Document:

rlyp-ex102_421.htm

 

Exhibit 10.2

	
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Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Amendment No. 1 to

Manufacturing and Supply Agreement

 

This Amendment No. 1 to the Manufacturing and Supply Agreement (“Amendment No. 1”) is made and entered into effective as of March 7, 2016 (the “Amendment No. 1 Effective Date”) by and between RELYPSA, INC., a Delaware corporation, located at 100 Cardinal Way, Redwood City, CA 94063 (“RELYPSA”) and DPx FINE CHEMICALS AUSTRIA GMBH & CO KG (formerly known as DSM Fine Chemicals Austria NFG GMBH & CO KG), with an address at Sankt-Peter-Straße 25, A-4020 Linz, Austria (“PATHEON”).

Whereas, Relypsa and PATHEON entered into that certain Manufacturing and Supply Agreement effective as of May 14, 2014 (the “Agreement”);

Whereas, in 2014, DSM Fine Chemicals Austria NFG GMBH & CO KG was renamed DPx Fine Chemicals Austria GMBH & CO KG; and

Whereas, the parties now desire to amend the Agreement as set forth below.

Now, Therefore, in consideration of the premises and mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:  

Agreement

1. Amendment of the Agreement.  The Parties hereby agree to amend the terms of the Agreement as provided below, effective as of the Amendment No. 1 Effective Date.  To the extent that the Agreement is explicitly amended by this Amendment No. 1, the terms of this Amendment No. 1 will control where the terms of the Agreement are contrary to or conflict with the following provisions.  Where the Agreement is not explicitly amended, the terms of the Agreement will remain in full force and effect.  Capitalized terms used in this Amendment No. 1 that are not otherwise defined herein shall have the same meanings as such terms have in the Agreement.

1.1 Each and every reference to “DSM” in the Agreement shall be replaced with “PATHEON”.

1.2 Section 5.1 of the Agreement is hereby amended to add the following language at the end thereof:

“During the 2015 Production Campaign (defined below), PATHEON carried out certain additional analytical method implementations.  RELYPSA shall pay PATHEON the total sum of Euro [***] for all such implementations and any related work, in accord with an appropriate invoice to be issued under this Agreement in March 2016.”

1.3 Section 5.2 of the Agreement is hereby amended to add the following language at the end thereof:

“PATHEON shall at no cost or expense to RELPYSA purchase, install and qualify a [***] in the Facility (the “[***]”).  The [***] may be installed in PATHEON’s production facility [***]. The 

 

 

[***] of the [***] shall be substantially analogous to those of the [***] used in the 2015 Production Campaign (the “[***]). The [***] shall be operational no later than March 31, 2017 and shall be capable of accommodating [***] validation batches of Bulk Drug in an analogous way as performed by PATHEON using the [***]. The purchase, installation and qualification of the [***] shall be completed in accordance with all Legal Requirements in all material respects and in a [***] manner, and PATHEON shall use its reasonable best efforts to meet all requirements necessary for the cGMP Manufacture of pharmaceutical products. In addition, PATHEON will use [***] in the Facility before the start of the next production Campaign for Bulk Drug.”

1.4 Section 5.5 is of the Agreement is hereby amended and restated in its entirety as follows:

“5.5 Payment for Validation Batches. Upon successful completion of the Validation Batches, as defined by (a) [***] and (b) [***], RELYPSA shall pay PATHEON the total sum of Euro [***], in accord with an appropriate invoice to be issued under this Agreement. This payment shall be [***], provided that [***] (for clarity, for example, if the [***] for purposes of completing Validation, PATHEON is still obligated to [***] in order to receive such payment).

