Document:

EX-10.1

Exhibit 10.1

*** INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED.
ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

SECOND AMENDMENT TO THE COLLABORATION AGREEMENT

     This Second Amendment (“Second Amendment”) to the Collaboration Agreement is effective as of
the Second Amendment Effective Date (as set forth in Section 4 of this Second Amendment), by and
between UCYCLYD PHARMA, INC., a Maryland corporation, with its principal place of business at 7720
North Dobson Road, Scottsdale, AZ 85256 (“Ucyclyd”) and HYPERION THERAPEUTICS, INC., a Delaware
corporation, with its principal place of business at 601 Gateway Blvd., Suite 200, South San
Francisco, CA 94080 (hereunder referred to as “Hyperion”). Ucyclyd and Hyperion are sometimes
referred to herein individually as a “Party” and collectively as the “Parties.”

RECITALS

     WHEREAS, Ucyclyd and Hyperion entered into that certain Collaboration Agreement dated August
23, 2007 (the “Collaboration Agreement”), as amended by the First Amendment on November 24, 2008;

     WHEREAS, Ucyclyd and Hyperion desire to amend the Collaboration Agreement as more fully set
forth in this Second Amendment; and

     WHEREAS, in partial consideration of Ucyclyd agreeing to the modifications set forth in this
Second Amendment, Hyperion has agreed to sell five percent (5%) of its common stock to Ucyclyd and
concurrent with the signing of this Second Amendment, the Parties have entered into a Common Stock
Purchase Agreement (the “Transaction Document”).

     NOW, THEREFORE, in consideration of the foregoing recitals (which are incorporated by
reference into this Second Amendment), and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:

1. Capitalized Terms. All capitalized terms not otherwise defined in this Second Amendment shall
have the meanings ascribed to them as set forth in the Collaboration Agreement.

2. Amendments.

	 	a)	 	Article 1 is hereby amended to include the following defined terms:
	 
	 	 	 	“Note” means that certain Note to be issued by Hyperion in favor of Ucyclyd
in accordance with Section 3.3, the form of which is attached hereto as
Exhibit 9 (Note).
	 
	 	 	 	“Security Agreement” means that certain Security Agreement to be entered
into between Hyperion and Ucyclyd in accordance with Section 3.3, the form
of which is attached hereto as Exhibit 10 (Security Agreement).
	 
	 	b)	 	Section 1.15 is hereby amended and restated in its entirety as follows:
	 
	 	 	 	“Change in Control” means the consummation of: (a) any merger,
consolidation, business combination or sale of shares of stock other than in
a direct issuance of shares of stock by a Party for fair value, that, if
completed, will result in the stockholders of such Party prior to such
transaction not having voting control of the surviving entity immediately
after the transaction such that they, acting in concert with one another,
could not elect a majority of the board of directors of the surviving
entity; or (b) the sale,
transfer, exchange or other disposition of all or substantially all of a
Party’s assets or business relating to this Agreement (whether alone or in
connection with a sale, transfer, exchange or other disposition of other
assets or businesses of such Party). Notwithstanding the foregoing, Change
in Control shall not include a financing transaction, either in the form of
a private equity financing or public offering.

 

 

	 	c)	 	Section 1.24 is hereby amended and restated in its entirety as follows:

“Development Field” means the treatment of any human disease, disorder or
condition, including but not limited to UCD, HE or Hyperammonemia.

Notwithstanding the amendment set forth above, Hyperion acknowledges and affirms: (i) its
obligations under Section 2.2 of the Agreement including Hyperion’s agreement that the
primary focus of its efforts under the Development and Regulatory Program is to obtain
Regulatory Approval first in the United States for GT4P in UCD and HE; and (ii)
Hyperion does not have any rights to further develop Ammonul HE during the Development
Term.

	 	d)	 	Section 2.2.2 is hereby amended and restated in its entirety as follows:

“2.2.2 R&D Rights of Third Parties.

     (a) Hyperion acknowledges that, prior to the Second Amendment Effective
Date, Ucyclyd has granted Third Parties certain rights under the
Distribution Agreements (as such term has been amended based on changes to
Schedule 1.30 pursuant to this Second Amendment) with respect to research
and development of the Products for uses within the Development Field (the
“Pre-existing Rights”) and that Hyperion’s exclusive license in Section 8.2
is subject to such Pre-existing Rights.

     (b) From the Second Amendment Effective Date until the termination or
expiration of the Development Term, Ucyclyd agrees not to grant (i) such
Third Parties or any new Third Parties any further rights with respect to
GT4P for uses within the Development Field; and (ii) distribution rights to
the Marketed Products in the United States to a Third Party which will
extend past the Closing Date. The Parties acknowledge and agree that
because the Closing Date is based on the occurrence of certain events
described in Section 3.1 (Purchase Rights), the exact date cannot be
determined accurately and the Parties can rely only upon the dates on which
the Closing is anticipated to occur based on the Development Plan in effect
as of the Second Amendment Effective Date. Based on such Development Plan,
the Closing Date is anticipated to be ***, which shall be the date relied
upon with respect to the foregoing limitation; provided, however, that the
date will be adjusted automatically if the events on which it is based
change in the Development Plan or the events have not occurred by such date
(as may be adjusted based on the foregoing) and the Parties agree to extend
the date for a Closing under the Agreement.

     (c) During the Development Term, Ucyclyd reserves the right to grant
Third Parties that currently or in the future distribute the Marketed
Products the right to conduct research and development with respect to the
Marketed Products for purposes of (i) obtaining Regulatory Approval for the
Marketed Products in the applicable country or region, (ii) conducting
post-marketing approval studies, and (iii) conducting any other studies or
activities required by the applicable Regulatory Agency.

     (d) During the Development Term, Ucyclyd shall have the right to
support investigator-sponsored activities or investigator-sponsored use of
the Marketed Products for uses within the Development Field and will keep
Hyperion apprised of such activities through the JSC meetings.

     (e) During the Development Term, Ucyclyd may support
investigator-sponsored activities or investigator-sponsored use of GT4P only
after allowing Hyperion to review such activities in advance and obtaining
Hyperion’s approval of such activities.”

Second Amendment to Collaboration Agreement

2

 

	 	e)	 	Section 2.2.3 is hereby amended and restated in its entirety as follows:

“R&D Rights Outside of the United States.

     (a) During the Development Term, Hyperion shall have the right to
conduct research and development activities outside of the United States in
support of Hyperion’s efforts to obtain Regulatory Approval in the United
States, except in those jurisdictions where such research and development
efforts would conflict with the rights granted to Third Parties pursuant to
the Pre-existing Rights.

