UNITED STATES

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.    )

EGALET CORPORATION
460 East Swedesford

600 Lee Road, Suite 1050
100

Wayne, PA 19087

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held On June 10, 201515, 2016

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders of Egalet Corporation, a Delaware corporation. The meeting will be held on Wednesday, June 10, 201515, 2016 at 9:00 a.m. local time at the Sheraton HotelEmbassy Suites at 480 North Gulph Road, King of Prussia, Pennsylvania 19406888 Chesterbrook Boulevard, Wayne, PA 19087 for the following purposes:

1.

To elect the Board of Directors' nominees, Jean-François Formela, M.D. and Robert Radie, to hold office until the 2018 Annual Meeting of Stockholders.



2.

To approve an amendment to the Third Amended and Restated Certificate of Incorporation of Egalet Corporation to increase the maximum number of directors that may serve on the Board of Directors from seven to nine.



3.

To ratify the selection of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2015.



4.

To conduct any other business properly brought before the meeting.

These items of business are more fully described in the Proxy Statement.

The record date for the Annual Meeting is April 13, 2015.18, 2016. Only stockholders of record at the close of business on that date may vote at the meeting or any adjournment thereof.

Wayne, Pennsylvania

April 28, 201525, 2016

TABLE OF CONTENTS

On November 26, 2013, Egalet Corporation acquired all of the outstanding shares of Egalet Limited ("(“Egalet UK"UK”). As a result, Egalet UK became a wholly-ownedwholly‑owned subsidiary of Egalet Corporation, and the former shareholders of Egalet UK received shares of Egalet Corporation (the "Share Exchange"“Share Exchange”). Unless the context indicates otherwise, as used in this Annual Report on Form 10-K,proxy statement, the terms "Egalet," "we," "us," "our," "our company"“Egalet,” “we,” “us,” “our,” “our company” and "our business"“our business” refers to the Company for all periods subsequent to the Share Exchange, and to Egalet UK for all periods prior to the Share Exchange.

EGALET CORPORATION
460 East Swedesford

600 Lee Road, Suite 1050
100

Wayne, PA 19087

PROXY STATEMENT

FOR THE 20152016 ANNUAL MEETING OF STOCKHOLDERS

June 15, 2016

June 10, 2015

ABOUT THE MEETING

Why did I receive a notice regarding the availability of proxy materials on the internet?

Pursuant to rules adopted by the Securities and Exchange Commission (the "SEC"“SEC”), we have elected to provide access to our proxy materials over the internet. Accordingly, we have sent you a Notice of Internet Availability of Proxy Materials (the "Notice"“Notice”) because the Board of Directors (the "Board"“Board”) of Egalet Corporation (also referred to as "we," "us," "Egalet,"“we,” “us,” “Egalet,” and the "Company"“Company”) is soliciting your proxy to vote at the 20152016 Annual Meeting of Stockholders, including any adjournments or postponements of the meeting. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or may request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the internet or to request a printed copy may be found in the Notice.

We intend to mail the Notice on or about April 28, 20152016 to all stockholders of record entitled to vote at the Annual Meeting.

How do I attend the Annual Meeting?

The meeting will be held on Wednesday, June 10, 201515, 2016 at 9:00 a.m. local time at the Sheraton HotelEmbassy Suites at 480 North Gulph Road, King of Prussia, Pennsylvania 19406.888 Chesterbrook Boulevard, Wayne, PA 19087. Information on how to vote in person at the Annual Meeting is discussed below.

Who can vote at the Annual Meeting?

Only stockholders of record at the close of business on April 13, 201518, 2016 will be entitled to vote at the Annual Meeting. On this record date, there were 17,323,66325,085,554 shares of common stock outstanding and entitled to vote.

Stockholder of Record: Shares Registered in Your Name

If on April 13, 201518, 2016 your shares were registered directly in your name with our transfer agent, Broadridge Corporate Issuer Solutions, Inc., then you are a stockholder of record. As a stockholder of record, you may vote in person at the meeting or vote by proxy. Whether or not you plan to attend the meeting, we urge you to fill out and return the enclosed proxy card to ensure your vote is counted.

Beneficial Owner: Shares Registered in the Name of a Broker, Bank or Other Agent

If on April 13, 201518, 2016 your shares were held, not in your name, but rather in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial owner of shares held in "street name"“street name” and the Notice is being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the shares in your account. You are also invited to attend the Annual Meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the meeting unless you request and obtain a valid proxy from your broker or other agent.

Beneficial Owner: Shares Registered in the Name of Broker, Bank or Other Agent

If you are a beneficial owner of shares registered in the name of your broker, bank, or other agent, you should have received a Notice containing voting instructions from that organization rather than from us. Simply follow the voting instructions in the Notice to ensure that your vote is counted. To vote in person at the Annual Meeting, you must obtain a valid proxy from your broker, bank or other agent. Follow the instructions included with these proxy materials, or contact your broker, bank or other agent to request a proxy form.

How many votes do I have?

On each matter to be voted upon, you have one vote for each share of common stock you owned as of April 13, 2015.18, 2016.

What happens if I do not vote?

Stockholder of Record: Shares Registered in Your Name

If you are a stockholder of record and do not vote by completing your proxy card, by telephone, through the internet or in person at the Annual Meeting, your shares will not be voted.

Beneficial Owner: Shares Registered in the Name of Broker, Bank or Other Agent

See "What“What are broker non-votes?"non‑votes?” below.

What if I return a proxy card or otherwise vote but do not make specific choices?

If you return a signed and dated proxy card or otherwise vote without marking voting selections, your shares will be voted, "For"“For” the election of each of Dr. FormelaMr. Walbert and Mr. RadieWeaver as directors, "For"“For” the approval of an amendmentthe Amendment to the Charter to increaseStock Plan, “For” the maximum numberadoption of directors that may serve on the Board from seven to nine,Employee Stock Purchase Plan and "For"“For” the ratification of the selection of Grant ThorntonErnst & Young LLP as our independent registered public accounting firm. If any other matter is properly presented at the meeting, your proxy holder (one of the individuals named on your proxy card) will vote your shares using his best judgment.

Who is paying for this proxy solicitation?

We will pay for the entire cost of soliciting proxies. In addition to these proxy materials, our directors and employees may also solicit proxies in person, by telephone, or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the reasonable cost of forwarding proxy materials to beneficial owners.

What does it mean if I receive more than one Notice?

If you receive more than one Notice, your shares may be registered in more than one name or in different accounts. Please follow the voting instructions on the Notices to ensure that all of your shares are voted.

Can I changemy vote after submitting my proxy?

Yes. You can revoke your proxy at any time before the final vote at the meeting.

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Stockholder of Record: Shares Registered in Your Name

If you are the record holder of your shares, you may revoke your proxy in any one of the following ways:

•

You may submit another properly completed proxy card with a later date.



•

You may grant a subsequent proxy by telephone or through the internet.



•

You may send a timely written notice that you are revoking your proxy to our Secretary at Egalet Corporation, 460 East Swedesford Road, Suite 1050, Wayne, PA 19087.



•

You may attend the Annual Meeting and vote in person. Simply attending the meeting will not, by itself, revoke your proxy.

Your most current proxy card or telephone or internet proxy is the one that is counted.

Beneficial Owner: Shares Registered in the Name of Broker, Bank or Other Agent

If your shares are held by your broker, bank or other agent as a nominee, you should follow the instructions provided by your broker, bank or other agent.

When are stockholder proposals and director nominations due for next year'syear’s annual meeting?

        ShareholderStockholder proposals intended to be presented at the 20162017 Annual Meeting of ShareholdersStockholders must be received by us no later than January 1,December 26, 2016 in order to be considered for inclusion in our annual meeting Proxy Statement next year. Upon receipt of any such proposal, we will determine whether or not to include such proposal in the Proxy Statement and proxy in accordance with regulations governing the solicitation of proxies. ShareholdersStockholders who wish to submit a proposal not intended to be included in our annual meeting Proxy Statement but to be presented at next year'syear’s annual meeting, or who propose to nominate a candidate for election as a director at that meeting, are required by our bylaws to provide notice of such proposal or nomination no later than the close of business on April 11, 2016,16, 2017, but no earlier than the close of business on March 12, 2016,17, 2017, to be considered for a vote at next year'syear’s annual meeting. Any proposal, nomination or notice must contain the information required by our bylaws and be delivered to our principal executive offices at Egalet Corporation c/o Corporate Secretary, 460 East Swedesford600 Lee Road, Suite 1050,100, Wayne, PA 19087.

How are votes counted?

Votes will be counted by the inspector of election appointed for the meeting, who will separately count, for the proposal to elect each of Dr. FormelaMr. Walbert and Mr. Radie,Weaver, votes "For," "Withhold"“For,” “Withhold” and broker non-votes;non‑votes; with respect to the proposal to approve an amendmentthe Amendment to the Charter to increase the maximum number of directors that may serve on the Board from seven to nine,Stock Plan, votes "For"“For” and "Against,"“Against,” abstentions and, if applicable, broker non-votes;non‑votes; with respect to the proposal to approve the adoption of the Employee Stock Purchase Plan, votes “For” and “Against,” abstentions and, if applicable, broker non‑votes; and, with respect to the proposal to ratify the selection of Grant ThorntonErnst & Young LLP, votes "For"“For” and "Against,"“Against,” abstentions and, if applicable, broker non-votes.non‑votes. Abstentions will have the same effect as an "Against"“Against” vote for the proposal to ratify the selection of Grant ThorntonErnst & Young LLP and the proposalproposals to approve the amendmentAmendment to the Charter.Stock Plan and the adoption of the Employee Stock Purchase Plan. Because a director nominee is elected by the affirmative vote of the holders of a plurality of the shares of common stock voted, abstentions will have no effect on the vote for the proposal to elect each of Dr. Formela or Mr. Radie.Walbert and Mr. Weaver. Broker non-votesnon‑votes have no effect and will not be counted towards the vote total for any proposal.

What are "broker non-votes"“broker non‑votes”?

