Document:

Exhibit 10.2

 

JP ENERGY PARTNERS LP
 2014 LONG-TERM INCENTIVE PLAN

 

SECTION 1.                            Purpose of the Plan.

 

This JP Energy Partners LP 2014 Long-Term Incentive Plan (the “Plan”) has been adopted by JP Energy GP II LLC, a Delaware limited liability company (the “Company”), the general partner of JP Energy Partners LP, a Delaware limited partnership (the “Partnership”).  The Plan is intended to promote the interests of the Partnership and the Company by providing incentive compensation awards denominated in or based on Units to Employees, Consultants and Directors to encourage superior performance.  The Plan is also intended to enhance the ability of the Partnership, the Company and their Affiliates to attract and retain the services of individuals who are essential for the growth and profitability of the Partnership, the Company and their Affiliates and to encourage them to devote their best efforts to advancing the business of the Partnership, the Company and their Affiliates.

 

SECTION 2.                            Definitions.

 

As used in the Plan, the following terms shall have the meanings set forth below:

 

“Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question.  As used herein, the term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

 

“ASC Topic 718” means Accounting Standards Codification Topic 718, Compensation — Stock Compensation, or any successor accounting standard.

 

“Award” means an Option, Restricted Unit, Phantom Unit, DER, Substitute Award, Unit Appreciation Right, Unit Award or Profits Interest Unit granted under the Plan.

 

“Award Agreement” means the written or electronic agreement by which an Award shall be evidenced and which agreement may include a separate plan, policy, agreement or other written document.

 

“Board” means the board of directors or board of managers, as the case may be, of the Company.

 

“Cause” means, unless otherwise set forth in an Award Agreement or other written agreement between the Company and the applicable Participant, a finding by the Committee, before or after the Participant’s termination of Service, of: (i) any material failure by the Participant to perform the Participant’s duties and responsibilities under any written agreement between the Participant and the Company or its Affiliate(s); (ii) any act of fraud, embezzlement, theft or misappropriation by the Participant relating to the Company, the Partnership or any of their Affiliates; (iii) the Participant’s commission of a felony or a crime involving moral turpitude; (iv) any gross negligence or intentional misconduct on the part of the Participant in the conduct of the Participant’s duties and responsibilities with the Company or any Affiliate(s) of 

 

 

the Company or which adversely affects the image, reputation or business of the Company, the Partnership or their Affiliates; or (v) any material breach by the Participant of any agreement between the Company or any of its Affiliates, on the one hand, and the Participant on the other. The findings and decision of the Committee with respect to such matter, including those regarding the acts of the Participant and the impact thereof, will be final for all purposes.

 

“Change in Control” means, and shall be deemed to have occurred upon one or more of the following events:

 

(i)                                     any “person” or “group” within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act, other than the Company or an Affiliate of the Company (as determined immediately prior to such event), shall become the beneficial owner, by way of merger, acquisition, consolidation, recapitalization, reorganization or otherwise, of 50% or more of the combined voting power of the equity interests in the Company or the Partnership;

 

(ii)                                  the limited partners of the Partnership approve, in one or a series of transactions, a plan of complete liquidation of the Partnership;

 

(iii)                               the sale or other disposition by either the Company or the Partnership of all or substantially all of the Company’s or the Partnership’s assets, respectively, in one or more transactions to any Person other than the Company, the Partnership or an Affiliate of the Company or of the Partnership; or

 

(iv)                              a transaction resulting in a Person other than the Company or an Affiliate of the Company (as determined immediately prior to such event) being the sole general partner of the Partnership.

 

                                                Notwithstanding the foregoing, if a Change in Control constitutes a payment event with respect to any Award which provides for the deferral of compensation subject to Section 409A or such compensation otherwise would be subject to Section 409A, the transaction or event described in subsection (i), (ii), (iii) or (iv) above with respect to such Award must also constitute a “change in control event,” as defined in Treasury Regulation §1.409A-3(i)(5), and as relates to the holder of such Award, to the extent required to comply with Section 409A.

 

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

 

“Committee” means the Board, except that it shall mean such committee of the Board as may be appointed by the Board to administer the Plan, or as necessary to comply with applicable legal requirements or listing standards.

 

“Consultant” means an individual who renders consulting services to the Company, the Partnership or any of their Affiliates.

 

“DER” means a distribution equivalent right, representing a contingent right to receive an amount in cash, Units, Restricted Units and/or Phantom Units equal in value to the distributions made by the Partnership with respect to a Unit during the period such Award is outstanding.

 

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“Director” means a member of the board of directors or board of managers, as the case may be, of the Company, the Partnership or any of their Affiliates who is not an Employee or a Consultant (other than in that individual’s capacity as a Director).

 

“Disability” means, unless otherwise set forth in an Award Agreement or other written agreement between the Company, the Partnership or one of their Affiliates and the applicable Participant, as determined by the Committee in its discretion exercised in good faith, a physical or mental condition of a Participant that would entitle him or her to payment of disability income payments under the Company’s, the Partnership’s or one of their Affiliates’ long-term disability insurance policy or plan, as applicable, for employees as then in effect; or in the event that a Participant is not covered, for whatever reason, under any such long-term disability insurance policy or plan for employees of the Company, the Partnership or one of their Affiliates or the Company, the Partnership or one of their Affiliates does not maintain such a long-term disability insurance policy, “Disability” means a total and permanent disability within the meaning of Section 22(e)(3) of the Code; provided, however, that if a Disability constitutes a payment event with respect to any Award which provides for the deferral of compensation subject to Section 409A or such compensation otherwise would be subject to Section 409A, then, to the extent required to comply with Section 409A, the Participant must also be considered “disabled” within the meaning of Section 409A(a)(2)(C) of the Code.  A determination of Disability may be made by a physician selected or approved by the Committee and, in this respect, Participants shall submit to an examination by such physician upon request by the Committee.

 

“Employee” means an employee of the Company, the Partnership or any of their Affiliates.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Fair Market Value” means, as of any given date, the closing sales price on such date during normal trading hours (or, if there are no reported sales on such date, on the last date prior to such date on which there were sales) of the Units on the New York Stock Exchange or, if not listed on such exchange, on any other national securities exchange on which the Units are listed or on an inter-dealer quotation system, in any case, as reported in such source as the Committee shall select.  If there is no regular public trading market for the Units, the Fair Market Value of the Units shall be determined by the Committee in good faith and, to the extent applicable, in compliance with the requirements of Section 409A.

 

“Option” means an option to purchase Units granted pursuant to Section 6(a) of the Plan.

 

“Other Unit-Based Award” means an award granted pursuant to Section 6(f) of the Plan.

 

“Participant” means an Employee, Consultant or Director granted an Award under the Plan and any authorized transferee of such individual.

 

“Partnership Agreement” means the Agreement of Limited Partnership of the Partnership, as it may be amended or amended and restated from time to time.

 

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“Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof.

 

“Phantom Unit” means a notional interest granted under the Plan that, to the extent vested, entitles the Participant to receive a Unit or an amount of cash equal to the Fair Market Value of a Unit, as determined by the Committee in its discretion.

 

“Profits Interest Unit” means to the extent authorized by the Partnership Agreement, an interest in the Partnership that is intended to constitute a “profits interest” within the meaning of the Code, Treasury Regulations promulgated thereunder, and any published guidance by the Internal Revenue Service with respect thereto.

 

“Restricted Period” means the period established by the Committee with respect to an Award during which the Award remains subject to forfeiture and is either not exercisable by or payable to the Participant, as the case may be.

 

“Restricted Unit” means a Unit granted pursuant to Section 6(b) of the Plan that is subject to a Restricted Period.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“SEC” means the Securities and Exchange Commission, or any successor thereto.

 

“Section 409A” means Section 409A of the Code and the Treasury Regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be amended or issued after the Effective Date (as defined in Section 9 below).

 

“Service” means service as an Employee, Consultant or Director.  The Committee, in its sole discretion, shall determine the effect of all matters and questions relating to terminations of Service, including, without limitation, the questions of whether and when a termination of Service occurred and/or resulted from a discharge for Cause, and all questions of whether particular changes in status or leaves of absence constitute a termination of Service.  The Committee, in its sole discretion, subject to the terms of any applicable Award Agreement, may determine that a termination of Service has not occurred in the event of (a) a termination where there is simultaneous commencement by the Participant of a relationship with the Partnership, the Company or any of their Affiliates as an Employee, Director or Consultant or (b) a termination which results in a temporary severance of the service relationship.

 

“Substitute Award” means an award granted pursuant to Section 6(g) of the Plan.

 

“Unit” means a Common Unit of the Partnership.

 

“Unit Appreciation Right” or “UAR” means a contingent right that entitles the holder to receive the excess of the Fair Market Value of a Unit on the exercise date of the UAR over the exercise price of the UAR.

 

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“Unit Award” means an award granted pursuant to Section 6(d) of the Plan.

 

SECTION 3.                            Administration.

