Exhibit 10.1

 

EXECUTION VERSION

 

EXCHANGE AGREEMENT

 

                                                       (the “Undersigned”), for
itself and on behalf of the beneficial owners listed on Exhibit A hereto
(“Accounts”) for whom the Undersigned holds contractual and investment authority
(each Account, as well as the Undersigned if it is exchanging Existing Notes (as
defined below) hereunder, a “Holder”), enters into this Exchange Agreement (this
“Agreement”) with Egalet Corporation, a Delaware corporation (the “Company”),
and certain subsidiaries of the Company listed on the signature pages hereto
(the “Guarantors”), on December 20, 2017 whereby the Holders will exchange (the
“Exchange”) a portion of the Company’s existing 5.50% Convertible Senior Notes
due 2020 (the “Existing Notes”) for the Company’s new 6.50% Convertible Senior
Notes due 2024 (the “New Notes”) that will be issued pursuant to the provisions
of an Indenture (the “Indenture”), to be dated on the date of Closing (as
defined below), among the Company, the Guarantors and The Bank of New York
Mellon, a New York banking corporation, as trustee (the “Trustee”).

 

On and subject to the terms and conditions set forth in this Agreement, the
parties hereto agree as follows:

 

ARTICLE I.

 

EXCHANGE OF THE EXISTING NOTES FOR THE NEW NOTES.

 

SECTION 1.01.                                   Exchange. At the Closing (as
defined herein), the Undersigned hereby agrees to cause each Holder to exchange
and deliver to the Company the aggregate principal amount of Existing Notes
(collectively the “Exchanged Notes”), and in exchange therefor the Company
hereby agrees to issue to such Holder the aggregate principal amount of New
Notes (collectively, the “Holders’ New Notes”), all as set forth opposite such
Holder’s name on Exhibit A hereto.

 

SECTION 1.02.                                   Closing. The closing of the
Exchange (the “Closing”) shall occur on the second business day after the date
of this Agreement.  On or before 9:00 AM (New York time) on the date of the
Closing, (a) each Holder shall deliver or cause to be delivered to the Company
all right, title and interest in and to its Exchanged Notes (and no other
consideration) free and clear of any mortgage, lien, pledge, charge, security
interest, encumbrance, title retention agreement, option, equity or other
adverse claim thereto (collectively, “Liens”), together with any documents of
conveyance or transfer that the Company may deem necessary or desirable to
transfer to and confirm in the Company all right, title and interest in and to
the Exchanged Notes free and clear of any Liens and (b) the Undersigned shall
deliver or cause to be delivered to the Company the applicable IRS forms
described in Section 4.6, and promptly thereafter, the Company shall deliver to
each Holder such Holders’ New Notes; provided, however, that the parties
acknowledge that the Company may delay the Closing due to procedures and
mechanics within the system of The Depository Trust Company or The Nasdaq Global
Market (including the procedures and mechanics regarding the listing of the
Conversion Common Stock (as defined below) on such exchange), or other events
beyond the Company’s control and that such delay will not be a default under
this Agreement so long as (i) the Company is using its commercially reasonable
efforts to effect the issuance of one or more global notes representing the New
Notes, and (ii) such delay is no longer than three business days following the
scheduled Closing date.  Simultaneously with or after the Closing, the Company
may issue

 

--------------------------------------------------------------------------------

 

New Notes to one or more other holders of outstanding Existing Notes or to other
investors, subject to the terms of the Indenture.  The cancellation of the
Exchanged Notes and the delivery of the New Notes shall be effected via DWAC
pursuant to the instructions to be provided by JMP Securities LLC (“JMP”) after
the effective time of this Agreement.  JMP shall provide instructions to the
Undersigned for settlement of the Exchange.

 

SECTION 1.03.                                   Exchanged Notes Interest. On the
date of the Closing, the Company shall pay or cause to paid to each Holder, to
an account specified in writing by such Holder, an amount in cash equal to all
accrued but unpaid interest (through the date of the Closing and calculated in
accordance with the indenture governing the Existing Notes) on such Holder’s
Exchanged Notes.

