Document:

Exhibit 10.1

  

   

    

  
    SEPARATION AND TRANSITION AGREEMENT

    

    

    THIS SEPARATION AND TRANSITION AGREEMENT (the “Agreement”) is entered into by and between USA
      Technologies, Inc., a Pennsylvania corporation (the “Company”), and Glen Goold (“Employee”), as of October 8,
      2020.

    

    

    WHEREAS, Employee previously served as the Company’s Chief Accounting Officer through September 15, 2020;

    

    

    WHEREAS, Employee’s employment with the Company will end on October 30, 2020 (the “Separation Date”),

      and during the period from the date of this Agreement through and including the Separation Date, Employee will continue to provide services as requested by the Company (including, without limitation, assisting the Company with the transition of
      Employee’s duties to his successor); and

    

    

    WHEREAS, the Company and Employee desire to resolve all disputes between them on the terms and conditions set forth in this Agreement.

    

    

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

    

    

    1.          Continued Employment
            Through the Separation Date; Payment of Accrued Salary.

    

    

    (a)          Continued Employment.
          From the date hereof through and including the Separation Date, (i) Employee will continue to be employed by the Company on a full-time basis, providing such services as requested by the Company (including, without limitation, assisting the
          Company with the transition of Employee’s duties to his successor), and (ii) in consideration for such services, the Company will continue to pay Employee his base salary at the rate in effect as of the date of this Agreement (as reduced in May
          2020 in light of the COVID-19 pandemic) and Employee will continue to participate in the Company’s benefit plans at the same level as in effect on the date of this Agreement, subject to the terms and conditions of such benefit plans.

    

    

    (b)          Accrued Salary. On
          or as soon after the Separation Date as is administratively practicable, the Company shall issue to Employee his final paycheck, reflecting Employee’s fully earned and accrued but unpaid base salary through the Separation Date. Except as provided
          in Section 2 below, Employee acknowledges and agrees that with his final check, Employee will have received all monies, bonuses, commissions, or other compensation he earned or was due during his employment by the Company.

    

    

    (c)          Benefits.
          Employee’s entitlement to benefits from the Company, and eligibility to participate in the Company’s benefit plans, shall cease on the Separation Date. As soon as is administratively practicable after the Separation Date, the Company shall issue
          to Employee payment for his accrued and unused Paid Time Off through the Separation Date.  Provided that he is otherwise eligible, Employee may elect to receive continued healthcare coverage at Employee’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.

    

    

    (d)          No Other Pay or
            Benefits.  Employee acknowledges and agrees that the payments and benefits outlined in Sections 1 and 2 of this Agreement are the only payments and benefits to which Employee is entitled.

    

    

    2.          Severance Benefits. 

          Subject to and conditioned upon (x) Employee’s timely execution and delivery (within twenty-one (21) days following the Company’s providing a copy of this Agreement to Employee) and non-revocation of this Agreement, (y) Employee’s continued
          compliance with the terms of this Agreement, and (z) Employee’s timely execution and delivery (within twenty-one (21) days following the Separation Date) of the Release attached hereto as Exhibit A (the “Release”), the Company
          shall pay or provide Employee with the following separation payments and benefits:

    

    

    (a)          Severance pay of
          $9,615.39 per pay period for thirteen regular pay periods, to be paid on the Company’s regular payroll schedule over the six (6)-month period commencing on the Company’s first regular payroll date that is at least ten (10) days following the date
          that the Release has become fully effective and irrevocable in accordance with its terms; and

    

    

    (b)          Vesting of Employee’s
          outstanding 8,982 shares of restricted stock, effective on the date that the Release has become fully effective and irrevocable in accordance with its terms.

    

    

    Except as provided in this Section 2, Employee acknowledges and agrees that he is owed no further severance pay or benefits of any kind from the Company or any of its subsidiaries.

    

    

    3.          Confirmation of Continuing Obligations.

    

    

    (a)          Restrictive Covenants. Employee
          acknowledges and agrees that the restrictive covenants contained in his offer letter with the Company, dated March 2, 2020, including confidentiality, non-competition, and non-solicitation of employees and customers covenants, remain in full
          force and effect, and Employee shall continue to abide by such covenants following the Separation Date in accordance with their terms. Such restrictive covenants are incorporated by reference as through fully set forth in this Agreement.

    

    

    (b)          Non-Disparagement. Employee and Company
          agree to the following Non-Disparagement sections, which apply to all time periods both before and after the Separation Date.  This clause (b) will not be violated by any truthful statements made in the course of a governmental investigation,
          legal proceeding, or under applicable law.

    

    

    [1] Employee will not make any disparaging or untruthful remarks or statements, whether oral or written, about
        the Company, its operations or its products, services, affiliates, officers, directors, employees, or agents, or issue any communication that reflects adversely on or encourages any adverse action against the Company.  Employee will not make any
        direct or indirect written or oral statements to the press, television, radio or other media or other external persons or entities concerning

     

      

    
      
        

      

    

    

    

    any matters pertaining to the business and affairs of the Company, its affiliates or any of its officers or directors.

