Document:

Execution Copy: August 1, 2013

 

 

ASSET PURCHASE AGREEMENT

 

ASSET PURCHASE AGREEMENT
(“Agreement”), dated August 1, 2013 (the “Effective Date”), between Mikah Pharma LLC
a limited liability company organized under the laws of the State of Delaware (
“Seller”) and Elite Laboratories, Inc., a corporation incorporated under the laws of the State
of Delaware (“Buyer”). Buyer and Seller are each “Party” to this Agreement and together constitute
the “Parties”.

 

Background

 

Seller owns ANDAs that
it acquired from Actavis, Inc. that was operating under a Consent Decree, a copy of which was provided to Buyer, which may subject
the ANDAs (as defined below) to additional scrutiny before FDA permits the Products (as defined below) to be manufactured elsewhere.
Nevertheless, on the terms and conditions set forth in this Agreement and the Consent Decree, Buyer wishes to purchase from Seller
and Seller wishes to sell to Buyer, the ANDAs.

 

NOW, THEREFORE, in consideration
of the mutual covenants herein contained and for other good and valuable consideration the receipt and adequacy of which are hereby
acknowledged, the Parties hereby agree as follows:

  

Article
1

 

DEFINITIONS

 

Section
1.1                 
Definitions

 

All terms not defined
below are defined elsewhere in this Agreement.

 

“Affiliate”
means any Person that directly or indirectly Controls, is Controlled by or is under common Control with another Person. A Person
will be deemed to “Control” another Person if it has the power to direct or cause the direction of the other
Person, whether through ownership of securities, by contract or otherwise.

 

“Agency”
means any governmental regulatory authority or authorities in the United States responsible for granting approval(s), clearance(s),
qualification(s), license(s) or permit(s) for any aspect of the research, development, manufacture, marketing, distribution or
sale of a Product. The term “Agency” includes, but is not limited to, the FDA and the United States Drug Enforcement
Administration.

 

“ANDA(s)”
means Abbreviated New Drug Applications listed in Schedule 1 and all amendments thereto, that have to date been filed with
the FDA seeking authorization and approval to manufacture, package, ship and sell, as more fully defined in 21 C.F.R. Part 314,
the Products.

 

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

               

    	 	-1-	Confidential

    	 

    

  

“ANDA Technology
and Scientific Materials” means any technological, scientific, chemical or biological materials, trade secrets, know-how,
Intellectual Property, techniques, data, inventions, practices, methods and all other confidential and proprietary technical, research,
development and other applicable business information (whether patented, patentable or otherwise) related to the manufacture, validation,
packaging, release testing, stability and shelf life of the Product, including all Product formulations, in existence and in the
possession of Seller as of the Closing Date.

 

“Assumed Liabilities”
has the meaning set forth in Section 2.3.

 

“Bill of Sale”
means a bill of sale to be delivered by Seller to Buyer effective on the Closing Date, substantially in the form of Exhibit
A.

 

“Business
Day” means any day other than a Saturday, Sunday or other day on which banks in New York, New York are permitted or required
to close by law or regulation.

 

“Buyer”
has the meaning set forth in the preamble.

 

“Buyer Indemnified
Parties” has the meaning set forth in Section 8.2.

 

Calendar Quarter”
means the three month period ending on the last day of each of March, June, September and December.

 

“Closing”
and “Closing Date” have the meanings given such terms in Section 3.1.

 

“Development”
means all preclinical and clinical drug development activities, including test method development and stability testing, toxicology,
bioequivalency, formulation, process development, manufacturing scale-up, development-stage manufacturing, quality assurance/quality
control development, statistical analysis and report writing, conducting clinical trials for the purpose of obtaining any and all
approvals, licenses, registrations or authorizations from any Agency necessary for the manufacture, use, storage, import, export,
transport, promotion, marketing and sale of the Products, Product approval and registration, and regulatory affairs related to
the foregoing. “Develop” means to engage in Development.

 

“Effective
Date” has the meaning set forth in the preamble.

 

“Encumbrance”
means any mortgage, charge, lien, security interest, easement, right of way, pledge or encumbrance of any nature whatsoever.

 

“Excluded
Liabilities” has the meaning set forth in Section 2.3.

 

“FDA”
means the United States Food and Drug Administration.

 

“Governmental
Entity” means any court, administrative agency, department or commission or other governmental authority or instrumentality,
whether U.S. or non-U.S.

 

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

 

    	 	-2-	Confidential

    	 

    

  

“Governmental
Rule” means any law, judgment, order, decree, statute, ordinance, rule or regulation issued or promulgated by any Governmental
Entity or Agency.

 

“Intellectual
Property” has the meaning set forth in Section 4.7.

 

“Liabilities”
means any and all debts, liabilities and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured, or
determined or determinable, including those arising under any law, action or governmental order and those arising under any contract,
agreement, arrangement, commitment or undertaking, or otherwise.

 

“Losses”
means, collectively, any and all damages, losses, taxes, Liabilities, claims, judgments, penalties, costs and expenses (including
reasonable legal fees and expenses).

 

“Material
Adverse Effect” means an effect which is material and adverse to the Purchased Assets taken as a whole, but does not
include: (i) any adverse effect due to changes in conditions generally affecting (A) the healthcare industry or (B) the United
States economy as whole, (ii) any change or adverse effect caused by, or relating to, the announcement of this Agreement and the
transactions contemplated by this Agreement or (iii) any adverse effect due to legal or regulatory changes.

 

“Mutual Confidential
Disclosure Agreement” means the Mutual Confidential Disclosure Agreement entered into by the parties dated May 18, 2010.

 

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

 

“Product(s)”
means the pharmaceutical or products now or hereafter described in the ANDAs.

 

“Purchase
Note” has the meaning set forth in Section 2.1.

 

“Purchase
Price” has the meaning set forth in Section 2.1.

 

“Purchased
Assets” has the meaning set forth in Section 2.2.

 

“Security
Agreement” has the meaning set forth in Section 2.1.

 

“Territory”
means the United States and its territories, possessions, and commonwealths, including Puerto Rico.

 

“United States”
or “U.S.” or “U.S.A.” means the United States of America.

 

Section
1.2                 
Interpretation

 

When used in this Agreement
the words “include”, “includes” and “including” will be deemed to be followed by the words
“without limitation.” Any terms defined in the singular will have a comparable meaning when used in the plural, and
vice-versa.

 

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

  

    	 	-3-	Confidential

    	 

    

 

Section
1.3                 
Currency

 

All currency amounts
referred to in this Agreement are in United States Dollars, unless otherwise specified.

