Document:

Lexaria Bioscience Corp. - Exhibit 10.1 - Filed by newsfilecorp.com

PURCHASE OF MEMBERSHIP INTEREST AGREEMENT 

THIS AGREEMENT is made as of the 23rd day of October, 2016 

AMONG: 

LEXARIA BIOSCIENCE CORP. a
Nevada corporation, with its principal offices at 156 Valleyview Road, Kelowna,
British Columbia, Canada V1X 3M4

(“Lexaria”) 

AND: 

POVIVA TEA, LLC (formerly Poppy’s
Teas, LLC), a Nevada limited liability company, with its principal offices
at 156 Valleyview Road, Kelowna, British Columbia, Canada V1X 3M4 

(“PoViva”) 

AND: 

MARIAN WASHINGTON, an
individual residing at 232 Marshside Drive, St. Augustine, Florida, U.S.A, 32080

(the “Washington”) 

AND: 

MICHELE REILLO, an individual
residing at 232 Marshside Drive, St. Augustine, Florida, U.S.A, 32080

(the “Reillo”) 

(Washington and Reillo are jointly and
individually referred to herein as the “PoViva Members”) 

WHEREAS: 

	A. 	
      Lexaria and the PoViva Members (in their capacity as the
      then sole members and managers of Poppy’s Teas LLC) are parties to that
      certain Operating Agreement dated November 11, 2014, as amended, regarding
      the ownership and management and operation of, PoViva.

	 	 
	B. 	
      Lexaria is the legal and beneficial owner of a 51%
      membership interest in PoViva;

	 	 
	C. 	
      The PoViva Members are the legal and beneficial owner of
      a 49% membership interest in PoViva;

	D. 	
      Lexaria has agreed to pay the Purchase Price, and to
      grant the Royalty (as hereinafter defined), as of the Closing Date (as
      hereinafter defined) to the PoViva Members in consideration for the
      purchase by Lexaria from the PoViva Members of 100% of the 49% Interest at
      Closing; and

	 	 
	E. 	
      Upon the terms and subject to the conditions set forth in
      this Agreement, the PoViva Members have agreed to sell the 49% Interest to
      Lexaria in consideration for the Purchase Price.

THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties covenant
and agree as follows: 

1.              
DEFINITIONS 

	1.1. 	
      Definitions. The following terms have the
      following meanings, unless the context indicates
  otherwise:

	 	(a) 	
      “Affiliate” means, with respect to a party, any
      individual or entity, that directly, or indirectly through one or more
      intermediaries, controls, is controlled by, or is under common control
      with the Company;

	 	 	 
	 	(b) 	
      “Agreement” or “Purchase Agreement” shall mean this
      Agreement, and all the exhibits, schedules and other documents attached to
      or referred to in this Agreement, and all amendments and supplements, if
      any, to this Agreement;

	 	 	 
	 	(c) 	
      “Closing” shall mean the completion of the Transaction,
      in accordance with Article 7 hereof, at which the Closing Documents shall
      be exchanged by the parties, except for those documents or other items
      specifically required to be exchanged at a later time;

	 	 	 
	 	(d) 	
      “Closing Date” shall mean October 27 2017, or such
      earlier or later date mutually agreed upon by the parties hereto in
      writing and in accordance with Section 11.6 following the satisfaction or
      waiver by Lexaria and the PoViva Members of the conditions precedent set
      out in Sections 5.1 and 5.2 respectively;

	 	 	 
	 	(e) 	
      “Closing Documents” shall mean the papers, instruments
      and documents required to be executed and delivered at the Closing
      pursuant to this Agreement;

	 	 	 
	 	(f) 	
      “Confidential Information” shall have the meaning set out
      in Section 6.1 herein;

	 	 	 
	 	(g) 	
      “Developments” shall have the meaning set out in Section
      6.3 herein;

	 	 	 
	 	(h) 	
      “Effective Date” means the date first written
    above;

	 	(i) 	
      “Intellectual Property” means means all rights and title
      under copyright, or trademark, and all trade-names, designs, Technical
      Know-How, Patents and other intellectual property rights of any kind
      throughout the world, whether registered or not, owned or controlled by PoViva and relating to the
      Patents or to the products or services of PoViva and which exist as of the
  Effective Date;

	 	(j) 	
      “Liabilities” shall include any direct or indirect
      indebtedness, guaranty, endorsement, claim, loss, damage, deficiency,
      cost, expense, obligation or responsibility, fixed or unfixed, known or
      unknown, asserted choate or inchoate, liquidated or unliquidated, secured
      or unsecured;

	 	 	 
	 	(k) 	
      “Operating Agreement” means the Operating Agreement dated
      November 11, 2014, as amended, between Lexaria and Poppy’s Teas
  LLC;

	 	 	 
	 	(l) 	
      “NPR” or “Net Profit Royalty” shall have the definition
      as set out in Schedule 1;

	 	 	 
	 	(m) 	
      “49% Interest” shall mean 100% of all right, title and
      interest in and to the PoViva Shareholder’s membership interest in PoViva
      to be acquired by Lexaria, being a 49% membership interest;

	 	 	 
	 	(n) 	
      “Party(ies)” means each Lexaria, PoViva, and the PoViva
      Members;

	 	 	 
	 	(o) 	
      “Patents” shall mean U.S. Provisional Patent Application
      Serial Nos. 62/010,621 (filed June 11, 2014), 62/037,706 (filed August 15,
      2014), and 62/153.835 (filed April 28, 2015) and any patents issuing
      therefrom in the U.S. and in non-U.S. jurisdictions, together will
      divisions, continuations, continuations-in-part, re- examinations,
      reissues, substitutions, or extensions thereof and any patents issuing
      therefrom in the U.S. and in non-U.S. jurisdictions;

	 	 	 
	 	(p) 	
      “Personal Use License” means a non-exclusive,
      non-assignable, non-transferable license, for the life of the PoViva
      Member, to personally practice the patents for personal, non-public,
      non-commercial, and non-charitable purposes. Without limiting the
      foregoing, the scope of practice permitted by the Personal Use License
      shall be strictly limited to the production of comestibles incorporating
      the Patents by the PoViva Members, within the confines of their
      households, and for their personal and household consumption. The
      donation, gifting, sale, or other distributionof comestibles or other
      goods incorporating the Patents, whether for charitable or non- charitable
      purposes, shall be strictly outside the scope of use permitted by the
      Personal Use License;

	 	 	 
	 	(q) 	
      “Purchase Price” shall have the meaning set out in
      Section 2.2;

	 	 	 
	 	(r) 	
      “Transaction” shall mean the purchase of the 49% Interest
      by Lexaria in consideration for the payment of the Purchase
  Price.

	1.2. 	
      Schedules. The following schedules are attached to
      and form part of this Agreement:

	Schedule 1 	– 	Definition of NPR 
	Schedule 2 	  	Bill of Sale

1.3        Currency.
All references to currency referred to in this Agreement are in United States
Dollars (US$), unless expressly stated otherwise. 

2.              
PURCHASE AND SALE OF MEMBERSHIP INTEREST 

	2.1. 	
      Purchase and Sale of Membership Interest. Subject
      to the terms and conditions of this Agreement, PoViva and the PoViva
      Members hereby covenant and agree to sell, assign and transfer to Lexaria,
      and Lexaria hereby covenants and agrees to purchase from the PoViva
      Members, the 49% Interest, consisting of a 100% of the PoViva Members’s
      ownership interest in PoViva.

	 	 
	2.2. 	
      Consideration. As consideration for the sale of
      the 49% Interest by the PoViva Members to Lexaria, Lexaria shall pay to
      them the Purchase Price payable as follows:

	 	(a) 	
      $70,000 to the PoViva Members ($35,000 as to Washington
      and $35,000 as to Reillo) within five (5) business days of the Effective
      Date;

	2.3. 	
      Net Profit Royalty and Personal Use License. As
      additional consideration to the PoViva Members for the transfer of the 49%
      Interest to Lexaria, and for the covenants of the PoViva Members
      hereunder, PoViva hereby grants to each of the PoViva Members, subject to
      and effective upon the Closing, the following royalty and
  license:

	 	(a) 	
      an NPR equal to 2.5% (per PoViva Member) of the Net
      Pofits of PoViva; and

	 	 	 
	 	(b) 	
      the Personal Use License.

The Personal Use License shall expire,
with respect to each PoViva Member, upon that PoViva’s Member’s death. The NPR,
with respect to each PoViva Member shall expire on the earlier of: (i) the
20th anniversary of the Closing Date; and (ii) upon that PoViva’s
Member’s death.

3.              
REPRESENTATIONS AND WARRANTIES OF THE POVIVA MEMBERS

As of the Effective Date and as of the Closing, the PoViva
Members, jointly and severally, represent and warrant to Lexaria, and
acknowledge that Lexaria is relying upon such representations and warranties, in
connection with the execution, delivery and performance of this Agreement,
notwithstanding any investigation made by or on behalf of Lexaria, as follows:

	3.1. 	
      No Encumbrance. the PoViva Members shall be the
      legal and beneficial owner of the 49% Interest and on the date of the
      Closing, the PoViva Members shall transfer to Lexaria the 49% Interest,
      free and clear of all liens, restrictions, covenants or adverse claims of
      any kind or character; and

	 	 
	3.2. 	
      Authority. The PoViva Members have the legal
      power, capacity and authority to execute and deliver this Agreement and
      all other documents required to be executed and delivered by the PoViva
      Members hereunder and to consummate the transactions contemplated
      hereby.

4.               REPRESENTATIONS AND WARRANTIES OF LEXARIA 

As of the Closing, Lexaria represents and warrants to the
  PoViva Members and acknowledges that the PoViva Members are relying upon such
  representations and warranties in connection with the execution, delivery and performance of this Agreement,
  notwithstanding any investigation made by or on behalf of the PoViva Members, as
  follows: 

	4.1. 	
      Organization and Good Standing. Lexaria is duly
      incorporated, organized, validly existing and in good standing under the
      laws of the State of Nevada and has all requisite corporate power and
      authority to own, lease and to carry on its business as now being
      conducted. Lexaria is qualified to do business and is in good standing as
      a foreign corporation in each of the jurisdictions in which it owns
      property, leases property, does business, or is otherwise required to do
      so, where the failure to be so qualified would have a material adverse
      effect on the businesses, operations, or financial condition of
      Lexaria.

	 	 
	4.2. 	
      Authority. Lexaria has all requisite corporate
      power and authority to execute and deliver this Agreement and any other
      document contemplated by this Agreement (collectively, the “Lexaria
      Documents”) to be signed by Lexaria and to perform its obligations
      hereunder and to consummate the transactions contemplated hereby. The
      execution and delivery of each of the Lexaria Documents by Lexaria and the
      consummation by Lexaria of the transactions contemplated hereby have been
      duly authorized by its board of directors and no other corporate or
      shareholder proceedings on the part of Lexaria is necessary to authorize
      such documents or to consummate the transactions contemplated hereby. This
      Agreement has been, and the other Lexaria Documents when executed and
      delivered by Lexaria as contemplated by this Agreement will be, duly
      executed and delivered by Lexaria and this Agreement is, and the other
      Lexaria Documents when executed and delivered by Lexaria, as contemplated
      hereby will be, valid and binding obligations of Lexaria enforceable in
      accordance with their respective terms,
except:

	 	(a) 	
      as limited by applicable bankruptcy, insolvency,
      reorganization, moratorium, and other laws of general application
      affecting enforcement of creditors’ rights generally;

	 	 	 
	 	(b) 	
      as limited by laws relating to the availability of
      specific performance, injunctive relief, or other equitable remedies;
      and

	 	 	 
	 	(c) 	
      as limited by public policy.

	4.3. 	
      Non-Contravention. Neither the execution, delivery
      and performance of this Agreement, nor the consummation of the
      Transaction, will:

	 	 	 
		(a) 	
      conflict with, result in a violation of, cause a default
      under (with or without notice, lapse of time or both) or give rise to a
      right of termination, amendment, cancellation or acceleration of any
      obligation contained in or the loss of any material benefit under, or
      result in the creation of any lien, security interest, charge or
      encumbrance upon any of the material properties or assets of Lexaria under
      any term, condition or provision of any loan or credit agreement, note,
      debenture, bond, mortgage, indenture, lease or other agreement,
      instrument, permit, license, judgment, order, decree, statute, law,
      ordinance, rule or regulation applicable to Lexaria or any of its material
      property or assets;

	 	 	 
		(b) 	
      violate any provision of the applicable incorporation or
      charter documents of Lexaria; or

	 	(c) 	
      violate any order, writ, injunction, decree, statute,
      rule, or regulation of any court or governmental or regulatory authority
      applicable to Lexaria or any of its material property or
  assets.