    

    

    [2] None of the Company’s executives will make any disparaging or untruthful remarks or
        statements, whether oral or written, to the press, television, radio or other media or other external persons or entities about the Employee’s character or fitness to perform his professional duties or which would otherwise harm his professional
        reputation.

    

    

    (c)          Injunctive Relief.
          Employee acknowledges and agrees that it would be difficult to fully compensate the Company for damages resulting from the breach or threatened breach of the covenants set forth in Section 3 of this Agreement and accordingly agrees that the
          Company shall be entitled to temporary and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the need to post any bond, to enforce such provisions in any action or proceeding
          instituted in the United States District Court for the District of Delaware or in any court in the State of Delaware having subject matter jurisdiction. This provision with respect to injunctive relief shall not, however, diminish the Company’s
          right to claim and recover damages. Employee further acknowledges and agrees that, without limitation of any other remedies available to the Company at law or in equity, in the event of any breach of any of the covenants set forth in Section 3 of
          this Agreement, Employee shall repay to the Company any payments (on a pre-tax basis) received pursuant to Section 2(a) of this Agreement within ten (10) days of any such breach

    

    

    (d) Cooperation. Employee agrees to the following Cooperation sections, which apply to all time
      periods both before and after the Separation Date:

    

    

    [1] Cooperation with the Company.  Employee agrees (a) to be reasonably available
      to answer questions for any of the Company’s officers or directors regarding any matter, project, or effort with which Employee was involved while employed by the Company and (b) to cooperate with the Company during the course of all proceedings
      arising out of the Company’s operations or business about which Employee has knowledge or information. For purposes of this Agreement, “proceedings” includes internal investigations, administrative investigations or proceedings, and lawsuits
      (including pre-trial discovery and trial testimony) and “cooperation” includes [i] the Employee’s being reasonably available for interviews, meetings, depositions, hearings and/or trials without the need for subpoena or assurances by the Company,
      [ii] providing any and all documents in Employee’s possession that relate to the proceeding, and [iii] providing assistance in locating any and all relevant notes and/or documents relevant to any proceedings.  Such assistance and cooperation shall be
      without additional compensation other than reimbursement for reasonable associated expenses, which may if appropriate include reasonable attorney’s fees, any of which must be pre-approved, in writing, by the Company.

    

    

    [2] Cooperation with Third Parties. Unless compelled to do so by lawfully-served
      subpoena or court order or to the extent it is necessary (but only to the extent that it is necessary) to enforcement of Employee’s rights under this Agreement, Employee agrees not to communicate with, or give statements or testimony to, any opposing
      attorney, opposing attorney’s representative (including a private investigator) or current or former employee relating to any matter (including pending or threatened lawsuits or administrative investigations) about which Employee has knowledge or
      information except in cooperation with the Company. Employee also agrees to

     

    

    
      
        

      

    

    

    

    notify the Company’s Chief Executive Officer and General Counsel immediately after being contacted by a third party or receiving a subpoena or court order to appear and testify with
      respect to any matter affected by this section.

    

    

    (e) Return of Property. On or promptly following the Separation Date (or upon the earlier
      request of the Company), Employee shall return to the Company all of the Company’s property (including, without limitation, any Company-owned electronic devices, laptops, desktop computers, or computer accessories), documents (hard copy or electronic
      files), and information). Employee has not and will not copy or transfer any Company information, nor will Employee maintain any Company information after the date of return described in this clause (e), except as required to comply with any
      litigation holds.

    

    

    (f) Whistleblower Provision. Notwithstanding anything to the contrary contained in this
      Agreement, (i) Employee 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) Employee 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. Employee represents to the Company that he is not aware of any actual or suspected violation of law that could be the subject of any claims or proceedings described in this clause (f).

    

    

    4.          Release of Claims.

    

    

    (a) General Release of Claims by Employee. In exchange for the benefits of this Agreement, and
      in consideration of the further agreements and promises set forth herein, Employee, 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 Employee 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 (collectively, “Claims”), whether in law or equity, known or unknown, asserted or unasserted,
      suspected or unsuspected, which Employee has or may have had against such entities based on any events or circumstances arising or occurring 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 Employee’s employment by or service to the Company or the termination thereof, and Employee’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 Employee as a result of this Agreement; and all 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; the Americans with Disabilities Act, as amended (“ADEA”); the Rehabilitation Act of 1973, as amended; 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; the Genetic Information Nondiscrimination Act; the Equal Pay Act, as amended; regulations of the Office of Federal Contract Compliance, 41 C.F.R. Section 60,
      et seq.; the Family and Medical Leave Act, as amended; the Fair Labor Standards Act of 1938, as amended; the Employee Retirement Income Security Act, as amended; the Fair Credit Reporting Act.; the Worker Adjustment and Retraining Notification Act;
      the Sarbanes-Oxley Act, 18 U.S.C. Section 1514A.1, et seq.; the Pennsylvania Human Relations Act; the federal and any state constitution; and all Pennsylvania state and local laws.

