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Exhibit 10.1
Termination Agreement
This Termination Agreement is entered into effective as of the 1st
day
of February, 2007 (the "Effective Date"), by and between Anand
Baichwal
("Baichwal") and Penwest Pharmaceuticals Co., a Washington
corporation
("Penwest").
WHEREAS, Baichwal and Penwest are parties to a Recognition and
Incentive Agreement, dated as of May 14, 1990, as amended on
October 22, 1997
(the "Baichwal Agreement"); and
WHEREAS, Baichwal and Penwest wish to terminate specified sections
of
the Baichwal Agreement in its entirety;
NOW, THEREFORE, in consideration of the mutual covenants and
premises
hereinafter set forth, it is agreed by and between the parties as
follows:
1.
Termination of the Incentive Provisions of the Baichwal
Agreement.
Baichwal and Penwest hereby agree that, effective as of the
Effective
Date, Section 1 of the Baichwal Agreement and the second paragraph
of Section 5
of the Baichwal Agreement (together, the "Incentive Provisions")
are terminated
and shall terminate and be of no further force or effect; provided,
however,
that Penwest shall remain obligated to pay, and shall pay, to
Baichwal the
royalties owed to Baichwal under Section 1 of the Baichwal
Agreement with
respect to the one-year period commencing on January 1, 2006.
Penwest shall pay
such royalty (the "Post-Termination Royalty"), in accordance with
the terms of
the Baichwal Agreement, on or prior to April 30, 2007.
2.
Representations, Warranties and Covenants.
(a) Baichwal represents and warrants, as of the Effective Date,
that
(i) neither the execution and delivery by Baichwal of this
Agreement, nor the
consummation by Baichwal of the transactions contemplated hereby,
will require
on the part of Baichwal any filing with, or any permit,
authorization, consent,
waiver or approval of, any third party, whether pursuant to
contract, applicable
law or otherwise; and (ii) no other person or entity has any rights
under the
Incentive Provisions of the Baichwal Agreement, including without
limitation
rights to royalties, that can not be, and are not hereby being,
waived, amended,
released or terminated by Baichwal under this Agreement.
(b) Penwest represents and warrants, as of the Effective Date,
that
neither the execution and delivery by Penwest of this Agreement,
nor the
consummation by Penwest of the transactions contemplated hereby,
will require on
the part of Penwest any filing with, or any permit, authorization,
consent,
waiver or approval of, any third party, whether pursuant to
contract, applicable
law or otherwise.
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3.
Consideration.
In consideration for Baichwal's agreement to terminate the
Incentive
Provisions of the Baichwal Agreement hereunder, Baichwal's
representations,
warranties and covenants hereunder and Baichwal's release
hereunder, Penwest
hereby agrees that, within ten days of the Effective Date, it
shall
(a) pay to Baichwal $770,000 in cash; and
(b) issue to Baichwal 19,696 shares of common stock of Penwest,
$.001
par value per share ("Common Stock"); provided, however, that,
notwithstanding
the foregoing to the contrary, Penwest shall have no obligation to
issue shares
of Common Stock, and Baichwal shall not be entitled to any shares
of Common
Stock, until such time as Baichwal executes and delivers to the
Company the
investment representation letter attached hereto as Exhibit A.
4.
Release.
In connection with the termination of the Incentive Provisions of
the
Baichwal Agreement and the payment of the consideration
contemplated by Section
3, Baichwal hereby releases, remises, waives, acquits, forever
discharges, and
covenants not to sue Penwest and its subsidiaries and affiliates,
and each of
their current or former officers, directors, agents, employees,
successors,
predecessors, assigns, attorneys, and the heirs, executors, and
administrators
of any such released individuals (collectively, "Penwest
Releasees"), from any
demands, claims, actions, suits, judgments, damages, losses, or
liabilities,
both in law and in equity, federal and state, which did arise or
could have
arisen prior to the Effective Date against Penwest Releasees under
the Baichwal
Agreement, other than Baichwal's claim for payment of the
Post-Termination
Royalty under Section 1 of t