 

ARTICLE II.

 

COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE HOLDERS

 

The Undersigned hereby covenants as follows, and makes the following
representations and warranties on its own behalf and where specified below, on
behalf of each Holder, each of which is and shall be true and correct on the
date hereof and at the Closing, to the Company, the Guarantors and JMP, and all
such covenants, representations and warranties shall survive the Closing.

 

SECTION 2.01.                                   Power and Authorization.  Each
of the Undersigned and each Holder is duly organized, validly existing and in
good standing under the laws of its jurisdiction of formation, and the
Undersigned has the power, authority and capacity to execute and deliver this
Agreement, to perform its obligations hereunder, and to consummate the Exchange
contemplated hereby, in each case, on behalf of itself and each Holder.  If the
Undersigned is executing this Agreement on behalf of Accounts, the Undersigned
has all requisite discretionary and contractual authority to enter into this
Agreement on behalf of, and bind, each Account, including with respect to such
Account’s obligations pursuant to Section 2.11. Exhibit A hereto is a true,
correct and complete list of (i) if the Undersigned is executing this Agreement
on behalf of accounts, the name of each Account and (ii) the principal amount of
the Undersigned’s Exchanged Notes (if any) and any such Account’s Exchanged
Notes.

 

SECTION 2.02.                                   Valid and Enforceable Agreement;
No Violations.  This Agreement has been duly executed and delivered by the
Undersigned and constitutes a valid and legally binding obligation of the
Undersigned and each Holder, enforceable against the Undersigned and each Holder
in accordance with its terms, except that such enforcement may be subject to
(a) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or
other similar laws affecting or relating to enforcement of creditors’ rights
generally, and (b) general principles of equity, whether such enforceability is
considered in a proceeding at law or in equity (the exceptions described in
clauses (a) and (b) collectively, the “Enforceability Exceptions”).  This
Agreement and consummation of the Exchange will not violate, conflict with or
result in a breach of or default under (i) the Undersigned’s or the applicable
Holder’s organizational documents, (ii) any agreement or instrument to which the
Undersigned or the applicable Holder is a party or by which the Undersigned or
the applicable Holder or any of their respective assets are bound, or (iii) any
laws, regulations or governmental or judicial decrees, injunctions or orders
applicable to the Undersigned or the applicable Holder, except in the case of
clauses (ii) and (iii),

 

--------------------------------------------------------------------------------

 

where such violations, conflicts, breaches or defaults would not affect the
Undersigned’s or the applicable Holder’s ability to consummate the transactions
contemplated hereby in any material respect.

 

SECTION 2.03.                                   Title to the Exchanged Notes. 
Each Holder is the sole legal and beneficial owner of the Exchanged Notes set
forth opposite its name on Exhibit A hereto (or, if there are no Accounts, the
Undersigned is the sole legal and beneficial owner of all of the Exchanged
Notes).  Each Holder has good, valid and marketable title to its Exchanged
Notes, free and clear of any Liens (other than pledges or security interests
that the Holder may have created in favor of a prime broker under and in
accordance with its prime brokerage agreement with such broker).  No Holder has,
in whole or in part, except as described in the preceding sentence,
(a) assigned, transferred, hypothecated, pledged, exchanged or otherwise
disposed of any of its rights, title or interest in or to its Exchanged Notes,
or (b) given any person or entity (other than the Undersigned) any transfer
order, power of attorney or other authority of any nature whatsoever with
respect to its Exchanged Notes.  Upon the Holder’s delivery of its Exchanged
Notes to the Company pursuant to the Exchange, such Exchanged Notes shall be
free and clear of all Liens.

 

SECTION 2.04.                                   Accredited Investor or Qualified
Institutional Buyer.  Each Holder is (a) (i) an “accredited investor” within the
meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D promulgated under the
Securities Act of 1933, as amended (the “Securities Act”), and/or (ii) a
“qualified institutional buyer” within the meaning of Rule 144A promulgated
under the Securities Act and (b) is acquiring the New Notes hereunder for
investment for its own account and not with a view to, or for resale in
connection with, any distribution thereof in a manner that would violate the
registration requirements of the Securities Act or of any state or other
jurisdiction.

