose of affixing such Trademarks to the
Product in accordance with LANNETT’s directions and specifications during the
Term. LANNETT shall have sole approval authority over all Product labeling and
packaging specifications of the Products supplied to LANNETT pursuant to this
Agreement.

 

8

 

 

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

(b)ELITE shall deliver the full quantities of the Products set forth in each
Purchase Order (Incoterms 2010 EXW) to LANNETT or its designee. All Products
shall be packaged for shipment in accordance with the packaging specifications
set forth in the Marketing Authorizations and packing instructions reasonably
required by LANNETT.

 

(c)Each Products shipment made by ELITE shall be accompanied by and shall
include a Certificate of Analysis for each shipment of the Products manufactured
and supplied hereunder. ELITE shall be responsible for all applicable release
testing of the Products in accordance with the Analytical Specifications. ELITE
shall perform all required in-process quality control tests and quality
assurance reviews on the Products, including without limitation, stability
testing at its sole cost and expense. In addition, ELITE shall furnish LANNETT,
along with the first shipment of the Products, ELITE's Material Safety Data
Sheets containing the relevant safety and health information and such other
similar information as LANNETT may reasonably from time-to-time request in
connection therewith.

 

(d)All Products provided to LANNETT shall have no less than eighty five percent
(85%) remaining shelf-life remaining as per the Product’s ANDA.

 

(e)All orders containing at least ninety percent (90%) of the specified amount
of Product in a given Purchase Order shall be deemed satisfied.

 

4.4Failure to Supply. ELITE shall notify LANNETT as promptly as possible, but in
no event later than five (5) Business Days, after ELITE discovers that it will
not be able to supply the quantity of Products ordered by the delivery date
specified in a Purchase Order. In such event: (i) ELITE shall cooperate with
LANNETT in taking all actions that LANNETT deems reasonably necessary in order
to remedy such inability to supply, at ELITE’s expense; and (ii) If ELITE’s
inability to supply continues past twenty (20) days from the required delivery
date set forth in the Purchase Order at LANNETT’s election, any or all
outstanding Purchase Orders relating to such Product may be cancelled and
LANNETT shall have no obligations with respect to such Purchase Orders;
provided, however, ELITE must cover any Failure to Supply (as defined below)
obligations set forth in this Section. Compliance by ELITE with this Article 4.4
shall not relieve ELITE of any other obligation or liability under this
Agreement. LANNETT shall otherwise retain all of its rights under this Agreement
and/or at law against ELITE for its failure to deliver all or any portion of the
quantity of Products ordered by LANNETT. With regards to a Binding Forecast or
if ELITE accepted a Purchase Order from LANNETT, pursuant to the procedures
defined in Section 4.2 of this Agreement, then ELITE shall be responsible for
the late charges and any penalties assessed against LANNETT by its Customers or
any other third party or any costs, fees, charges, or penalties incurred by
Lannett (“Failure to Supply”), unless the delay is attributable to (i) action or
controls imposed by the DEA that do not result from ELITE's negligence, gross
negligence or willful misconduct; or (ii) demonstrable raw material shortages
that are beyond ELITE's control, but ELITE will use commercially reasonable
efforts to keep three (3) to six (6) months of raw materials inventory on hand
at all times. Late charges and any penalties assessed against ELITE by LANNETT
under this paragraph are due and payable within thirty (30) days of being
invoiced by LANNETT and, if not timely paid, may be deducted against amounts
owed by LANNETT to ELITE.

 

9

 

 

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

4.5Samples and Batch Records. ELITE shall prepare and maintain batch records and
file samples, properly stored, for each lot or batch of Products manufactured
and shipped hereunder in compliance with all GMPs and Laws in the Territory.

 

4.6Commercialization. LANNETT shall use Commercially Reasonable Efforts to
market and sell the Products in the Territory. All commercial matters regarding
the marketing, promotion, sale, offer for sale, pricing or distribution of the
Products in the Territory shall be under the exclusive control of LANNETT.

 

4.7Change of Specification. No alterations of the Specifications for the
Products or other changes requiring prior approval by the FDA, or material
changes to the manufacturing process or validated processes, can be made without
the prior written approval of LANNETT. ELITE shall notify LANNETT in writing of
any proposed alterations for the Specifications for the Products or any Major
Changes to the manufacturing process or validated processes. LANNETT shall
notify ELITE of LANNETT’s decision within thirty (30) days of receipt of such
proposal from ELITE. If ELITE does not receive LANNETT’s decision in writing
within thirty (30) days, the alteration of the Specifications or other Major
Changes to the manufacturing process or validated process proposed by ELITE
shall be deemed rejected by LANNETT. In the event that the FDA or any other
governmental authority shall suggest or mandate any change or revision to the
Product, such that the Specifications would no longer comply with such
suggestion or mandate, the Parties shall work together in good faith to develop
revised Specifications that meet all changes or revisions suggested or mandated
by the FDA or other governmental authority and Schedule B shall be amended in
writing to set forth the new agreed upon Specifications.

 

4.8Acceptance of the Product.

 

(a)Following receipt of a shipment of Product at the final destination, LANNETT,
or its designee, shall conduct a visual inspection of the Product and all
accompanying documents provided by ELITE, including without limitation, the
Certificate of Analysis, in accordance with its customary procedures. LANNETT
shall advise ELITE, in writing, if it is rejecting a shipment of Product due to
obvious physical damage or obvious packaging defect that are evident upon such
visual inspection of the packaged Product as shipped by ELITE. LANNETT (and its
designees) shall have no obligation to inspect the Product beyond the visual
inspection provided for in this Article 4.8(a).

 

(b)In the case of defects other than those obvious defects described in Article
4.8(a), including, by way of example, any failure of the Product, at the time of
delivery, to meet the Analytical Specifications and the representations,
warranties and covenants of Article 9.2(f), LANNETT shall promptly notify ELITE
if it becomes aware of such non-obvious defect(s). Any defect in physical
condition of Products delivered by ELITE or Products that do not conform with
the Analytical Specifications (as may be in effect from time to time) or the
representations, warranties and covenants of Article 9.2(f) for any reason shall
be deemed to be a non-conforming product (“Non-Conforming Product”). LANNETT, or
its designee, shall have the right to reject any Non-Conforming Product and no
failure on the part of LANNETT, or its designee, or passage of time shall
prejudice LANNETT’s right to reject or revoke acceptance of Non-Conforming
Product. All Non-Conforming Product shall be returned to ELITE at its sole cost
and expense.

 

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THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

(c)If ELITE confirms the Non-Conforming Product or lab testing pursuant to
Article 4.8(d) determines that the Product is Non-Conforming Product, ELITE
shall, at LANNETT’s election, either replace such Non-Conforming Product with
conforming Product or, refund to LANNETT, the price paid for such Non-Conforming
Product.

