Exhibit
10(P)


 


	 	 	FILED
	 	 	IN CLERK’S OFFICE
	 	 	U.S. DISTRICT COURT E.D.N.Y.
	 	 	 
	 	 	 ̃       SEP 23 2014        ̃
	 	 	 
	 	 	LONG ISLAND OFFICE


 

	UNITED STATES DISTRICT COURT 	 	 
	EASTERN DISTRICT OF NEW YORK	 	 
	 	X	 
	 	 	 
	UNITED STATES OF AMERICA	 	 
	ex rel. O AND U 2011 PARTNERSHIP 	 	 
	LLP, and on behalf of the STATE OF NEW YORK,	 	 
		 	 
	 	 	 


 

	 	 	Civil Action No. 11-CV-5222
	Plaintiffs,	 	 
	v.	 	(Spatt, J.)
	 	 	(Lindsday, M.J.)


 

	ENZO CLINICAL LABORATORIES, INC	 	 
	and ENZO BIOCHEM, INC.,	 	 
	 	 	 
	Defendants.	 	 
	 	X	 


 


SETTLEMENT AGREEMENT


 


This
Settlement Agreement (the “Agreement”) is entered into among the United States of America, acting through the United
States Department of Justice and on behalf of the Office of Inspector General (“OIG-HHS”) of the Department of Health
and Human Services (“HHS”) (collectively the “United States”), the State of New York, acting through the
Attorney General’s Medicaid Fraud Control Unit (collectively, the “State”), Enzo Biochem, Inc. (“EBI”
or the “Parent”) and Enzo Clinical Laboratories (“ECL”) (collectively, “Enzo”), and relator
O and U 2011 Partnership, LLP (“Relator”) (hereafter, all of the above are collectively referred to as “the
Parties”), through their authorized representatives.


 


RECITALS


 


A. Defendant
EBI is a New York publicly-traded corporation with three operating segments: (1) Enzo Life Sciences; (2) Enzo Therapeutics; and
(3) ECL. EBI’s corporate headquarters are located at 527 Madison Avenue, New York, New York 10022.


 


B. ECL
is a New York Corporation and a wholly-owned subsidiary of EBI, with 



    	 



    	



    



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United States ex rel. O and U Partnership LLP v. Enzo Clinical
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principal
offices in Farmingdale, New York. ECL is a full service regional clinical laboratory which offers a menu of clinical laboratory
tests or procedures used in patient care by physicians to establish or support a diagnosis, monitor treatment or medication, and
search for an otherwise undiagnosed condition.


 


C. At
all relevant times, ECL submitted claims for and received payments for a wide range of clinical laboratory tests that were billed
to government programs provided to patients in the State of New York and elsewhere, including the Medicare Program (“Medicare”),
Title XVIII of the Social Security Act, 42 U.S.C. §§ 1395-1395kkk-l, and the State’s Medicaid program.


 


D. On or about
October 26, 2011, Relator, a partnership formed by former employees of Enzo, filed an action in the United States
District Court for the Eastern District of New York captioned United States ex rel. O and U 2011 Partnership, LLP v. Enzo
Clinical Laboratories, Inc. and Enzo Biochem, Inc., Civil Action No. 011-5222 (the “Civil Action”), pursuant
to the qui tam provisions of the False Claims Act, 31 U.S.C. § 3730(b). Thereafter, on November 22, 2013, Relator
filed an Amended Complaint in the Civil Action.


 


E. The
United States and the State allege that they have certain civil claims against Enzo for engaging in the following alleged conduct,
which occurred at times during the period January 1, 2004 through the Effective Date of this Agreement, as defined in paragraph
31 infra (hereinafter referred to as the “Covered Conduct”):


 


Enzo
improperly input diagnosis codes into claim forms that it caused to be submitted for payment to Centers for Medicare & Medicaid
Services (“CMS”) and the State Medicaid Program. Enzo input the diagnosis codes for the purpose of supporting the
purported medical necessity of tests or other services. Enzo had not obtained the diagnosis codes from physicians who had ordered



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the
tests and services. Specifically, when the codes were not submitted by the physicians, Enzo’s employees would select and
assign codes which they believed would be most likely to lead to reimbursement instead of going back to physicians — as they were
required to do — to obtain the missing codes.


 


F. This
Agreement is neither an admission of liability by Enzo nor a concession by the United States and the State that their claims are
not well founded.


 


G. Relator
claims entitlement under 31 U.S.C. § 3730(d) to a share of the proceeds of this Agreement and to Relator’s reasonable
expenses, attorneys’ fees and costs.


 


H. To
avoid the delay, uncertainty, inconvenience, and expense of protracted litigation of the above claims, and in consideration of
the mutual promises and obligations of this Agreement, the Parties agree and covenant as follows:


 


TERMS AND CONDITIONS


 


1. Enzo
shall pay to the United States Three and One-Half Million Dollars and Zero Cents ($3,500,000.00) (“Federal Settlement Amount”)
and to the State of New York Ten Thousand Two Hundred Forty-Five Dollars and Ninety-Four Cents ($10,245.94) (“New York Medicaid
Settlement Amount”) for a total settlement amount of $3,510,245.94 (“Settlement Amount”). The parties further
agree that interest at a rate of 2.25% per annum will accrue on this Settlement Amount, beginning from May 15, 2014. On the Effective
Date of this Agreement, as defined in paragraph 31 infra, this Settlement Amount shall constitute a debt due and owing
to the United States and the State of New York.