Broker non-votesnon‑votes occur when a beneficial owner of shares held in "street name"“street name” does not give instructions to the broker or nominee holding the shares as to how to vote on matters deemed "non-routine."“non‑routine.” Generally, if shares are held in street name, the beneficial owner of the shares is

entitled to give voting instructions to the broker or nominee holding the shares. If the beneficial owner does not provide voting instructions, the broker or nominee can still vote the shares with respect to matters that are considered to be "routine,"“routine,” but not with respect to "non-routine"“non‑routine” matters. Under the rules and interpretations of NASDAQ, "non-routine"“non‑routine” matters are matters that may substantially affect the rights or privileges of

stockholders, such as mergers, stockholder proposals, elections of directors (even if not contested) and executive compensation, including the amendment to the Stock Plan and the Employee Stock Purchase Plan, as well as the advisory stockholder votes on executive compensation and on the frequency of stockholder votes on executive compensation.

How many votes are needed to approve each proposal?

•

For the elections of Dr. Formela and Mr. Radie, a plurality of the votes cast will be required for election. Only votes "For" or "Withheld" will affect the outcome.



•

To be approved, the approval of an amendment to the Charter to increase the maximum number of directors that may serve on the Board from seven to nine must receive "For" votes from the holders of a majority of shares outstanding and entitled to vote on the matter. If you "Abstain" from voting, it will have the same effect as an "Against" vote. Broker non-votes will have no effect.



•

To be approved, the ratification of the selection of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2015, must receive "For" votes from the holders of a majority of shares present in person or represented by proxy and entitled to vote on the matter. If you "Abstain" from voting, it will have the same effect as an "Against" vote. Broker non-votes will have no effect.

What is the quorum requirement?

A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if stockholders holding at least a majority of the outstanding shares entitled to vote are present at the meeting in person or represented by proxy. On the record date, there were 17,323,66325,085,554 shares outstanding and entitled to vote. Thus, the holders of 8,661,83212,542,778 shares must be present in person or represented by proxy at the meeting to have a quorum.

Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote in person at the meeting. Abstentions and broker non-votesnon‑votes will be counted towards the quorum requirement. If there is no quorum, either the chairman of the meeting or the holders of a majority of shares present at the meeting in person or represented by proxy may adjourn the meeting to another date.

How can I find out the results of the voting at the Annual Meeting?

Preliminary voting results will be announced at the Annual Meeting. In addition, final voting results will be published in a current report on Form 8-K8‑K that we expect to file within four business days after the Annual Meeting. If final voting results are not available to us in time to file a Form 8-K8‑K within four business days after the meeting, we intend to file a Form 8-K8‑K to publish preliminary results and, within four business days after the final results are known to us, file an additional Form 8-K8‑K to publish the final results.

Who can help answer your questions?

If you have questions about the Annual Meeting or would like additional copies of this Proxy Statement, you should contact our Executive Vice President, Chief Financial Officer and Secretary, Stan Musial, at 460 East Swedesford600 Lee Road, Suite 1050,100, Wayne, PA 19087.

Annual Report

On written request, we will provide, without charge, a copy of our Annual Report on Form 10-K10‑K (including a list briefly describing the exhibits thereto), filed with the SEC, to any record holder or beneficial owner of its common stock on the record date or to any person who subsequently becomes such a record holder or beneficial owner. Requests should be directed to the attention of our Chief Financial Officerchief financial officer at the address set forth above.

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EXPLANATORY NOTE

We are an “emerging growth company” under applicable federal securities laws and therefore permitted to take advantage of certain reduced public company reporting requirements. As an emerging growth company, we provide in this Proxy Statement the scaled disclosure permitted under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), including the compensation disclosures required of a “smaller reporting company,” as that term is defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, as an emerging growth company, we are not required to conduct votes seeking approval, on an advisory basis, of the compensation of our named executive officers or the frequency with which such votes must be conducted. We will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1 billion or more; (ii) December 31, 2019; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.

PROPOSAL 1

Election of Directors

Our Board is divided into three classes: Class A, Class B and Class C, with each class serving a three-yearthree‑year term. Vacancies on the Board may be filled only by persons elected by a majority of the remaining directors. A director elected by the Board to fill a vacancy in a class, including vacancies created by an increase in the number of directors that may serve on the Board, shall serve for the remainder of the full term of that class and until the director'sdirector’s successor is duly elected and qualified.

The Board presently has seven members. Immediately following the Annual Meeting, the service of Ms. Renee Aguiar-Lucander on the Board will end and the Board will have six members. The following table sets forth information regarding each of our directors whose term of office will continue after the Annual Meeting and the Board'sBoard’s nominee as of April 13, 2015:18, 2016:

 Dr. Formela

Mr. Walbert and Mr. Radie,Weaver, the nominees listed below, are currently directors of the Company. If elected at the Annual Meeting, each would serve until the 2018 annual meeting2019 Annual Meeting and his successor has been duly elected and qualified, or, if sooner, until his death, resignation or removal. Our directors are expected to attend our Annual Meeting, either in person or telephonically.

Directors are elected by a plurality of the votes of the holders of shares present in person or represented by proxy and entitled to vote on the election of directors. Accordingly, each of Dr. FormelaMr. Walbert and Mr. RadieWeaver will be elected if he receives a plurality of the votes cast. Shares represented by executed proxies will be voted, if authority to do so is not withheld, for the election of both Dr. FormelaMr. Walbert and Mr. Radie.Weaver. If Dr. FormelaMr. Walbert or Mr. RadieWeaver becomes unavailable for election as a result of an unexpected occurrence, shares that would have been voted for him will instead be voted for the election of a substitute nominee proposed by our Board. Dr. FormelaMr. Walbert and Mr. RadieWeaver have each agreed to serve if elected. Our management has no reason to believe that either Dr. FormelaMr. Walbert or Mr. RadieWeaver will be unable to serve.

CLASS BC NOMINEES FOR ELECTION FOR A THREE-YEARTHREE‑YEAR TERM EXPIRING AT THE 2019 ANNUAL MEETING

Timothy P. Walbert.  Mr. Walbert has served as a member of the Board since March 2014 and as Chairman of the Board since June 2015. Mr. Walbert has been president and chief executive officer of Horizon Pharma since June 2008 and the chairman of the board of directors since April 2010. From May 2007 to June 2009, Mr. Walbert served as president, chief executive officer and director of IDM Pharma, Inc., a public biopharmaceutical company which was acquired by Takeda America Holdings, Inc. in June 2009. Prior to that, Mr. Walbert served as executive vice president, commercial operations of NeoPharm, Inc., a public biopharmaceutical company. From June 2001 to August 2005, Mr. Walbert served as divisional vice president and general manager, Immunology, where he led the global development and launch of the multi-indication biologic HUMIRA which exceeded $14.0 billion in sales in 2015 and divisional vice president, global cardiovascular strategy at Abbott, now AbbVie. Mr. Walbert received his B.A. in business from Muhlenberg College in Allentown, Pennsylvania. Mr. Walbert sits on the boards of directors of XOMA Ltd, a public biotechnology company, Sucampo Pharmaceuticals, Inc., a public biopharmaceutical company, the Pharmaceutical Research and Manufacturers of America (PhRMA), the Biotechnology Industry Organization (BIO), World Business Chicago (WBC), the Greater Chicago Arthritis Foundation and the Illinois Innovation Council and serves as the chairman of the the Illinois Biotechnology Industry Organization (iBIO). Mr. Walbert is also a member of the Illinois Innovation Council. Mr. Walbert previously served on the board of directors of Raptor Pharmaceuticals Corp., a public biopharmaceutical company, from 2010 to 2014. Mr. Walbert was appointed by Illinois Governor Pat Quinn in 2013 to the Illinois Innovation Council. The Board believes Mr. Walbert’s perspective and experience in senior management and

board positions with companies in our industry, as well as his educational background, provide him with the qualifications and skills necessary to serve as a director.

Gregory Weaver.  Mr. Weaver has served as a member of the Board since February 2014. Since November 2015, Mr. Weaver has served as the Chief Financial Officer of Prometic Life Sciences, Inc., a biopharmaceutical company focused on bioseparation, plasma-derived therapeutics and small-molecule drug development, and from January 2015 to October 2015 served as the Executive Vice President and Chief Financial Officer of Oryzon Genomics, S.A. From November 2014 to December 2014, Mr. Weaver worked as a consultant. From August 2013 until October 2014, Mr. Weaver has served as the Chief Financial Officer, Senior Vice President, Treasurer and Corporate Secretary of Fibrocell Science, Inc., a publicly held cell therapy company. From June 2011 to July 2013, Mr. Weaver served as Senior Vice President and Chief Financial Officer of Celsion Corporation, a publicly held biotechnology company, and was a director and chairman of the audit committee of Celsion’s Board of Directors from 2005 to 2011. From February 2009 to September 2010, Mr. Weaver served as Senior Vice President and Chief Financial Officer of Poniard Pharmaceuticals, a public oncology drug development company. Mr. Weaver currently serves on the board of directors and audit committee, and is the chairman of the compensation committee, of Atossa Genetics, a publicly held diagnostics company, and also served as a director and chairman of the audit committee of SCOLR Pharmaceuticals, a public drug delivery company, from 2007 to 2009. Mr. Weaver is a certified public accountant and received an M.B.A. from Boston College and a B.S. in accounting from Trinity University. The Board believes Mr. Weaver’s perspective and experience in senior management positions with drug development companies, as well as his educational background, provide him with the qualifications and skills necessary to serve as a director.

THE BOARD OF UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF ITS NOMINEES.

