Document:

Exhibit 10.2

 

EMPLOYMENT SEPARATION AGREEMENT
 AND GENERAL RELEASE

 

THIS EMPLOYMENT SEPARATION AGREEMENT AND GENERAL RELEASE (the “Agreement”) is entered into by and between Egalet Corporation, a Delaware Corporation (the “Company”), and Stanley J. Musial (“Executive” or “Musial”), effective following Executive’s signature of it without timely revocation (the “Effective Date”).

 

WHEREAS, the Company and Executive are parties to that Employment Agreement dated February 11, 2014 (“Employment Agreement”);

 

WHEREAS, Executive has tendered his resignation effective November 9, 2018 (the “Separation Date”);

 

WHEREAS, Company and Executive desire that Executive assist with a transition by providing consulting services through December 31, 2018; and

 

WHEREAS, the Company and Executive desire to resolve any and all disputes between them, including but not limited to with respect to any of Executive’s severance rights, on the terms and conditions set forth in this Agreement.  For the avoidance of doubt, nothing in this Agreement will be deemed to release or waive Executive’s right to indemnification and advancement by the Company under any applicable contract or law.

 

NOW, THEREFORE, in consideration of the mutual promises herein contained, the parties agree as follows:

 

1.                                      Payment of Accrued Wages and Expenses Through the Separation Date.

 

(a)                           Within thirty days after the Separation Date, the Company shall issue to Executive his final paycheck, reflecting (i) Executive’s fully earned but unpaid base salary, through the Separation Date at the rate then in effect, and (ii) all accrued, unused vacation due Executive through the Separation Date.  Except as otherwise set forth herein, Executive acknowledges and agrees that with his final check, Executive will have received all monies, bonuses, commissions, or other compensation he earned or was due during his employment by the Company.

 

(b)                           Expense Reimbursements.  The Company, within thirty (30) days after the Separation Date, will reimburse Executive for any and all reasonable and necessary business expenses incurred by Executive in connection with the performance of his job duties prior to the Separation Date.  Executive shall submit such expenses to the Company with supporting receipts and/or documentation no later than thirty (30) days after the Separation Date.

 

(c)                            Benefits.  With the exception of healthcare benefits for Executive which continue until and including November 30, 2018, Executive’s entitlement to benefits from the Company, and eligibility to participate in the Company’s benefit plans, shall cease on the Separation Date. Executive may elect to and is eligible to receive continued healthcare

 

 

coverage at Executive’s own expense pursuant to the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) in accordance with the provisions of COBRA.  Executive will receive a lump sum payment equal to 102% of the total cost of his current group medical, dental and vision insurance premiums for the month of December in his final paycheck.  COBRA information will be provided via mail.

 

2.                                      Consulting Service.  Executive agrees to reasonably assist with the orderly transition of his duties and assist the Company’s outside professional services firm from November 10, 2018 through December 31, 2018 provided that it does not interfere with other gainful employment.  In consideration for the provision of these consulting services, Executive shall receive gross payments of $43,333.33 through the Company’s normal payroll process and subject to applicable withholding on or about each of November 30, 2018, December 15, 2018 and December 31, 2018 (“Consulting Service Payments”).

 

3.                                      Continuing Obligations.  Executive agrees to cooperate with the Company and the Company’s legal counsel to the fullest extent possible with respect to any pending or future governmental or regulatory investigation, civil or administrative proceeding or arbitration, legal proceedings, and litigation, including any internal investigations related thereto. Such cooperation shall include but not be limited to telephone and in-person conferences with the Company’s personnel and counsel and giving testimony at deposition and/or trial.

 

4.                                      Separation Benefits.  Except as otherwise set forth herein, Executive acknowledges and agrees that he is not entitled to any severance or termination benefits under any severance plan or program of the Company.

 

5.                                      Confirmation of Continuing Obligations.

 

(a)                           Restrictive Covenants.  Executive acknowledges that he continues to be bound by the Company Remedies and the Restrictive Covenants provisions set forth in Sections 7 and 8 of the Employment Agreement or any other agreement governing the use of the Company’s confidential information that Executive signed in connection with Executive’s employment in accordance with the terms thereof.

 

(b)                           Nondisparagement.  Executive agree that he will not defame, criticize, or disparage the Company and its current and former directors, officers, agents, affiliates, subsidiaries, predecessors, counsel, successors and assigns, and the current and former employees and agents of the foregoing, both individually and in their business capacities or its products and services in any medium or to any person without limitation in time, except as may be required by law or subpoena.  Executive further agree not to take any action that would harm the business or professional reputation of the Company, its officers, directors, employees, or shareholders.

 

(c)                            Return of Property.  On or promptly following the Separation Date, Executive shall return to the Company all of the Company’s property, documents (hard copy or electronic files), and information. Executive has not and will not copy or transfer any Company information, nor will Executive maintain any Company information after the Separation Date. Executive acknowledges that he continues to be bound by the provisions

 

2

 

of Section 9 of the Employment Agreement governing the Company’s intellectual and other property.