 


2. Enzo
shall discharge its debt to the United States and the State of New York under the following terms and conditions:



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	 	a.	Federal
    Payment Schedule: Enzo shall pay to the United States the principal sum of $2,000,000 plus interest accrued thereon
    at the rate of 2.25% per annum, in accordance with the payment schedule set forth in Schedule A attached hereto. As set forth
    in Schedule A, within 10 business days after the Effective Date of this Agreement, Enzo shall pay the United States the initial
    fixed payment in the amount of $400,000 (“Initial Payment”), plus any interest that may have accrued between May
    15, 2014 and the Effective Date, and thereafter make four additional annual payments (inclusive of interest) in the amount
    of $422,750.28 (“Annual Payments”) due in each of the four subsequent years.
	 	 	 
	 	b.	Effect
    of Recovery in the Patent Case on Federal Settlement Amount and Federal Payment Schedule: As of the Effective
    Date, the Parties acknowledge that in the patent infringement case (United States Patent No. 5,449,667) Enzo Biochem Inc.,
    et al. v. Applera Corp., et al., Case Number 3:04-CV-00929 (D. Ct.) (the “Patent Case”), which is now
    on appeal to the United States Court of Appeals for the Federal Circuit, Enzo BioChem, Inc. and others were awarded a judgment
    (set forth in the case as Document No. 544).
	 	 	 
	 	 	In the event that Enzo does not receive
    any payments in the Patent Case on or before the date the fifth payment is due (as set forth in Schedule A), or before full
    payment has been made pursuant to paragraph 2(a), the Parties agree to reduce the Federal Settlement Amount owed pursuant
    to this Settlement Agreement by $1.5 million (resulting in a total Federal Settlement Amount of $2,000,000, plus interest
    accrued thereon at the rate of 2.25% per annum, as set forth above).
	 	 	 
	 	 	In the event that Enzo receives a
    payment in the Patent Case on or before the date the fifth payment is due (as set forth in Schedule A), or before full payment
    has been made pursuant to paragraph 2(a), within 30 days of Enzo’s receipt thereof, Enzo agrees to pay the United States
    the lesser of $1.5 million or 50% of such payment in the Patent Case, with accrued interest at a rate of 2.25% per annum.
	 	 	 
	 	 	In the event that Enzo receives a
    payment in the Patent Case on or before the date the fifth payment is due (as set forth in Schedule A), or before full payment
    has been made pursuant to paragraph 2(a), and the amount Enzo pays to the United States under this paragraph 2(b) is less
    than $1.5 million, then the Parties agree to reduce the Federal Settlement Amount owed pursuant to this Settlement Agreement
    by the difference between $1.5 million and the amount that Enzo paid to the United States under this 




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	 	 	paragraph 2(b). By way
    of illustration, if Enzo receives payment of $2 million dollars in the Patent Case, Enzo will (within 30 days) pay the United
    States, separate from its scheduled obligations in Paragraph 2(a), $1 million dollars (representing 50% of $2 million) plus
    interest at a rate of 2.25% per annum, and the Federal Settlement Amount will be reduced by $500,000 to a total amount of
    $3 million (representing the difference between $1.5 million and the $1 million payment). Any additional payments Enzo .receives
    from the Patent Case will be accounted for in the same manner, Except as set forth in Paragraph 2(d), Enzo’s receipt
    of payment in the Patent Case will not accelerate Enzo’s payment obligations under Paragraph 2(a) of this Settlement Agreement.
	 	 	 
	 	c.	Contingency:
    If Enzo receives additional capital, whether in the form of an issuance of stock or warrants, a draw down from a new credit
    facility, a draw down from a refinancing of an existing credit facility, or a sale of one or more assets (excluding the sale
    of inventory assets (e.g., assays, kits, raw materials, or other products and/or materials sold by Enzo)), that exceeds
    $10 million in any one fiscal year before the later of (1) the last payment date on Schedule A or (2) full payment pursuant
    to paragraph 2(a), it agrees to pay the United States 20% of such excess (over $10 million) up to the remaining balance of
    the Federal Settlement Amount plus accrued interest at a rate of 2.25% per annum, within 30 days of Enzo’s receipt thereof.
    The parties agree that Enzo’s recovery of money in the following cases do not apply to this contingency provision: Enzo
    Biochem, Inc., et al v. Perkinelmer, Inc., et al., No. 03-CV-3817 (S.D.N.Y.); Affymetrix, Inc. v. Enzo Biochem, Inc.,
    et al., 03-CV-8907 (S.D.N.Y.) and Enzo Life Sciences, Inc. v. Affymetrix, Inc. 04-CV-1555 (S.D.N.Y.).
	 	 	 
	 	d.	Acceleration
    Clause: In the event EBI or ECL are sold or merged or a significant amount of assets (excluding the sale of inventory
    assets (e.g., assays, kits, raw materials, or other products and/or materials sold by Enzo)) of EBI or ECL or any of their
    subsidiaries or affiliated entities is sold, merged, or transferred into another non-affiliated entity within four years of
    the Effective Date of this Agreement, then Enzo shall promptly notify the United States, and all remaining payments owed pursuant
    to the Settlement Agreement shall be accelerated and become immediately due and payable. In addition, if on or before the
    date the fifth payment is due (as set forth in Schedule A), Enzo receives payment in the Patent Case of $20 million or more,
    then all remaining payments owed pursuant to the Settlement Agreement shall be accelerated and become immediately due and
    payable.