CLASS A DIRECTORS CONTINUING IN OFFICE UNTIL THE 2017 ANNUAL MEETING

Nicholas C. Nicolaides, Ph.D.  Dr. Nicolaides has served as a member of the Board since April 2015. Dr. Nicolaides is the President, Chief Executive Officer and co‑founder of Morphotek® Inc., a biopharmaceutical company specializing in the development of protein and antibody therapeutics through the use of a proprietary gene evolution technology. He has served as President and CEO of Morphotek since its founding in 2000. Morphotek was acquired by Eisai, Co. Ltd. of Japan in 2007 and continues to operate as an autonomous subsidiary. Morphotek has developed a pipeline of therapeutic antibodies in the areas of cancer, inflammation and infectious disease. Dr. Nicolaides is a trained molecular geneticist and has authored over 50 peer‑reviewed scientific papers on the molecular and genetic basis of cancer and respiratory diseases and holds over 50 issued patents. He received a B.S. in Biology from St. Joseph’s University, Philadelphia, PA, a Ph.D. in genetics from Thomas Jefferson University, Philadelphia, PA and a Fellowship in oncology from Johns Hopkins University, Baltimore, MD. While at Johns Hopkins, his research resulted in the discovery of the genetic cause of one of the most common forms of inherited cancer and the development of Morphotek’s platform technology called morphogenics. He has been recognized by R&D Directions’ as one of the Top 20 Most Notable People in Research and Development and received the Ernst & Young’s Entrepreneur of the Year award as well as the Pennsylvania Governor’s Entrepreneur Impact Award for his successful accomplishments in founding and expanding Morphotek’s product pipeline and operations. He currently serves as an ad hoc reviewer for several immunology and cancer research journals; is a member of the American Association for Cancer Research and New York Academy of Sciences; and serves on the Dean’s Advisory Board of St. Joseph’s University’s. The Board believes Dr. Nicolaides’ perspective and experience in senior management and board positions with companies in our industry, as well as his educational background, provide him with the qualifications and skills necessary to serve as a director.

John E. Osborn.  Mr. Osborn has served as a member of the Board since April 2015. Mr. Osborn currently serves as a Senior Advisor in the Corporate & Government Regulatory Practice Groups with the law firm Hogan Lovells US LLP, a position he has held since December 2013, and as an Executive-in-Residence/Industry Advisor with the Healthcare and Consumer Group of the global private equity firm Warburg Pincus, a position he has held since August 2013. He also holds a faculty appointment as an affiliate professor of law at the University of Washington, Seattle, a position he has held since April 2012. From June 2012 to March 2013, he was the Senior Vice President of Global Corporate Affairs at Onyx Pharmaceuticals, Inc., a biopharmaceutical company focused on developing and marketing cancer therapeutics. From August 2011 to June 2012, he served in various senior management and advisory positions with Dendreon Corporation, a biotechnology company focused on manufacturing and marketing an innovative oncology

immunotherapy, including as Executive Vice President, General Counsel & Secretary. From August 2010 to February 2011, he was the Executive Vice President & General Counsel of US Oncology, Inc., a Fortune 1000 physician management and oncology services company, where he worked prior to and immediately following its acquisition by McKesson Corporation. Mr. Osborn was nominated by President George W. Bush and confirmed by the Senate as a member of the United States Advisory Commission on Public Diplomacy, where he served from 2008 to 2011. During 2008, he also was a visiting research fellow with the Centre for Socio‑Legal Studies at the University of Oxford, and a visiting senior member of Wadham College, Oxford. Prior to that, Mr. Osborn was the Executive Vice President, General Counsel & Secretary of Cephalon, Inc., a Fortune 1000 biopharmaceutical company, where he worked from 1997 to 2008. Mr. Osborn serves on the corporate advisory board of QPID Health, Inc., a healthcare information technology company, and on the Leadership Council of the University of Michigan Life Sciences Institute. He earned a B.A. in economics and history from the University of Iowa, a M.I.P.P. from The Johns Hopkins University, and a J.D. from the University of Virginia, and was a visiting fellow in politics at Princeton University. The Board believes that Mr. Osborn’s experience in senior management positions with leading biopharmaceutical and healthcare companies, and his background in matters involving law, compliance, public policy and business transactions, provide him with the qualifications and skills necessary to serve as a director of the Company.

CLASS B DIRECTORS CONTINUING IN OFFICE UNTIL THE 2018 ANNUAL MEETING

        Jean-FrançJean‑François Formela, M.D.  Dr. Formela has served as a member of the Board since September 2010 and has served as chair sincefrom March 2012.2012 until June 2015. He is currently a partner at Atlas Venture, an early stage venture capital firm focused on investments in biological and drug discovery technologies, and has served in such capacity since joining Atlas Venture in 1993. He also serves on the board of directors of RaNA Therapeutics, Inc., which he co-founded,co‑founded, and serves on the board of directors of the following privately held companies: Annovation Biopharma,Ataxion, Inc., ArteausF-star Beta Ltd., Intellia Therapeutics, Inc., Navitor Pharmaceuticals, Inc., Spero Therapeutics, LLC and F-star Biotechnology Limited.ZappRx, Inc. Within the last five years, Dr. Formela has also served on the boards of directors of the following public companies: ARCA biopharma, Inc., Horizon Pharma, Inc. and Achillon Pharmaceuticals, Inc. Prior to joining Atlas Venture, Dr. Formela served as a senior director of medical marketing and scientific affairs at Schering-PloughSchering‑Plough Corporation, a pharmaceutical company which merged with Merck & Co., Inc.. Dr. Formela began his career as a medical doctor and practiced emergency medicine at Necker University Hospital in Paris. Dr. Formela is a member of the Massachusetts General Hospital Research Advisory Council and a trustee of the Boston Institute of Contemporary Art. He received his M.D. from the Paris University School of Medicine and his M.B.A.

Table of Contents

from Columbia University. The Board believes Dr. Formela'sFormela’s perspective and experience as an investor and board member in the life sciences industry, as well as his medical practice, combined with his educational background, provides him with the qualifications and skills to serve as a director.

Robert Radie.  Mr. Radie is our President and Chief Executive Officer and a member of the Board, positions he has held since March 2012. From November 2010 to October 2011, Mr. Radie served as President and Chief Executive Officer of Topaz Pharmaceuticals Inc., a specialty pharmaceutical company acquired by Sanofi Pasteur in the fourth quarter of 2011. From March 2009 to November 2010, Mr. Radie served as President and Chief Executive Officer of Transmolecular, Inc., a biotechnology company developing cancer diagnostic and treatment products, after serving as a consultant to Transmolecular from December 2008 through March 2009. From September 2008 to December 2008, Mr. Radie was unemployed. From September 2007 to September 2008, Mr. Radie served as the Chief Business Officer of Prestwick Pharmaceuticals, Inc., a specialty pharmaceutical company. Before joining Prestwick, Mr. Radie served in senior management positions with a number of pharmaceutical and biotechnology companies, including Morphotek, Inc., Vicuron Pharmaceuticals, Inc. and Eli Lilly and Company, and as a director of Affinium Pharmaceuticals, Ltd. from July 2012 to March 2014, when a majority of Affinium'sAffinium’s assets were acquired by a third party. Mr. Radie is currently a member of the board of directors of Paratek Pharmaceuticals (NASDAQ: PRTK), a position he has held since November 2014, and also serves as a director of Horse Power For Life, a non-profitnon‑profit organization dedicated to improving the quality of life for individuals diagnosed with cancer, a position he has held since 2007. Mr. Radie received his B.S. in Chemistry from Boston College. The Board believes Mr. Radie'sRadie’s perspective and experience as our President and Chief Executive Officer, as well as his depth of operating and senior management experience in our industry and educational background, provide him with the qualifications and skills to serve as a director.

CLASS C DIRECTORS CONTINUING IN OFFICE UNTIL THE 2016 ANNUAL MEETING

        Gregory Weaver.    Mr. Weaver has served as a member of the Board since February 2014. Since January 2015, Mr. Weaver has served as the Executive Vice President and Chief Financial Officer of Oryzon Genomics, S.A. From November 2014 to December 2014, Mr. Weaver worked as a consultant. From August 2013 until October 2014, Mr. Weaver has served as the Chief Financial Officer, Senior Vice President, Treasurer and Corporate Secretary of Fibrocell Science, Inc., a publicly held cell therapy company. From June 2011 to July 2013, Mr. Weaver served as Senior Vice President and Chief Financial Officer of Celsion Corporation, a publicly held biotechnology company, and was a director and chairman of the audit committee of Celsion's Board of Directors from 2005 to 2011. From February 2009 to September 2010, Mr. Weaver served as Senior Vice President and Chief Financial Officer of Poniard Pharmaceuticals, a public oncology drug development company. From February 2007 to February 2009, Mr. Weaver served as Chief Financial Officer of Talyst, Inc., a privately-held pharmacy information product company. In 2006 and 2007, he served as Senior Vice President and Chief Financial Officer of Sirna Therapeutics, a public RNA therapeutics company until it was acquired by Merck & Co., Inc. in December 2006. From 2002 to 2005, Mr. Weaver was Chief Financial Officer of Nastech Pharmaceuticals, a public drug delivery company. From 1999 to 2002, Mr. Weaver was Chief Financial Officer of Ilex Oncology Inc., a public oncology drug development company, and from 1996 to 1999, he was Chief Financial Officer of Prism Technologies, a privately-held medical device company. Prior to that, Mr. Weaver held increasingly senior positions with Fidelity Capital and Arthur Andersen LLP. Mr. Weaver currently serves on the board of directors and audit committee, and is the chairman of the compensation committee, of Atossa Genetics, a publicly held diagnostics company, and also served as a director and chairman of the audit committee of SCOLR Pharmaceuticals, a public drug delivery company, from 2007 to 2009. Mr. Weaver is a certified public accountant and received an M.B.A. from Boston College and a B.S. in accounting from Trinity University. The Board believes Mr. Weaver's perspective and experience in senior management positions with drug development companies, as well as his educational background, provide him with the qualifications and skills necessary to serve as a director.