 

Article
2

 

SALE AND PURCHASE OF ASSETS

 

Section
2.1                 
Purchase and Sale

 

Upon the terms and
subject to the conditions of this Agreement, on the Closing Date, upon payment of the $10,000,000 purchase price (the “Purchase
Price”) in the form of a Senior Secured Convertible Promissory Note ( the “Purchase Note”), a copy
of the form of which is attached hereto as Exhibit B, payment and performance of which by Buyer is secured in accordance
with an ANDA Security Agreement in the form attached hereto as Exhibit C (the “Security Agreement”),
and by this reference incorporated herein, Seller will sell, assign, transfer, convey and deliver to Buyer, and Buyer will purchase,
acquire and accept, all right, title and interest, within the Territory, of Seller in, to and under the Purchased Assets.

 

Section
2.2                 
Purchased Assets

 

The term “Purchased
Assets” means the following properties, assets and rights of whatever kind and nature, tangible or intangible, of Seller
existing on the Closing Date that relate solely and exclusively to the ANDAs and any testing, data, studies, and formulations created
in connection therewith including but not limited to: (i) the ANDAs,
(ii) any correspondence with the FDA in Seller’s files with respect to the ANDAs, (iii) the right of reference to
the Drug Master Files, as set forth in the ANDAs; (iv) the ANDA Technology and Scientific Materials; (v) all rights to manufacture,
sell or otherwise exploit any products resulting therefrom including all rights to revenues generated therefrom; and (vi) a royalty
free limited license to use any ANDA Technology and Scientific Materials which is common to the Product and any other product of
Seller, but only for Buyer’s use in connection with the manufacture of any Product.

 

Section
2.3            Assumption
of Certain Liabilities and Obligations

 

From and after the Closing,
Buyer will assume, be responsible for and pay, perform and discharge when due only those Liabilities in connection with the Purchased
Assets, the use thereof and the later sale of any Product by Buyer arising from and after the Closing Date and only with respect
to events, conditions, actions or circumstances first arising after the Closing Date, including but not limited to (i) Liabilities
arising from any patent or trademark infringement claim or lawsuit brought by any Third Party, (ii) any product liability claim,
and (iii) Liabilities arising from FDA or any other Governmental Entity action or notification after the Closing Date (collectively,
the “Assumed Liabilities”). Notwithstanding the foregoing, Buyer will not assume or be liable for any Liabilities
arising in connection with the Product and the Purchased Assets manufactured prior to the Closing Date, including Liabilities resulting
from Third Party agreements of Seller or its Affiliates and Third Party claims arising out of acts or omissions of Seller prior
to Closing Date (collectively, the “Excluded Liabilities”).

 

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

 

    	 	-4-	Confidential

    	 

    

  

Article
3

 

CLOSING

 

Section
3.1                 
Closing Date

 

The closing of the
sale and transfer of the Purchased Assets (the “Closing”) will take place at the offices of either Buyer or
Seller or by fax, electronic delivery or mail, or other place as mutually agreed to by the Parties. The Closing shall take place
on the Effective Date or first Business Day following the execution of this Agreement; provided, however, all of
the conditions to each Party’s obligations under this Article have been satisfied or waived, or at such other time and date
as will be mutually agreed to by the Parties hereto (such date of the Closing being hereinafter referred to as the “Closing
Date”).

 

Section
3.2                 
Intentionally left blank.

 

Section
3.3                 
Conditions to Obligations of Buyer

 

The obligation of Buyer
to purchase the Purchased Assets from Seller is subject to the satisfaction on and as of the Closing of each of the following conditions,
unless waived by Buyer:

 

(a)               
Representations. The representations and warranties of Seller set forth in this Agreement will be true and
correct as of the Closing as though made on and as of the Closing, except to the extent such representations and warranties relate
to an earlier date (in which case such representation and warranties will be true and correct as of such earlier date).

 

(b)              
Performance of Obligations of Seller. Seller will have performed or complied in all material respects with
all obligations, conditions and covenants required to be performed by it under this Agreement at or prior to the Closing.

 

(c)               
Closing Deliveries. Seller will have executed and delivered to Buyer, dated as of the Closing Date, the (i)
Bill of Sale, and (ii) a “Transfer of Ownership” letter to the FDA, relating to each of the ANDAs, as prescribed in
21 CFR 314.72, and shall deliver to Buyer a certificate of the Secretary of State or other applicable Governmental Authority certifying
the good standing of Seller in its jurisdiction of organization as of a date within seven days of the Closing Date.

 

(d)              
ANDAs. As further described in Section 6.2, Seller will deliver the ANDAs to Buyer.

 

(e)               
No Government Rule enacted, entered, promulgated, enforced or issued by any Governmental Entity, Agency, or other
legal restraint or prohibition shall be pending, threatened or in effect, which would (i) prevent consummation of any of the transactions
contemplated by this Agreement, (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation
or (iii) affect adversely the right of Purchaser to own or exploit the Purchased Assets.

 

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

 

    	 	-5-	Confidential

    	 

    

 

Section
3.4                 
Conditions to the Obligations of Seller

 

The obligations of
Seller to sell, assign, convey, and deliver the Purchased Assets, or to cause the Purchased Assets to be sold, assigned, conveyed
or delivered, as applicable, to Buyer are subject to the satisfaction on and as of the Closing of each of the following conditions,
unless waived by the Seller:

 

(a)               
Representations and Warranties. The representations and warranties of Buyer set forth in this Agreement will
be true and correct in all material respects as of the Closing as though made on and as of the Closing, except: (i) to the extent
such representations and warranties expressly relate to an earlier date (in which case such representations and warranties will
be true and correct as of such earlier date) and (ii) for breaches of representations and warranties as to matters that individually
or in the aggregate would not materially interfere with Buyer’s performance of its obligations hereunder; and

 

(b)              
Closing Deliveries. Buyer shall have delivered to Seller, (i) an original executed copy of the Purchase Note
and Security Agreement, and (ii) a certificate of the Secretary of State or other applicable Governmental Authority certifying
the good standing of Buyer in its jurisdiction of organization as of a date within seven days of the Closing Date.

 

Article
4

 

REPRESENTATIONS
AND WARRANTIES OF SELLER

 

As
of each of the Effective Date and Closing Date, Seller hereby represents and warrants to Buyer as follows: 

 

Section
4.1                 
Seller Organization; Good Standing; Business

 

Seller is a limited
liability company, duly organized, validity existing and in good standing under the laws of the State of Delaware. Seller has the
requisite power and authority to own the Purchased Assets and to carry on its business as currently conducted. Seller is duly qualified
to conduct business as a foreign limited liability company and is in good standing in each jurisdiction where the nature of the
business conducted by it makes such qualification necessary, except where the failure to do so qualify or be in good standing would
not have a Material Adverse Effect. Seller, in the ordinary course of its business, regularly acquires and sells ANDAs.