     (b) Subject to any Pre-existing Rights, during the Development Term,
Hyperion shall have the right to propose to the JSC research and development
activities outside of the United States in connection with obtaining
Regulatory Approval for the Development Products outside of the United
States. Ucyclyd shall advise Hyperion whether the conduct of any such
activities would conflict with any rights granted to Third Parties that are
in addition to the Pre-existing Rights. To the extent such proposed
activities do not conflict with any Third Party rights, Hyperion shall have
the right to perform such proposed activities. In the event that Hyperion
conducts any research and development activities outside of the United
States as permitted in this Section, Hyperion shall coordinate all such
activities with Ucyclyd through the JSC during the Development Term.”

	 	f)	 	Schedule 1.30 (Distribution Agreements) is hereby amended and restated in its
entirety in the new Schedule 1.30 attached to this Second Amendment.
	 
	 	g)	 	Section 3.3.2 is hereby amended and restated in its entirety as follows:

“Closing. The Parties will mutually agree upon a closing date (the “Closing
Date”), which shall occur not later than *** following, as applicable: (a)
the GT4P Approval Date, (b) Hyperion’s exercise of the Purchase Option #1 or
(c) the Purchase Option #2 End Date.

(a) On the Closing Date, Hyperion shall become obligated to pay Ucyclyd the
Purchase Price, Purchase Option Price #1 or Purchase Option Price #2, as
applicable (the “Purchase Price Amount”) in accordance with Section 3.3.3.

(b) On the Closing Date the Parties shall execute and deliver all documents
set forth below (the “Purchase Transaction Documents”), under which Ucyclyd
shall sell, transfer, assign and convey all Assets to Hyperion:

     (i) a Bill of Sale in the form attached to the Agreement as Exhibit 4
(Bill of Sale), under which Ucyclyd transfers the ownership of certain
Assets (including all Inventories) to Hyperion, which shall be signed by
both Ucyclyd and Hyperion;

     (ii) a Technology Assignment Agreement in the form attached to the
Agreement as Exhibit 5 (Technology Assignment Agreement), under which
Ucyclyd shall assign all Product Technology and Developed Technology, which
shall be signed by Ucyclyd;

     (iii) an Assignment and Assumption Agreement of all Assigned Agreements
in the form attached to the Agreement as Exhibit 6 (Assignment and
Assumption Agreement), which shall be countersigned by Ucyclyd and
accompanied by all consents required from the applicable Third Parties to
such Assigned Agreements to Hyperion as attachments to such Assignment and
Assumption Agreement;

Second Amendment to Collaboration Agreement

3

 

     (iv) a Note in the form attached to the Agreement as Exhibit 9 (Note);
and

     (v) a Security Agreement in the form attached to the Agreement as
Exhibit 10 (Security Agreement).”

	 	h)	 	Section 3.3.3 is hereby amended and restated in its entirety as follows:

“Payment of Purchase Price Amount.

     (a) The Purchase Price Amount shall be due and payable *** commencing
on the first Business Day of the *** following the Closing Date and
continuing on the first Business Day of *** thereafter in accordance with
the terms and conditions of the Note. Hyperion’s obligations under the Note
shall be secured by a first priority lien in and to the Collateral (as
defined in the Security Agreement) in accordance with the terms and
conditions of the Security Agreement.

     (b) From and after the Closing Date, Hyperion shall keep the Collateral
in good order, and shall have sole responsibility for taking such steps as
may be necessary, from time to time, to preserve all rights of Hyperion and
Ucyclyd in the Collateral against Third Parties. Hyperion, at its place of
business, shall keep accurate and complete books and records related to the
Collateral in accordance with sound and generally accepted accounting
principles applied on a basis consistent with prior years. Ucyclyd shall
have the right at all times during business hours to inspect said books and
records and make extracts therefrom.

     (c) Effective as of and after the Closing, Hyperion hereby covenants
with and warrants to Ucyclyd that: (i) Hyperion is the sole owner of the
Collateral free from any lien, security interest or encumbrance of any kind;
(ii) Hyperion will not sell, lease or grant any further security interest in
the Collateral or any part thereof, and will not part with possession of the
same, except in the usual and ordinary course of Hyperion ‘s business; and
(iii ) Hyperion will not use or permit the Collateral to be used in
violation of any law or ordinance. Hyperion covenants, warrants and
represents to Ucyclyd that all representations and warranties of Hyperion
contained in this Section 3.3 shall be true at the time of the Closing Date
and shall survive the execution, delivery and acceptance thereof by the
Parties hereto and the closing of the transactions described herein or
related hereto.”

	 	i)	 	Section 4.1.1 is hereby amended and restated in its entirety as follows:

“Exclusive Commercialization Rights. Subject to the terms and conditions of
this Agreement (including rights of Third Parties under the Distribution
Agreements), on and following Closing, Hyperion shall have the sole and
exclusive worldwide rights (even as to Ucyclyd) to Commercialize all
Products for any and all indications (including any and all indications in
the field of Hyperammonemia) which rights shall include the worldwide
manufacture and supply of Products for use in all such Commercialization
activities, provided that Hyperion complies with the terms and conditions
set forth in Section 8.2.2 (Manufacturing Technology; Drug Master Files)
regarding the manufacture and supply of Products. Hyperion shall be solely
responsible for all costs and expenses in the Commercialization of Products
including the supply and manufacture thereof.”

	 	j)	 	Section 8.2.1 is hereby amended and restated in its entirety as follows:

“Product Technology and Developed Technology. Subject to the terms and
conditions of the Agreement, Ucyclyd hereby grants to Hyperion an exclusive
(except as to Ucyclyd

Second Amendment to Collaboration Agreement

4

 

as set forth in Section 2.2.6(a) (Transition of
Development and Regulatory Program to Hyperion)), non-transferable (except
as permitted by Section 16.14 (Assignment)),
non-sublicenseable (except as necessary to conduct research and development
activities outside of the United States in accordance with in Section 2.2.3
(R&D Rights Outside of the United States)), license under the Product
Technology and the Developed Technology to research, develop, make, have
made, import and use the Development Products to: (a) perform the
activities under the Development and Regulatory Program in the Development
Field in the Development Territory; and (b) perform research and development
activities of such Development Products outside the Development Territory
only pursuant to Section 2.2.3 (R&D Rights Outside of the United States), in
each case for the duration of the Development Term. For clarity, the
license granted under this Section 8.2.1 (Product Technology and Developed
Technology) does not grant Hyperion the right to Commercialize, promote,
market or sell the Development Products, and any rights to Commercialize,
promote market or sell the Development Products in the Development Field
arise only on and following Closing.”