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	 	e.	Payment
    Method: All payments set forth in this paragraph 2 shall be made to the United States by electronic funds transfer
    pursuant to written instructions provided by the Office of the United States Attorney for the Eastern District of New York.
    The entire principal balance of the Federal Settlement Amount or any portion thereof, plus any interest accrued on the principal
    as of the date of any prepayment, may be prepaid without penalty.
	 	 	 
	 	f.	Payment
    to New York State: Enzo shall pay to the State the New York Medicaid Settlement Amount ($10,245.94), plus interest
    accrued thereon from May 15, 2014 to the Effective Date of this Agreement at the rate of 2.25% per annum, within 10 business
    days after the Effective Date by electronic funds transfer pursuant to written instructions provided by the Attorney General’s
    Medicaid Fraud Control Unit.
	 	 	 
	 	g.	Relator
    Attorneys’ Fees: Relator and Enzo have agreed to the amount of reasonable attorneys’ fees and costs
    to be paid pursuant to 31 U.S.C § 3730(d). This amount shall be paid as an electronic funds transfer to the Relator’s
    attorney (to be allocated in accordance with their instructions) no later than ten (10) business days after the stipulations
    of dismissal are filed as set forth in Paragraph 21.


 


3. In
the event that Enzo fails to pay any amount as provided in Paragraph 2 above within five (5) business days of the date on which
such payment is due, Enzo shall be in default of its payment obligations (“Default”). The United States will provide
written notice of the Default to Enzo and Enzo shall have the opportunity to cure such Default within five (5) business days from
the date of receipt of the notice. Notice of Default will be delivered to David Goldberg, Vice President, Corporate Development,
Enzo Biochem, Inc., or to such other representative as Enzo shall designate in advance in writing. If Enzo fails to cure such
Default within five (5) business days of receiving the Notice of Default (“Uncured Default”), the remaining unpaid balance
of the Federal Settlement Amount (subject to Paragraph 2), shall become immediately due and payable, and interest shall accrue
at the rate of 12% per annum compounded daily from the date of Default on the remaining unpaid total (principal and interest balance).
Upon an uncured default, the



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United
States, at its sole option, may: (a) offset the remaining unpaid balance from any amounts due and owing to Enzo by any department,
agency, or agent of the United States at the time of Default; (b) collect the entire unpaid balance of the Federal Settlement
Amount (subject to Paragraph 2), plus interest, including 12% interest from the date of Default, and all other amounts due upon
the event of Default as specified in this paragraph; (c) file a civil action for the Covered Conduct; or (d) exercise any other
rights granted by law or in equity, including referral of this matter for private collection. In the event a complaint is filed
pursuant to subsection (c) of this paragraph, Enzo agrees not to plead, argue, or otherwise raise any defenses under the theories
of statute of limitations, laches, estoppel, res judicata, or similar theories to the allegations in the complaint, except to
the extent such defenses were available to Enzo on the Effective Date of this Agreement. Enzo agrees not to contest any consent
judgment, offset, recoupment and/or collection action undertaken by the United States pursuant to this paragraph, either administratively
or in any state or federal court. Enzo shall pay to the United States all reasonable costs of collection and enforcement under
this paragraph, including attorneys’ fees and expenses.


 


4. Notwithstanding
the foregoing, in the event of Uncured Default as defined in Paragraph 3, above, OIG-HHS may exclude Enzo from participating in
all Federal health care programs until Enzo pays the Remaining Federal Settlement Amount (subject to Paragraph 2) and Default
Interest Balance, and Collection Costs as set forth in Paragraph 3 above. OIG-HHS will provide written notice of any such exclusion
to Enzo. Enzo waives any further notice of exclusion under 42 U.S.C. § 1320a-7(b)(7), and agrees not to contest exclusion
on the basis of the Uncured Default either administratively or in any state or federal court. Reinstatement to



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program
participation is not automatic. If at the end of the period of exclusion Enzo wishes to apply for reinstatement, Enzo must submit
a written request for reinstatement to OIG-HHS in accordance with the provisions of 42 C.F.R. §§ 1001.3001-.3005. Enzo
will not be reinstated unless and until HHS-OIG approves such request for reinstatement. The option for Exclusion for an Uncured
Default as defined in this Paragraph is in addition to, and not in lieu of, the options identified in this Agreement or otherwise
available.


 


5. Subject
to the exceptions in Paragraph 8 (concerning excluded claims) below, and conditioned upon Enzo’s discharging its debt to
the United States in accordance with Paragraph 2, the United States releases Enzo, together with its current and former parent
corporations; direct and indirect subsidiaries; brother or sister corporations; divisions; current or former owners, officers
and directors; and the successors and assigns of any of them, from any civil or administrative monetary claim the United States
has for the Covered Conduct under the False Claims Act, 31 U.S.C. §§ 3729-3733; the Civil Monetary Penalties Law, 42
U.S.C. § 1320a-7a; the Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-3812; any statutory provision creating
a cause of action for civil damages or civil penalties for which the Civil Division of the Department of Justice has actual and
present authority to assert and compromise pursuant to 28 C.F.R. Part 0, Subpart
I. 0.45(d); or the common law theories of payment by mistake, unjust enrichment, and fraud.