	4.4. 	
      Filings, Consents and Approvals. No filing or
      registration with, no notice to and no permit, authorization, consent, or
      approval of any public or governmental body or authority or other person
      or entity is necessary for the consummation by Lexaria of the Transaction
      contemplated by this Agreement to continue to conduct its business after
      the Closing Date in a manner which is consistent with that in which it is
      presently conducted.

5.              
CLOSING CONDITIONS 

	5.1. 	
      Conditions Precedent to Closing by Lexaria. The
      obligation of Lexaria to consummate the Transaction is subject to the
      satisfaction or written waiver of the conditions set forth below by a date
      mutually agreed upon by the parties hereto in writing and in accordance
      with Section 11.6. The Closing of the Transaction contemplated by this
      Agreement will be deemed to mean a waiver of all conditions to Closing.
      These conditions precedent are for the benefit of Lexaria and may be
      waived by Lexaria in its sole discretion.

	 	 	 
		(a) 	
      Representations and Warranties. The
      representations and warranties of PoViva and the PoViva Members set forth
      in this Agreement will be true, correct and complete in all material
      respects as of the Closing Date, as though made on and as of the Closing
      Date.

	 	 	 
		(b) 	
      Performance. All of the covenants and obligations
      that PoViva and the PoViva Members are required to perform or to comply
      with pursuant to this Agreement at or prior to the Closing must have been
      performed and complied with in all material respects.

	 	 	 
		(c) 	
      Transaction Documents. This Agreement, the PoViva
      Documents and all other documents necessary or reasonably required to
      consummate the Transaction, all in form and substance reasonably
      satisfactory to Lexaria, will have been executed and delivered to
      Lexaria.

	5.2 	
      Conditions Precedent to Closing by the PoViva Members.
      The obligation of the PoViva Members to consummate the Transaction is
      subject to the satisfaction or written waiver of the conditions set forth
      below by a date mutually agreed upon by the parties hereto in writing and
      in accordance with Section 11.6. The Closing of the Transaction will be
      deemed to mean a waiver of all conditions to Closing. These conditions
      precedent are for the benefit of the PoViva Members and may be waived by
      the PoViva Members in their discretion.

	 	 	 
		(a) 	
      Representations and Warranties. The
      representations and warranties of Lexaria set forth in this Agreement will
      be true, correct and complete in all material respects as of the Closing
      Date, as though made on and as of the Closing Date.

	 	 	 
		(b) 	
      Performance. All of the covenants and obligations
      that Lexaria are required to perform or to comply with pursuant to this
      Agreement at or prior to the Closing must have been performed and complied
      with in all material respects. Lexaria must
have delivered each of the documents required to be delivered
  by it pursuant to this Agreement.

	 	(c) 	
      Transaction Documents. This Agreement, the Lexaria
      Documents and all other documents necessary or reasonably required to
      consummate the Transaction, all in form and substance reasonably
      satisfactory to the PoViva Members, will have been executed and delivered
      by Lexaria.

6.              
CONFIDENTIALITY AND MAINTENANCE OF INTELLECTUAL PROPERTY 

	6.1. 	
      Maintenance of Confidential Information. The
      PoViva Members acknowledge that, in the course of their involvement and
      relationship with PoViva and Lexaria, they have created accessed, or been
      entrusted with information (whether oral, written or by inspection)
      relating to PoViva, Lexaria, or their respective affiliates, associates or
      customers (the "Confidential Information"). For the purposes of
      this Agreement, "Confidential Information" includes, without limitation,
      the Intellectual Property, and any and all Developments (as defined
      herein), trade secrets, inventions, innovations, techniques, processes,
      formulas, drawings, designs, products, systems, creations, improvements,
      documentation, data, specifications, technical reports, customer lists,
      supplier lists, distributor lists, distribution channels and methods,
      retailer lists, reseller lists, employee information, financial
      information, sales or marketing plans, competitive analysis reports and
      any other thing or information whatsoever, whether copyrightable or
      uncopyrightable or patentable or unpatentable. The PoViva Members
      acknowledges that the Confidential Information constitutes a proprietary
      right, which PoViva and Lexaria are entitled to protect. Accordingly the
      PoViva Members covenant and agree that during the Term and thereafter
      until such time as all the Confidential Information becomes publicly known
      and made generally available through no action or inaction of the PoViva
      Members, the PoViva Members will keep in strict confidence the
      Confidential Information and shall not, without prior written consent of
      Lexaria in each instance, disclose, use or otherwise disseminate the
      Confidential Information, directly or indirectly, to any third
    party.

	 	 	 
	6.2. 	
      Exceptions. The general prohibition contained in
      Section 6.1 against the unauthorized disclosure, use or dissemination of
      the Confidential Information shall not apply in respect of any
      Confidential Information that:

	 	 	 
		(a) 	
      is available to the public generally in the form
      disclosed;

	 	 	 
		(b) 	
      becomes part of the public domain through no fault of the
      PoViva Members; or

	 	 	 
		(c) 	
      is compelled by applicable law to be disclosed, provided
      that the PoViva Members give Lexaria and PoViva prompt written notice of
      such requirement prior to such disclosure and provides assistance in
      obtaining an order protecting the Confidential Information from public
      disclosure.

	6.3. 	
      Developments Any information, data, work product
      or any other thing or documentation whatsoever which the PoViva Members,
      either by themselves or in conjunction with any third party, conceive,
      make, develop, acquire or acquire knowledge of, during the term of this
      Agreement, or which the PoViva Members, either by themselves or in
      conjunction with any third party, shall conceive, make, develop, acquire
      or acquire knowledge of (collectively the "Developments") during or at any
      time thereafter during the Term of this Agreement that incorporates, is
      derived from, or otherwise related to, the Patents, shall automatically
      form part of the Confidential Information and shall become and remain the
      sole and exclusive property of Lexaria and PoViva. Accordingly, the PoViva
      Members do hereby irrevocably, exclusively and absolutely assign, transfer
      and convey to PoViva, in perpetuity, all worldwide right, title and
      interest in and to any and all Developments and other rights of whatsoever
      nature and kind in or arising from or pertaining to all such Developments
      created or produced by PoViva Members during the Term of this Agreement,
      including, without limitation, the right to effect any registration in the
      world to protect the foregoing rights. PoViva and Lexaria shall have the
      sole, absolute and unlimited right throughout the world, therefore, to
      protect the Developments by patent, copyright, industrial design,
      trademark or otherwise and to make, have made, use, reconstruct, repair,
      modify, reproduce, publish, distribute and sell the Developments, in whole
      or in part, or combine the Developments with any other matter, or not use
the Developments at all, as PoViva and Lexaria see fit.

	6.4. 	
      Notification. Between the date of this Agreement
      and the Closing Date, each of the parties to this Agreement will promptly
      notify the other parties in writing if it becomes aware of any fact or
      condition that causes or constitutes a material breach of any of its
      representations and warranties as of the date of this Agreement, if it
      becomes aware of the occurrence after the date of this Agreement of any
      fact or condition that would cause or constitute a material breach of any
      such representation or warranty had such representation or warranty been
      made as of the time of occurrence or discovery of such fact or condition.
      During the same period, each party will promptly notify the other parties
      of the occurrence of any material breach of any of its covenants in this
      Agreement or of the occurrence of any event that may make the satisfaction
      of such conditions impossible or unlikely.

	 	 
	6.5. 	
      Public Announcements. The PoViva Members each
      agree that they will not release or issue any reports or statements or
      make any public announcements relating to this Agreement or the
      Transaction contemplated herein without the prior written consent of
      Lexaria, except as may be required upon written advice of counsel to
      comply with applicable laws or regulatory requirements after consulting
      with the other party hereto and seeking their reasonable consent to such
      announcement.

	 	 
	6.6. 	
      Prosecution and Maintenance of Intellectual
      Property. Lexaria or PoViva may, at their own expense, register, file,
      prosecute, and maintain the Intellectual Property in any jurisdiction(s)
      they so wish, in their sole discretion. The PoViva Members shall at all
      times use their best efforts to assist Lexaria or PoViva with the filing,
      prosecution, and maintenance of the Intellectual Property to the extent
      reasonably required by Lexaria or PoViva from time to time, provided that
      all reasonable and documented expenses of the PoViva Members incurred in
      providing such assistance shall be borne by Lexaria or PoViva.

	 	 
	6.7. 	
      Enforcement of the Intellectual Property. Lexaria
      or PoViva shall have the sole right, but not the obligation, to enforce
      the Intellectual Property against any third party. The PoViva Members
      agree to join as a party plaintiff in any such action initiated by Lexaria
      of PoViva if reasonably requested by Lexaria or PoViva, at the sole cost
      of Lexaria or PoViva, and the PoViva Members shall use their best efforts
      to assist Lexaria or PoViva as reasonably requested from time to time at
      Lexaria’s or PoViva’s sole expense. All proceeds received as a result of
      prosecuting such infringement claim shall first be used to reimburse
      Lexaria or

		
      PoViva for all costs and expenses associated in bringing
      prosecuting such infringement action. All remaining proceeds actually
      received as a result of prosecuting such infringement claim shall be
      divided by the Parties on a pro-rata basis in proportion to their
      respective interest in the Intellectual Property and any royalties related
      thereto, and provided that the PoViva Members have joined as a plaintiff
      in such action. Lexaria or PoViva shall be entitled to settle or resolve
      any infringement claim relating to the Patents without the consent of the
      PoViva Members.

	 	 
	6.8. 	
      No Contestation. The PoViva Members or their
      Affiliates shall not, at any time, directly or indirectly, dispute or
      contest (i) the validity or enforceability of the Intellectual Property or
      the registration therefore; or (ii) the exclusive ownership rights of
      Lexaria or PoViva in and to the Intellectual Property.

	 	 
	6.9. 	
      Power of
      Attorney.        Each of the PoViva
      Members hereby authorizes Lexaria, and does hereby make, constitute and
      appoint PoViva and Lexaria’s Affiliates, and its respective officers,
      agents, successors or assigns with full power of substitution, as the
      PoViva Member’s true and lawful attorney-in-fact, with power, in the name
      of Lexaria or the PoViva Member, after the occurrence and during the
      continuance of an Event of Default under above Section 6.6, at the option
      of Lexaria, and at the expense of Lexaria, at any time, or from time to
      time, to execute and deliver any and all documents and instruments and to
      do all acts and things which Lexaria deems necessary to protect, preserve
      and realize upon the Patent, in order to effect the intent of this
      Agreement all as fully and effectually as the PoViva Member might or could
      do; and the PoViva Member hereby ratifies all that said attorney shall
      lawfully do or cause to be done by virtue hereof. This power of attorney
      is coupled with an interest and shall be irrevocable for the term of this
      Agreement. Without limiting the generality of the foregoing, after the
      occurrence and during the continuance of an Event of Default, the PoViva
      Member specifically authorizes Lexaria to execute and file, in Lexaria’s
      name or in the PoViva Member’s name, any applications or instruments of
      transfer or assignment in respect of any patents, trademarks, copyrights
      or other intellectual property with the United States Patent and Trademark
      Office and the United States Copyright Office.

7.              
CLOSING 

	7.1. 	
      Closing. The Closing shall take place on the
      Closing Date at the offices of the lawyers for Lexaria or at such other
      location as agreed to by the parties. Notwithstanding the location of the
      Closing, each party agrees that the Closing may be completed by the
      exchange of undertakings between the respective legal counsel for PoViva,
      the PoViva Members, and Lexaria, provided such undertakings are
      satisfactory to each party’s respective legal counsel.