For clarity, references to Ammonul HE have been removed since Hyperion no longer has rights
to Ammonul HE prior to the Closing and any references to Development Products only refer to
GT4P.

	 	k)	 	Section 10.3(b)(i) is hereby amended and restated in its entirety as follows:

“(b) the Developed Technology developed, conceived, reduced to practice,
originated, prepared, learned, generated, obtained or made by or on behalf
of Hyperion, its Affiliates or their respective subcontractors in connection
with the Agreement: (i) shall be performed, developed or manufactured in
conformity with the Development Plan and all Legal Requirements, including
current Good Laboratory Practices, Good Manufacturing Practices, and Good
Clinical Practices, and all applicable FDA regulations, (ii) does not, to
Hyperion’s actual knowledge as of the Second Amendment Effective Date,
infringe upon the patents of a Third Party actually known to Hyperion; and
(iii) does not, to Hyperion’s actual knowledge as of the Second Amendment
Effective Date, infringe upon, or result from the misappropriation of, any
other intellectual property rights of a Third Party.”

	 	l)	 	Section 12.2(f) is hereby amended and restated in its entirety as follows:

“(f) Ucyclyd shall have the right to terminate the Term of this Agreement
immediately upon prior written notice to Hyperion, as a result of one or
more of the following violations, if Hyperion fails to remedy such violation
within thirty (30) days following receipt of written notice of such
violation from Ucyclyd, or if Hyperion is unable to cure such violation
using reasonably diligence efforts within such thirty day period, such
additional time as is reasonably necessary to cure such violation, but in
any event not to exceed ninety (90) days following receipt of written notice
from Ucyclyd:

     (i) *** violation of any of the Compliance Requirements by Hyperion or
any of its officers, directors or employees including a violation
manifesting a wanton and reckless disregard for compliance;

     (ii) *** violation of any of the Compliance Requirements by a
subcontractor of Hyperion that manifests a wanton and reckless disregard by
Hyperion to require compliance by its subcontractors;

     (iii) *** violations of any particular obligation under the Compliance
Requirements by Hyperion or any Hyperion Personnel that in the aggregate
manifest a wanton and reckless disregard by Hyperion for compliance; or

Second Amendment to Collaboration Agreement

5

 

     (iv) *** violation of any of the Compliance Requirements by Hyperion or
any Hyperion Personnel that results in an enforcement action or proceeding,
whether, criminal, civil or administrative, by a Governmental Authority or
Regulatory Agency
(including the OIG) against any of Hyperion, Ucyclyd, Medicis or their
respective Affiliates. For avoidance of doubt, the initial receipt of a
Form 483, and efforts undertaken in good faith to respond thereto, by and of
itself shall not constitute a violation for the purpose of this section.”

	 	m)	 	Section 14.2.2 is hereby amended and restated starting with subsection (o) as follows:

“(o) the negligence, recklessness, or willful misconduct of a Hyperion
Indemnitee with respect to the promotion, marketing, sale, manufacture,
distribution, import or use of Product, including (i) unfair competition
claims, (ii) product liability claims and (iii) any other claims arising out
of failure to comply with Legal Requirements or Section 5.1(c) (General
Compliance) by any Hyperion Indemnitee or any Third Party on behalf of a
Hyperion Indemnitee; or

(p) any claim that the Developed Technology developed, conceived, reduced to
practice, originated, prepared, first learned, generated, obtained or made
by or on behalf of Hyperion, its Affiliates or their respective
subcontractors in connection with the Agreement (i) infringes upon the
patents of a Third Party actually known to Hyperion at the time of such
Developed Technology is developed, conceived, reduced to practice,
originated, prepared, first learned, generated, obtained or made; or (ii)
infringes upon, or results from the misappropriation of, any other
intellectual property rights of a Third Party;

provided, however, that Hyperion shall not be required to indemnify any of
the Ucyclyd Indemnitees to the extent that any Losses arise out of or result
from: (x) the negligence, recklessness or willful misconduct of any Ucyclyd
Indemnitee including failure by a Ucyclyd Indemnitee to comply with Legal
Requirements; (y) any failure of a Ucyclyd Indemnitee to comply with the
Agreement; or (z) any act or omission for which Ucyclyd is required to
indemnify a Hyperion Indemnitee under Section 14.2.1 (Indemnification by
Ucyclyd).”

	 	n)	 	Section 16.14 is hereby amended and restated in its entirety as follows:

“(a) Hyperion acknowledges that Ucyclyd is entering into this Agreement
based, in part, on the intangible benefits of partnering with Hyperion,
including the experience, understanding and unique capabilities of Hyperion
and its officers.

(b) Neither Party may assign its rights or obligations under this Agreement
except as otherwise expressly provided in this Section 16.14 (Assignment).

(c) Prior to the Closing, Hyperion may only assign or transfer the Agreement
(i) to an Affiliate or (ii) otherwise pursuant to (and only pursuant to) a
Change in Control, in each case with the prior written consent of Ucyclyd,
which consent shall not be unreasonably withheld, conditioned or delayed.
Both Parties agree that it shall be reasonable for Ucyclyd to withhold its
consent to any Change in Control only if the Person that would become the
successor to Hyperion’s interests under this Agreement pursuant to such
Change in Control, at the time of the closing of the transaction resulting
in the Change in Control:

(i) has a substantial business in the development and/or
commercialization of products that compete with the products of
Ucyclyd or Medicis Pharmaceutical Corporation or its other
Affiliates;

Second Amendment to Collaboration Agreement

6

 

(ii) does not have the financial wherewithal to satisfy the
obligations of Hyperion under the Agreement;

(iii) does not have demonstrated expertise and experience in
developing and obtaining regulatory approval for pharmaceutical
products; or

(iv) is the subject of a corporate integrity or other agreement,
investigation, proceeding, judgment, finding or violation that, in
each case (or in the aggregate), would increase the compliance
obligations of Ucyclyd or its Affiliates or increase the compliance
risk to Ucyclyd or its Affiliates.

(d) On or after the Closing, Hyperion may assign or transfer the Agreement
(i) to an Affiliate or (ii) otherwise pursuant to (and only pursuant to) a
Change in Control, in each case without the prior written consent of
Ucyclyd.