CLASS A DIRECTORS CONTINUING IN OFFICE UNTIL THE 2017 ANNUAL MEETING

        Nicholas C. Nicolaides, Ph.D.    Dr. Nicolaides has served as a member of the Board since April 2015. Dr. Nicolaides is the President, Chief Executive Officer and co-founder of Morphotek® Inc., a biopharmaceutical company specializing in the development of protein and antibody products through the use of a proprietary gene evolution technology. He has served as President and CEO of Morphotek since its founding in 2000. Morphotek was acquired by Eisai, Co. Ltd. of Japan in 2007 and continues to operate as an autonomous subsidiary. Morphotek has developed a pipeline of therapeutic antibodies in late and early-stage development in the areas of cancer, inflammation and infectious disease. Dr. Nicolaides is a trained molecular geneticist and has authored over 50 peer-reviewed scientific papers on the molecular and genetic basis of cancer and respiratory diseases and holds over 50 issued patents. He received a B.S. in Biology from St. Joseph's University, Philadelphia, PA, a Ph.D. in genetics from Thomas Jefferson University, Philadelphia, PA and a Fellowship in oncology from Johns Hopkins University, Baltimore, MD. While at Johns Hopkins, his research resulted in the discovery of the genetic cause of one of the most common forms of inherited cancer and the development of Morphotek's platform technology calledmorphogenics. He has been recognized by R&D Directions' as one of the Top 20 Most Notable People in Research and Development and received the Ernst & Young's Entrepreneur of the Year award as well as the Pennsylvania Governor's Entrepreneur Impact Award for his successful accomplishments in founding and expanding Morphotek's product pipeline and operations. He currently serves as an ad hoc reviewer for several immunology and cancer research journals; is a member of the American Association for Cancer Research and New York Academy of Sciences; and serves on the Dean's Advisory Board of St. Joseph's University's. The Board believes Dr. Nicolaides' perspective and experience in senior management and board positions with companies

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in our industry, as well as his educational background, provide him with the qualifications and skills necessary to serve as a director.

        John E. Osborn.    Mr. Osborn has served as a member of the Board since April 2015. Mr. Osborn currently serves as a Senior Advisor in the Corporate & Government Regulatory Practice Groups with the law firm Hogan Lovells US LLP, a position he has held since December 2013, and as an Executive-in-Residence with the Healthcare Group of the global private equity firm Warburg Pincus, a position he has held since August 2013. He also holds a faculty appointment as an affiliate professor of law at the University of Washington, Seattle, a position he has held since April 2012. From June 2012 to March 2013, he was the Senior Vice President of Global Corporate Affairs at Onyx Pharmaceuticals, Inc., a biopharmaceutical company focused on developing and marketing cancer therapeutics. From August 2011 to June 2012, he was the Executive Vice President, General Counsel & Secretary of Dendreon Corporation, a biotechnology company focused on manufacturing and marketing an innovative oncology immunotherapy. From August 2010 to February 2011, he was the Executive Vice President & General Counsel of US Oncology, Inc., a Fortune 1000 physician management and oncology services company, where he worked prior to and immediately following its acquisition by McKesson Corporation. Mr. Osborn was nominated by President George W. Bush and confirmed by the Senate as a member of the United States Advisory Commission on Public Diplomacy, where he served from 2008 to 2011. During 2008, he also was a visiting research fellow with the Centre for Socio-Legal Studies at the University of Oxford, and a visiting senior member of Wadham College, Oxford. Prior to that, Mr. Osborn was the Executive Vice President, General Counsel & Secretary of Cephalon, Inc., a Fortune 1000 biopharmaceutical company, where he worked from 1997 to 2008. Mr. Osborn serves on the corporate advisory board of QPID Health, Inc., a healthcare information technology company. He earned a B.A. in economics and history from the University of Iowa, a M.I.P.P. from The Johns Hopkins University, and a J.D. from the University of Virginia. The Board believes that Mr. Osborn's experience in senior management positions with leading biopharmaceutical and healthcare companies, and his background in matters involving law, compliance, public policy and business transactions, provide him with the qualifications and skills necessary to serve as a director of the Company.

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CORPORATE GOVERNANCE

Independence of the Board of Directors

As required under the NASDAQ listing standards, a majority of the members of a listed company'scompany’s board of directors must qualify as "independent,"“independent,” as affirmatively determined by the board of directors. The Board consults with our counsel to ensure that the Board'sBoard’s determinations are consistent with relevant securities and other laws and regulations regarding the definition of "independent,"“independent,” including those set forth in pertinent listing standards of NASDAQ, as in effect from time to time.

The Board has undertaken a review of the independence of our directors and has determined that all directors except Mr. Radie are independent within the meaning of Section 5605(a)(2) of the NASDAQ Stock Market listing rules and that Messrs. Weaver and Walbert and Ms. Aguiar-Lucander meet the additional tests for independence for Audit Committee members imposed by Rule 10A-3 under the Securities Exchange Act of 1934 and Section 5605(c)(2)(A) of the NASDAQ Stock Market listing rules. Mr. Radie is not an independent director under these rules because he is our Chief Executive Officer.

Board Leadership Structure

The Board has appointed Dr. FormelaMr. Walbert Chairman of the Board. The Chairman has the authority, among other things, to preside over Board meetings, to set meeting agendas and to perform all other duties delegated to him from time to time by the Board. We believe that separation of the positions of Board Chair and Chief Executive Officer reinforces the independence of the Board in its oversight of our business and affairs. In addition, we believe that having an independent Chairman creates an environment that is more conducive to objective evaluation and oversight of management'smanagement’s performance, increasing management accountability and improving the ability of the Board to monitor whether management'smanagement’s actions are in our best interests and the best interests of our stockholders. As a result, we believe that having an independent Chairman can enhance the effectiveness of the Board as a whole.

Role of the Board in Risk Oversight

One of the Board'sBoard’s key functions is informed oversight of our risk management process. The Board does not have a standing risk management committee, but rather administers this oversight function directly through the Board as a whole, as well as through various Board standing committees that address risks inherent in their respective areas of oversight. In particular, our Board is responsible for monitoring and assessing strategic risk exposure, including a determination of the nature and level of risk appropriate for us. Our Audit Committee has the responsibility to review and discuss with management and Grant ThorntonErnst & Young LLP, as appropriate, our guidelines and policies with respect to risk assessment and risk management, including our major financial risk exposures and the steps taken by management to monitor and control these exposures. Our Nominating and Corporate Governance Committee is responsible for developing our corporate governance principles, and periodically reviews these principles and their application. Our Compensation Committee reviews our practices and policies of employee compensation as they relate to risk management and risk-takingrisk‑taking incentives, to determine whether such compensation policies and practices are reasonably likely to have a material adverse effect on us.

Meetings of the Board of Directors

The Board met tenfive times during the 20142015 fiscal year. All directors attended at least 75% of the aggregate number of meetings of the Board and of the committees on which they served held during 20142015 or the portion thereof for which they were directors or committee membersmembers. Each of our directors attended our 2015 Annual Meeting of Stockholders in person, other than Mr. Weaver, who attended via teleconference.

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Information Regarding Committees of the Board of Directors

The Board has established an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. The following table provides membership information as of December 31, 20142015 for each of these Board committees. From time to time, our Board and committees also take action by written consent without a meeting. Each of our Board committees has authority to engage legal counsel or other experts or consultants, as it deems appropriate to carry out its responsibilities.

EXECUTIVE OFFICERS

The following table sets forth information regarding our executive officers as of April 13, 2015.18, 2016. Biographical information for our President, Chief Executive Officer and Director Mr. Radie is included above with the director biographies under the caption, "Class A“Class B Directors Continuing in Office Until the 20172018 Annual Meeting."”

Stan Musial.  Mr. Musial has served as our Chief Financial Officer since April 2013, and as our Secretary since September 2013.2013 and as an Executive Vice President since December 2015. From June 2011 to March 2013, Mr. Musial was self-employed,self‑employed, acting as an independent consultant in the fields of financial management and accounting services. From January 2005 to May 2011, Mr. Musial served as Chief Financial Officer of Prism Pharmaceuticals, Inc., a specialty pharmaceutical and drug development company. Prior to joining Prism Pharmaceuticals, Mr. Musial was Vice President, Finance, and Chief Financial Officer for Strategic Diagnostics, Inc., a publicly-heldpublicly‑held biotechnology company, from 2002 to 2004. Mr. Musial began his career with KPMG LLP, a professional services company. Mr. Musial received a B.S. in Accounting from the Pennsylvania State University and an M.B.A. from Temple University. He is a Certified Public Accountant in the Commonwealth of Pennsylvania.

Mark Strobeck, Ph.D.  Dr. Strobeck is our Executive Vice President and Chief BusinessOperating Officer, a position he has held since January 2014,September 2015 and previously served as anour Chief Business Officer from January 2014 to September 2015. Prior to his employment at Egalet, he was our adviser to Egalet from June 2012 to December 2013. From January 2012 to December 2013, Dr. Strobeck served as President and Chief Executive Officer and a director of Corridor Pharmaceuticals, Inc., which was acquired by AstraZeneca in 2014. From December 2010 to October 2011, Dr. Strobeck served as Chief Business Officer of Topaz Pharmaceuticals Inc., a specialty pharmaceutical company acquired by Sanofi Pasteur in the fourth quarter of 2011. From June 2010 to November 2010 and October 2011 to January 2012, Dr. Strobeck worked as a consultant. From January 2008 to May 2010, Dr. Strobeck served as Chief Business Officer of Trevena, Inc., a pharmaceutical company. Prior to joining Trevena, Dr. Strobeck held management roles at GlaxoSmithKline, SR One Limited and EuclidSR Partners, L.P. Dr. Strobeck currently serves on the Board of Directors of Horse Power For Life, a non-profitnon‑profit organization dedicated to improving the quality of life for individuals diagnosed with cancer, a position he has held since 2012. Dr. Strobeck received his B.S. in Biology from St. Lawrence University and his Ph.D. in Pharmacology from the University of Cincinnati, and completed his post-doctoralpost‑doctoral fellowship at the University of Pennsylvania.

Jeffrey M. Dayno, M.D.  Dr. Dayno is our Chief Medical Officer, a position he has held since July 2014. From May 2014 to June 2014 Dr. Dayno served as our consultant. Prior to joining Egalet, Dr. Dayno served as vice president, global medical affairs, at ViroPharma Inc., a pharmaceutical company acquired by Shire Pharmaceuticals Group plc in early 2014, where he was a member of several senior research and development leadership teams and the portfolio management team, from August 2011 to April 2014. Prior to joining ViroPharma, Dr. Dayno held the position of chief medical officer at Labopharm, Inc., a Canadian biotechnology company, from May 2010 to July 2011, where he oversaw all of Labopharm'sLabopharm’s research and development activities and gained valuable experience working in the area of abuse-deterrentabuse‑deterrent opioid product development. Before joining Labopharm, Dr. Dayno served as the vice president, medical services, at Cephalon Inc. from December 2005 to April 2010, where he directed Cephalon'sCephalon’s Phase 3B/4 clinical development programs. Dr. Dayno started

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his career in the pharmaceutical industry at Merck & Co., Inc. where he spent seven years in roles of increasing responsibility in the medical and scientific affairs division. Dr. Dayno was a board certified neurologist and completed fellowship training in stroke and cerebrovascular diseases at Henry Ford Hospital, which held the NIH Program Grant for both Stroke and Migraine/Headache Disorders. He spent ten years in academic/clinical medicine, during which time he served as the principleprincipal investigator on numerous clinical trials in the areas of stroke and migraine. In May 2014, Dr. Dayno was invited to serve on the Board of Visitors of Temple University School of Medicine.