 

(d)                           Whistleblower Provision.  Notwithstanding anything to the contrary contained in this Agreement, (i) Executive will not be prevented from reporting possible violations of federal law or regulation to any United States governmental agency or entity in accordance with the provisions of and rules promulgated under Section 21F of the Securities Exchange Act of 1934 or Section 806 of the Sarbanes-Oxley Act of 2002, or any other whistleblower protection provisions of state or federal law or regulation (including the right to receive an award for information provided to any such government agencies), and (ii) Executive acknowledges that he will not be held criminally or civilly liable for (A) the disclosure of confidential or proprietary information that is made in confidence to a government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (B) disclosure of confidential or proprietary information that is made in a complaint or other document filed in a lawsuit or other proceeding under seal or pursuant to court order.

 

6.                                      General Release of Claims by Executive.

 

(a)                           In exchange for the benefits of this Agreement, and in consideration of the further agreements and promises set forth herein, Executive, on behalf of himself and his executors, heirs, administrators, representatives and assigns, hereby agrees to release and forever discharge the Company and all predecessors, successors and their respective parent corporations, affiliates, related, and/or subsidiary entities, and all of their past and present investors, directors, shareholders, officers, general or limited partners, employees, attorneys, agents and representatives, and the employee benefit plans in which Executive is or has been a participant by virtue of his employment with or service to the Company (collectively, the “Releasees”), from any and all claims, debts, demands, accounts, judgments, rights, causes of action, equitable relief, damages, costs, charges, complaints, obligations, promises, agreements, controversies, suits, expenses, compensation, responsibility and liability of every kind and character whatsoever (including attorneys’ fees and costs), whether in law or equity, known or unknown, asserted or unasserted, suspected or unsuspected (collectively, “Claims”), which Executive has or may have had against such entities based on any events or circumstances arising or occurring on or prior to the date hereof or on or prior to the date hereof, arising directly or indirectly out of, relating to, or in any other way involving in any manner whatsoever Executive’s employment by or service to the Company or the termination thereof, and Executive’s right to purchase, or actual purchase of any common shares or other equity interests of the Company or any of its affiliates, including any and all claims arising under federal, state, or local laws relating to employment, including without limitation claims of wrongful discharge, breach of express or implied contract, fraud, negligent or intentional misrepresentation, promissory estoppel, negligent or intentional infliction of emotional distress, negligent or intentional interference with contract or prospective economic advantage, unfair business practices, defamation, libel, slander, negligence, personal injury, assault, battery, invasion of privacy, false imprisonment, conversion, disability benefits, or other liability in tort or contract; claims for recovery of attorneys’ fees and costs; claims for any loss, cost, damage, or expense arising out of any dispute over the non-withholding or other tax treatment of any of the proceeds received by Executive as a result of this Agreement; and all

 

3

 

legal and equitable claims of any kind that may be brought in any court or administrative agency including, without limitation, claims under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. Section 2000, et seq.; the Americans with Disabilities Act, as amended, 42 U.S.C. § 12101 et seq.; the Rehabilitation Act of 1973, as amended, 29 U.S.C. § 701 et seq.; the Civil Rights Act of 1866, and the Civil Rights Act of 1991; 42 U.S.C. Section 1981, et seq.; the Age Discrimination in Employment Act, as amended, 29 U.S.C. Section 621, et seq. (the “ADEA”); the Equal Pay Act, as amended, 29 U.S.C. Section 206(d); regulations of the Office of Federal Contract Compliance, 41 C.F.R. Section 60, et seq.; the Family and Medical Leave Act, as amended, 29 U.S.C. § 2601 et seq.; the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201 et seq.; the Employee Retirement Income Security Act, as amended, 29 U.S.C. § 1001 et seq.; the Fair Credit Reporting Act, 15 U.S.C. Section 1681, et seq.; the Worker Adjustment and Retraining Notification Act, 29 U.S.C. Section 2100, et seq.; the Sarbanes-Oxley Act, 18 U.S.C. Section 1514A.1, et seq.; the federal and any state constitution; and all Pennsylvania state and local laws.

 

(b)                           Notwithstanding the generality of the foregoing, Executive does not release the following claims: (i) claims under this Agreement; (ii) claims for unemployment compensation, workers’ compensation, or any disability benefits pursuant to the terms of applicable law or policy; (iii) claims pursuant to the terms and conditions of the federal law known as COBRA; (iv) claims for indemnity under the bylaws of the Company, as provided for by applicable law or under any applicable insurance policy with respect to Executive’s liability as an employee, director or officer of the Company; (v) claims for vested stock or other equity under the terms of the Company’s plans; and (vi) Executive’s right to bring to the attention of the Equal Employment Opportunity Commission or any other federal, state or local government agency claims of discrimination, harassment, interference with leave rights or retaliation; provided, however, that Executive does release Executive’s right to secure any damages for such alleged treatment; and (vii) Executive’s right to communicate or cooperate with any government agency.

 

(c)                            Executive acknowledges that he has been advised that, by statute or common law, a general release may not extend to Claims of which Executive is not aware at the time of entering into this Agreement which, if known by Executive may or would have materially affected his decision to enter into the Agreement.  Being aware of this fact, Executive waives any right he may have by statute or under common law principles to preserve his ability to assert such unknown Claims.