(e) If Hyperion assigns or transfers the Agreement in accordance with
Section 16.14(d) upon or after the Closing, then within *** after
consummation of the transaction giving rise to such Change in Control,
Hyperion shall pay Ucyclyd an amount equal to *** less any previously paid
portion of the Purchase Price plus any accrued but unpaid interest.

(f) Ucyclyd shall have the right to assign the Agreement, or any right to
receive payments hereunder, to an Affiliate or to a Third Party pursuant to
a Change of Control at any time upon written notice to Hyperion but without
the consent of Hyperion.

(g) Any rights granted to a Party under the Agreement shall inure to the
benefit of any acquirer of, or successor in interest to, such Party.

(h) A Party making a permitted assignment hereunder shall promptly notify
the other Party of such assignment. Any purported assignment in
contravention of this Section 16.14 (Assignment) shall be null and void and
of no effect. No assignment shall release either Party from responsibility
for the performance of any accrued obligation of such Party hereunder. This
Agreement shall be binding upon and enforceable against the permitted
successors, transferees or assignees of either of the Parties.”

	 	o)	 	Schedule 7 (Payment Obligations) (including Attachments 1 and 2 thereto) to the
Agreement is hereby amended and restated in its entirety, as set forth in Schedule 7 to
this Second Amendment (including Attachment 1 thereto).

3. Extension Payments to the Brusilows. Hyperion affirms its obligation to pay its portion of the
Extension Payments due to the Brusilow Licensors under Section 4 (Assumed Payments) of the amended
Schedule 7 within the time frames set forth therein.

4. Schedule 10.2. Ucyclyd hereby affirms that the disclosures made in Schedule 10.2 to the
Collaboration Agreement with respect to Section 10.2(c) of the Collaboration Agreement are true and
correct as of the Second Amendment Effective Date and to Ucyclyd’s Actual Knowledge there are no
additional issued and unexpired patents and pending patent applications with respect to the
manufacture, sale or use of Products and which are owned or licensed by Ucyclyd or its Affiliates
other than those that have been filed by Hyperion.

5. Effectiveness of Modifications. The modifications set forth in this Second Amendment shall be
effective on and after the date when all of the following conditions have been satisfied (the
“Second Amendment Effective Date”):

Second Amendment to Collaboration Agreement

7

 

	 	a)	 	This Second Amendment has been signed by authorized representatives of Ucyclyd
and Hyperion and delivered to Ucyclyd; and

	 	b)	 	The Transaction Document has been signed by authorized representatives of
Ucyclyd and Hyperion and delivered to Ucyclyd.

This Second Amendment, together with the Transaction Document, sets forth the entire agreement
between the Parties, and there are no representations, agreements, arrangements or understandings,
oral or written, between the Parties relating to the subject matter of this Second Amendment, which
are not fully expressed herein. This Second Amendment may not be changed or terminated orally or
in any manner other than a written agreement executed by both Parties. Except as modified in the
First Amendment and this Second Amendment, the Collaboration Agreement remains unchanged.

6. Authority. Each Party represents and warrants to the other Party that this Second Amendment is
being executed by the authorized representatives of each respective Party and each Party has the
authority to enter into this Second Amendment.

7. Counterparts. This Second Amendment may be executed in one or more counterparts, each of which
shall be deemed an original and all of which together shall be deemed one and the same instrument.

[Signature Page Follows]

Second Amendment to Collaboration Agreement

8

 

     IN WITNESS WHEREOF, the Parties hereto have caused this Second Amendment to be executed by
their duly authorized representatives as of the Second Amendment Effective Date.

	 	 	 	 	 	 	 
	UCYCLYD PHARMA, INC.	 	HYPERION THERAPEUTICS, INC.
	 
	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 
	 

	 	Richard D. Peterson
	 	 	 	Donald J. Santel
	 

	 	Vice President, Treasurer
	 	 	 	Chief Executive Officer

Second Amendment to Collaboration Agreement

9

 

SCHEDULE 7

PAYMENT OBLIGATIONS

1. Definitions. Capitalized terms used in this Schedule 7 (Payment Obligations) shall have
the meanings ascribed to them below or if not defined below, then as set forth in Article 1
(Definitions) of the Agreement.

1.1 “Annual Period” means each calendar year.

1.2 “Bundled Product” means when a Product is sold or otherwise transferred or delivered with
one or more other products or services in circumstances where the price of the Product is either
not shown separately on the invoice or is shown as nil (free of charge).

1.3 “Bundled Product Adjustment” means the following:

	 	(a)	 	In the event of a Bundled Product, then Net Sales for such Bundled Product
shall be calculated, on a country-by-country basis, by multiplying ***.
	 
	 	(b)	 	If, on a country-by-country basis, the Products are sold separately in finished
form in such country but the other products or services in the Bundled Product are not
sold separately in finished form in such country, Net Sales shall be calculated by
multiplying ***.
	 
	 	(c)	 	If, on a country-by-country basis, the other products or services in the
Bundled Product are sold separately in finished form in such country but the Products
are not sold separately in finished form in such country, Net Sales shall be calculated
by multiplying ***.
	 
	 	(d)	 	If, on a country-by-country basis, neither the Products nor the other products
or services of the Bundled Product are sold separately in finished form in such
country, Net Sales of the Bundled Product shall be determined by the Parties in good
faith based on ***.

1.4 “First Commercial Sale” of any applicable Product means, following Regulatory Approval for each
such Product in the applicable country, the first sale to a Third Party for use or consumption by
patients of such Product but excluding distribution to a Third Party of Products for research,
manufacturing or quality testing, clinical trials, compassionate or humanitarian purposes including
expanded access programs (which provide access to therapies for no monetary consideration) or
charitable donations.

1.5 “Major Non-U.S. Territory” means any of the following: (a) ***; (b) ***. Major Non-U.S.
Territory does not include the United States of America or its territories and possessions.

1.6 “Net Sales” means, with respect to Products and subject to any Bundled Product Adjustment, the
***. For the avoidance of doubt, the transfer of any Product by Hyperion or one of its Affiliates
to another Affiliate of Hyperion shall not be considered a sale; in such cases, Net Sales shall be
determined based on ***. Net Sales shall not include distribution to a Third Party of Products for
research, manufacturing or quality testing, clinical trials, compassionate or humanitarian purposes
including expanded access programs (which provide access to therapies for no monetary
consideration) or charitable donations. Net Sales includes amounts recovered in certain actions as
set forth in Section 9.2.3 (Settlements) and Section 9.4(b) (Enforcement of Licensed Marks).