    

    

    (b) Notwithstanding the generality of the foregoing, Employee does not release the following claims: (i) Claims under this Agreement; (ii) Claims
        pursuant to the terms and conditions of COBRA; (iii) Employee’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 Employee does release Employee’s right to secure any damages for such alleged treatment; (iv) Employee’s right to communicate or cooperate with any government agency; and (v) Claims
      for indemnification under the Company’s Amended and Restated Bylaws, as such may be further amended or restated, or under applicable law with respect to Employee’s liability as an employee, director or officer of the Company; and claims for coverage
      under any available Directors &Officers Insurance Policy or Errors & Omissions Insurance Policy with respect to Employee’s liability as an employee, director or officer of the Company.

    

    

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

    

    

    (d) Employee acknowledges that the Company has advised him in writing that he should consult with an attorney of his choice before signing this Agreement, and
      Employee has had sufficient time to consider the terms of this Agreement, including his release of Claims.

     

    

    
      
        

      

    

    

    

    Employee represents and acknowledges that Employee executes this Agreement knowingly, voluntarily, and upon the advice and with the approval of Employee’s legal counsel.

    

    

    (e) Employee acknowledges that he has been provided with twenty-one (21) days to consider the terms of this Agreement, but may voluntarily elect to sign
        this Agreement in a shorter period of time. Employee further understands that he has seven (7) days following the execution of this Agreement to revoke this Agreement (including Employee’s release of claims in this Section 4), and that this
      Agreement and Employee’s release of claims will not become effective or enforceable until the seven (7)-day period has expired. Employee may revoke this Agreement by providing written notice of revocation to the Company’s General Counsel within such
      seven (7)-day period.  This Agreement will become effective and irrevocable on the eighth (8th) day after Employee signs it if he does not timely revoke
      it. Employee acknowledges and agrees that he is receiving payments and benefits to which he would not be entitled in absence of his timely execution,
        delivery, and non-revocation of this Agreement (including Exhibit A), and that if Employee fails to timely execute and deliver, or if Employee revokes, this Agreement (including Exhibit A), then the Company will have no further obligation to pay or provide Employee any payments or benefits under this
        Agreement, including the severance benefits described in Section 2.

    

    

    5.          Additional
            Representations and Warranties By Employee. Employee represents that Employee 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 Employee signs this Agreement, is not owed wages, commissions, bonuses or other compensation, other than as set forth in this Agreement, and did not, to the best of his knowledge,
          during the course of Employee’s employment, sustain any injuries for which Employee might be entitled to compensation pursuant to worker’s compensation law. Except as expressly permitted by this Agreement, Employee further represents that
          Employee 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 5 is intended to affect Employee’s right to communicate directly with, cooperate with, or provide information to, any federal, state or local government regulator.
          Employee additionally represents and warrants to the Company that Employee has disclosed to the Board of Directors of the Company (as constituted as of the date of this Agreement) any and all information of which Employee has knowledge that is
          relevant to the Company’s past and ongoing internal investigations in which Employee was asked to participate.

    

    

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

     

        

    
      
        

      

    

    

    

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

    

    

    7.          Miscellaneous.

    

    

    (a)          Entire Agreement;
            Modification. This Agreement sets forth the entire understanding of the parties, superseding all prior agreements and understandings, written or oral, with respect to the subject matter hereof and supersedes all existing agreements between
          them concerning such subject matter. This Agreement may be amended or modified only with the written consent of Employee 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 Employee, 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 Employee 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 Employee. Any attempted assignment, transfer, conveyance, or other disposition (other than as aforesaid) of any interest in the rights of Employee to receive any form of compensation to be made by the Company pursuant to this
          Agreement shall be void.

    

    

    (f)          Jurisdiction;
            Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of Delaware without regard to the conflicts of law provisions thereof. Employee and the Company agree that the state and federal courts
          of Wilmington, Delaware shall have the exclusive jurisdiction to consider any matters related to this Agreement, including without limitation any claim of a violation of this Agreement. With respect

     

        

    
      
        

      

    

    

    

    to any such court action, Employee submits to the jurisdiction of such courts and Employee acknowledges that venue in such courts is proper.

    

    

    (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 Employee 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)          Taxes; Right to Seek
            Independent Advice. Employee 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. Employee acknowledges and agrees that
          neither the Company nor the Company’s counsel has provided any legal or tax advice to Employee and that Employee is free to, and is hereby advised to, consult with a legal or tax advisor of Employee’s choosing.

