Document:

Exhibit 10.32

 

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

 

FIRST AMENDMENT TO DEVELOPMENT AND SUPPLY AGREEMENT

 

THIS FIRST AMENDMENT TO DEVELOPMENT AND SUPPLY AGREEMENT (this “First Amendment”“) is entered into as of the 28th day of March, 2014 by and between K-V Pharmaceutical Company (“KV”) and Hospira Worldwide, Inc. (“Hospira”) to amend the terms of that certain Development and Supply Agreement between Hospira and Hologic, Inc. dated September 17, 2009 which was subsequently assigned to KV by Hologic (the “Agreement”‘).

 

Whereas, KV and Cytyc Prenatal Products Corp., a wholly owned subsidiary of Hologic entered into an Asset Purchase Agreement dated January 16, 2008, and as subsequently amended, (collectively, the “APA”) pursuant to which KV agreed to purchase the worldwide rights to the product Gestiva (now known as Makena) (hydroxyprogesterone caproate injection) and its related assets; and

 

Whereas, In connection with the APA, KV agreed to assume the Agreement; and

 

Whereas, Hologic notified Hospira of such assignment in accordance with Section 12.5 of the Agreement by letter dated February 10, 2011 from Mr. Robb Hesley, Vice President, Business Development, Hologic to Mr. Cacich, VP & GM Contract Manufacturing Services, Hospira; and

 

Whereas, Hospira and KV have continued to perform their respective obligations under the Agreement since such assignment; and

 

Whereas, KV assumed the Agreement in connection with its bankruptcy proceedings jointly administered under Case No. 12-13346 in the United States Bankruptcy Court for the Southern District of New York; and

 

Whereas, Hospira has confirmed its intention to continue to perform under the Agreement by letter dated September 11, 2013 from Mr. Kevin Orfan, Vice President, One 2 One (Hospira) to Mr. Daniel Thompson, Chief Compliance Officer and Vice President Business Development, KV; and

 

Whereas, Hospira and KV mutually desire to amend the terms of the Agreement to reflect, among other items, the development of a [***] Product (as hereinafter defined), the pricing for the [***] Product and the minimum purchase requirements with respect to the Product and the [***] Product.

 

Now, therefore in consideration of the mutual promises and agreements contained herein, the parties agree to amend the Agreement as follows:

 

1.                            Incorporation of the Agreement.  All capitalized terms which are not defined herein shall have the same meanings as set forth in the Agreement, and the Agreement is incorporated herein by this reference as though the same was set forth in its entirety.  Except as specifically set forth herein, the Agreement shall remain in full force and effect and its provisions shall be binding on the parties hereto.

 

2.                            Transfer of Agreement to KV.  The parties hereby recognize the transfer of the Agreement from Hologic to KV.  All references to Hologic shall now refer to KV.

 

 

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

 

3.                            Definitions.

 

3.1                     The definition of “Product” is revised as follows:

 

·                  “Product” shall mean the Drug in final dosage form, filled in a [***] vial, including labeling and secondary packaging meeting the Product Specifications.

 

3.2                     The following definitions are added to the Agreement:

 

a.              “[***] Product” shall mean the Drug in final dosage form, filled in a [***] vial, including labeling, and secondary packaging meeting the [***] Product Specifications.

 

b.              “[***] Product Specifications” shall mean the Product Specifications for the [***] Product.

 

c.               “Submission Batches” shall mean the manufacture of [***] registration batches of the [***] Product manufactured under GMP conditions that meet the [***] Product Specifications as demonstrated by internal testing and as set forth in Exhibits 3 and 4 to this First Amendment.

 

d.              “Target Date” is August 28, 2014, the date by which Hospira must complete the Submission Batches.  The Parties shall revise the Target Date to reflect any additional time needed to address (i) any change in the assumptions set forth on Exhibit 3; (ii) any delay resulting from the action, inaction or negligence of KV; and/or or (iii) any delay due in no fault to either party.  Notwithstanding the foregoing, the Target Date shall not be revised if such delay is caused by the actions, inaction or negligence of Hospira.

 

4.                            Addition of [***] Product to the Agreement.  Except as otherwise set forth herein, the Agreement shall be amended to include the [***] Product when the term “Product” is referenced, including by way of example and not of exclusion:

 

·                  Article 4 shall apply to the [***] Product and [***] Project;

·                  Article 5 shall apply to the [***] Product and [***] Project except as amended below;

·                  Article 6 shall apply to the [***] Product and [***] Project except as amended below;

·                  Article 7 shall apply to the [***] Product and [***] Project;

·                  Article 8 shall apply to the [***] Product and [***] Project;

·                  Article 9 shall apply to the [***] Product and [***] Project;

·                  Article 10 shall apply to the [***] Product and [***] Project except as amended below; and

·                  Article 11 shall apply to the [***] Product and [***] Project;

·                  Article 12 shall apply to the [***] Product and [***] Project.