 

Section
4.2                 
Authority; Execution and Delivery

 

Seller has the requisite
limited liability company power and authority to enter into this Agreement and to consummate the transaction contemplated. The
execution and delivery of this Agreement by Seller and the consummation of the transactions contemplated have been validly authorized.
This Agreement has been executed and delivered by Seller and, assuming the due authorization, execution and delivery of this Agreement
by Buyer, will constitute the legal and binding obligation of Seller, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors’
rights generally from time to time in effect and to general principles of equity (including concepts of materiality, reasonableness,
good faith and fair dealing) regardless of whether considered in a proceeding in equity or at law.

 

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

 

    	 	-6-	Confidential

    	 

    

 

Section
4.3                 
Consents; No Violation, Etc.

 

The execution and delivery
of this Agreement do not, and the consummation of the transactions contemplated hereby and the compliance with the terms hereof
will not: (i) violate any Governmental Rule applicable to Seller, (ii) conflict with any provision of the certificate of incorporation
or by-laws or certificate of formation or operating agreement (or similar organizational document) of Seller, (iii) result in a
violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right
of termination, cancellation or acceleration) under, or result in the creation of any Encumbrance upon any of the Purchased Assets
(other than those imposed by the Security Agreement) under any of the terms, conditions or provisions of, any contract, agreement,
plan, understanding, undertaking, commitment or arrangement, whether written or oral, any note, bond, mortgage, indenture, lease,
license, deed of trust, loan, or other agreement, instrument or obligation to which Seller is a party or by which Seller or any
of the Purchased Assets may be bound, (iv) to the knowledge of Seller, violate any rights of any non-party, or (v) require any
approval, authorization, consent, license, exemption, filing or registration with any court, arbitrator or Governmental Entity,
except, with respect to the foregoing clauses (i) and (iii), for such violations or conflicts which would not have a Material Adverse
Effect or materially interfere with Seller’s performance of its obligations hereunder or, with respect to the foregoing clause
(v), for such approvals, authorizations, consents, licenses, exemptions, filings or registrations which have been obtained or made
or which, if not obtained or made, would not have a Material Adverse Effect or interfere with Seller’s performance of its
obligations hereunder.

 

Section
4.4                 
Litigation

 

To the knowledge of
Seller, there are no claims, suits, actions or other proceedings pending or threatened in writing against Seller at law or in equity
before or by any Governmental Entity or Agency, including but not limited to federal, state, municipal or other governmental department,
commission, board bureau, agency or instrumentality, domestic or foreign, which may in any way materially adversely affect the
performance of Seller’s obligations under this Agreement or the transactions contemplated hereby. There are no outstanding
claims, suits, actions, judgments, orders, injunctions, decrees or awards against Seller in connection with the Purchased Assets,
this Agreement or the transactions contemplated hereby that have not been satisfied in all material respects.

 

Section
4.5                 
Title to Purchased Assets; AS IS

 

Seller has good and
valid title to all of the Purchased Assets, as the case may be, free and clear of all Encumbrances. Buyer agrees that it is purchasing
and will take possession of the Purchased Assets in their AS IS condition and that Buyer has been given the opportunity
to conduct such investigations and inspections of the Purchased Assets as it deems necessary or appropriate.

 

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

 

    	 	-7-	Confidential

    	 

    

 

 

Section
4.6                 
Purchased Assets AS IS

 

SELLER DOES NOT
MAKE ANY REPRESENTATIONS OR WARRANTIES THAT THE FDA WILL APPROVE ANY FILINGS FOR OR RELATED TO THE ANDAS TRANSFERRED HEREUNDER
OR THAT BUYER WILL EVER BE ABLE TO PRODUCE A COMMERICALLY SALEABLE PRODUCT AS TO THE ANDAS. SELLER FURTHER MAKES NO REPRESENTATIONS
AS TO THE ADEQUACY OR COMPLETENESS OF THE FORMULATION OR OTHER DATA UNDERLYING THE ANDAS AND FURTHER MAKES NO REPRESENTATION AS
TO THE REGULATORY SUFFICIENCY OF THE ANDAS.

 

Section
4.7                 
Intellectual Property. 

 

Seller
owns or possesses adequate and enforceable licenses or other rights to use all “Intellectual Property” as defined below,
is not in default under any such licensing or similar agreement and has not received any notice or has knowledge of conflict with
or infringement (or alleged infringement) of any rights of others. Seller has no notice or knowledge that any of the Intellectual
Property is being infringed upon or appropriated by any third party. The use of any Intellectual Property and other technical or
proprietary data related to the Purchased Assets has not required and does not require the payment of any royalty or similar payment
to any person, firm or corporation, and, immediately following the Closing, Buyer will have good and marketable title thereto,
free and clear of any Encumbrances. “Intellectual Property”
means all inventions, improvements, patents, utility models, designs, trade names, trade dress, trade secrets, trademarks, service
marks, copyrights, know-how and other proprietary rights (including all grants, registrations or applications therefor), and all
goodwill associated therewith, relating to the Purchased Assets or necessary for exploitation of the Purchased Assets, including,
without limitation, any trade name, trademark or service mark.

 

Section
4.8                 
Full Disclosure

 

No
representation or warranty of Seller in this Agreement (including the Schedules attached hereto) and no statement of Seller contained
in any document or certificate contemplated by this Agreement, considered as a whole with all other representations, warranties
and statements, contains or will contain any untrue statement of material fact or omits or will omit to state any material fact
necessary, in light of the circumstances under which it was made, in order to make the statements herein or therein not misleading.

 

Section
4.9                 
Exclusive Representations and Warranties

 

Other than the representations
and warranties set forth in this Article 4VI, Seller is not making any other representations or warranties, express or implied,
with respect to the Purchased Assets.

 

Article
5

 

REPRESENTATIONS OF BUYER

 

As of each of the Effective
Date and Closing Date, Buyer hereby represents and warrants to Seller as follows:

 

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

 

    	 	-8-	Confidential

    	 

    

  

Section
5.1                 
Buyer’s Organization; Good Standing

 

Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the State of Delaware. Buyer is not in arrears of any taxes
and is not under investigation by any Governmental Entity. Buyer has requisite corporate power and authority to carry on its business
as it is currently being conducted. Buyer is qualified to conduct business as a foreign corporation and is in good standing in
every jurisdiction where the nature of the business conducted by it makes such qualification necessary, except where the failure
to so qualify or be in good standing would not prevent or materially delay the consummation of the transactions contemplated hereby.