    

    

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

    
      	 	
              USA TECHNOLOGIES, INC.

            	 
	 	 	 	 
	
              

              

            	
              By: 

            	/s/ Sean E. Feeney  

            	 
	 	Name:  Sean E. Feeney	 
	 	Title:  CEO

            	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	EMPLOYEE	 
	 	 	 	 
	 	/s/ Glen Goold     	 
	 	Glen Goold	 
	 	 	 	 

    

    

    

    

    

    

    

    

    
      
        [Signature Page to Goold Separation and Transition Agreement]

      

      
        

      
        

        

      

    

    
    Exhibit A

    

    

    Release

    

    

    
      	
              1.

            	
              I, Glen Goold, hereby execute this Release as of the date set forth below.  Capitalized terms used but not defined in this Release shall have the meanings set forth in
                the Separation and Transition Agreement (the “Separation Agreement”) to which this Release is attached as Exhibit A.

            

    

    

    

    
      	
              2.

            	
              I hereby extend my release of Claims set forth in Section 4 of the Separation Agreement to cover all Claims I have ever had, have, or hereafter may have against any
                Releasee, directly or indirectly, whether known or unknown, from the beginning of time to the date of this Release.

            

    

    

    

    
      	
              3.

            	
              My foregoing release shall not apply to the extent prohibited by law or to my right to enforce the terms of the Separation Agreement; it being understood and agreed
                that the payments and benefits set forth in Section 2 of the Separation Agreement are expressly contingent upon my timely execution and delivery (within twenty-one (21) days following the Separation Date)
                  of this Release and continued compliance with the terms of the Separation Agreement and this Release, and if these conditions are at any time not satisfied, the Company shall have no further obligation to pay or provide any of the
                payments or benefits provided in Section 2 of the Separation Agreement.

            

    

    

    

    
      	
              4.

            	
              Except as provided in paragraph 5 below, I represent and warrant that I have not filed and will not file any claim, charge, or lawsuit (civil, administrative, or
                criminal) against any Releasee, either individually in any type of proceeding or as a member of a class, based upon acts, occurrences, or events which are subject to my release in paragraph 2 above.  If I breach this provision and file an
                action falling within its scope, I agree to indemnify the Releasees for all costs, including court costs and reasonable attorneys’ fees, incurred by any Releasee in the defense of such action or in establishing or maintaining the
                application or validity of this Release or the provisions thereof.

            

    

    

    

    
      	
              5.

            	
              I understand that by this Release I am not releasing: (i) Claims under the Separation Agreement; (ii) Claims pursuant to the terms and conditions of COBRA; (iii)
                  my 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 I do release my right to secure any damages for such alleged treatment; (iv) my right to communicate or cooperate with any government agency; and (v) Claims for indemnification under the Company’s Amended and
                Restated Bylaws, as such may be further amended or restated, or under applicable law with respect to my liability as an employee, director or officer of the Company; and claims for coverage under any available Directors &Officers
                Insurance Policy or Errors & Omissions Insurance Policy with respect to Employee’s liability as an employee, director or officer of the Company.

            

    

    

    

    
      	
              6.

            	
              I hereby confirm that I am in full compliance with all terms and conditions of the Separation Agreement.

            

    

    

    

    
      
        A-1

      

      
        

      
        

        

      

    

    

    

    
      	
              7.

            	
              I acknowledge and agree that in accordance with the terms of ADEA, as amended by the Older Workers Benefit Protection Act:

            

    

    

    

    
      	
              a.

            	
              I have read and understand this Release and knowingly and voluntarily entered into this Release without fraud, duress, or any undue influence.

            

    

    
      	
              b.

            	
              I acknowledge that by this Release, the Company has advised me in writing to consult with an attorney before signing this Release.

            

    

    
      	
              c.

            	
              I understand the language of this Release and its meaning, particularly with respect to my waiver and release of any Claims against the Releasees.

            

    

    
      	
              d.

            	
              I have been afforded twenty-one (21) days to consider the terms of this Release, but may voluntarily elect to sign this Release in a shorter period of time.

            

    

    
      	
              e.

            	
              I have seven (7) days following the execution of this Release to revoke my release of Claims provided in this Release, and such release will not become effective or
                enforceable until the seven (7)-day period has expired. I may revoke this Release by providing written notice of revocation to the Company’s General Counsel within such seven (7)-day period. This Release will become effective and
                irrevocable on the eighth (8th) day after I sign it if I do not timely revoke it.

            

    

    
      	
              f.

            	
              I am receiving payment and other consideration from the Company that I would not otherwise be entitled to in absence of this Release and further understand that if I
                do not execute this Release, or timely revoke my release of Claims provided in this Release, the Company shall have no further obligation to pay or provide any of the payments or benefits provided in Section 2 of the Separation Agreement.

            

    

    
      	
              g.