 

(d)If the Parties cannot agree as to whether a delivered quantity of Product is
Non-Conforming Product, then the Parties agree to have the batch in dispute
tested and further analyzed by a recognized independent testing laboratory
selected by the Parties or a quality consultant (if not a laboratory analysis
issue). The appointment of such laboratory or quality consultant shall not be
unreasonably withheld or delayed by either Party. The decision of the laboratory
or quality consultant shall be in writing and, save for manifest error on the
face of the decision, shall be binding on both Parties. Should said laboratory’s
testing or quality consultant determine that the Product is Non-Conforming
Product then ELITE will bear the cost of such testing or quality consultant and
comply with the terms of Article 4.8(c). If said Product is determined to have
been conforming, then LANNETT shall bear all costs of the independent laboratory
testing or quality consultant as well as accept the Product shipment and pay for
same within forty-five (45) days of such acceptance.

 

ARTICLE 5 - INSPECTIONS

 

5.1Inspections. During the Term of this Agreement and thereafter in the event of
a Claim against either Party regarding use of the Products is threatened or
commenced, ELITE shall permit LANNETT’s representatives to enter ELITE’s
facilities, upon reasonable prior notice (except in the event of a for-cause
audit) and during normal business hours, for the purpose of inspecting the
facility and quality control procedures and confirming compliance with all
applicable GMPs and Laws in the Territory, the requirements of the Regulatory
Authorities in the Territory, the Quality Agreement and this Agreement. If
during any such inspection LANNETT discovers any instances in which ELITE has
not complied with the foregoing, then ELITE shall promptly provide to LANNETT a
written plan for correcting such deficiencies, including a proposed timetable
for implementing such corrections, and shall ensure that such deficiencies are
corrected, at ELITE’s sole expense, as soon as reasonably practicable. ELITE
agrees to provide LANNETT with copies of all: (i) reasonably requested
documentation in its possession relating to the manufacture of Product,
Specifications, compliance with quality assurance standards, raw material
vendors and manufacturing processes; and (ii) U.S. and international regulatory
approvals, regulatory inspections of the manufacturing process, facilities and
documentation, and other communications with Regulatory Authorities related to
the Product; however ELITE shall not be required to provide copies to LANNETT of
ELITE’s proprietary information and ELITE shall only be required to allow
LANNETT to inspect such proprietary information such as batch records at ELITE’s
site and under ELITE’s supervision. Notwithstanding the provision of this
Article 5.1, LANNETT shall have no obligation or be deemed to have an obligation
to inspect ELITE’s facilities.

 

5.2Regulatory Authority Inspections. ELITE shall permit any Regulatory Authority
to inspect the facility used to manufacture the Products and all associated
records to the full extent permitted by applicable Law (“Regulatory
Inspection”). ELITE shall notify LANNETT within forty-eight (48) hours of
becoming aware of any planned or actual Regulatory Inspection. ELITE agrees to
reasonably cooperate with the applicable Regulatory Authority in connection with
such audits. ELITE shall notify LANNETT prior to the commencement of any
meetings with, or inspection activity by, any Regulatory Authority, unless such
inspection activity is an unannounced inspection. Further, ELITE shall provide a
reasonable description to LANNETT of any such governmental inquiries,
notifications or inspections related to Products promptly (but in no event later
than five (5) calendar days) after such visit or inquiry. ELITE shall furnish to
LANNETT: (i) within five (5) calendar days after receipt, any report or
correspondence issued by the Regulatory Authority in connection with such visit
or inquiry, including but not limited to, any FDA Form 483, establishment
inspection report, or warning letter; and (ii) copies of any and all responses
or explanations to any Regulatory Authority relating to items set forth above
prior to the submission of such responses or explanations to any Regulatory
Authority by ELITE for comment, which comments shall be taken into consideration
by ELITE in good faith. ELITE shall also provide LANNETT with a copy of all
final responses.

 

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THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

ARTICLE 6 - RECORDS

 

6.1Records. ELITE and LANNETT shall maintain all records necessary to comply
with all applicable Laws in the Territory relating to the performance of their
respective obligations under this Agreement. ELITE shall also maintain, or cause
to be maintained (i) all manufacturing records, standard operating procedures,
validation records, equipment log books, batch records, laboratory notebooks and
all raw data relating to the manufacturing of the Products, and (ii) such other
records as LANNETT may reasonably require in order to ensure compliance by ELITE
with the terms of this Agreement. All such records shall be maintained for such
period as may be required pursuant to the applicable Laws.

 

6.2Inspection of ELITE Books and Records. During the Term of this Agreement, and
thereafter for the greater of (i) the period stipulated by the Laws in the
Territory, and (ii) two (2) years from the expiration of the last Products
manufactured, ELITE agrees that LANNETT, at reasonable times upon reasonable
prior notice, may inspect the research and development books and records of
ELITE pertaining to ELITE’s obligations under this Agreement for purposes of
ensuring compliance with the terms of this Agreement.

 

6.3Inspection of LANNETT Books and Records. LANNETT shall keep, and shall
require its Affiliates to maintain, in connection with the handling, sale, and
distribution of the Product hereunder, books and records necessary to allow the
accurate calculation, consistent with GAAP, of the amounts due to ELITE, the
reporting obligations contemplated herein, and compliance with the terms of this
Agreement, and LANNETT shall maintain such books and records for a period of at
least two (2) years after the end of the calendar year in which they were
generated, or for such longer period as may be required by Applicable Law. Upon
at least thirty (30) days prior written notice, ELITE, at its expense, shall
have the right to have an independent public accounting or auditing firm,
reasonably acceptable to LANNETT, obtain access to such books and records as may
be reasonably necessary to determine or verify the amount of payments due under
this Agreement and compliance with the obligations hereof; provided, however,
that this right may not be exercised more than once in any calendar year. Such
accounting firm shall conduct such examination, and LANNETT shall make such
books and records available, during normal business hours at the facility(ies)
where such books and records are customarily maintained. Each such examination
shall be limited to pertinent books and records for any year ending not more
than twenty-four (24) months prior to the date of request, except that ELITE
shall not be permitted to audit the same period of time more than once. The
independent accounting firm will prepare and provide to each Party a written
report stating whether the reports submitted and amounts paid are correct or
incorrect and the amounts of any discrepancies. The conclusions of such
accounting firm shall be final and binding on the Parties absent demonstrable
error. If there was an underpayment by LANNETT hereunder, LANNETT shall promptly
(but in no event later than thirty (30) days after its receipt of the
independent auditor’s report so concluding) make payment to ELITE of any
shortfall by wire transfer in U.S. dollars, plus interest on the amount of such
shortfall calculated at the lesser of (a) five percent (5%) per annum, or (b)
the maximum rate permitted by law from the date such payment should have been
made to the date the shortfall is paid. If there was an overpayment by LANNETT
hereunder, ELITE shall promptly (but in no event later than thirty (30) days
after ELITE’s receipt of the independent auditor’s report so concluding) refund
to LANNETT the excess amount by wire transfer in U.S. dollars. All costs of the
audit, including the expenses of the independent accounting firm, shall be borne
by ELITE unless the underpayment by LANNETT results in a cumulative discrepancy
during any calendar year in excess of the greater of (i) ten percent (10%) of
the total amount reported to ELITE for that period or (ii) one hundred thousand
dollars ($100,000.00), in which case all reasonable and documented costs of the
audit, including the expenses of the independent accounting firm, shall be borne
and promptly paid by LANNETT. ELITE shall ensure that the independent public
accountant or auditor maintains the confidentiality of LANNETT’s Confidential
Information on terms no less restrictive than those set forth in this Agreement.