“(a) Within [***] days of full execution of this Agreement, RELYPSA agrees to issue a purchase order under Section 3.2 of this Agreement with such purchase order to cover the Validation Batches in accord with this Section 5.5 ("Validation PO"). Such Validation PO shall be a Firm Order under this Agreement. In addition, within [***] days of full execution of this Agreement, in accord with Section 6.3, RELYPSA will issue a Rolling Forecast (defined below) including a first [***] forecast of Demand, with such [***] forecast of Demand to be binding under the terms of Section 6.3; provided that such first [***] forecast of Demand shall be for a minimum of [***] MT of Bulk Drug (on a [***]) for a Campaign to begin in calendar year 2015 at a price of Euro [***]. PATHEON shall Manufacture, supply and Release to RELYPSA (or RELYPSA's designee) and REL YPSA shall pay for and take delivery of those Batches of Bulk Drug set forth in the Validation PO that are Manufactured in accordance of the terms of this Agreement. The Validation PO can only be changed by mutual agreement of the Parties. It is understood and agreed by the parties that the above mentioned Rolling Forecast (and subsequent Firm Order) shall be issued in a manner such that the Campaign for [***] MT of Bulk Drug (on a [***]) shall [***].

“(b) The Parties acknowledge that “the Campaign for [***] MT of Bulk Drug (on a [***])” referred to in Section 5.5(a) above was carried out by PATHEON from [***] (the “2015 Production Campaign”) [***]. Accordingly, notwithstanding the provisions of Section 5.5(a) above, the Parties agree that RELYPSA shall pay PATHEON an aggregate amount of Euro [***] (i.e., representing the sum of Euro [***] and Euro [***] as set forth in Sections 5.6(a) and 5.6(b), respectively) as final payment for the 2015 Production Campaign, in accord with an appropriate invoice to be issued under this Agreement, and that RELYPSA shall [***] (both as defined below in Section 5.6) produced by PATHEON in the course of the 2015 Production Campaign, as provided in Section 5.6. For clarity, as of the Amendment No. 1 Effective Date, RELYPSA shall [***] as set forth in Section 5.5(a) and PATHEON shall [***], and PATHEON shall [***] MT of Bulk Drug (on a [***]) from the 2015 Production Campaign as set forth in Section 5.5(a) and RELYPSA shall [***].”

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Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

1.5 A new section 5.6 is added to the Agreement follows:

“5.6 Held Materials.

“(a) [***].  PATHEON produced [***] kg of [***] in the course of the Validation Campaign and the 2015 Production Campaign (“[***]”). RELYPSA agrees take delivery of [***]. Accordingly, RELYPSA shall pay PATHEON the total sum of Euro [***], in accord with an appropriate invoice to be issued under this Agreement by the end of March 2016. RELYPSA shall provide PATHEON on or before March 20, 2016 with [***]. PATHEON shall [***] RELYPSA and ship them to RELYPSA at a mutually agreed time, but in any event on or before [***]. Delivery shall be made according to the delivery terms of this Agreement. PATHEON shall [***] and provide RELYPSA with [***].

“(b) [***]. PATHEON produced [***] kg of [***] in the course of the 2015 Production Campaign (the “[***]”). For clarity, the [***] do not include [***] produced during the Validation Campaign. RELYPSA agrees to take delivery of this quantity of the [***]. Accordingly, RELYPSA shall pay PATHEON the total sum of Euro [***], in accord with an appropriate invoice to be issued under this Agreement by the end of February 2016.  PATHEON shall [***] RELYPSA and ship it to RELYPSA at a mutually agreed time, but in any event on or before May 31, 2016. Delivery shall be made according to the delivery terms of this Agreement.

“(c) [***]. PATHEON produced [***] MT of [***] in the course of the 2015 Production Campaign. PATHEON shall [***] this quantity of [***] and [***]. Title to and risk of loss or deterioration of the [***]. In the event all or a portion of [***] cannot be [***], PATHEON shall [***]. RELYPSA shall [***], in accord with an appropriate invoice to be issued under this Agreement no earlier than March 31, 2016. This [***] for Bulk Drug produced in the next Campaign for RELYPSA.

“(d) MFA.  PATHEON holds [***] MT of the raw material MFA [***] which was [***] during the 2015 Production Campaign.  PATHEON shall [***] this quantity of MFA [***] and [***].  PATHEON shall [***] quantity of MFA at premises and under conditions suitable for the storage of MFA. If required for quality reasons, PATHEON shall [***] batches. In the event all or a portion of this quantity of [***] for any reason in [***] for RELYPSA. PATHEON shall [***].”

