AMENDMENT

TO THE AUGUST 1, 2013 SECURED CONVERTIBLE NOTE

TO MIKAH PHARMA LLC

DUE AUGUST 1, 2016 IN THE PRINCIPAL AMOUNT OF $10,000,000

 

This Amendment, dated as of February 7, 2014 (the “Amendment”), by and between
Elite Pharmaceuticals, Inc., a corporation organized under the laws of the State
of Nevada, and its wholly-owned subsidiary, Elite Laboratories, Inc., a
corporation organized under the laws of the State of Delaware (collectively, the
“Company”), and Mikah Pharma LLC, a limited liability company organized under
the laws of the State of Delaware (“Holder” and along with the Company, the
“Parties”), to that certain August 1, 2013 Secured Convertible Note from the
Company to Holder due August 1, 2016 in the principal amount of $10,000,000 (the
“Note”);

 

WHEREAS the Company and Holder desire to amend the Note on the terms and subject
to the conditions contained herein; and

 

WHEREAS, pursuant to section 14(f) of the Note, the Note may be amended by the
Parties in a writing executed by both Parties;

 

NOW, THEREFORE in consideration of the mutual covenants and agreements contained
herein and in the Note, the sufficiency, adequacy and satisfaction of which are
hereby acknowledged, the Parties hereby agree as follows:

 

1.          All capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Note.

 

2.          Section one is amended as follows:

 

(a)          The following definition is added: “’Series I Preferred’ means
shares of the Company’s Series I Preferred Stock, $0.001 par value.”

 

(b)          The definition of “Conversion Price” is amended in its entirety and
now reads as follows:

“’Conversion Price’ means $0.07 if converted into shares of Common Stock and
$100,000.00 if converted into shares of Series I Preferred, subject to
adjustment from time to time pursuant to Section 10.”

 

(c)          The definition of “Conversion Shares” is amended in its entirety
and now reads as follows:

“’Conversion Shares’ means shares of Common Stock and Series I Preferred
issuable to holder upon Conversion.

 

(d)          The definition of “Excluded Stock” is amended to add the following
subsection (h) thereto: “(h) the issuance of any shares of Series I Preferred or
the issuance of any Common Stock upon the conversion of any shares of Series I
Preferred.”

 

 

 

 

(e)          The definition of “Issuable Maximum” is amended in its entirety and
now reads as follows: “Issuable Maximum” means for purposes of Section 6(b)(i) a
number of shares of Common Stock equal to 19.99% of the of the Company's
outstanding shares on the Original Issue Date.

 

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

 

3.          Section 3 is amended in its entirety and now reads as follows:

 

“3. Covenants.

 

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

 

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4.          Section 6 is amended in its entirety and now reads as follows:

 

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

 

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

 

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

 

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

 

5.          Section 8(b) is amended in its entirety and now read as follows:
“(b) Upon the occurrence of any Bankruptcy Event, all amounts due and owing
under this Note shall immediately become due and payable in full in cash and not
in Common Stock or Series I Preferred, without any further action by the Holder.

 

6.          Schedule 1 is amended in its entirety and now reads as set forth on
Schedule 1 attached hereto.

 

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7.          Except for the changes to the Note contained in this Amendment, All
other terms of the Note are unchanged and remain in full force and effect.

 

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IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed by
their duly authorized representatives as of the day and year first above
written.

 

ELITE PHARMACEUTICALS, INC.   ELITE LABORATORIES, INC.       By: s/ Carter Ward
  By: s/ Carter Ward   Carter Ward, Chief Financial Officer     Carter Ward,
Chief Financial Officer         MIKAH PHARMA LLC               By: s/ Nasrat
Hakim         Nasrat Hakim, Manager      

 

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Schedule 1

 

FORM OF CONVERSION NOTICE

 

(To be executed by the registered Holder

in order to convert a Convertible Note)

 

TO: ELITE PHARMACEUTICALS, INC.

  

Re:Secured Convertible Note due 2016 (this “Note”) issued by Elite
Pharmaceuticals, Inc. and Elite Laboratories, Inc. to Mikah Pharma LLC on or
about August 1, 2013 in the original principal amount of $10,000,000 as amended.

 

The undersigned hereby elects to convert the aggregate principal amount
indicated below of this Note into shares of common stock, par value $0.001 per
share (the “Common Stock”) and/or shares of Series I Preferred Stock, par value
$0.01 per share (the “Series I Preferred”), of Elite Pharmaceuticals, Inc., a
Nevada corporation (the “Corporation”), according to the conditions hereof, as
of the date written below.

 

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

 

 

 

 

ACKNOWLEDGEMENT

 

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

 

  ELITE PHARMACEUTICALS, INC.       By:     Name:     Title:  

  

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