 

(d)                           Executive acknowledges that Executive is entitled to have twenty-one (21) days’ time in which to consider this Agreement.  Executive further acknowledges that the Company has advised him in writing that he is waiving his rights under the ADEA, and that Executive should consult with an attorney of his choice before signing this Agreement, and Executive has had sufficient time to consider the terms of this Agreement.  Executive represents and acknowledges that if Executive executes this Agreement before twenty-one (21) days have elapsed, Executive does so knowingly, voluntarily, and upon the advice and with the approval of Executive’s legal counsel (if any), and that Executive voluntarily waives any remaining consideration period.

 

4

 

(e)                            Executive understands that after executing this Agreement, Executive has the right to revoke it within seven (7) days after his execution of it.  If the seventh day falls on a weekend or federal holiday, he has until the next business day to revoke.  Executive understands that this Agreement will not become effective and enforceable unless the revocation period passes and Executive does not revoke the Agreement in writing.  Executive understands that this Agreement may not be revoked after the revocation period has passed.  Executive also understands that any revocation of this Agreement must be made in writing and delivered to Megan C. Timmins, Senior Vice President and General Counsel, by email at mtimmins@egalet.com on or before 5 p.m. Eastern on the last day of the revocation period following Executive’s signature of the Agreement.

 

(f)                             Executive understands that this Agreement shall become effective, irrevocable, and binding upon Executive after his execution of it and the expiration of the revocation period, so long as Executive has not revoked it within the time period and in the manner specified in clause (e) above.

 

(g)                            Executive further understands that Executive will not be eligible to  receive the Consulting Service Payments under Section 2 of this Agreement unless it is timely executed and allowed to become effective.

 

7.                                      Additional Representations and Warranties By Executive.  Executive represents that Executive has no pending complaints or charges against the Releasees, or any of them, with any state or federal court, or any local, state or federal agency, division, or department based on any event(s) occurring prior to the date Executive signs this Agreement, is not owed wages, commissions, bonuses or other compensation, other than as set forth in this Agreement, and did not, during the course of Executive’s employment sustain any injuries for which Executive might be entitled to compensation pursuant to worker’s compensation law.  Except as expressly permitted by this Agreement, Executive further represents that Executive will not in the future, file, participate in, encourage, instigate or assist in the prosecution of any claim, complaints, charges or in any lawsuit by any party in any state or federal court against the Releasees, or any of them. unless such aid or assistance is ordered by a court or government agency or sought by compulsory legal process, claiming that the Releasees, or any of them, have violated any local, state or federal laws, statutes, ordinances or regulations based upon events occurring prior to the execution of this Agreement. Nothing in this Section 8 is intended to affect Executive’s right to communicate directly with, cooperate with, or provide information to, any federal, state or local government regulator.

 

8.                                      No Admission of Liability.  By entering into this Agreement, the parties do not admit, and specifically deny, any liability, wrongdoing or violation of any statutory or common law, order, regulation or policy whether under federal, state and/or local law.

 

9.                                      Knowing and Voluntary.  Executive represents and agrees that, prior to signing this Agreement, Executive had the opportunity to discuss the terms of this Agreement with legal counsel of Executive’s choosing.  Executive further represents and agrees that Executive is entering into this Agreement knowingly and voluntarily. Executive affirms that no promise was made to cause Executive to enter into this Agreement, other than what is promised in this Agreement. Executive further confirms that Executive has not relied upon any other statement

 

5

 

or representation by anyone other than what is in this Agreement as a basis for Executive’s agreement.

 

10.                               Miscellaneous.

 

(a)                           Modification; Prior Claims.  This Agreement and the Employment Agreement as modified herein, set forth the entire understanding of the parties with respect to the subject matter hereof and supersede all existing agreements between them concerning such subject matter.  Except as preserved by express reference in this Agreement, the Employment Agreement shall be superseded entirely by this Agreement and such agreements shall be terminated and be of no further force or effect.  This Agreement may be amended or modified only with the written consent of Executive and an authorized representative of the Company.  No oral waiver, amendment or modification will be effective under any circumstances whatsoever.

 

(b)                           Assignment; Assumption by Successor.  The rights of the Company under this Agreement may, without the consent of Executive, be assigned by the Company, in its sole and unfettered discretion, to any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly, acquires all or substantially all of the assets or business of the Company.  The Company will require any successor (whether direct or indirect, by purchase, merger or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and to agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place; provided, however, that no such assumption shall relieve the Company of its obligations hereunder.  As used in this Agreement, the “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law or otherwise.

 

(c)                            Third-Party Beneficiaries.  This Agreement does not create, and shall not be construed as creating, any rights enforceable by any person not a party to this Agreement.

 

(d)                           Waiver.  The failure of either party hereto at any time to enforce performance by the other party of any provision of this Agreement shall in no way affect such party’s rights thereafter to enforce the same, nor shall the waiver by either party of any breach of any provision hereof be deemed to be a waiver by such party of any other breach of the same or any other provision hereof.

 

(e)                            Non-transferability of Interest.  None of the rights of Executive to receive any form of compensation payable pursuant to this Agreement shall be assignable or transferable except through a testamentary disposition or by the laws of descent and distribution upon the death of Executive.  Any attempted assignment, transfer, conveyance, or other disposition (other than as aforesaid) of any interest in the rights of Executive to receive any form of compensation to be made by the Company pursuant to this Agreement shall be void.