        Deanne F. Melloy.    Ms. Melloy has served as our Chief Commercial Officer since January 2015. From November 2014Medicine, where he continues to December 2014 Ms. Melloy served as our consultant. Prior to joining Egalet, Ms. Melloy served as executive vice president and chief operating officer, at Shionogi, Inc. from January 2011 to October 2014 and was responsible for leading the company's business operations and commercial activities in the United States. Before joining Shionogi, Inc. she served as vice president for the general therapeutics and lifecycle management division and the vice president of CNS marketing at Sanofi from September 2008 to January 2011 where she oversaw new product launches, P&L and centralized lifecycle management for all U.S. brands. Prior to her role at Sanofi, Ms. Melloy served for five years at Endo Pharmaceuticals in multiple marketing positions where she ultimately became vice president of marketing. During her tenure at Endo, she led the strategy and launch of multiple brands including Opana and Lidoderm, increased growth in sales demand for existing products and managed commercial responsibility for a $1.3 billion pain product portfolio. Prior to Endo she spent 12 years in pharmaceutical sales and marketing positions at Johnson & Johnson, EMPI, Inc. and Medtronic, Inc. In 2013, Ms. Melloy was honored as one of "New Jersey's Top 50 Women in Business." She was also recognized in 2010 at the Women's Global Forum as one of the top 30 women from Sanofi Worldwide. In 2007 she was namedbe an HBA Rising Star. Ms. Melloy holds a B.S. from Iowa State University and an MBA from University of St. Thomas.active board member.

Karsten Lindhardt, Ph.D.  Dr. Lindhardt has served as our Senior Vice President, Research and Development since December 2013 and previously served as our Vice President, Research and Development from April 2011 to December 2013 and as our Senior Director of Portfolio Management and Alliance Manager from May 2010 to April 2011. From August 2008 to May 2010, Dr. Lindhardt served as the Director of Portfolio Management for our predecessor Egalet A/S, and as a Project Manager from March 2008 to August 2008. Before joining Egalet A/S, Dr. Lindhardt served in management positions for Curalogic A/S, Prosidion Ltd. and OSI Pharmaceuticals, and as a clinical pharmacologist for Ferring Pharmaceuticals and Novo Nordisk A/S. Dr. Lindhardt has earned a Diploma of Business Excellence at Columbia University, Copenhagen Business School. Dr. Lindhardt received a M.Sci. in Pharmaceutics and a Ph.D. in pharmaceutical development and pharmacology, each from the Royal Danish School of Pharmacy.

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EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth information for the fiscal years ended December 31, 20142015 and 20132014 concerning compensation of our principal executive officer and our two most highly compensated executive officers other than our principal executive officer who were serving as executive officers as of December 31, 2014. We refer to these three executives as our named executive officers. Dr. Strobeck was named our Chief Business Officer in January 2014 and therefore Dr. Strobeck was not a named executive officer as of December 31, 2013.2015.

(1)

Amounts shown in this column do not reflect actual compensation received by the named executive officers. The amounts reflect the grant date fair value of stock option awards and are calculated in accordance with the provisions of FASB Accounting Standards Codification Topic 718 Compensation—Stock Compensation ("ASC Topic 718"), and assume no forfeiture rate derived in the calculation of the grant date fair value of these awards. Assumptions used in the calculation of these awards are included in Note 7, "Stock-based Compensation" in the notes to Egalet's consolidated financial statements included in our most recent Annual Report on Form 10-K. The executive will only realize compensation to the extent the trading price of Egalet's common stock is greater than the exercise price of such stock options.

(2)

Amounts shown in this column do not reflect actual compensation received by the named executive officers. The amounts reflect the grant date fair value of restricted stock units issued in accordance with the provisions of ASC Topic 718 and are based on the closing stock price of Egalet's common stock on the date of grant and assume no forfeiture rate derived in the calculation of the grant date fair value of these awards. Stock awards granted to the named executive officers during 2014 consisted of restricted stock units that vest on an accelerated schedule over a range of two to five years. See Note 7, "Stock-based Compensation" in the notes to Egalet's consolidated financial statements included in our most recent Annual Report on Form 10-K for further information on restricted stock units.

(3)

Dr. Strobeck joined the Company as an employee and became an executive officer in January 2014. During the year ended December 31, 2013, Dr. Strobeck received advisory fees from Egalet UK in the amount of $150,000 pursuant to a consulting agreement. This agreement was terminated effective January 1, 2014.

(4)

Includes signing bonus of $50,000.

(5)

Mr. Musial joined the Company and became an executive officer in April 2013.

participant in our employee benefits plans, programs and arrangements. Mr. Radie'sRadie’s current annual base salary is $475,000, Mr. Musial's$531,000, Dr. Strobeck’s annual base salary is $387,000 and Dr. Dayno’s current annual base salary is $320,000 and Dr. Strobeck's annual base salary is $320,000,$385,000, in each case subject to annual review and increase at the discretion of the Board. Mr. Radie has an annual target bonus opportunity equal to 50% of his annual base salary and Mr. MusialDr. Strobeck and Dr. StrobeckDayno each has an annual target bonus opportunity equal to 35% of their respective annual base salaries. The executives'executives’ annual bonus opportunities will be subject to the terms and conditions of our Annual Incentive Bonus Plan. The executives must be employed by us on the payment date in order to be paid any such bonus except as otherwise described below in the section entitled "Potential“Potential Payments Upon a Termination or Change in Control."” Each employment agreement also provides for additional payments and benefits to be made in connection with the executive'sexecutive’s termination of employment, as described below in the section entitled "Potential“Potential Payments upon a Termination or Change in Control."” Each employment agreement provides that during the term of employment and for a period of 12 months thereafter (24 months if we terminate the executive'sexecutive’s employment without cause or the executive terminates his employment for good reason, in either case, within 24 months following a change in control), the executive will not compete with us or solicit our customers or employees. Each employment agreement also contains provisions requiring the executive to safeguard our confidential information and to assign to any intellectual property developed by the executive during his employment by us.

Outstanding Equity Awards at Fiscal Year-EndYear‑End

The table below sets forth the number of securities underlying outstanding plan awards for each executive as of December 31, 2014.2015.

(1)

Options vest annually with respect to one-fourth of the underlying shares on the first four anniversaries of the grant date.

(2)

Market value is based upon the closing price of our common stock on December 31, 2014 of $5.69.

such coverage under our health plan. Such payments will continue for 12 months (24 months if such termination occurs within 24 months following a change in control) or, if earlier, until the executive becomes eligible for coverage under another medical plan. The executive will also be entitled to any stock-basedstock‑based compensation due to the executive pursuant to any written agreement with us, on the terms and conditions set forth therein.

The following table sets forth potential payments payable to our named executive officers upon a termination of employment without cause or resignation for good reason or termination of employment without cause or resignation for good reason in connection with a change in control. The table below reflects amounts payable to our named executive officers assuming their employment was terminated on December 31, 20142015 and, if applicable, a change in control also occurred on such date:

(1)

Assumes all outstanding options vest upon termination. Pursuant to our 2013 Stock-Based Incentive Plan and the applicable award agreements, any vesting upon a change of control would be subject to the Board's discretion.

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PROPOSAL 2

PROPOSAL 2

APPROVAL OF AN AMENDMENT TO THE THIRD AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF EGALET CORPORATION TO INCREASE THE MAXIMUM NUMBER OF DIRECTORS THAT MAY SERVE ON THE BOARD
2013 STOCK‑BASED INCENTIVE PLAN, AS AMENDED

BackgroundIntroduction

The Board proposesunanimously approved, and recommends that our stockholders approve, an amendment to amend (the "Amendment") Article V(a) of the Company's Third Amended and Restated Certificate of Incorporation (the "Certificate of Incorporation")Egalet Corporation 2013 Stock-Based Incentive Plan, as amended, which we refer to as the Stock Plan, to increase the number of shares available for grant under the Stock Plan by 2,600,000 shares. A copy of the amendment is attached to this Proxy Statement as Annex A-1. This amendment will become effective only upon its approval by our stockholders.

The purpose of the Stock Plan is to assist us and our subsidiaries and affiliates in attracting and retaining employees, non-employee directors and consultants by offering them a greater stake in our success and a closer identity with it, and to encourage ownership of our stock by such employees, non-employee directors and consultants.  The Stock Plan was first adopted by our Board of Directors on November 7, 2013 and was subsequently approved by our stockholders. Our stockholders also approved an amendment to the Stock Plan on June 9, 2014.

The maximum number of directorsshares that may serve oncurrently be issued under the Board from sevenStock Plan is 3,680,000, of which 42,147 remain available for grant as of April 18, 2016 (including 265,000 options granted to nine. In March 2014,our chief executive officer under the Board approved,Stock Plan contingent upon stockholder approval of the Amendment). As of April 18, 2016 we had outstanding under all of our equity and recommended thatequity-based plans (i) 2,173,533 stock options, with a weighted average exercise price of $8.99 and a weighted average remaining term of 9.10 years and (ii) 629,018 shares of restricted stock with a weighted average grant date fair value of $11.17 and weighted average term until vesting of 1.31 years (including 265,000 options granted to our chief executive officer under the Company's shareholders approve atStock Plan contingent upon stockholder approval of the Annual Meeting,Amendment).  All of such options and shares of restricted stock have been granted under the Amendment.Stock Plan.  As of April 18, 2016, there were 25,085,554 shares of our common stock outstanding and, in addition to the shares reserved for issuance under the Stock Plan, an additional 4,102,360 shares were reserved for issuance in connection with the potential exercise of our outstanding 5.50% convertible senior notes due April 1, 2020.