 

(a)                                 The Plan shall be administered by the Committee, subject to subsection (b) below; provided, however, that in the event that the Board is not also serving as the Committee, the Board, in its sole discretion, may at any time and from time to time exercise any and all rights and duties of the Committee under the Plan.  The governance of the Committee shall be subject to the charter, if any, of the Committee as approved by the Board.  Subject to the terms of the Plan and applicable law, and in addition to other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to a Participant; (iii) determine the number of Units to be covered by Awards; (iv) determine the terms and conditions of any Award; (v) determine whether, to what extent, and under what circumstances Awards may be settled, exercised, canceled, or forfeited; (vi) interpret and administer the Plan and any instrument or agreement relating to an Award made under the Plan; (vii) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (viii) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan.  The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan or an Award Agreement in such manner and to such extent as the Committee deems necessary or appropriate.  Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive, and binding upon all Persons, including the Company, the Partnership, any of their Affiliates, any Participant and any beneficiary of any Participant.

 

(b)                                 To the extent permitted by applicable law and the rules of any securities exchange on which the Units are listed, quoted or traded, the Board or Committee may from time to time delegate to a committee of one or more members of the Board or one or more officers of the Company the authority to grant or amend Awards or to take other administrative actions pursuant to Section 3(a); provided, however, that in no event shall an officer of the Company be delegated the authority to grant awards to, or amend awards held by, the following individuals: (i) individuals who are subject to Section 16 of the Exchange Act, or (ii) officers of the Company (or Directors) to whom authority to grant or amend Awards has been delegated hereunder; provided, further, that any delegation of administrative authority shall only be permitted to the extent that it is permissible under applicable provisions of the Code and applicable securities laws and the rules of any securities exchange on which the Units are listed, quoted or traded.  Any delegation hereunder shall be subject to such restrictions and limitations as the Board or Committee, as applicable, specifies at the time of such delegation, and the Board or Committee, as applicable, may at any time rescind the authority so delegated or appoint a new delegatee.  At all times, the delegatee appointed under this Section 3(b) shall serve in such capacity at the pleasure of the Board and the Committee.

 

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SECTION 4.                            Units.

 

(a)                                 Limits on Units Deliverable.  Subject to adjustment as provided in Section 4(c), the number of Units that may be delivered with respect to Awards under the Plan is 3,642,700.  If any Award is forfeited, cancelled, exercised, paid, or otherwise terminates or expires without the actual delivery of Units pursuant to such Award (for the avoidance of doubt, the grant of Restricted Units is not a delivery of Units for this purpose unless and until such Restricted Units vest and any restrictions placed upon them under the Plan lapse), the Units subject to such Award that are not actually delivered pursuant to such Award shall again be available for Awards under the Plan.  To the extent permitted by applicable law and securities exchange rules, Substitute Awards and Units issued in assumption of, or in substitution for, any outstanding awards of any entity (including an existing Affiliate of the Partnership) that is (or whose securities are) acquired in any form by the Partnership or any Affiliate thereof shall not be counted against the Units available for issuance pursuant to the Plan.  There shall not be any limitation on the number of Awards that may be paid in cash.

 

(b)                                 Sources of Units Deliverable Under Awards.  Any Units delivered pursuant to an Award shall consist, in whole or in part, of Units acquired in the open market, from the Partnership, any Affiliate thereof or any other Person, or Units otherwise issuable by the Partnership, or any combination of the foregoing, as determined by the Committee in its discretion.

 

(c)                                  Anti-dilution Adjustments.

 

                                                (i)                                     Equity Restructuring.  With respect to any “equity restructuring” event (within the meaning of ASC Topic 718) that could result in an additional compensation expense to the Company or the Partnership pursuant to the provisions of ASC Topic 718 if adjustments to Awards with respect to such event were discretionary, the Committee shall equitably adjust the number and type of Units covered by each outstanding Award and the terms and conditions, including the exercise price and performance criteria (if any), of such Award to equitably reflect such event and shall adjust the number and type of Units (or other securities or property) with respect to which Awards may be granted under the Plan after such event.  With respect to any other similar event that would not result in an ASC Topic 718 accounting charge if the adjustment to Awards with respect to such event were subject to discretionary action, the Committee shall have complete discretion to adjust Awards and the number and type of Units (or other securities or property) with respect to which Awards may be granted under the Plan in such manner as it deems appropriate with respect to such other event.

 

                                                (ii)                                  Other Changes in Capitalization.  In the event of any non-cash distribution, Unit split, combination or exchange of Units, merger, consolidation or distribution (other than normal cash distributions) of Partnership assets to unitholders, or any other change affecting the Units of the Partnership, other than an “equity restructuring,” the Committee may make equitable adjustments, if any, to reflect such change with respect to (A) the aggregate number and kind of Units that may be issued under the Plan; (B) the number and kind of Units (or other securities or property) subject to outstanding Awards; (C) the terms and conditions of any outstanding Awards (including, without limitation, any applicable performance targets or 

 

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criteria with respect thereto); and (D) the grant or exercise price per Unit for any outstanding Awards under the Plan.

 

SECTION 5.                            Eligibility.

 

Any Employee, Consultant or Director shall be eligible to be designated a Participant and receive an Award under the Plan.

 

SECTION 6.                            Awards.

 

(a)                                 Options and UARs.  The Committee shall have the authority to determine the Employees, Consultants and Directors to whom Options and/or UARs shall be granted, the number of Units to be covered by each Option or UAR, the exercise price therefor, the Restricted Period and other conditions and limitations applicable to the exercise of the Option or UAR, including the following terms and conditions and such additional terms and conditions, as the Committee shall determine, that are not inconsistent with the provisions of the Plan.  Options which are intended to comply with Treasury Regulation Section 1.409A-1(b)(5)(i)(A) and UARs which are intended to comply with Treasury Regulation Section 1.409A-1(b)(5)(i)(B) or, in each case, any successor regulation, may be granted only if the requirements of Treasury Regulation Section 1.409A-1(b)(5)(iii), or any successor regulation, are satisfied.  Options and UARs that are otherwise exempt from or compliant with Section 409A may be granted to any eligible Employee, Consultant or Director.

 

(i)                                     Exercise Price.  The exercise price per Unit purchasable under an Option or subject to a UAR shall be determined by the Committee at the time the Option or UAR is granted but, except with respect to a Substitute Award, may not be less than the Fair Market Value of a Unit as of the date of grant of the Option or UAR.

 

(ii)                                  Time and Method of Exercise.  The Committee shall determine the exercise terms and any applicable Restricted Period with respect to an Option or UAR, which may include, without limitation, provisions for accelerated vesting upon the achievement of specified performance goals and/or other events, and the method or methods by which payment of the exercise price with respect to an Option or UAR may be made or deemed to have been made, which may include, without limitation, cash, check acceptable to the Company, withholding Units having a Fair Market Value on the exercise date equal to the relevant exercise price from the Award, a “cashless” exercise through procedures approved by the Company, or any combination of the foregoing methods.

 

(iii)                               Exercise of Options and UARs on Termination of Service.  Each Option and UAR Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option or UAR following a termination of the Participant’s Service.  Unless otherwise determined by the Committee, if the Participant’s Service is terminated for Cause, the Participant’s right to exercise the Option or UAR shall terminate as of the start of business on the effective date of the Participant’s termination.  Unless otherwise determined by the Committee, to the extent the Option or UAR is not 

 

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vested and exercisable as of the termination of Service, the Option or UAR shall terminate when the Participant’s Service terminates.

 

(iv)                              Term of Options and UARs.  The term of each Option and UAR shall be stated in the Award Agreement, provided, that the term shall be no more than ten (10) years from the date of grant thereof.

 

(b)                                 Restricted Units and Phantom Units.  The Committee shall have the authority to determine the Employees, Consultants and Directors to whom Restricted Units and/or Phantom Units shall be granted, the number of Restricted Units or Phantom Units to be granted to each such Participant, the applicable Restricted Period, the conditions under which the Restricted Units or Phantom Units may become vested or forfeited and such other terms and conditions, including, without limitation, restrictions on transferability, as the Committee may establish with respect to such Awards.

 

(i)                                     Payment of Phantom Units.  The Committee shall specify, or permit the Participant to elect in accordance with the requirements of Section 409A, the conditions and dates or events upon which the cash or Units underlying an award of Phantom Units shall be issued, which dates or events shall not be earlier than the date on which the Phantom Units vest and become nonforfeitable and which conditions and dates or events shall be subject to compliance with Section 409A (unless the Phantom Units are exempt therefrom).

 

(ii)                                  Vesting of Restricted Units.  Upon or as soon as reasonably practicable following the vesting of each Restricted Unit, subject to satisfying the tax withholding obligations of Section 8(b), the Participant shall be entitled to have the restrictions removed from his or her Unit certificate (or book-entry account, as applicable) so that the Participant then holds an unrestricted Unit.

 

(c)                                  DERs.  The Committee shall have the authority to determine the Employees, Consultants and/or Directors to whom DERs are granted, whether such DERs are tandem or separate Awards, whether the DERs shall be paid directly to the Participant, be credited to a bookkeeping account (with or without interest in the discretion of the Committee), any vesting restrictions and payment provisions applicable to the DERs, and such other provisions or restrictions as determined by the Committee in its discretion, all of which shall be specified in the applicable Award Agreements.  Distributions in respect of DERs shall be credited as of the distribution dates during the period between the date an Award is granted to a Participant and the date such Award vests, is exercised, is distributed or expires, as determined by the Committee.  Such DERs shall be converted to cash, Units, Restricted Units and/or Phantom Units by such formula and at such time and subject to such limitations as may be determined by the Committee.  Tandem DERs may be subject to the same or different vesting restrictions as the tandem Award, or be subject to such other provisions or restrictions as determined by the Committee in its discretion. Notwithstanding the foregoing, DERs shall only be paid in a manner that is either exempt from or in compliance with Section 409A.