 

6.4Annual Reports. ELITE shall provide Lannett in a timely manner copies of
ELITE's annual reports to the FDA or any other Regulatory Authority with respect
to the Products.

 

12

 

 

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

  

ARTICLE 7 - RECALLS

 

7.1Notification of Recall. If any Regulatory Authority or other governmental
agency issues or requests a Recall or takes similar action in connection with a
Product in the Territory, or if LANNETT reasonably determines after consultation
with ELITE that an event has occurred which may result in the need for a Recall,
the Party notified of or wishing to implement such Recall shall, within
forty-eight (48) hours (regardless of weekday, weekend or holiday), advise the
other Party thereof by telephone or facsimile, after which the Parties shall
promptly discuss and work together to effect an appropriate course of action.
ELITE shall be responsible for notifying the Regulatory Authorities in the
Territory of any voluntary Recall and implementing any Recalls. LANNETT shall
fully cooperate with ELITE to fully implement any Recall. ELITE agrees to
forward to LANNETT a copy of any field communication associated with the
Products that it plans to issue before such communication is issued or sent to
any governmental agency. ELITE will maintain complete and accurate records of
any activities conducted with respect to any Recall for such period as may be
required by Law. Following any Recall, ELITE will review all of its procedures
as impacted by the identified root cause in the associated investigation, and
will revise such procedures, as necessary, to correct the cause of such Recall
subject to the change control requirements set forth in the Quality Agreement.
ELITE will provide LANNETT with such information regarding such review and
revisions as LANNETT may request and ELITE shall provide LANNETT the right to
approve, reject or request modifications to the proposed changes.

 

7.2Recall Expenses. If a Recall results from the acts or omissions of one Party,
then such Party shall bear the full expenses of both Parties incurred in the
Recall. For clarity, if a Recall is due to a defect during the manufacture,
processing, packaging or labelling of the Product prior to delivery, the cost
and expense shall be borne solely by ELITE. If a Recall is partially caused by
the actions or omissions of both Parties, then each Party shall be responsible
for its proportionate share of the Recall expenses based on its proportionate
share of causation. Recall expenses include the expenses of notification,
shipping, return, replacement (if possible), customer fees and penalties, and
destruction of recalled Products (including Products which cannot be shipped due
to the condition causing the Recall). The Parties shall discuss in good faith
and agree on the scope and costs of Recall, if practicable, prior to enforcement
of the Recall.

 

7.3Notice of Failure to Meet Specifications. If ELITE discovers that there is a
potential that any batch or lot of the Products already delivered to LANNETT may
fail to conform to the Specifications, then ELITE shall notify LANNETT within
twenty-four (24) hours (or one (1) business day), of such determination of
failure to meet the Specifications and of the nature thereof in detail,
including, but not limited to, supplying LANNETT with all investigatory reports,
data and communications, out-of-specification reports and data and the results
of all outside laboratory testing and conclusions, if any. ELITE shall
investigate all such failures promptly, and at its sole expense, cooperate with
LANNETT in determining the cause for the failure and a corrective action to
prevent future failures.

 

13

 

 

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THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

ARTICLE 8 - TERM & TERMINATION

 

8.1Term. This Agreement shall commence upon the Effective Date, and, unless
terminated earlier in accordance with the provisions hereof, shall continue for
a period of three (3) years from the Effective Date (“Initial Term”). Unless
earlier terminated pursuant to this Agreement, the Initial Term may be extended
for successive one (1) year periods (“Renewal Term”) upon mutual agreement of
the Parties in writing. The Initial Term and all Renewal Term (if any) are
collectively referred to as the “Term.”

 

8.2Termination. If any one or more of the following events of default shall
occur, then this Agreement may be terminated as set forth herein:

 

(a)if a Party files a petition in bankruptcy or is adjudged as bankrupt, or a
petition in bankruptcy is filed against it and is not dismissed within sixty
(60) days, or it becomes insolvent, takes advantage of legislation for creditor
relief, has a receiver or receiver-manager appointed in relation to its assets,
or discontinues its business, then the other Party may terminate this Agreement
upon delivering written notice of termination;

 

(b)if a Party hereto violates or fails to perform any of its material
undertakings, agreements, covenants or obligations under this Agreement
(excluding matters otherwise specifically addressed with a termination right
elsewhere in this Agreement) and the failure is not remedied within thirty (30)
days after written notice from the non-defaulting Party, then the non-defaulting
Party may terminate this Agreement upon delivering written notice of termination
to the breaching Party; provided that if the breaching Party is diligently
pursuing in good faith the remedy of the breach at the expiration of such thirty
(30) day cure period, then such thirty (30) day cure period may be extended as
reasonably required to effect the cure if agreed to by the non-defaulting Party;

 

(c)if a Party hereto willfully or fraudulently misrepresents any fact,
information or report disclosed pursuant to this Agreement and such
misrepresentation is not cured or remedied within thirty (30) days after the
receipt of written notice thereof by the non-defaulting Party, then the other
Party may terminate this Agreement upon delivering written notice of
termination;

 

(d)if a court of competent jurisdiction makes a final determination that the
marketing and sale of a Product in the Territory infringes the patent or other
Intellectual Property Rights in the Territory of a third party and enjoins the
marketing and sale of the Product in the Territory, and if all rights to appeal
have been exhausted or expired, then LANNETT may, upon delivering written notice
to ELITE, terminate this Agreement with respect to such Product;

 

14

 

 

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THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

(e)by ELITE or LANNETT, on a Product by Product basis, if any time after the
first twelve (12) months from the first commercial sale, the average License Fee
paid by Lannett is less than three hundred thousand dollars (US$300,000) for a
six (6) month sales period for that Product; and

 

(f)Lannett will also have the right to suspend further performance under this
Agreement and/or terminate this Agreement in its entirety, without liability
except for unpaid previously delivered Products, if: (i) ELITE loses any
approval(s) from the FDA required to perform its obligations under this
Agreement; (ii) ELITE or its principals are involved in felonious or fraudulent
activities related to Elite’s business; or (iii) ELITE is unable to successfully
address material deficiencies identified by the FDA that prevent Elite from
manufacturing Product as a result of an inspection of ELITE’S facility within
sixty (60) days after ELITE’S receipt of a deficiency notice from the FDA; or
(iv) more than three (3) late shipments of the Products occur during any
12-month period during the Term. In any such event, LANNETT may terminate this
Agreement immediately by written notice to ELITE. For purposes of this Section,
a late shipment shall mean failure by ELITE to deliver to LANNETT ninety (90)
percent (90%) of the Products ordered by LANNETT for delivery within twenty (20)
days of the date specified for such delivery in the applicable Purchase Order.

 

8.3Other Termination Rights. In addition to Article 8.2, (i) either Party may
terminate this Agreement pursuant to Articles 14.3 (Assignment without Consent)
and 14.5 (Force Majeure), and (ii) LANNETT may terminate this Agreement pursuant
to Article 4.4 (Failure to Supply) and Article 9.2(c) (Debarred), and (iii)
ELITE may terminate this Agreement pursuant to Article 9.3(c) (Debarred).
LANNETT may terminate this Agreement for any reason upon providing ELITE with
six (6) months written notice.

