CALDERWOOD & HARKNESS LLP Attorneys at Law 1 Federal Street, 35th Floor Boston, Massachusetts 02110
Telephone: (617) 548-3000 Facsimile: (617) 548-3001 www.calderwoodharkness.com
March 29, 2021
Jennifer Chao, Esq. General Counsel Penterra Pharmaceuticals Corp. 400 Carnegie Center Drive, Suite 600 Princeton, New Jersey 08540
Re: Engagement of Calderwood & Harkness LLP by Penterra Pharmaceuticals Corp. — Declaratory Judgment Action Against Vantage Medical Distribution, LLC Matter Number: 1018-00007
Dear Ms. Chao:
Thank you for selecting Calderwood & Harkness LLP (the "Firm," "we," or "us") to represent Penterra Pharmaceuticals Corp. ("Penterra," "PPC," or the "Company") in the matter referenced above. We are pleased to have the opportunity to serve Penterra once again and look forward to working closely with you and your team. The purpose of this engagement letter is to set forth the terms and conditions upon which the Firm will provide legal services to Penterra in connection with this matter. We ask that you review this letter carefully and, if the terms are acceptable, sign and return a copy to us as described below.
1. Purpose and Scope of Engagement
This letter confirms that Penterra Pharmaceuticals Corp., a corporation organized under the laws of the State of Delaware, publicly traded on the Nasdaq Stock Market under the ticker symbol "PTRA," and headquartered at 400 Carnegie Center Drive, Suite 600, Princeton, New Jersey 08540, has engaged Calderwood & Harkness LLP to provide legal representation in connection with a declaratory-judgment action to be filed in the Superior Court of the Commonwealth of Massachusetts, Business Litigation Session, Suffolk County (the "Action").
The Action will be filed against Vantage Medical Distribution, LLC ("Vantage"), a Massachusetts limited liability company with its principal offices located at 75 Cabot Road, Suite 310, Medford, Massachusetts 02155. The purpose of the Action is to obtain a judicial declaration that the exclusive distribution territory granted to Vantage under the Exclusive Distribution Agreement entered into between Penterra and Vantage, dated as of July 1, 2017 (the "EDA"), is limited to the six New England states — namely, Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont — as expressly defined in Exhibit A to the EDA (the "Territory"). The declaration sought will confirm that the Territory does not encompass the states of New York, New Jersey, or Pennsylvania, and that Penterra's distribution activities in those states do not constitute a breach of the EDA or any other obligation owed to Vantage.
The products at issue under the EDA are Oncalaris® (pegvisomant-axel), available in 20 mg and 40 mg vials, and Renuvesta® (cilosporin-beta), available in 5 mg capsules. The dispute centers on Vantage's contention that the Territory under the EDA should be interpreted more broadly than the six New England states identified in Exhibit A, a position that we believe is inconsistent with the plain language of the agreement and the parties' course of dealing.
In addition to the declaratory-judgment claim, this engagement encompasses the defense of any counterclaims that Vantage may assert in connection with the Action. We note that Vantage's outside counsel, Hargrove, Sinclair & Polk LLP, communicated a threat of claims against Penterra in a letter dated March 22, 2021, in which Vantage asserted potential damages of approximately $35 million arising from alleged breach of contract and related theories. The Firm's representation will extend to the defense and resolution of any such counterclaims that may be filed.
The scope of this engagement includes all phases of the litigation, specifically:
(a) Pre-filing investigation and case strategy development, including review of the EDA and all relevant amendments, correspondence, and course-of-dealing evidence;
(b) Preparation and filing of the Complaint for Declaratory Judgment, together with all initial pleadings and responsive pleadings (including, without limitation, any Answer and Affirmative Defenses to Vantage's counterclaims);
(c) Written discovery, including preparation and service of interrogatories, requests for production of documents, and requests for admissions, as well as responses and objections to Vantage's discovery requests;
(d) Depositions of fact witnesses, including preparation of witnesses for deposition and attendance at and conduct of all depositions;
(e) Motion practice, including any motions to dismiss, motions to compel, motions in limine, motions for summary judgment, and other dispositive or procedural motions;
(f) Trial preparation, including development of trial strategy, witness preparation, preparation of trial exhibits, pre-trial memoranda, and proposed jury instructions (if applicable) or proposed findings of fact and conclusions of law;
(g) Trial, including all in-court proceedings through and including the entry of final judgment; and
(h) Post-trial motions, including any motion for a new trial, motion to alter or amend the judgment, or motion for reconsideration.