 

Section
5.2                 
Authority; Execution and Delivery

 

Buyer has the corporate
power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Buyer and the consummation of the transactions contemplated hereby have been authorized. This Agreement has
been executed and delivered by Buyer and, assuming the due authorization, execution and delivery of this Agreement by Seller, constitutes
the legal and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors’ rights generally
from time to time in effect and to general principles of equity (including concepts of materiality, reasonableness, good faith
and fair dealing regardless) of whether considered in a proceeding in equity or at law.

 

Section
5.3                 
Consents; Notices; No Violations, Etc.

 

The execution and delivery
of this Agreement do not, and the consummation of the transactions contemplated hereby and the compliance with the terms hereof
will not: (i) violate any Governmental Rule, (ii) conflict with any provision of the certificate of incorporation or by-laws of
Buyer, (iii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration) under, or result in the creation of any Encumbrance upon
any of the Purchased Assets (other than those imposed by the Security Agreement) under any of the terms, conditions or provisions
of, any contract, agreement, plan, understanding, undertaking, commitment or arrangement, whether written or oral, any, note, bond,
mortgage, indenture, lease, license, deed of trust, loan, or other agreement, instrument or obligation to which Buyer is a party
or (iv) require any approval, authorization, consent, license, exemption, filing or registration with any court, arbitrator or
Governmental Entity, except with respect to the foregoing clauses (i) and (iii), for such violations or conflicts which would not
materially interfere with Buyer’s performance of its obligations hereunder or, with respect to the foregoing clause (iv),
for such approvals, authorizations, consents, licenses, exemptions, filings or registrations which have been obtained or made or
which, if not obtained or made, would not materially interfere with Buyer’s performance of its obligations hereunder.

 

Section
5.4                 
Litigation

 

As of the date hereof,
there is no suit, claim, action, investigation or proceeding pending or, to the knowledge of Buyer, threatened against Buyer or
any of its Affiliates which if adversely determined would delay the ability of Buyer to perform any of its obligations hereunder.

 

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

 

    	 	-9-	Confidential

    	 

    

  

Section
5.5                 
Status of ANDAs

 

Buyer has reviewed
each of the ANDAs, recognizes that they may be subject to additional scrutiny by the FDA as a result of the Consent Decree, and
recognizes and assumes all risks and costs directly or indirectly associated with the ANDAs, obtaining FDA approval to transfer
the manufacturing site for the ANDAs and the Products.

 

Section
5.6                 
Assumption of Regulatory Commitments

 

From and after the
Closing Date, Buyer will assume control of and responsibility for all costs, obligations and Liabilities arising from or related
to, any commitments or obligations to any Governmental Entity involving the ANDAs and any of the other Purchased Assets.

 

Article
6

 

OTHER AGREEMENTS

 

Section
6.1                 
Confidentiality

 

The parties agree that
the exchange of confidential information and materials relating to the Purchased Assets and the terms and conditions contained
in this Agreement shall be governed by the Mutual Confidential Disclosure Agreement, which is hereby incorporated herein by reference
in its entirety.  The term of the Mutual Confidential Disclosure Agreement is hereby extended by the parties for five (5)
years beyond the term of the Agreement. 

 

Section
6.2                 
Transfer of ANDAs and Technology Transfer Assistance

 

For a period of 30
days from and after the Closing Date, Seller will cooperate with Buyer in disclosing and copying any relevant records and reports
which are required to be made, maintained and reported pursuant to Governmental Rules in the Territory with respect to the ANDA
that is a part of the Purchased Assets, including ANDA documents, marketing and regulatory authorizations and a tech-transfer package
containing analytical methods, master batch records, validation reports, Annual Product Reports, finished product and raw material
specifications, and retain samples, in each case to the extent they are available. The Parties will make reasonable efforts to
recover any missing regulatory documents (original ANDA and any amendments or supplements thereto) from FDA and to take any other
actions required by the FDA to effect the transactions contemplated herein.

 

Section
6.3                 
Intentionally left blank. 

 

Section
6.4                 
Further Action; Consents; Filings

 

Upon the terms and
subject to the conditions hereof, Seller and Buyer will use their respective reasonable efforts to: (i) take, or cause to be taken,
all actions necessary and proper under applicable Governmental Rules or otherwise to satisfy the conditions to ClosingXI and consummate
and make effective the transactions contemplated by this Agreement, (ii) obtain from the requisite Governmental Entities any consents,
licenses, permits, waivers, approvals, authorizations or orders required to be obtained or made in connection with the authorization,
execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement, and (iii) make
all necessary filings, and thereafter make any other advisable submissions, with respect to this Agreement and the transactions
contemplated by this Agreement required under any applicable Governmental Rules. The parties will cooperate with each other in
connection with the making of all filings, including by providing all such non-confidential documents to the other party hereto
and its advisors prior to filing and, if requested, by accepting all reasonable additions, deletions or changes suggested in connection
therewith. Seller and Buyer will furnish all information required for any application or other filing to be made pursuant to the
rules and regulations of any applicable Governmental Rules in connection with the transactions contemplated by this Agreement.

 

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

 

    	 	-10-	Confidential

    	 

    

  

Article
7

 

TERMINATION AMENDMENT AND WAIVER

 

Section
7.1                 
Termination

 

(a)This Agreement
may be terminated and the transactions contemplated hereby abandoned at any time prior to the Closing:

 

		(i)	by mutual written consent of Seller and Buyer; or

 

		(ii)	by Buyer if any of the conditions set forth in Section
3.3 will have become incapable of fulfillment and will not have been waived by Buyer; or

 

		(iii)	by Seller if any of the conditions set forth in Section
3.4 will have become incapable of fulfillment and will not have been waived by Seller,

 

provided,
the party seeking termination pursuant to clause (ii) or (iii) is not in breach of any of its representations, warranties, covenants
or agreements contained in this Agreement.

 

(b)In
the event of termination of this Agreement by either party pursuant to this Section, written notice thereof will be given to the
other party and the transactions contemplated by this Agreement will be terminated, without further action by either party. If
this Agreement is terminated as provided herein:

 

		(i)	Buyer will return the Purchased Assets and all documents
and other material received from Seller relating to the Purchased Assets and to the transactions contemplated hereby, whether
so obtained before or after the execution hereof, to Seller; and

 

		(ii)	All confidential information received by Buyer with respect
to Seller, the Purchased Assets will be continued to be treated confidential in accordance with the Mutual Confidential Disclosure
Agreement.