 


6. Subject
to the exceptions in Paragraph 8 (concerning excluded claims) below, and conditioned upon Enzo’s discharging its debt to
the State of New York in accordance with Paragraph 2, the State releases Enzo, together with its current and former parent
corporations;



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direct and indirect
subsidiaries; brother or sister corporations; divisions; current or former owners, officers, and directors, and
the successors and assigns of any of them, from any civil or administrative monetary claim the State has for the Covered
Conduct under the State False Claims Act, State Finance Law § 187 et seq., any statutory provision creating a
cause of action for civil damages or civil penalties for which the Attorney General’s Medicaid Fraud Control Unit has
actual and present authority to assert and compromise; or the common law theories of payment by mistake, unjust enrichment,
and fraud.


 


7. Conditioned upon
Enzo’s discharging its debt to the United States and the State of New York in accordance with Paragraph 2, Relator, for
itself and for its current or former owners, partners, officers, directors, and affiliates; and the successors and assigns of
any of them, agrees to dismiss with prejudice any currently pending claims against Enzo and to release Enzo, together with its
current and former parent corporations; direct and indirect subsidiaries; brother or sister corporations; divisions; current or
former owners, officers, directors, and affiliates; and the successors and assigns of any of them, from any and all claims that
it has asserted, could have asserted, or may assert in the future against Enzo, its current and former parent corporations, direct
and indirect subsidiaries, brother or sister corporations, divisions, current or former owners, officers, directors, and affiliates,
and the successors and assigns of any of them, including without limitation the matters set forth in Relator’s complaint
and amended complaint filed in this Civil Action, any civil monetary claim the Relator has or may have for itself or on behalf
of the United States or the State of New York under the False Claims Act, 31 U.S.C. §§ 3729-3733, or the New York False
Claims Act, N.Y. State Fin. Law §§ 187 et seq.



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8. Notwithstanding the releases given in paragraphs 5 and 6 of this Agreement, or any other term of this Agreement, the following claims of the United States and the State are specifically
reserved and are not released:


 


	 	a.	Any liability arising under Title 26, U.S. Code (Internal Revenue Code);
	 	 	 
	 	b.	Any criminal liability;
	 	 	 
	 	c.	Except as explicitly stated in this Agreement, any administrative liability, including mandatory or permissive exclusion from Federal health care programs;
	 	 	 
	 	d.	Any liability to the United States (or its agencies) for any conduct other than the Covered Conduct;
	 	 	 
	 	e.	Any liability which may be asserted by or on behalf of any payor or insurer paid by the State’s Medicaid program on a capitated basis;
	 	 	 
	 	f.	Any liability based upon such obligations as are created by this Agreement;
	 	 	 
	 	g.	Any liability for express or implied warranty claims or other claims for defective or deficient products or services, including quality of goods and services;
	 	 	 
	 	h.	Any liability for failure to deliver goods or services due; and
	 	 	 
	 	i.	Any liability for personal injury or property damage or for other consequential damages arising from the Covered Conduct.


 


9.
Relator and its current or former owners, partners, officers, directors, and affiliates; and the successors and assigns of any
of them shall not object to this Agreement but agrees and confirm that this Agreement is fair, adequate, and reasonable under all
the circumstances, pursuant to 31 U.S.C. § 3730(c)(2)(B). Payments by the United States and the State to Relator, as provided



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for
by 31 U.S.C. § 3730(d)(1) and N.Y. State Fin. Law § 190(6)(a), are not included in this Agreement, and will be the subject
of separate agreements. The United States and the Relator have agreed on a Relator’s share of the Federal Settlement Amount
of 17%; the State of New York and the Relator have agreed on a Relator’s share of the New York Medicaid Settlement Amount
of 15%. Payments made to Relator pursuant to 31 U.S.C. § 3730(d)(1) and N.Y. State Fin. Law § 190(6)(a) are contingent
upon the United States and the State receiving the Settlement Amount payments set forth in Schedule A and in paragraph 2 above.
It is expressly understood and agreed that the United States and the State in no way promise, guarantee, nor are liable to Relator
for the collection or payment of any funds pursuant to this Agreement or the payment of Relator’s share except as provided
herein for funds actually collected and received by the United States and the State. Contingent upon actual receipt of payments,
including accrued interest as set forth in Schedule A, the United States and the State of New York shall promptly inform Relator’s
counsel of such payment’s receipt, and pay to Relator any agreed-upon Relator’s share as soon as feasible after receipt,
in accordance with payment instructions to be provided in writing by Relator’s counsel.


 


10. Enzo
has provided sworn financial disclosure statements (the “Financial Statements”) to the United States and the United
States has relied on the accuracy and completeness of those Financial Statements in reaching this Agreement. Enzo warrants that
the Financial Statements are complete, accurate, and current as of the date submitted, and that there have been no material changes
in Enzo’s ability to pay the Federal Settlement Amount since that time. If the United States learns of asset(s) in which
Enzo had an interest at the time of this



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Agreement that
were not disclosed in the Financial Statements, or to the United States during subsequent negotiations relating to this settlement,
or if the United States learns of any misrepresentation by Enzo on, or in connection with, the Financial Statements, and if such
nondisclosure or misrepresentation changes the estimated assets and liabilities or results of operation set forth in the Financial
Statements by $350,000 or more, the United States may at its option: (a) rescind this Agreement and file suit based on the Covered
Conduct, or (b) let the Agreement stand and collect the full Settlement Amount plus one hundred percent (100%) of the value of
the net worth of Enzo previously undisclosed. Enzo agrees that if the United States discovers such a nondisclosure or misrepresentation,
it will not contest any collection action undertaken by the United States pursuant to this provision, and pay the United States
all reasonable costs incurred in such an action, including attorney’s fees and expenses.