The scope of this engagement expressly does not include the following:
(i) Any appeal from the trial court's final judgment or any interlocutory order. Should an appeal become necessary or advisable, representation on appeal would require a separate engagement letter setting forth the terms and conditions applicable to appellate proceedings.
(ii) Regulatory matters of any kind, including but not limited to communications with or filings before the U.S. Food and Drug Administration, the Drug Enforcement Administration, or any state regulatory agency.
(iii) Securities and Exchange Commission disclosure advice, including advice concerning the Company's obligations under Regulation FD, Item 103 of Regulation S-K, or any other SEC reporting requirements that may arise from the pendency of this litigation.
(iv) Transactional work related to distribution agreements with parties other than Vantage, including but not limited to the proposed distribution arrangement with Meridian National Distributors, Inc. or any other third-party distributor.
If any of the foregoing excluded matters arise in connection with this dispute, we would be happy to discuss the engagement of the Firm or the referral to other qualified counsel to address those matters under separate terms.
2. Engagement Team
The following attorneys have been assigned to this matter and will constitute the core engagement team:
Linda Osei — Responsible Partner. Ms. Osei is a partner in the Firm's Litigation Department with twenty-two years of experience in complex commercial litigation, with a particular emphasis on pharmaceutical distribution disputes, supply chain agreements, and territorial exclusivity claims. Ms. Osei will have overall supervisory responsibility for all aspects of the representation and will serve as the primary client contact for Penterra. She will be responsible for making strategic recommendations, overseeing the work of all team members, managing key court appearances and depositions, and ensuring the quality and timeliness of all work product.
Priya Anand — Billing Partner. Ms. Anand is a partner in the Firm's Litigation Department and leads the Firm's Life Sciences Disputes Practice Group. She brings eighteen years of experience representing pharmaceutical, biotechnology, and medical device companies in high-stakes commercial litigation throughout the Northeast. Ms. Anand will oversee the strategic and financial aspects of the engagement, including budget management, staffing decisions, and coordination with the Responsible Partner on key strategic issues. She will also contribute substantively to critical briefing and motion practice as the matter progresses.
Hannah Brinkley — Lead Associate. Ms. Brinkley is a sixth-year associate in the Firm's Litigation Department. She has significant experience managing all phases of complex commercial litigation, from initial case assessment through trial. Ms. Brinkley will manage the day-to-day litigation tasks associated with this matter, including the coordination of document review and production, preparation of written discovery, drafting of briefs and memoranda of law, deposition preparation and attendance, and trial preparation logistics.
Patrick Gallagher — Working Associate. Mr. Gallagher is a third-year associate in the Firm's Litigation Department. He will provide research and drafting support throughout the engagement, including legal research on contract interpretation issues under Massachusetts and Delaware law, drafting of discovery responses, preparation of deposition outlines, and assistance with motion practice briefing.
The Firm may, from time to time, assign additional attorneys, paralegals, or professional staff to the matter as the needs of the engagement require. Any such additional personnel will be subject to the same billing terms and discount described in Section 3 below. The Firm will notify Penterra of any material changes to the core engagement team, including any change in the Responsible Partner or Lead Associate, and will consult with Penterra before making any such change.
3. Billing Rates and Fee Arrangement
This engagement will be conducted on an hourly basis at the Firm's standard 2021 billing rates, subject to the agreed-upon discount described below. The current standard hourly billing rates for the members of the engagement team are as follows:
In recognition of the longstanding relationship between Calderwood & Harkness LLP and Penterra Pharmaceuticals Corp., and the volume of legal work Penterra has entrusted to the Firm over the years, the Firm has agreed to apply a seven percent (7%) discount to all professional fees billed in connection with this engagement. This discount will be applied to all time charges for all attorneys, paralegals, and litigation support staff assigned to the matter. The effective discounted rates for the core engagement team are as follows:
Paralegals and litigation support staff assigned to the matter will be billed at their respective standard rates, which currently range from $250.00 to $400.00 per hour, also subject to the 7% discount.