 

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(d)                                 Unit Awards.  Awards of Units may be granted under the Plan (i) to such Employees, Consultants and/or Directors and in such amounts as the Committee, in its discretion, may select, and (ii) subject to such other terms and conditions, including, without limitation, restrictions on transferability, as the Committee may establish with respect to such Awards.

 

(e)                                  Profits Interest Units.  Any Award consisting of Profits Interest Units may be granted to an Employee, Consultant or Director for the performance of services to or for the benefit of the Partnership (i) in the Participant’s capacity as a partner of the Partnership, (ii) in anticipation of the Participant becoming a partner of the Partnership, or (iii) as otherwise determined by the Committee.  At the time of grant, the Committee shall specify the date or dates on which the Profits Interest Units shall vest and become nonforfeitable, and may specify such conditions to vesting as it deems appropriate.  Profits Interest Units shall be subject to such restrictions on transferability and other restrictions as the Committee may impose.

 

(f)                                   Other Unit-Based Awards.  Other Unit-Based Awards may be granted under the Plan to such Employees, Consultants and/or Directors as the Committee, in its discretion, may select.  An Other Unit-Based Award shall be an award denominated or payable in, valued in or otherwise based on or related to Units, in whole or in part.  The Committee shall determine the terms and conditions of any Other Unit-Based Award.  Upon vesting, an Other Unit-Based Award may be paid in cash, Units (including Restricted Units) or any combination thereof as provided in the Award Agreement.

 

(g)                                  Substitute Awards.  Awards may be granted under the Plan in substitution of similar awards held by individuals who are or who become Employees, Consultants or Directors in connection with a merger, consolidation or acquisition by the Partnership or an Affiliate of another entity or the securities or assets of another entity (including in connection with the acquisition by the Partnership or one of its Affiliates of additional securities of an entity that is an existing Affiliate of the Partnership).  Such Substitute Awards that are Options or UARs may have exercise prices less than the Fair Market Value of a Unit on the date of the substitution if such substitution complies with Section 409A and other applicable laws and securities exchange rules.

 

(h)                                 General.

 

(i)                                     Award Agreements. Each Award shall be evidenced in writing in an Award Agreement that shall reflect any vesting conditions or restrictions imposed by the Committee covering a period of time specified by the Committee and shall also contain such other terms, conditions and limitations as shall be determined by the Committee in its sole discretion. Where signature or electronic acceptance of the Award Agreement by the Participant is required, any such Awards for which the Award Agreement is not signed or electronically accepted shall be forfeited.

 

(ii)                                  Forfeitures.  Except as otherwise provided in the terms of an Award Agreement, upon termination of a Participant’s Service for any reason during an applicable Restricted Period, all outstanding, unvested Awards held by such Participant 

 

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shall be automatically forfeited by the Participant.  Notwithstanding the immediately preceding sentence, the Committee may, in its discretion, waive in whole or in part such forfeiture with respect to any such Award; provided, that any such waiver shall be effective only to the extent that such waiver will not cause (i) any Award intended to satisfy the requirements of Section 409A to fail to satisfy such requirements or (ii) any Award intended to be exempt from Section 409A to become subject to and to fail to satisfy such requirements.

 

(iii)                               Awards May Be Granted Separately or Together.  Awards may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution for any other Award granted under the Plan or any award granted under any other plan of the Company or any Affiliate.  Awards granted in addition to or in tandem with other Awards or awards granted under any other plan of the Company or any Affiliate may be granted either at the same time as or at a different time from the grant of such other Awards or awards.

 

(iv)                              Limits on Transfer of Awards.

 

(A)                               Except as provided in paragraph (C) below, each Option and UAR shall be exercisable only by the Participant (or the Participant’s legal representative in the case of the Participant’s Disability or incapacitation) during the Participant’s lifetime, or by the person to whom the Participant’s rights shall pass by will or the laws of descent and distribution.

 

(B)                               Except as provided in paragraph (C) below, no Award and no right under any such Award may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant other than by will or the laws of descent and distribution and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company, the Partnership or any Affiliate.

 

(C)                               The Committee may provide in an Award Agreement or in its discretion that an Award may, on such terms and conditions as the Committee may from time to time establish, be transferred by a Participant without consideration to any “family member” of the Participant, as defined in the instructions to use of the Form S-8 Registration Statement under the Securities Act, as applicable, or any other transferee specifically approved by the Committee after taking into account any state, federal, local or foreign tax and securities laws applicable to transferable Awards.  In addition, vested Units may be transferred to the extent permitted by the Partnership Agreement and not otherwise prohibited by the Award Agreement or any other agreement or policy restricting the transfer of such Units.

 

(v)                                 Term of Awards.  Subject to Section 6(a)(iv) above, the term of each Award, if any, shall be for such period as may be determined by the Committee.

 

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(vi)                              Unit Certificates.  Unless otherwise determined by the Committee or required by any applicable law, rule or regulation, neither the Company nor the Partnership shall deliver to any Participant certificates evidencing Units issued in connection with any Award and instead such Units shall be recorded in the books of the Partnership (or, as applicable, its transfer agent or equity plan administrator).  All certificates for Units or other securities of the Partnership delivered under the Plan and all Units issued pursuant to book entry procedures pursuant to any Award or the exercise thereof shall be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and/or other requirements of the SEC, any securities exchange upon which such Units or other securities are then listed, and any applicable federal or state laws, and the Committee may cause a legend or legends to be inscribed on any such certificates or book entry to make appropriate reference to such restrictions.

 

(vii)                           Consideration for Grants.  To the extent permitted by applicable law, Awards may be granted for such consideration, including services, as the Committee shall determine.

 

(viii)                        Delivery of Units or other Securities and Payment by Participant of Consideration.  Notwithstanding anything in the Plan or any Award Agreement to the contrary, subject to compliance with Section 409A, the Company shall not be required to issue or deliver any certificates or make any book entries evidencing Units pursuant to the exercise or vesting of any Award, unless and until the Board or the Committee has determined, with advice of counsel, that the issuance of such Units is in compliance with all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any securities exchange on which the Units are listed or traded, and the Units are covered by an effective registration statement or applicable exemption from registration.  In addition to the terms and conditions provided herein, the Board or the Committee may require that a Participant make such reasonable covenants, agreements, and representations as the Board or the Committee, in its discretion, deems advisable in order to comply with any such laws, regulations, or requirements.  Without limiting the generality of the foregoing, the delivery of Units pursuant to the exercise or vesting of an Award may be deferred for any period during which, in the good faith determination of the Committee, the Company is not reasonably able to obtain or deliver Units pursuant to such Award without violating applicable law or the applicable rules or regulations of any governmental agency or authority or securities exchange.  No Units or other securities shall be delivered pursuant to any Award until payment in full of any amount required to be paid pursuant to the Plan or the applicable Award Agreement (including, without limitation, any exercise price or tax withholding) is received by the Company.

 

SECTION 7.                            Amendment and Termination; Certain Transactions.

 

Except to the extent prohibited by applicable law:

 

(a)                                 Amendments to the Plan.  Except as required by applicable law or the rules of the principal securities exchange, if any, on which the Units are traded and subject to Section 7(b) 

 

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below, the Board or the Committee may amend, alter, suspend, discontinue, or terminate the Plan in any manner at any time for any reason or for no reason without the consent of any partner, Participant, other holder or beneficiary of an Award, or any other Person.  The Board shall obtain securityholder approval of any Plan amendment to the extent necessary to comply with applicable law or securities exchange listing standards or rules.

 

(b)                                 Amendments to Awards.  Subject to Section 7(a) above, the Committee may waive any conditions or rights under, amend any terms of, or alter any Award theretofore granted, provided that no change, other than pursuant to Section 7(c) below, in any Award shall materially reduce the rights or benefits of a Participant with respect to an Award without the consent of such Participant.

 

(c)                                  Actions Upon the Occurrence of Certain Events.  Upon the occurrence of a Change in Control, any transaction or event described in Section 4(c) above, any change in applicable laws or regulations affecting the Plan or Awards hereunder, or any change in accounting principles affecting the financial statements of the Company or the Partnership, the Committee, in its sole discretion, without the consent of any Participant or holder of an Award, and on such terms and conditions as it deems appropriate, which need not be uniform with respect to all Participants or all Awards, may take any one or more of the following actions:

 

(i)                                     provide for either (A) the termination of any Award in exchange for a payment in an amount, if any, equal to the amount that would have been attained upon the exercise of such Award or realization of the Participant’s rights under such Award (and, for the avoidance of doubt, if as of the date of the occurrence of such transaction or event, the Committee determines in good faith that no amount would have been payable upon the exercise of such Award or realization of the Participant’s rights, then such Award may be terminated by the Company without payment) or (B) the replacement of such Award with other rights or property selected by the Committee in its sole discretion having an aggregate value not exceeding the amount that could have been attained upon the exercise of such Award or realization of the Participant’s rights had such Award been currently exercisable or payable or fully vested;

 

(ii)                                  provide that such Award be assumed by the successor or survivor entity, or a parent or subsidiary thereof, or be exchanged for similar options, rights or awards covering the equity of the successor or survivor, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of equity interests and prices;

 

(iii)                               make adjustments in the number and type of Units (or other securities or property) subject to outstanding Awards, the number and kind of outstanding Awards, the terms and conditions of (including the exercise price), and/or the vesting and performance criteria included in, outstanding Awards;

 

(iv)                              provide that such Award shall vest or become exercisable or payable, notwithstanding anything to the contrary in the Plan or the applicable Award Agreement; and

 

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(v)                                 provide that the Award cannot be exercised or become payable after such event and shall terminate upon such event.