 

For purposes of the [***] Project, Articles 2 and 3 of the Agreement shall be deleted in their entirety and replaced as set forth in Sections 5 and 6 below.

 

5.                            Article 2, Development Program.

 

·                  [***] Project.  The activities set forth in Article 2 of the Agreement regarding the Project have been completed.  The parties agree promptly after the Effective Date of this First Amendment (as set forth in Section 11) to undertake a product development project to develop the [***] Product consisting of the development activities set forth in Exhibits 3 and 4 attached hereto (the “[***] Project”).  As set forth in the [***] Project, Hospira shall assist KV in the development of the [***] Product and in obtaining an approved FDA filing for the

 

2

 

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

 

[***] Product.  Subject to the approval of the applicable Regulatory Authorities, Hospira shall manufacture and deliver [***] Product to KV for sale by KV as a human pharmaceutical.  The current scope of the [***] Project is a flip top vial presentation.  Each party shall use its commercially reasonable efforts to successfully complete the [***] Project.  However, the parties agree and understand that neither party hereto guarantees that the [***] Project will be successful, nor warrants or guarantees that a marketable [***] Product will result from the [***] Project.

 

·                  [***] Project.  KV and Hospira agree that Hospira will not develop a [***] presentation of the Product.

 

6.                            Article 3, Payment for Hospira’s Development Efforts.  To reimburse Hospira for its efforts in the [***] Project, KV shall pay to Hospira a nonrefundable development fee of [***] (the “[***] Development Fee”); provided such amount shall adjust as set forth in the Agreement (as amended hereby) in the event of early termination in accordance with the terms and conditions of the Agreement (as amended hereby).  The [***] Development Fee shall be paid to Hospira in accordance with the payment schedule set forth in Exhibit 4.  KV has already paid [***] of the [***] Development Fee which is noted in Exhibit 4.  In addition to the [***] Development Fee, KV shall pay to Hospira a development incentive fee as set forth in the schedule in Exhibit 4 (the [***] Development Incentive Fee”) in the event that Hospira completes the Submission Batches prior to the Target Date.  If earned by Hospira, KV shall pay the [***] Development Incentive Fee to Hospira in accordance with the payment schedule in Exhibit 4.  For the avoidance of doubt, Sections 3.2, 3.3 and 3.4 of the Agreement shall also apply to the [***] Project.

 

7.                            Article 5, Manufacture and Supply of Product.  Article 5 shall apply to the Product and the [***] Product subject to the following revisions:

 

·                  Section 5.1 Purchase and Sale of Product is hereby deleted in its entirety and replaced with the following:

 

5.1 Purchase and Sale of Product.  Pursuant to the terms and conditions of this Agreement and for the duration of this Agreement, Hospira shall manufacture, sell and deliver Product and [***] Product to KV for sale in the United States.

 

·                  Section 5.8(a) Price is hereby deleted in its entirety and replaced with the following:

 

Hospira shall invoice KV for Product and [***] Product delivered by Hospira at the prices set forth below.  These prices are for United States vial Product and [***] Product presentations only.  Prices are firm through December 31, 2014.  Beginning on January 1, 2015, and on each succeeding January 1 during the term hereof, Hospira may increase the prices of the Product and the [***] Product by giving KV no less than [***] days’ written notice of such price change.  Price increases shall be effective for orders for Product and [***] Product filled after January 1 of each calendar year.  Such increases shall not exceed the [***].  For the sake of clarity, the Product Price includes bulk packaging (i.e. case and pallet) of the Product.

 

3

 

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

 

Table 1

 

	
Year
    	
 
    	
[***] Vial
    	
 
    	
[***] Vial
    
	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    

 

·                  Section 5.8(b) Payment is hereby deleted in its entirety and replaced with the following:

 

Hospira shall invoice KV upon shipment of Product and [***] Product.  KV shall make payment net [***] days from the date of Hospira’s invoice.