 

8.4Effect of Termination. Upon termination or expiration of this Agreement, the
provisions of this Agreement shall continue to apply with respect to the
Parties’ respective rights and obligations in relation to any Purchase Order
made prior to such termination, including without limitation ELITE’s obligation
to manufacture, release and deliver Products to LANNETT, and LANNETT’s
obligation to make payment for such Products. If this Agreement is terminated
while LANNETT is still in possession of Products (“Remaining Products”), ELITE
hereby grants LANNETT and its Affiliates a license to promote, market,
distribute and sell the Remaining Products in the Territory, subject to the
License Fees in Article 3.3.

 

8.5Survival. The expiration or earlier termination of this Agreement shall not
relieve either Party hereto from any obligations which accrued prior to such
expiration or earlier termination, and shall not destroy or diminish the binding
force and effect of any of the terms and conditions of this Agreement that
expressly or by implication come into or continue in effect on or after
termination or expiration, including ARTICLE 1 - , ARTICLE 5 - , ARTICLE 6 - ,
ARTICLE 7 - , Section 8.4, ARTICLE 9 - , ARTICLE 11 - , ARTICLE 12 - , Sections
14.6, and 14.7. Further, the provisions from the Original Agreement that were
deemed to survive the termination or expiration of that Agreement shall further
survive.

 

15

 

 

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THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

ARTICLE 9 - REPRESENTATIONS & WARRANTIES

 

9.1Representations and Warranties. Each Party represents and warrants to the
other Party as follows, which representations and warranties shall be true as at
the date hereof and throughout the Term of this Agreement:

 

(a)it has full corporate power and authority and has taken all corporate action
necessary to enter into and perform this Agreement; and

 

(b)this Agreement is its legal, valid and binding obligation, enforceable in
accordance with the terms and conditions hereof.

 

9.2ELITE General and Supply Warranties. ELITE represents and warrants to LANNETT
as follows:

 

(a)No Other Agreements. No contracts, commitments or agreements of any nature
exist, and none will be entered into during the Term of this Agreement, that
impair or inhibit the ability of ELITE to perform its obligations hereunder.

 

(b)No Lawsuits. As of the date hereof there have not been any Claims, lawsuits,
arbitrations, legal or administrative or regulatory proceedings, charges, or
complaints or investigations, by any third party or government authority
threatened, commenced, pending or proceeding against ELITE, and ELITE has not
received any notice thereof, which could prevent ELITE from complying with its
material obligations under this Agreement.

 

(c)Debarred. Neither ELITE nor any of its officers, directors, or employees or
consultants performing services under this Agreement has been or is: (1) an
individual who has been debarred by the FDA pursuant to 21 U.S.C. § 335a(a) or
(b) (“Debarred Individual”) from providing services in any capacity to a person
that has an approved or pending drug product application with FDA, or an
employer, employee, or partner of such a Debarred Individual; or (2) a
corporation, partnership or association that has been debarred by FDA pursuant
to 21 U.S.C. § 335a(a) or (b) (“Debarred Entity”) from submitting or assisting
in the submission of an ANDA, or an employee, partner, shareholder, member,
subsidiary, or affiliate of a Debarred Entity; or (3) an employer, employee or
partner of an individual convicted within the last five years for crimes
described in subsections (a) or (b) of Section 306 of the FDCA. If and when
ELITE becomes aware of any fact that makes or gives rise to make this
representation and warranty untrue, ELITE shall immediately notify LANNETT in
writing and any such breach may result in immediate termination of this
Agreement by LANNETT.

 

(d)Non-Infringement.

 

(i)ELITE’s performance of its obligations hereunder to the best of ELITE’s
knowledge does not and will not infringe any intellectual property rights of a
third party.

 

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THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

(ii)To the best of ELITE’s knowledge no patents, patent applications if issued,
or any other proprietary rights of any third party would be infringed by the
manufacture, use or sale of the Product and ELITE shall indemnify, defend and
hold harmless LANNETT and its Affiliates against any and all such infringement
claims, demands, actions, losses, damages, fines, penalties, costs and expenses
(including reasonable attorneys’ fees). The indemnification obligation of ELITE
shall include Third Party patents issued after the Effective Date.

 

(e)Facility. The Facility is in compliance with all Laws, including without
limitation GMP, and that there are no, nor have been any, citations or adverse
conditions of a material nature noted in any inspection of the site which would
cause the Product to be misbranded or adulterated. It has and shall maintain
sufficient knowledge and experience and adequate production facility(s),
equipment and processes to produce the Product and perform its obligations under
this Agreement in compliance with all Laws.

 

(f)Products Supply. ELITE warrants, represents and covenants to LANNETT that all
Products delivered to LANNETT hereunder shall:

 

(i)comply with the Specifications;

 

(ii)comply with the applicable Purchase Order;

 

(iii)be manufactured, tested, packaged, labeled, stored, handled and delivered
by ELITE in accordance with (i) the terms of this Agreement, including the
Specifications, and the Quality Agreement, (ii) the requirements of the
Marketing Authorization, (iii) all applicable GMPs and Laws in the Territory,
including regulations set forth by the DEA, (iv) all of ELITE’S quality control
procedures and associated test methods for the Products;

 

(iv)be manufactured at the Facility approved by the Regulatory Authorities in
the Territory;

 

(v)not be adulterated or misbranded under any applicable Laws in the Territory;

 

(vi)have at least eighty-five percent (85%) of the Product’s shelf-life
remaining at the time of delivery; and

 

(vii)be free of all liens, security interests, and other claims of any nature
and free from defects in material, manufacturing and workmanship for the
shelf-life of the Products.

 

(g)be manufactured, supplied, packaged, labeled and delivered in compliance with
all serialization and aggregation requirements set forth in the Drug Supply
Chain Security Act (DSCSA) Marketing Authorizations. The serialization
requirements include, but are not limited to, the addition of Product
identifiers imprinted on each sellable unit, on each homogenous case and on each
pallet intended to be introduced in the Territory. Unique Product identifiers
will include a national drug code, serial identifier (proved by LANNETT), lot
number and expiration date. Serial numbers must be aggregated from item to case
and case to pallet. ELITE warrants, represents and covenants to LANNETT that (i)
all Marketing Authorizations have been obtained as necessary to permit LANNETT
to manufacture, use, store, import, transport and sell the Product in the
Territory pursuant to the terms of this Agreement and (ii) ELITE shall maintain
all necessary Marketing Authorizations in good standing to permit LANNETT to
manufacture, use, store, import, transport and sell the Product in the Territory
pursuant to the terms of this Agreement.

 

17

 

 

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THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

(h)It is and shall at all times relevant to this Agreement be in full compliance
with all applicable Laws relating or impacting in the performance of ELITE’s
duties and obligations under this Agreement, including but not limited to, those
rules, regulations, and/or guidance promulgated or issued by the FDA, the
Centers for Medicare & Medicaid Services, the U.S. Department of Health and
Human Services Office of Inspector General the U.S. Drug Enforcement Agency, the
U.S. Department of Justice, as well as any applicable environmental requirements
and all serialization and aggregation requirements set forth in the Drug Supply
Chain Security Act.