 

Notwithstanding the foregoing, (i) with respect to an above event that constitutes an “equity restructuring” that would be subject to a compensation expense pursuant to ASC Topic 718, the provisions in Section 4(c) above shall control to the extent they are in conflict with the discretionary provisions of this Section 7, provided, however, that nothing in this Section 7(c) or Section 4(c) above shall be construed as providing any Participant or any beneficiary of an Award any rights with respect to the “time value,” “economic opportunity” or “intrinsic value” of an Award or limiting in any manner the Committee’s actions that may be taken with respect to an Award as set forth in this Section 7 or in Section 4(c) above; and (ii) no action shall be taken under this Section 7 which shall cause an Award to result in taxation under Section 409A, to the extent applicable to such Award.

 

SECTION 8.                            General Provisions.

 

(a)                                 No Rights to Award.  No Person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Participants, including the treatment upon termination of Service or pursuant to Section 7(c).  The terms and conditions of Awards need not be the same with respect to each recipient.

 

(b)                                 Tax Withholding.  Unless other arrangements have been made that are acceptable to the Company, the Company or any Affiliate thereof is authorized to deduct or withhold, or cause to be deducted or withheld, from any Award, from any payment due or transfer made under any Award, or from any compensation or other amount owing to a Participant the amount (in cash or Units, including Units that would otherwise be issued pursuant to such Award or other property) of any applicable taxes payable in respect of an Award, including its grant, its exercise, the lapse of restrictions thereon, or any payment or transfer thereunder or under the Plan, and to take such other action as may be necessary in the opinion of the Company to satisfy its withholding obligations for the payment of such taxes.  In the event that Units that would otherwise be issued pursuant to an Award are used to satisfy such withholding obligations, the number of Units which may be so withheld or surrendered shall be limited to the number of Units which have a Fair Market Value on the date of withholding equal to the aggregate amount of such liabilities based on the minimum statutory withholding rates for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such supplemental taxable income.

 

(c)                                  No Right to Employment or Services.  The grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of the Company, the Partnership or any of their Affiliates, or to continue to serve as a Consultant or a Director, as applicable.  Furthermore, the Company, the Partnership and/or an Affiliate thereof may at any time dismiss a Participant from employment or consulting free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan, any Award Agreement or other written agreement between any such entity and the Participant.

 

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(d)                                 No Rights as Unitholder.  Except as otherwise provided herein, a Participant shall have none of the rights of a unitholder with respect to Units covered by any Award unless and until the Participant becomes the record owner of such Units.

 

(e)                                  Section 409A.  To the extent that the Committee determines that any Award granted under the Plan is subject to Section 409A, the Award Agreement evidencing such Award shall be drafted with the intention to include the terms and conditions required by Section 409A.  To the extent applicable, the Plan and Award Agreements shall be interpreted in accordance with Section 409A.  Notwithstanding any provision of the Plan to the contrary, in the event that following the Effective Date (as defined in Section 9 below), the Committee determines that any Award may be subject to Section 409A, the Committee may adopt such amendments to the Plan and the applicable Award Agreement, adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), and/or take any other actions that the Committee determines are necessary or appropriate to preserve the intended tax treatment of the Award, including without limitation, actions intended to (i) exempt the Award from Section 409A, or (ii) comply with the requirements of Section 409A; provided, however, that nothing herein shall create any obligation on the part of the Committee, the Partnership, the Company or any of their Affiliates to adopt any such amendment, policy or procedure or take any such other action, nor shall the Committee, the Partnership, the Company or any of their Affiliates have any liability for failing to do so.  If any termination of Service constitutes a payment event with respect to any Award which provides for the deferral of compensation and is subject to Section 409A, such termination of Service must also constitute a “separation from service” within the meaning of Section 409A.  Notwithstanding any provision in the Plan to the contrary, the time of payment with respect to any Award that is subject to Section 409A shall not be accelerated, except as permitted under Treasury Regulation Section 1.409A-3(j)(4).  Notwithstanding any provision of this Plan to the contrary, if a Participant is a “specified employee” within the meaning of Section 409A as of the date of such Participant’s termination of Service and the Company determines that immediate payment of any amounts or benefits under this Plan would cause a violation of Section 409A, then any amounts or benefits which are payable under this Plan upon the Participant’s “separation from service” within the meaning of Section 409A that: (i) are subject to the provisions of Section 409A; (ii) are not otherwise exempt under Section 409A; and (iii) would otherwise be payable during the first six-month period following such separation from service, shall be paid, without interest, on the first business day following the earlier of: (1) the date that is six months and one day following the date of termination; or (2) the date of the Participant’s death.  Each payment or amount due to a Participant under this Plan shall be considered a separate payment, and a Participant’s entitlement to a series of payments under this Plan is to be treated as an entitlement to a series of separate payments.

 

(f)                                   Lock-Up Agreement.  Each Participant shall agree, if so requested by the Company or the Partnership and any underwriter in connection with any public offering of securities of the Partnership or any Affiliate, not to directly or indirectly offer, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of or otherwise dispose of or transfer any Units held by it for such period, not to exceed one hundred eighty (180) days following the effective date of the relevant registration statement filed under the Securities Act in connection with such public offering, as such underwriter shall specify reasonably and in good faith.  The Company or the 

 

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Partnership may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such 180-day period.  Notwithstanding the foregoing, the 180-day period may be extended for up to such number of additional days as is deemed necessary by such underwriter or the Company or Partnership to continue coverage by research analysts in accordance with FINRA Rule 2711 or any successor rule.

 

(g)                              Compliance with Laws.  The Plan, the granting and vesting of Awards under the Plan and the issuance and delivery of Units and the payment of money under the Plan or under Awards granted or awarded hereunder are subject to compliance with all applicable federal, state, local and foreign laws, rules and regulations (including but not limited to state, federal and foreign securities law and margin requirements), the rules of any securities exchange or automated quotation system on which the Units are listed, quoted or traded, and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Company or the Partnership, be necessary or advisable in connection therewith.  Any securities delivered under the Plan shall be subject to such restrictions, and the Person acquiring such securities shall, if requested by the Company or the Partnership, provide such assurances and representations to the Company or the Partnership as the Company or the Partnership may deem necessary or desirable to assure compliance with all applicable legal requirements.  To the extent permitted by applicable law, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.  In the event an Award is granted to or held by a Participant who is employed or providing services outside the United States, the Committee may, in its sole discretion, modify the provisions of the Plan or of such Award as they pertain to such Participant to comply with applicable foreign law or to recognize differences in local law, currency or tax policy.  The Committee may also impose conditions on the grant, issuance, exercise, vesting, settlement or retention of Awards in order to comply with such foreign law and/or to minimize the Company’s or the Partnership’s obligations with respect to tax equalization for Participants employed outside their home country.

 

(h)                                 Governing Law.  The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of Delaware without regard to its conflicts of laws principles.

 

(i)                                     Severability.  If any provision of the Plan or any Award is or becomes, or is deemed to be, invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable law or, if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in full force and effect.

 

(j)                                    Other Laws.  The Committee may refuse to issue or transfer any Units or other consideration under an Award if, in its sole discretion, it determines that the issuance or transfer of such Units or such other consideration might violate any applicable law or regulation, the rules of the principal securities exchange on which the Units are then traded, or entitle the Partnership or an Affiliate to recover the same under Section 16(b) of the Exchange Act, and any 

 

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payment tendered to the Company by a Participant, other holder or beneficiary in connection with the exercise of such Award shall be promptly refunded to the relevant Participant, holder or beneficiary.

 

(k)                                 No Trust or Fund Created.  Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company, the Partnership or any of their Affiliates, on the one hand, and a Participant or any other Person, on the other hand.  To the extent that any Person acquires a right to receive payments pursuant to an Award, such right shall be no greater than the right of any general unsecured creditor of the Partnership or any participating Affiliate of the Partnership.

 

(l)                                     No Fractional Units.  No fractional Units shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional Units or whether such fractional Units or any rights thereto shall be canceled, terminated, or otherwise eliminated.

 

(m)                             Headings.  Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference.  Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision hereof.

 

(n)                             No Guarantee of Tax Consequences.  None of the Board, the Committee, the Company or the Partnership provides or has provided any tax advice to any Participant or any other Person or makes or has made any assurance, commitment or guarantee that any federal, state, local or other tax treatment will (or will not) apply or be available to any Participant or other Person and assumes no liability with respect to any tax or associated liabilities to which any Participant or other Person may be subject.

 

(o)                                 Clawback.  To the extent required by applicable law or any applicable securities exchange listing standards, or as otherwise determined by the Committee, Awards and amounts paid or payable pursuant to or with respect to Awards shall be subject to the provisions of any clawback policy implemented by the Company or the Partnership, which clawback policy may provide for forfeiture, repurchase and/or recoupment of Awards and amounts paid or payable pursuant to or with respect to Awards.  Notwithstanding any provision of this Plan or any Award Agreement to the contrary, the Company and the Partnership reserve the right, without the consent of any Participant, to adopt any such clawback policies and procedures, including such policies and procedures applicable to this Plan or any Award Agreement with retroactive effect.