1.6 Section 6.6 of the Agreement is hereby amended and restated in its entirety as follows:

6.6 Commitment. 

(a) Each calendar year during the Term, and assuming use of the Manufacturing process described in Appendix 4, or an FDA approved version thereof, PATHEON commits to Manufacture and reserves the capacity, personnel, equipment and other resources to Manufacture [***] MT of Ca Bulk Drug (the "Capacity"). In the event of [***] the Capacity. In consideration of PATHEON's reservation of Capacity under this Section 6.6, RELYPSA commits to purchase from PATHEON during the Term [***] MT of Bulk Drug (on a [***]) or, if so agreed in accordance with Section 6.5, Third Party Intermediate, at a rate of [***] MT [***], with the first Campaign starting in [***] and with further Campaigns starting in each of the subsequent [***] until RELYPSA has purchased [***] MT of Bulk Drug (on a [***]) in accordance with this Agreement (the “Aggregate Commitment”). For purposes of clarity, the volume produced in a Campaign is attributable to the [***]. Also for clarity, after RELYPSA has fulfilled the Aggregate Commitment, then the [***] in this Agreement 

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Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

shall no longer apply even if the Term has not expired. For purposes of further clarity, the Aggregate Commitment does not include [***] manufactured by PATHEON in the 2015 Production Campaign.

(b) The Parties agree to work together to develop [***]. Using such [***] RELYPSA agrees to purchase from PATHEON certain minimum volumes of Bulk Drug per year as set forth below after RELYPSA has fulfilled the Aggregate Commitment:

(a) Year 1: [***] MT, however, total annual quantities shall not exceed the maximum volume according to this Agreement (including any subsequent amendment hereto resulting from improved processes or changed processes for the manufacture Bulk Drug);

(b) Year 2: [***] MT, however, total annual quantities shall not exceed the maximum volume according to this Agreement (including any subsequent amendment hereto resulting from improved processes or changed processes for the manufacture Bulk Drug); and

(c) Year 3: [***] MT, however, total annual quantities shall not exceed the maximum volume according to this Agreement (including any subsequent amendment hereto resulting from improved processes or changed processes for the manufacture Bulk Drug).

1.7 Section A5.1 of Appendix 5 is deleted in its entirety and replaced with the new Section A5.1 attached hereto as Exhibit 1. For clarity Section A5.2 of Appendix 5 remains unchanged.: The new Section A5.1 of Appendix 5 sets forth the Base Price as of the Effective Date for specified volumes of Ca Bulk Drug with respect to (i) a production Campaign commenced in calendar year 2015 (Appendix 5.1A); (ii) the Base Price as of the Amendment No. 1 Effective Date for specified volumes of Ca Bulk Drug with respect to a production Campaign commenced during calendar year 2016 (Appendix 5.1B), and (iii) the Base Price as of the Amendment No. 1 Effective Date for specified volumes of Ca Bulk Drug with respect to a production Campaign commenced during a calendar year after 2016 (Appendix 5.1C).

1.8 Section 14.1 of the Agreement is hereby amended by adding the following new language immediately to the end of Section 14.1:

PATHEON has informed RELYPSA that during the 2015 Production Campaign, PATHEON sold [***] to third parties in order to [***] for RELYPSA. Provided that appropriate regulatory approval is obtained and in compliance with any Legal Requirement, starting with the first production Campaign commenced in calendar year 2016, PATHEON may [***] (i.e., [***]) in the Manufacturing process for the production of [***] (i.e., [***]).

The size for the first production Campaign commenced in calendar year 2016 (with a targeted completion date in [***]) is fixed at [***] MT of Bulk Drug following validation of [***] batches in the [***], provided that the [***] described in Appendix 8 (as defined below) will be [***]. This means that the anticipated cycle and batch time for the first production Campaign commenced in calendar year 2016 would be [***] hours for [***] and [***] hours for Bulk Drug (on a [***]). Provided that appropriate regulatory approval is obtained and in compliance with any Legal Requirement, starting with the first production Campaign commenced in calendar year 2016, PATHEON shall [***] described Appendix 8. RELYPSA and PATHEON shall use their best efforts to obtain all required regulatory approvals and to [***] described in Appendix 8 as of the start of the production campaign commenced 2016. In case the [***] despite RELYPSA and PATHEON having used their best efforts to do so, RELYPSA and PATHEON will discuss in good faith a fair and 