1.7 “Net Sales Adjustments” means the following items as applicable to each such Product to the
extent such items are customary under industry practices:

	 	(a)	 	***;
	 
	 	(b)	 	***;
	 
	 	(c)	 	***;

Schedule 7 to Second Amendment to Collaboration Agreement

 

 

	 	(d)	 	***;
	 
	 	(e)	 	***; and
	 
	 	(f)	 	***.

1.8 “Other Indication(s)” means: (a) with respect to GT4P, an indication for which labeling is
approved by the FDA other than HE or UCD; and (b) with respect to Ammonul, an indication for which
labeling is approved by the FDA other than UCD or HE.

1.9 “Reporting Period” means the applicable period for which payment is due by one Party to the
other Party under this Schedule 7 (Payment Obligations).

1.10 “Valid Claim” means: (a) an unexpired claim of an issued patent that has not been expressly
abandoned, cancelled, disclaimed, or revoked by written or public announcement of the applicable
patent assignee, or held to be invalid or unenforceable by a court or other authority of competent
jurisdiction, from which decision no appeal can be further taken; and (b) a claim of a pending
patent application that has not been pending for longer than ***.

2. Milestone Payments by Hyperion. As further consideration for the rights and licenses
granted to Hyperion under the Agreement, Hyperion shall make the following non-refundable payments
to Ucyclyd. All such payments due pursuant to Section 2.1 shall be paid within *** following the
achievement of the applicable milestone by or on behalf of Hyperion corresponding to the payment
amount set forth below. All such payments due pursuant to Section 2.2 shall be paid within ***
following the achievement of the applicable milestone by or on behalf of Hyperion corresponding to
the payment amount set forth below. Hyperion shall notify Ucyclyd in writing within *** following
the achievement of any such milestone.

2.1 Regulatory Milestones. The payment obligations under this Section shall continue until
there are no further payments due under this Section.

	 	 	 	 	 
	REGULATORY MILESTONES	 	PAYMENT
	GT4P in UCD
	 	 	 	 
	***
	 	$	*	**
	***
	 	$	*	**
	***
	 	$	*	**
	GT4P in HE
	 	 	 	 
	***
	 	$	*	**
	***
	 	$	*	**
	***
	 	$	*	**
	***
	 	$	*	**
	Ammonul HE in HE
	 	 	 	 
	***
	 	$	*	**

Schedule 7 to Second Amendment to Collaboration Agreement

 

 

	 	 	 	 	 
	REGULATORY MILESTONES	 	PAYMENT
	***
	 	$	*	**
	***
	 	$	*	**
	***
	 	$	*	**
	GT4P in Other Indications
	 	 	 	 
	***
	 	$	*	**
	***
	 	$	*	**
	***
	 	$	*	**
	***
	 	$	*	**
	Ammonul in Other Indications
	 	 	 	 
	***
	 	$	*	**
	***
	 	$	*	**
	***
	 	$	*	**
	***
	 	$	*	**

In the event that a regulatory milestone for GT4P in *** is achieved prior to achieving the
corresponding milestone for GT4P in HE, then the payment that would have been due for achieving the
GT4P in *** milestone shall be due and paid to Ucyclyd; provided, however, in the event the same
milestone is achieved later with respect to GT4P in ***, then Hyperion shall pay the amount
corresponding to such milestone for GT4P in ***. For clarity, in no event shall Hyperion be
required to pay more than once any milestone set forth above for GT4P for the *** indication.

Example:

June 1, 2010: *** — Hyperion pays $***

August 1, 2010: *** — Hyperion pays $***

June 1, 2011: *** — Hyperion pays $***

August 1, 2011: *** — Hyperion pays $***

2.2 Net Sales Milestones. The payment obligations under this Section shall continue until
there are no further payments due under this Section, provided that each milestone payment shall be
due only once and Hyperion’s total payment obligation under this Section 2.2 (Net Sales Milestones)
shall not exceed $***.

	 	 	 	 	 
	NET SALES MILESTONES	 	PAYMENT
	GT4P and Ammonul in all indications
	 	 	 	 
	***
	 	$	*	**
	***
	 	$	*	**

Schedule 7 to Second Amendment to Collaboration Agreement

 

 

	 	 	 	 	 
	NET SALES MILESTONES	 	PAYMENT
	GT4P and Ammonul in all indications
	 	 	 	 
	***
	 	$	*	**
	***
	 	$	*	**
	***
	 	$	*	**
	***
	 	$	*	**

3. Other Ongoing Payment Obligations of Hyperion.

3.1 General. As further consideration for the rights and licenses granted to Hyperion
under the Agreement, Hyperion shall make the following payments to Ucyclyd based on total annual
global Net Sales for each applicable Product identified below during the applicable Annual Period
during the Term:

	 	 	 	 	 
	 	 	% OF NET
	ANNUAL NET SALES	 	SALES
	Ammonul in all indications
	 	 	 	 
	***
	 	 	*	**%
	***
	 	 	*	**%
	GT4P in all indications
	 	 	 	 
	***
	 	 	*	**%
	***
	 	 	*	**%

3.2 Payment Terms. Hyperion shall pay the ongoing payments due to Ucyclyd within ***.

3.3 Duration of Ongoing Payment Obligations.

	 	(a)	 	The payment obligations under Section 3.1 (General) with respect to Ammonul for
use in any indication shall become effective upon the First Commercial Sale of Ammonul
anywhere in the world by Hyperion, its Affiliates or their respective sublicensees for
use in any indication other than UCD and shall remain in effect until ***.
	 
	 	(b)	 	(i) The payment obligations under Section 3.1 (General) with respect to GT4P
for use in any indication (including UCD and HE) shall become effective upon the First
Commercial Sale of GT4P

Schedule 7 to Second Amendment to Collaboration Agreement

 

 

	 	 	 	anywhere in the world by Hyperion, its Affiliates or their
respective sublicensees for use in any indication and shall remain in effect until ***.

	 		 	(ii)  If GT4P is approved by the FDA for an Other Indication following expiration of
the GT4P Payment Period, then no payments under Section 3.1 (General) shall be due to
Ucyclyd with respect to GT4P for use in such Other Indication.