The Firm's billing rates are subject to annual adjustment, typically effective as of January 1 of each calendar year. Given that this engagement may extend beyond December 31, 2021, any rate changes that take effect during the course of the engagement will be communicated to Penterra in writing in advance of their effective date. The 7% discount will continue to apply to any adjusted rates for the duration of the engagement.
Time is recorded in increments of one-tenth of an hour (six minutes). Each invoice will reflect the actual time expended by each attorney or professional staff member, multiplied by his or her applicable discounted rate.
4. Estimated Budget
Based on the Firm's preliminary assessment of this matter — including the complexity of the contract interpretation issues presented by the EDA, the anticipated scope of fact and document discovery, the likelihood of contested deposition testimony from key Penterra and Vantage personnel, the anticipated motion practice (including a potential motion for summary judgment), and the possibility that the matter may proceed to trial in the Business Litigation Session — the Firm estimates that total professional fees for this engagement, through and including trial if required, will fall in the range of $750,000 to $1,200,000.
This estimate does not include costs and disbursements, which are addressed separately in Section 5 below.
The fee estimate is based on the following assumptions: (a) the dispute will involve substantial document production by both parties, including a significant volume of electronically stored information; (b) written discovery will be conducted, including interrogatories, requests for production, and requests for admissions; (c) approximately eight to twelve fact depositions will be taken, including key Penterra and Vantage personnel involved in the negotiation and performance of the EDA; (d) summary judgment briefing will be pursued if the factual record supports it; and (e) the matter may proceed to trial over a period of approximately five to eight trial days.
We emphasize that this estimate is provided for planning purposes and is not a cap on fees or a guaranteed total. Actual fees may fall above or below the estimated range depending on a number of factors, including but not limited to:
• The complexity and volume of discovery, including any disputes regarding the scope of document production or the availability of electronically stored information;
• The scope and nature of Vantage's counterclaims, including the number of claims asserted and the damages sought;
• The extent and complexity of motion practice, including the number and nature of motions filed by either party;
• Whether the matter proceeds to trial or is resolved through dispositive motions, settlement, or other means; and
• Any unforeseen developments, including third-party discovery, intervention by other parties, or changes in the legal landscape.
The Firm is committed to providing Penterra with cost-effective representation and will manage staffing and case strategy with an eye toward efficiency. To that end, the Firm will provide periodic budget updates, no less frequently than quarterly, and will promptly inform Penterra if the matter is trending toward the upper end of or beyond the estimated range. The Firm will not exceed the upper end of the estimated range without prior discussion with and authorization from Penterra, except in circumstances where immediate action is required to protect Penterra's interests.
5. Costs and Disbursements
In addition to professional fees, Penterra will be responsible for reimbursing the Firm for all reasonable costs and disbursements incurred in connection with this engagement. Such costs and disbursements include, but are not limited to, the following:
• Court filing fees, service of process costs, and fees for certified copies of court documents;
• Deposition transcript costs, including charges for expedited transcripts, daily copy service, and real-time reporting, as well as videography costs for videotaped depositions;
• Copying, printing, and document production expenses, including the cost of reproducing documents for discovery production, court filings, and internal work product;
• Travel expenses incurred in connection with the engagement, including transportation (airfare, train, automobile mileage at the then-prevailing IRS standard rate, parking, and tolls), lodging, and meals, all at actual cost and in accordance with reasonable business travel standards;
• Expert witness fees, including fees for consultation, report preparation, deposition testimony, and trial testimony, in the event that expert witnesses are engaged in connection with the matter (the retention of any expert witness will be discussed with and approved by Penterra in advance);
• Electronic discovery and litigation support vendor fees, including fees for data collection, processing, hosting, review platform licensing, technology-assisted review, and production of electronically stored information;
• Messenger, courier, and overnight delivery charges;
• Computerized legal research charges, including charges for Westmark Data Systems, Sundial Solutions, and other online legal research databases; and
• Any other out-of-pocket costs reasonably and necessarily incurred in connection with the engagement.