	 	 	 
	7.2. 	
      Closing Deliveries of PoViva and the PoViva Members.
      At Closing, PoViva and the PoViva Members will deliver or cause to be
      delivered the following, fully executed and in the form and substance
      reasonably satisfactory to Lexaria:

	 	 	 
		(a) 	
      copies of all resolutions and/or consent actions adopted
      by or on behalf of the managers of PoViva or the PoViva Members, as
      required by the constating documents of PoViva, evidencing approval of
      this Agreement and the Transaction;

	 	 	 
		(b) 	
      share certificates or bill of sale issued to and in the
      name of Lexaria for the 49% Interest being acquired;
and

	 	(c) 	
      the PoViva Members’ Documents, and any other necessary
      documents, each duly executed by the PoViva Members, as required to give
      effect to the Transaction.

	7.3. 	
      Closing Deliveries of Lexaria. At Closing, Lexaria
      will deliver or cause to be delivered the following, fully executed and in
      the form and substance reasonably satisfactory to the PoViva
    Members:

	 	 	 
		(a) 	
      The cash consideration set out in Section 2.2,
    above.

	 	 	 
		(b) 	
      copies of all resolutions and/or consent actions adopted
      by or on behalf of the board of directors of Lexaria evidencing approval
      of this Agreement and the Transaction; and

	 	 	 
		(c) 	
      the Lexaria Documents and any other necessary documents,
      each duly executed by Lexaria, as required to give effect to the
      Transaction.

8.              
TERMINATION 

	8.1. 	
      Termination. This Agreement may be terminated at
      any time prior to the Closing Date contemplated hereby by:

	 	 	 
		(a) 	
      mutual agreement of Lexaria and the PoViva
  Members;

	 	 	 
		(b) 	
      Lexaria, if there has been a material breach any of the
      PoViva Members of any material representation, warranty, covenant or
      agreement set forth in this Agreement on the part of the PoViva Members
      that is not cured, to the reasonable satisfaction of Lexaria, within ten
      business days after notice of such breach is given by Lexaria (except that
      no cure period will be provided for a breach by the PoViva Members that by
      its nature cannot be cured);

	 	 	 
		(c) 	
      by election of Lexaria or the PoViva Members, if the
      Closing is not achieved by the Closing Date, provided that neither party
      may elect termination pursuant this section 8.1(c) if the failure to
      achieve Closing resulted solely from the electing party’s failure to
      satisfy its closing deliveries in accordance with Article 7
    hereunder.

	 	 	 
		(d) 	
      the PoViva Members, if there has been a material breach
      by Lexaria of any material representation, warranty, covenant or agreement
      set forth in this Agreement on the part of Lexaria that is not cured by
      the breaching party, to the reasonable satisfaction of the PoViva Members,
      within ten business days after notice of such breach is given by the
      PoViva Members(except that no cure period will be provided for a breach by
      Lexaria that by its nature cannot be cured); or

	 	 	 
		(e) 	
      Lexaria,PoViva, or the PoViva Members if any permanent
      injunction or other order of a governmental entity of competent authority
      preventing the consummation of the Transaction contemplated by this
      Agreement has become final and non-appealable.

	8.2. 	
      Effect of Termination. In the event of the
      termination of this Agreement as provided in Section 8.1, this Agreement
      will be of no further force or effect, provided, however, that Article 6
      (Confidentiality and Maintenance of Intellectual Property) and Article 11
      (Miscellaneous Provisions) of this Agreement shall survive termination of
      this Agreement, and no termination of this Agreement
will relieve any party of liability for any breaches of this Agreement failure
to perform any obligations that occurred prior to the date of termination.

9.              
TERMINATION OF OPERATING AGREEMENT AND MUTUAL RELEASE

9.1       
Termination. Each Lexaria, PoViva, and the PoViva Members agree that,
subject to and effective upon the Closing Date, the Operating Agreement shall
terminate and be of no further force or effect. 

9.2        Mutual
Release. Subject to and effective upon the Closing, each Party hereby
irrevocably remises, releases and forever discharges the other Party(ies) and
his, her or its respective, directors, officers, shareholders, employees,
agents, consultants, attorneys, affiliates and servants, and, where applicable,
the heirs, executors, administrators, successors and assigns of each other from
any and all manner of action and actions, cause and causes of action, suits,
debts, dues, sums of money, claims, demands and obligations whatsoever, at law
or in equity, with the exception of fraud or gross negligence, which each party
may have had or now have or which their assigns, receivers, receiver-managers,
trustees, affiliates, and, where applicable, the heirs, executors,
administrators, successors and assigns of each other hereafter can, shall or may
have in regards to the Operating Agreement (the “Mutual Release”). 

9.3       
Exclusions. Notwithstanding the foregoing and for greater clarification,
the Mutual Release described in this Article 9 does not bar any claims that may
arise from facts that arise out of, or relate to, actions or omissions occurring
in relation to this Agreement. 

9.4        No Claims.
The Parties agree that they shall neither commence nor continue any claims or
proceedings against anyone in respect of anything hereby released which may
result in a claim or proceedings against any other party to the Mutual Release.
If any such claim or proceeding results in any claim or proceeding against
another party to the Mutual Release, then the party bringing such claim or
proceeding shall indemnify and save harmless the other party from all resulting
liabilities, obligations and costs. 

9.5        No
Assignment. The Parties, and each of them, hereby represent that they are
the only parties entitled to the consideration expressed in the Mutual Release,
and that they have not assigned any right of action released hereby to any other
firm, corporation or person. 

10.            
INDEMNIFICATION, REMEDIES, SURVIVAL 

	10.1. 	
      Certain Definitions. For the purposes of this
      Article 10 the terms “Loss” and “Losses” mean any and all demands, claims,
      actions or causes of action, assessments, losses, damages, Liabilities,
      costs, and expenses, including without limitation, interest, penalties,
      fines and reasonable attorneys, accountants and other professional fees
      and expenses, but excluding any indirect, consequential or punitive
      damages suffered by Lexaria, PoViva, or the PoViVa Members, as applicable,
      including damages for lost profits or lost business
  opportunities.

	10.2. 	Agreement of the PoViva Members to Indemnify. The
      PoViva Members will indemnify, defend, and hold harmless, to the full
      extent of the law, Lexaria, PoViva, and their respective directors,
      officers, shareholders, employees, agents, consultants, attorneys,
      affiliates, servants, administrators, successors
and assigns by reason of, resulting from, based upon or arising out of: 

	 	(a) 	
      any material breach by the PoViva Members of this
      Agreement; or

	 	 	 
	 	(b) 	
      any misstatement, misrepresentation or breach of the
      representations and warranties made by the PoViva Members contained in or
      made pursuant to this Agreement.

	10.3. 	
      Agreement of Lexaria and PoViva to Indemnify.
      Lexaria and PoViva will indemnify, defend, and hold harmless, to the
      full extent of the law, the PoViva Members, and their respective heirs and
      assigns, from, against, for, and in respect of any and all Losses asserted
      against, relating to, imposed upon, or incurred by the PoViva Members by
      reason of, resulting from, based upon or arising out of:

	 	 	 
		(a) 	
      any material breach by Lexaria or PoViva of this
      Agreement; or

	 	 	 
		(b) 	
      any misstatement, misrepresentation or breach of the
      representations and warranties made by Lexaria contained in or made
      pursuant to this Agreement.

11.            
MISCELLANEOUS PROVISIONS 

	11.1. 	
      Effectiveness of Representations; Survival. Each
      party is entitled to rely on the representations, warranties and
      agreements of each of the other parties and all such representation,
      warranties and agreement will be effective regardless of any investigation
      that any party has undertaken or failed to undertake. Unless otherwise
      stated in this Agreement, and except for instances of fraud, the
      representations, warranties and agreements will survive the Closing Date
      and continue in full force and effect until one (1) year after the Closing
      Date.

	 	 
	11.2. 	
      Further Assurances. Each of the parties hereto
      will co-operate with the others and execute and deliver to the other
      parties hereto such other instruments and documents and take such other
      actions as may be reasonably requested from time to time by any other
      party hereto as necessary to carry out, evidence, and confirm the intended
      purposes of this Agreement.

	 	 
	11.3. 	
      Amendment. This Agreement may not be amended
      except by an instrument in writing signed by each of the
parties.

	 	 
	11.4. 	
      Expenses. Each of the parties will be responsible
      for all costs (including, but not limited to, financial advisory,
      accounting, legal and other professional or consulting fees and expenses)
      incurred by it in connection with the transactions hereby
    contemplated.

	 	 
	11.5. 	
      Entire Agreement. This Agreement, the schedules
      attached hereto and the other documents in connection with this
      transaction contain the entire agreement between the parties with respect
      to the subject matter hereof and supersede all prior arrangements and
      understandings, both written and oral, expressed or implied, with respect
      thereto. Any preceding correspondence or offers are expressly superseded
      and terminated by this Agreement.

	11.6. 	Notices. All notices and other communications
      required or permitted under this Agreement must be in writing and will be
      deemed given if sent by personal delivery, faxed with electronic
      confirmation of delivery, internationally-recognized express courier or
      registered or certified mail (return receipt
requested), postage prepaid, to the parties at the following addresses (or at
such other address for a party as will be specified by like notice): 

If to Lexaria or PoViva at: 

156 Valleyview Road 

  Kelowna,
  British Columbia 

  Canada V1X 3M4 

  Attention: Christopher Bunka

Fax:            
  250.765.2599

  E-mail:       
bossbunka@gmail.com 

If to the PoViva Members: 

MarianWashington 

  232 Marshside
  Drive 

St. Augustine FL 32080

Fax: 

E-mail:  

Michele Reillo 

  232 Marshside Drive
  

St. Augustine FL 32080

Fax: 

E-mail:  

All such notices and other
communications will be deemed to have been received: 

	 	(a) 	
      in the case of personal delivery, on the date of such
      delivery;

	 	 	 
	 	(b) 	
      in the case of a fax, when the party sending such fax has
      received electronic confirmation of its delivery;

	 	 	 
	 	(c) 	
      in the case of delivery by internationally-recognized
      express courier, on the business day following dispatch; and

	 	 	 
	 	(d) 	
      in the case of mailing, on the fifth business day
      following mailing.

	11.7. 	
      Headings. The headings contained in this Agreement
      are for convenience purposes only and will not affect in any way the
      meaning or interpretation of this Agreement.

	11.8. 	
      Benefits. This Agreement is and will only be
      construed as for the benefit of or enforceable by those persons party to
      this Agreement.

	 	 
	11.9. 	
      Assignment. This Agreement may not be assigned
      (except by operation of law) by any party without the consent of the other
      parties.

	 	 
	11.10. 	
      Governing Law. This Agreement will be governed by
      and construed in accordance with the laws of the State of Nevada
      applicable to contracts made and to be performed therein.

	 	 
	11.11. 	
      Construction. The language used in this Agreement
      will be deemed to be the language chosen by the parties to express their
      mutual intent, and no rule of strict construction will be applied against
      any party.

	 	 
	11.12. 	
      Gender. All references to any party will be read
      with such changes in number and gender as the context or reference
      requires.

	 	 
	11.13. 	
      Business Days. If the last or appointed day for
      the taking of any action required or the expiration of any rights granted
      herein shall be a Saturday, Sunday or a legal holiday in the State of
      Nevada, then such action may be taken or right may be exercised on the
      next succeeding day which is not a Saturday, Sunday or such a legal
      holiday.

	 	 
	11.14. 	
      Counterparts. This Agreement may be executed in
      one or more counterparts, all of which will be considered one and the same
      agreement and will become effective when one or more counterparts have
      been signed by each of the parties and delivered to the other parties, it
      being understood that all parties need not sign the same
    counterpart.

	 	 
	11.15. 	
      Digital Execution. This Agreement may be executed
      by delivery of executed signature pages by electronic copy (scan and
      email, or facsimile) and such execution will be effective for all
      purposes.

	 	 
	11.16. 	
      Schedules and Exhibits. The schedules and exhibits
      are attached to this Agreement and incorporated
herein.

[SIGNATURE PAGE FOLLOWS] 

IN WITNESS WHEREOF the parties hereto have executed this
Agreement as of the day and year first above written. 

LEXARIA BIOSCIENCE CORP. 