 


11. In
the event that the United States, pursuant to Paragraph 10 (concerning disclosure of assets), above, opts to rescind this Agreement,
Enzo agrees not to plead, argue, or otherwise raise any defenses under the theories of statute of limitations, laches, estoppel,
res judicata, or similar theories, to any civil or administrative claims that (a) are filed by the United States within 60 calendar
days of written notification to Enzo that this Agreement has been rescinded, and (b) relate to the Covered Conduct, except to the
extent these defenses were available on the Effective Date.


 


12. Enzo
waives and shall not assert any defenses Enzo may have to any criminal prosecution or administrative action relating to the Covered
Conduct that may be based in whole or in part on a contention that, under the Double Jeopardy Clause in the Fifth Amendment of
the



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Clinical Labs, et al.


 


Constitution,
or under the Excessive Fines Clause in the Eighth Amendment of the Constitution, this Agreement bars a remedy sought in such criminal
prosecution or administrative action. Nothing in this paragraph or any other provision of this Agreement constitutes an agreement
by the United States or the State concerning the characterization of the Settlement Amount for purposes of the Internal Revenue
laws, Title 26 of the United States Code.


 


13. Enzo
fully and finally releases the United States and the State, their agencies, officers, agents, employees, and servants, from any
claims (including attorney’s fees, costs, and expenses of every kind and however denominated) that Enzo has asserted, could have
asserted, or may assert in the future against the United States and the State, their agencies, officers, agents, employees, and
servants, related to the Covered Conduct and the investigation and prosecution thereof by the United States and the State.


 


14. Enzo
fully and finally releases the Relator, and its current or former owners, agents, attorneys, partners, officers, directors, and
affiliates; and the successors and assigns of any of them, from any claims (including attorney’s fees, costs, and expenses
of every kind and however denominated) that Enzo has asserted, could have asserted, or may assert in the future against the Relator,
its current or former owners, agents, attorneys, partners, officers, directors, and affiliates; and the successors and assigns
of any of them related to the matters set forth in the qui tam complaint and amended complaint filed in this Civil Action.


 


15. The
Settlement Amount shall not be decreased as a result of the denial of claims for payment now being withheld from payment by any
Medicare contractor (e.g.,
Medicare Administrative Contractor, fiscal intermediary, carrier or any state payer) or the State’s Medicaid



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program, related
to the Covered Conduct; and Enzo agrees not to resubmit to any Medicare contractor or any State payer any previously denied claims
related to the Covered Conduct, and agrees not to appeal any such denials of claims.


 


16. Enzo
agrees to the following:


 


	 	a.	Unallowable Costs Defined: All costs (as defined in the Federal Acquisition Regulation, 48 C.F.R. § 31.205-47; and in Titles XVIII and XIX of the Social Security Act, 42 U.S.C. §§ 1395-1395kkk and 1396-1396w-5; and the regulations and official program directives promulgated thereunder) incurred by or on behalf of Enzo, its present or former officers, directors, employees, shareholders, and agents in connection with:
	 	 	 	 
	 	 	i.	the matters covered by this Agreement;
	 	 	 	 
	 	 	ii.	the United States’ audit(s) and civil investigation(s) of the matters covered by this Agreement;
	 	 	 	 
	 	 	iii.	Enzo’s investigation, defense, and corrective actions undertaken in response to the United States’ audit(s) and civil investigation(s) in connection with the matters covered by this Agreement (including attorney’s fees);
	 	 	 	 
	 	 	iv.	the negotiation and performance of this Agreement; and
	 	 	 	 
	 	 	v.	the payment Enzo makes to the United States pursuant to this Agreement and any payments that Enzo may make to Relator, including costs and attorneys’ fees,


 


are
unallowable costs for government contracting purposes and under the Medicare Program, Medicaid Program, TRICARE Program, and
Federal Employees Health Benefits Program (“FEHBP”) (hereinafter referred to as “Unallowable
Costs”).


 


	 	b.	Future Treatment of Unallowable Costs: If applicable, Unallowable Costs shall be separately determined and accounted for by Enzo, and Enzo shall not charge such Unallowable Costs directly or indirectly to any contracts with the United States or any State Medicaid program, or seek payment




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Clinical Labs, et al.


 


	 	 	for such Unallowable
    Costs through any cost report, cost statement, information statement, or payment request submitted by Enzo or any of its subsidiaries
    or affiliates to the Medicare, Medicaid, TRICARE, or FEHBP Programs.
	 	 	 
	 	c.	Treatment of Unallowable Costs Previously Submitted for Payment: If applicable, Enzo further agrees that within 90 days of the Effective Date of this Agreement it shall identify to applicable Medicare and TRICARE fiscal intermediaries, carriers, and/or contractors, and Medicaid and FEHBP fiscal agents, any Unallowable Costs (as defined in this Paragraph) included in payments previously sought from the United States, or any State Medicaid program, including, but not limited to, payments sought in any cost reports, cost statements, information reports, or payment requests already submitted by Enzo or any of its subsidiaries or affiliates, and shall request, and agree, that such cost reports, cost statements, information reports, or payment requests, even if already settled, be adjusted to account for the effect of the inclusion of the Unallowable Costs. Enzo agrees that the United States, at a minimum, shall be entitled to recoup from Enzo any overpayment plus applicable interest and penalties as a result of the inclusion of such Unallowable Costs on previously-submitted cost reports, information reports, cost statements, or requests for payment.
	 	 	 