All costs and disbursements will be billed at the actual amounts incurred, without markup. For any individual disbursement expected to exceed $10,000, the Firm will seek Penterra's prior approval before incurring the expense, except where the expenditure is necessary to meet an imminent court-imposed deadline.
6. Billing and Payment Terms
The Firm will render invoices on a monthly basis. Each invoice will include a detailed description of the services performed during the billing period, identifying the attorney or professional staff member who performed each task, the date on which the task was performed, the time expended (in tenths of an hour), and the applicable billing rate. Each invoice will also separately itemize all costs and disbursements incurred during the billing period.
Payment of each invoice is due within thirty (30) days of the invoice date. We appreciate timely payment, as it enables the Firm to continue to devote appropriate resources to the matter.
The Firm reserves the right to charge interest at the rate of 1.0% per month (12% per annum) on any invoice amount that remains unpaid more than sixty (60) days after the invoice date. Interest will accrue from the sixty-first day after the invoice date until the date of payment.
All invoices will reference the assigned matter number: 1018-00007. Please ensure that this matter number is included on all remittances so that payments can be properly credited.
Invoices will be directed to Jennifer Chao, Esq., General Counsel, Penterra Pharmaceuticals Corp., at the address set forth above, or to such other address or electronic billing platform as Penterra may designate in writing from time to time. If Penterra utilizes an electronic billing system and wishes the Firm to submit invoices through that system, please provide the Firm with the applicable platform credentials, billing guidelines, and timekeeper registration requirements at your earliest convenience.
If Penterra has any questions or concerns regarding any invoice, we ask that such questions or concerns be communicated to the Firm in writing within thirty (30) days of receipt of the invoice. The Firm will work with Penterra in good faith to resolve any billing disputes promptly.
7. Retainer
No retainer deposit is required in connection with this engagement. This accommodation is extended in recognition of the longstanding and valued relationship between Calderwood & Harkness LLP and Penterra Pharmaceuticals Corp. The Firm reserves the right to request a retainer in the future if circumstances warrant, including in the event of a material change in the scope of the engagement or a pattern of late payment.
8. Client Responsibilities
The success of this engagement depends in significant part on Penterra's full cooperation with the Firm. To that end, Penterra agrees to the following:
Cooperation and Information Sharing. Penterra will cooperate fully with the Firm throughout the course of this engagement, including by timely providing all documents, data, electronically stored information, and other materials reasonably requested by the Firm in connection with the representation. Penterra will also make its officers, directors, employees, and agents available for interviews, meetings, deposition preparation sessions, and, if necessary, testimony at trial, in accordance with schedules to be reasonably coordinated between the Firm and Penterra.
Primary Client Contact. Penterra designates Jennifer Chao, Esq., General Counsel, as the primary client contact for this engagement. Ms. Chao will have the authority to give instructions to the Firm, provide factual information, make day-to-day decisions regarding the conduct of the litigation, and approve case strategy, all on behalf of Penterra and subject to any internal corporate approvals that may be required by Penterra's governance policies or Board of Directors. In Ms. Chao's absence, Penterra will designate an alternate contact with appropriate authority to ensure that the engagement can proceed without delay.
Litigation Hold. Penterra will promptly implement a litigation hold as directed by the Firm to preserve all documents and electronically stored information that are potentially relevant to the dispute with Vantage. The Firm will provide Penterra with a draft litigation hold notice for review and dissemination within Penterra's organization. The litigation hold should be communicated to all relevant custodians and their administrative support staff, and Penterra should take all reasonable steps to ensure compliance with the hold, including the suspension of any routine document destruction or data retention policies as they apply to potentially relevant materials.