  

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

 

    	 	-11-	Confidential

    	 

    

 

Section
7.2                 
Amendments and Waivers

 

This Agreement may
not be amended except by an instrument in writing signed by both parties hereto. By an instrument in writing, Buyer, on the one
hand, or Seller, on the other hand, may waive compliance by the other party with any term or provision of this Agreement that such
other party was or is obligated to comply with perform.

 

Article
8

 

INDEMNIFICATION

 

Section
8.1                 
Survival

 

All representations
and warranties of Seller and Buyer contained herein or made pursuant hereto will survive the Closing Date for an indefinite period
or until such time as Buyer and Seller shall mutually agree in writing. The covenants and agreements of the parties hereto contained
in this Agreement will survive and remain in full force for the applicable periods described herein or, if no such period is specified,
indefinitely. Any right of indemnification pursuant to this ArticleXIII with respect to a claimed breach of a representation, warranty,
covenant, agreement or obligation shall expire only upon written release by the party whom such representation, warranty, covenant,
agreement or obligation is owed. The provisions of this Section 8.113.1 will survive for so long as any other Section of
this Agreement will survive.

 

Section
8.2                 
Indemnification

 

(a)Seller Indemnification.
Seller hereby agrees to indemnify and defend Buyer and its Affiliates, and their respective officers, directors and employees (the
“Buyer Indemnified Parties”) against, and agrees to hold them harmless from, any Losses to the extent such Losses
arise from or in connection with the following:

 

(i)breach or alleged breach by Seller and/or any of
its Affiliates or successors in interest thereto of any representation or warranty made by it contained in this Agreement;

 

(ii)any breach or alleged breach by Seller and/or any
of its Affiliates or successors in interest thereto of any of its covenants, agreements or obligations contained in this Agreement;
or

 

(iii)events, conditions actions or circumstances arising
prior to the Closing;

 

provided, that Seller’s aggregate
liability in respect of all Losses suffered or incurred by Buyer Indemnified Parties shall not exceed, and Seller will have no
obligation to compensate any Buyer Indemnified Party for Losses in excess of, an aggregate amount equal to the Purchase Price.
Seller may satisfy any obligation hereunder to compensate Buyer Indemnified Parties by a reduction in the unpaid balance of the
Purchase Note; and, if the amount of such Losses exceeds the unpaid portion of the Purchase Note, then, to the extent that any
portion of the Purchase Price or the payments due on the Purchase Note have been paid in the form of shares of stock in Buyer,
Seller may pay such excess Losses with shares of common stock in Buyer. If Seller elects to use common stock in Buyer to compensate
the excess Losses suffered or incurred by the Buyer Indemnified Parties, then the value of each share shall be the average closing
price of a share of Buyer’s common stock on the principal trading market on which such shares are then trading for the 10
trading days immediately preceding the date on which the shares are delivered in payment.

 

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

 

    	 	-12-	Confidential

    	 

    

 

(b)Buyer Indemnification.
Buyer hereby agrees to indemnify and defend Seller and its Affiliates and related companies, and their respective officers, directors
and employees (the “Seller Indemnified Parties”) against, and agrees to hold them harmless from, any Losses
to the extent such Losses arise from or in connection with the following:

 

(i)any breach or alleged breach by Buyer and/or any
of its Affiliates or successors in interest of any representation or warranty made by it contained in this Agreement;

 

(ii)any breach or alleged breach by Buyer and/or any
of its Affiliates or successors in interest of any of its covenants, agreements or obligations contained in this Agreement; or

 

(iii)any and all liability in connection with the use
and sale of the Product(s) by Buyer or the ANDAs

 

provided, that Buyer’s aggregate
liability in respect of all Losses suffered or incurred by Seller Indemnified Parties shall not exceed, and Buyer will have no
obligation to compensate any Seller Indemnified Party for Losses in excess of, an aggregate amount equal to the Purchase Price.

 

Section
8.3                 
Procedure

 

(a)               
In order for an Indemnified Party under this Article 8XIII (an “Indemnified Party”) to
be entitled to any indemnification provided for under this Agreement, the Indemnified Party will, within a reasonable period of
time following the discovery of the matters giving rise to any Losses, notify its applicable insurer and the indemnifying party
under this Article XIII8 (the “Indemnifying Party”) in writing of its claim for indemnification for such
Losses, specifying in reasonable detail the nature of the Losses and the amount of the liability estimated to accrue therefrom;
provided, however, that failure to give notification will not affect the indemnification provided hereunder, except
to the extent the Indemnifying Party will have been actually prejudiced as a result of the failure. Thereafter, the Indemnified
Party will deliver to the Indemnifying Party, within a reasonable period of time after the Indemnified Party’s receipt of
such request, all information, records and documentation reasonably requested by the Indemnifying Party with respect to such Losses.
The Indemnifying Party shall control all litigation reflecting to the indemnification. Without limiting the foregoing, the Indemnified
Party shall control choice of counsel, staffing, and all decisions to be made with the litigation.

 

(b)        
If the indemnification sought pursuant hereto involves a claim made by a non-party against the Indemnified Party
(a “Non-Party Claim”), the Indemnifying Party will be entitled to participate in the defense of such Non-Party
Claim and, if it so chooses, to assume the defense of such Non-Party Claim with counsel selected by the Indemnifying Party. Should
the Indemnifying Party so elect to assume the defense of a Non-Party Claim, the Indemnifying Party will not be liable to the Indemnified
Party for any legal expenses subsequently incurred by the Indemnified Party in connection with the defense thereof. If the Indemnifying
Party assumes such defense, the Indemnifying Party will control such defense. The Indemnifying Party will be liable for the reasonable
fees and expenses of counsel employed by the Indemnified Party for any period during which the Indemnifying Party has not assumed
the defense thereof (other than during any period in which the Indemnified Party will have failed to give notice of the Non-Party
Claim as provided above). If the Indemnifying Party chooses to defend or prosecute a Non-Party Claim, all of the parties hereto
will cooperate in the defense or prosecution thereof. Such cooperation will include the retention and (upon the Indemnifying Party’s
request) the provision to the Indemnifying Party of records and information, which are reasonably relevant to such Non-Party Claim,
and making employees available on a mutually convenient basis to provide additional information and explanation of any material
provided hereunder. If the Indemnifying Party chooses to defend or prosecute any Non-Party Claim, the Indemnifying Party will seek
the approval of the Indemnified Party (not to be unreasonably withheld) to any settlement, compromise or discharge of such Non-Party
Claim the Indemnifying Party may recommend and which by its terms obligates the Indemnifying Party to pay the full amount of the
liability in connection with such Non-Party Claim. Whether or not the Indemnifying Party will have assumed the defense of a Non-Party
Claim, the Indemnified Party will not admit any liability with respect to, or settle, compromise or discharge, such Non-Party Claim
without the Indemnifying Party’s prior written consent. The Indemnifying Party shall reimburse upon demand, all reasonable
costs and expenses incurred by the Indemnified Party in cooperation with the defense or prosecution of the Non-Party Claim.

