RETIREMENT AND CONSULTING AGREEMENT
This Retirement and Consulting Agreement ("Agreement") is entered
into by and between Xxxxxx X. Xxxxxxx, an individual residing in Houston,
Texas, (hereinafter "Xxxxxxx") and PanEnergy Corp, a Delaware corporation,
on July 19, 1996. For purposes of this Agreement, the term "PanEnergy"
refers, collectively, to PanEnergy Corp and all its subsidiaries and other
affiliates, including, but not limited to, Texas Eastern Transmission
Corporation, Panhandle Eastern Pipe Line Company, Trunkline Gas Company,
Algonquin Energy, Inc., and PanEnergy International Development
Corporation.
RECITALS
WHEREAS, Xxxxxxx was employed by PanEnergy pursuant to an employment
agreement dated November 1, 1989, as amended ("1989 Agreement");
WHEREAS, PanEnergy owns and operates natural gas transmission
pipelines, gathering facilities, gas processing plants, and liquified
natural gas plants and has ownership interests in a petroleum product
pipeline, a methanol plant and other integrated energy projects.
WHEREAS, during the course of Xxxxxxx'x employment with PanEnergy,
Xxxxxxx had access to and became acquainted with PanEnergy's trade secrets
and confidential and proprietary information and materials, including but
not limited to marketing plans and strategies;
WHEREAS, during the course of Xxxxxxx'x employment with PanEnergy,
Xxxxxxx was aware that the confidentiality of PanEnergy's trade secrets and
confidential and proprietary information was required to be maintained by
PanEnergy's employees;
WHEREAS, during the course of Xxxxxxx'x employment with PanEnergy,
Xxxxxxx was aware that PanEnergy's marketing plans and business strategies
were subject to restricted use and disclosure;
WHEREAS, during the course of Xxxxxxx'x employment with PanEnergy,
PanEnergy took steps to protect its trade secrets and confidential and
proprietary information;
WHEREAS, Xxxxxxx recognizes that PanEnergy's business and goodwill
are dependent upon PanEnergy's trade secrets and confidential and
proprietary information;
WHEREAS, PanEnergy will sustain great loss and damage if Xxxxxxx
discloses, utilizes or causes to be disclosed or utilized PanEnergy's trade
secrets and/or confidential and proprietary information to third parties or
for Xxxxxxx'x own benefit;
WHEREAS, Xxxxxxx is not otherwise entitled to the sums being paid
under this Agreement, except as provided herein;
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NOW, THEREFORE, in consideration of the mutual promises, terms,
covenants and conditions set forth below, the parties to this Agreement
agree as follows:
1. Term of Employment. (a) Xxxxxxx shall from November 1, 1996
through and including August 31, 1997 remain an employee of PanEnergy. As
of January 1, 1997, Xxxxxxx shall relinquish his position as Vice Chairman
of PanEnergy Corp and shall resign as a Director of PanEnergy Corp, and,
from January 1, 1997 through and including August 31, 1997, Xxxxxxx shall
act in the capacity of advisor to the President and Chief Executive Officer
of PanEnergy Corp.
(b) During the period from November 1, 1996 through December 31,
1996, Xxxxxxx shall receive his regular base salary of Sixteen Thousand Two
Hundred Fifty and No/100ths Dollars ($16,250.00) per semi-monthly pay
period, payable in accordance with PanEnergy's customary practices, and
shall remain a participant in PanEnergy Corp's Annual Cash Bonus Plan for
1996, in connection with which any earned bonus shall be paid in 1997.