Of the option awards granted under the Stock Plan, awards consisting of options to purchase 303,219 shares of our common stock are currently vested. The Board believeshas concluded that the ability to increase its size could provide the opportunity, consistent withit is in our corporate governance guidelinesbest interests, and principles and the considerations mandated by the charter of our Nominating and Corporate Governance Committee, to maintain a Board with diverse talents and perspectives, as well as demonstrated experience and expertise, which blends a limited number of key management members with non-employee directors. Although the Board does not have any current intention to further expand the size of the Board, the Board believes increasing its size to both accommodate new and diverse members is in the best interests of our companystockholders, to increase the number of shares available for grant under the Stock Plan by 2,600,000 shares. In making this recommendation, the Board considered various aspects of the Stock Plan, including the number of shares subject to outstanding awards, the number of shares that remain available for future awards under the Stock Plan, our historical pattern of granting equity awards, the cost of issuing additional shares, the impact of share dilution on existing stockholders, and the central role of equity compensation in our compensation programs. The Board believes that the proposed increase in the number of shares is necessary for retaining the flexibility to grant equity-based compensation at levels that are optimal for motivating and rewarding our employees for their contributions to our success and the growth in the value of our common stock.

The following summary of the Stock Plan sets for the principal features of the Stock Plan, as amended. This summary is entirely qualified by reference to the Stock Plan, a copy of which is attached to this Proxy Statement as Annex A-2. In the event of any contradiction or inconsistency between the summary and the terms of the Stock Plan, the terms of the Stock Plan will control.

Summary of the Stock Plan

We initially reserved an aggregate of 1,400,000 shares of our common stock for issuance pursuant to awards granted under the Stock Plan.  In connection with preparing for our initial public offering, the Board and our stockholders. Thisstockholders approved a 1.2 to 1 forward stock split of our common stock, thereby increasing the number of shares reserved for issuance to 1,680,000.  On June 9, 2014 our stockholders approved an amendment to the Stock Plan, which increased the total number of shares reserved for issuance by 2,000,000 to 3,680,000, in the aggregate.  As of April 18, 2016 there were 42,147 shares available for future awards under the Stock Plan, and, if our stockholders approve the proposed amendment, there will be 2,642,147 shares available for future awards under the Stock Plan (including 265,000

options granted to our chief executive officer under the Stock Plan contingent upon stockholder approval of the Amendment). The maximum number of shares of common stock that may be subject to awards granted to an individual participant during a single year is 1,840,000.

Eligibility.    All of our employees, non-employee directors and consultants, and the employees, non-employee directors and consultants of our subsidiaries and affiliates, are eligible to receive awards under the Stock Plan.

Administration.    The Stock Plan is administered by our Compensation Committee (the “Committee”). The Committee has the power to: (i) select the employees, consultants and non-employee directors who will receive awards pursuant to the Stock Plan; (ii) determine the type or types of awards to be granted to each participant; (iii) determine the number of shares of common stock to which an award will relate, the terms and conditions of any award granted under the Stock Plan, including, but not partlimited to, restrictions as to vesting, transferability or forfeiture, exercisability or settlement of an award and waivers or accelerations thereof, and waivers of or modifications to performance conditions relating to an award, based in each case on such considerations as the Committee shall determine, and all other matters to be determined in connection with an award; (iv) determine whether, to what extent, and under what circumstances an award may be canceled, forfeited, or surrendered; (v) determine whether, and to certify that, the performance goals to which the settlement of an award is subject are satisfied; (vi) correct any defect or supply any omission or reconcile any inconsistency in the Stock Plan; (vii) adopt, amend and rescind such rules and regulations as, in its opinion, may be advisable in the administration of the Stock Plan; and (viii) construe and interpret the Stock Plan and make all other determinations as it may deem necessary or advisable for the administration of the Stock Plan.  The Committee also has the power to determine the effect, if any, of a planchange in control upon the Stock Plan and any outstanding awards.  The Committee may delegate some or proposalall of its powers to make it more difficult forany of our executive officers or any other person, other than its authority to grant awards to certain specified executives.

Types of Awards.    Awards that can be granted under the Stock Plan include common stock, deferred stock, restricted stock, restricted stock units, or RSUs, stock options and stock appreciation rights, or SARs.

Common Stock.    In a common stock award, a participant receives a grant of shares of our common stock that are not subject to any restrictions on transfer or other vesting conditions. Upon the grant date, the participant will have all of the customary rights of a stockholder with respect to such shares, including the right to vote such shares and to receive dividends with respect to such shares.

Deferred Stock.    In a deferred stock award, we agree to deliver, subject to certain conditions, a fixed number of shares of common stock to the participant at the end of a specified deferral period or groupperiods.  During such period or periods, the participant will have no rights as a stockholder with respect to any such shares. No dividends will be paid with respect to shares of stockholdersdeferred stock during the applicable deferral period, and the participant will have no future right to influenceany dividend paid during such period.

Restricted Stock.    In a restricted stock award, a participant receives a grant of shares of common stock that are subject to certain restrictions, including forfeiture of such stock upon the happening of certain events.  During the restriction period, holders of restricted stock will have the right to vote the shares of restricted stock. No dividends will be paid with respect to shares of restricted stock during the applicable restriction period, and the participant shall have no future right to any dividend paid during such period.

Restricted Stock Units.    An RSU is a grant of the right to receive a payment in our common stock or otherwise have an impactcash, or in a combination thereof, equal to the fair market value of a share of our common stock on the Company.

The Amendmentexpiration of the applicable restriction period or periods.  During such period or periods, the participant will have no rights as a stockholder with respect to any such shares.  No dividends will be paid with respect to shares underlying an RSU during the applicable restriction period, and the participant will have no future right to any dividend paid during such period.

 Pursuant

Stock Options.    Stock options granted under the Stock Plan may be either incentive stock options or non-qualified stock options. The exercise price of an option shall be determined by the Committee, but must be at least 100% of the fair market value of our common stock on the date of the grant.  If the participant owns, directly or indirectly, shares constituting more than 10% of the total combined voting power of all classes of our stock, the exercise price of an

incentive stock option must be at least 110% of the fair market value of a share of common stock on the date the incentive stock option is granted.

Stock Appreciation Rights.    A grant of a SAR entitles the holder to receive, upon exercise of the Delaware General Corporation Law,SAR, the excess of the fair market value of one share of our common stock on the date of exercise over the grant price of the SAR as determined by the Committee.  The grant price of a boardSAR may never be less than 100% of directorsthe fair market value of a share of common stock on the date of grant.

Performance Goals.    In the discretion of the Committee, any award may be granted subject to performance goals that must consistbe met by the end of a period specified by the Committee, but that are substantially uncertain to be met before the grant of the award, and that must be based upon one or more natural persons,of the following as they relate to us, our subsidiaries or affiliates, or any business unit or department thereof: (i) stock price, (ii) market share, (iii) sales, (iv) earnings per share, (v) diluted earnings per share, (vi) diluted net income per share, (vii) return on stockholder equity, (viii) costs, (ix) cash flow, (x) return on total assets, (xi) return on capital or invested capital, (xii) return on net assets, (xiii) operating income, (xiv) net income, (xv) earnings (or net income) before interest, taxes, depreciation and amortization, (xvi) improvements in capital structure, (xvii) gross, operating or other margins, (xviii) budget and expense management, (xix) productivity ratios, (xx) working capital targets, (xxi) enterprise value, (xxii) safety record, (xxiii) completion of acquisitions or business expansion (xxiv) economic value added or other value added measurements, (xxv) expenses targets, (xxvi) operating efficiency, (xxvii) regulatory body approvals for commercialization of products, (xxviii) implementation or completion of critical projects or related milestones (including, without limitation, milestones such as clinical trial enrollment targets, commencement of phases of clinical trials and completion of phases of clinical trials) or (xxix) partnering or similar transactions. The Committee may structure awards to qualify for the exemption for performance-based compensation to the limitations on the deductibility of compensation in excess of $1,000,000 paid to certain of our executive officers under Section 162(m) of the Code; however, the Committee retains the discretion to grant awards that are not fully deductible under Section 162(m) of the Code.  Performance goals with respect to awards that are not intended to constitute qualified performance-based compensation under Section 162(m) of the Code may be based on one or more of the preceding measures or any other measure that the Committee may determine in its sole discretion.  Performance goals may be measured absolutely or relative to an index or peer group.

Effect of a Change in Control.    Upon the occurrence of a change in control of the Company, the Committee may, in its discretion: (i) fully vest any or all awards; (ii) determine whether all applicable performance goals have been achieved and the applicable level of performance; (iii) cancel any outstanding awards in exchange for a cash payment of an amount, but not less than zero, equal to the difference between the then fair market value of the award less the exercise or base price of the award; (iv) after having given the participant a chance to exercise any vested outstanding options or SARs, terminate any or all of the participant's unexercised options or SARs; (v) where we are not the surviving corporation after a change in control, cause the surviving corporation to assume or replace all outstanding awards with comparable awards; or (vi) take such other action as the Committee shall determine appropriate.

Effects of Certain Corporate Transactions.    In the event of a stock dividend, recapitalization, forward or reverse stock split, reorganization, division, merger, consolidation, spin-off, combination, repurchase or share exchange, extraordinary or unusual cash distribution or other corporate transaction or event that affects our common stock, the Committee shall make equitable adjustments in (i) the number specifiedand kind of shares of common stock which may thereafter be issued in connection with awards, (ii) the number and kind of shares of common stock issuable in respect of outstanding awards, (iii) the aggregate number and kind of shares of common stock available under the Stock Plan, and (iv) the exercise or fixedgrant price relating to any award, or if deemed appropriate, the Committee may also make provision for a cash payment with respect to any outstanding award.

Actions Requiring Stockholder Approval.    Our Board of Directors must obtain stockholder approval in accordance with a corporation's certificate of incorporation or bylaws. Theorder to take any action that would (i) increase the number of directorsshares subject to the Stock Plan, except for adjustments upon changes in capitalization; (ii) result in the repricing, replacement or repurchase of any option, SAR or other award; or (iii) be required to be submitted for stockholder approval under any federal or state law or regulation or NASDAQ listing rules.

