I've recently had some questions in regards to the Elite - Epic Alliance so I started reading through the documents again to re-familiarize myself with the agreement. This is nothing new, but it might be helpful for those new to the board.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year On March 18, 2009, Elite Pharmaceuticals, Inc., a Delaware corporation (the “Registrant”), entered into a Strategic Alliance Agreement (the “Alliance Agreement”) with Epic Pharma, LLC, a Delaware limited liability company (“Epic”), and Epic Investments, LLC, a Delaware limited liability company and wholly-owned subsidiary of Epic (the “Purchaser”), pursuant to which the Registrant will commence a strategic relationship with Epic, a pharmaceutical company that operates a business synergistic to that of the Registrant in the research and development, manufacturing, sales and marketing of oral immediate and controlled release drug products. Under the Alliance Agreement (i) at least eight additional generic drug products will be developed by Epic at the Registrant’s facility with the intent of filing abbreviated new drug applications for obtaining United States Food and Drug Administration (“FDA”) approval of such generic drugs, (ii) the Registrant will be entitled to 15% of the profits generated from the sales of such additional generic drug products upon approval by the FDA, and (iii) Epic and the Registrant will share with each other certain resources, technology and know-how in the development of drug products, which the Registrant believes will benefit the continued development of its current drug products. In order to provide the Registrant with the additional capital necessary for the product development and synergies presented by the strategic relationship with Epic, Epic will invest in the Registrant through the purchase by its wholly-owned subsidiary, the Purchaser, of $3.75 million of newly issued shares of the Registrant’s Series E Convertible Preferred Stock, par value US$0.01 per share (the “Series E Preferred Stock”), at a price of US$1,000 per share, each share convertible, at US$0.05 per share (the “Conversion Price”), into approximately 20,000 shares of its Common Stock, par value US$0.01 per share (the “Common Stock”), subject to certain adjustments. A copy of the Alliance Agreement is attached to this Form 8-K as Exhibit 10.1 and this summary of the terms of the Alliance Agreement is qualified in its entirety by reference to such Exhibit. Pursuant to the Alliance Agreement, Epic has agreed to guarantee the performance by the Purchaser of its obligations under the Alliance Agreement.
Use of Facility and Joint Development of Drug Products On the Initial Closing Date, Epic and its employees and consultants will commence using a portion of the Registrant’s facility located at 165 Ludlow Avenue, Northvale, New Jersey (the “Facility”), for the purpose of developing new generic drug products, all at Epic’s sole cost and expense (other than Facility related expenses), for a period of at least three years (the “Initial Term”), unless sooner terminated or extended pursuant to the Alliance Agreement or by mutual agreement of the Registrant and Epic (the Initial Term, as shortened or extended, the “Term”). In addition to the use of the Facility, Epic will use the Registrant’s machinery, equipment, systems, instruments and tools residing at the Facility (collectively the “Personal Property”) in connection with its joint drug development project at the Facility. Epic will have the right, exercisable in its sole discretion, to extend the Initial Term for two periods of one year each by giving written notice to the Registrant of such extension within ninety days of the end of the Initial Term or any extension thereof. Any such extension will be on the same terms and conditions contained in the Alliance Agreement. The Registrant will be responsible for (and Epic will have no responsibility for) any maintenance, services, repairs and replacements in, to or of the Facility and the Personal Property, at the Registrant’s sole cost and expense, unless any such maintenance, service, repair or replacement is required as a result of the negligence or misconduct of Epic’s employees or representatives, in which case Epic will be responsible for the costs and expenses associated therewith.
During the Term, Epic will use and occupy a portion of the Facility and use the Personal Property for the purpose of developing (i) at least four control release products (the “Identified CR Products”) and (ii) at least four immediate release products (the “Identified IR Products”), the identity of each will be subject to the prior agreement between Epic and the Registrant. If, during the Term, Epic determines, in its reasonable business judgment, that the further or continuing development of any Identified CR Product and/or Identified IR Product is no longer commercially feasible, Epic may, upon written notice to the Registrant, eliminate from development under the Alliance Agreement such Identified CR Product and/or Identified IR Product, and replace such eliminated product with another control release or immediate release product, as applicable.
Epic will also use a portion of the Facility and use the Personal Property for the purpose of developing (x) additional control release products of Epic (the “Additional CR Products”), subject to the mutual agreement of Epic and the Registrant, and/or (y) additional immediate release products of Epic (the “Additional IR Products”), subject to the mutual agreement of the Registrant and Epic (each Identified CR Product, Identified IR Product, Additional CR Product and Additional IR Product, individually, a “Product,” and collectively, the “Products”). Under
the Alliance Agreement, Epic may not eliminate an Identified CR Product or an Identified IR Product unless it replaces such Product with an Additional CR product or Additional IR Product, as the case may be. Subject to the mutual agreement of the parties as to additional consideration and other terms, Epic may use and occupy the Facility for the development of other products of Epic (in addition to the Products).
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