 

6

 

(f)                             Governing Law.  This Agreement will be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania without regard to the conflicts of law provisions thereof.

 

(g)                            Ambiguities.  The general rule that ambiguities are to be construed against the drafter shall not apply to this Agreement.  In the event that any language of this Agreement is found to be ambiguous, all parties shall have the opportunity to present evidence as to the actual intent of the parties with respect to any such ambiguous language.

 

(h)                           Severability.  If any sentence, phrase, paragraph, subparagraph or portion of this Agreement is found to be illegal or unenforceable, such action shall not affect the validity or enforceability of the remaining sentences, phrases, paragraphs, subparagraphs or portions of this Agreement.

 

(i)                               Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, all of which together shall constitute one and the same instrument.

 

(j)                              Withholding and other Deductions.  All compensation payable or provided to Executive hereunder shall be subject to such deductions as the Company is from time to time required to make pursuant to law, governmental regulation or order.

 

(k)                           Code Section 409A.

 

(i)                                     Notwithstanding anything to the contrary in this Agreement, no payment or benefit to be paid or provided to Executive upon his termination of employment, if any, pursuant to this Agreement that, when considered together with any other payments or benefits, are considered deferred compensation under Code Section 409A (together, the “Deferred Payments”) will be paid or otherwise provided until Executive has a “separation from service” within the meaning of Code Section 409A.  Similarly, no amounts payable to Executive, if any, pursuant to this Agreement that otherwise would be exempt from Code Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9) will be payable until Executive has a “separation from service” within the meaning of Section 409A.

 

(ii)                                  Notwithstanding anything to the contrary in this Agreement, if Executive is a “specified employee” within the meaning of Code Section 409A at the time of Executive’s termination of employment (other than due to death), then the Deferred Payments that are payable within the first six (6) months following Executive’s separation from service, will become payable on the first payroll date that occurs on or after the date six (6) months and one (1) day following the date of Executive’s separation from service.  All subsequent Deferred Payments, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit.  Notwithstanding anything herein to the contrary, if Executive dies following Executive’s separation from service, but prior to the six (6) month anniversary of the separation from service, then any payments delayed in accordance with this paragraph will be payable in a lump sum as soon as administratively practicable after the date of Executive’s death and all other Deferred Payments will be payable in accordance with the payment schedule applicable to each payment or benefit.  Each payment and benefit payable under this Agreement is intended to 

 

7

 

constitute a separate payment for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.

 

(iii)                               Any amount paid under this Agreement that satisfies the requirements of the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations will not constitute a Deferred Payment for purposes of clauses (i) and (ii) above.

 

(iv)                              Any amount paid under this Agreement that qualifies as a payment made as a result of an involuntary separation from service pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that does not exceed the limits set forth therein will not constitute a Deferred Payment for purposes of clauses (i) and (ii) above.

 

(v)                                 This Agreement is intended to be written, administered, interpreted and construed in a manner such that no payment or benefits provided under the Agreement become subject to (A) the gross income inclusion set forth within Code Section 409A(a)(1)(A) or (B) the interest and additional tax set forth within Code Section 409A(a)(1)(B) (together, referred to herein as the “Section 409A Penalties”), including, where appropriate, the construction of defined terms to have meanings that would not cause the imposition of Section 409A Penalties.  In no event shall the Company be required to provide a tax gross-up payment to Executive or otherwise reimburse Executive with respect to Section 409A Penalties.   The Company and Executive agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any Section 409A Penalties on Executive.

 

(vi)                              Any reimbursement of expenses or in-kind benefits payable under this Agreement shall be made in accordance with Treasury Regulation Section 1.409A-3(i)(1)(iv) and shall be paid on or before the last day of Executive’s taxable year following the taxable year in which Executive incurred the expenses.  The amount of expenses reimbursed or in-kind benefits payable in one year shall not affect the amount eligible for reimbursement or in-kind benefits payable in any other taxable year of Executive’s, and Executive’s right to reimbursement for such amounts shall not be subject to liquidation or exchange for any other benefit.

 

(l)                               Taxes; Right to Seek Independent Advice.  Executive understands and agrees that all payments under this Agreement will be subject to appropriate tax withholding and other deductions, as and to the extent required by law.  Executive acknowledges and agrees that neither the Company nor the Company’s counsel has provided any legal or tax advice to Executive and that Executive is free to, and is hereby advised to, consult with a legal or tax advisor of Executive’s choosing.

 

(Signature Page Follows)

 

8

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above.