3.4 Minimum Payments.

	 	(a)	 	No later than *** prior to commercial launch of a Product for which Hyperion is
obligated to make payments under Section 3.1 (General) and, thereafter, no later than
*** prior to expiration of each Annual Period, Hyperion shall submit to Ucyclyd an
annual sales forecast for the subsequent Annual Period for each product for which
Hyperion is obligated to make payments under Section 3.1 (General) (“Minimum Sales
Forecast”). If Ucyclyd disputes the Minimum Sales Forecast, Ucyclyd will notify
Hyperion in writing within *** after receiving such Minimum Sales Forecast from
Hyperion, and the Executive Sponsors shall meet and attempt to resolve such dispute
promptly after Hyperion receives such written notification of dispute from Ucyclyd. If
the Executive Sponsors cannot resolve such dispute within *** following Hyperion’s
receipt of Ucyclyd’s written notification of such dispute, then such dispute shall be
resolved as set forth in Article 15 (Dispute Resolution). The Parties acknowledge that
factors outside Hyperion’s reasonable control (such as market conditions, competitive
products or regulatory actions) may have an effect on the actual volume of sales in an
Annual Period, and Hyperion shall have the right to amend the Minimum Sales Forecast
for any Annual Period during which any such factors occur by providing Ucyclyd with
written notice of such amendment. If Ucyclyd disputes such amendment, Ucyclyd shall
notify Hyperion in writing and the Executive Sponsors shall meet and attempt to resolve
such dispute. If the Executive Sponsors cannot resolve such dispute within ***
following Ucyclyd’s notification of the dispute, then such dispute shall be resolved as
set forth in Article 15 (Dispute Resolution).
	 
	 	(b)	 	Hyperion agrees that, during each Annual Period during the Term, with respect
to each product for which Hyperion is obligated to make payments under Section 3.1
(General), Ucyclyd will receive minimum payments under Section 3.1 (General) equal to
*** percent (***%) of the Minimum Sales Forecast, as amended pursuant to subsection (a)
above if applicable (“Minimum Payments”). If the amounts paid to Ucyclyd under Section
3.1 (General) during an Annual Period with respect to each applicable product are less
than the Minimum Payment for such Annual Period with respect to each applicable
product, Hyperion shall pay Ucyclyd the difference between the Minimum Payments and the
amounts paid within *** following the end of the applicable Annual Period. Any
payments under Section 3.1 (General) that are in excess of any Minimum Payments due in
an Annual Period shall not be applied against any future Minimum Payments that are or
become due. The obligation to pay Minimum Payments shall continue with respect to each
applicable product until such time as no payments remain under Section 3.3 (Duration of
Ongoing Payment Obligations) with respect to each such Development Product.

4. Assumed Payments. Hyperion acknowledges and agrees that all of the payments due to
Ucyclyd under the Agreement including Schedule 7 (Payment Obligations) are in addition to the
following payments, all for which Hyperion agrees to be responsible and for which Hyperion assumes
as follows:

	 	(a)	 	Hyperion shall be responsible for, and hereby assumes, all payments due after
the Effective Date to the Brusilow Licensors in accordance with the terms and
conditions of the Brusilow License Agreement; provided, however

	 	(i)	 	with respect to the Extension Payments due to the Brusilow
Licensors under Section 9.3 of the Brusilow Original Agreement and Section 3 of
the Brusilow Amendment, Hyperion and Ucyclyd shall be responsible as follows:

Schedule 7 to Second Amendment to Collaboration Agreement

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Total Payment	 	 	 	 
	Extension	 	Due Brusilow	 	Hyperion	 	 
	Payment Year	 	Licensors	 	Responsibility	 	Ucyclyd Responsibility
	2008
	 	$	 	***	 	$	*	**	 	 	*	**
	2009
	 	$	 	***	 	$	*	**	 	$	*	**
	2010
	 	$	 	***	 	$	*	**	 	$	*	**
	2011
	 	$	 	***	 	$	*	**	 	$	*	**
	2012
	 	$	 	***	 	$	*	**	 	$	*	**

	 	 	 	Any Extension Payments due beyond calendar year 2012 shall be the sole
responsibility of Hyperion. Hyperion confirms that it will pay to Ucyclyd its
portion of the Extension Payments due to the Brusilow Licensors for 2009 no later
than the second (2nd) Business Day after the Second Amendment
Effective Date.

	 	(ii)	 	with respect to payments due to the Brusilow Licensors pursuant to
Sections 1(a) and (b) of the Brusilow Amendment, Hyperion shall be responsible
for making all such payments to the Brusilow Licensors. In the event that
Hyperion owes Ucyclyd *** percent (***%) of Net Sales for GT4P under Section 3.1
(General) of this Schedule 7 (Payment Obligations), Hyperion shall be permitted
to deduct from such payment, an amount equal to the percentage of Net Sales due
to the Brusilow Licensors that is in excess of the *** percent (***%) of Net
Sales except in no event shall such deduction result in Ucyclyd receiving less
than (***%) of Net Sales.

	 	(iii)	 	Ucyclyd shall be responsible solely for the $*** payment due to
the Brusilow Licensors pursuant to Section 2 of the Brusilow Amendment.

	 	(b)	 	Hyperion shall be responsible for, and hereby assumes, all payments due on and
after the Closing (and prior to the Closing in the event Ammonul HE for the treatment
of HE is approved prior to Closing) to Dr. Marshall Summar under the agreement between
Dr. Summar and Ucyclyd (as the successor in interest to Medicis), dated April 1, 2002,
a copy of which is attached to the Agreement as Exhibit 8 (Summar Agreement) (“Summar
Agreement”).
	 
	 	(c)	 	Prior to the Closing, all such payments as described in Sections 4(a) and (b)
(Assumed Payments) above shall be in the form of reimbursements to Ucyclyd and shall be
received by Ucyclyd from Hyperion no less than *** prior to the date such payments are
due from Ucyclyd to such licensors. To the extent that Ucyclyd is invoiced by such
licensors for services rendered by such licensors, Ucyclyd shall promptly forward such
invoice to Hyperion and Hyperion shall have *** after receiving such invoice to submit
such payment to Ucyclyd. Hyperion shall not be required to reimburse Ucyclyd for
services rendered by the licensors that are in connection with a request by Ucyclyd.
	 
	 	(d)	 	On and after the Closing, Hyperion shall make such payments directly to the
licensors under the Brusilow License Agreement and Dr. Summar in accordance with the
terms and conditions of the respective agreements with each referenced above.
	 
	 	(e)	 	With respect to any payments due to the Brusilow Licensors, this Section 4
(Assumed Payments) shall continue for the Term and until all payments due to the
Brusilow Licensors have been fully and finally satisfied.
	 
	 	(f)	 	With respect to any payments due to Dr. Summar under the Summar Agreement, this
Section 4 (Assumed Payments) shall continue for the term of the Summar Agreement and
until all payments due to Dr. Summar thereunder have been fully and finally satisfied.