	 	d.	Any payments due after the adjustments have been made shall be paid to the United States pursuant to the direction of the Department of Justice and/or the affected agencies. The United States reserves its rights to disagree with any calculations submitted by Enzo or any of its subsidiaries or affiliates on the effect of inclusion of Unallowable Costs (as defined in this Paragraph) on Enzo or any of its subsidiaries or affiliates’ cost reports, cost statements, or information reports.
	 	 	 
	 	e.	Nothing in this Agreement shall constitute a waiver of the rights of the United States to audit, examine, or re-examine Enzo’s books and records to determine that no Unallowable Costs have been claimed in accordance with the provisions of this Paragraph.


 


17. This
Agreement is intended to be for the benefit of the Parties only. The Parties do not release any claims against any other
person or entity, except to the extent provided for in Paragraph 18 (waiver for beneficiaries paragraph), below.



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Agreement, Civil Action No. 11-CV-5222


United States ex rel.
O and U Partnership LLP v. Enzo Clinical Labs, et al.


 


18.
Enzo agrees that it waives and shall not seek payment for any of the health care billings covered by this Agreement from any health
care beneficiaries or their parents, sponsors, legally responsible individuals, or third party payors based upon the claims defined
as Covered Conduct.


 


19.
Enzo warrants that it has reviewed its financial situation and that it currently is solvent within the meaning of 11 U.S.C. §§
547(b)(3) and 548(a)(l)(B)(ii)(I), and (a) shall remain solvent following payment of the Settlement Amount due as of the Effective
Date of the Agreement (either through payment or by transfer of the Withhold Amount to the State) and (b) expects to remain solvent
following payment of the remainder of the Settlement Amount. Further, the Parties warrant that, in evaluating whether to execute
this Agreement, they (a) have intended that the mutual promises, covenants, and obligations set forth herein constitute a contemporaneous
exchange for new value given to Enzo, within the meaning of 11 U.S.C. § 547(c)(1), and (b) conclude that these mutual promises,
covenants, and obligations do, in fact, constitute such a contemporaneous exchange. Further, the Parties warrant that the mutual
promises, covenants, and obligations set forth herein are intended to and do, in fact, represent a reasonably equivalent exchange
of value that is not intended to hinder, delay, or defraud any entity to which Enzo was or became indebted to on or after the
date of this transfer, within the meaning of 11 U.S.C. § 548(a)(1).


 


20.
If within 91 days of the Effective Date of this Agreement or of any payment made under this Agreement, Enzo commences, or a third
party commences, any case, proceeding, or other action under any law relating to bankruptcy, insolvency, reorganization, or relief
of debtors



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Agreement, Civil Action No. 11-CV-5222


United States ex rel.
O and U Partnership LLP v. Enzo Clinical Labs, et al.


 


(a)
seeking to have any order for relief of Enzo’s debts, or seeking to adjudicate Enzo as bankrupt or insolvent; or (b) seeking
appointment of a receiver, trustee, custodian, or other similar official for Enzo or for all or any substantial part of Enzo’s
assets, Enzo agrees as follows:


 


	 	a.	Enzo’s obligations under
    this Agreement may not be avoided pursuant to 11 U.S.C. § 547, and Enzo shall not argue or otherwise take the position
    in any such case, proceeding, or action that: (i) Enzo’s obligations under this Agreement may be avoided under 11 U.S.C.
    § 547; (ii) Enzo was insolvent at the time this Agreement was entered into, or became insolvent as a result of the payments
    made to the United States or the State; or (iii) the mutual promises, covenants, and obligations set forth in this Agreement
    do not constitute a contemporaneous exchange for new value given to Enzo.
	 	 	 
	 	b.	If Enzo’s obligations under
    this Agreement are avoided for any reason, including, but not limited to, through the exercise of a trustee’s avoidance
    powers under the Bankruptcy Code, the United States, at its sole option, may rescind the releases in this Agreement and bring
    any civil and/or administrative claim, action, or proceeding against Enzo for the claims that would otherwise be covered by
    the release provided in Paragraph 5 above. Enzo agrees that: (i) any such claims, actions, or proceedings brought by the United
    States are not subject to an “automatic stay” pursuant to 11 U.S.C. § 362(a) as a result of the action, case,
    or proceedings described in the first clause of this paragraph, and Enzo shall not argue or otherwise contend that the United
    States’ claims, actions, or proceedings are subject to an automatic stay; (ii) Enzo shall not plead, argue, or otherwise
    raise any defenses under the theories of statute of limitations, laches, estoppel, res judicata, or similar theories, to any
    such civil or administrative claims, actions, or proceedings that are brought by the United States within 60 calendar days
    of written notification to Enzo that the releases have been rescinded pursuant to this paragraph, except to the extent such
    defenses were available on October 26, 2011; and (iii) the Government has a valid claim against Enzo in the amount of $3,500,000.00,
    and the United States may pursue its claim in the case, action, or proceeding referenced in the first clause of this paragraph,
    as well as in any other case, action, or proceeding.
	 	 	 
	 	c.	Enzo acknowledges that its agreements
    in this paragraph are provided in exchange for valuable consideration provided in this Agreement.