            	
              I am not waiving any rights or claims that may arise after the date this Release is executed.

            

    

    

    

    
      	
              8.

            	
              This Release will be governed by and construed in accordance with the laws of the State of Delaware without regard to the conflicts
                  of law provisions thereof. I agree that the state and federal courts of Wilmington, Delaware shall have the exclusive jurisdiction to consider any matters related to this Release, including without limitation any claim of a violation of
                  this Release. With respect to any such court action, I submit to the jurisdiction of such courts and I acknowledge that venue in such courts is proper.

            

    

    

    

    *          *          *          *          *

    

    

    

    

    IN WITNESS WHEREOF, I, Glen Goold, have signed this Release on  ___________, 2020.

    

    

    

    

    _____________________________

    Glen Goold

    (not to be signed until Separation Date)

     

    

     

    

    
      A-2Exhibit 4.1

 

THIS INTEREST HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATES IN THE UNITED STATES. THIS INTEREST IS SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.

 

ROYALTY INTEREST

 

	
Effective   Date: October 8, 2020
    	
U.S. $12,000,000.00
    

 

FOR VALUE RECEIVED, JAGUAR HEALTH, INC., a Delaware corporation (“Company”), promises to pay to ILIAD RESEARCH AND TRADING, L.P., a Utah limited partnership, or its successors or assigns (“Investor”), $12,000,000.00 and any interest, fees, and charges in accordance with the terms set forth herein (the “Royalty Repayment Amount”) and to pay interest on the Royalty Repayment Amount at the rate of ten percent (10%) per annum from the Purchase Price Date until the same is paid in full. This Royalty Interest (this “Interest”) is issued and made effective as of October 8, 2020 (the “Effective Date”). This Interest is issued pursuant to that certain Royalty Interest Purchase Agreement dated October 8, 2020, as the same may be amended from time to time, by and between Company and Investor (the “Purchase Agreement”). All interest calculations hereunder shall be computed on the basis of a 360-day year comprised of twelve (12) thirty (30) day months, shall compound daily and shall be payable in accordance with the terms of this Interest. Certain capitalized terms used herein are defined in Attachment 1 attached hereto and incorporated herein by this reference.

 

Company agrees to pay $25,000.00 to Investor to cover Investor’s legal fees, accounting costs, due diligence, monitoring and other transaction costs incurred in connection with the purchase and sale of this Interest, which amount will be deducted from the amount funded at closing.

 

1.                                      Payment; Prepayment.

 

1.1.                            Payment. All payments owing hereunder shall be in lawful money of the United States of America as provided for herein, and delivered to Investor at the address or bank account furnished to Company for that purpose. All payments shall be applied first to (a) costs of collection, if any, then to (b) fees and charges, if any, then to (c) accrued and unpaid interest, and thereafter, to (d) principal.

 

1.2.                            Prepayment. Company may repay the Royalty Repayment Amount at any time without penalty.

 

2.                                      Royalty.

 

2.1.                            Royalty Payments. Beginning on the six-month anniversary of the Purchase Price Date and continuing until such time as the Royalty Repayment Amount has been paid in full, Company will pay Investor ten percent (10%) of Company’s Net Sales on Included Products and ten percent (10%) of worldwide revenues related to upfront licensing fees and milestone payments from licensees and/or distributors, but specifically excluding licensing fees and/or milestone payments that are reimbursements of clinical trial expenses (“Royalty Payments”). Company shall pay the Royalty Payments in arrears on the tenth (10th) day of each month for the prior month. For the avoidance of doubt, the first Royalty Payment will be due on May 10, 2021.

 

 

2.2.                            Minimum Royalty Payment. Beginning on the six-month anniversary of the Purchase Price Date and continuing until the 12-month anniversary of the Purchase Price Date, the monthly Royalty Payment shall be the greater of (a) $250,000.00, and (b) the actual Royalty Payment amount Investor is entitled to for such month pursuant to Section 2.1 above. Beginning on the 12-month anniversary of the Purchase Price Date and continuing until the 18-month anniversary of the Purchase Price Date, the monthly Royalty Payment shall be the greater of (a) $400,000.00, and (b) the actual Royalty Payment amount Investor is entitled to for such month pursuant to Section 2.1 above. Beginning on the 18-month anniversary of the Purchase Price Date and continuing until the 24-month anniversary of the Purchase Price Date, the monthly Royalty Payment shall be the greater of (a) $600,000.00, and (b) the actual Royalty Payment amount Investor is entitled to for such month pursuant to Section 2.1 above. Beginning on the 24-month anniversary of the Purchase Price Date and continuing until the Royalty Repayment Amount has been paid in full, the monthly Royalty Payment shall be the greater of (a) $750,000.00, and (b) the actual Royalty Payment amount Investor is entitled to for such month pursuant to Section 2.1 above.