 

(i)Subject to DEA quotas, it has access to sufficient supplies of raw materials,
components and other required resources to perform the services required under
this Agreement, and shall exercise commercially reasonable and diligent efforts
to maintain access to sufficient supplies without interruption during the Term.

 

9.3LANNETT General Warranties. LANNETT represents and warrants to ELITE that:

 

(a)No Other Agreements. No contracts, commitments or agreements of any nature
exist, and LANNETT covenants that none will be entered into during the Term of
this Agreement that impair or inhibit the ability of LANNETT to perform its
obligations hereunder.

 

(b)No Lawsuits. As of the date hereof there have not been any Claims, lawsuits,
arbitrations, legal or administrative or regulatory proceedings, charges, or
complaints or investigations by any third party or government authority
threatened, commenced, pending or proceeding against LANNETT, and LANNETT has
not received any notice thereof, which could prevent LANNETT from complying with
its material obligations under this Agreement.

 

(c)Debarred. Neither LANNETT nor any of its officers, directors, or employees or
consultants performing services under this Agreement has been or is: (1) a
Debarred Individual or an employer, employee, or partner of such a Debarred
Individual; or (2) a Debarred Entity, or an employee, partner, shareholder,
member, subsidiary, or affiliate of a Debarred Entity; or (3) an employer,
employee or partner of an individual convicted within the last five years for
crimes described in subsections (a) or (b) of Section 306 of the FDCA. If and
when LANNETT becomes aware of any fact that makes or gives rise to make this
representation and warranty untrue, LANNETT shall immediately notify ELITE in
writing and any such breach may result in immediate termination of this
Agreement by ELITE.

 

18

 

 

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THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

(d)It is and shall at all times relevant to this Agreement be in full compliance
with all applicable Laws relating or impacting in the performance of LANNETT’s
duties and obligations under this Agreement, including, to the extent
applicable, but not limited to, those rules, regulations, and/or guidance
promulgated or issued by the FDA, the Centers for Medicare & Medicaid Services,
the U.S. Department of Health and Human Services Office of Inspector General the
U.S. Drug Enforcement Agency, the U.S. Department of Justice, as well as any
applicable environmental requirements and all applicable requirements set forth
in the Drug Supply Chain Security Act.

 

9.4Disclaimer. EXCEPT FOR THE WARRANTIES AND REPRESENTATIONS PROVIDED OR
REFERENCED IN THIS AGREEMENT, THE PARTIES MAKE NO OTHER WARRANTIES OR
REPRESENTATIONS TO EACH OTHER, EXPRESS OR IMPLIED, INCLUDING THOSE WITH RESPECT
TO THE PRODUCTS, WHETHER STATUTORY OR OTHERWISE, AND EACH PARTY SPECIFICALLY
DISCLAIMS ALL OTHER WARRANTIES, INCLUDING ANY IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

 

ARTICLE 10 - COVENANTS

 

10.1Compliance. Each Party shall perform its obligations under this Agreement in
strict compliance with all applicable GMPs and Laws in the Territory, and all
applicable licenses, governmental permits or applications in the Territory.

 

10.2Permits and Licenses. Each Party shall throughout the Term of this Agreement
obtain and maintain any and all licenses, permits, orders, applications and
consents (including facility licenses and permits) required by the Regulatory
Authorities in the Territory, and all applicable Laws, regulations and GMPs
necessary or required to perform its obligations under this Agreement.

 

ARTICLE 11 - INDEMNIFICATION & INSURANCE

 

11.1Indemnification of ELITE. LANNETT shall defend, indemnify and hold harmless
ELITE, its Affiliates and their respective officers, directors, employees,
agents and representatives from and against all Losses from any Third-Party
Claim directly resulting from:

 

(a)any breach of any obligations, actions, or representations made by LANNETT
under this Agreement; and

 

(b)any negligent, grossly negligent or intentionally wrongful act or omission of
LANNETT or of any person acting on LANNETT’s behalf, with authorization, when
the wrongful act or omission occurred in performance of LANNETT’s obligations
under this Agreement;

 

provided, however, that the foregoing indemnification obligations shall not
apply to the extent such Losses are caused by an act or omission for which ELITE
is contributorily negligent and/or otherwise required to indemnify LANNETT under
Article 11.2.

 

19

 

 

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

11.2Indemnification of LANNETT. ELITE shall defend, indemnify and hold harmless
LANNETT, its Affiliates and their respective officers, directors, employees,
agents and representatives from and against all Losses from any Third-Party
Claim directly resulting from:

 

(a)any breach of any obligations, actions, or representations made by ELITE
under this Agreement;

 

(b)any infringement or claim of infringement of any patent, trademark or other
intellectual property rights based on the manufacture and release of the Product
furnished under the provisions of this Agreement;

 

(c)personal injury (including death) or property damage relating to or arising
out of any use, distribution or sale of the Products by LANNETT or its
Affiliates to the extent that such Loss was the result of the Product not being
manufactured to meet the Analytical Specifications;

 

(d)any negligent, grossly negligent or intentionally wrongful act or omission of
ELITE or of any person acting on ELITE’s behalf, with authorization, when the
wrongful act or omission occurred in performance of ELITE’ obligations under
this Agreement;

 

(e)the condition of any Products sold, supplied or delivered to LANNETT under
this Agreement, including any defect in material, workmanship, design,
manufacturing or formulary;

 

(f)any warnings and instructions, or lack thereof, for any Product;

 

(g)the possession, distribution, sale and/or use of, or by reason of the seizure
of, any Product; and

 

(h)any actual or asserted violation(s) of the FDCA or any applicable Law by
virtue of which any Product sold, supplied or delivered to Lannett under this
Agreement is alleged or determined to be adulterated, misbranded, mislabeled or
otherwise not in full compliance with, or in contravention of, any applicable
Law.

 

provided, however, that the foregoing indemnification obligations shall not
apply to the extent such Losses are caused by an act or omission for which
LANNETT is contributorily negligence or is required to indemnify ELITE under
Article 11.1. ELITE shall also indemnify LANNETT for any damages arising from
any interruption in supply of the Products to LANNETT occasioned by ELITE’s
commitments, contractual or otherwise, with a Third Party subject to Article
4.4.

 

11.3Indemnification Procedure. Any Party entitled to indemnification hereunder
(the “Indemnitee”) shall notify the indemnifying Party (the “Indemnitor”)
promptly of any claim threatened or commenced against the Indemnitee. The
Indemnitor shall assume control and direct the defense, investigation and
handling of the claim for and on behalf of the Indemnitee, provided, however
that the Indemnitor shall not settle or consent to judgment without the
Indemnitee’s approval, which approval shall not to be unreasonably withheld. The
Indemnitee shall cooperate with the Indemnitor, and may participate, at the
Indemnitee’s expense, in the defense of such claim. If the Indemnitor fails to
assume control of the defense of any claim, or, having elected to assume
control, thereafter fails to diligently defend the claim, the Indemnitee shall,
without limitation to the Indemnitor’s obligations hereunder, be entitled to
contest, settle or pay the amount of the claim, and the Indemnitor shall be
bound by the results obtained by the Indemnitee with respect to the claim.