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Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

adequate  adaptation of the campaign size and pricing. As consideration for [***] described in Appendix 8 in accordance with this Agreement, RELYPSA will pay PATHEON an aggregate amount of Euro [***] in accord with a first invoice in the amount of Euro [***] to be appropriately issued under this Agreement no earlier than [***], and a second invoice in the amount of Euro [***] to be appropriately issued under this Agreement no earlier than [***]. The Base Price for Ca Bulk Drug and Third Party Intermediate shall be amended for future Campaigns as described in Appendix 5.

1.9 The first sentence of Section 16 of the Agreement is hereby amended and restated in its entirety as follows:

“Subject to the provisions for early termination contained in Section 20, this Agreement shall commence as of the Effective Date and shall continue thereafter until the ninth (9th) anniversary of the Effective Date.”

1.10 Section 20.1(b) of the Agreement is hereby amended and restated in its entirety as follows:

“(b) RELYPSA may terminate this Agreement without cause for any reason at any time after (i) the Manufacture and Release of [***] MT of Bulk Drug by PATHEON hereunder and (ii) the Manufacture and Release of volumes of Bulk Drug by PATHEON in accordance with Section 6.6(b) (provided [***] months advance written notice to PATHEON.”

1.11 The first sentence of Section 20.2 of the Agreement is hereby amended and restated in its entirety as follows:

“PATHEON may terminate this Agreement without cause at any time after the Manufacture and Release of [***] MT of Bulk Drug hereunder and (ii) the Manufacture and Release of volumes of Bulk Drug by PATHEON in accordance with Section 6.6(b) (provided [***] months advance written notice to RELYPSA.”

1.12 New Appendix 8, attached hereto as Exhibit 2, is hereby added to the Agreement.

2.    Miscellaneous

2.1 Full Force and Effect.   This Amendment No. 1 amends the terms of the Agreement and is deemed incorporated into, and governed by all other terms of, the Agreement.  The provisions of the Agreement, as amended by this Amendment No. 1, remain in full force and effect.

2.2 Further Actions.  Each party shall execute, acknowledge and deliver such further instruments, and do all other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Amendment No. 1.

2.3 Counterparts.  This Amendment No. 1 may be signed in counterparts, each and every one of which shall be deemed an original, notwithstanding variations in format or file designation, which may result from the electronic transmission, storage and printing of copies of this Amendment No. 1 from separate computers or printers.  Facsimile signatures shall be treated as original signatures.

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Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

In Witness Whereof, the parties hereto have caused this Amendment No. 1 to be executed by their duly authorized representatives as of the Amendment No. 1 Effective Date.

 

	
Relypsa, Inc. 
	
 
	
DPx Fine Chemicals Austria

GmbH & Co KG 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
Signature: 
	
 
	
/s/ Ronald A. Krasnow for John A. Orwin
	
 
	
Signature:
	
 
	
/s/ Michael Stanek  /s/ Klaus Hilber

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
Print Name:
	
 
	
John A. Orwin
	
 
	
Print Name: 
	
 
	
Michael Stanek  Klaus Hilber

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
Title:
	
 
	
CEO
	
 
	
Title: 
	
 
	
VP, Business Mgmt  General Counsel 

	
 
	
 
	
 
	
 
	
 
	
 
	
Patheon API

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
Date:
	
 
	
06-Mar-2016
	
 
	
Date:
	
 
	
09.March.2016

 

 

 

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Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

Exhibit 1

A5.1A Base Price for production Campaign

commenced in calendar year 2015

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1

	
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Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

A5.1B Base Price for production Campaign

commenced in calendar year 2016

[***]

2

	
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Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

A5.1C Base Price for production Campaign

commenced in calendar year after 2016

[***]

3

	
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Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

Appendix 2

Appendix EIGHT: [***] Program

	
 
	
·
	
[***]

	
 
	
·
	
[***]

	
 
	
·
	
[***]

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Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.memp-ex102_612.htm

Exhibit 10.2

MEMORIAL PRODUCTION PARTNERS GP LLC

CHANGE OF CONTROL AGREEMENT

 

                          [●], 2016

[Name]

[Address]

[City][State][Zip]

 

Dear [●]:

 

Memorial Production Partners GP LLC (the “Company”), the general partner of Memorial Production Partners LP (the “Partnership”), considers it essential to the best interests of the Partnership’s unitholders to attract top executives and to foster the continuous employment of key management personnel. In this regard, the Board of Directors of the Company (the “Board”) recognizes that the possibility of a change of control may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Partnership and its unitholders.