 

	
 
    	
Egalet Corporation
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Robert S. Radie
    
	
 
    	
Name:
    	
Robert Radie
    
	
 
    	
Title:
    	
President and Chief   Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
EXECUTIVE
    
	
 
    	
 
    	
 
    
	
 
    	
/s/ Stanley J. Musial
    
	
 
    	
Stanley J. Musial
    
				

 

9Exhibit 10.3

 

[EXECUTION COPY]

 

TERMINATION AND SETTLEMENT AGREEMENT

 

THIS TERMINATION AND SETTLEMENT AGREEMENT (this “Agreement”) is dated as of October 29, 2018, by and between Halo Pharmaceutical, Inc., a Delaware corporation, having offices at 30 North Jefferson Road, Whippany, NJ 07981 (“Halo”), and Egalet Corporation, a Delaware corporation, having offices at 600 East Lee Road, Suite 100, Wayne, PA 19087, Egalet, Ltd, a UK company having offices at 160 Queen Victoria Street London EC4V 4QQ and Egalet US Inc., having offices at 600 Lee Road, Wayne, PA 19087 (collectively, “Client”).  As used herein, Halo and Client are referred to collectively as the “Parties” and individually as a “Party”.

 

RECITALS

 

WHEREAS, Halo and Client previously entered into that certain Drug Product Manufacturing Services Agreement, effective as of February 28, 2017 (as amended, the “Manufacturing Agreement”);

 

WHEREAS, Halo and Client mutually desire to resolve amounts due to Halo under the Manufacturing Agreement and to terminate the Manufacturing Agreement in accordance with the terms of this Agreement;

 

WHEREAS, capitalized terms used and not otherwise defined in this Agreement have the meanings ascribed to them in the Manufacturing Agreement; and

 

NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements contained in this Agreement and intending to be legally bound hereby, the Parties agree as follows:

 

ARTICLE I.
  TERMINATION OF THE MANUFACTURING AGREEMENT

 

Section 1.1                                                    Termination of Rights under the Manufacturing Agreement.

 

(a)                         Upon the terms and subject to the conditions set forth herein, Halo and Client shall irrevocably terminate, and do hereby terminate effective as of the Payment Date (as defined below), the Manufacturing Agreement in its entirety so that the Parties and their respective Affiliates, from and after the Payment Date, shall have no obligations to or rights from one another pursuant to the Manufacturing Agreement and such that the Manufacturing Agreement will have no further force or effect; provided, that Sections 11.1 (Confidentiality) and 12.2 (Inventions) of the Manufacturing Agreement shall survive such termination and remain in full force and effect, mutatis mutandis.  For the avoidance of doubt, except as explicitly set forth in this Agreement, no provision of the Manufacturing Agreement shall survive such termination notwithstanding any provision of the Manufacturing Agreement to the contrary.

 

(b)                         The Parties expressly acknowledge and agree that, as of the Payment Date, and notwithstanding anything to the contrary in the Manufacturing Agreement, all licenses and sublicenses granted to a Party or its predecessor Parties or their respective Affiliates under

 

 

intellectual property Controlled by the other Party or its predecessor Parties or their respective  Affiliates pursuant to the Manufacturing Agreement are hereby terminated.  As used herein, “Controlled” means, with respect to any intellectual property, possession by a Party, whether by ownership or license (other than pursuant to the Manufacturing Agreement).

 

(c)                          Client acknowledges and agrees that, as of the Payment Date, (i) the aggregate amount of  $1,097,713 is currently due and owing under the Manufacturing Agreement to Halo, including with respect to invoices sent to Client prior to the date hereof (the “Outstanding Fees”), and (ii) in addition to the Outstanding Fees, Halo has claims totaling not less than $6,368,988 in respect of the early termination of the Manufacturing Agreement and all other amounts owed to or claimed by Halo against Client under the Manufacturing Agreement (the “Termination Claims,” and the Outstanding Fees plus the Termination Claims, the “Halo Claim”).  Client acknowledges and agrees that it has no claims, counterclaims, offsets, credits, or defenses to the Halo Claim, and the Halo Claim constitutes a direct obligation under the Manufacturing Agreement and is not in any respect indirect, incidental, special, consequential, exemplary, or punitive damages.

 

Section 1.2                                                    Wind-Down Activities; Payment and Expenses.

 

(a)                         Following the Payment Date, the Parties shall undertake the activities set forth on Schedule A hereto (the “Wind-Down Activities”), in each case, for the time periods set forth on Schedule A.

 

(b)                         Upon the signing of this agreement, in full and final satisfaction of all amounts owed to or claimed by Halo with respect to the Manufacturing Agreement or otherwise with respect to Client (in each case, subject to the other terms of this Agreement including, without limitation, Sections 2.1(b), (c) and (d)), Client shall pay to Halo, by wire transfer of immediately available funds in accordance with the wire instructions provided by Halo to Client prior to the date hereof, the aggregate amount of $3,100,000 (the “Settlement Payment”).  For the avoidance of doubt, notwithstanding anything to the contrary contained herein, this Agreement shall not be effective or binding on any Party until the date on which Halo has received the Settlement Payment in immediately available funds (such date, the “Payment Date”).

 

(c)                          Unless otherwise provided by this Agreement, the Parties shall be responsible for their own costs and expenses related to their respective activities under this Agreement, including the Wind-Down Activities (as defined below).

 

ARTICLE II.

COVENANT NOT TO SUE AND RELEASE

 

Section 2.1                                    Covenant Not to Sue Client Parties.