 

20

 

 

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

11.4Insurance. Each Party hereby represents to the other that it has, and during
the Initial Term and any Renewal Term and for three (3) years after termination
or expiration of this Agreement, will maintain, products liability insurance
coverage of not less than US five million dollars ($5,000,000.00) per occurrence
and five million dollars ($5,000,000) in the aggregate. For the sake of clarity,
should ELITE increase its product liability insurance coverage beyond this
amount, the new levels shall automatically apply to this Agreement. Upon the
request of the other Party hereto, the insured Party shall furnish the other
Party with a certificate of insurance evidencing such coverage and each Party
shall endeavor to provide notice to the other Party if there is a material
change or cancellation of the policy. Each Party shall list the other Party as
an additional insured on such Party's applicable insurance coverage. Each Party
shall provide the certificate of insurance within ten (10) days of its receipt
of a request for proof of insurance.

 

11.5Survival. The obligations set forth in this ARTICLE 11 - shall survive the
termination of this Agreement and remain in full force and effect for an
indefinite period after termination in relation to any claim based on events
which occur during the term hereof.

 

ARTICLE 12 - CONFIDENTIALITY

 

12.1Confidentiality. During the Term of this Agreement and for five (5) years
thereafter, each Party shall maintain in strict confidence the Confidential
Information (as defined below) of the other Party. Each Party shall not use the
Confidential Information of the other Party for any purpose other than the
purposes expressly permitted by this Agreement, and shall not disclose such
Confidential Information to any third party (including in connection with any
publications, presentations or other disclosures) except to its employees,
agents or advisors (“Representatives”) who have a need to know such Confidential
Information to perform such Party’s obligations under this Agreement. Each Party
shall ensure that any Representative to whom it discloses the other Party’s
Confidential Information is informed of the confidential nature of and duty not
to disclose the information, and is obligated under written obligation to
maintain the confidentiality thereof on terms at least as restrictive as those
set forth herein. Each Party shall be responsible for any breach of this
Agreement by its Representatives, which shall be considered a breach by such
Party. Under no circumstances shall the receiving Party use the disclosing
Party’s Confidential Information for its own commercial advantage to the
detriment of the disclosing Party. Each Party may disclose such of the
Confidential Information of the other Party as may be required by the order of a
court of competent jurisdiction or by any governmental authority having
jurisdiction, provided that prior to any such disclosure the Party required to
disclose shall, to the extent permitted by Law, notify the other Party prior to
disclosing any Confidential Information and provide such other Party with a
reasonable opportunity to contest or limit the scope of the required disclosure
and obtain any protective orders as may be appropriate. In the event the
disclosure is nonetheless compelled, the Party making the disclosure shall only
disclose the information to the extent required to comply with the Law. Upon
termination or expiration of this Agreement, or upon request, a Party shall
destroy or return all Confidential Information of the other Party and certify in
writing that such return (or destruction) has been completed; provided, however,
that each Party shall be entitled to retain one archival copy of such
Confidential Information solely for purposes of monitoring such Party’s
compliance with its obligations under this ARTICLE 12 - .

 

21

 

 

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

12.2Definition. “Confidential Information” means all proprietary technical
information, marketing, business and financial information, scientific data,
information, whether or not labeled “Confidential”, and all tangible and
intangible embodiments and oral disclosures thereof of any kind whatsoever, and
all other materials which a disclosing Party treats confidentially that relates
to a Product or the business of a Party and is disclosed or developed under or
in connection with this Agreement. Confidential Information shall not include
any information which the receiving Party can show by competent proof:

 

(a)was known to or in the possession of the receiving Party prior to the date of
its actual receipt from the disclosing Party;

 

(b)is readily available to the public other than through the fault of the
receiving Party;

 

(c)was disclosed by a third party not under an obligation of confidentiality to
the disclosing Party; or

 

(d)is subsequently independently developed by the receiving Party without use of
the Confidential Information as demonstrated by competent written records.

 

12.3Injunctive Relief. The Parties acknowledge that any breach of this ARTICLE
12 - may constitute irreparable harm, and that the non-breaching Party shall be
entitled to seek specific performance or injunctive relief to enforce this
ARTICLE 12 - in addition to whatever remedies such Party may otherwise be
entitled to at law or in equity, without the necessity of posting bond or any
other security.

 

12.4Separate Confidentiality Agreement. LANNETT and ELITE have entered into a
separate Mutual Confidential Disclosure Agreement dated January 7, 2019
(“Confidentiality Agreement”). Such Confidentiality Agreement will be and remain
in full force and effect as provided therein. In the event of any conflict
between the terms of this Agreement and the terms of any such Confidentiality
Agreement, the terms of such Confidentiality Agreement will control.

 

12.5No Publicity. Except as required by law, neither Party shall originate any
publicity, news release or other public announcements, written or oral, whether
to the public press, to stockholders, or otherwise, relating to this Agreement,
any amendment hereto, performance hereunder or the existence of an arrangement
between the Parties without the prior written approval of the other Party, which
approval shall not be unreasonably withheld. Nothing in the provision shall be
deemed to prevent a Party from making such disclosures or announcements that are
legally required of such Party; provided that in any event the non-disclosing
Party shall have the right to review any such disclosure and revise such
disclosure to the extent it relates to the use of the non-disclosing Party’s
name or Confidential Information. No Party shall, without the prior written
consent of the affected Party, use in advertising, publicity, or otherwise, the
name, trademark, logo, symbol, or other image of the affected Party without the
other Party’s prior written consent.

 

ARTICLE 13 - REGULATORY MATTERS

 

13.1Regulatory Responsibilities. ELITE will, at its own cost and expense,
continue to own and maintain the applicable Regulatory Approvals necessary to
market the Products in the Territory. ELITE shall be responsible for all
regulatory and safety reporting requirements associated with ownership of the
Regulatory Approval, including, without limitation, adverse event reports,
annual reports mandated by the applicable Laws in the Territory. Additionally,
ELITE shall be responsible for complying with applicable Laws to appropriately
categorize and report changes to the FDA, including without limitation,
amendments, supplements, and annual reports. All communications by ELITE with
the FDA relating to the Products as marketed in the Territory shall be promptly
provided in writing to LANNETT, and ELITE shall promptly provide to LANNETT
copies of all documents sent to or received from the FDA regarding the Products.

 

22

 

 

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

13.2Labeling. ELITE shall be responsible for the creation, content, and printing
of the labeling for the Products. ELITE shall send LANNETT all labeling
materials (e.g., package insert, container label, carton label, medication
guide, patient labeling, etc.) in final format for the Products for LANNETT’S
review and final written approval. ELITE is responsible for ensuring the most
current labeling content, consistent with the reference listed drug (“RLD”)
labeling content and all requested FDA updates, is used on Products supplied to
LANNETT. ELITE is responsible for notifying LANNETT within three (3) business
days of any FDA communication requesting changes to labeling materials,
including Safety Change Notifications and changes requested per section
505(o)(4) of the FDCA. ELITE will provide LANNETT with a copy of all FDA
communications related to labeling. All changes to labeling materials for the
Products require LANNETT’S review and final written approval. Labeling materials
that have not been subject to LANNETT’S review and written approval are
prohibited to be used on Products supplied to LANNETT. ELITE is responsible for
submitting the content of labeling in Structured Product Labeling (“SPL”) format
to the FDA for LANNETT’S NDC numbers within fourteen (14) days of ANDA approval
to ensure proper drug listing. ELITE is also responsible for submitting updated
SPL files within fourteen (14) days when labeling changes are made and approved
and as required by applicable Laws.