 

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

 

    	 	-13-	Confidential

    	 

    

 

Section
8.4                 
Exclusive Remedy.

 

The indemnification
rights provided in this Article 8 shall constitute the sole and exclusive remedy with respect to all claims of any kind or nature
related to, or arising out of, or in connection with, any breach of or inaccuracy in any representation, warranty or covenant contained
in this Agreement (other than claims arising from fraud or intentional misrepresentation on the part of a party in connection with
the transactions contemplated by this Agreement). Nothing in this Section 8.4 shall limit any party's right to seek and obtain
any equitable relief, including specific performance, to which any party shall be entitled or to seek any remedy on account of
any party's fraudulent or intentional misrepresentation.

 

Article
9

GENERAL PROVISIONS

Section
9.1                 
Expenses

 

Except as otherwise
specified in this Agreement, all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants,
incurred in connection with this Agreement and the transactions contemplated hereby will be paid by the party incurring such costs
and expenses, whether or not the Closing will have occurred.

 

Section
9.2                 
Further Assurances and Actions

 

Each of the parties
hereto, upon the request of the other party hereto, whether before or after the Closing and without further consideration, will
do, execute, acknowledge and deliver or cause to be done, executed, acknowledged or delivered all such further acts, deeds, documents,
assignments, transfers, conveyances, powers of attorney and assurances as may be reasonably necessary to effect complete consummation
of the transactions contemplated by this Agreement. Seller and Buyer agree to execute and deliver such other documents, certificates,
agreements and other writings and to take such other actions as may be reasonably necessary in order to consummate or implement
expeditiously the transactions contemplated by this Agreement.

  

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

 

    	 	-14-	Confidential

    	 

    

 

Section
9.3                 
Notices

 

All notices and other
communications required or permitted to be given or made pursuant to this Agreement shall be in writing signed by the sender and
shall be deemed duly given: (a) on the date delivered, if personally delivered, (b) on the date sent by facsimile with automatic
confirmation by the transmitting machine showing the proper number of pages were transmitted without error, (c) on the Business
Day after being sent by Federal Express or another recognized overnight mail service which utilizes a written form of receipt for
next day or next business day delivery, or (d) upon receipt after mailing, if mailed by United States postage-prepaid certified
or registered mail, return receipt requested, in each case addressed to the applicable party at the address set forth below: provided
that a party may change its address for receiving notice by the proper giving of notice hereunder:

 

		 	(a)	if to Seller, to:

  

Mikah Pharma LLC

20 Kilmer Drive

Hillsborough, New Jersey, 08844

Attention: Nasrat Hakim, President

Fax No.: (908) 450-1318

 

		 	(b)	if to Buyer, to:

 

			Elite Laboratories, Inc.

			165 Ludlow Avenue

		Northvale,	New Jersey 0764760

			Attn: Jerry Treppel

Fax No.:
(201) 750-2755

 

With a courtesy
copy, which shall not constitute notice hereunder, sent to:

 

			

Richard Feiner,
Esq.

381 Park Avenue
South

16th
floor

New York, NY 10016

			Attn: Richard Feiner

			Fax No.: (917) 720-0863

 

Section
9.4                 
Headings

 

The table of contents
and headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation
of this Agreement.

 

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

 

    	 	-15-	Confidential

    	 

    

 

Section
9.5                 
Severability

 

If any term or other
provision of this Agreement is invalid, illegal or incapable of being enforced under any law or public policy, all other terms
and provisions of this Agreement will nevertheless remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto will negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties hereto as closely as possible in an acceptable manner
in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

 

Section
9.6                 
Counterparts

 

This Agreement may
be executed in one (1) or more counterparts, all of which will be considered one and the same agreement and will become effective
when one or more counterparts have been signed by each of the Parties hereto and delivered to the other parties hereto. This Agreement,
once executed by a Party, may be delivered to the other Party hereto by facsimile or electronic transmission of a copy of this
Agreement bearing the signature of the Party so delivering this Agreement. A faxed or electronically delivered signature shall
have the same legally binding effect as an original signature.

 

Section
9.7                 
Entire Agreement: No Non-Party Beneficiaries

 

This Agreement and
the Exhibits and Schedules hereto constitute the entire agreement and supersede all prior agreements and understandings both written
and oral (including any letter or intent, memorandum of understanding electronic communicators, e-mail or term sheet), between
or among the parties hereto with respect to the subject matter hereof. Except as specifically provided herein or therein, such
agreements are not intended to confer upon any non-party other than the parties hereto any rights or remedies hereunder or thereunder.

 

Section
9.8                 
Governing Law

 

This Agreement and
any and all matters arising directly or indirectly herefrom shall be governed by and construed and enforced in accordance with
the laws of the State of New Jersey, U.S.A. applicable to agreements made and to be performed entirely in such state, without giving
effect to the conflict of law principles thereof.

 

Section
9.9                 
Jurisdiction, Venue, Service of Process

 

Buyer and Seller agree
to irrevocably submit to the sole and exclusive jurisdiction of the state or federal courts in the state of New Jersey for any
suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby. Notwithstanding the foregoing,
only if such suit, action or other proceeding may not be brought in New Jersey, it may instead be brought in a Delaware court of
appropriate jurisdiction. Each party agrees that service of any process, summons, notice or document by U.S. registered mail or
recognized international courier service to such party’s address set forth in Section 14.3this Agreement shall be effective
service of process.

 

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

 

    	 	-16-	Confidential

    	 

    

 

Section
9.10             
Specific Performance

 

The parties hereto
agree that irreparable damage would occur in the event any provision of this Agreement were not performed in accordance with the
terms hereof and that the parties will be entitled to specific performance of the terms hereof, in addition to any other remedy
at law or in equity, without the necessity of demonstrating the inadequacy of monetary damages and without the posting of a bond.