Schedule 7 to Second Amendment to Collaboration Agreement

 

 

	 	(g)	 	A summary of Hyperion’s royalty obligations with respect to GT4P is attached to
this Schedule 7 (Payment Obligations) as Attachment 1 (Summary of GT4P Royalty
Obligations) for the convenience of the Parties.

5. Reports.

	 	(a)	 	Any payments due to a Party under this Schedule 7 (Payment Obligations) will be
accompanied by a report by the payor for the term that such payments are due. Such
report shall contain the following information with respect to the applicable Product:

	 	(i)	 	the gross sales of the applicable Products during the applicable
Reporting Period in each country or region in which such sale occurred (separately
stated for each approved sublicensee and each country or region);

	 	(ii)	 	the computation of the Net Sales of the applicable Products during
the applicable Reporting Period based on the dollar value determined in (i) above,
including an accounting of any allowed deductions from gross sales to arrive at
Net Sales, and the exchange rates used for converting foreign currency to U.S.
dollars in accordance with Section 7.8 (Currency Conversion) of the Agreement; and

	 	(iii)	 	the computation of ongoing payments by Hyperion with respect to the
Development Products during the applicable Reporting Period.

	 	(b)	 	If no payments are due for a particular Reporting Period, the payor will so
report.
	 
	 	(c)	 	On or before the date that is *** following the end of the last Reporting
Period in which a Party has payment obligations under the Agreement, the payor will
provide to the payee a final written report that complies in all respects with this
Section 5 (Reports).
	 
	 	(d)	 	A finance officer of Ucyclyd shall certify to best of his or her knowledge in
writing to the correctness and completeness of each report prepared by Ucyclyd under
this Section 5 (Reports). The Chief Financial Officer or Vice President of Finance of
Hyperion shall certify to best of his or her knowledge in writing the correctness and
completeness of each report prepared by Hyperion under this Section 5 (Reports).
	 
	 	(e)	 	For the avoidance of doubt, prior to the Closing, Hyperion shall deliver to
Ucyclyd a report that satisfies the requirements under the Brusilow License Agreement
with respect to any payment due under Section 4 (Assumed Payments) above. On and after
the Closing, Hyperion shall comply with all of the reporting requirements under the
Brusilow License Agreement with respect to the payment obligations of Hyperion under
Section 4 (Assumed Payments) above.

Schedule 7 to Second Amendment to Collaboration Agreement

 

 

ATTACHMENT 1 TO SCHEDULE 7

***

 

 

SCHEDULE 1.30

DISTRIBUTION AGREEMENTS

***

Schedule 1.30 to Second Amendment to Collaboration AgreementExhibit 10.1

Exhibit 10.1

	 	 	 	 	 
	

WESTMORELAND COAL COMPANY

Manual of Policies:
	 	Number: GP- 33

Revision Date: January 1, 2009

Supersedes: Previously Issued Letters & Memos 

Approved Issuing Officer:

Original signed as Policy # GP-33 on file in Corporate Office

Name: Keith Alessi 

Title: Chairman of the Board, President & CEO
	 	 
	 	 	 
	COMPENSATION
Title:

ANNUAL INCENTIVE PLAN (AIP)

	 	 	 

	1.	 	POLICY STATEMENT

Westmoreland Coal Company’s Annual Incentive Program (AIP) is designed to compensate
designated employees with annual financial incentives for the accomplishment of key
strategic goals and objectives intended to promote financial performance, productivity and
safety.

	2.	 	ELIGIBILITY

You are an “Eligible Employee” if:

	 	•	 	You are an employee designated by Westmoreland Coal Company to be eligible

	 	•	 	You are an active full-time employee of the Company, scheduled to work at least 40 hours per week

	3.	 	DETERMINATION AND PAYMENT OF AIP PAYMENTS

The Company measures the accomplishments of our employees based on financial, safety and
individual components. The “Targeted Amount” of the incentive is based on a percentage of
the employee’s base salary relative to the employee’s position within Westmoreland.

	 	•	 	Financial Goals — are based on Westmoreland attaining or exceeding its
budgeted operating income goals. Financial Goals have a threshold, target, and
double target.

	 	•	 	Safety Goals — are based on the actual Mine Safety & Health
Administration (MSHA) Reportable Incident Rate (RIR) for the coal industry (strip
mines, preparation plants and independent shops/yards). Safety Goals have a
threshold, target, and double target.

	 	•	 	Individual Goals — are based on achievement of individual objectives.

The components of Westmoreland’s Annual Incentive Plan (Financial Goals, Safety Goals, and
Individual Goals) have different weight and emphasis depending on whether the employee is in
Operations or Corporate. Employees have the opportunity to earn more than 100% of their
individual goals, based on exemplary performance.

3.1 OPERATIONS MANAGEMENT

For those eligible employees in Operations, the following guidelines will apply relative to
their Annual Incentive Plan:

	 	•	 	Financial Goals: The Financial Goal is 40% of Targeted Amount based on
the Mine’s/Division’s budgeted Operating Income.

	 	•	 	Financial Threshold: Financial Threshold is defined as meeting the annual
budgeted Operating Income. 50% of the Financial Goal will be paid upon
achieving Financial Threshold. Under no circumstances will a payout of the
Financial Goal be made if Financial Threshold is not achieved.

	 	•	 	Financial Target: Financial Target is defined as exceeding Financial
Threshold by 7.5%. 100% of the Financial Goal will be paid upon meeting
Financial Target. Results that fall between Financial Threshold and
Financial Target will result in a prorated calculation between 50% and 100%.
	 
	 	 	 	Financial Double Target: Financial Double Target is defined as exceeding
Financial Threshold by 15%. 200% of the Financial Goal will be paid upon
achieving Financial Double Target. Results that fall between Financial Target
and Financial Double Target will result in a prorated calculation between 100%
and 200%. 200% is the maximum payout of the Financial Goal even if Financial
Double Target is exceeded.

 

 

 

	 	 	 	 	 	 	 	 	 
	Title: 

ANNUAL INCENTIVE PLAN (AIP)

	 	No. 

GP – 33
	 	Date Issued:

12/1/08
	 	Supersedes

issued letters
	 	Page 2 of 4

	 	•	 	Safety Goals: 30% of Targeted Amount will be based upon achieving the
following Safety Goals for each mine.

	 	•	 	Safety Threshold: Safety Threshold is defined as meeting the annual
National Mine Safety & Health Administration (MSHA) average for Reportable
Incident Rate (RIR) for the coal industry (strip mines, preparation plants,
and independent shops/yards). 50% of the Safety Goal will be paid upon
achieving Safety Threshold. Under no circumstances will a payout of the
Safety Goal be made if Safety Threshold is not met.