Key Custodians. Based on the Firm's preliminary understanding of the matter, the following individuals have been identified as key custodians whose files, communications, and electronically stored information should be subject to the litigation hold:
• Dr. Marcus Lindholm, Chief Executive Officer;
• Jennifer Chao, Esq., General Counsel;
• Steven Kapoor, Vice President, Commercial Operations; and
• Rachel Mendez, Director of Distribution & Logistics.
Additional custodians may be identified as the Firm's investigation proceeds. The Firm will work with Penterra to identify and add any such custodians to the litigation hold in a timely manner.
Truthfulness and Completeness. Penterra understands that the Firm's ability to provide effective representation depends on receiving truthful, complete, and timely information from the Company. Penterra agrees to disclose to the Firm all facts and circumstances material to the matter, including any facts that may be unfavorable to Penterra's position, so that the Firm can properly assess risks and develop appropriate strategies.
9. Conflicts of Interest
The Firm has conducted a thorough conflicts check in accordance with its internal procedures and the Massachusetts Rules of Professional Conduct. Based on that review, the Firm has identified no conflicts of interest that would preclude the Firm from representing Penterra in connection with this matter.
Specifically, the Firm has confirmed that it does not currently represent, and has not previously represented, any of the following individuals or entities:
• Vantage Medical Distribution, LLC;
• Hargrove, Sinclair & Polk LLP (counsel for Vantage);
• Donald R. Farnham (identified as a principal of Vantage);
• Lisa Petrangelo;
• Brian Kopec;
• Meridian National Distributors, Inc.; and
• Thomas Welliver.
The Firm's conflict check also encompassed all other known related parties and individuals identified in the materials provided by Penterra to date. If additional parties or related individuals are identified as the matter progresses, the Firm will conduct supplemental conflict checks as appropriate.
Penterra acknowledges and agrees that this engagement is limited to the specific matter described in this letter. The engagement does not create an attorney-client relationship between the Firm and Penterra with respect to any other matter, nor does it preclude the Firm from representing other clients whose interests may be adverse to Penterra in matters unrelated to this engagement, provided that such representation complies with the Firm's ethical obligations under the Massachusetts Rules of Professional Conduct and applicable law. If a potential conflict arises during the course of this engagement, the Firm will promptly notify Penterra and take all steps required by the applicable rules of professional conduct to address the conflict.
10. Confidentiality and Privilege
All communications between Penterra and the Firm in connection with this engagement are intended to be protected by the attorney-client privilege, and all work product prepared by the Firm in connection with the engagement is intended to be protected by the attorney work product doctrine. The Firm will maintain these protections to the fullest extent permitted by law.
The Firm will maintain the confidentiality of all information received from Penterra in connection with this engagement in accordance with the Massachusetts Rules of Professional Conduct, including Rule 1.6 (Confidentiality of Information), and all other applicable law. The Firm will not disclose confidential information relating to the representation except as authorized by Penterra or as required or permitted by the applicable rules of professional conduct.
To help preserve the protections afforded by the attorney-client privilege and work product doctrine, Penterra should take care to avoid inadvertent waiver of these protections. In particular, we recommend that Penterra limit the dissemination of legal advice received from the Firm to those individuals within the Company who have a genuine need to know the information in connection with their responsibilities relating to this matter. Communications forwarding or summarizing legal advice from the Firm should be clearly marked as "Privileged and Confidential — Attorney-Client Communication" and should not be forwarded to or shared with individuals outside the Company (including business partners, distributors, consultants, or other third parties) without first consulting with the Firm.
11. Document Retention
Upon the conclusion of this matter — whether by final judgment, settlement, voluntary dismissal, or other resolution — the Firm will retain the client file in accordance with its standard document retention policies. Under the Firm's current policy, client files are retained for a minimum of seven (7) years from the date on which the matter is formally closed in the Firm's records management system. After the expiration of the retention period, the Firm may destroy the file in accordance with its standard procedures without further notice to Penterra, unless Penterra has requested the return of the file or any portion thereof.
Original documents provided by Penterra to the Firm in connection with this engagement will be returned to Penterra upon written request, either during the course of the engagement or upon its conclusion. The Firm recommends that Penterra retain copies of all original documents provided to the Firm.