 

	Per: ____________________________________
	Its: Chief Executive Officer and 
	Authorized Signatory 

 

POVIVA TEA, LLC 

 

	Per: /s/ John
      Docherty                                                     
      	 
	       John Docherty 	 
	Its: Managing Member 	 
	  	 
	  	 
	Per: /s/ Christopher
      Bunka                                              
      	 
	       Christopher Bunka
    	 
	Its: Managing Member 	 
	  	 
	  	 
	Per:  /s/ Michelle
      Reillo                                                    
      	 
	        Michele Reillo
    	 
	Its:  Managing Member 	 
	  	 
	  	 
	  	 
	/s/Marina
      Washington	 
	MARIAN WASHINGTON 	 
	  	 
	  	 
	  	 
	  	 
	/s/Michelle
    Reillo	 
	MICHELE REILLO 	 

SCHEDULE 1 
TO PURCHASE AGREEMENT 
AMONG LEXARIA
BIOSCIENCES CORP., POVIVA LLC, AND THE POVIVA MEMBERS AS 
SET OUT IN THE
PURCHASE AGREEMENT 

Any capitalized terms not defined in this Schedule 1 have the
meaning ascribed to them in the Purchase Agreement to which this Schedule 1 is
attached.

The Net Profit Royalty, or NPR reserved herein shall be subject
to the following: 

1.        Definitions 

a.        "Gross
Revenues" means the aggregate of the following revenues (without
duplication) of the Products actually received by the Payor in each quarterly
period: 

	(i) 	
      the revenue from arm's length purchasers of all Products;
      

	 	 
	(ii) 	
      the fair market value of all Products sold to persons not
      dealing at arm's length with the PoViva or its Affiliates; and 

	 	 
	(iii) 	
      any proceeds of insurance on Products.

b.        "Net
Profits" means Gross Revenues less Permissible Deductions. 

c.        “Payor”
means PoViva and its Affiliates. 

d.        “Permissible
Deductions” means the aggregate of the following charges (without
duplication) that are paid or accrued with respect to the Products in each
quarterly period including all those items to determine “Net Income” as defined
by US GAAP and/or IFRS accounting principles including but not limited to

	(i) 	
      cost of goods sold; 

	 	 
	(ii) 	
      any sums received and thereafter refunded; 

	 	 
	(iii) 	
      any withholding tax, sales tax, consumption tax or other
      applicable taxes collected in respect of the sales; 

	 	 
	(iv) 	
      any and all sales which are refundable until earned or
      forfeited (but all non-refundable advances or advances which are subject
      only to delivery or the passage of time shall be included in Gross
      Revenues); 

	 	 
	(v) 	
      any payments of Gross Revenues payable to any
      non-Affiliate of the Payor such as but not limited to third party sales
      commissions, etc; 

	 	 
	(vi) 	
      all insurance; 

	 	 
	(vii) 	
      all license fees or royalties; and

(viii)              
all other operating expenses as defined by US GAAP and IFRS accounting
principles. 

e.        “Products”
means all products produced by, or on behalf of, PoViva or its Affiliates, and
which incorporate the technology represented by the Patents; 

f.        “GAAP”
means United States Generally Accepted Accounting Principles, or Canadian
Generally Accepted Accounting Principles, as may be adopted by PoViva from time
to time.

g.        “IFRS”
means International Financial Reporting Standards, as may be adopted by PoViva
from time to time.

2.        Terms of
Royalty 

            a.       
Estimation of Royalty. The Royalty will consist of a 2.5% Net Profit
Royalty calculated on a quarterly basis.

            b.       
Frequency of Payment of Royalty. The Royalty shall be due and payable
within forty-five (45) calendar days after the end date of each fiscal quarter
of PoViva (fiscal year end is currently August 31).

            c.       
Method of Making Payments. All payments required hereunder may be mailed
or delivered to the royalty holder at such address designated by the recipient
in writing from time to time in accordance with Section 11.6 of the Purchase
Agreement. The delivery or the deposit in the mail of any payment hereunder on
or before the due date thereof shall be deemed timely payment hereunder. 

3.        Records and
Reports 

            a.       
Records, Inspection and Audit. Within seventy five (75) days following
the end of each fiscal year, commencing with the first fiscal year following the
effectiveness of this NPR in which any Products are sold, (the Payor shall
deliver to the royalty holder a statement of the Royalty paid for said fiscal
year (the "Statement"). 

            b.       
Objections. All Royalty payments will be considered final and in full
satisfaction of all obligations of the Payor with respect thereto, unless within
ninety (90) days after receipt by the Royalty Holder of a Statement in respect
of such Royalty payments. The Royalty Holder disputes any calculation of Royalty
by delivering to the Payor a written notice (the "Objection Notice")
describing and setting forth a specific objection Upon delivery of an Objection
Notice, the Royalty Holder shall have the right within a period of ninety (90)
days from the date of the Objection Notice, upon reasonable notice to the Payor,
to inspect the Payor's books and records relating to the Royalty payments made
in the applicable fiscal year and to conduct an independent audit of such books
and records at its own cost and expense. All books and records used and kept by
the Payor to calculate the Royalty due hereunder will be kept in accordance with
GAAP and/or IFRS. If such audit determines that there has been a deficiency or
an excess in the Royalty payments made to the Royalty Holder in the applicable
fiscal year, such deficiency or excess will be resolved by adjusting the next
payment due hereunder. The Royalty Holder will pay all the costs and expenses of
such audit unless a deficiency of ten (10%) percent or more of the amount due is
determined to exist. The Payor will pay the costs and expenses of such audit if
a deficiency of ten (10%) percent or more of the amount due is determined to
exist. 

            c.       
Objections. If the Royalty Holder does not deliver an Objection Notice
during the ninety (90) day period after receipt of a Statement, all payments of
Royalty for the fiscal year will be considered final and in full satisfaction of
all obligations of the Payor with respect thereto.

4.        Inurement

The Royalty reserved herein shall run with Patents and be
binding on all subsequent owners of the Patents, including any amendments,
relocations, patents of the same or additional or alternative rights to mine as
may be conferred by any changes in the mineral laws of the United States. 

5.          
Duration 

The Royalty hereunder shall be effective until the earlier of:
(i) the 20th anniversary of the Closing Date (as defined therein) of
the Purchase Agreement, or (ii) the death of the Royalty Recipient.

6.           No
Assignment by Royalty Holder 

The Royalty Holder may not transfer, pledge, mortgage, assign,
charge or otherwise encumber all or any part of its right, title and interest in
and to its Royalty reserved hereunder. 

SCHEDULE 2 
TO PURCHASE AGREEMENT 
AMONG LEXARIA
BIOSCIENCES CORP., POVIVA LLC, AND THE POVIVA MEMBERS AS 
SET OUT IN THE
PURCHASE AGREEMENT 

BILL OF SALE 

	TO: 	LEXARIA BIOSCIENCES CORP. (the
      “Purchaser”) 
	  	  
	FROM: 	MARIAN WASHINGTON AND MICHELLE
      REILLO (jointly and severally, the “Vendor”)

            For
good and valuable consideration (the receipt and sufficiency of which is hereby
acknowledged by the undersigned), the Vendor hereby assigns, sets over, conveys
and transfers to the Purchaser all of its right, title and membership interest
in and to PoViva Tea, LLC (the “Subject Interest”), and all right, title,
property and claim whatsoever in respect thereof. 

            TO
HOLD the said Subject Interest and every part thereof, and all the right, title
and interest of the Vendor therein and thereto, unto and to the use of the
Purchaser. 

            AND
the Vendor does hereby, covenant, promise and agree with the Purchaser: THAT the
Vendor is now rightfully and absolutely possessed of and entitled to the said
Subject Interest and every part thereof; AND that the Vendor now has good right
to assign the same unto the Purchaser, and according to the true intent and
meaning of this Bill of Sale; AND that the Purchaser, shall and may from time to
time, and at all times hereafter, peaceably and quietly have, hold, possess, and
enjoy the said Subject Interest and every part thereof, to and for its own use
and benefit, without any manner of hindrance, interruption, molestation, claim
or demand whatsoever of, from or by the Vendor or any person or persons
whomsoever; AND that the said Subject Interest are free and clear from all
encumbrances. 

            IT
IS AGREED that this Bill of Sale and everything herein contained shall enure to
the benefit of and be binding upon the executors, administrators and assigns or
successors and assigns of the parties hereto respectively. 

      
     The undersigned hereby agrees to execute such
further documents, transfers, assignments, conveyances, consents and assurances
as may be necessary to give full effect to the transactions referred to herein.

DATED as of the 25th day of October 2017 

 

	/s/Michelle
      Reillo 	 	/s/Marina Washington 
	MICHELEE REILLO 	 	 MARIAN WASHINGTONExhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (“Agreement”) is made and entered into by and between EP Energy Corporation, a Delaware corporation (the “Company”), and Russell Parker (“Employee”) effective as of November 1, 2017 (the “Effective Date”).

 

1.                                      Employment.  During the Employment Period (as defined in Section 4), the Company shall employ Employee.  Effective as of the first Business Day (as defined below) following the date on which the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2017 is filed, and for the duration of the Employment Period thereafter, Employee shall serve as President and Chief Executive Officer of the Company and in such other position or positions as may be assigned from time to time by the board of directors of the Company (the “Board”).

 

2.                                      Duties and Responsibilities of Employee.

 

(a)                                 During the Employment Period, Employee shall devote Employee’s full business time, attention and best efforts to the businesses of the Company and its direct and indirect subsidiaries (collectively, with the Company, the “Company Group”) as may be requested by the Board from time to time.  Employee’s duties shall include those normally incidental to the position(s) identified in Section 1, as well as such additional duties as may be assigned to Employee by the Board from time to time, which duties may include providing services to other members of the Company Group in addition to the Company.  Employee may, without violating this Agreement, (i) as a passive investment, own publicly traded securities in such form or manner as will not require any services by Employee in the operation of the entities in which such securities are owned; (ii) engage in charitable and civic activities; or (iii) with the prior written consent of the Board, engage in other personal and passive investment activities, in each case, so long as such interests or activities do not interfere with Employee’s ability to fulfill Employee’s duties and responsibilities under this Agreement and are not inconsistent with Employee’s obligations to the Company Group or competitive with the business of the Company Group.

 

(b)                                 Employee hereby represents and warrants that Employee is not the subject of, or a party to, any employment agreement, non-competition, non-solicitation, restrictive covenant, non-disclosure agreement, or any other agreement, obligation, restriction or understanding that would prohibit Employee from executing this Agreement or fully performing each of Employee’s duties and responsibilities hereunder, or would in any manner, directly or indirectly, limit or affect any of the duties and responsibilities that may now or in the future be assigned to Employee hereunder.  Employee expressly acknowledges and agrees that Employee is strictly prohibited from using or disclosing any confidential information belonging to any prior employer (excluding any member of the Company Group) in the course of performing services for any member of the Company Group, and Employee shall not do so.  Employee shall not introduce documents or other materials containing confidential information of any such prior employer to the premises or property (including computers and computer systems) of any member of the Company Group.

 

 

3.                                      Compensation.

 

(a)                                 Base Salary.  During the Employment Period, the Company shall pay to Employee an annualized base salary of $500,000 (the “Base Salary”) in consideration for Employee’s services under this Agreement, payable in substantially equal installments in conformity with the Company’s customary payroll practices for similarly situated employees as may exist from time to time, but no less frequently than monthly.

 

(b)                                 Annual Bonus.  The Company shall establish, and Employee shall be eligible to participate in, an annual performance bonus plan under which Employee will be eligible for an annual bonus for each complete calendar year that Employee is employed by the Company hereunder (the “Annual Bonus”).  The performance targets that must be achieved in order to be eligible for certain bonus levels shall be established by the Board (or a committee thereof) annually, in its sole discretion, and communicated to Employee within the first ninety (90) days of the applicable calendar year (the “Bonus Year”).  Employee’s target annual bonus will be at least 100% of Employee’s Base Salary, but the actual amount of the Annual Bonus will be determined in the discretion of the Board (or a committee thereof) depending on performance.  Each Annual Bonus, if any, shall be paid as soon as administratively feasible after the Board (or a committee thereof) certifies whether the applicable performance targets for the applicable Bonus Year have been achieved, but in no event later than March 15 following the end of such Bonus Year.  Notwithstanding anything in this Section 3(b) to the contrary, no Annual Bonus, if any, nor any portion thereof, shall be payable for any Bonus Year unless Employee remains continuously employed by the Company from the Effective Date through the date on which such Annual Bonus is paid; provided, however, that if Employee ceases to be employed by the Company (i) due to Employee’s resignation from employment for Good Reason, (ii) as a result of the death or Disability of Employee or (iii) as a result of the termination of Employee by the Company without Cause, in each case, after the end of a Bonus Year but prior to the date on which any applicable Annual Bonus for such Bonus Year is paid, Employee shall be entitled to the full amount of any Annual Bonus.

