STIPULATION OF SETTLEMENT AND RELEASE
Execution
Version
This Stipulation of
Settlement and Release (“Stipulation”),
entered into as of June 25, 2010 (the “Effective Date”), is
by and among Elite Pharmaceuticals, Inc., a Delaware corporation (“Elite”), and
Midsummer Investment, Ltd., a Bermuda corporation (“Midsummer”) and
Bushido Capital Master Fund, LP, a Cayman Islands limited partnership (“Bushido”, and
collectively with Midsummer, the “Plaintiffs”), BCMF
Trustees LLC (“BCMF”), Epic
Pharma,
LLC, a
Delaware limited liability company, and Epic
Investments, LLC, a Delaware limited
liability company (Epic Pharma and Epic Investments collectively,
“”Epic”). Elite, the Plaintiffs, BCMF and Epic (the “Parties” and each a
“Party”)
intending to be legally bound, covenant, agree and represent as
follows:
WHEREAS, the Plaintiffs filed an action
against Elite in the United States District Court, Southern District of New
York, Number 09 CV 8074 (SHS), seeking injunctive relief and monetary damages
relating to the issuance of the Series E Convertible Preferred Stock (the “Action”);
WHEREAS, Elite denied all material
allegations asserted in the Action and asserted defenses;
WHEREAS,
to avoid the delays, expense and risks inherent in litigation, the Parties
desire to resolve their dispute under the terms and conditions of this
Stipulation and the Amendment Agreement, dated as of June 25, 2010 among Elite
and the investors signatory thereto (“Amendment
Agreement”); and
WHEREAS, the Parties believe that the
terms of this Stipulation are fair and were reached in good faith.
NOW THEREFORE, in
consideration of the obligations and promises as set forth in this Stipulation,
the full sufficiency of which the Parties hereby acknowledge, and in full
settlement of the Parties’ claims, the Parties agree as follows:
1. Execution of the Amendment
Agreement. This Stipulation will only become binding upon the
Parties upon both complete execution of the Amendment Agreement and satisfaction
or waiver of the conditions set forth in Sections 2.12 and 2.13 of the Amendment
Agreement.
2. Dismissal of
Action. Concurrent with the execution of this Stipulation,
counsel for the Parties will execute a Stipulation of Discontinuance of the
Action, with prejudice and without costs, substantially in the form annexed
hereto as Exhibit A. Counsel for Plaintiffs will file the Stipulation
of Discontinuance once this Stipulation becomes binding pursuant to the terms of
paragraph 1 herein, and send a stamped copy to counsel for Elite.
3. Elite
Release. In exchange for the execution of this Agreement, and
the promises herein, and the execution of the Amendment Agreement, Elite and
Epic, individually and on behalf of each of their respective officers,
directors, agents, representatives, successors, affiliated entities,
subsidiaries, heirs, employees, administrators and assigns (the “Elite Releasors”)
hereby releases and forever discharges each of the Plaintiffs, BCMF, their
owners, officers, directors, investors, agents, representatives, successors,
affiliated entities, subsidiaries, heirs, employees, administrators and assigns
(the “Plaintiffs’
Releasees”) from any and all actions, causes of action, claims, liens,
suits, debts, accounts, liabilities, expenses, attorneys’ fees, agreements,
promises, charges, complaints and demands whatsoever, known or unknown, whether
in law or equity, which the Elite Releasors may now have or hereafter can have,
shall have, may have, or may have had for, upon, or by reason of any cause or
thing whatsoever including, but not limited to, claims that could have been
asserted in the Action or any other court action, based upon any conduct from
the beginning of the world up to and including the date of this Stipulation;
provided, however, that the
Elite Releasors do not release any claim of breach of the terms of this
Stipulation, breach of the terms of the Amendment Agreement, or any cause of
action arising from future conduct by the Plaintiffs’ Releasees.
4. Plaintiffs’
Release. In exchange for the execution of this Agreement, the
promises herein, and the execution of the Amendment Agreement, Plaintiffs and
BCMF, individually and on behalf of each of their respective owners, officers,
directors, investors, agents, representatives, successors, affiliated entities,
subsidiaries, heirs, employees, administrators and assigns (the “Plaintiffs’
Releasors”) hereby release and forever discharge Elite and Epic and each
of their respective officers, directors, agents, representatives, successors,
affiliated entities, subsidiaries, heirs, employees, administrators and assigns
(the “Elite
Releasees”), from any and all actions, causes of action, claims, liens,
suits, debts, accounts, liabilities, expenses, attorneys’ fees, agreements,
promises, charges, complaints and demands whatsoever, known or unknown, whether
in law or equity, which the Plaintiffs’ Releasors may now have or hereafter can
have, shall have, may have, or may have had for, upon, or by reason of any cause
or thing whatsoever including, but not limited to, claims that could have been
asserted in the Action or any other court action, based upon any conduct from
the beginning of the world up to and including the date of this Stipulation;
provided, however, that the
Plaintiffs’ Releasors do not release any claim of breach of the terms of this
Stipulation, breach of the terms of the Amendment Agreement or any cause of
action arising from future conduct by the Elite Releasees.