12. Termination
Either Penterra or the Firm may terminate this engagement at any time upon written notice to the other party. Any such termination is subject to the Firm's ethical obligations under the Massachusetts Rules of Professional Conduct (including Rule 1.16, regarding the declining or terminating of representation) and any applicable court rules or orders governing the withdrawal of counsel from pending litigation.
In the event that this engagement is terminated for any reason:
(a) Penterra will be responsible for the payment of all professional fees for services rendered and all costs and disbursements incurred through the effective date of termination, in accordance with the terms of this letter.
(b) The Firm will take all reasonable steps to protect Penterra's interests upon termination, including providing reasonable notice to Penterra and, to the extent permitted by the rules of professional conduct, continuing to act on Penterra's behalf for a reasonable period to allow Penterra to retain successor counsel.
(c) The Firm will cooperate fully in the orderly transfer of the client file and all related materials to Penterra or its successor counsel, subject to the Firm's right to retain copies of its work product and to exercise any applicable lien rights for unpaid fees and costs.
13. No Guarantee of Outcome
While the Firm believes, based on its preliminary review of the EDA, the relevant correspondence, and the applicable law, that the merits strongly favor Penterra's position that the exclusive distribution territory under the EDA is limited to the six New England states expressly defined in Exhibit A thereto, no assurance or guarantee of a particular outcome can be given. The practice of law, and litigation in particular, inherently involves risks and uncertainties that are beyond the control of any attorney or law firm. The ultimate outcome of this matter will depend on range factors, including the development of the factual record, the court's interpretation of the relevant contractual provisions, the resolution of Vantage's threatened counterclaims, and other legal and factual developments that cannot be predicted with certainty at this time.
The Firm will, of course, keep Penterra informed of all material developments in the litigation and will provide its candid assessment of the strengths and risks of Penterra's position as the matter progresses. Nothing in this letter or in any subsequent communication from the Firm should be construed as a guarantee or prediction of a specific result.
14. Governing Law
This engagement letter and the terms and conditions set forth herein shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, without regard to its conflict-of-laws principles.
15. Acceptance
We are enthusiastic about the opportunity to represent Penterra in this important matter and are confident that we can provide the high level of service that you expect. If the terms set forth in this letter are acceptable to you, please indicate Penterra's agreement by signing and dating this letter in the space provided below and returning a signed copy to me at the address above or by email to losei@calderwoodharkness.com. The engagement will be deemed effective as of the date of this letter — March 29, 2021 — upon our receipt of the signed copy.
If you have any questions about any of the terms set forth in this letter, please do not hesitate to contact me directly. We look forward to working with you and the Penterra team on this matter.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Linda Osei, Partner Calderwood & Harkness LLP 1 Federal Street, 35th Floor Boston, Massachusetts 02110 Telephone: (617) 548-3112
Email: losei@calderwoodharkness.com
AGREED AND ACCEPTED:
The undersigned, being duly authorized to act on behalf of Penterra Pharmaceuticals Corp., has read and agrees to the terms and conditions set forth in this engagement letter, including the Firm's Standard Terms of Engagement enclosed herewith and incorporated by reference herein.
PENTERRA PHARMACEUTICALS CORP.
By: ________
Name: Jennifer Chao, Esq.
Title: General Counsel
Date: ________
Encl.: Calderwood & Harkness LLP Standard Terms of Engagement (incorporated by reference)
cc: Priya Anand, Esq., Calderwood & Harkness LLP cc: Dr. Marcus Lindholm, Chief Executive Officer, Penterra Pharmaceuticals Corp.
| Attorney | Role | Standard Rate |
| Linda Osei | Responsible Partner | $1,150.00 per hour |
| Priya Anand | Billing Partner | $1,075.00 per hour |
| Hannah Brinkley | Lead Associate | $725.00 per hour |
| Patrick Gallagher | Working Associate | $575.00 per hour |
| Attorney | discounted Rate | |
| Linda Osei | $1,069.50 per hour | |
| Priya Anand | $999.75 per hour | |
| Hannah Brinkley | $674.25 per hour | |
| Patrick Gallagher | $534.75 per hour |