 

SECTION 2.05.                                   No Affiliate Status.  Each of
the Holders is not, and has not been during the consecutive three-month period
preceding the date hereof, a director, officer or “affiliate” within the meaning
of Rule 144 promulgated under the Securities Act (an “Affiliate”) of the Company
or any subsidiary of the Company.  To its knowledge, no Holder acquired any of
the Exchanged Notes, directly or indirectly, from an Affiliate of the Company or
any subsidiary of the Company.

 

SECTION 2.06.                                   No Illegal Transactions.  Each
of the Undersigned and each Holder has not, directly or indirectly, and no
person acting on behalf of or pursuant to any understanding with it has,
disclosed to a third party any information regarding the Exchange or engaged in
any transactions in the securities of the Company (including, without
limitation, any Short Sales (as defined below) involving any of the Company’s
securities) since the time that the Undersigned was first contacted by any of
the Company, JMP or any other person regarding the Exchange, this Agreement or
an investment in the New Notes or the Company.  Each of the Undersigned and each
Holder covenants that neither it nor any person acting on its behalf or pursuant
to any understanding with it will disclose to a third party any information
regarding the Exchange or engage, directly or indirectly, in any transactions in
the securities of the Company (including Short Sales) prior to the first to
occur of (a) the time the transactions contemplated by this Agreement are
publicly disclosed by the Company and (b) the close of business on the date set
forth in Section 3.6.  “Short Sales” include, without limitation, all “short
sales” as defined in Rule 200 of Regulation SHO promulgated under the Securities
Exchange Act of 1934, as

 

--------------------------------------------------------------------------------

 

amended (the “Exchange Act”), and all types of direct and indirect stock
pledges, forward sale contracts, options, puts, calls, short sales, swaps,
derivatives and similar arrangements (including on a total return basis), and
sales and other transactions through non-U.S. broker-dealers or foreign
regulated brokers.  Solely for purposes of this Section 2.6, subject to the
Undersigned’s and each Holder’s compliance with their respective obligations
under the U.S. federal securities laws and the Undersigned’s and the Holder’s
respective internal policies, the terms “Undersigned” and “Holder” shall not be
deemed to include any employees, subsidiaries, desks, groups or Affiliates of
the Undersigned or the applicable Holder that are effectively walled off by
appropriate “Fire Wall” information barriers approved by the Undersigned’s or
such Holder’s respective legal or compliance department (and thus such
walled-off parties have not been privy to any information concerning the
Exchange).

 

SECTION 2.07.                                   Adequate Information; No
Reliance.  The Undersigned is a registered investment adviser with the
Securities and Exchange Commission (the “SEC”) acting on behalf of itself and of
Holders who are its investment advisory clients.  The Undersigned acknowledges
and agrees on behalf of itself and each Holder that (a) the Undersigned has been
furnished with all materials it considers relevant to making an investment
decision to enter into the Exchange and has had the opportunity to review the
Company’s filings and submissions with the SEC, including, without limitation,
all information filed or furnished pursuant to the Exchange Act, (b) the
Undersigned has had a full opportunity to ask questions of the Company
concerning the Company, its businesses, operations, financial performances,
financial conditions and prospects, and the terms and conditions of the
Exchange, (c) the Undersigned has had the opportunity to consult with its
accounting, tax, financial and legal advisors to be able to evaluate the risks
and consequences (including any potential original issue discount on the New
Notes) involved in the Exchange and to make an informed investment decision with
respect to such Exchange, (d) neither the Company nor JMP is acting as a
fiduciary or financial or investment advisor to the Undersigned or any Holder
and (e) neither the Undersigned nor any Holder is relying, and none of them has
relied, upon any statement, advice (whether accounting, tax, financial, legal or
other), representation or warranty made by the Company or any of its Affiliates
or representatives including, without limitation, JMP, except for (i) the
publicly available filings and submissions made by the Company with the SEC
under the Exchange Act and (ii) the representations and warranties made by the
Company in this Agreement.