Clawback.    Any award granted under the Stock Plan, including a common stock award, will be subject to mandatory repayment by the participant to us pursuant to the terms of any “clawback” or recoupment policy that is directly applicable to the Stock Plan and set forth in an award agreement or as required by law to be applicable to the participant.

Transfer Restrictions.    No award or other right or interest of a participant under the Stock Plan may be increasedassigned or decreased from timetransferred for any reason during the participant's lifetime, other than to timeus or any of our subsidiaries or affiliates.  Notwithstanding the foregoing, the Committee may grant awards, other than incentive stock options, that are transferable by amendmentthe participant during his or her lifetime, but only to or in the mannerextent specifically provided in the certificateagreement entered into with such participant.  No incentive stock option shall be transferable other than by will or the laws of incorporationdescent and distribution.

Certain Federal Income Tax Considerations

The following discussion is a summary of certain U.S. federal income tax considerations that may be relevant to participants in the Stock Plan.  The discussion is for general informational purposes only and does not purport to address specific federal income tax considerations that may apply to a participant based on his or bylaws. The proposed Amendmenther particular circumstances, nor does it address state, local or foreign income tax or other tax considerations that may be relevant to a participant.

PARTICIPANTS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE PARTICULAR FEDERAL INCOME TAX CONSEQUENCES TO THEM OF PARTICIPATING IN THE STOCK PLAN, AS WELL AS WITH RESPECT TO ANY APPLICABLE STATE, LOCAL OR FOREIGN INCOME TAX OR OTHER TAX CONSIDERATIONS.

Common Stock

Upon the grant of an award of our common stock, a participant will setrecognize ordinary income equal to the number of directors at a minimum of three and a maximum of nine and grantdifference between the Boardamount paid, if any, for the authority to fix the exact number of directors from time to time by resolution of the Board. Currently, our Certificate of Incorporation sets the minimum number of directors at threecommon stock and the maximum number of directors at seven. The Board believes a larger maximum number of directors increases the Board's ability to attract and retain qualified director candidates. Accordingly, the Board is recommending that stockholders vote "FOR" the following resolution: "RESOLVED, that the Certificate of Incorporation of the Company shall be amended by deleting Article V(a) and replacing it with the following: "Subject to the special rights of the holders of any series of Preferred Stock to elect directors, the number of directors on the Board of Directors shall be fixed from time to time by resolution of the Board of Directors and the number so fixed shall comprise the entire Board of Directors, which such number shall not be fewer than three (3) and not more than nine (9), each of whom shall be a natural person."

        The above description is qualified in its entirety by the actual text of the Amendment, which is set forth in Annex A.

Vote Required

        The affirmative vote of the holders of a majority of the outstanding sharesfair market value of the common stock on the grant date, and subject to Section 162(m) of the Code, we will be requiredentitled to approvea corresponding deduction.  The participant’s tax basis in the proposed amendment. Abstentionsshares of common stock will equal the fair market value of such shares on the grant date.  Upon sale of shares of common stock, the participant will recognize short-term or long-term capital gain or loss, depending on whether at the time of sale the shares have been held for more than one year following the grant date.  The gain or loss will be equal to the difference between the amount realized upon the sale of the shares and broker non-votesthe tax basis of the shares in the participant’s hands. 

Deferred Stock

A participant recognizes no taxable income and we are not entitled to a deduction when deferred stock is awarded.  When the deferral period for the Award ends and the participant receives shares of common stock, the participant will recognize ordinary income equal to the fair market value of the shares at that time, and, subject to Section 162(m) of the Code, we will be entitled to a corresponding deduction.  A participant’s tax basis in shares of common stock received at the end of a deferral period will be equal to the fair market value of such shares when the participant receives them.  Upon sale of the shares, the participant will recognize short-term or long-term capital gain or loss, depending upon whether the shares have been held for more than one year at the same effect as votes againsttime of sale.  Such gain or loss will be equal to the proposed amendment.difference between the amount realized upon the sale of the shares and the tax basis of the shares in the participant’s hands.

Restricted Stock

Shares of restricted stock received pursuant to Awards will be considered subject to a substantial risk of forfeiture for federal income tax purposes.  If a participant who receives shares of restricted stock does not make the election described below, the participant recognizes no taxable income upon the receipt of shares of restricted stock and we are not entitled to a deduction at such time.  When the forfeiture restrictions with respect to the restricted stock

lapse, the participant will recognize ordinary income equal to the fair market value of the shares at that time, and, subject to Section 162(m) of the Code, we will be entitled to a corresponding deduction.  A participant’s tax basis in shares of restricted stock will be equal to their fair market value when the forfeiture restrictions lapse, and the participant’s holding period for the shares will begin when the forfeiture restrictions lapse.  Upon sale of the shares, the participant will recognize short-term or long-term gain or loss, depending upon whether the shares have been held for more than one year at the time of sale.  Such gain or loss will be equal to the difference between the amount realized upon the sale of the shares and the tax basis of the shares in the participant’s hands.

Participants receiving shares of restricted stock may make an election under Section 83(b) of the Code with respect to the shares.  By making a Section 83(b) election, the participant elects to recognize compensation income with respect to the shares when the shares are received rather than at the time the forfeiture restrictions lapse.  The amount of such compensation income will be equal to the fair market value of the shares when the participant receives them (valued without taking the restrictions into account), and we will be entitled to a corresponding compensation deduction at that time.  By making a Section 83(b) election, the participant will recognize no additional compensation income with respect to the shares when the forfeiture restrictions lapse, and will instead recognize gain or loss with respect to the shares when they are sold.  The participant’s tax basis in the shares with respect to which a Section 83(b) election is made will be equal to their fair market value when received by the participant, and the participant’s holding period for such shares begins at that time.  If, however, the shares are subsequently forfeited to us, the participant will not be entitled to claim a loss with respect to the shares to the extent of the income recognized by the participant upon the making of the Section 83(b) election.  To make a Section 83(b) election, a participant must file an appropriate form of election with the Internal Revenue Service and with us, each within 30 days after a restricted stock award is granted, and the participant must also attach a copy of his or her election to his or her federal income tax return for the year in which the restricted stock award is granted. 

Restricted Stock Unit

A participant will recognize no taxable income when RSUs are granted, and we are not entitled to a deduction upon such grant. When the award is settled and the participant receives shares of common stock, the participant will recognize compensation taxable as ordinary income equal to the fair market value of the shares at that time and, subject to Section 162(m) of the Code, we will be entitled to a corresponding deduction. A participant’s tax basis in shares of common stock received at the end of a restriction period will be equal to the fair market value of such shares when the participant receives them, and the participant’s holding period will begin on such date. Upon the sale of such shares, the participant will recognize short-term or long-term capital gain or loss, depending upon whether the shares have been held for more than one year at the time of sale. Such gain or loss will be equal to the difference between the amount realized upon the sale of the shares and the tax basis of the shares in the participant’s hands. In addition, as discussed below, RSUs may be considered deferred compensation that must comply with the requirements of Section 409A of the Code in order to avoid early income inclusion and tax penalties.

Non-Qualified Options

A participant recognizes no taxable income and we are not entitled to a deduction when a non-qualified option is granted.  Upon exercise of a non-qualified option, a participant will recognize ordinary income equal to the excess of the fair market value of the shares received over the exercise price of the non-qualified option, and, subject to Section 162(m) of the Code, we will be entitled to a corresponding deduction. A participant’s tax basis in the shares of common stock received upon exercise of a non-qualified option will be equal to the fair market value of such shares on the exercise date, and the participant’s holding period for such shares will begin at that time. Upon sale of the shares of common stock received upon exercise of a non-qualified option, the participant will recognize short-term or long-term capital gain or loss, depending upon whether the shares have been held for more than one year. The amount of such gain or loss will be equal to the difference between the amount realized in connection with the sale of the shares and the participant’s tax basis in such shares.

EffectivenessUnder the Stock Plan, non-qualified options may, with the consent of the Committee, be exercised in whole or in part with shares of common stock or restricted stock held by the participant. Payment in common stock or restricted stock will be treated as a tax-free exchange of the shares of common stock surrendered for an equivalent number of

shares of common stock received, and the equivalent number of shares received will have a tax basis equal to the tax basis of the surrendered shares. In the case of payment in restricted stock, however, the equivalent number of shares of common stock received shall be subject to the same risks of forfeiture or restrictions on transfer as those that applied to the restricted stock surrendered. The fair market value of shares of common stock received in excess of the number of shares surrendered will be treated as ordinary income and such shares have a tax basis equal to their fair market value on the date of the exercise of the non-qualified option.

Incentive Stock Options

A participant recognizes no taxable income, and we are not entitled to a deduction, when an incentive stock option is granted or exercised. Provided the participant meets the applicable holding period requirements for the shares received upon exercise of an incentive stock option (two years from the date of grant and one year from the date of exercise), gain or loss recognized by a participant upon sale of the shares received upon exercise will be long-term capital gain or loss, and we will not be entitled to a deduction. If, however, the participant disposes of the shares before meeting the applicable holding period requirements (a “disqualifying disposition”), the participant will recognize ordinary income at that time equal to the excess of the fair market value of the shares on the exercise date over the exercise price of the incentive stock option.  Any amount realized upon a disqualifying disposition in excess of the fair market value of the shares on the exercise date of the incentive stock option will be treated as capital gain and will be treated as long-term capital gain if the shares have been held for more than one year.  If the sales price is less than the sum of the exercise price of the incentive stock option and the amount included in ordinary income due to the disqualifying disposition, this amount will be treated as a short-term or long-term capital loss, depending upon whether the shares have been held for more than one year.  Notwithstanding the above, individuals who are subject to Alternative Minimum Tax may recognize ordinary income upon exercise of an incentive stock option.

 If our stockholders approve this proposal,

Under the proposed Amendment would become effective upon filingStock Plan, incentive stock options may, with the Secretary of Stateconsent of the StateCommittee, be exercised in whole or in part with shares of Delaware, which wouldcommon stock held by the participant.  Such an exercise will be treated as a tax-free exchange of the shares of common stock surrendered (assuming the surrender of the previously-owned shares does not constitute a disqualifying disposition of those shares) for an equivalent number of shares of common stock received, and the equivalent number of shares received will have a tax basis equal to the tax basis of the surrendered shares.  Shares of common stock received in excess of the number of shares surrendered will have a tax basis of zero.