5. Continued Rights and
Obligations. It is expressly understood and agreed that
nothing herein affects any future rights or obligations of the Parties under the
Transaction Documents, as defined in the Amendment Agreement.
6. Non-Admission. Each
of the Parties expressly denies any wrongdoing or liability and nothing in this
Stipulation shall be interpreted as an admission of liability by any of the
Parties to this Stipulation.
7. Enforceability. The
Parties understand and acknowledge that this Stipulation is final and binding,
and the Parties agree not to challenge its enforceability.
8. Governing
Law. The Parties further agree that this Stipulation will be
governed by the laws of the State of New York.
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9. Severability. The
Parties further agree that if any of the provisions, terms, clauses, waivers and
releases of claims and rights contained in this Stipulation are declared
illegal, unenforceable, or ineffective in a legal forum of competent
jurisdiction, such provisions, terms, clauses, waivers and releases of claims or
rights shall be modified, if possible, in order to achieve, to the extent
possible, the intentions of the Parties, and, if necessary, such provisions,
terms, clauses, waivers and releases of claims and rights shall be deemed
severable, such that all other provisions, terms, clauses, waivers and releases
of claims and rights contained in this Stipulation shall remain valid and
binding upon all Parties.
10. Amendments. The
Parties further agree that this Stipulation may not be altered, amended,
modified, superseded, canceled or terminated except by an express written
agreement duly executed by all the Parties or their attorneys on their behalf,
which makes specific reference to this Stipulation.
11. Drafting. The
Parties agree that this Stipulation has been jointly drafted and negotiated with
the assistance of counsel for each Party and that any ambiguity shall not be
construed against any Party as the drafter of the Stipulation.
12. Counsel. The
Parties acknowledge and represent that each has been represented by the counsel
of his or its choosing in the negotiation and execution of this Stipulation,
that each Party has read the entire Stipulation, and is fully aware of its legal
effect. Parties shall each pay their own legal fees and costs, except
as otherwise expressly set forth in this Stipulation.
13. Notices. Any
notices or other communications to be given in accordance with this Stipulation
shall be made in accordance with the provisions of the Securities Purchase
Agreement, dated September 15, 2008, as amended.
14. Authority. The
Parties represent and warrant that they have the power, authority and
authorization to enter into this Stipulation and that they have not transferred,
assigned or hypothecated to any third party any of their rights released in this
Stipulation.
15. Copies. This
Stipulation may be executed in one or more counterpart originals, whether by
facsimile or otherwise, all of which, taken together, shall constitute one and
the same instrument.
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REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]
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To
signify their agreement to the terms of this Stipulation, the Parties have
executed this Stipulation on the date set forth opposite their signatures which
appear below.
| Dated: June 25, 2010 | |||
| ELITE PHARMACEUTICALS, INC. | |||
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By:
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| Name: | |||
| Title: | |||
| Dated: June 25, 2010 | |||
| MIDSUMMER INVESTMENT, LTD. | |||
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By:
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| Name: | |||
| Title: | |||
| Dated: June 25, 2010 | |||
| BUSHIDO CAPITAL MASTER FUND, LP | |||
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By:
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| Name: | |||
| Title: | |||
| Dated: June 25, 2010 | |||
| BCMF TRUSTEES LLC | |||
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By:
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| Name: | |||
| Title: | |||
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| Dated: June 25, 2010 | |||
| EPIC PHARMA, LLC | |||
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By:
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| Name: | |||
| Title: | |||
| Dated: June 25, 2010 | |||
| EPIC INVESTMENTS, LLC | |||
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By:
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| Name: | |||
| Title: | |||
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EXHIBIT
A
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UNITED
STATES DISTRICT COURT
SOUTHERN
DISTRICT OF NEW YORK
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x
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Midsummer
Investment, Ltd., and
Bushido
Capital Master Fund, LP,
Plaintiffs,
-against-
Elite
Pharmaceuticals, Inc.,
Defendant.
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09
CV 8074 (SHS)
STIPULATION
OF DISMISSAL WITH PREJUDICE
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x
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IT IS HEREBY STIPULATED AND AGREED
by and among the parties that the above-captioned action, be dismissed in
its entirety, with prejudice, with no award of counsel fees or costs by the
Court to either side.
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Law
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Attorney
for Plaintiffs
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Attorneys
for Defendant
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