 

(p)                                 Unit Retention Policy.  The Committee may provide in its sole and absolute discretion, subject to applicable law, that any Units received by a Participant in connection with an Award granted hereunder shall be subject to a unit ownership, unit retention or other policy restricting the sale or transfer of units, as the Committee may determine to adopt, amend or terminate in its sole discretion from time to time.

 

(q)                                 Limitation of Liability. No member of the Board or the Committee or Employee to whom the Board or the Committee has delegated authority in accordance with the provisions of Section 3 of this Plan shall be liable for anything done or omitted to be done by him or her by 

 

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any member of the Board or the Committee or by any Employee in connection with the performance of any duties under this Plan, except for his or her own willful misconduct or as expressly provided by statute.

 

(r)                                    Facility Payment.  Any amounts payable hereunder to any Person under legal disability or who, in the judgment of the Committee, is unable to manage properly his or her financial affairs, may be paid to the legal representative of such Person, or may be applied for the benefit of such Person in any manner that the Committee may select, and the Partnership, the Company and all of their Affiliates shall be relieved of any further liability for payment of such amounts.

 

SECTION 9.                            Term of the Plan.

 

The Plan shall be effective on the date on which the Plan is adopted by the Board (the “Effective Date”) and shall continue until the date terminated by the Board.  However, any Award granted prior to such termination, and the authority of the Board or the Committee to amend, alter, adjust, suspend, discontinue, or terminate any such Award or to waive any conditions or rights under such Award, shall extend beyond such termination date.  The Plan shall, within twelve (12) months after the date of the Board’s initial adoption of the Plan, be submitted for approval by a majority of the outstanding Units of the Partnership entitled to vote.

 

17Exhibit 10.3

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “Agreement”) is made effective as of September 17, 2014, by and between JP Energy GP II LLC, a Delaware limited liability company (the “Company”), and Patrick J. Welch (the “Employee”).

 

WHEREAS, the Employee has been providing services to the Company as an executive officer of the Company as the Company’s Executive Vice President and Chief Financial Officer;

 

WHEREAS, the Employee previously or may in the future enter into one or more restricted unit or other equity incentive award agreements with the Company, JP Energy Partners LP (the “Partnership”) and/or their Affiliates (the “Award Agreements”);

 

WHEREAS, the Company and the Employee desire to enter into an employment agreement that governs the terms and conditions of the Employee’s employment from this date forward;

 

WHEREAS, pursuant to this Agreement, the Employee shall be employed by the Company in a confidential and fiduciary relationship, and Confidential Information (as defined in Section 9.A. hereof) will necessarily be provided to, communicated to, or acquired by the Employee by virtue of his employment with the Company; and

 

WHEREAS, for purposes of this Agreement, “Business” shall mean any business or activity in which the Company, the Partnership, JP Energy Development LP (“DevCo”) or any of their subsidiaries or affiliates (collectively, the “JPE Companies”) is or was engaged (or was actively considering or contemplating engaging in) at the time of the Employee’s termination, was engaged within the 12 month period prior to the time of Employee’s termination

 

NOW THEREFORE, based upon the above, the Company agrees to employ the Employee and the Employee agrees to be employed by the Company in accordance with the following terms and conditions.

 

1.                                      Prior Agreements.  Effective as of the date hereof, this Agreement shall supersede all prior agreements between the Employee and the Company regarding the terms and conditions of Employee’s employment and severance rights with the Company and the JPE Companies including, without limitation any employment agreement or offer letter previously entered into between the Employee and any JPE Company.  Notwithstanding the foregoing, the grant, vesting and other terms and conditions of the Employee’s equity awards shall continue to and will be governed exclusively by the Award Agreements.

 

2.                                      Term.  This Agreement shall become effective as of the date hereof (the “Effective Date”) and, subject to the provisions of Section 7 below, shall have a term that continues through and including the thirty-six (36) month anniversary of the Effective Date (the “Initial Term”) unless earlier terminated in accordance with this Agreement. The Initial Term shall automatically be extended for successive one (1) year periods (each, an “Extension Term” and, collectively with the Initial Term, the “Term”), unless either party hereto gives written notice of non-extension to the other no later than sixty (60) days prior to the expiration of the then-applicable Term.  Notwithstanding the foregoing, the Employee’s employment with the Company may be terminated prior to the expiration of the Initial Term or any Extension Term in accordance with Section 7 of this Agreement.

 

3.                                      Employment After the Term.  Upon and following any non-extension of the Term in accordance with Section 2, the Company and the Employee expect that the Employee will continue to be 

 

 

employed by the Company after the Term on an at-will basis on such terms and conditions as the Company and the Employee may then agree, provided that Sections 9 through 21 of this Agreement shall survive the expiration of the Term, regardless of whether the other provisions of this Agreement remain in effect, subject to the terms thereof, and regardless of whether any termination of the Employee’s employment is effected pursuant to this Agreement.

 

4.                                      Duties and Responsibilities.  During the Term of this Agreement, the Employee shall serve as Executive Vice President and Chief Financial Officer of the Company.  The Employee shall have those responsibilities ordinarily consistent with his position and those other responsibilities that may be assigned to him from time to time by the Company’s board of directors (the “Board”).  The Employee agrees to devote his full business time, energy and ability to the performance of his duties and responsibilities under this Agreement, and shall not pursue any other business activity of any type that would materially interfere with his performance of his duties under this Agreement.

 

5.                                      Place of Employment.  The Employee shall perform his duties and responsibilities under this Agreement at the Company’s offices at 600 E. Las Colinas Blvd., Suite 2000, Irving, Texas 75039, or, subject to Section 7.E. hereof, such other location(s) as may be required by the Board.

 

6.                                      Compensation and Benefits and Related Matters.  The Company shall pay the following compensation and benefits to the Employee for all services rendered by the Employee under the Agreement:

 

                                                                                                A.                                    Base Salary.  Subject to the terms and conditions set forth herein, including Section 7, the Company will pay the Employee a base salary at the annual rate of $400,000 (prorated for any portion of a year in which the Employee is employed by the Company), which amount shall be paid in equal installments on a bi-weekly basis at the Company’s regular payroll intervals.  The Employee’s base salary may be reviewed and adjusted from time to time in the discretion of the Board or the compensation committee of the Board (the “Committee”).

 

                                                          B.                                    Bonus.  The Employee shall be eligible to receive an annual bonus in accordance with the Company’s employee incentive bonus plan, as approved by the Board or the Committee and in effect from time to time.  The Employee shall have a target bonus equal to 75% of the Employee’s annual base salary (“Target Bonus”), which target bonus shall be earned based on the attainment of personal and Company performance goals as established by the Board or the Committee in its sole discretion.  Notwithstanding the foregoing, the Employee’s receipt of any annual bonus shall be conditioned upon the Company achieving at least 90% of the applicable EBITDA or other performance targets as determined by the Board or the Committee and as necessary to fund such bonus.  The Employee’s right to receive any annual bonus shall be subject to his continued employment with the Company through the applicable date of payment, unless otherwise determined by the Board or the Committee in its discretion or as otherwise set forth in the Company’s employee incentive bonus plan, as in effect from time to time.

 

                                                C.                                    Benefits. The Employee shall be eligible to participate in all vacation, group health, dental, life, 401(k), profit sharing and other insurance and/or benefit plans that the Company may offer to its employees from time to time and on the same terms as offered to other similarly situated employees as in effect on and after the Effective Date.

 

                                                D.                                    Business Expenses. During the Term, the Company shall reimburse the Employee for all necessary and reasonable business expenses actually incurred by the Employee for travel, lodging and food in performing his duties and responsibilities under this Agreement in accordance with the Company’s expense reimbursement policies in effect from time to time, provided that the Employee shall submit documentation of such expenses in a form acceptable to the Company.

 

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                                                E.                                     Key Person Insurance.  At any time during the Term, the Company shall have the right, at the sole discretion of the Board or the Committee, to insure the life of Employee for the Company’s sole benefit.   The Company shall have the right to determine the amount of insurance and the type of policy.  Employee shall reasonably cooperate with the Company in obtaining such insurance by submitting to physical examinations, by supplying all information reasonably required by any insurance carrier, and by executing all necessary documents reasonably required by any insurance carrier, provided that any information provided to an insurance company or broker shall not be provided to the Company without the prior written authorization of Employee.  Employee shall incur no financial obligation by executing any required document, and shall have no interest in any such policy.