 

Section
9.11             
Force Majeure

 

Neither party will
be in default of this Agreement to the extent that performance of its obligations (other than obligations to pay amounts owed under
this Agreement) is delayed or prevented by reason of events or circumstances beyond its reasonable control, including without limitation,
earthquake, flood or other acts of God, fire, explosion, terrorism, war, compliance with laws, regulations or governmental or judicial
orders, labor disputes, unavailability of transportation (“Force Majeure”). Should either party be delayed in
or prevented from performing any of its obligations under this Agreement by reason of Force Majeure, such party shall give prompt
notice thereof to the other party and shall be obligated to perform the affected obligations within sixty (60) days after the Force
Majeure ceases to delay or prevent performance thereof.

 

Section
9.12             
Publicity

 

Neither party will
make any public announcement concerning, or otherwise publicly disclose, any information with respect to the transactions contemplated
by this Agreement or any of the terms and conditions hereof without the prior written consent of the other parties hereto. Notwithstanding
the foregoing, either party may make any public disclosure concerning the transactions contemplated hereby that in the opinion
of such party’s counsel may be required by law or the rules of any stock exchange on which such party’s or its Affiliates’
securities trade; provided, however, the party making such disclosure will provide the non-disclosing party with
a copy of the intended disclosure reasonably, and to the extent practicable, prior to public dissemination, and the parties hereto
will coordinate with one another regarding the timing, form and content of such disclosure. Notwithstanding the foregoing, after
the Closing, Buyer may publicize its ability to market and sell the Product(s) without approval from Seller.

 

Section
9.13             
Schedules and Exhibits.

 

The Schedules and all
Exhibits attached hereto are hereby incorporated by reference into, and made a part of, this Agreement.

 

Section
9.14             
Ambiguities.

 

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

 

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

 

    	 	-17-	Confidential

    	 

    

 

Section
9.15             
Assignment

 

Neither party may assign
its rights or obligations under this Agreement without the prior written consent of the other party; provided, however,
that either party may assign its rights and obligations under this Agreement, without the prior written consent of the other party,
to an Affiliate or to a successor of the assignment party by reason of merger, sale of all or substantially all of its assets or
any similar transaction. Any permitted assignee or successor-in-interest will assume all obligations of its assignor under this
Agreement. No assignment will relieve either party of its responsibility for the performance of any obligation. This Agreement
will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

 

[signature page follows]

 

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

 

    	 	-18-	Confidential

    	 

    

  

IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be signed by their respective representatives thereunto duly authorized, all as
of the date first written above.

 

	 	MIKAH PHARMA LLC	 	 	ELITE LABORATORIES, INC. 
	 	 	 	 	 
	By:	s/Nasrat Hakim		By:	s/Jerry Treppel
	 	Nasrat Hakim, President and CEO	 	 	Jerry Treppel, Chief Executive Officer

 

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

 

    	 	-19-	Confidential

    	 

    

 

[Redacted Version]

Execution Copy: August 1, 2013

 

SCHEDULE 1

 

ABBREVIATED NEW DRUG APPLICATIONS

 

 

	Number	Description	Status
	{***}	{***}	Approved ANDA
	 	 	 
	{***}	{***}	Approved ANDA
	{***}	{***}	Approved ANDA
	{***}	{***}	Approved ANDA
	{***}	{***}	Approved ANDA
	{***}	{***}	Approved ANDA
	{***}	{***}	Approved ANDA
	{***}	{***}	Approved ANDA
	{***}	{***}	Approved ANDA
	{***}	{***}	Approved ANDA
	{***}	{***}	Approved ANDA
	{***}	{***}	Approved ANDA
	Pending:	 	 
	{***}	{***}	Pending ANDA
	 	 	 
	 	 	 
	 	 	 
	 	 	 

 

 

__________________________________

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

 

 

    	 	-1-	Confidential

    	 

    

 

EXHIBIT A

 

BILL OF SALE

 

THIS BILL OF SALE,
dated August 1, 2013, is executed by Mikah Pharma LLC (“Seller”), a limited liability company organized under the laws
of Delaware in favor of Elite Laboratories, Inc. (“Buyer”), a corporation incorporated under the laws of Delaware,
pursuant to the Asset Purchase Agreement, dated August 1, 2013 (the “Agreement”), by and between Seller and Buyer.
Capitalized terms used but not defined herein have the meanings given to them in the Agreement.

 

i.The Agreement provides for, among
other things, the sale of the Purchased Assets by Seller to Buyer.

 

ii.In consideration
of the payment of the amounts set forth in the Agreement, Seller by this Bill of Sale does hereby, sell, transfer, assign and deliver
to Buyer, all of its rights, title and interest in and to the Purchased Assets.

 

iii.Seller hereby
represents that from time to time after the delivery of this instrument, at Buyer’s request and without further consideration,
Seller will do, execute, acknowledge and deliver, or will cause to be done, executed, acknowledged and delivered, all such further
acts, deeds, conveyances, transfers, assignments, powers of attorney and assurances as reasonably may be required more effectively
to convey, transfer to and vest in Buyer, and to put Buyer in possession of, the Purchased Assets.

 

iv.This instrument
is executed by, and will be binding upon, Seller and its successors and assigns for the uses and purposes set forth herein.

 

v.This Bill of
Sale shall be construed and enforced in accordance with the laws of the State of New Jersey.

 

 

IN WITNESS WHEREOF,
this Bill of Sale has been duly executed and delivered by Seller as of the date and year first written above.

 

	 	MIKAH PHARMA LLC 	 
	 	 	 
	By: 	s/Nasrat Hakim	 
	 	Nasrat Hakim, President and CEO	 

 

__________________________________

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

 

    	 	-1-	Confidential

    	 

    

 

[Redacted Version]

Execution Copy: August 1, 2013

 

EXHIBIT B

 

FORM OF SECURED CONVERTIBLE PROMISSORY
NOTE

 

 

 

 

 

 

 

 

 

 

 

__________________________________

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

  

    	 	-1-	Confidential

    	 

    

  

[Redacted Version]

Execution Copy: August 1, 2013

 

 

EXHIBIT C

 

FORM OF ANDA SECURITY AGREEMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

__________________________________

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

 

 

    	 	-1-	ConfidentialExecution Copy: August 1, 2013

 

  

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

 

	Issue Date: August 1, 2013 	 	Principal Amount: $10,000,000.

 

ELITE PHARMACEUTICALS, INC. AND ELITE
LABORATORIES, INC.