 

8.                            Section 6.3. Minimum Purchase Requirement.  Section 6.3 is deleted in its entirety and replaced with the following:

 

6.3                               Minimum Purchase Requirements.

 

(a)                                 Provided the following conditions have been met: a) KV obtains an approved FDA filing covering the [***] Product that allows its commercial sale by KV; b) FDA has approved Hospira as a manufacturer of the [***] Product; and c) Hospira is able to manufacture and release the [***] Product for commercial sale by KV (collectively, the “[***] Product Approval”), the following minimum purchase requirements shall apply:

 

i.                  During the calendar year in which the [***] Product Approval takes place (the “Partial Time Period”), KV agrees to purchase at least the pro rata amount of a minimum purchase requirement of [***] of Product and/or [***] Product (“Pro Rata Amount”) (as way of example only, if the [***] Product Approval occurs on July 1, 2015, the Pro Rata Amount that KV must make for the Partial Time Period will be [***].  If KV has not purchased the Pro-Rata Amount during such Partial Time Period, then within [***] days after the end of the Partial Time Period, Hospira shall invoice KV the difference between the Pro Rata Amount and the amount of Product and [***] Product purchased for such time period (the “Pro-Rata Minimum Payment”), noting that KV’s purchases may be purchases of (i) all Product, (ii) all [***] Product; or (iii) a combination of both.  Such invoice shall be payable within [***] days after issuance.

 

ii.               Provided the [***] Product Approval occurs before the end of calendar year 2015, KV agrees to purchase at least [***] of Product and/or [***] Product combined (“Annual Amount”) in calendar year 2016.  If the [***] Product Approval does not occur until calendar year 2016 then the Annual Amount shall be prorated as set forth in Section 6.3(a)(i) above.  If KV has not purchased the Annual Amount during the 2016 Calendar Year, then within [***] days following the end of the 2016 Calendar Year, Hospira shall invoice KV the difference between the Annual Amount and the amount of Product and [***] Product purchased for such time period (the “Annual Minimum Payment”); noting that KV’s purchases may be purchases of (i) all Product, (ii) all [***] Product; or (iii) a combination of both.  Each such invoice shall be payable within [***] days after issuance.

 

iii.            The Pro-Rata Minimum Payment and the Annual Minimum Payment described above shall be determined for such time period by the amount of Product and [***] Product purchased by KV (meaning such Product and/or [***] Product has been paid for by KV to Hospira during the applicable time 

 

4

 

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

 

period).  Provided however, in the event KV’s purchases are less than the Pro-Rata Minimum Payment or the Annual Minimum Payment as a result of a manufacturing yield causing the orders to be fulfilled at less than the amount ordered, the Pro-Rata Minimum Amount and the Annual Minimum Amount shall be reduced accordingly.

 

(b)                                 KV will only be obligated to the minimum purchase requirements under Section 6(a) above as long as: (a) the FDA has not suspended or revoked the NDA and/or orphan designation for the Product and/or [***] Product; (b) there has been no material change in the safety or efficacy for the Product and/or [***] Product; (c) there has been no material change in KV’s ability to commercialize the Product or [***] Product as a result of an FDA action; (d) the Product and [***] Product conform in all respects to their respective specifications and are not otherwise adulterated; and (e) Hospira has not exercised its right to terminate the manufacture of the Product or [***] Product in accordance with the terms specified in Section 10.2 of the Agreement (as amended hereby).

 

9.                            Product Take or Pay for Calendar Year [***].  For calendar year [***], Hospira shall manufacture the Product for KV only if KV submits a forecast and a purchase order to Hospira on or before [***] for [***] of the Product for delivery during calendar year [***].

 

10.                     Section 10.1, Term.  Section 10.1 is hereby deleted in its entirety and replaced with the following:

 

10.1 Term.  This Agreement shall commence on the Effective Date and, unless earlier terminated as provided below, shall expire (i) with respect to the manufacture of [***] Product on December 31, [***] (specifically, Hospira will not fill any [***] Product after December 31, [***], although labeling or other secondary packaging of vials filled near the end of [***] may extend into [***]); (ii) if KV has not submitted a forecast and purchase order for [***] of Product on or before September 30, [***] in accordance with Section 9 above, then on December 31, [***]; and (iii) if KV has exercised its option to purchase [***] of Product during calendar year [***] in accordance with Section 9 above, then on December 31, [***].

 

11.                     Section 10.2, Termination of Product Development Project.  Section 10.2 is hereby deleted in its entirety and replaced with the following:

 

10.2 Termination of [***] Project.  Hospira may terminate the [***] Project upon [***] days prior written notice to KV if Hospira determines in good faith that the development of the [***] Product is not technically feasible.  KV may terminate the [***] Project upon [***] days prior written notice to Hospira if KV determines in good faith that the development of the [***] Product is not commercially feasible.  If the [***] Project is terminated by either party, Hospira shall advise KV of Hospira’s actual development costs on the [***] Project incurred prior to such termination.  KV shall pay Hospira for all reasonable and documented development costs incurred to the date the termination notice is received.

 

12.                     Orphan Drug Status.  KV represents, and Hospira recognizes, that (i) FDA approved the Product on February 3, 2011 for an orphan indication; and (ii) at the time of such approval, KV received seven years of exclusivity under the Orphan Drug Act for the Product.