 

4.                                      Term of Employment.  The initial term of Employee’s employment under this Agreement shall be for the period beginning on the Effective Date and ending on the fourth anniversary of the Effective Date (the “Initial Term”).  On the fourth anniversary of the Effective Date and on each subsequent anniversary thereafter, the term of Employee’s employment under this Agreement shall automatically renew and extend for a period of twelve (12) months (each such twelve (12)-month period being a “Renewal Term”) unless written notice of non-renewal is delivered by either party to the other not less than thirty (30) days prior to the expiration of the then-existing Initial Term or Renewal Term, as applicable.  Notwithstanding any other provision of this Agreement, Employee’s employment pursuant to this Agreement may be terminated at any time in accordance with Section 7.  The period from the Effective Date through the expiration of this Agreement or, if sooner, the termination of Employee’s employment pursuant to this Agreement, regardless of the time or reason for such termination, shall be referred to herein as the “Employment Period.”

 

5.                                      Business Expenses.  Subject to Section 23, the Company shall reimburse Employee for Employee’s reasonable out-of-pocket business-related expenses actually incurred in the performance of Employee’s duties under this Agreement so long as Employee timely submits

 

2

 

all documentation for such reimbursement, as required by Company policy in effect from time to time.  Any such reimbursement of expenses shall be made by the Company upon or as soon as practicable following receipt of such documentation (but in any event not later than the close of Employee’s taxable year following the taxable year in which the expense is incurred by Employee).  In no event shall any reimbursement be made to Employee for expenses incurred after the date of Employee’s termination of employment with the Company.

 

6.                                      Benefits.  During the Employment Period, Employee shall be eligible to participate in the same benefit plans and programs in which other similarly situated Company employees are eligible to participate, subject to the terms and conditions of the applicable plans and programs in effect from time to time.  The Company shall not, however, by reason of this Section 6, be obligated to institute, maintain, or refrain from changing, amending, or discontinuing, any such plan or policy, so long as such changes are similarly applicable to similarly situated Company employees generally.

 

7.                                      Termination of Employment.

 

(a)                                 Company’s Right to Terminate Employee’s Employment for Cause.  The Company shall have the right to terminate Employee’s employment hereunder at any time for “Cause.”  For purposes of this Agreement, “Cause” shall mean:

 

(i)                                     Employee’s material breach of this Agreement or any other written agreement between Employee and one or more members of the Company Group, including Employee’s breach of any material representation, warranty or covenant made under any such agreement, or Employee’s material breach of any policy or code of conduct established by a member of the Company Group in a writing previously provided to Employee and applicable to Employee; provided, however, that if Employee’s actions or omissions as set forth in this Section 7(a)(i) are of such a nature that they are curable by Employee, such actions or omissions must remain uncured thirty (30) days after the Board has provided Employee written notice of the obligation to cure such actions or omissions;

 

(ii)                                  the commission of willful misconduct, breach of fiduciary duty, fraud, theft or embezzlement on the part of Employee;

 

(iii)                               the commission by Employee of, or conviction or indictment of Employee for, or plea of nolo contendere by Employee to, any felony (or state law equivalent) or any crime involving moral turpitude (each, a “Crime”); or

 

(iv)                              Employee’s willful failure or refusal, other than due to Disability, to perform Employee’s obligations pursuant to this Agreement or to follow any lawful directive from the Board that is commensurate with Employee’s position; provided, however, that if Employee’s actions or omissions as set forth in this Section 7(a)(iv) are of such a nature that they are curable by Employee, such actions or omissions must remain uncured thirty (30) days after the Board has provided Employee written notice of the obligation to cure such actions or omissions.

 

3

 

(b)                                 Company’s Right to Terminate for Convenience.  The Company shall have the right to terminate Employee’s employment for convenience at any time and for any reason, or no reason at all, upon written notice to Employee.

 

(c)                                  Employee’s Right to Terminate for Good Reason.  Employee shall have the right to terminate Employee’s employment with the Company at any time for “Good Reason.”  For purposes of this Agreement, “Good Reason” shall mean:

 

(i)                                     a material diminution in Employee’s Base Salary;

 

(ii)                                  a material breach by the Company of any of its covenants or obligations under this Agreement; or

 

(iii)                               the relocation of the geographic location of Employee’s principal place of employment by more than fifty (50) miles from the location of Employee’s principal place of employment as of the Effective Date.

 

Notwithstanding the foregoing provisions of this Section 7(c) or any other provision of this Agreement to the contrary, any assertion by Employee of a termination for Good Reason shall not be effective unless all of the following conditions are satisfied: (A) the condition described in Section 7(c)(i), (ii) or (iii) giving rise to Employee’s termination of employment must have arisen without Employee’s consent; (B) Employee must provide written notice to the Board of the existence of such condition(s) within thirty (30) days of the initial existence of such condition(s); (C) the condition(s) specified in such notice must remain uncorrected for thirty (30) days following the Board’s receipt of such written notice; and (D) the date of Employee’s termination of employment must occur within sixty (60) days after the initial existence of the condition(s) specified in such notice.

 

(d)                                 Death or Disability.  Upon the death or Disability of Employee, Employee’s employment with Company shall terminate with no further obligation under this Agreement of either party hereunder.  A “Disability” shall exist if Employee is unable to perform the essential functions of Employee’s position (after accounting for reasonable accommodation, if applicable), due to physical or mental impairment or other incapacity that continues, or can reasonably be expected to continue, for a period in excess of one hundred-twenty (120) consecutive days or one hundred-eighty (180) days, whether or not consecutive, in any twelve (12)-month period.  The determination of whether Employee has incurred a Disability shall be made in good faith by the Board.

 

(e)                                  Employee’s Right to Terminate for Convenience.  In addition to Employee’s right to terminate Employee’s employment for Good Reason, Employee shall have the right to terminate Employee’s employment with the Company for convenience at any time and for any other reason, or no reason at all, upon thirty (30) days’ advance written notice to the Company; provided, however, that if Employee has provided notice to the Company of Employee’s termination of employment, the Company may determine, in its sole discretion, that such termination shall be effective on any date prior to the effective date of termination provided in such notice (and, if such earlier date is so required, then it shall not change the basis for

 

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Employee’s termination of employment nor be construed or interpreted as a termination of employment pursuant to Section 7(b)).

 

(f)                                   Effect of Termination.

 

(i)                                     If Employee’s employment hereunder is terminated (I) by the Company without Cause pursuant to Section 7(b), (II) upon the expiration of the then-existing Initial Term or Renewal Term, as applicable, as a result of a non-renewal of the Employment Period by the Company pursuant to Section 4, or (III) by Employee for Good Reason pursuant to Section 7(c), then, in each case, so long as (and only if) Employee: (A) executes on or before the Release Expiration Date (as defined below), and does not revoke within the time provided by the Company to do so, a release of all claims in a form acceptable to the Company (the “Release”), which Release shall be substantially in the form attached as Exhibit A (and the Company may reasonably adjust such form to reflect any developments in applicable law and the circumstances of Employee’s separation from employment); and (B) abides by the terms of each of Sections 9, 10 and  11, then the Company shall make severance payments to Employee in a total amount equal to twelve (12) months’ worth of Employee’s Base Salary for the year in which such termination occurs (such total severance payments being referred to as the “Severance Payment”).  The Severance Payment will be divided into twelve (12) substantially equal installments.  On the Company’s first regularly scheduled pay date that is on or after the date that is sixty (60) days after the date on which Employee’s employment terminates (the “Termination Date”), the Company shall pay to Employee, without interest, a number of such installments equal to the number of such installments that would have been paid during the period beginning on the Termination Date and ending on the Company’s first regularly scheduled pay date that is on or after the date that is sixty (60) days after the Termination Date had the installments been paid on a monthly basis commencing on the Company’s first regularly scheduled pay date coincident with or next following the Termination Date, and each of the remaining installments shall be paid on a monthly basis thereafter; provided, however, that (1) to the extent, if any, that the aggregate amount of the installments of the Severance Payment that would otherwise be paid pursuant to the preceding provisions of this Section 7(f)(i) after March 15 of the calendar year following the calendar year in which the Termination Date occurs (the “Applicable March 15”) exceeds the maximum exemption amount under Treasury Regulation Section 1.409A-1(b)(9)(iii)(A), then such excess shall be paid to Employee in a lump sum on the Applicable March 15 (or the first Business Day preceding the Applicable March 15 if the Applicable March 15 is not a Business Day) and the installments of the Severance Payment payable after the Applicable March 15 shall be reduced by such excess (beginning with the installment first payable after the Applicable March 15 and continuing with the next succeeding installment until the aggregate reduction equals such excess), and (2) all remaining installments of the Severance Payment, if any, that would otherwise be paid pursuant to the preceding provisions of this Section 7(f)(i) after December 31 of the calendar year following the calendar year in which the Termination Date occurs shall be paid with the installment of the Severance Payment, if any, due in December of the calendar year following the calendar year in which the Termination Date occurs.  “Business Day” shall mean any day except a Saturday, Sunday or other day on which

 

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commercial banks in New York, New York or Houston, Texas are authorized or required by law to be closed.

 

(ii)                                  Notwithstanding anything herein to the contrary, the Severance Payment (and any portion thereof) shall not be payable if Employee’s employment hereunder terminates upon the expiration of the then-existing Initial Term or Renewal Term, as applicable, as a result of a non-renewal of the Employment Period by Employee pursuant to Section 4.

 

(iii)                               If the Release is not executed and returned to the Company on or before the Release Expiration Date, or the required revocation period has not fully expired without revocation of the Release by Employee, then Employee shall not be entitled to any portion of the Severance Payment.  As used herein, the “Release Expiration Date” is that date that is twenty-one (21) days following the date upon which the Company delivers the Release to Employee (which shall occur no later than seven (7) days after the Termination Date or, in the event of severance eligibility due to the circumstances described in Section 7(h) below, within seven (7) days after the final order of acquittal referenced in Section 7(h)) or, in the event that such termination of employment is “in connection with an exit incentive or other employment termination program” (as such phrase is defined in the Age Discrimination in Employment Act of 1967, as amended), the date that is forty-five (45) days following such delivery date.

 

(g)                                  After-Acquired Evidence.  Notwithstanding any provision of this Agreement to the contrary, in the event that the Company determines that Employee is eligible to receive the Severance Payment pursuant to Section 7(f) but, within one (1) year after such determination, the Company subsequently acquires evidence or determines that: (i) Employee has failed to abide by the terms of Sections 9, 10 or 11; or (ii) a Cause condition existed prior to the Termination Date that, had the Company been fully aware of such condition, would have resulted in the termination of Employee’s employment pursuant to Section 7(a), then the Company shall have the right to cease the payment of any future installments of the Severance Payment and Employee shall promptly return to the Company all installments of the Severance Payment received by Employee prior to the date that the Company determines that the conditions of this Section 7(g) have been satisfied.

 

(h)                                 Indictment.  Notwithstanding any other provision of this Agreement, if Employee’s employment hereunder is terminated by the Company for Cause due to the indictment of Employee for any Crime, and within two (2) years following the Termination Date, Employee is acquitted of such Crime by a final order of a court of competent jurisdiction (or if Employee is not convicted of any such Crime within two years after the date of indictment and charges for such Crime are no longer pending), then (i) Employee’s employment hereunder shall be deemed to have been terminated by the Company without Cause, and (ii) so long as (and only if) Employee (A) executes the Release on or before the Release Expiration Date and does not revoke the Release within the time provided by the Company to do so and (B) abides by the terms of each of Sections 9, 10 and 11, the Company shall (x) make a severance payment to Employee, within 30 days of the final order of acquittal, in an amount equal to the amount of the Severance Payment that Employee would have been eligible to receive during the period commencing on the Termination Date and ending on the date of the final order of acquittal had Employee’s employment hereunder been

 

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terminated by the Company without Cause, and (y) if such severance payment referenced in subclause (x) is less than the total amount of the Severance Payment for which Employee is eligible, make payments of the remaining amount of the Severance Payment to Employee in substantially equal monthly installments pursuant to Section 7(f)(i) until the entire Severance Payment has been paid.