 

2.3.                            Minimum VWAP. If the Weekly VWAP is not equal to or greater than the Minimum VWAP at least twice during each calendar month during the six-month period beginning on November 1, 2020, then the Royalty Repayment Amount will automatically be increased by $6,000,000.00 at the end of such six-month period. Weeks which begin in one calendar month and end in another calendar month will be counted as part of the calendar month in which the week began.

 

3.                                      Defaults and Remedies.

 

3.1.                            Defaults. The following are events of default under this Interest (each, an “Event of Default”): (a) Company fails to pay any principal or any interest, fees, charges, or any other amount when due and payable hereunder, which default remains uncured for a period of three (3) Business Days; (b) a receiver, trustee or other similar official shall be appointed over Company or a material part of its assets and such appointment shall remain uncontested for thirty (30) calendar days or shall not be dismissed or discharged within sixty (60) calendar days; (c) [INTENTIONALLY LEFT BLANK]; (d) Company makes a general assignment for the benefit of creditors; (e) Company files a petition for relief under any bankruptcy, insolvency or similar law (domestic or foreign); (f) an involuntary bankruptcy proceeding is commenced or filed against Company which is not dismissed or discharged within sixty (60) calendar days; (g) Company defaults or otherwise fails to observe or perform any covenant, obligation, condition or agreement of Company contained herein or in any other Transaction Document (as defined in the Purchase Agreement), other than those specifically set forth in this Section 3.1 and Section 4 of the Purchase Agreement, which default continues for a period of thirty (30) calendar days following notice by Investor to Company thereof; (h) any representation, warranty or other statement made or furnished by or on behalf of Company to Investor herein or in any Transaction Document, is false, incorrect, incomplete or misleading in any material respect when made or furnished; (i) the occurrence of a Fundamental Transaction without Investor’s prior written consent, such consent shall not be unreasonably withheld; (j) Company effectuates a reverse split of its Common Stock without twenty (20) Business Days prior written notice to Investor (other than such splits effectuated to remain listed with NASDAQ); (k) any money judgment, writ or similar process is entered or filed against Company or any subsidiary of Company or any of its property or other assets for more than $1,000,000.00, and shall remain unpaid, unvacated, unbonded or unstayed for a period of thirty (30) calendar days unless otherwise consented to by Investor; (l) Company fails to observe or perform any covenant set forth in Section 4 of the Purchase Agreement, which default continues for a period of thirty (30) calendar days following the occurrence of the applicable breach; or (m) Company breaches any covenant or other term or condition contained in any Other Agreements, which default continues for a period of thirty (30) calendar days following notice by Investor to Company thereof.

 

3.2.                            Remedies.  At any time following the occurrence of any Event of Default, Investor may, at its option, elect to increase the Royalty Repayment Amount by applying the Default Effect (subject

 

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to the limitation set forth below) via written notice to Company without accelerating the Royalty Repayment Amount, in which event the Royalty Repayment Amount shall be increased as of the date of the occurrence of the applicable Event of Default pursuant to the Default Effect. At any time following the occurrence of any Event of Default, upon written notice given by Investor to Company, interest shall accrue on the Royalty Repayment Amount beginning on the date the applicable Event of Default occurred at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted under applicable law (“Default Interest”). Nothing herein shall limit Investor’s right to pursue any other remedies available to it at law or in equity.

 

4.                                      Unconditional Obligation; No Offset. Company acknowledges that this Interest is an unconditional, valid, binding and enforceable obligation (except as may be limited by applicable bankruptcy, insolvency and similar laws affecting creditors’ rights and by general principles of equity) of Company not subject to offset, deduction or counterclaim of any kind. Company hereby waives any rights of offset it now has or may have hereafter against Investor, its successors and assigns, and agrees to make the payments called for herein in accordance with the terms of this Interest.

 

5.                                      Waiver. No waiver of any provision of this Interest shall be effective unless it is in the form of a writing signed by the party granting the waiver. No waiver of any provision or consent to any prohibited action shall constitute a waiver of any other provision or consent to any other prohibited action, whether or not similar. No waiver or consent shall constitute a continuing waiver or consent or commit a party to provide a waiver or consent in the future except to the extent specifically set forth in writing.

 

6.                                      Payment of Collection Costs. If this Interest is placed in the hands of an attorney for collection or enforcement prior to commencing arbitration or legal proceedings, or is collected or enforced through any arbitration or legal proceeding, or Investor otherwise takes action to collect amounts due under this Interest or to enforce the provisions of this Interest, then Company shall pay the reasonable and documented out-of-pocket costs incurred by Investor for such collection, enforcement or action including, without limitation, reasonable and documented attorneys’ fees and disbursements.

 

7.                                      Governing Law; Venue. This Interest shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Interest shall be governed by, the internal laws of the State of Utah, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Utah. The provisions set forth in the Purchase Agreement to determine the proper venue for any disputes are incorporated herein by this reference.