 

(a)                                 Effective as of the Payment Date, Halo for itself and on behalf of all of its Affiliates, together (as applicable) with each of their respective officers, directors, employees, agents, trustees, attorneys, advisors, parents, subsidiaries, heirs, administrators, executors, successors and assigns (each a “Halo Party” and collectively, the “Halo Parties”) do hereby agree not to commence any lawsuit or bring any legal action against the Client Parties (as defined below) for any and all actions, causes of action, claims, counterclaims, damages, debts, demands, losses,

 

2

 

liabilities, costs, expenses, liens and obligations of whatsoever name and nature, whether known or unknown, fixed,  or contingent, suspected or unsuspected, both at law and in equity, which any Halo Party now has, has ever had, or may hereafter have against any Client Party arising out of any act, fact, transaction, matter, cause or event occurring or arising on or before the Payment Date, to the extent arising out of or related to the Manufacturing Agreement or the transactions or activities contemplated or undertaken thereunder, including (x) any rights to indemnification or reimbursement under the Manufacturing Agreement, and (y) the balance of the Halo Claim remaining after Halo’s receipt of the Settlement Payment (collectively, the “Causes of Action”); provided, however, that this covenant not to sue shall not apply to any claims by a Halo Party against a Client Party under this Agreement, including as a result of a breach of any representation, warranty or covenant made by Client in this Agreement.

 

(b)                                 If an Insolvency Proceeding has not been commenced by or against any of the Client Parties within ninety-one (91) days after the Payment Date, then the Client Parties shall be fully and automatically released from all Causes of Action without further action by the Halo Parties on the date that is ninety-one (91) days after the Payment Date; provided, however, that the foregoing release shall not release or discharge any claims by a Halo Party against a Client Party under this Agreement, including as a result of a breach of any representation, warranty or covenant made by Client in this Agreement.  As used herein, “Insolvency Proceeding” means any proceeding commenced by or against any person or entity under any provision of title 11 of the United States Code, 11 U.S.C. § 101, et seq. (as amended or re-codified from time to time) or under any other state, federal, or foreign bankruptcy or insolvency law, assignments for the benefit of creditors, or other proceedings seeking reorganization, arrangement, or other similar relief.

 

(c)                                  Notwithstanding anything to the contrary in this Agreement, if an Insolvency Proceeding is commenced by or against any of the Client Parties within ninety-one (91) days after the Payment Date and any action, cause of action, suit, claim, challenge, or proceeding is asserted against any Halo Party to avoid, declare fraudulent or preferential, set aside, recover, or otherwise invalidate this Agreement or the transactions contemplated hereunder, including the Settlement Payment (whether brought by a Client Party, a trustee appointed in the Insolvency Proceeding, a creditor of Client, or any other party) (a “Challenge”), then the Halo Parties and the Client Parties shall each be automatically released from their covenant not to sue under Section 2.1(a) and release and covenant not to sue under Section 2.2, respectively, and Halo shall be entitled to file a proof of claim or otherwise to seek payment of the balance of the Halo Claim; provided, however, that if no Challenge is asserted prior to the time that the Insolvency Proceeding is closed, the Halo Parties and the Client Parties shall each be fully and automatically released from all Released Claims and all Causes of Action, respectively, without further action by the Client Parties or the Halo Parties.

 

(d)                                 Notwithstanding anything to the contrary in this Agreement, if an Insolvency Proceeding is commenced by or against any of the Client Parties within ninety-one (91) days of the Payment Date, Halo shall be entitled to file a protective proof of claim in respect of the Halo Claim in such Insolvency Proceeding, which proof of claim shall be fully and automatically withdrawn and released if no Challenge is asserted prior to the time that such Insolvency Proceeding is closed.

 

Section 2.2                                    Release of Halo Parties

 

(a)                                 Effective as of the Payment Date, Client for itself and on behalf of all of

 

3

 

its Affiliates, together (as applicable) with each of their respective officers, directors, employees, agents,  trustees, attorneys, advisors, parents, subsidiaries, heirs, administrators, executors, successors and assigns (each a “Client Party” and collectively, the “Client Parties”) hereby jointly and severally, fully, finally and forever releases and discharges Halo and its past, present and future Affiliates together with each of their respective officers, directors, employees, agents, trustees, attorneys, advisors, parents, subsidiaries, heirs, administrators, executors, successors and assigns (individually, a “Halo Releasee” and, collectively, the “Halo Releasees”) from any and all actions, causes of action, claims, counterclaims, damages, debts, demands, losses, liabilities, costs, expenses, liens and obligations of whatsoever name and nature (hereinafter, the “Released Claims”), whether known or unknown, fixed, or contingent, suspected or unsuspected, both at law and in equity, which any Client Party now has, has ever had, or may hereafter have against any Halo Releasee arising out of any act, fact, transaction, matter, cause or event occurring or arising on or before the Payment Date, to the extent arising out of or related to the Manufacturing Agreement or the transactions or activities contemplated or undertaken thereunder, including any rights to indemnification or reimbursement under the Manufacturing Agreement; provided, however, that this release shall not release or discharge any claims by a Client Party against a Halo Releasee under this Agreement, including as a result of a breach of any representation, warranty or covenant made by Halo in this Agreement.