 

5

 

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

 

13.                     Recitals.  The third recital shall be deleted in its entirety to reflect the semi-exclusive relationship contemplated herein between the Parties for Hospira to manufacture and supply and for KV to purchase and distribute the Product and [***] Product.

 

14.                     Effective Date.  The amendment to the Agreement contemplated by this First Amendment shall be deemed effective as of the date first written above upon the full execution of this First Amendment and without any further action required by the parties hereto.  There are no conditions precedent or subsequent to the effectiveness of this First Amendment.

 

15.                     Counterparts.  This First Amendment may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.  One or more counterparts of this First Amendment may be delivered by facsimile or by e-mail of a “.pdf” format data file, with the intention that delivery by such means shall have the same effect as delivery of an original counterpart thereof.

 

[Signature page follows]

 

6

 

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

 

IN WITNESS WHEREOF, the parties hereto have duly executed this First Amendment as of the date first above written.

 

 

	
HOSPIRA   WORLDWIDE, INC
    	
 
    	
KV   PHARMACEUTICAL CO.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
By   
    	
/s/   Kevin Orfan
    	
 
    	
 
    	
By
    	
 /s/ Thomas McHugh
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name   
    	
Kevin   Orfan
    	
 
    	
 
    	
Name   
    	
Thomas   McHugh
    
	
 
    	
(type   or print)
    	
 
    	
 
    	
 
    	
(type   or print)
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title
    	
Vice   President, One 2 One
    	
 
    	
 
    	
Title   
    	
CFO   
    

 

 

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

 

Exhibit 3

 

[***] Project Development Activities

 

Assumptions.  In the event of any changes to any of the assumptions set forth below, the Target Date shall be revised according to the terms of the First Amendment.

 

·                  Container/Closure.  The container/closure for the [***] Product will be a [***]-[***] treated vial with a [***] finish.  The stopper for the [***] Product will be made of the same material as is used with the Product.

 

·                  [***] Line.  Hospira will fill the [***] Product on Line [***] at [***]

 

·                  Batch Runs.  Hospira shall run the following batches:

 

	
Item
    	
 
    	
Description
    	
 
    	
Batch Size
    
	
1
    	
 
    	
[***]   - Engineering Batches
    	
 
    	
[***]L   per batch - only fill 

~   [***] units 

Bulk   Package
    
	
2
    	
 
    	
[***]   - Submission Batches
    	
 
    	
[***]L   per batch - only fill 

~   [***] units 

Bulk   Package
    
	
3
    	
 
    	
[***]   - Process Validation Batches
    	
 
    	
[***]L   per batch - only fill 

~   [***] units 

Bulk   Package
    
	
4
    	
 
    	
[***]   - Engineering Package Run
    	
 
    	
Approximately   [***] units
    

 

·                  Stability Testing.  Hospira shall conduct [***] month stability testing on the [***] Submission Batches at [***] month time points ([***] orientation) and [***] month time points ([***] orientation) Hospira shall conduct the stability testing on the [***] Submission Batches concurrently.  KV shall submit its regulatory submission based on [***] month stability data.

 

·                  Commercial Packaging.  Commercial packaging shall consist of [***] unit cartons per [***] shelf carton to be priced separately.

 

Schedule - Project milestones, costs, durations, start dates and invoice amounts/dates are set forth on Exhibit 4.

 

 

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

 

Exhibit 4

 

Development Costs payable to Hospira 
 Project milestones, costs, durations, start dates and invoice schedule and amounts

 

	
Description
    	
 
    	
Cost
    	
 
    	
Target / Completion
   Date
    	
 
    	
Invoicing Schedule
    	
 
    	
Invoice
   Amount
    
	
Project   Initiation
    	
 
    	
$ [***]
    	
 
    	
[***]
    	
 
    	
$[***]   will be paid specifically for the Kickoff meeting on 15Jan14 per the 9Jan14   Letter Agreement.
    	