 

7.                                     Termination.  The Company and the Employee shall be free to terminate this Agreement and the Employee’s employment hereunder as follows:

 

                                                A.                                    Termination by the Company for Cause.  The Company shall have the right to terminate for “Cause” immediately.  For purposes of this Agreement, “Cause” shall mean (i) fraud, embezzlement, or theft against the Company or any of its affiliates, (ii) any material violation of the Company’s corporate policies or code of ethics, (iii) any acts involving gross negligence, dishonesty or fraud, or that in the good faith opinion of the Company may cause a material harm to the Company or any of its affiliates, or any conviction of, or guilty plea or nolo contendere plea to, or confession of, a Class A-type felony or felony involving moral turpitude or other crime involving moral turpitude, (iv) an unauthorized disclosure or misuse of any trade secrets or confidential information of the Company or any of its affiliates, (v) material nonperformance by the Employee of his duties hereunder, including, without limitation, failing in any material respect to carry out lawful directions of the Board, and failure to remedy such nonperformance within ten (10) days following written notice from the Company specifically identifying the nonperformance and the actions required to cure it, provided that the Employee shall not be permitted to cure repeated failures, (vi) willful misconduct by the Employee that is intended to, or reasonably likely to, in the good faith judgment of the Company, materially injure the business, prospects, or reputation of the Company or its affiliates and failure to remedy such misconduct within ten (10) days following written notice from the Company specifically identifying the misconduct and the actions required to cure it (if such misconduct can be cured), provided that the Employee shall not be permitted to cure repeated failures, (vii) breach of a fiduciary duty owed to the Company or any of the material terms or provisions of this Agreement and failure to remedy such breach within ten (10) days following written notice from the Company specifically identifying the breach and the actions required to cure it (if such breach can be cured), provided that the Employee shall not be permitted to cure repeated failures, (viii) use of illegal drugs at work; and (ix) material breach of the terms of this Agreement.  Notwithstanding any other provision of this Agreement, in the event of a termination pursuant to this Section, the Company shall only be obligated to pay the Employee within thirty (30) days after the date of Employee’s termination of employment (a) his base salary through the date of termination, (b) reimbursement for reimbursable business expenses incurred prior to the date of termination, and (c) such other benefits and payments to which the Employee may be entitled by law or pursuant to the benefit plans of the Company then in effect (the amounts described in clauses (a)-(c), the “Accrued Obligations”).  Notwithstanding the foregoing, any payment to which the Employee may be entitled pursuant to the benefit plans of the Company then in effect shall be paid at the time and in the form specified in such benefit plans.  For the avoidance of doubt, in the event of a termination under this Section 7.A., the Employee shall not be entitled to any other payments under this Agreement except as set forth in the immediately preceding sentence.

 

                                                B.                                    Disability.  The Company shall have the right to terminate in the event that the Employee shall be prevented by Disability from substantially performing his duties and responsibilities hereunder for ninety (90) or more days out of any one hundred eighty (180) day period.  For purposes of this Agreement, “Disability” shall mean, at any time the Company or any of its affiliates sponsors a long-

 

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term disability plan for the Company’s employees, “disability” as defined in such long-term disability plan for the purpose of determining a participant’s eligibility for benefits, provided, however, if the long-term disability plan contains multiple definitions of disability, “Disability” shall refer to that definition of disability which, if the Employee qualified for such disability benefits, would provide coverage for the longest period of time.  The determination of whether the Employee has a Disability shall be made by a physician selected by the Company and reasonably acceptable to the Executive or his representative(s).  At any time the Company does not sponsor a long-term disability plan for its employees, Disability shall mean the Employee’s inability to perform, with or without reasonable accommodation, the essential functions of the Employee’s position for ninety (90) or more days out of any one hundred eighty (180) day period as a result of incapacity due to mental or physical illness as determined by the Board or the Committee in its sole discretion.  Any refusal by the Employee to submit to a medical examination for the purpose of determining Disability shall be deemed to constitute conclusive evidence of the Employee’s Disability. In the event of a termination pursuant to this Section, the Company shall pay the Employee, as severance pay, on the 30th day following termination of employment, an amount equal to his base salary that would have been paid through the end of the third month following the termination, after which time the Employee’s right (if any) to receive income continuation shall be determined solely in accordance with the terms and conditions of the Company’s disability plans and/or any other compensation and benefit plans then in effect.  For the avoidance of doubt, in the event of a termination under this Section 7.B., the Employee shall not be entitled to any other payments under this Agreement except for the Accrued Obligations or as set forth in the immediately preceding sentence.

 

                                                C.                                    Death.  In the event of a termination by reason of the Employee’s death, the Company shall pay to the Employee’s estate, designated beneficiary or legal representative his base salary through the end of the month in which his death occurs.  For the avoidance of doubt, in the event of a termination under this Section 7.C., the Employee shall not be entitled to any other payments under this Agreement except for the Accrued Obligations or as set forth in the immediately preceding sentence.

 

                                                D.                                    Termination by the Company other than for Disability, Death or Cause.  The Company shall have the right to terminate, other than for Cause, disability or death, upon thirty (30) days prior written notice to the Employee (or may terminate immediately and pay the Employee’s base salary for such 30 days in a lump sum on the 30th day following termination, subject to Employee’s execution and nonrevocation of a release of claims as described below).  In the event of a termination pursuant to this Section, in addition to any other payments or benefits to which the Employee may be entitled under the Company’s benefit plans then in effect, the Company shall pay to the Employee, (i) his base salary through the date of termination, and (ii) provided that the Employee executes within 21 days after termination of employment and does not revoke a general release of claims against the Company and its affiliates, equityholders, officers, directors, agents and employees as to employment, benefits and compensation related claims, in a form acceptable to the Company, an amount (the “Severance Amount”) equal to one times (1.0x) the sum of Employee’s (a) annual base salary as of the date of termination and (b) Bonus Amount, payable in a single lump sum within 30 days after the date of termination.  For purposes of this Agreement, “Bonus Amount” means the Employee’s average cash bonus paid for the three most recently completed fiscal years or, for any portion of the three most recently completed years that Employee was not employed by the Company and therefore did not receive a bonus, Employee’s Target Bonus as a percentage of his base salary for the current fiscal year shall be used for the purpose of calculating Bonus Amount under this Section). In the event a severance payment is made under this Section 7.D, the Company will pay to Employee a monthly payment on the first payroll date of each month equal to the COBRA cost of continued health and dental coverage under health and dental plans of the Company pursuant to Section 4980B of the Internal Revenue Code, less the amount that Employee would be required to contribute for health and dental coverage if Employee were an active employee, for a period of twelve (12) months from the termination date; provided, however, that this obligation shall cease upon Employee’s obtaining new employment that provides Employee with eligibility for medical 

 

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benefits without a pre-existing condition limitation (such period is referred to as the “Benefit Period”).  These payments will commence on the Company’s first payroll date after the termination date and will continue until the end of the Benefit Period. For the avoidance of doubt, in the event of a termination under this Section 7.D., the Employee shall not be entitled to any other payments under this Agreement except for the Accrued Obligations or as set forth in the immediately preceding sentence.  For the avoidance of doubt, an election by the Company not to renew the Term effected by the Company giving the Executive written notice of non-extension of the Term no later than sixty (60) days prior to the expiration of the then-applicable Term in accordance with Section 2 shall not entitle the Executive to the severance payments and benefits described in this subsection D, provided, however, that if the Company terminates the Executive’s employment other than for Cause, disability or death upon the expiration of the Term, the Executive shall be entitled to receive the severance payments and benefits described in this subsection D, subject to all of the terms and conditions described herein.

 

                                                E.                                     Termination by the Employee for Good Reason.  The Employee shall have the right to terminate for “Good Reason” upon thirty (30) days’ prior written notice.  For purposes of this Agreement, “Good Reason” shall mean (i) the Company’s material breach of its obligations under this Agreement, including, without limitation, its obligation to pay salary to the Employee, (ii) a material and adverse diminution in the Employee’s job duties, responsibilities or authority, (iii) a change in the location where the Employee is required to perform his duties and responsibilities which exceeds fifty (50) miles from the location specified in Section 5 hereof, or (iv) a material reduction in the Employee’s base salary, it being intended that an individual or aggregate reduction of more than 10% from the Employee’s prior base salary level shall be considered material for purposes of this Agreement.  Employee may not resign Employee’s employment for Good Reason unless (A) Employee gives the Company written notice of his objection to any event set forth above within 30 days following such event, (B) such event is not corrected, in all material respects, by the Company within 30 days following its receipt of such notice, and (C) Employee resigns his employment with the Company not more than 30 days following the expiration of the 30-day correction period described in the foregoing subclause (B).  In the event of a termination pursuant to this Section, in addition to any other payments or benefits to which the Employee may be entitled under the Company’s benefit plans then in effect, the Company shall pay to the Employee, (i) his base salary through the date of termination, and (ii) provided that the Employee executes within 21 days after termination of employment and does not revoke a general release of claims against the Company and its affiliates, equityholders officers, directors, agents and employees as to employment, benefits and compensation related claims, in a form acceptable to the Company, an amount equal to one times (1.0x) the sum of Employee’s (a) base salary as of the date of termination and (b) Bonus Amount, payable in a single lump sum within 30 days after the date of termination.  In the event a severance payment is made under this Section 7.E., the Company will pay to Employee a monthly payment on the first payroll date of each month equal to the COBRA cost of continued health and dental coverage under health and dental plans of the Company pursuant to Section 4980B of the Internal Revenue Code, less the amount that Employee would be required to contribute for health and dental coverage if Employee were an active employee, for a period of twelve (12) months from the termination date; provided, however, that this obligation shall cease at the end of the Benefits Period.  These payments will commence on the Company’s first payroll date after the termination date and will continue until the end of the Benefit Period. For the avoidance of doubt, in the event of a termination under this Section 7.E., the Employee shall not be entitled to any other payments under this Agreement except for the Accrued Obligations or as set forth in the immediately preceding sentence.