 


21.
Contemporaneously with the filing of this Settlement Agreement, the United States





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Settlement
Agreement, Civil Action No. 11-CV-5222


United States ex rel.
O and U Partnership LLP v. Enzo Clinical Labs, et al.


 


and
State shall file in this Civil Action a Notice of Partial Intervention and a Proposed Unsealing Order. Upon receipt of the Initial
Payment described in Paragraph 2(a), above, the United States, State and Relator shall promptly sign and file a Joint Stipulation
of Dismissal of this Civil Action pursuant to Rule 41(a)(1). The dismissal shall be with prejudice as to Relators. With respect
to the United States and State of New York, the dismissal shall be with prejudice as to the allegations contained in the Covered
Conduct, and without prejudice as to any other allegations contained in Relator’s complaints.


 


22.
Except as expressly provided to the contrary in this Agreement, each Party shall bear its own legal and other costs incurred in
connection with this matter, including the preparation and performance of this Agreement.


 


23.
Each Party and signatory to this Agreement represents that it freely and voluntarily enters in to this Agreement without any degree
of duress or compulsion.


 


24.
This Agreement is governed by the laws of the United States. The Parties agree that the exclusive jurisdiction and venue for any
dispute arising between and among the Parties relating to this Agreement is the United States District Court for the Eastern District
of New York. For purposes of construing this Agreement, this Agreement shall be deemed to have been drafted by all Parties to
this Agreement and shall not, therefore, be construed against any Party for that reason in any subsequent dispute.


 


25.
This Agreement constitutes the complete agreement between the Parties. This Agreement may not be amended except by written consent
of the Parties.


 


26. The undersigned
counsel represent and warrant that they are fully authorized to



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Settlement
Agreement, Civil Action No. 11-CV-5222


United States ex rel.
O and U Partnership LLP v. Enzo Clinical Labs, et al.


 


execute this
Agreement on behalf of the persons and entities indicated below.


 


27.
This Agreement may be executed in counterparts, each of which constitutes an original and all of which constitute one and the
same Agreement.


 


28.
This Agreement is binding on Enzo’s successors, transferees, heirs, and assigns.


 


29.
This Agreement is binding on Relators’ successors, transferees, heirs, and assigns.


 


30.
All parties consent to the United States’ and State of New York’s disclosure of this Agreement, and information about
this Agreement, to the public.


 


31.
This Agreement is effective on the date of signature of the last signatory to the Agreement (the “Effective Date of this
Agreement”). Signatures delivered by facsimile transmission or as .pdf attachments shall constitute acceptable, binding
signatures for purposes of this Agreement.



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Settlement
Agreement, Civil Action No. 11-CV-5222


United
States ex rel. O and U Partnership LLP v. Enzo Clinical Labs, et al.


 


THE
UNITED STATES OF AMERICA


 


	 	 	 	 	LORETTA E. LYNCH

    United States Attorney

    Eastern District of New York	 
	 	 	 	 	 	 
	DATED: 	9/22/14	 	BY:		 
	 	 	 	 	KENNETH M. ABELL	 
	 	 	 	 	Assistant United States Attorney	 
	 	 	 	 	Eastern District of New York	 


 

	DATED: 	9/19/14	 	BY:		 
	 	 	 	 	ROBERT K. DECONTI	 
	 	 	 	 	Assistant Inspector General for Legal Affairs	 
	 	 	 	 	Office of Counsel to the Inspector General	 
	 	 	 	 	Office of Inspector General	 
	 	 	 	 	United States Department of Health and	 
	 	 	 	 	Human Services	 




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Settlement
Agreement, Civil Action No. 11-CV-5222


United
States ex rel. O and U Partnership LLP v. Enzo Clinical Labs, et al.


 


STATE
OF NEW YORK


 


	 	 	 	 	ERIC SCHNEIDERMAN

    Attorney General

    State of New York	 
	 	 	 	 	 	 
	DATED:  	9/22/14	 	BY:	 	 
	 	 	 	 	CAROLYN ELLIS	 
	 	 	 	 	Special Assistant Attorney General	 
	 	 	 	 	State of New York	 




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Settlement
Agreement, Civil Action No. 11-CV-5222


United
States ex rel. O and U Partnership LLP v. Enzo Clinical Labs, et al.


 


DEFENDANT
ENZO 


 


By
signing below, I confirm that I have read and understood the above.


 


	 	AGREED AND CONSENTED TO:	 
	 	 	 
	 		 
	 	David C. Goldberg	 
	 	Vice President	 
	 	Corporate Development	 
	 	Enzo Biochem, Inc.	 


 


On the
19th day of Sept. in the year 2014, before me, the undersigned, personally appeared David Goldberg, personally
known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within
instrument.


 


	 	 	 
	 	 	 
	 	 	 
	 	NOTARY PUBLIC	 


 

	Dated:  	__________ , _____	 	 	Approved as to Form:
	 	 	 	 	GARFUNKEL WILD, P.C.
	 	 	 	 	Attorneys for Defendant


 

	 	By:	 	 
	 	 	Robert A. Del Giorno, Esq.	 
	 	 	Garfunkel Wild, P.C.	 
	 	 	111 Great Neck Road, Sixth Floor	 
	 	 	Great Neck, NY 11021	 
	 	 	Tel. (516) 393-2505	 
	 	 	Fax. (516) 918-5683	 




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Settlement
Agreement, Civil Action No. 11-CV-5222


United
States ex rel. O and U Partnership LLP v. Enzo Clinical Labs, et al.