 
    	
$[***]*
    
	
 
    	
 
    	
Upon execution of this Amendment
    	
 
    	
The   remainder ($[***]) will be invoiced upon execution of this Amendment
    	
 
    	
$[***]
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Analytical   / Microbial Development
    	
 
    	
$[***]
    	
 
    	
Upon execution of this Amendment
    	
 
    	
50%   upon execution of this Amendment
    	
 
    	
$[***]
    
	
 
    	
 
    	
[***]
    	
 
    	
50%   upon both parties’ approval of the control monograph
    	
 
    	
$[***]
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Engineering   Batch ([***])
    	
 
    	
$[***], $[***] has been paid for initial purchase of Seals/Stoppers/   vials
    	
 
    	
[***]
    	
 
    	
100%   upon fill
    	
 
    	
$[***]
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Submission   Batches ([***])**
    	
 
    	
$[***]
   ($[***]
   completion of each Submission Batch)
    	
 
    	
Target Date (subject to revision as set forth in the Agreement, as   amended hereby)
    	
 
    	
100%   upon batch acceptance or completion of t=0 stability test
    	
 
    	
$[***]
    
	
Process   Validation
    	
 
    	
$[***]
    	
 
    	
[***]
    	
 
    	
50%   upon both parties’ approval of protocols (VPP)
    	
 
    	
$[***]
    
	
 
    	
 
    	
 
    	
 
    	
[***]
    	
 
    	
50%   upon both parties’ approval of reports (VPPR)
    	
 
    	
$[***]
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Regulatory   Filing
    	
 
    	
$[***]
    	
 
    	
[***]
    	
 
    	
100%   upon submission by KV Pharma to the Regulatory Authority
    	
 
    	
$[***]
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Packaging   Engineering Run
    	
 
    	
$ [***]
    	
 
    	
[***]
    	
 
    	
100%   upon completion
    	
 
    	
$[***]
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Commercialization***
    	
 
    	
$ [***]
    	
 
    	
[***]
    	
 
    	
100%   upon both parties’ approval of First Lot to Stock and Commercialization   achieved.
    	
 
    	
$[***]
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Development   Stability Testing ([***] batches tested concurrently)
    	
 
    	
$[***] For the avoidance of doubt, this payment is for the stability   testing of all [***] batches collectively, and not per batch
    	
 
    	
[***]
    	
 
    	
Payment   due upon each time point during the stability testing period: [***] months   ([***] orientation) and [***] month time points ([***] orientation)
    	
 
    	
$[***] (x[***]) + final payment of $[***] upon completion of [***]   months stability
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Total
    	
 
    	
$[***]
    	
 
    	
 
    	
 
    	
 
    	
 
    	
$[***]
    

 

 

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

 

* Amount already paid per Letter Agreement dated January 9, 2014

 

**[***].

 

*** “Commercialization” shall be deemed achieved once KV has received [***] Product Approval (as that term is defined in the First Amendment) to sell the [***] Product in the United States.

 

Development Incentive

 

	
Description
    	
 
    	
Incentive
    	
 
    	
Completion Date
    	
 
    	
Invoicing Schedule
    	
 
    	
Invoice amount
    
	
Submission   Batches
   ([***])
    	
 
    	
$[***]
    	
 
    	
[***]
    	
 
    	
50%   upon the [***] batch acceptance; 50% upon Commercialization as defined above
    	
 
    	
$[***];   $[***]
    
	
Submission   Batches
   ([***])
    	
 
    	
$[***]
    	
 
    	
[***]
    	
 
    	
50%   upon the [***] batch acceptance; 50% upon Commercialization as defined above
    	
 
    	
$[***];   

$[***]
    
	
Submission   Batches
   ([***])
    	
 
    	
$[***]
    	
 
    	
[***]
    	
 
    	
50%   upon the [***] batch acceptance; 50% upon Commercialization as defined above
    	
 
    	
$[***];   

$[***]
    
	
Submission   Batches
   ([***])
    	
 
    	
$[***]
    	
 
    	
[***]
    	
 
    	
50%   upon the [***] batch acceptance; 50% upon Commercialization as defined above
    	
 
    	
$[***];   

$[***]
    

 

10NI-2014.12.31-EX10.21

Exhibit 10.21

POLICY SUBJECT:    Executive Severance Policy

EFFECTIVE DATE:    June 1, 2002

REVISED:    January 1, 2015

		
	1.
	Purpose.  The NiSource Executive Severance Policy (“Policy”) originally was established in June 2002 to provide Severance Pay and other benefits to terminated executive‐level employees of NiSource Inc. and certain subsidiaries and affiliate corporations (“Company”) who satisfy the terms of the Policy.  Benefits under the Policy shall be in lieu of any benefits available under the NiSource Severance Policy or any other severance plan or policy maintained by the Company or any Affiliate; provided however that benefits will not be payable under the Policy if the relevant termination of employment results in the employee being eligible for a payment under a Change in Control and Termination Agreement.  The Policy is amended and restated effective January 1, 2015.