 

F.                                      Termination by the Employee other than for Good Reason.  The Employee shall have the right to terminate for any reason other than for Good Reason by providing thirty (30) days’ prior written notice to the Company; provided that the Company may then terminate the Employee immediately.  For the avoidance of doubt, in the event of a termination under this Section 7.F., the Employee shall not be entitled to any other payments under this Agreement except for the Accrued 

 

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Obligations.

 

G.                                    Change in Control.  For purposes of this Agreement, “Change in Control” shall have the same meaning as is set forth in the Partnership’s 2014 Long-Term Incentive Plan.  Notwithstanding anything to the contrary in Section 7.D or 7.E above, in the event the Employee’s employment is terminated by the Company other than for Cause, disability or death or the Employee resigns for Good Reason, in either case within six months after a Change in Control (a “Change in Control Termination”), then the cash severance amount payable to the Employee under Section 7.D or 7.E above shall be calculated using two times (2.0x) the annual base salary and Bonus Amount (instead of 1.0 times), payable in a single lump sum within 30 days after the date of termination, and the Benefit Period will be twenty-four (24) months following the termination date (provided, however, that this obligation shall cease upon Employee’s obtaining new employment that provides Employee with eligibility for medical benefits without a pre-existing condition limitation), in each case subject to the release requirement.

 

                                                8.                                      Deemed Resignation.  Any termination of the Employee’s employment with the Company shall constitute an automatic resignation of the Employee as an officer of the Company and each JPE Company and an automatic resignation of the Employee from the Board (if applicable, and unless otherwise agreed in writing) and from the board of directors or similar governing body of any JPE Company and from the board of directors or similar governing body of any corporation, limited liability company or other entity in which the Company or any JPE Company holds an equity interest and with respect to which board or similar governing body the Employee serves as the Company’s or such JPE Company’s designee or other representative.

 

9.                                      Restrictive Covenants and Intellectual Property.

 

                                                                                                A.                                    Confidential Information. For the purpose of assisting the Employee in performance of his job requirements and responsibilities with the Company, the Company shall provide the Employee, during the Term of this Agreement, with some or all of the following, any and all of which constitute confidential information of the Company, the Partnership and their respective affiliates, including, but not limited to, JP Energy Development GP LLC and JP Energy Development LP (collectively the “Confidential Information”): (a) any and all trade secrets concerning the business and affairs of the Company, the Partnership or their respective affiliates, product specifications, data, know-how, formulae, compositions, processes, designs, sketches, photographs, graphs, drawings, samples, inventions and ideas, past, current and planned research and development, current and planned manufacturing and distribution methods and processes, customer lists, current and anticipated customer requirements, price lists, market studies, business plans, proprietary technologies, systems, structures, architectures, processes, improvements, devices, know-how, discoveries, concepts, methods and information of the Company, the Partnership and their respective affiliates and any other information, however documented, of the Company, the Partnership and their respective affiliates that is a trade secret under applicable law; (b) any and all information concerning the business and affairs of the Company, the Partnership and their respective affiliates (which includes historical financial statements, financial projections and budgets, historical and projected sales, capital spending budgets and plans, the names and backgrounds of key personnel, contractors, agents, suppliers personnel training and techniques and materials, and purchasing methods and techniques) however documented; and (c) any and all notes, analysis, compilations, studies, summaries and other material prepared by or for the Company, the Partnership and their respective affiliates containing or based, in whole or in part, upon any information included in the foregoing. The Employee acknowledges that he will occupy a position of trust and confidence with the Company during the Term of this Agreement and that he will during the Term of this Agreement have access to and become familiar with such Confidential Information.

 

                                                Both during and after termination of employment, whether such termination is voluntary or 

 

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involuntary, the Employee hereby agrees not to disclose to any unauthorized Persons or use for his own account or for the benefit of any third party any Confidential Information, whether or not such information is embodied in writing or other physical form or is retained in the memory of the Employee, without the Company’s prior written consent, unless and to the extent that the Confidential Information was known to Employee prior to his commencement of employment with the Company or is or becomes generally known to and available for use by the public other than as a result of any action by the Employee.  Notwithstanding the foregoing, if the Employee becomes legally compelled to disclose Confidential Information pursuant to judicial or administrative subpoena or process or other legal obligation, the Employee may make such disclosure only to the extent so required.  The Employee will, as promptly as possible and in any event (if permitted by law) prior to the making of such disclosure, notify the Company of any such subpoena, process or obligation and shall cooperate with the Company in seeking a protective order or other means of protecting the confidentiality of the Confidential Information.

 

The Employee agrees to deliver to the Company at the time his employment under this Agreement terminates for any reason, and at any other time the Company may request, all documents, memoranda, notes, plans, records, reports and other documentation (and all copies of all of the foregoing), that contain Confidential Information and any other Confidential Information that the Employee may then possess or have under his control in transferable form.

 

                                                B.                                    Noncompetition.  For the period during which the Employee is employed with the Company or its affiliates and during the Restricted Period, the Employee shall not, without the prior written consent of the Company, for whatever reason and with or without cause, either individually or in partnership or jointly or in conjunction with any person or persons as principal, agent, employee, stockholder, consultant, programmer, owner, investor, partner or in any other manner whatsoever (other than a holding of shares listed on a United States stock exchange or automated quotation system that does not exceed five percent of the outstanding shares so listed), directly or indirectly, knowingly (a) engage in the Business or participate in competition with any of the JPE Companies in any state in which (and otherwise within 60 miles of any location where) any JPE Company engages in the Business or is actively considering engaging in the Business (which geographic area shall be determined as of the date of the Employee’s termination with respect to the application of this Section 9.B. following such termination date), (b) solicit such Business from, or provide such services to, any of the customers or accounts of the Company or any of its affiliates or subsidiaries or any JPE Company, or (c) become the employee of, or otherwise render services to or on behalf of, any enterprise which competes with the Business.  For purposes of this Agreement, “Restricted Period” means (1) year following Employee’s termination of employment for any reason, regardless of whether such termination occurs during the Term, provided, however, that in the event of a Change in Control Termination that results in Employee receiving additional cash severance payments as a result of Section 7.G of this Agreement, the Restricted Period shall be two (2) years following Employee’s termination of employment.

 

                                                C.                                    Nonsolicitation.  For the period during which the Employee is employed with the Company or its affiliates pursuant to this Agreement and for two (2) years following Employee’s termination, the Employee shall not, without the prior written consent of the Company, directly or indirectly, knowingly (a) induce or attempt to induce any employee or consultant of any of the JPE Companies to leave the employ or services of any of the JPE Companies, (b) in any way interfere with the relationship between any of the JPE Companies and any employee or consultant of any of the JPE Companies, (c) employ, or otherwise engage as an employee, independent contractor or otherwise, any employee of any of the JPE Companies, or (d) induce or attempt to induce any customer, supplier, licensee or business relation of any of the JPE Companies or its affiliates to cease doing business with any of the JPE Companies, or in any way interfere with the relationship between any customer, supplier, licensee or business relation of any of the JPE Companies.

 

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                                                D.                                    Non-Disparagement.  The Employee agrees that he will not during the Term of this Agreement or thereafter disparage the Company, the Partnership or any of their respective affiliates, any of the products, practices or services of the Company, the Partnership or any of their respective affiliates, or any directors, officers, managers, employees, agents, representatives, equityholders or affiliates of the Company or the Partnership, either orally or in writing, at any time and the Company shall instruct members of the Board and the executive officers of the Company not to disparage the Employee, either orally or in writing, at any time; provided, that either party may confer in confidence with its legal representatives and make truthful statements as required by law or as required by any applicable rules of professional conduct.

 

                                                E.                                     Enforcement. The Employee acknowledges that (a) the Business of the Company and its affiliates is national in scope and may expand over time; (b) its products and services related to such Business are marketed throughout the United States; (c) the Business of the JPE Companies competes with other businesses that are located throughout the United States; (d) the provisions of this Section 9 are reasonable and necessary to protect and preserve the Company’s good will and Confidential Information; (e) this Section 9 is reasonable with respect to its duration, geographical area and scope; (f) the terms of this Section 9 are necessary to safeguard the Company’s Confidential Information; and (g) the Company would be irreparably damaged if the Employee were to breach this Section 9.  In the event of a breach by the Employee of any covenant set forth in this Section 9, the term of such covenant with respect to the Employee will be extended by the period of the duration of such breach.

 

                                                The parties hereto agree that, if any court of competent jurisdiction in a final nonappealable judgment determines that a specified time period, a specified geographical area, a specified business limitation or any other relevant feature of this Section 9 is unreasonable, arbitrary or against public policy, then a lesser time period, geographical area, business limitation or other relevant feature which is determined to be reasonable, not arbitrary and not against public policy may be enforced against the applicable party.

 

The Employee agrees that irreparable damage might occur and that the Company might not have any adequate remedy at law in the event that any of the provisions of this Section 9 were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Company shall be entitled to seek an injunction or injunctions to prevent breaches of this Section 9 and to seek to enforce specifically the terms and provisions of this Section 9 in any Federal court located in the State of Texas or in any Texas state court, this being in addition to any other remedy to which the Company is entitled at law or in equity.  In addition, each of the parties hereto (a) consents to submit itself to the personal jurisdiction of any Federal court located in the State of Texas or a Texas state court in the event that any dispute arises out of this Section 9 for which an injunction is sought and (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court.  The Employee acknowledges that should it become necessary for the Company to file suit to seek an injunction or other equitable remedy to enforce the provisions contained in this Section 9, and any court of competent jurisdiction awards the Company any damages and/or an injunction due to the acts of the Employee, then the Company shall be entitled to recover its reasonable costs incurred in conducting the suit, including, but not limited to, reasonable attorneys’ fees and expenses.