 

The Board has determined that appropriate steps should be taken to ensure the continuity of management and to foster objectivity in the face of uncertainty arising from the possibility of a change of control of the Company, although no such change is now contemplated. In order to induce you to remain in the employ of the Company and in consideration of your continued services to the Company, the Company agrees that effective as of [●], 2016, you shall be eligible to receive the severance benefits from the Company set forth in this letter agreement (“Agreement”) in the event you “Separate from Service” with the Company and all related entities (collectively, the “Company Group”) subsequent to a “Change of Control” of the Company (as such terms are defined in Section 2 hereof) under the circumstances described below. This Agreement supersedes and replaces prior agreements and/or policies related to severance benefits payable to you following a Change of Control of the Company, as specified in Section 10 of this Agreement.

 

1. Term of Agreement. This Agreement shall be effective as of the date hereof and shall continue in effect until the earlier of (i) your Separation from Service other than on account of a Qualifying Termination; (ii) the Company's satisfaction of all of its obligations under this Agreement; or (iii) the execution of a written agreement between the Company and you terminating this Agreement.

2. Definitions. As used in this Agreement:

(a)“Annual Compensation” means the total of:

(i)one year of base salary, at the highest base salary rate that you were paid by the Company in the 12-month period prior to the date of your Separation from Service (the “Look-Back Period”); and

(ii)100% of the greatest target annual bonus target for which you were eligible within the Look-Back Period. 

 

 

(b)“Cause” means (i) your commission of, conviction for, plea of guilty or nolo contendere to a felony or a crime involving moral turpitude; (ii) engaging in conduct that constitutes fraud, gross negligence or willful misconduct that results or would reasonably be expected to result in material harm to the Partnership or its affiliates or their respective businesses or reputations; (iii) breach of any material terms of your employment, including any of the Company’s policies or code of conduct; or (iv) willful and continued failure to substantially perform your duties for the Company which such failure is not remedied within ten business (10) days after written demand by the Board for substantial performance is actually received by you which specifically identifies the nature of such failure. 

(c)“Change of Control” has the meaning ascribed to such term in the Long Term Incentive Plan; provided, that such Change of Control shall be deemed not to have occurred if the Partnership acquires the Company.

(d)“Code” means the Internal Revenue Code of 1986, as amended.

(e)“Company” means Memorial Production Partners GP LLC, and any successor as provided in Section 7 hereof.

(f)“Disability” means that, at the time you Separate from Service, you have been unable to perform the duties of your position for a period of 180 consecutive days as the result of your incapacity due to physical or mental illness.

(g)“Good Reason” means the occurrence of one of the following without your express written consent (i) a material reduction of your duties, position or responsibilities, or your removal from such position and responsibilities, unless you are offered a comparable position (i.e., a position of equal or greater organizational level, duties, authority, compensation, title and status); (ii) a material reduction by the Company of your base compensation (base salary and target bonus) as in effect immediately prior to such reduction; (iii) you are requested to relocate (except for office relocations that would not increase your one way commute by more than 50 miles); or (iv) any other action or inaction that constitutes a material breach by the Company of this Agreement, including, without limitation, the failure of the Company to obtain the assumption of this Agreement pursuant to Section 7; provided, that any such event shall not constitute Good Reason unless and until you shall have provided the Company with written notice thereof no later than thirty (30) days following the initial occurrence of such event and the Company shall have failed to fully remedy such event within thirty (30) days following receipt of such notice.

(h)“Long Term Incentive Plan” means the Memorial Production Partners GP LLC Long-Term Incentive Plan, as amended or amended and restated from time to time.