		
	2.
	Administration.  The Policy is administered by the Officer Nomination and Compensation Committee of the Board of Directors of the Company (“Committee”).  The Committee has the complete discretion and authority with respect to the Policy and its application.  The Committee reserves the right to interpret the Policy, prescribe, amend and rescind rules and regulations relating to it, determine the terms and provisions of severance benefits and make all other determinations it deems necessary or advisable for the administration of the Policy.  The determination of the Committee in all matters regarding the Policy shall be conclusive and binding on all persons.  The Committee may delegate any of its duties under the Policy to the Senior Vice President of Human Resources and hereby delegates to the Senior Vice President of Human Resources, or his delegate, the authority to develop and implement administrative guidelines regarding the operation of the Policy and render decisions on initial claims by Participants.

		
	3.
	Scope.  The Policy will apply to all full-time or part-time regular, non-union employees of the Company and each of its affiliated entities (collectively, “Affiliates” and each an “Affiliate”) whose job scope level, as established by the Company, is D2 (or its equivalent) or above (“Participants”).

		
	4.
	Eligibility for Severance Pay.  A Participant becomes entitled to receive severance pay (“Severance Pay”) only if he or she is terminated by an Affiliate for any of the following reasons, provided that such a termination event constitutes a "separation from service" as defined under Section 409A of the Internal Revenue Code of 1986, as amended, and applicable guidance thereunder, and further provided the conditions described in Section 5 below are met:

		
	(a)
	The Participant’s position is eliminated due to a reduction in force or other restructuring.

		
	(b)
	The Participant’s position is moved by the Company more than 50 miles from its current location and results in the Participant having a longer commute of at least 20 miles and the Participant chooses not to relocate, and such events are considered a "good reason" termination under Section 409A of the Internal Revenue Code of 1986, as amended, and applicable guidance thereunder.

		
	(c)
	The Participant’s employment is constructively terminated.  Constructive termination shall be defined in a manner consistent with the guidance for a "good reason" termination under 

1

Section 409A of the Internal Revenue Code of 1986, as amended, and applicable guidance thereunder, and means (1) the scope of the Participant’s position is changed materially (other than in the case of a rotational assignment or its equivalent) or (2) the Participant’s base pay is reduced by a material amount or (3) the Participant’s opportunity to earn a bonus under a short-term cash incentive compensation plan of the Affiliates is materially reduced or is eliminated, and, in any such event, the Participant chooses not to remain employed in such position, if a Participant does not assert constructive termination within 14 days of being informed of a change described in (1), (2) or (3) above, in a written instrument delivered to the Senior Vice President of Human Resources, such change will not be deemed a constructive termination.  The decision as to whether such a change constitutes constructive termination shall be made by the Committee or its delegate, not the Participant.  If the Participant disagrees, the Participant must follow the claims procedure set forth in Section 15.

5.    Conditions to Receipt of Benefits.

		
	(a)
	Severance Pay is not available to a Participant otherwise eligible for Severance Pay who transfers to another position with any Affiliate.

		
	(b)
	Severance Pay is not available to a Participant whose position is eliminated due to (1) the sale of the Affiliate or assets of the Affiliate which employs the Participant on the date of termination or (2) the outsourcing of work, where in either such event the purchaser of the Affiliate or assets of the Affiliate or the outsourcing service provider makes an offer of employment to the Participant that, if it were an Affiliate, would not constitute “constructive termination” as described in Section 4(c).

		
	(c)
	Severance Pay is not available to a Participant whose position is eliminated due to the spin-off of any Affiliate,  if the spun-off entity makes an offer of employment to the Participant that, if it were an Affiliate making such an offer, would not constitute “constructive termination” as described in Section 4(c).

		
	(d)
	A Participant must execute and not revoke the release described in Section 6 below.

		
	(e)
	During the period in which a Participant is entitled to consider the execution of the release described in Section 6, or during such other period as is otherwise agreed to by the Company and the Participant, he or she may be required to complete unfinished business projects and be available for discussions regarding matters relative to the Participant’s duties.

		
	(f)
	A Participant must return all Affiliate property and information to the Affiliate.

		
	(g)
	A Participant must agree to pay all outstanding amounts owed to any Affiliate and authorize the Affiliate to withhold any outstanding amounts from his or her final paycheck and/or Severance Pay.

		
	6.
	Amount of Severance Pay.  The amount of Severance Pay to which a Participant is entitled under the Policy is 52 weeks of base salary at the rate in effect on the date of termination.

A Participant who is receiving benefits under a short term disability plan maintained by any Affiliate will be entitled to Severance Pay at the end of the period of payment of short term disability if, and only if, (1) he or she is not then eligible for benefits under a long term disability plan maintained by an Affiliate, and (2) he or she is not offered employment with an Affiliate that, in the discretion of the Committee, is comparable to that held by the Participant at the time the applicable period of short 

2

term disability commenced.  A Participant will not be entitled to Severance Pay at the end of the period of long term disability.