 

8.                                      Arbitration of Disputes. By its acceptance of this Interest, each party agrees to be bound by the Arbitration Provisions (as defined in the Purchase Agreement) set forth in the Purchase Agreement.

 

9.                                      Cancellation. After repayment of the entire Royalty Repayment Amount, this Interest shall be deemed paid in full, shall automatically be deemed canceled, and shall not be reissued.

 

10.                               Amendments. The prior written consent of both parties hereto shall be required for any change or amendment to this Interest.

 

11.                               Assignments. Company may not assign this Interest without the prior written consent of Investor. This Interest may not be offered, sold, assigned or transferred by Investor without the prior written consent of Company, which consent shall not be unreasonably withheld.

 

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12.                               Time is of the Essence. Time is expressly made of the essence with respect to each and every provision of this Interest and the documents and instruments entered into in connection herewith.

 

13.                               Notices. Whenever notice is required to be given under this Interest, unless otherwise provided herein, such notice shall be given in accordance with the subsection of the Purchase Agreement titled “Notices.”

 

14.                               Liquidated Damages. Investor and Company agree that in the event Company fails to comply with any of the terms or provisions of this Interest, Investor’s damages would be uncertain and difficult (if not impossible) to accurately estimate because of the parties’ inability to predict future interest rates, future share prices, future trading volumes and other relevant factors. Accordingly, Investor and Company agree that any fees, balance adjustments, Default Interest or other charges assessed under this Interest are not penalties but instead are intended by the parties to be, and shall be deemed, liquidated damages.

 

15.                               Waiver of Jury Trial. EACH OF INVESTOR AND COMPANY IRREVOCABLY WAIVES ANY AND ALL RIGHTS SUCH PARTY MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS INTEREST OR THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY APPLICABLE STATUTE, LAW, RULE OR REGULATION. FURTHER, EACH PARTY HERETO ACKNOWLEDGES THAT SUCH PARTY IS KNOWINGLY AND VOLUNTARILY WAIVING SUCH PARTY’S RIGHT TO DEMAND TRIAL BY JURY.

 

16.                               Voluntary Agreement. Company has carefully read this Interest and has asked any questions needed for Company to understand the terms, consequences and binding effect of this Interest and fully understand them. Company has had the opportunity to seek the advice of an attorney of Company’s choosing, or has waived the right to do so, and is executing this Interest voluntarily and without any duress or undue influence by Investor or anyone else.

 

17.                               Severability. If any part of this Interest is construed to be in violation of any law, such part shall be modified to achieve the objective of Company and Investor to the fullest extent permitted by law and the balance of this Interest shall remain in full force and effect.

 

[Remainder of page intentionally left blank; signature page follows]

 

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IN WITNESS WHEREOF, Company has caused this Interest to be duly executed as of the Effective Date.

 

	
 
    	
COMPANY:
    
	
 
    	
 
    
	
 
    	
JAGUAR HEALTH, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Lisa A. Conte
    
	
 
    	
Name:
    	
Lisa A. Conte
    
	
 
    	
Title:
    	
President & CEO
    

 

ACKNOWLEDGED, ACCEPTED AND AGREED:

 

INVESTOR:

 

	
ILIAD   RESEARCH AND TRADING, L.P.
    	
 
    
	
 
    	
 
    
	
By:   Iliad Management, LLC, its General Partner
    	
 
    
	
 
    	
 
    
	
By:   Fife Trading, Inc., its Manager
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By: 
    	
/s/   John M. Fife
    	
 
    
	
 
    	
John   M. Fife, President
    	
 
    

 

[Signature Page to Royalty Interest]

 

 

ATTACHMENT 1

DEFINITIONS

 

For purposes of this Interest, the following terms shall have the following meanings:

 

A1.                             “Business Day” means any day other than a Saturday, Sunday or any day on which banks located in the State of California or Utah are authorized or obligated to close.

 

A2.                             “Default Effect” means multiplying the Royalty Repayment Amount as of the date the applicable Event of Default occurred by 15%.

 