 

SECTION 2.08.                                   No Public Market; Adjustment to
Existing Warrants.  The Undersigned acknowledges and agrees on behalf of itself
and each Holder that no public market exists for the New Notes and that there is
no assurance that a public market will ever develop for the New Notes.  The
Undersigned acknowledges on behalf of itself and each Holder that the exercise
price in respect of the Company’s existing warrants issued on July 11, 2017 will
be reduced in accordance with the terms of such warrants as a result of the
issuance of the New Notes.

 

SECTION 2.09.                                   Risk Factors.  The Undersigned,
on behalf of itself and the other Holders, acknowledges receipt of the Risk
Factors attached hereto as Exhibit B.  The Undersigned and each Holder have read
and understand the Risk Factors attached hereto as Exhibit B, as well as the
Risk Factors contained in the Company’s filings with the Securities and Exchange
Commission.

 

--------------------------------------------------------------------------------

 

SECTION 2.10.                                   Tax Documentation.  The
Undersigned has provided and attached hereto, or will provide no later than two
business days prior to the Closing, properly completed and executed originals of
whichever of the following is applicable to the Undersigned: (a) an Internal
Revenue Service (“IRS”) Form W-9, or (b) IRS Form W-8BEN-E, IRS Form W-8BEN or
other applicable IRS Form W-8 (including any IRS forms, documents or schedules
required to be attached thereto).

 

SECTION 2.11.                                   Covenant to Vote Shares.

 

(a)                                 To the extent the Undersigned or any of the
other Holders is currently, or becomes prior to the date of Stockholder Approval
(as defined in the Indenture) or Secondary Stockholder Approval (as defined in
the warrants that may be issued pursuant to the Indenture prior to the Company
obtaining Stockholder Approval) (collectively, the “Subject Matter”), a holder
of Common Stock (as defined below), the Undersigned, on behalf of itself and
each Holder, hereby appoints the Chief Executive Officer of the Company and
Chief Financial Officer of the Company, and each of them, as proxies and
attorneys-in-fact, each with the power to appoint his substitute, and hereby
authorizes each of them to represent and to vote (or cause to be voted) all
shares of Common Stock that each such Holder is entitled to vote at any meeting
of the holders of the Common Stock at which a vote of such holders regarding the
Subject Matter is held, and any adjournment or postponement thereof. This
irrevocable proxy shall be effective during any period in which the undersigned
is a holder of Common Stock until such time as the Stockholder Approval is
obtained, provided that in no event shall the duration of this irrevocable proxy
exceed the permissible limits of applicable law.

 

(b)                                 Each of the Undersigned and each Holder
hereby revokes any and all prior proxies given by the Undersigned or any Holder
with respect to the Subject Matter and the Company hereby consents to the
revocation of any and all such prior proxies given by the Undersigned or any
Holder to the Company with respect to the Subject Matter. Each of the
Undersigned and each Holder hereby agrees that they shall not grant any proxies
with respect to the Subject Matter, or enter into any agreement or understanding
with any person to vote or give instructions with respect to their shares of
common stock of the Company or the Subject Matter other than as set forth in, or
to effectuate the transactions contemplated by, this Agreement.

 

(c)                                  Prior to the Stockholder Approval, the
Company acknowledges that the Undersigned may transfer any shares of Common
Stock held by such Holder on the date hereof or acquired hereafter and that such
transferred shares will not remain subject to the proxy granted hereby.

 

(d)                                 The Undersigned, on behalf of itself and
each other Holder, agrees to execute and deliver at any time all such further
instruments (including, without limitation, additional irrevocable proxies) as
may be necessary or appropriate to carry out the intent of this proxy.

 

--------------------------------------------------------------------------------

 

ARTICLE III.