(i)“Qualifying Termination” means your Separation from Service on account of (i) an involuntary termination by the Company without Cause or (ii) your voluntary resignation for Good Reason, in either case, within six (6) months prior to, or twenty-four (24) months following, a Change of Control.

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(j)“Separation from Service” or “Separates from Service” means a termination of employment with the Company Group that the Company determines is a Separation from Service in accordance with Section 409A of the Code. 

(k)“Severance Payment” means the payment of severance compensation as provided in Section 3(a) of this Agreement.

(l)“Specified Employee” means a “specified employee” within the meaning of that term under Section 409A(a)(2)(B) of the Code and using the identification methodology selected by the Company from time to time in accordance therewith, or if none, the default methodology set forth therein.

3. Compensation Upon a Qualifying Termination. If you Separate from Service on account of a Qualifying Termination, then subject to (x) your signing and not revoking a separation agreement and release of claims in a form reasonably satisfactory to the Company (which separation agreement and release of claims will be provided by the Company to you within five (5) days following such Qualifying Termination and must be executed by you and returned to the Company within fifty (50) days following such Qualifying Termination) and (y) Section 4:

(a)You will be entitled to a Severance Payment in a lump sum amount equal to [one and a half times (1.5x)][two times (2x)][two and a half times (2.5x)] your Annual Compensation, which shall be payable in accordance with subsection (c) below.

(b)The Company agrees that, in addition to the payment provided under Section 3(a):

(i)all outstanding unvested awards previously granted to you under the Long Term Incentive Plan shall immediately be 100% vested upon such Separation from Service; 

(ii)to the extent that you timely elect COBRA continuation coverage under the Company’s group insurance plans, the Company shall reimburse you for the amount of COBRA continuation premiums (less required co-pay) until the earlier of (x) twelve (12) months following your Separation from Service and (y) such time as you are no longer eligible for COBRA continuation coverage;

(iii)the Company will provide you with financial counseling services for twelve (12) months following your Separation from Service, subject to a maximum benefit of $30,000.00; and

(iv)the Company will provide you with outplacement counseling services for twelve (12) months following your Separation from Service, subject to a maximum value of $30,000.00.

(c)Subject to Section 19(b) below, the Severance Payment under subsection (a) shall be made in a lump sum on the sixtieth (60th) calendar day following your Separation from Service, provided that your separation agreement and release of claims referenced above must be effective and not revocable on the date payment is to be made in order to receive payments under subsection (a). 

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(d)Notwithstanding anything contained herein to the contrary, the Company shall have no obligation to make any payment or offer any benefits to you under this Agreement if you Separate from Service other than on account of a Qualifying Termination. 

4. Parachute Payments. If the Board determines, in its sole discretion, that Section 280G of the Code applies to any compensation payable to you, then the provisions of this Section 4 shall apply.  If any payments or benefits to which you are entitled from the Company, any affiliate, any successor to the Company or an affiliate, or any trusts established by any of the foregoing by reason of, or in connection with, any transaction that occurs after the date hereof (collectively, the “Payments,” which shall include, without limitation, the vesting of any equity awards or other non-cash benefit or property) are, alone or in the aggregate, more likely than not, if paid or delivered to you, to be subject to the tax imposed by Section 4999 of the Code or any successor provisions to that section, then the Payments (beginning with any Payment to be paid in cash hereunder), shall be either (a) reduced (but not below zero) so that the present value of such total Payments received by you will be one dollar ($1.00) less than three times your “base amount” (as defined in Section 280G(b)(3) of the Code) and so that no portion of such Payments received by you shall be subject to the excise tax imposed by Section 4999 of the Code, or (b) paid in full, whichever of (a) or (b) produces the better net after tax position to you (taking into account any applicable excise tax under Section 4999 of the Code and any other applicable taxes).  The determination as to whether any Payments are more likely than not to be subject to taxes under Section 4999 of the Code and as to whether reduction or payment in full of the amount of the Payments provided hereunder results in the better net after tax position to you shall be made by the Board and you in good faith.