 


DEFENDANT
ENZO 


 


By
signing below, I confirm that I have read and understood the above.


 


	 	AGREED AND CONSENTED TO:	 
	 	 	 
	 		 
	 	David C. Goldberg	 
	 	Vice President 	 
	 	Corporate Development 	 
	 	Enzo Biochem, Inc.	 


 


On
the _____ day of ______________ in the year ________, before me, the undersigned, personally appeared _____________, personally known to me or
proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within
instrument.


 


	 	 	 
	 	 	 
	 	NOTARY PUBLIC	 


 

	Dated:  	September 22, 2014	 	 	Approved as to Form:
	 	 	 	 	GARFUNKEL WILD, P.C.
	 	 	 	 	Attorneys for Defendant


 

	 	By:		 
	 	 	Robert A. Del Giorno, Esq.	 
	 	 	Garfunkel Wild, P.C.	 
	 	 	111 Great Neck Road, Sixth Floor	 
	 	 	Great Neck, NY 11021	 
	 	 	Tel. (516) 393-2505	 
	 	 	Fax. (516) 918-5683	 




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Settlement
Agreement, Civil Action No. 11-CV-5222


United
States ex rel. O and U Partnership LLP v. Enzo Clinical Labs, et al.




 


RELATORS


 


By
signing below, I confirm that I have read and understood the above.


 


	 	AGREED AND CONSENTED TO:	 
	 		 
	 	Joy Reiher, Partner	 
	 	O and U 2011 Partnership LLP	 
	 	 	 
	 	AGREED AND CONSENTED TO:	 
	 	 	 
	 	 	 
	 	Ruben Fantauzzi, Partner	 
	 	O and U 2011 Partnership LLP	 




 


On the 19 day of September
in the year 2014, before me, the  undersigned, personally appeared Joy Reiher, personally known to me or proved
to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument.


 


	 	 		 
	 	 	 	 
	 	 	 	 
	 	 	NOTARY PUBLIC	 
	 	 	 	 
	Dated: 9/19, 2014	 	Approved as to Form:

    BLANK ROME LLP 

    Attorneys for Relator	 
	 	 	 	 
	 	By:	 	 
	 	 	Thomas J. Poulin, Esq.

    Blank Rome LLP
Watergate 600 New Hampshire Ave., NW
Washington, DC 20037
Phone: 202.772.5986
Fax: 202.572.8432	 








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Settlement
Agreement, Civil Action No. 11-CV-5222


United
States ex rel. O and U Partnership LLP v. Enzo Clinical Labs, et al.




 


RELATORS


 


By signing below,
I confirm that I have read and understood the above.


 


	 	AGREED AND CONSENTED TO:	 
	 	 	 
	 	 	 
	 	Joy Reiher, Partner

    O and U 2011 Partnership LLP	 
	 	 	 
	 	AGREED AND CONSENTED TO:	 
	 		 
	 	Ruben Fantauzzi, Partner

    O and U 2011 Partnership LLP	 


 


On the 19 day of September
in the year 2014, before me, the undersigned, personally appeared Ruben Fantauzzi, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument.


 


	 	 		 
	 	NOTARY PUBLIC	 
	 	 	 	 
	Dated: September 19, 2014	 	Approved as to Form:

    BLANK ROME LLP 

    Attorneys for Relator	 
	 	 	 	 
	 	By:	 	 
	 	 	Thomas J. Poulin, Esq.

    Blank Rome LLP

    Watergate 600 New Hampshire Ave., NW

    Washington, DC 20037

    Phone: 202.772.5986

    Fax: 202.572.8432	 




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Settlement
Agreement, Civil Action No. 11-CV-5222


United
States ex rel. O and U Partnership LLP v. Enzo Clinical Labs, et al.


 


RELATORS


 


By signing below, I confirm that I have
read and understood the above.


 


	 	AGREED
    AND CONSENTED TO:	 
	 	 	 
	 	 	 
	 	Joy Reiher, Partner

    O and U 2011 Partnership LLP	 
	 	 	 
	 	AGREED AND CONSENTED
    TO:	 
	 	 	 
	 	 	 
	 	Ruben Fantauzzi, Partner

    O and U 2011 Partnership LLP	 


 


On
the         day of                                 in the year                        ,
before me, the undersigned, personally appeared                   , personally
known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within
instrument.


 


	 	 	 	 
	 	 	NOTARY PUBLIC	 
	 	 	 	 
	Dated: 9/19, 2014	 	Approved as to Form:

    BLANK ROME LLP 

    Attorneys for Relator	 
	 	 	 	 
	 	By:	 	 
	 	 	Thomas J. Poulin, Esq.

    Blank Rome LLP

    Watergate 600 New Hampshire Ave., NW

    Washington, DC 20037

    Phone: 202.772.5986

    Fax: 202.572.8432	 




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Settlement
Agreement, Civil Action No. 11-CV-5222


United
States ex rel. O and U Partnership LLP v. Enzo Clinical Labs, et al.


 


SO ORDERED.


 


	 	 
	HONORABLE ARTHUR D. SPATT
SENIOR UNITED STATES DISTRICT JUDGE



 


 


	A TRUE COPY
 ATTEST	 
	DATE 	9/25 2014	
	 	DOUGLAS C. PALMER	 
	 	CLERK	 
	BY		 
	 	DEPUTY CLERK	 



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