Severance Pay will be paid to a Participant in one lump sum cash payment as soon as practicable after the date of the Participant’s termination of employment, but in no event later than the 15th day of the 3rd month after such date, provided that the Participant has executed a valid release of all Affiliates, and their respective officers, directors and employees, from any and all actions, suits, proceedings, claims and demands relating to the Participant’s employment with all Affiliates and the termination thereof, and the applicable revocation period has expired within this period.  Severance Pay shall be reduced by applicable amounts necessary to comply with federal, state and local income tax withholding requirements.

7.    Benefits.

		
	(a)
	Welfare Benefits.  A Participant entitled to Severance Pay shall receive, at the time of payment of Severance Pay, a lump sum payment equivalent to 130% of 52-weeks of COBRA (as defined in Section 4980B of the Internal Revenue Code of 1986, as amended, and Sections 601‐609 of the Employee Retirement Income Security Act of 1974, as amended, or any successor sections) continuation coverage premiums in lieu of any continued medical, dental, vision, and other welfare benefits offered by the Company or any Affiliate.  Such 52-week period of COBRA continuation coverage shall be included as part of the period during which the Participant may elect continued group health coverage under COBRA.

		
	(b)
	Outplacement Services.  A Participant entitled to Severance Pay shall receive outplacement services, selected by the Company at its expense, for a period commencing on the date of termination of employment and continuing until the earlier to occur of the Participant accepting other employment or 12 months thereafter.

		
	8.
	No Re-employment. A Participant who receives benefits pursuant to the Policy shall not be eligible for re-employment with any Affiliate, unless the Committee or its delegate provides the Participant with a written waiver of the Section.

		
	9.
	Independent Contractor Status.  A Participant who receives benefits pursuant to the Policy shall not be eligible at any time after termination of employment to enter into a consulting or independent contractor relationship with any Affiliate pursuant to which relationship he or she shall perform the same or similar services, upon the same or similar terms and conditions, as were applicable to such Participant on the date of termination of employment.

		
	10.
	Death of Participant.  It a Participant dies prior to receiving Severance Pay to which he or she is entitled under the Policy, payment will be made to the representative of his or her estate.

11.    Amendment or Termination.

		
	(a)
	The Policy may be amended or terminated by the Committee at any time during its term when, in its judgment, such amendment or termination is necessary or desirable.  No such termination or amendment will affect the rights of any Participant who is then entitled to receive Severance Pay or other benefits under the Policy at the time of such amendment or termination.  The Policy can only be changed by written endorsement by an officer of the Company and only when the Company attaches the written amendment to the Policy.  No agent or other employee, 

3

other than an officer of the Company, has the authority to change or waive any provision of the Policy.

		
	(b)
	Severance benefits under the Policy are not intended to be a vested right.

12.    Governing Law and Venue.  The terms of the Policy shall, to the extent not preempted by federal law, be governed by, and construed and enforced in accordance with, the laws of the State of Indiana, including all matters of construction, validity and performance. In order to benefit Participants under this Policy by establishing a uniform application of law with respect to the administration of the Plan, the provisions of this Section 13 shall apply.  Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Plan shall be brought in any court of the State of Indiana and of the United States for the Northern District of Indiana.  The Company, each Affiliate, each Participant, and any related parties irrevocably and unconditionally consent to the exclusive jurisdiction of such courts in any such litigation related to this Plan and any transactions contemplated hereby.  Such parties irrevocably and unconditionally waive any objection that venue is improper or that such litigation has been brought in an inconvenient forum.

13.    Miscellaneous Provisions.

		
	(a)
	Severance Pay and other benefits pursuant to the Policy shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge prior to actual receipt by a Participant, and any attempt to so anticipate, alienate, sell, transfer, assign, pledge, encumber or charge prior to such receipt shall be void and no Affiliate shall be liable in any manner for, or subject to, the debts, contracts, liabilities, engagements or torts of any person entitled to any Severance Pay or other benefits under the Policy.

		
	(b)
	Nothing contained in the Policy shall confer upon any individual the right to be retained in the service of any Affiliate, nor limit the right of any Affiliate to discharge or otherwise deal with any individual without regard to the existence of the Policy.

		
	(c)
	The Policy shall at all times be entirely unfunded.  No provision shall at any time be made with respect to segregating assets of any Affiliate for payment of any Severance Pay or other benefits hereunder.  No employee or any other person shall have any interest in any particular assets of any Affiliate by reason of the right to receive Severance Pay or other benefits under the Policy, and any such employee or any other person shall have only the rights of a general unsecured creditor of an Affiliate with respect to any rights under the Policy.