SECURED CONVERTIBLE NOTE DUE 2016

 

 

FOR VALUE RECEIVED,
pursuant to the Purchase Agreement (as defined below), ELITE PHARMACEUTICALS, INC., a Nevada corporation (the “Company”)
and its wholly-owned subsidiary, ELITE LABORATORIES, INC., a Delaware corporation (“Elite” and, together
with the Company, the “Debtors”), jointly and severally, promise to pay to the order of MIKAH PHARMA
LLC, a limited liability company organized under the laws of the State of Delaware (the “Holder”), the
principal sum of Ten Million Dollars and no cents ($10,000,000), on the Maturity Date (as defined below), or such earlier date
as the Note is required or permitted to be repaid as provided hereunder.

 

This Note is interest
free.

 

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

 

1.                 
Definitions. In addition to the terms defined elsewhere in this Note, (a) capitalized terms that are not
otherwise defined herein have the meanings given to such terms in the Asset Purchase Agreement by and between Holder and Elite
of even date (the “Purchase Agreement”), and (b) the following terms have the meanings indicated:

 

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

 

8K 2013 8 5 Exhibit 10 2 Secured Convertible Note.doc

 

    	 

    	 

    

 

“Change
of Control” will be deemed to exist if (i) there occurs any consolidation, merger or other business combination of
a Debtor with or into any other corporation or other entity or person (whether or not such Debtor is the surviving corporation),
or any other corporate reorganization or transaction or series of related transactions in which in any of such events the voting
stockholders of such Debtor prior to such event cease to own fifty percent (50%) or more of the voting power, or corresponding
voting equity interests, of the surviving corporation after such event (including without limitation: (x) any “going private”
transaction under Rule 13e-3 promulgated pursuant to the 1934 Act or (y) any tender offer by the Company under Rule 13e-4 promulgated
pursuant to the 1934 Act for twenty percent (20%) or more of the Company's Common Stock), (ii) any person (as defined in Section
13(d) of the 1934 Act) beneficially owns or is deemed to beneficially own (as described in Rule 13d-3 under the 1934 Act without
regard to the 60-day exercise period) in excess of fifty percent (50%) of the Company’s voting power, (iii) there is a replacement
of more than one-half of the members of the Company’s Board of Directors which is not approved by a majority of those individuals
who are members of the Company’s Board of Directors on the Original Issue Date, (iv) in one or a series of related transactions,
there is a sale or transfer of all or substantially all of the assets of the Company, determined on a consolidated basis, or (v)
any Debtor enters into any agreement providing for an event set forth in (i), (ii), (iii) or (iv) above.

 

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

 

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

 

 

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

 

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

 

“Conversion
Price” means $0.07, subject to adjustment from time to time pursuant to Section 10.

 

    	2

    	 

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    	3

    	 

    

 

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

 

“Security
Agreement” means the Security Agreement of even date between the Holder as Secured Party and the Debtors as Debtors.

 

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

 

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

 

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

 

“Transaction
Documents” means, collectively, this Note, the Purchase Agreement, the Security Agreement, and the schedules and
exhibits hereto and thereto.

 

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

 

2.                 
Payment of Principal.

 

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

 

3.                 
Covenants.

 

    	4

    	 

    

 

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

 

4.                 
Registration of Notes. The Debtors shall register the Note upon records to be maintained by the Debtors for that
purpose (the “Note Register”) in the name of the record holder thereof from time to time. The Debtors
may deem and treat the registered Holder of this Note as the absolute owner hereof for the purpose of any conversion hereof or
any payment of principal hereon, and for all other purposes, absent actual notice to the contrary.

 

5.                 
Transfers; Registration thereof.

 

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

 

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

 

6.                 
Conversion.

 

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

 

    	5

    	 

    

 

(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.

 

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

 

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

 

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

 

    	6

    	 

    

 

7.                 
Mechanics of Conversion.

 

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

 

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

 

8.                 
Events of Default.

 

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

 

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

 

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

 

(iii)            
the occurrence of a Triggering Event;

 

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

 

(v)              
the occurrence of a Bankruptcy Event.

 

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

 

    	7

    	 

    

 

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

 

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

 

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

 

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

 

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

 

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

 

    	8

    	 

    

 

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

 

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

 

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

 

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

 

    	9

    	 

    

 

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

 

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

 

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

 

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

 

    	10

    	 

    

 

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

 

12.             
Grant of Security Interest. This Note and payments of principal and all other obligations with respect to this
Note are hereby secured by all of the Purchased Assets. Elite hereby conveys to Holder a first priority security interest in all
Purchased Assets as set forth in the Security Agreement.

 

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

 

14.             
Miscellaneous.

 

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

 

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

 

(c)               
Governing Law; Venue; Waiver Of Jury Trial. all questions concerning the
construction, validity, enforcement and interpretation of this Note shall be governed by and construed and enforced in accordance
with the internal laws of the state of new JERSEY, without regard to the principles of conflicts of law thereof. each party hereby
irrevocably submits to the exclusive jurisdiction of the federal courts sitting in the county of ESSEX, CITY OF NEWARK AND OF THE
STATE COURTS SITTING IN THE COUNTY OF BERGEN, city of HACKENSACK, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the
transaction documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper. each party
hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding
by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this agreement and agrees that such service shall constitute good and sufficient service
of process and notice thereof. nothing contained herein shall be deemed to limit in any way any right to serve process in any manner
permitted by law. the borrowers hereby waives all rights to a trial by jury.

 

    	11

    	 

    

 

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

 

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

 

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

 

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

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOLLOWS]

 

    	12

    	 

    

 

 

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

 

 

	 	 	 
	 	ELITE PHARMACEUTICALS, INC	 
	 	 	 
	 	 	 
	 	By__________________________	 
	 	Name: 	 
	 	Title: 	 
	 	 	 
	 	ELITE LABORATORIES, INC.	 
	 	 	 
	 	 	 
	 	By___________________________	 
	 	Name: 	 
	 	Title: 	 

 

 

    	13

    	 

    

  

Execution Copy: August 1, 2013

  

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.

 

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

  

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

 

 

    	 

    	 

    

 

ACKNOWLEDGEMENT

 

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

 

	 	ELITE PHARMACEUTICALS, INC.	 
	 	By: ___________________________________________________________	 
	 	Name: _________________________________________________________	 
	 	Title: __________________________________________________________	 

 

    	 

    	 

    

 

Execution Copy: August 1, 2013

 

Schedule 2

 

CONVERSION SCHEDULE

 

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

 

	Date of Conversion	Amount of Conversion	Aggregate Principal Amount Remaining Subsequent to Conversion

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