SARs

A participant recognizes no taxable income and we are not entitled to a deduction when a SAR is granted.  Upon exercising a SAR, a participant will recognize ordinary income in an amount equal to the cash or the fair market value of the stock received minus any amount paid for the stock, and, subject to Section 162(m) of the Code, we will be entitled to a corresponding deduction.  A participant’s tax basis in the shares of common stock received upon exercise of a SAR will be equal to the fair market value of such shares on the exercise date, and the participant’s holding period for such shares will begin at that time.  Upon sale of the shares of common stock received upon exercise of a SAR, the participant will recognize short-term or long-term capital gain or loss, depending on whether the shares have been held for more than one year.  The amount of such gain or loss will be equal to the difference between the amount realized in connection with the sale of the shares, and the participant’s tax basis in such shares.

Section 162(m) Limitations on Compensation Deductions

Pursuant to Section 162(m) of the Code, a publicly-held corporation may be denied a deduction for compensation paid in any one taxable year in excess of $1.0 million to a “covered employee” unless the compensation properly qualifies as “performance-based compensation” subject to certain requirements.  A covered employee for this purpose is the chief executive officer of the corporation and each of the three other most highly compensated officers of the corporation (other than the chief financial officer), as reported to stockholders under the Securities Exchange Act of 1934.  If the Committee determines that it is necessary or advisable to ensure deduction under Section 162(m) of the Code, certain participants who may be covered employees will be granted awards that meet the applicable requirements for performance-based compensation such that compensation that is otherwise deductible under the Code will not be subject to limitation under Section 162(m) of the Code.

Withholding

We are entitled to deduct from the payment of any award (whether made in stock or in cash), or any other payment due to a participant under the Stock Plan, all applicable income and employment taxes required by federal, state, local or foreign law to be withheld in connection with any transaction involving an award.  Withholding in the form of shares of common stock shall not occur promptlyat a rate that exceeds the minimum required statutory federal and state withholding rates.

Section 409A

Section 409A of the Code contains certain restrictions on the ability to defer receipt of compensation to future tax years.  Any award that provides for the deferral of compensation, such as restricted stock units, that are settled more than two and one-half months after the final adjournmentend of the annual meeting.year in which they vest, must comply with Section 409A of the Code.  If this proposalthe applicable requirements of Section 409A of the Code are not met with respect to an award, the value of the award (to the extent not already included in gross income) will be included in the participant’s taxable income in the later of the year in which such violation occurs or the year in which such amounts are no longer subject to a substantial risk of forfeiture, even if such amounts have not been actually received.  In addition, such violation will result in an additional tax to the participant of 20% of the value of the award plus applicable interest computed from the date the award was earned, or if later, the date on which it vested.  Participants are urged to consult their tax advisors to determine if Code Section 409A has any impact on their awards.

Section 280G

If the vesting or payment of an award made to a “disqualified individual” (as defined in Section 280G of the Code) occurs in connection with a change in control of the Company, such vesting and/or payment, either alone or when combined with other compensation payments which such disqualified individual is entitled to receive, may result in an “excess parachute payment” (as defined in Section 280G of the Code).  Section 4999 of the Code generally imposes a 20% excise tax on the amount of any such “excess parachute payment” received by such “disqualified individual” and Section 280G of the Code would prevent us or any of our subsidiaries or affiliates, as applicable, from deducting such “excess parachute payment.”

New Plan Benefits

The benefits that will be awarded or paid under the Stock Plan are not approved,currently determinable.  Awards granted under the certificateStock Plan are within the discretion of incorporation would remain unchangedthe Committee, and the range of the size of the Board would remainCommittee has not less than threedetermined future Awards or more than seven directors. Other than as described herein, the proposed amendment to the certificate of incorporation effects no other changes to the certificate of incorporation. If the proposed Amendment is approved by shareholders, the Board will adopt conforming amendments to the Company's By-Laws.who might receive them.

Equity Compensation Plan Information

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS

A VOTE IN FAVOR OF PROPOSAL 2.

PROPOSAL 3

APPROVAL OF THE EMPLOYEE STOCK PURCHASE PLAN

Background

The Board of Directors has adopted, subject to stockholder approval, the Company’s 2016 Employee Stock Purchase Plan. The Employee Stock Purchase Plan is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code of 1986 (the “Code”). The Employee Stock Purchase Plan permits full-time and part-time employees of the Company to acquire our common stock through regular payroll deductions of up to 15% of compensation. A copy of the Employee Stock Purchase Plan is attached to this Proxy Statement as Annex B.

The Employee Stock Purchase Plan provides for the quarterly purchase of our common stock exclusively through payroll deductions at a purchase price equal to 85% of the lower of the market price at the close of the first day or the last day of the semi-annual offering period. Subject to stockholder approval, 750,000 shares have been reserved for issuance under the Employee Stock Purchase Plan.

Description of the Employee Stock Purchase Plan

The essential features of the Employee Stock Purchase Plan are outlined below.

Eligibility. Except as described below, after 90 days of service to the Company, all full-time and part-time employees of the Company, any domestic subsidiary and designated subsidiaries, including employees who are officers or directors, are eligible to participate in the Employee Stock Purchase Plan. A part-time employee is one who is not full-time, but who works at least 20 hours a week and at least five months out of the year. Any employee who owns or would be deemed to own 5% or more of the voting power or value of all classes of stock of the Company, taking into account the shares that the employee otherwise could purchase in the quarterly offering in question, is ineligible to participate in the Employee Stock Purchase Plan.

Plan Offerings and Purchase of Shares. The Employee Stock Purchase Plan provides for a series of quarterly offerings (“Offerings”), with a new Offering commencing on each of January 1 and July 1 of each year and ending on June 30 and December 31, respectively. The first Offering commenced January 1, 2016, subject to stockholder approval. On the first day of each Offering (the “Offering Commencement Date”), each eligible employee will automatically be granted an option to purchase shares of our common stock to be automatically exercised on the last day of the Offering (the "Offering Termination Date"). No option shall permit an employee's right to purchase shares under the Employee Stock Purchase Plan to accrue at a rate that exceeds $25,000 of fair market value (determined at the Offering Commencement Date) for each calendar year that the option is outstanding. Each eligible employee may elect to participate in the Employee Stock Purchase Plan by filing a subscription and payroll deduction authorization. Shares may be purchased under the Employee Stock Purchase Plan only through payroll deductions of not more than 15% of an employee's base salary compensation. On the Offering Termination Date, the amounts withheld will be applied to purchase shares for the employee from the Company. The purchase price will be 85% of the lesser of the closing market price of the Common Stock on the Offering Commencement Date (or if it is not a business date, on the nearest subsequent business date) or on the Offering Termination Date (or if it is not a business date, on the nearest prior business date).

An employee may terminate participation in the Employee Stock Purchase Plan by written notice to the Company at least 10 days before the Offering Termination Date. The employee will then receive all funds withheld from his or her pay and not yet used to purchase shares. No interest will be paid on funds withheld from employees. An employee may reinstate participation in the Employee Stock Purchase Plan, but only after the first Offering Termination Date following termination. The rights of employees under the Employee Stock Purchase Plan are not transferable.

Administration. The Employee Stock Purchase Plan is administered by the Board of Directors, which may delegate administration to the Compensation Committee. The Board of Directors may promulgate rules and regulations for the operation of the Employee Stock Purchase Plan, adopt forms for use in connection with the Employee Stock Purchase Plan, decide any question of interpretation of the Employee Stock Purchase Plan or rights arising thereunder and generally supervise the administration of the Employee Stock Purchase Plan. The Company will pay all expenses of the Employee Stock Purchase Plan other than commissions on sales or transfers of shares for employees' accounts by the custodian.

Custodian. An independent custodian maintains the records under the Employee Stock Purchase Plan. Shares purchased by employees under the Employee Stock Purchase Plan are delivered to and held by the custodian on behalf of the employees. By appropriate instructions from an employee, all or part of the shares may be sold or transferred into the employee's own name and delivered to the employee.

Amendments and Termination. The Board of Directors may amend the Employee Stock Purchase Plan, except that without the approval of the stockholders of the Company, the Employee Stock Purchase Plan may not be amended to increase the number of reserved shares or decrease the purchase price of shares. The Board of Directors may terminate the Employee Stock Purchase Plan at any time, except that termination will not affect outstanding options.

Tax Consequences

The Employee Stock Purchase Plan is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Code. Under the Code, employees will not be taxed at either the Offering Commencement Date or the Offering Termination Date on income or gain with respect to shares purchased under the Employee Stock Purchase Plan. 

If an employee disposes of shares purchased under the Employee Stock Purchase Plan within twelve months after the Offering Commencement Date, the employee will be required to report the excess of the fair market value of the shares on the Offering Termination Date over the purchase price as ordinary compensation income for the year of disposition. Any difference between the fair market value of the shares on the Offering Termination Date and the sale proceeds will be capital gain or loss. In the event of a disposition within twelve months after the Offering Commencement Date, the Company will be entitled to a deduction from income in the year of such disposition equal to the amount the employee is required to report as ordinary compensation income. Under the Code, the Company is required to track the disposition of all shares acquired under the Employee Stock Purchase Plan and to provide an information statement to the employee upon disposition of the shares.

If a current or former employee disposes of shares purchased under the Employee Stock Purchase Plan more than two years after the Offering Commencement Date, or in the event of the employee's death at any time while holding the shares, the employee or the employee's estate will be required to report as ordinary compensation income for the taxable year of disposition or death an amount equal to the lesser of (1) the excess of the fair market value of the shares at the time of disposition or death over the purchase price of the shares, or (2) 15 percent of the fair market value of the shares on the Offering Commencement Date. In the case of such a disposition or death, the Company will not be entitled to any deduction from income. Any gain on the disposition in excess of the amount treated as ordinary compensation income will be capital gain.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS

A VOTE IN FAVOR OF PROPOSAL 3.

SECURITY OWNERSHIP OF

CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the ownership of our common stock as of April 13, 201518, 2016 by: (i) each director and nominee for director; (ii) each Named Executive Officer; (iii) all of our executive officers and directors as a group; and (iv) all stockholders known us to be beneficial owners of more than five percent of our common stock.