 

(b)                                 Client for itself and for each Client Party hereby irrevocably covenants to and Client shall and shall cause each Client Party to refrain from, directly or indirectly, asserting any claim or demand, or commencing, instituting or causing to be commenced or instituted any proceeding of any kind, against any Halo Releasee, based upon any Released Claim released hereby.  Furthermore, if a Client Party commences such a proceeding against any Halo Releasee and the judicial body before which the proceeding is brought determines in a final judgment that such claim or demand has been released pursuant to Section 2.2(a), such Client Party shall reimburse the Halo Releasee for all costs and expenses (including reasonable costs of investigation and defense and attorney’s fees and expenses) incurred in connection with such proceeding.

 

ARTICLE III.
 REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Section 3.1                                                      Representations and Warranties of Each Party.  As of the date hereof, each Party hereby represents and warrants to the other Party hereto as follows: (a) it is a corporation or entity duly organized and validly existing under the laws of the state or other jurisdiction of its incorporation or formation; (b) the execution, delivery and performance of this Agreement by such Party has been duly authorized by all requisite corporate action and does not require any shareholder action or approval; (c) it has the power and authority to execute and deliver this Agreement and to perform its obligation hereunder; and (d) the execution, delivery and performance by such Party of this Agreement and its compliance with the terms and provisions do not and will not conflict with or result in a breach of any of the terms and provisions of or constitute a default under (i) a loan agreement, guaranty, financing agreement, agreement affecting a product or other agreement or instrument binding or affecting it or its property; (ii) the provisions of its charter or operative documents or bylaws; or (iii) any order, writ, injunction or decree of any court or governmental authority entered against it or by which any of its property is bound, in each case, that would result in a material adverse effect on such Party or its financial condition or results of operations.

 

4

 

Section 3.2                                                      Further Assurance.  The Parties agree that subsequent to the date hereof, at the request and at the cost and expense of the other Party, they will execute and deliver, or cause to be delivered, to the other Party, such further instruments and take such other action as may be reasonably necessary to carry out the intents and purposes contemplated by this Agreement.

 

Section 3.3                                                      Wind-Down Activities.  Following the date hereof, Halo and Client shall undertake the Wind-Down Activities in accordance with and as set forth on Schedule A.

 

ARTICLE IV.
 MISCELLANEOUS

 

Section 4.1                                                    Notices.  Any notice, approval, instruction or other written communication required or permitted hereunder shall be sufficient if made or given to Halo or Client, as the case may be, by personal delivery, by facsimile communication, by delivery via nationally recognized overnight courier service, by first class mail postage prepaid, or by PDF attachment to an email or similar electronic transmission to the mailing address, facsimile number or email address set forth below:

 

(a)                                 If to Client:

 

Egalet Corporation

600 Lee Road, Suite 100

Wayne, Pennsylvania 19087

Attn: Mark Strobeck, Chief Operating Officer

Facsimile No: (484) 580-6230

Email: mstrobeck@egalet.com

 

(b)                                 If to Halo:

 

Halo Pharmaceutical, Inc.

30 North Jefferson Road

Whippany, New Jersey 07981

Attn: Lee Karras, Chief Executive Officer

Facsimile No: (973) 428-4254

Email: lee.karras@cambrex.com

 

or to such other contact information provided to the other party in accordance with the terms of this Section 4.1.  Notices or written communications made or given by personal delivery, overnight courier service, facsimile or email shall be deemed to have been sufficiently made or given when sent (receipt acknowledged), or if mailed, three (3) Business Days after being deposited in the United States mail, postage prepaid or upon receipt, whichever is sooner.  For the avoidance of doubt, Halo’s giving of notice to Egalet Corporation in accordance with this Section 4.1 shall suffice for notice also to Egalet Ltd. and Egalet US Inc.

 

Section 4.2                                                    Costs and Expenses.  Except as otherwise expressly provided

 

5

 

herein, the Parties shall bear their own respective expenses (including, but not limited to, all compensation and expenses of counsel, financial advisors, consultants and independent accountants) incurred in  connection with the preparation and execution of this Agreement and consummation of the transactions contemplated hereby.

 

Section 4.3                                                    No Withholding

 

(a)         Each Party will make all payments to the other Party under this Agreement without deduction or withholding for any present or future taxes, levies, imposts, duties, charges, assessments or fees of any nature, including any interest thereon (“Taxes”).  To the extent that any such deduction or withholding is required by applicable legal requirements at the time of payment, the sum payable by the paying Party shall be increased as necessary so that, after making all required deductions or withholdings of Taxes, the recipient Party shall receive an amount equal to the sum it would have received had no such withholdings or deductions have been made.

 

(b)                                                 Any Tax required to be withheld on amounts payable under this Agreement will be paid by the paying Party on behalf of the recipient Party to the appropriate governmental authority, and the paying Party will furnish the recipient Party with proof of payment of such Tax.  Any such Tax required to be withheld will be an expense of and borne by the paying Party.

 

(c)                                                  The Parties will cooperate with respect to all documentation required by any taxing authority or reasonably requested by either Party to secure a reduction in the rate of applicable withholding Taxes.