 

ARTICLE 14 - MISCELLANEOUS

 

14.1Notices. Any notice or other document required or permitted to be given
pursuant to this Agreement shall be in writing and shall be delivered by
personally by hand; by courier; by prepaid certified mail, return receipt
requested; or by email, in each case addressed to the Party to whom it is to be
given at the address set forth below or at such other address as the Party to
whom such notice is to be given shall have last notified the other Party in
accordance with the provisions of this section:

  

In the case of LANNETT at:                          Lannett Company, Inc., USA
9000 State Road
Philadelphia, PA 19136
Attention: Legal Department

Email: [**]

 

And in the case of ELITE at:                          Elite Pharmaceuticals,
Inc.
165 Ludlow Avenue
Northvale, NJ 07647
Attention: CEO

Email: [**]

 

Any such notice or other document shall:

 

(i)if delivered by hand, courier, or email be deemed to have been given and
received at the place of receipt on the date of delivery, provided that if
delivery is other than during business hours (9:00 a.m. to 5:00 p.m., local
time) on a Business Day in the place of receipt, such notice shall be deemed to
have been given and received at the place of receipt on the first Business Day
thereafter; and

 

(ii)if mailed, be deemed to have been given and received at the place of receipt
on the earlier of the date of actual receipt and three (3) Business Days after
the date of mailing. In the event of postal disruption, such notices or
documents must be delivered by means other than by mail.

 

23

 

 

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

14.2Relationship of the Parties. The relationship of the Parties is that of
independent contractors. Nothing in this Agreement shall be deemed or construed
to constitute or create between the Parties hereto a partnership, joint venture,
agency, or other relationship other than as expressly set forth herein. This
Agreement does not constitute any one Party hereto as the agent or legal
representative of the other Party for any purpose whatsoever. Neither of the
Parties grants to the other any right or authority to assume or create any
obligation or responsibility, express or implied, on behalf of it or in its name
in any manner whatsoever, unless otherwise agreed to in writing by the other
Party.

 

14.3Inurement & Assignment. This Agreement shall be binding upon and inure to
the benefit of the Parties hereto and their respective successors and permitted
assigns. Except as otherwise expressly provided herein, neither Party may assign
or transfer it rights or obligations under this Agreement, in whole or in part,
without the prior written consent of the other Party. Notwithstanding the
foregoing, both LANNETT and ELITE shall be entitled to assign its rights and
performance of its obligations under this Agreement to any Affiliate or to the
acquirer of all or substantially all of the business or assets to which this
Agreement relates (whether by stock sale, asset sale, merger, consolidation or
otherwise), provided that the assigning Party remains fully responsible for the
performance of the obligations of its Affiliates under this Agreement. Any
assignment or transfer by a Party other than in accordance with the terms hereof
shall be void and shall entitle the other Party to terminate this Agreement.

 

14.4No Waiver; Remedies. No Party to this Agreement shall be deemed or taken to
have waived any provision of this Agreement unless such waiver is in writing,
and then such waiver shall be limited to the circumstances set forth in such
written waiver. No failure or delay on the part of a Party in exercising any
right, power or remedy shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
All remedies provided for hereunder shall be cumulative of and in addition to
any and all other remedies, at law or in equity, which any Party may have, and
the exercise of any one or more of such remedies shall not preclude the exercise
of any others.

 

14.5Force Majeure. If either Party is prevented from complying, either totally
or in part, with any of the terms or provisions of this Agreement by reason of
force majeure, including fire, flood, earthquake, storm, general strike,
lockout, riot, war, terrorism, rebellion, accident, acts of God and/or any other
cause or externally induced similar casualty beyond its reasonable control and
without the fault or negligence of either Party(a “Force Majeure Event”), then,
upon written notice by the Party liable to perform to the other Party, the
requirements of this Agreement or such of its provisions as may be affected, and
to the extent so affected, shall be suspended during the period of such
disability, provided that the Party asserting force majeure shall bear the
burden of establishing the existence of such Force Majeure Event by clear and
convincing evidence, and provided further that the Party prevented from
complying shall use its best efforts to remove such disability, and shall
continue performance with the utmost dispatch whenever such causes are removed,
and shall notify the other Party of the Force Majeure Event not more than five
(5) Business Days from the time of the event and state the nature of the Force
Majeure Event, its anticipated duration and any action being taken to avoid or
minimize its effect. The suspension of performance shall be of no greater scope
and no longer duration than is reasonably required. When such circumstances
arise, the Parties shall discuss what, if any, modification of the terms of this
Agreement may be required in order to arrive at an equitable solution.
Notwithstanding the foregoing, if a Force Majeure Event shall continue for a
period of longer than three (3) consecutive months or one hundred and twenty
(120) days in any twelve (12) month period, then the Party unaffected by such
event may terminate this Agreement immediately upon giving written notice of
termination to the other Party. Notwithstanding any provision contained herein,
any action taken by a Regulatory Authority as a result of a Party’s negligence
or willful misconduct shall not constitute a Force Majeure Event under this
Article 14.5.

 

24

 

 

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

14.6Dispute Resolution. The Parties recognize that disputes as to certain
matters may from time to time arise which relate to a Party's rights and/or
obligations under this Agreement. It is the objective of the Parties to
establish procedures to facilitate the resolution of such disputes in an
expedient manner by mutual cooperation and without resort to litigation. To
accomplish this objective, the Parties agree to follow the procedures set forth
in this Article 14.6 if and when such a dispute arises between the Parties
arises. Notwithstanding the provisions of this Article 14.6 however, nothing
herein contained shall preclude a Party from seeking equitable remedies in any
court of competent jurisdiction as set forth in Article 14.7 hereof. If any
controversy, dispute or claim arises between the Parties relating to the
interpretation, breach, performance, enforcement, termination or validity of
this Agreement and the Parties cannot resolve the dispute within thirty (30)
days of a written request by one Party to any other Party, the Parties agree to
hold a meeting, attended by each Parties authorized representatives , to attempt
in good faith to negotiate a resolution of the dispute prior to pursuing other
available remedies. If, within thirty (30) days after such written request, the
Parties have not succeeded in negotiating a resolution of the dispute, the Party
may seek any other remedies available to it in at law or in equity.

 

14.7Governing Law & Venue. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without giving effect to any
choice of law or conflict of law rules or provisions that would cause the
application of the laws of any jurisdiction other than the State of Delaware.
Each Party hereby irrevocably submits to the exclusive jurisdiction of any
federal or state court in Delaware for the purposes of any suit, action or other
proceeding arising out of this Agreement or any transaction contemplated hereby.
Each Party further agrees that service of any process, summons, notice or
document by certified or registered mail to such Party’s address set forth in
Article 14.1 or such other address or to the attention of such other person as
the recipient Party has specified by prior written notice to the sending Party
shall be effective service of process in any action, suit or proceeding in
Delaware with respect to any matters to which it has submitted to jurisdiction
as set forth above in the immediately preceding sentence. Each Party irrevocably
and unconditionally waives any objection to the laying of venue of any action,
suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in the federal or the state courts in Delaware and hereby
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in such court has
been brought in an inconvenient forum.