 

COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND GUARANTORS

 

Each of the Company and, where specified below, the Guarantors, hereby covenants
as follows, and makes the following representations and warranties, each of
which is and shall be true and correct on the date hereof and at the Closing, to
the Holders and JMP, and all such covenants, representations and warranties
shall survive the Closing.

 

SECTION 3.01.                                   Power and Authorization.  Each
of the Company and the Guarantors is duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, and has the
power, authority and capacity to execute and deliver this Agreement and the
Indenture, to perform its respective obligations hereunder and thereunder, and
to consummate the Exchange contemplated hereby.  No material consent, approval,
order or authorization of, or material registration, declaration or filing with,
any governmental entity is required on the part of either the Company or the
Guarantors in connection with the execution, delivery and performance by the
Company and the Guarantors of this Agreement and the consummation by the Company
and the Guarantors of the transactions contemplated hereby, other than filings
required by the Exchange Act.

 

SECTION 3.02.                                   Valid and Enforceable Agreement;
No Violations.  This Agreement has been duly executed and delivered by the
Company and the Guarantors and constitutes a valid and legally binding
obligation of the Company and the Guarantors, enforceable against the Company
and the Guarantors in accordance with its terms, except that such enforcement
may be subject to the Enforceability Exceptions.  The Indenture, which will be
consistent in all material respects with the indenture governing the Company’s
Existing Notes as modified by the Description of Notes attached as Exhibit C
hereto (the “Description of Notes”), has been duly authorized and at the Closing
will be duly executed and delivered by the Company and the Guarantors and will
constitute a valid and legally binding obligation of the Company and the
Guarantors, enforceable against the Company and the Guarantors in accordance
with its terms, except that such enforcement may be subject to the
Enforceability Exceptions.  The warrants contemplated by the Indenture and
described in the Description of Warrants attached to the Description of Notes
(the “Warrants”), which will be consistent in all material respects with such
Description of Warrants, have been duly authorized by the Company and when
executed in connection with the issuance thereof, if any, as contemplated by the
Indenture will be duly executed and delivered by the Company and will constitute
a valid and legally binding obligations of the Company, enforceable against the
Company in accordance with their terms, except that such enforcement may be
subject to the Enforceability Exceptions. This Agreement, the Indenture, the
Warrants and the consummation of the Exchange (including the issuance of the New
Notes) will not violate, conflict with or result in a breach of or default under
(a) the certificate of incorporation, bylaws or other organizational documents
of the Company or the Guarantors, (b) any material agreement or instrument to
which the Company or any of the Guarantors is a party or by which the Company or
any of the Guarantors or any of their respective assets are bound, or (c) any
laws, regulations or governmental or judicial decrees, injunctions or orders
applicable to the Company or any of the Guarantors, except in the case of
clauses (b) and (c), where such violations, conflicts, breaches or defaults
would not affect the Company’s or Guarantors’ respective businesses or their
respective ability to consummate the transactions contemplated hereby in any
material respect.

 

SECTION 3.03.                                   Validity of the Holders’ New
Notes.  The Holders’ New Notes have been duly authorized by the Company and,
when executed and authenticated in accordance with the provisions of the
Indenture and delivered to the applicable Holder pursuant to the Exchange

 

--------------------------------------------------------------------------------

 

against delivery of the Exchanged Notes in accordance with the terms of this
Agreement, the Holders’ New Notes will be valid and legally binding obligations
of the Company, enforceable in accordance with their terms, except that such
enforcement may be subject to the Enforceability Exceptions, and the Holders’
New Notes will not be subject to any preemptive, participation, rights of first
refusal or other similar rights (other than any such rights that will be waived
prior to Closing).  Assuming the accuracy of each Holder’s representations and
warranties hereunder, the Holders’ New Notes (a) will be issued in the Exchange
exempt from the registration requirements of the Securities Act pursuant to
Section 4(a)(2) of the Securities Act and it will not be necessary to qualify
the Indenture under the Trust Indenture Act of 1939, as amended, (b) will, at
the Closing, be free of any restrictions on resale by such Holder pursuant to
Rule 144 promulgated under the Securities Act (“Rule 144”), and (c) will be
issued in compliance with all applicable state and federal laws concerning the
issuance of the Holders’ New Notes.  For the purposes of Rule 144, the Company
acknowledges that, assuming the accuracy of each Holder’s representations and
warranties hereunder, the holding period of the New Notes may be “tacked” onto
the holding period of the Exchanged Notes as contemplated by
Rule 144(d)(3)(ii) and the Company agrees not to take a position contrary
thereto.