A3.                             “Fundamental Transaction” means that, except in connection with the transactions contemplated by the Merger Agreement and the S-4 Transactions, (a) (i) Company shall, directly or indirectly, in one or more related transactions, consolidate or merge with or into (whether or not Company or any of its subsidiaries is the surviving corporation) any other person or entity, or (ii) Company shall, directly or indirectly, in one or more related transactions, sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of its respective properties or assets to any other person or entity, or (iii) Company or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, allow any other person or entity to make a purchase, tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of voting stock of Company (not including any shares of voting stock of Company held by the person or persons making or party to, or associated or affiliated with the persons or entities making or party to, such purchase, tender or exchange offer), or (iv) Company shall, directly or indirectly, in one or more related transactions, consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with any other person or entity whereby such other person or entity acquires more than 50% of the outstanding shares of voting stock of Company (not including any shares of voting stock of Company held by the other persons or entities making or party to, or associated or affiliated with the other persons or entities making or party to, such stock or share purchase agreement or other business combination), or (v) Company shall, directly or indirectly, in one or more related transactions, reorganize, recapitalize or reclassify the Common Stock, other than an increase in the number of authorized shares of Company’s Common Stock, or (b)  any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act and the rules and regulations promulgated thereunder) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding voting stock of Company. Notwithstanding the foregoing, a Fundamental Transaction shall not include any transaction where Company, directly or indirectly, in one or more related transactions, including, without limitation, business development transactions entered into for the purpose of licensing any or all of Company’s technology or products, consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with any other person or entity whereby such other person or entity acquires more than 50% of the outstanding shares of voting stock of Company if such person or entity agrees to a non-disturb of the terms of this Interest and such person or entity has the ability to fulfill the obligations of this Interest.

 

A4.                             “Included Products” means the pharmaceutical drug known as Mytesi, including any improvements or modifications thereto and any follow-on products, owned or controlled by Company, including Lechlemer for any indications that would cannibalize Mytesi indication(s) or any other chronic indication. For the avoidance of doubt, this includes without limitation any future indications for which Mytesi is approved, such as cancer therapy-related diarrhea and irritable bowel syndrome, among others.

 

A5.                             “Merger Agreement” means the Agreement and Plan of Merger, dated March 31, 2017, by and among Napo Pharmaceuticals, Inc., a Delaware corporation, Company and Napo Acquisition Corporation, a Delaware corporation, as amended.

 

A6.                             “Minimum VWAP” means $0.3035.

 

A7.                             “Net Sales” means, with respect to any given period, the gross amount invoiced for the sale of the Included Products to unaffiliated third parties (other than sublicensees) (the “Invoiced Sales”) less deductions for:

 

7.1.                            normal and customary trade, quantity and cash discounts and sales returns and allowances, including (i) those granted on account of price adjustments, billing errors, rejected goods, damaged goods and returns, (ii) administrative and other fees and reimbursements and similar payments to wholesalers and other distributors,

 

 

buying groups, pharmacy benefit management organizations, health care insurance carriers and other institutions, (iii) allowances, rebates and fees paid to distributors, and (iv) chargebacks;

 

7.2.                            freight, postage, shipping and insurance expenses to the extent that such items are included in the Invoiced Sales;

 

7.3.                            customs and excise duties and other duties related to the sales to the extent that such items are included in the Invoiced Sales;

 

7.4.                            rebates and similar payments made with respect to sales paid for by any governmental or regulatory authority such as, by way of illustration and not in limitation of the parties’ rights hereunder Federal or state Medicaid, Medicare or similar state program or equivalent foreign governmental program;

 

7.5.                            sales and other taxes and duties directly related to the sale or delivery of Included Products (but not including taxes assessed against the income derived from such sale);

 

7.6.                            any other similar and customary deductions that are consistent with GAAP, or in the case of non-United States sales, other applicable accounting standards;

 

7.7.                            distribution expenses to the extent that such items are included in the Invoiced Sales; and

 

7.8.                            any such invoiced amounts that are not collected by Company or its affiliates.

 

For purposes of determining Net Sales, the Included Products shall be deemed to be sold when invoiced and a “sale” shall not include transfers or dispositions for charitable, promotional, pre-clinical, clinical, regulatory or governmental purposes to the extent no amount is received by Company, its affiliates, or sublicensees in connection therewith.

 

For purposes of calculating Net Sales, sales between or among Company, its affiliates and its sublicensees shall be excluded from the computation of Net Sales, but sales by Company, its affiliates or its sublicensees to third parties (other than sublicensees) shall be included in the computation of Net Sales.

 

A8.                             “Other Agreements” means, collectively, (a) all existing and future agreements and instruments between, among or by Company (or an affiliate), on the one hand, and Investor (or an affiliate), on the other hand, and (b) any financing agreement or a material agreement that affects Company’s ongoing business operations.

 

A9.                             “Purchase Price Date” means the date the Purchase Price (as defined in the Purchase Agreement) is delivered by Investor to Company.

 

A10.                      “S-4 Transactions” means any and all transactions individually or in the aggregate and documents and agreements referenced and/or filed as exhibits as disclosed or contemplated in that certain Form S-4 Registration Statement relating to Company and filed with the United States Securities and Exchange Commission on April 18, 2017, as amended, modified or supplemented from time to time.

 

A11.                      “VWAP” means the volume weighted average price of the Common Stock on the principal market for a particular Trading Day or set of Trading Days, as the case may be, as reported by Bloomberg.

 

A12.                      “Weekly VWAP” means the VWAP for any given calendar week regardless of the number of Trading Days in such calendar week.

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