	 	•	 	Safety Target: Safety Target is defined as safety experience 25% better
than Safety Threshold. 100% of the Safety Goal will be paid upon achieving
Safety Target. Results falling between Safety Threshold and Safety Target
will result in a prorated calculation between 50% and 100%.

	 	•	 	Safety Double Target: Safety Double Target is defined as safety experience
50% better than Safety Threshold. 200% of the Safety Goal will be paid upon
achieving Safety Double Target. Results falling between Safety Target and
Safety Double Target will result in a prorated calculation between 100% and
200%. 200% is the maximum payout of the Safety Goal, even if Safety Double
Target is exceeded.

	 	•	 	Individual Goals: The Individual Goal is 30% of Targeted Amount and will
be based on achievement of certain individual goals.

	 	•	 	The percentage payout will be evaluated on achievement of certain
individual goals established between the employee and his/her manager and
will be based on the employee’s overall performance evaluation. For the
Individual Goal, employees and their manager will select two goals for the
purpose of the AIP. These goals should be defined no later than March 31 of
each applicable year (or on the employee’s date of hire if later than March
31). All goals should be “SMART” goals in that they are Specific,
Measurable, Aligned, Realistic, and Time-bound. The individual goals will
require approval by the Westmoreland President/CEO and VP of Human Resources
and Administration.

	 	•	 	The individual goals cannot be related to safety or financial performance.
Further, there will be no payout for individual goals if a person is deemed
responsible for a material deficiency relative to the Sarbanes-Oxley Act
(SOX).

3.2 CORPORATE MANAGEMENT

If an employee is considered to be an eligible corporate employee, the following guidelines
will apply relative to their Annual Incentive Plan:

	 	•	 	Financial Goals: The Financial Goal is 55% of Targeted Amount based on
the corporate’s budgeted Operating Income.

	 	•	 	Threshold: Threshold is defined as meeting the annual budgeted Operating
Income. 50% of the Financial Goal will be paid upon achieving Threshold.
Under no circumstances will a payout of the Financial Goal be made if
Threshold is not achieved.

	 	•	 	Target: Target is defined as exceeding Threshold by 7.5%. 100% of the
Financial Goal will be paid upon meeting Target. Results that fall between
Threshold and Target will result in a prorated calculation between 50% and
100%.

	 	•	 	Double Target: Double Target is defined as exceeding Threshold by 15%.
200% of the Financial Goal will be paid upon achieving Double Target.
Results that fall between Target and Double Target will result in a prorated
calculation between 100% and 200%. 200% is the maximum payout of the
Financial Goal even if Double Target is exceeded.

	 	•	 	Individual Goals: The Individual Goal is 45% of Targeted Amount and will
be based on achievement of certain individual goals.

	 	•	 	The percentage payout will be evaluated on achievement of certain
individual goals established between the employee and his/her manager and
will be based on the employee’s overall performance evaluation. For the
Individual Goal, employees and their manager will select two goals for the
purpose of the AIP. These goals should be defined no later than March 31 of
each applicable year (or on the employee’s date of hire if later than March
31). All goals should be “SMART” goals in that they are Specific,
Measurable,
Aligned, Realistic, and Time-bound. The individual goals will require
approval by the Westmoreland President/CEO and VP of Human Resources and
Administration.

	 	•	 	The individual goals cannot be related to financial performance. Further,
there will be no payout for individual goals if a person is deemed
responsible for a material deficiency relative to the Sarbanes-Oxley Act
(SOX).

 

 

 

Page 3 of 4

	4.	 	Important Plan Terms and Conditions:

	 	•	 	Any incentive or bonus award may be adjusted either up or down at the
sole discretion of the Westmoreland Coal Company’s CEO, based upon individual
performance and/or other factors regardless of whether it is earned in accordance
with this and/or any other document.

	 	•	 	Awards are capped at two times target for each Financial and Safety
goals.

	 	•	 	All incentive awards granted will be calculated based upon the
participant’s base salary earned during the twelve months ending on December
31st of the applicable year.

	 	•	 	A participant must be employed by Westmoreland Coal Company or its
subsidiaries on the date the incentive payments are distributed in order to receive
any payment under the Plan.

	 	•	 	Incentive award checks will be distributed following completion of
Westmoreland Coal Company’s annual audit and approval of Westmoreland Coal
Company’s Compensation & Benefits Committee, typically at the end of the first
quarter of the subsequent year.

	 	•	 	Taxes, deferrals (401(k)) and distributions that are required to be
withheld by federal, state or local or other governmental authority shall be
deducted from all payments.

	 	•	 	Any incentive award for a newly hired or promoted participant will be
based upon the base salary earned from their date of hire to December
31st.

	 	•	 	No member of the Board of Directors or the Compensation and Benefits
Committee shall be liable for any action taken or determination made in good faith
with respect to AIP.

	 	•	 	Receipt of any portion of the incentive award is subject to all terms and
conditions described in this document.

	 	•	 	Participation in this Plan is neither a contract nor a guarantee of continuing employment.

	 	•	 	This Plan may be modified, suspended or terminated at any time by Westmoreland Coal Company.

 

 

 

Page 4 of 4

ADDENDUM

WESTMORELAND COAL COMPANY ANNUAL INCENTIVE PLAN FOR NON-UNION EMPLOYEES

	 	 	 	 	 	 	 
	Level	 	Position or Classification*	 	AIP %	 
	1
	 	• President/CEO	 	 	70	%
	 
	 	 	 	 	 	 
	2
	 	• Chief Financial Officer	 	 	45	%
	 
	 	• VP, Coal Operations	 	 	 	 
	 
	 	 	 	 	 	 
	3
	 	• General Counsel	 	 	40	%
	 
	 	• Controller	 	 	 	 
	 
	 	• Vice Presidents of a Functional Area	 	 	 	 
	 
	 	• Mine Managers	 	 	 	 
	 
	 	 	 	 	 	 
	4
	 	• Directors of a Functional Area	 	 	30	%
	 
	 	• Assistant General Counsel	 	 	 	 
	 
	 	 	 	 	 	 
	5
	 	• Managers of a Functional Area	 	 	20	%
	 
	 	 	 	 	 	 
	6
	 	• Superintendents	 	 	15	%
	 
	 	• Supervisors	 	 	 	 
	 
	 	• Other exempt salary personnel who are individual contributors

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