 

SECTION 3.04.                                   Validity of Underlying Common
Stock.  In accordance with the terms of the Indenture, the Holders’ New Notes
will be convertible into cash, common stock of the Company, par value $0.001 per
share (the “Common Stock” and any such Common Stock into which the New Notes or
Warrants may be convertible, the “Conversion Common Stock”), Warrants or a
combination thereof, in certain circumstances and during certain periods as
described in the Indenture (the date of such conversion with respect to each New
Note, the “Conversion Date”). As of the date hereof, 4,389,186 shares of the
Conversion Common Stock have been duly authorized and initially reserved by the
Company for issuance upon conversion of the New Notes.  The Conversion Common
Stock, when issued upon conversion of the Holders’ New Notes in accordance with
the terms of the Holders’ New Notes and the Indenture, will each be validly
issued, fully paid and non-assessable, and the issuance of the Conversion Common
Stock will not be subject to any preemptive, participation, rights of first
refusal or other similar rights.  The Conversion Common Stock to be issued to
the applicable Holder upon conversion will be issued pursuant to an exemption
from the registration requirements of the Securities Act.  Each of the Company
and the Guarantors acknowledges and agrees that the Conversion Common Stock to
be issued to the Holder will not contain any restrictive legend and will be
freely transferable by the Holder without restriction (provided that at the time
of such conversion, the Holder has not been in the preceding three (3) months an
“affiliate” of the Company or the Guarantors as defined in Rule 144 promulgated
under the Securities Act) and such issuance will be effected via DWAC to the
account(s) specified by the Undersigned.

 

SECTION 3.05.                                   Listing Approval.  At or within
one business day immediately following the Conversion Date, any Conversion
Common Stock to be delivered in connection with the applicable conversion shall
be approved for listing on The NASDAQ Global Market (or any other exchange which
the Common Stock may then be listed in accordance with the Indenture), subject
to a notice of issuance.

 

SECTION 3.06.                                   Disclosure.  On or before 9:30
a.m. eastern standard time on the business day following the date of this
Agreement, the Company shall issue a publicly available press release or file
with the SEC a Current Report on Form 8-K disclosing all material terms of the
Exchange.  Without the prior written consent of the Undersigned, none of the
Company, the

 

--------------------------------------------------------------------------------

 

Guarantors or any of their respective controlled Affiliates shall disclose the
name of the Undersigned or any Holder in any filing or announcement, unless such
disclosure is required by applicable law, rule, regulation or legal process. As
of the date hereof, all reports and other documents filed by the Company with
the SEC pursuant to the Securities Exchange Act of 1934, as amended, when
considered as a whole (with the more recent such reports and documents deemed to
amend inconsistent statements contained in any earlier such reports and
documents), do not contain any untrue statement of a material fact or any
omission of a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances in which they were
made, not misleading, other than, any material facts with respect to information
regarding the Exchange.

 

SECTION 3.07.                                   No Litigation.  There is no
action, lawsuit, arbitration, claim or proceeding pending or, to the knowledge
of the Company and the Guarantors, threatened, against the Company or the
Guarantors that would reasonably be expected to impede the consummation of the
transactions contemplated hereby.

 

SECTION 3.08.                                   Stockholder Approval.  The
Company will use its reasonable best efforts to obtain Stockholder Approval (as
defined in the Description of Notes) no later than the sixtieth (60th) day
following the date of the Indenture.