		
	14.
	Claims Procedure.  A claim for benefits under the Policy shall be submitted in writing to the Senior Vice President, Human Resources or his delegate. If a claim for benefits under the Policy by a Participant or his or her beneficiary is denied, either in whole or in part, the Senior Vice President, Human Resources, will let the claimant know in writing within 90 days.  If the claimant does not hear within 90 days, the claimant may treat the claim as if it had been denied.  A notice of a denial of a claim will refer to a specific reason or reasons for the denial of the claim; will have specific references to the Policy provisions upon which the denial is based; will describe any additional material or information necessary for the claimant to perfect the claim and explain why such material information is necessary; and will have an explanation of the Policy’s review procedure.

The claimant will have 60 days after the date of the denial to ask for a review and a hearing.  The claimant must file a written request with the Committee for a review, During this time the claimant 

4

may review pertinent documents and may submit issues and comments in writing.  The Committee will have another 60 days in which to consider the claimant’s request for review.  If special circumstances require an extension of time for processing, the Committee may have an additional 60 days to answer the claimant.  The claimant will receive a written notice if the extra days are needed.  The claimant may submit in writing any document, issues and comments he or she may wish.  The decision of the Committee will tell the claimant the specific reasons for its actions, and refer the claimant to the specific Policy provisions upon which its decision is based.   If the decision on review is not furnished within the time period set forth above, the claim shall be deemed denied on review.
If such determination is favorable to the claimant, it shall be binding and conclusive.  If such determination is adverse to such claimant, it shall be binding and conclusive unless the claimant or his duly authorized representative notifies the Committee within 90 days after the mailing or delivery to the claimant by the Committee of its determination that claimant intends to institute legal proceedings challenging the determination of the Committee and actually institutes such legal proceedings within 180 days after such mailing or delivery

		
	15.
	Rights Under ERISA.  Each Participant in the Policy is entitled to certain rights and protection under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).  ERISA provides that all Policy Participants shall be entitled to:

		
	(a)
	Examine, without charge, at the Company’s office all Policy documents.

		
	(b)
	Obtain copies of all Policy documents and other Policy information upon written request to the Committee.  The Committee may make a reasonable charge for the copies.

In addition to creating rights for Policy Participants, ERISA imposes duties upon the people who are responsible for the operation of an employee benefit plan.  The people who operate the Policy, called “fiduciaries” of the Policy, have a duty to do so prudently and in the interest of the Policy Participants and beneficiaries.  No one, including the Company, any affiliate or any other person, may fire a Participant or otherwise discriminate against a Participant in any way to prevent him or her from obtaining a benefit or exercising his or her rights under ERISA, If a Participant’s claim for a benefit is denied in whole or in part, he or she must receive a written explanation of the reason for the denial.  A Participant has the right to have the Committee review and reconsider his or her claim.  Under ERISA, there are steps a Participant can take to enforce the above rights.  For instance, if a Participant requests materials from the Committee and does not receive them within thirty (30) days, he or she may file suit in a federal court.  In such a case the court may require the Committee to provide the materials and pay the Participant up to $110 a day until the Participant receives the materials, unless the materials were not sent because of reasons beyond the control of the Committee.  If a Participant has a claim for benefits, which is denied or ignored, in whole or in part, he or she may file suit in a state or federal court.  If it should happen that the Policy fiduciaries misuse the Policy’s money, or if a Participant is discriminated against for asserting his or her rights, he or she may ask assistance from the United States Department of Labor, or he or she may file suit in a federal court, The court will decide who should pay the court costs and legal fees.  If the Participant is successful, the court may order the person he or she has sued to pay these costs and fees.  If the Participant loses, the court may order him or her to pay these costs and fees, for example, if it finds his or her claim to be frivolous.  If a Participant has questions about the Policy, he or she should contact the Committee.  If a Participant has any questions about this statement or about his or her rights under ERISA, he or she should contact the nearest Area Office of the United States Labor‐Management Services Administration, Department of Labor.

5

17.    Policy Facts.

	
		
	Company:
Address:
	NiSource Inc.
801 E, 86th Avenue
Merrillville, Indiana 46410

	Plan Name:
	NiSource Executive Severance Policy

	Type of Plan:
	Severance Policy‐Welfare Benefits Plan

	Policy Year:
	Calendar year

	Employer Identification Number (EIN):
	35-1719974

	Policy Administrator:
	Officer Nomination and Compensation
Committee of NiSource Inc.

	Business Address:
	801 E. 86th Avenue
Merrillville, Indiana  46410

	Agent for Service of Legal Process:
	Officer Nomination and Compensation
Committee of NiSource Inc.

	(Address)
	801 E. 86th Avenue
Merrillville, Indiana  46410

6

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