 

8.                                      Disclosures.  Promptly (and in any event, within three (3) Business Days) upon becoming aware of (a) any actual or potential Conflict of Interest or (b) any lawsuit, claim or arbitration filed against or involving Employee or any trust or vehicle owned or controlled by Employee, in each case, Employee shall disclose such actual or potential Conflict of Interest or such lawsuit, claim or arbitration to the Board.  A “Conflict of Interest” shall exist when Employee engages in, or plans to engage in, any activities, associations, or interests that conflict with, or create an appearance of a conflict with, Employee’s duties, responsibilities, authorities, or obligations for and to the Company Group.

 

9.                                      Confidentiality.  In the course of Employee’s employment with the Company and the performance of Employee’s duties on behalf of the Company Group hereunder, Employee will be provided with, and will have access to, Confidential Information (as defined below).  In consideration of Employee’s receipt and access to such Confidential Information and in exchange for other valuable consideration provided hereunder, and as a condition of Employee’s employment, Employee shall comply with this Section 9.

 

(a)                                 Both during the Employment Period and thereafter, except as expressly permitted by this Agreement or by directive of the Board, Employee shall not disclose any Confidential Information to any person or entity and shall not use any Confidential Information except for the benefit of the Company Group.  Employee acknowledges and agrees that Employee would inevitably use and disclose Confidential Information in violation of this Section 9 if Employee were to violate any of the covenants set forth in Section 10.  Employee shall follow all Company policies and protocols regarding the physical security of all documents and other material containing Confidential Information (regardless of the medium on which Confidential Information is stored).  The covenants of this Section 9(a) shall apply to all Confidential Information, whether now known or later to become known to Employee during the period that Employee is employed by or affiliated with the Company or any other member of the Company Group.

 

(b)                                 Notwithstanding any provision of Section 9(a) to the contrary, Employee may make the following disclosures and uses of Confidential Information:

 

(i)                                     disclosures to other employees of the Company Group who have a need to know the information in connection with the businesses of the Company Group;

 

(ii)                                  disclosures to customers and suppliers when, in the reasonable and good faith belief of Employee, such disclosure is in connection with Employee’s performance of Employee’s duties under this Agreement and is in the best interests of the Company Group;

 

(iii)                               disclosures and uses that are approved in writing by the Board; or

 

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(iv)                              disclosures to a person or entity that has (x) been retained by a member of the Company Group to provide services to one or more members of the Company Group and (y) agreed in writing to abide by the terms of a confidentiality agreement.

 

(c)                                  Upon the expiration of the Employment Period, and at any other time upon request of the Company, Employee shall promptly surrender and deliver to the Company all documents (including electronically stored information) and all copies thereof and all other materials of any nature containing or pertaining to all Confidential Information in Employee’s possession, custody or control and Employee shall not retain any such document or other materials.  Within ten (10) days of any such request, Employee shall certify to the Company in writing that all such documents and materials have been returned to the Company.

 

(d)                                 All trade secrets, non-public information, designs, ideas, concepts, improvements, product developments, discoveries and inventions, whether patentable or not, that are conceived, made, developed or acquired by or disclosed to Employee, individually or in conjunction with others, during the period that Employee is employed by the Company or any other member of the Company Group (whether during business hours or otherwise and whether on the Company’s premises or otherwise) that relate to any member of the Company Group’s businesses or properties, products or services (including all such information relating to corporate opportunities, operations, future plans, methods of doing business, business plans, strategies for developing business and market share, research, financial and sales data, pricing terms, evaluations, opinions, interpretations, acquisition prospects, the identity of customers or their requirements, the identity of key contacts within customers’ organizations or within the organization of acquisition prospects, or marketing and merchandising techniques, prospective names and marks) is defined as “Confidential Information.”  Moreover, all documents, videotapes, written presentations, brochures, drawings, memoranda, notes, records, files, correspondence, manuals, models, specifications, computer programs, e-mail, voice mail, electronic databases, maps, drawings, architectural renditions, models and all other writings or materials of any type including or embodying any of such information, ideas, concepts, improvements, discoveries, inventions and other similar forms of expression are and shall be the sole and exclusive property of the Company Group and be subject to the same restrictions on disclosure applicable to all Confidential Information pursuant to this Agreement.  For purposes of this Agreement, Confidential Information shall not include any information that (i) is or becomes generally available to the public other than as a result of a disclosure or wrongful act of Employee or any of Employee’s agents; (ii) was available to Employee on a non-confidential basis before its disclosure by a member of the Company Group; or (iii) becomes available to Employee on a non-confidential basis from a source other than a member of the Company Group; provided, however, that such source is not bound by a confidentiality agreement with, or other obligation with respect to confidentiality to, a member of the Company Group.

 

(e)                                  Notwithstanding the rest of this Section 9:

 

(i)                                     Employee shall not be prevented from, nor shall Employee be criminally or civilly liable under any federal or state trade secret law for, making a disclosure of trade secrets or other Confidential Information that is: (A) made (x) in confidence to a federal, state or local government official, either directly or indirectly, or to

 

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an attorney, and (y) solely for the purpose of reporting or investigating a suspected violation of applicable law; (B) made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; or (C) protected under the whistleblower provisions of applicable law; and

 

(ii)                                  in the event Employee files a lawsuit for retaliation by the Company for Employee’s reporting of a suspected violation of law, Employee may (A) disclose a trade secret to Employee’s attorney and (B) use the trade secret information in the court proceeding related to such lawsuit, in each case, if Employee (x) files any document containing such trade secret under seal; and (y) does not otherwise disclose such trade secret, except pursuant to court order.

 

10.                               Non-Competition; Non-Solicitation.

 

(a)                                 The Company shall provide Employee access to Confidential Information for use only during the Employment Period, and Employee acknowledges and agrees that the Company Group will be entrusting Employee, in Employee’s unique and special capacity, with developing the goodwill of the Company Group, and in consideration thereof and in consideration of the Company providing Employee with access to Confidential Information and as an express incentive for the Company to enter into this Agreement and employ Employee, Employee has voluntarily agreed to the covenants set forth in this Section 10.  Employee agrees and acknowledges that the limitations and restrictions set forth herein, including geographical and temporal restrictions on certain competitive activities, are reasonable in all respects, will not cause Employee undue hardship, and are material and substantial parts of this Agreement intended and necessary to prevent unfair competition and to protect the Company Group’s Confidential Information, goodwill and substantial and legitimate business interests.

 

(b)                                 During the Prohibited Period, Employee shall not, without the prior written approval of the Board, directly or indirectly, for Employee or on behalf of or in conjunction with any other person or entity of any nature:

 

(i)                                     engage in or participate within the Market Area in competition with any member of the Company Group in any aspect of the Business, which prohibition shall prevent Employee from directly or indirectly owning, managing, operating, joining, becoming an officer, director, employee or consultant of, or loaning money to, or selling or leasing equipment or real estate to or otherwise being affiliated with any person or entity engaged in, or planning to engage in, the Business in the Market Area in competition, or anticipated competition, with any member of the Company Group;

 

(ii)                                  appropriate any Business Opportunity of, or relating to, the Company Group located in the Market Area;

 

(iii)                               solicit, canvass, approach, encourage, entice or induce any customer or supplier of any member of the Company Group to cease or lessen such customer’s or supplier’s business with the Company Group; or

 

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(iv)                              solicit, canvass, approach, encourage, entice or induce any employee or contractor of the Company Group to terminate his, her or its employment or engagement with any member of the Company Group.

 

(c)                                  Because of the difficulty of measuring economic losses to the Company Group as a result of a breach or threatened breach of the covenants set forth in Section 9 and in this Section 10, and because of the immediate and irreparable damage that would be caused to the members of the Company Group for which they would have no other adequate remedy, the Company and each other member of the Company Group shall be entitled to enforce the foregoing covenants, in the event of a breach or threatened breach, by injunctions and restraining orders from any court of competent jurisdiction, without the necessity of showing any actual damages or that money damages would not afford an adequate remedy, and without the necessity of posting any bond or other security.  The aforementioned equitable relief shall not be the Company’s or any other member of the Company Group’s exclusive remedy for a breach but instead shall be in addition to all other rights and remedies available to the Company and each other member of the Company Group at law and equity.

 

(d)                                 The covenants in this Section 10, and each provision and portion hereof, are severable and separate, and the unenforceability of any specific covenant (or portion thereof) shall not affect the provisions of any other covenant (or portion thereof).  Moreover, in the event any arbitrator or court of competent jurisdiction shall determine that the scope, time or territorial restrictions set forth are unreasonable, then it is the intention of the parties that such restrictions be enforced to the fullest extent which such arbitrator or court deems reasonable, and this Agreement shall thereby be reformed.

 

(e)                                  The following terms shall have the following meanings:

 

(i)                                     “Business” shall mean the business and operations that are the same or similar to those performed by the Company and any other member of the Company Group for which Employee provides services or about which Employee obtains Confidential Information during the Employment Period, which business and operations include acquiring, exploiting and developing oil and gas assets in the Market Area.

 

(ii)                                  “Business Opportunity” shall mean any commercial, investment or other business opportunity relating to the Business.

 

(iii)                               “Market Area” shall mean: (A) the Eagle Ford Shale; (B) the Altamont Field within the Uinta Basin (including the Bluebell and Cedar Rim fields); (C) the Southern Midland Basin; or (D) any other location within twelve and one-half (12.5) miles of any area in which the Company or any other member of the Company Group: (1) is engaged in the Business or in which any member of the Company Group otherwise owned property or interests related to the Business within the twelve (12) months prior to the Termination Date; or (2) has made material plans to conduct the Business within the twelve (12) months prior to the Termination Date of which Employee is aware; provided, however, that the Market Area shall not include any basin in which no member of the Company Group has engaged in the Business during the twelve (12) months prior to the Termination Date.

 

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(iv)                              “Prohibited Period” shall mean the period during which Employee is employed by the Company or any other member of the Company Group and continuing for a period of twelve (12) months following the date that Employee is no longer employed by the Company or any other  member of the Company Group; provided, however, that if Employee’s employment hereunder is terminated by Employee pursuant to Section 7(e) at any time following the expiration of the Initial Term, then the Board may (but shall not be required to), in its sole discretion, modify the Prohibited Period by providing written notice to Employee within ten (10) days following the Termination Date indicating that the Prohibited Period shall continue only for a period of six (6) months following the date that Employee is no longer employed by the Company or any other  member of the Company Group.

 

11.                               Ownership of Intellectual Property.  Employee agrees that the Company shall own, and Employee shall (and hereby does) assign, all right, title and interest (including patent rights, copyrights, trade secret rights, mask work rights, trademark rights, and all other intellectual and industrial property rights of any sort throughout the world) relating to any and all inventions (whether or not patentable), works of authorship, mask works, designs, know-how, ideas and information authored, created, contributed to, made or conceived or reduced to practice, in whole or in part, by Employee during the period in which Employee is or has been employed by or affiliated with the Company or any other member of the Company Group that either (a) relate, at the time of conception, reduction to practice, creation, derivation or development, to any member of the Company Group’s businesses or actual or anticipated research or development, or (b) were developed on any amount of the Company’s or any other member of the Company Group’s time or with the use of any member of the Company Group’s equipment, supplies, facilities or trade secret information (all of the foregoing collectively referred to herein as “Company Intellectual Property”), and Employee shall promptly disclose all Company Intellectual Property to the Company.  All of Employee’s works of authorship and associated copyrights created during the period in which Employee is employed by or affiliated with the Company or any member of the Company Group and in the scope of Employee’s employment shall be deemed to be “works made for hire” within the meaning of the Copyright Act.  Employee shall perform, during and for a period of 24 months after the period in which Employee is or has been employed by or affiliated with the Company or any other member of the Company Group, all reasonable acts deemed necessary by the Company to assist the Company Group, at the Company’s expense, in obtaining and enforcing its rights throughout the world in the Company Intellectual Property.  Such acts may include execution of documents and assistance or cooperation (i) in the filing, prosecution, registration, and memorialization of assignment of any applicable patents, copyrights, mask work, or other applications, (ii) in the enforcement of any applicable patents, copyrights, mask work, moral rights, trade secrets, or other proprietary rights, and (iii) in other legal proceedings related to the Company Intellectual Property.