 

SECTION 3.09.                                   Investment Company Act.  The
Company is not and, after giving effect to the transactions contemplated by this
Agreement, will not be required to register as an “investment company” or an
entity “controlled” by an “investment company” within the meaning of the
Investment Company Act of 1940, as amended, and the rules and regulations of the
SEC thereunder.

 

ARTICLE IV.

 

MISCELLANEOUS.

 

SECTION 4.01.                                   Entire Agreement.  This
Agreement and any documents and agreements executed in connection with the
Exchange embody the entire agreement and understanding of the parties hereto
with respect to the subject matter hereof and supersede all prior and
contemporaneous oral or written agreements, representations, warranties,
contracts, correspondence, conversations, memoranda and understandings between
or among the parties or any of their agents, representatives or Affiliates
relative to such subject matter, including, without limitation, any term sheets,
e-mails or draft documents.

 

SECTION 4.02.                                   Construction.  References in the
singular shall include the plural, and vice versa, unless the context otherwise
requires.  References in the masculine shall include the feminine and neuter,
and vice versa, unless the context otherwise requires.  Headings in this
Agreement are for convenience of reference only and shall not limit or otherwise
affect the meanings of the provisions hereof.  Neither party, nor its respective
counsel, shall be deemed the drafter of this Agreement for purposes of
construing the provisions of this Agreement, and all language in all parts of
this Agreement shall be construed in accordance with its fair meaning, and not
strictly for or against either party.

 

--------------------------------------------------------------------------------

 

SECTION 4.03.                                   Governing Law.  This Agreement
shall in all respects be construed in accordance with and governed by the
substantive laws of the State of New York, without reference to its choice of
law rules.

 

SECTION 4.04.                                   Counterparts.  This Agreement
may be executed in counterparts, each of which shall be deemed an original, but
all of which taken together shall constitute one and the same instrument.  Any
counterpart or other signature hereon delivered by facsimile or any standard
form of telecommunication or e-mail shall be deemed for all purposes as
constituting good and valid execution and delivery of this Agreement by such
party.

 

SECTION 4.05.                                   Third Party Beneficiaries.  JMP
is an express third party beneficiary of this Agreement and may rely on the
provisions of this Agreement, including, but not limited to, the respective
covenants, representations and warranties of the Undersigned, each Holder, the
Company and the Guarantors.

 

SECTION 4.06.                                   Other Transactions.  On or
before the date that is nine months from the date of this Agreement, without the
prior written consent of a majority in principal amount of the New Notes issued
at the Closing that remain outstanding, the Company shall not enter into a
binding agreement to consummate any exchange transaction (an “Additional
Exchange Transaction”)  pursuant to which (i) any Existing Notes are exchanged
for new convertible notes at an exchange ratio for such Existing Notes that is
more favorable to any holder of such Existing Notes than $750.00 principal
amount of New Notes per $1,000.00 principal amount of Existing Notes, (ii) the
Company pays any amount of cash to the exchanging holders in connection with the
Additional Exchange Transaction (other than payments of accrued but unpaid
interest on such Existing Notes in accordance with the terms of Section 1.03
hereof) and/or (iii) the Company issues other securities or items of value
(other than cash) in connection with the Additional Exchange Transaction
including, without limitation, debt, preferred stock, warrants or Common Stock,
such that the complete economics of the Additional Exchange Transaction are more
favorable than those offered by the Company hereunder. To the extent the Company
pays any consideration to a holder of New Notes in respect of obtaining any
consent pursuant to this Section 4.06, the Holder shall be entitled to receive
such consideration in an amount proportional to the principal amount of New
Notes then held by the Holder.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

--------------------------------------------------------------------------------

 

EXECUTION VERSION

 

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed as of the date first above written.

 

 

Undersigned:

(in its capacities described in the first paragraph above)

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

Company:

 

 

 

 

 

 

EGALET CORPORATION

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

Guarantors:

 

 

 

 

 

 

EGALET US INC.

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

EGALET LIMITED

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

--------------------------------------------------------------------------------