 

Section 4.4                                                    Governing Law.  This Agreement shall be construed and enforced in accordance with the laws of the State of New Jersey and the laws of the United States applicable therein. Any dispute resolution proceeding under this Section 4.4 shall be conducted in the jurisdiction of New Jersey, if any one or more Halo Parties are the defendant party(ies), or in Pennsylvania if any one or more Client Parties are the defendant party(ies), in each case, in the English language.

 

Section 4.5                                                    Headings.  The headings preceding the text of the Articles, Sections and subsections hereof are inserted solely for convenience of reference, and shall not constitute a part of this Agreement, nor shall they affect its meaning, construction or effect.  All words used in this Agreement will be construed to be of such gender or number as the context may require.

 

Section 4.6                                                    Interpretation and Rules of Construction.  In this Agreement, except to the extent otherwise provided or that the context otherwise requires: (a) in the event of a conflict between the terms of this Agreement and the terms of the Manufacturing Agreement, the terms of this Agreement shall control; (b) except where expressly provided otherwise, when a reference is made in this Agreement to an Article, Section or Schedule, such reference is to an Article or Section of, or a Schedule to, this Agreement; (c) whenever the words “include”, “includes” or “including” are used in this Agreement, they are deemed to be followed by the words “without limitation”; (d) the words “hereof”, “herein” and “hereunder” and words of

 

6

 

similar import, when used in this Agreement, refer to this Agreement as a whole and not to any particular provision of this Agreement; (e) all terms defined in this Agreement have the defined meanings when used in any certificate or other document made or delivered pursuant hereto, unless otherwise defined therein; (f) the definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms; (g) references to a Person are also to its successors and permitted  assigns; and (h) the use of “or” is not intended to be exclusive unless expressly indicated otherwise.

 

Section 4.7                                                    Amendment and Waiver.  No amendment, modification or supplement of any provisions of this Agreement shall be valid or effective unless made in writing and signed by a duly authorized officer of each Party.  No provision of this Agreement shall be waived by any act, omission or knowledge of a Party or its agents or employees except by an instrument in writing expressly waiving such provision and signed by a duly authorized officer of the waiving Party.

 

Section 4.8                                                    Entire Agreement.  This Agreement constitutes the entire understanding and agreement among the Parties in relation to the subject matter of this Agreement and supersedes all previous agreements among the Parties in relation to the same subject matter.  It is further agreed that none of the Parties has entered into this Agreement in reliance upon any warranty or undertaking of the other Party which is not expressly set out or referred to in this Agreement.

 

Section 4.9                                                    Assignment.  Neither this Agreement nor any interest under this Agreement shall be assignable by a Party without the prior written consent of the other Party, except as provided for in this Section 4.9.  This Agreement shall be binding upon the successors and permitted assigns of the Parties to this Agreement and the name of a Party to this Agreement appearing herein shall be deemed to include the names of such Party’s successors and permitted assigns to the extent necessary to carry out the intent of this Agreement.

 

Section 4.10                                             Publicity.  Neither Halo nor Client will make any press release or other public disclosure regarding this Agreement or the transactions contemplated hereby, including identifying the other as a business partner or in connection with any scholarly or industry publications or presentations, without the other’s express prior written consent.  The foregoing shall not apply to the extent disclosure is required, in the reasonable judgment of the disclosing Party, under applicable law, by any Authority or by the rules of any stock exchange on which the securities of the disclosing party are listed, in which case the disclosing party shall reasonably consult with and consider the other party’s comments as to the form, nature and extent of the press release or public disclosure prior to issuing or making the disclosure.

 

Section 4.11                                             Limitation of Liability.  IN NO EVENT SHALL EITHER PARTY OR ITS AFFILIATES BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES, WHETHER BASED UPON A CLAIM OR ACTION OF CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHER TORT, OR OTHERWISE, ARISING OUT OF OR RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT.

 

Section 4.12                                             Counterparts This Agreement may be executed in two or more

 

7

 

counterparts, by original or facsimile signature, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

Section 4.13                                             No Third Party Beneficiary Rights.  This Agreement is not intended to and shall not be construed to give any Person or entity other than the Parties, the Halo Parties, and the Client Parties, and as otherwise expressly set forth herein, any interest or rights (including any Third Party beneficiary rights) with respect to or in connection with any agreement or provision contained herein or contemplated hereby.

 

Section 4.14                                             Severability.  Each of the agreements, undertakings, covenants, warranties, indemnities and other obligations of the parties entered pursuant to this Agreement are considered reasonable by the Parties hereto.  Subject to Section 2.1, if any provision of this Agreement is held void or unenforceable or in conflict with the legal requirements of any relevant jurisdiction, the Parties hereto shall negotiate in good faith to modify this Agreement, so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

8

 

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed on the day and year first above written.

 

	
 
    	
HALO   PHARMACEUTICAL, INC.
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ L. Lee Karras
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
L. Lee. Karras
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Chief Executive Officer
    

 

 

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed on the day and year first above written.

 

	
 
    	
EGALET CORPORATION
    	
 
    
	
 
    	
EGALET   US INC.
    	
 
    
	
 
    	
EGALET   LTD
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Robert S. Radie
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Robert S. Radie
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Chief Executive   Officer
    

 

2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00288-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00288-of-00352.parquet"}]]