 

The Employee further agrees that in the event any of the provisions of this Section 9 are not performed in accordance with their terms or are otherwise breached, the Employee shall forfeit all rights to future payments under this Agreement and shall return to the Company any payments previously made by the Company pursuant to Section 7.D or 7.E of this Agreement.

 

                                                F.                                      Intellectual Property.  All rights to developments, discoveries, inventions, improvements and innovations (including all data and records pertaining thereto) related to the Business 

 

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of the Company, whether or not patentable, copyrightable, registrable as a trademark, or reduced to writing, that Employee may develop, discover, invent or originate during Employee’s employment with the Company, either alone or with others and whether or not during working hours or by the use of the facilities of the Company (“Intellectual Property”), shall be the exclusive property of the Company.  Employee shall promptly disclose all Intellectual Property to the Company, shall execute at the request of the Company any assignments or other documents the Company may deem reasonably necessary to protect or perfect its rights therein, and shall assist the Company, upon reasonable request and at the Company’s expense, in obtaining, defending and enforcing the Company’s rights therein. Employee hereby appoints the Company as Employee’s attorney-in-fact to execute on Employee’s behalf any assignments or other documents reasonably deemed necessary by the Company to protect or perfect its rights to any Intellectual Property.

 

                                                10.                               Duty of Loyalty.  The Employee acknowledges that he is a fiduciary of the Company and owes a duty of loyalty to the Company to perform his duties and responsibilities under this Agreement in good faith and in the best interests of the Company and without personal economic conflict.

 

11.                               Assignment.  This Agreement, and the rights and obligations of the Employee and the Company hereunder, shall inure to the benefit of and shall be binding upon the Employee, his heirs and representatives, and upon the Company and its successors and assigns.  This Agreement may not be assigned by either party, except that the Company may assign this Agreement to any affiliate of or successor to the Company.

 

                                                12.                               Choice of Law; Venue; Waiver of Jury Trial.  This Agreement shall be construed and interpreted in accordance with, and all disputes arising under or related to this Agreement shall be governed by, the laws of the State of Texas.  Each party to this Agreement hereby consents to the exclusive jurisdiction and venue of the United States District Court located in Dallas, Texas and of the State courts located in Dallas, Texas and irrevocably agrees that all actions or proceedings arising out of or relating to this Agreement shall be litigated in such courts.  Each party (a) consents to submit himself, herself or itself to the personal jurisdiction of such courts for such actions or proceedings, (b) agrees that he, she or it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, and (c) agrees that he, she or it will not bring any such action or proceeding in any court other than such courts.  Each party accepts for himself, herself or itself and in connection with such party’s properties, generally and unconditionally, the exclusive and irrevocable jurisdiction and venue of the aforesaid courts and waives any defense of forum non conveniens, and irrevocably agrees to be bound by any non-appealable judgment rendered thereby in connection with such actions or proceedings.  A copy of any service of process served upon the parties shall be mailed by registered mail to the respective party except that, unless otherwise provided by applicable law, any failure to mail such copy shall not affect the validity of service of process.  If any agent appointed by a party refuses to accept service, each party agrees that service upon the appropriate party by registered mail shall constitute sufficient service.  Nothing herein shall affect the right of a party to serve process in any other manner permitted by law.  Because disputes arising in connection with an employment relationship of the type set forth in this Agreement are most quickly and economically resolved by an experienced and expert person, the parties desire that their disputes be resolved by a judge applying all applicable laws as set forth herein. Therefore, each party to this Agreement hereby waives all rights to trial by jury in any action, suit, or proceeding brought to resolve any dispute between the parties hereto, whether arising in contract, tort, or otherwise, arising out of, connected with, related or incidental to this Agreement, the transactions contemplated hereby and/or the relationship established between the parties hereunder.

 

13.                               Notices.  All notices required by this Agreement shall be in writing and shall be delivered in person or mailed by certified mail, return receipt requested, or by a nationally recognized overnight delivery service as follows:

 

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A.                                    If to the Employee:

 

At the address set forth under the Employee’s signature to this Agreement

 

B.                                    If to the Company:

 

JP Energy GP II LLC

600 E. Las Colinas Blvd, Suite 2000

Irving, Texas 75039

Attn: Legal

Fax:   972-444-0320

 

or to such other address as the Employee or the Company, as applicable, shall specify in writing given in accordance with this Section 13.

 

14.                               Severability.  In the event that any one or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.  Moreover, if any one or more of the provisions contained in this Agreement shall be held to be excessively broad as to duration, activity or subject, such provision shall be construed by limiting or reducing them so as to be enforceable to the maximum extent compatible with applicable law.

 

15.                               Waiver.  No consent to or waiver of any breach or default in the performance of any obligation hereunder shall be deemed or construed to be a consent to or waiver of any other breach or default in the performance of any of the same or any other obligations hereunder.  No purported waiver hereunder shall be effective unless it is in writing and signed by the party waiving the breach or default hereunder.

 

16.                               Entire Agreement; Modification.  This Agreement sets forth the entire agreement and understanding between the Employee and the Company with respect to the subject matter contained herein, and supersedes any employment agreement or offer letter previously entered into between the Employee and any JPE Company and all other prior agreements, arrangements and understandings between them, whether written or oral, relating to the subject matter hereof.  Notwithstanding the foregoing, the Award Agreement(s), if any, previously entered into by the Employee shall remain unchanged by this Agreement and shall continue in full force and effect according to their terms.  This Agreement may be amended only by a written instrument signed by the Employee and an authorized representative of the Company.

 

17.                               Headings.  The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

 

18.                               Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same agreement, and shall become effective when one or more counterparts have been signed by the Employee and the Company.

 

19.                               Consultation with Counsel; No Representations.  The Employee agrees and acknowledges that he has had a full and complete opportunity to consult with counsel of his own choosing concerning the terms, enforceability and implications of this Agreement, and that the Company has made no representations, warranties, promises or inducements to him concerning the terms, enforceability or implications of this Agreement other than are as reflected in this Agreement.

 

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20.                               Withholding.  The Company shall be entitled to withhold from any amounts payable under this Agreement any federal, state, local or foreign withholding or other taxes or charges which the Company is required to withhold. The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of withholding shall arise.

 

21.                               Defense of Claims.  Employee agrees that, during a period of 48 months after the date on which Employee’s employment with the Company ceases, Employee will, upon written request by the Company, cooperate with the Company in the defense of any claims or actions that may be made by or against the Company or its affiliates that relate to Employee’s prior areas of responsibility, except if Employee’s reasonable interests are adverse to such entities in such claim or action.  The Company agrees to pay or reimburse Employee for all of his reasonable travel and other direct expenses incurred, or to be reasonably incurred, to comply with Employee’s obligations under this Section.

 

22.                               409A Compliance.  The intent of the Parties is that the payments and benefits under this Agreement comply with or be exempt from Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and guidance promulgated thereunder (collectively, “Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith.

 

Notwithstanding anything in this Agreement to the contrary, any compensation or benefits payable under this Agreement that is designated under this Agreement as payable upon Employee’s termination of employment shall be payable only upon Employee’s “separation from service” with the Company within the meaning of Section 409A (a “Separation from Service”).

 

Notwithstanding anything in this Agreement to the contrary, if Employee is deemed by the Company at the time of Employee’s Separation from Service to be a “specified employee” for purposes of Section 409A, to the extent delayed commencement of any portion of the benefits to which Employee is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A, such portion of Employee’s benefits shall not be provided to Employee prior to the earlier of (i) the expiration of the six-month period measured from the date of Employee’s Separation from Service with the Company or (ii) the date of Employee’s death.  Upon the first business day following the expiration of the applicable Section 409A period, all payments deferred pursuant to the preceding sentence shall be paid in a lump sum to Employee (or Employee’s estate or beneficiaries), and any remaining payments due to Employee under this Agreement shall be paid as otherwise provided herein.

 

To the extent that any reimbursements under this Agreement are subject to Section 409A, any such reimbursements payable to Employee shall be paid to Employee no later than December 31 of the year following the year in which the expense was incurred.  Provided that Employee submits Employee’s reimbursement request promptly following the date the expense is incurred, the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, other than medical expenses referred to in Section 105(b) of the Code, and Employee’s right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit.

 

Employee’s right to receive any installment payments under this Agreement, including without limitation any continuation salary payments that are payable on Company payroll dates, shall be treated as a right to receive a series of separate payments and, accordingly, each such installment payment shall at all times be considered a separate and distinct payment as permitted under Section 409A.  Except as otherwise permitted under Section 409A, no payment hereunder shall be accelerated or deferred unless such acceleration or deferral would not result in additional tax or interest pursuant to Section 409A.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed and delivered as of the date first written above.

 

 

	
 
    	
JP ENERGY GP II LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ J. Patrick Barley
    
	
 
    	
Name: 
    	
J. Patrick Barley
    
	
 
    	
Title:
    	
CEO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EMPLOYEE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Patrick J. Welch
    
	
 
    	
Name:    Patrick J. Welch
    
	
 
    	
Address: 
    	
9971 E. Progress Drive
    
	
 
    	
 
    	
Greenwood Village, CO 80111

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