 

12.                               Arbitration.

 

(a)                                 Subject to Section 12(b), any dispute, controversy or claim between Employee and the Company arising out of or relating to this Agreement or Employee’s employment with the Company will be finally settled by arbitration in Houston, Texas before, and in accordance with the then-existing American Arbitration Association (“AAA”) Employment Arbitration Rules.  The arbitration award shall be final and binding on both parties.  Any

 

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arbitration conducted under this Section 12 shall be heard by a single arbitrator (the “Arbitrator”) selected in accordance with the then-applicable rules of the AAA.  The Arbitrator shall expeditiously (and, if practicable, within ninety (90) days after the selection of the Arbitrator) hear and decide all matters concerning the dispute.  Except as expressly provided to the contrary in this Agreement, the Arbitrator shall have the power to (i) gather such materials, information, testimony and evidence as the Arbitrator deems relevant to the dispute before him or her (and each party will provide such materials, information, testimony and evidence requested by the Arbitrator), and (ii) grant injunctive relief and enforce specific performance.  The decision of the Arbitrator shall be reasoned, rendered in writing, be final and binding upon the disputing parties and the parties agree that judgment upon the award may be entered by any court of competent jurisdiction; provided, however, that the parties agree that the Arbitrator and any court enforcing the award of the Arbitrator shall not have the right or authority to award punitive or exemplary damages to any disputing party.  Each party to the dispute shall pay all costs and expenses incurred by such party in connection with the arbitration of such dispute pursuant to this Section 12.

 

(b)                                 Notwithstanding Section 12(a), either party may make a timely application for, and obtain, judicial emergency or temporary injunctive relief to enforce any of the provisions of Sections 9 through 11; provided, however, that the remainder of any such dispute (beyond the application for emergency or temporary injunctive relief) shall be subject to arbitration under this Section 12.

 

(c)                                  By entering into this Agreement and entering into the arbitration provisions of this Section 12, THE PARTIES EXPRESSLY ACKNOWLEDGE AND AGREE THAT THEY ARE KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVING THEIR RIGHTS TO A JURY TRIAL.

 

(d)                                 Nothing in this Section 12 shall prohibit a party to this Agreement from (i) instituting litigation to enforce any arbitration award, or (ii) joining the other party to this Agreement in a litigation initiated by a person or entity that is not a party to this Agreement.

 

13.                               Defense of Claims.  During the Employment Period and for a period of 24 months thereafter, upon request from the Company, Employee shall cooperate with the Company Group in the defense of any claims or actions that may be made by or against any member of the Company Group that relate to Employee’s actual or prior areas of responsibility.  The Company shall pay or reimburse Employee for all of Employee’s reasonable travel and other direct expenses reasonably incurred, to comply with Employee’s obligations under this Section 13, so long as Employee provides reasonable documentation of such expenses and obtains the Company’s prior approval before incurring such expenses.  Following the Termination Date, in receiving Employee’s assistance under Section 11 or this Section 13, the Company shall provide reasonable compensation (in no event to exceed $300 per day) for Employee’s time in connection with such assistance, taking into account comparable per diem consulting rates then prevalent in the market.  For the avoidance of doubt, regardless of whether the Company provides Employee compensation pursuant to this Section 13, any testimony that Employee provides in the course of providing assistance must be truthful and accurate in all respects.

 

14.                               Withholdings; Deductions.  The Company may withhold and deduct from any benefits and payments made or to be made pursuant to this Agreement (a) all federal, state, local

 

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and other taxes as may be required pursuant to any law or governmental regulation or ruling and (b) any deductions consented to in writing by Employee.

 

15.                               Title and Headings; Construction.  Titles and headings to Sections hereof are for the purpose of reference only and shall in no way limit, define or otherwise affect the provisions hereof.  Any and all Exhibits or Attachments referred to in this Agreement are, by such reference, incorporated herein and made a part hereof for all purposes.  Unless the context requires otherwise, all references herein to an agreement, instrument or other document shall be deemed to refer to such agreement, instrument or other document as amended, supplemented, modified and restated from time to time to the extent permitted by the provisions thereof.  All references to “dollars” or “$” in this Agreement refer to United States dollars.  The words “herein”, “hereof”, “hereunder” and other compounds of the word “here” shall refer to the entire Agreement, including all Exhibits attached hereto, and not to any particular provision hereof.  Wherever the context so requires, the masculine gender includes the feminine or neuter, and the singular number includes the plural and conversely.  All references to “including” shall be construed as meaning “including without limitation.”  Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against any party hereto, whether under any rule of construction or otherwise.  On the contrary, this Agreement has been reviewed by each of the parties hereto and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of the parties hereto.

 

16.                               Applicable Law; Submission to Jurisdiction.  This Agreement shall in all respects be construed according to the laws of the State of Texas without regard to its conflict of laws principles that would result in the application of the laws of another jurisdiction.  With respect to any claim or dispute related to or arising under this Agreement, the parties hereby consent to the arbitration provisions of Section 12 and recognize and agree that should any resort to a court be necessary and permitted under this Agreement, then they consent to the exclusive jurisdiction, forum and venue of the state and federal courts (as applicable) located in Houston, Texas.

 

17.                               Entire Agreement and Amendment.  This Agreement  contains the entire agreement of the parties with respect to the matters covered herein and supersede all prior and contemporaneous agreements and understandings, oral or written, between the parties hereto concerning the subject matter hereof.  This Agreement may be amended only by a written instrument executed by both parties hereto.

 

18.                               Waiver of Breach.  Any waiver of this Agreement must be executed by the party to be bound by such waiver.  No waiver by either party hereto of a breach of any provision of this Agreement by the other party, or of compliance with any condition or provision of this Agreement to be performed by such other party, will operate or be construed as a waiver of any subsequent breach by such other party or any similar or dissimilar provision or condition at the same or any subsequent time.  The failure of either party hereto to take any action by reason of any breach will not deprive such party of the right to take action at any time.

 

19.                               Assignment.  This Agreement is personal to Employee, and neither this Agreement nor any rights or obligations hereunder shall be assignable or otherwise transferred by Employee.  The Company may assign this Agreement without Employee’s consent, including to any member

 

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of the Company Group and to any successor (whether by merger, purchase or otherwise) to all or substantially all of the equity, assets or businesses of the Company.

 

20.                               Notices.  Notices provided for in this Agreement shall be in writing and shall be deemed to have been duly received (a) when delivered in person, (b) when sent by facsimile transmission (with confirmation of transmission) on a Business Day to the number set forth below, if applicable; provided, however, that if a notice is sent by facsimile transmission after normal business hours of the recipient or on a non-Business Day, then it shall be deemed to have been received on the next Business Day after it is sent, (c) on the first Business Day after such notice is sent by express overnight courier service, or (d) on the second Business Day following deposit with an internationally-recognized second-day courier service with proof of receipt maintained, in each case, to the following address, as applicable:

 

If to the Company, addressed to:

 

EP Energy Corporation
 1001 Louisiana St.
 Houston, TX 77002
 Attention: Board of Directors

 

If to Employee, addressed to:

 

Employee’s last known address on file with the Company.

 

21.                               Counterparts.  This Agreement may be executed in any number of counterparts, including by electronic mail or facsimile, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.  Each counterpart may consist of a copy hereof containing multiple signature pages, each signed by one party, but together signed by both parties hereto.

 

22.                               Deemed Resignations.  Except as otherwise determined by the Board or as otherwise agreed to in writing by Employee and any member of the Company Group prior to the termination of Employee’s employment with the Company or any member of the Company Group, any termination of Employee’s employment shall constitute, as applicable, an automatic resignation of Employee: (a) as an officer of the Company and each member of the Company Group; (b) from the Board; and (c) from the board of directors or board of managers (or similar governing body) of any member of the Company Group and from the board of directors or board of managers (or similar governing body) of any corporation, limited liability entity, unlimited liability entity or other entity in which any member of the Company Group holds an equity interest and with respect to which board of directors or board of managers (or similar governing body) Employee serves as such Company Group member’s designee or other representative.

 

23.                               Section 409A.

 

(a)                                 Notwithstanding any provision of this Agreement to the contrary, all provisions of this Agreement are intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the applicable Treasury regulations and administrative guidance issued thereunder (collectively, “Section 409A”) or an exemption

 

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therefrom and shall be construed and administered in accordance with such intent. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment. Any payments to be made under this Agreement upon a termination of Employee’s employment shall only be made if such termination of employment constitutes a “separation from service” under Section 409A.

 

(b)                                 To the extent that any right to reimbursement of expenses or payment of any benefit in-kind under this Agreement constitutes nonqualified deferred compensation (within the meaning of Section 409A), (i) any such expense reimbursement shall be made by the Company no later than the last day of the taxable year following the taxable year in which such expense was incurred by Employee, (ii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (iii) the amount of expenses eligible for reimbursement or in-kind benefits provided during any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year; provided, that the foregoing clause shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period in which the arrangement is in effect.

 

(c)                                  Notwithstanding any provision in this Agreement to the contrary, if any payment or benefit provided for herein would be subject to additional taxes and interest under Section 409A if Employee’s receipt of such payment or benefit is not delayed until the earlier of (i) the date of Employee’s death or (ii) the date that is six (6) months after the Termination Date (such date, the “Section 409A Payment Date”), then such payment or benefit shall not be provided to Employee (or Employee’s estate, if applicable) until the Section 409A Payment Date.  Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement are exempt from, or compliant with, Section 409A and in no event shall any member of the Company Group be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by Employee on account of non-compliance with Section 409A.

 

24.                               Certain Excise Taxes.  Notwithstanding anything to the contrary in this Agreement, if Employee is a “disqualified individual” (as defined in Section 280G(c) of the Code), and the payments and benefits provided for in this Agreement, together with any other payments and benefits which Employee has the right to receive from the Company or any of its affiliates, would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code), then the payments and benefits provided for in this Agreement shall be either (a) reduced (but not below zero) so that the present value of such total amounts and benefits received by Employee from the Company or any of its affiliates shall be one dollar ($1.00) less than three times Employee’s “base amount” (as defined in Section 280G(b)(3) of the Code) and so that no portion of such amounts and benefits received by Employee shall be subject to the excise tax imposed by Section 4999 of the Code or (b) paid in full, whichever produces the better net after-tax position to Employee (taking into account any applicable excise tax under Section 4999 of the Code and any other applicable taxes).  The reduction of payments and benefits hereunder, if applicable, shall be made by reducing, first, payments or benefits to be paid in cash hereunder in the order in which such payment or benefit would be paid or provided (beginning with such payment or benefit that would

 

15

 

be made last in time and continuing, to the extent necessary, through to such payment or benefit that would be made first in time) and, then, reducing any benefit to be provided in-kind hereunder in a similar order.  The determination as to whether any such reduction in the amount of the payments and benefits provided hereunder is necessary shall be made by the Company in good faith.  If a reduced payment or benefit is made or provided and through error or otherwise that payment or benefit, when aggregated with other payments and benefits from the Company or any of its affiliates used in determining if a “parachute payment” exists, exceeds one dollar ($1.00) less than three times Employee’s base amount, then Employee shall immediately repay such excess to the Company upon notification that an overpayment has been made.  Nothing in this Section 24 shall require the Company to be responsible for, or have any liability or obligation with respect to, Employee’s excise tax liabilities under Section 4999 of the Code.

 

25.                               Clawback.  To the extent required by applicable law or any applicable securities exchange listing standards, or as otherwise determined by the Board (or a committee thereof), amounts paid or payable under this Agreement shall be subject to the provisions of any applicable clawback policies or procedures adopted by the Company, which clawback policies or procedures may provide for forfeiture and/or recoupment of amounts paid or payable under this Agreement.  Notwithstanding any provision of this Agreement to the contrary, the Company reserves the right, without the consent of Employee, to adopt any such clawback policies and procedures, including such policies and procedures applicable to this Agreement with retroactive effect.

 

26.                               Effect of Termination.  The provisions of Sections 7, 9-14, 22 and 25 and those provisions necessary to interpret and enforce them, shall survive any termination of this Agreement and any termination of the employment relationship between Employee and the Company.

 

27.                               Third-Party Beneficiaries.  Each member of the Company Group that is not a signatory to this Agreement shall be a third-party beneficiary of Employee’s obligations under Sections 8, 9, 10, 11 and 12 and shall be entitled to enforce such obligations as if a party hereto.