 

14.8Waiver of Trial by Jury. TO THE FULLEST EXTENT PERMITTED BY LAW, THE PARTIES
HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY PROCEEDING BASED
UPON, ARISING OUT OF, OR RELATED TO THIS AGREEMENT, INCLUDING ANY DISPUTE
ARISING OUT OF OR RELATING TO THE PERFORMANCE THEREOF, OR ANY OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY
COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS.

 

14.9Severability. If any provision in this Agreement is held to be invalid, void
or unenforceable, then the remainder of this Agreement, or the application of
such provision to the Parties or to the circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby and
shall be enforced to the fullest extent permitted by law. The Parties agree to
renegotiate any such invalid, void or unenforceable provision in good faith in
order to provide a reasonably acceptable alternative consistent with the basic
purposes of this Agreement.

 

25

 

 

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

14.10Entire Agreement. This Agreement (including the Schedules attached hereto,
the SDEA and the Quality Agreement) constitutes the entire agreement between the
Parties with respect to the subject matter hereof, and all prior or agreements,
whether written or oral, are superseded hereby. This Agreement may be amended
only in writing executed by the Parties.

 

14.11Sub-contracting. ELITE shall not sub-contract any of the work to be
performed under this Agreement without the prior written consent of LANNETT. No
such sub-contracting shall relieve ELITE of any of its obligations hereunder.

 

14.12Counterparts. This Agreement may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original and all of
which when taken together shall constitute this Agreement.

 

14.13Headings. The captions and headings contained herein are for convenience of
the Parties and in no way define, limit or describe the scope of this Agreement.

 

14.14Language. The language of this Agreement and all proceedings taken in
relation thereto shall be English.

 

14.15Currency. Unless otherwise specifically provided, all references to money
amounts are expressed in terms of United States Dollars (USD) and all payments
made pursuant to this Agreement shall be made in that currency.

 

14.16Section 365(n) of the Bankruptcy Code. All rights and licenses granted
under or pursuant to any Section of this Agreement are and shall otherwise be
deemed to be for purposes of Section 365(n) of Title 11, of the United States
Code (the “Bankruptcy Code”) licenses of rights to "intellectual property" as
defined in Section 101(35A) of the Bankruptcy Code. The Parties shall retain and
may fully exercise all of their respective rights and elections under the
Bankruptcy Code. Upon the bankruptcy of any Party, the non-bankrupt Party shall
use its best efforts to transfer its Product responsibilities to a third party,
unless the bankrupt Party elects to continue, and continues, to perform all of
its obligations under this Agreement.

 

14.17Construction of Agreement. The terms and provisions of this Agreement
represent the results of negotiations between the Parties and their
representatives, each of which has been represented by counsel of its own
choosing, and neither of which has acted under duress or compulsion, whether
legal, economic or otherwise. Accordingly, the terms and provisions of this
Agreement shall be interpreted and construed in accordance with their usual and
customary meanings, and each of the Parties hereto hereby waives the application
in connection with the interpretation and construction of this Agreement of any
rule of law to the effect that ambiguous or conflicting terms or provisions
contained in this Agreement shall be interpreted or construed against the Party
whose attorney prepared the executed draft or any earlier draft of this
Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

26

 

 

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THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED. 

 

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first written above.

 

ELITE PHARMACEUTICALS, INC.   LANNETT COMPANY, INC.       By: /s/ Nasrat Hakim  
By: /s/ John Kozlowski Name: Nasrat Hakim   Name: John Kozlowski Title: CEO  
Title: COSSO

 

ELITE LABORATORIES, INC.

 

By: /s/ Nasrat Hakim   Name: Nasrat Hakim   Title: CEO  

 

Schedule A: Products and Prices     Schedule B: Product Specifications    
Schedule C: Quarterly Report for Calculation of Net Profit     Schedule D:
Shipping Instructions

 

27

 

 

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THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

SCHEDULE A

 

Products and Prices

 

Product List

 

Generic Name   ANDA #   Reference Listed Drug Dantrolene Sodium   76686  
Dantrium®, Par Sterile Products, LLC

 

28

 

 

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THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

Transfer Prices ($/bottle)

 

Name   Strength   Full Batch Qty.   Bottle Size   Cost per bottle Dantrolene
Sodium   25 mg   [**] bottles   100 count   $[**] Dantrolene Sodium   50 mg  
[**] bottles   100 count   $[**] Dantrolene Sodium   100 mg         [**]   100
count   $[**]

 

The Transfer Price for the Product is the cost of goods sold and means the fully
burdened cost of manufacturing a Product, which consists of the direct and
indirect costs associated with acquiring the materials, including the
manufacturing, testing and analysis of the finished dosage of a Product, quality
control, quality assurance,  labeling, and packaging, labor (including
benefits), serialization, annual generic drug user fees (GDUFA), depreciation
and overhead, all determined in accordance with GAAP and is subject pricing
adjustments in Section 4.1(d).

 

29

 

 

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THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

Schedule B

 

Product Specifications

 

[**]

 

30

 

 

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THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

Schedule C

 

Quarterly Report for Calculation of NET Profit

 

Product Name:________________________________________________________

 

Quantity sold by SKU   XXXX units Gross Sales   $ Deductions:     Chargebacks  
  Rebates     ADministrative Fees     Billbacks     Returns     Shelf Stock
Adjustments     Other deductions     Cash Discounts     Medicaid     NET SALES  
$ Transfer Price     DIstribution FEES     Shipping COsts           NET PROFITS
    Profit share Payment to ELITe at  the applicable Licence fee percentage set
forth in Section 3.3    

 

31

 

 

EXPLANATORY NOTE: [**] INDICATES THE PORTION OF THIS EXHIBIT

THAT HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND

(II) WOULD BE COMPETITIVELY HARMFUL IN PUBLICLY DISCLOSED.

 

SCHEDULE D

 

SHIPPING INSTRUCTIONS

 

All shipments inbound to LANNETT must arrive intact and in a certain and dry
condition that is free from defects and damage.

 

All material must have 85% of its maximum shelf life remaining at the time of
delivery and in no case less than 15 months.

 

All truckloads of the Products should be in sealed trailers, with the seal
number noted on the delivery receipt.

 

All truckload and less than truckload shipments must be on 40”x48” 4-way heat
treated pallets that are shrink-wrapped and free of broken boards.

 

Finished goods materials should have a maximum height of 51” from the floor to
the top of the pallet.

 

Each shipment must be labelled with a minimum of the name of the material, the
manufacturer’s lot number, the gross, tare, and net weights, the LANNETT item
number for the material, and the LANNETT purchase order number.

 

All finished products must be packaged as agreed in the product specification
and case labels must be HDMA complaint.

 

A dock appointment must be scheduled for deliveries consisting of 5 or more
pallets and for all hazardous material. Receiving hours are 7am-3pm Eastern. For
Seymour, IN deliveries, please contact the representative at 812-523-5446 to
schedule all freight deliveries.

 

Please email invoices to the following email address:
AccountsPayable@Lannett.com

 

 

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