5. No Mitigation. You shall not be required to mitigate the amount of any payment provided for in Section 3 hereof by seeking other employment or otherwise, nor shall the amount of such payment be reduced by reason of compensation or other income you receive for services rendered after your Separation from Service from the Company.

6. Exclusive Remedy. In the event of your Separation from Service on account of a Qualifying Termination, the provisions of Section 3 are intended to be and are exclusive and in lieu of any other rights or remedies to which you or the Company may otherwise be entitled (including any contrary provisions in any employment agreement you may have with the Company), whether at law, tort or contract, in equity, or under this Agreement.

7. Company’s Successors. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company and/or the Partnership, to expressly assume and agree to perform the obligations under this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. As used in this Section 7, Company includes any successor to its business or assets as aforesaid which executes and delivers this Agreement or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

8. Notice.  Notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or five (5) days after deposit with postal authorities transmitted by United States registered or certified mail, 

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return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first or last page of this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 

9. Amendment or Waiver. No provisions of this Agreement may be amended, modified, waived or discharged unless you and the Company agree to such amendment, modification, waiver or discharge in writing. No amendment, modification, waiver or discharge of this Agreement shall result in the accelerated payment of any Severance Payment provided for in Section 3. No waiver by either party at any time of the breach of, or lack of compliance with, any conditions or provisions of this Agreement shall be deemed a waiver of the provisions or conditions hereof.

10.Sole Agreement. This Agreement represents the entire agreement between you and the Company with respect to the matters set forth herein and supersedes and replaces any prior agreements in their entirety. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter of this Agreement will be made by either party which are not set forth expressly herein. No future agreement between you and the Company may supersede this Agreement, unless it is in writing and specifically makes reference to this Section 10.

11.Employee’s Successors. This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amounts are still payable to you hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee, or other designee or, if there be no such designees, to your estate.

12.Funding. This Agreement shall be unfunded. Any payment made under the Agreement shall be made from the Company’s general assets.

13.Waiver. No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

14.Headings. All captions and section headings used in this Agreement are for convenience purposes only and do not form a part of this Agreement.

15.Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which shall remain in full force and effect.

16. Withholding. All payments made pursuant to this Agreement will be subject to withholding of applicable income and employment taxes.

17.Applicable Law. This Agreement shall be interpreted and enforced in accordance with the laws of the State of Delaware (with the exception of its conflict of laws provisions). 

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18.Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument. 

19.Code Section 409A. 

(a) General. The Agreement is intended to either comply with, or be exempt from, the requirements of Code Section 409A.  To the extent that this Agreement is not exempt from the requirements of Code Section 409A, this Agreement is intended to comply with the requirements of Code Section 409A and shall be limited, construed and interpreted in accordance with such intent.  

(b)Separation from Service; Specified Employees; Separate Payments. A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a Separation from Service.  If you are deemed on the date of termination to be a Specified Employee, then to the extent any payment or benefit hereunder (after taking into account all exclusions applicable thereto under Code Section 409A) is “nonqualified deferred compensation” subject to Section 409A, then such payment shall be delayed and not be made prior to the earlier of (A) the six (6)-month anniversary of the date of such Separation from Service and (B) the date of your death (the “Delay Period”).  All payments delayed pursuant to this Section 19(b) (whether they would have otherwise been payable in a single lump sum or in installments in the absence of such delay) shall be paid to you in a single lump sum on the first payroll date on or following the first day following the expiration of the Delay Period, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.  Each payment made under this Agreement will be treated as a separate payment for purposes of Code Section 409A and the right to a series of installment payments under this Agreement is to be treated as a right to a series of separate payments.

 

If the foregoing conforms to your understanding, please indicate your agreement to the terms hereof by signing where indicated below and returning one copy of this Agreement to the undersigned.

 

 

[signature page follows]

6

 

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

 

 

 

MEMORIAL PRODUCTION PARTNERS GP LLC

 

 

 

By:______________________________________

Name: 

Title:   

 

 

 

 

ACCEPTED AND AGREED TO AS OF THE DATE FIRST SET FORTH ABOVE:

 

 

 

____________________________

Name: 

 

Signature Page to Change of Control Agreement

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