 

28.                               Severability.  If an arbitrator or court of competent jurisdiction determines that any provision of this Agreement (or portion thereof) is invalid or unenforceable, then the invalidity or unenforceability of that provision (or portion thereof)  shall not affect the validity or enforceability of any other provision of this Agreement, and all other provisions shall remain in full force and effect.

 

[Remainder of Page Intentionally Blank;
 Signature Page Follows]

 

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IN WITNESS WHEREOF, Employee and the Company each have caused this Agreement to be executed and effective as of the Effective Date.

 

	
 
    	
EMPLOYEE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Russell Parker
    
	
 
    	
Russell Parker
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EP ENERGY CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Kyle A. McCuen
    
	
 
    	
 
    	
Name: Kyle A. McCuen
    
	
 
    	
 
    	
Title: Vice President,   Interim Chief Financial Officer and Treasurer
    

 

SIGNATURE PAGE TO

EMPLOYMENT AGREEMENT

 

 

EXHIBIT A

 

FORM OF RELEASE AGREEMENT

 

This GENERAL RELEASE OF CLAIMS (this “Agreement”) is entered into by Russell Parker (“Employee”) and is that certain Release referred to in Section 7(f)(i) of the Employment Agreement made and entered into by and between EP Energy Corporation, a Delaware corporation (the “Company”), and Employee, effective as of November 1, 2017 (the “Employment Agreement”).  Capitalized terms not defined herein have the meanings given to them in the Employment Agreement.

 

1.                                      Separation; Severance Payment.  Employee acknowledges and agrees that the last day of Employee’s employment with the Company or any other member of the Company Group was            , 2    (the “Separation Date”) and as of the Separation Date, Employee was no longer employed by any member of the Company Group.  If (a) Employee executes this Agreement on or after the Separation Date and returns it to the Company, care of                                               so that it is received by                             no later than 11:59 p.m., central time on                 , (b) does not exercise his revocation right pursuant to Section 11 below, and (c) abides by Employee’s continuing obligations under the Employment Agreement (including the terms of Sections 9, 10, 11 and 13 thereof), then the Company will provide Employee the Severance Payment, which Severance Payment will be provided as set forth in Section 7(f)(i) of the Employment Agreement.

 

2.                                      Satisfaction of All Leaves and Payment Amounts; Prior Rights and Obligations.  In entering into this Agreement, Employee expressly acknowledges and agrees that Employee has received all leaves (paid and unpaid) to which Employee was entitled during Employee’s employment with the Company and any other Company Party (as defined below) and Employee has received all wages, bonuses, and other compensation, been provided all benefits, been afforded all rights and been paid all sums that Employee is owed and has been owed by the Company and any other Company Party as of the date that Employee executes this Agreement (the “Signing Date”).  For the avoidance of doubt, Employee acknowledges and agrees that Employee had no right to the Severance Payment (or any portions thereof) but for Employee’s entry into this Agreement.

 

3.                                      Release of Liability for Claims.

 

(a)                                 In consideration of Employee’s receipt of the Severance Payment (and any portion thereof), Employee hereby forever releases, discharges and acquits the Company, its affiliates, and each of the foregoing entities’ respective past, present and future subsidiaries, affiliates, stockholders, members, partners, directors, officers, managers, insurers, employees, agents, attorneys, heirs, predecessors, successors and representatives in their personal and representative capacities, as well as all employee benefit plans maintained by any Company Party and all fiduciaries and administrators of any such plans, in their personal and representative capacities (collectively, the “Company Parties”), from liability for, and Employee hereby waives, any and all claims, damages, or causes of action of any kind related to Employee’s employment with any Company Party, the termination of such employment, and any other acts or omissions related to any matter occurring or existing on or prior to the Signing Date, including (i) any alleged

 

 

violation through such date of: (A) any federal, state or local anti-discrimination or anti-retaliation law, including the Age Discrimination in Employment Act of 1967, as amended (including as amended by the Older Workers Benefit Protection Act), Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, as amended, and Sections 1981 through 1988 of Title 42 of the United States Code, as amended; and the Americans with Disabilities Act of 1990, as amended, the Texas Labor Code (including the Texas Payday Law the Texas Anti-Retaliation Act, Chapter 21 of the Texas Labor Code, and the Texas Whistleblower Act) as amended; (B) the Employee Retirement Income Security Act of 1974, as amended (“ERISA”); (C) the Immigration Reform Control Act, as amended; (D) the Occupational Safety and Health Act, as amended; (E) the Family and Medical Leave Act of 1993; (F) any federal, state or local wage and hour law; (G) any other local, state or federal law, regulation or ordinance; or (H) any public policy, contract, tort, or common law claim or claim for fiduciary duty or breach thereof or claim for fraud or misrepresentation or fraud of any kind; (ii) any allegation for costs, fees, or other expenses including attorneys’ fees incurred in, or with respect to, a Released Claim; (iii) any and all rights, benefits or claims Employee may have under any retention, change in control, bonus or severance plan or policy of any Company Party or any retention, change in control, bonus or severance-related agreement that Employee may have or have had with any Company Party other than the rights to the Severance Payment described herein; (iv) any and all rights, benefits or claims Employee may have under any employment contract (including the Employment Agreement), other than Employee’s rights to severance under Section 7 of the Employment Agreement, rights to compensation under Section 13 of the Employment Agreement or other entitlements in Sections 9, 10, 11, 12, 14 and 22 of the Employment Agreement that arise following the Termination Date and are intended to survive Employee’s termination of employment) or incentive compensation plan; and (v) any claim for compensation or benefits of any kind not expressly set forth in this Agreement (collectively, the “Released Claims”).  In no event shall the Released Claims include (I) any claim that first arises after the Signing Date, (II) any claim to vested benefits under an employee benefit plan, (III) any claim arising out of future rights with respect to vested equity or equity incentives, or (IV) any pending or future claim with respect to: (x) Employee’s rights under any directors & officers liability insurance policies then in effect, or (y) indemnification (including advancement of expenses) or contribution by the Company or any of its affiliates pursuant to contract or applicable law.  This Agreement is not intended to indicate that any such claims exist or that, if they do exist, they are meritorious.  Rather, Employee is simply agreeing that, in exchange for the Severance Payment (and any portion thereof), any and all potential claims of this nature that Employee may have against the Company Parties, regardless of whether they actually exist, are expressly settled, compromised and waived.  THIS RELEASE INCLUDES MATTERS ATTRIBUTABLE TO THE SOLE OR PARTIAL NEGLIGENCE (WHETHER GROSS OR SIMPLE) OR OTHER FAULT, INCLUDING STRICT LIABILITY, OF ANY OF THE COMPANY PARTIES.

 

(b)                                 Notwithstanding this release of liability, nothing in this Agreement prevents Employee from filing any non-legally waivable claim (including a challenge to the validity of this Agreement) with the Equal Employment Opportunity Commission, National Labor Relations Board, Occupational Safety and Health Administration, Securities and Exchange Commission, the Financial Industry Regulatory Authority (FINRA), or any other federal, state, or local governmental agency, authority, or commission (each, a “Governmental Agency”) or participating in any investigation or proceeding conducted by any Governmental Agency.  Employee understands that this Agreement does not limit Employee’s ability to communicate with

 

A-2

 

any Governmental Agency or otherwise participate in any investigation or proceeding that may be conducted by any Governmental Agency (including by providing documents or other information to a Governmental Agency) without notice to the Company or any other Company Party.  This Agreement does not limit Employee’s right to receive an award from a Governmental Agency for information provided to a Governmental Agency.

 

4.                                      Representation About Claims.  Employee hereby represents and warrants that, as of the Signing Date, Employee has not filed any claims, complaints, charges, or lawsuits against any of the Company Parties with any governmental agency or with any state or federal court or arbitrator for or with respect to a matter, claim, or incident that occurred or arose out of one or more occurrences that took place on or prior to the Signing Date.  Employee hereby further represents and warrants that Employee has made no assignment, sale, delivery, transfer or conveyance of any rights Employee has asserted or may have against any of the Company Parties with respect to any Released Claim.  Employee agrees not to bring or join any lawsuit against any of the Company Parties in any court relating to any of the Released Claims.

 

5.                                      Employee’s Acknowledgments.  By executing and delivering this Agreement, Employee expressly acknowledges that:

 

(a)                                 Employee has carefully read this Agreement and has had sufficient time (and at least                             days) to consider this Agreement before signing it and delivering it to the Company;

 

(b)                                 Employee has been advised, and hereby is advised in writing, to discuss this Agreement with an attorney of Employee’s choice and Employee has had adequate opportunity to do so prior to executing this Agreement;

 

(c)                                  Employee fully understands the final and binding effect of this Agreement; the only promises made to Employee to sign this Agreement are those stated herein; and Employee is signing this Agreement knowingly, voluntarily and of Employee’s own free will, and understands and agrees to each of the terms of this Agreement;

 

(d)                                 The only matters relied upon by Employee and causing Employee to sign this Agreement are the provisions set forth in writing within the four corners of this Agreement;

 

(e)                                  Employee would not otherwise have been entitled to the consideration described in Section 1 above, or any portion thereof, but for Employee’s agreement to be bound by the terms of this Agreement; and

 

(f)                                   no Company Party has provided any tax or legal advice regarding this Agreement and Employee has had the opportunity to receive sufficient tax and legal advice from advisors of Employee’s own choosing such that Employee enters into this Agreement with full understanding of the tax and legal implications thereof.

 

6.                                      Third-Party Beneficiaries.  Employee expressly acknowledges and agrees that each Company Party that is not a signatory to this Agreement shall be a third-party beneficiary of Employee’s release of claims and representations in Sections 2 through 5 and Section 9 hereof.

 

A-3

 

7.                                      Severability.  Any term or provision of this Agreement (or part thereof) that renders such term or provision (or part thereof) or any other term or provision hereof (or part thereof) invalid or unenforceable in any respect shall be severable and shall be modified or severed to the extent necessary to avoid rendering such term or provision (or part thereof) invalid or unenforceable, and such modification or severance shall be accomplished in the manner that most nearly preserves the benefit of the bargain set forth in the Employment Agreement and hereunder.

 

8.                                      Withholding of Taxes and Other Deductions.  Employee acknowledges that the Company may withhold from the Severance Payment all federal, state, local, and other taxes and withholdings as may be required by any law or governmental regulation or ruling.

 

9.                                      Return of Property. Employee hereby represents and warrants that Employee has returned to the Company all property belonging to the Company or any other Company Party, including all computer files, electronically stored information and other materials provided to him by the Company or any other Company Party in the course of Employee’s employment with the Company and Employee hereby further represents and warrants that Employee has not maintained a copy of any such materials in any form.

 

10.                               Further Assurances.  In signing below, Employee expressly acknowledges the enforceability, and continued effectiveness of Sections 9, 10, 11 and 13 of the Employment Agreement and promises to abide by those terms of the Employment Agreement.

 

11.                               Revocation Right.  Notwithstanding the initial effectiveness of this Agreement, Employee may revoke the delivery (and therefore the effectiveness) of this Agreement within the seven-day period beginning on the date Employee executes this Agreement (such seven-day period being referred to herein as the “Release Revocation Period”).  To be effective, such revocation must be in writing signed by Employee and must be received by                                                                                              before 11:59 p.m., central time, on the last day of the Release Revocation Period.  If an effective revocation is delivered in the foregoing manner and timeframe, no Severance Payment shall be provided, the release of claims set forth in Section 3 shall be of no force or effect and the remainder of this Agreement shall remain in full force and effect and shall not be affected by any such revocation.

 

12.                               Employment Agreement.  This Agreement shall be subject to the provisions of Section 15, 16, 17 and 21 of the Employment Agreement, which provisions are hereby incorporated by reference as a part of this Agreement.

 

[Remainder of Page Intentionally Blank;
 Signature Page Follows]

 

A-4

 

IN WITNESS WHEREOF, Employee has executed this Agreement as of the date set forth below, effective for all purposes as provided above.

 

	
 
    	
EMPLOYEE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Russell Parker
    
	
 
    	
 
    
	
 
    	
Date:
    	
 
    

 

SIGNATURE PAGE TO

GENERAL RELEASE OF CLAIMS

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