(c) If not previously paid, the supplemental retirement benefit
provided under paragraph 2.5 of the 1989 Agreement, consisting of Seven
Hundred Fifty Thousand Dollars ($750,000.00) and accumulated interest
thereon of Five Hundred Sixty-Six Thousand Thirty Dollars and Eighty Cents
($566,030.80), shall be paid to Xxxxxxx in a lump sum on January 2, 1997,
notwithstanding the continuation of Xxxxxxx'x employment pursuant to this
Agreement and, provided, that the amount of such payment shall not be taken
into account in determining the amount of any other benefit or payment to
which Xxxxxxx may be entitled under any other compensation or benefit plan,
program or arrangement, including, but not limited to, PanEnergy Corp's
1990 or 1994 Long Term Incentive, Retirement Income, Key Executive
Retirement Benefit Equalization, Employees' Savings or, Key Executive
Deferred Compensation Plan. Except as otherwise specifically provided
herein, on and after November 1, 1996, this Agreement shall supersede the
1989 Agreement.
(d) Effective January 1, 1997, and until the termination of his
employment on August 31, 1997, Xxxxxxx'x salary shall become Ten Thousand
and No/100ths Dollars ($10,000.00) per semi-monthly pay period, payable in
accordance with PanEnergy's customary practices.
(e) Except for the accumulated interest portion of the supplemental
retirement benefit referred to in clause (c) of this paragraph 1, all
amounts payable under this paragraph 1 shall be considered wages and shall
be subject to withholding for taxes and for any other lawful purpose.
(f) During the period from November 1, 1996 through August 31, 1997,
Xxxxxxx shall be eligible to participate in PanEnergy's employee benefit
plans under the same terms as similarly situated employees of PanEnergy,
except, that for the period from November 1, 1996 through December 31,
1996, to the extent more favorable to Xxxxxxx, as otherwise provided in the
1989 Agreement. Furthermore, certain provisions of the 1989 Agreement
respecting (i) the Texas Eastern Executive Service Supplement Plan, (ii)
vacation, and (iii) financial, legal and tax counselling shall continue in
effect through August 31, 1997 under this Agreement. Effective September 1,
1997, Xxxxxxx shall retire from PanEnergy employment and become eligible
for such retirement benefits as are generally available to similarly
situated retirees, including retiree life and medical benefit coverages,
subject to the terms and conditions of the respective benefit plan.
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2. Consulting Services. (a) Effective September 1, 1997, Xxxxxxx
shall become a consultant and shall perform consulting services for
PanEnergy through December 31, 1998, for a retainer of Twenty Thousand
Eight Hundred Thirty-Three and 33/100ths Dollars ($20,833.33) per month,
payable on the 15th day of each month. In exchange for the compensation
specified in this paragraph 2, Xxxxxxx shall perform consulting services
for PanEnergy for as many as one hundred eighty (180) days during the
sixteen consecutive month period commencing September 1, 1997. In the
event Xxxxxxx performs consulting services for more than 180 days during
such period, or for more than twelve (12) days during any calendar month
during such period, PanEnergy shall, upon receipt of an appropriate
invoice, compensate Xxxxxxx for the additional days at the rate of Two
Thousand and No/100ths Dollars ($2,000) per day.
(b) During the period from September 1, 1997 through December 31,
1998, Xxxxxxx shall advise and assist PanEnergy concerning regulatory
matters, marketing and customer relations, business strategy and such other
matters which may arise that PanEnergy determines require Xxxxxxx'x
experience and knowledge.
(c) During the period from September 1, 1997 through December 31,
1998, Xxxxxxx shall be an independent contractor and, as such, shall
control the detail, manner and means of providing consulting services
pursuant to this Agreement. Accordingly, Xxxxxxx shall not be required to
work any particular schedule, but shall use his best efforts to meet
PanEnergy's deadlines. Further, Xxxxxxx shall not, within reason, be
required to work at any particular location. However, PanEnergy shall
provide reasonable and sufficient office space and clerical and office
services support when Xxxxxxx'x presence is required at PanEnergy offices.
Xxxxxxx shall be responsible for payment of all taxes, including federal,
state and local taxes, arising from his receipt of compensation specified
in this paragraph 2 under the terms of this Agreement and, during the
period from September 1, 1997 through December 31, 1998, Xxxxxxx shall not
be eligible to participate in any benefit or compensation plan, practice or
arrangement that PanEnergy provides its employees. Subject to the prior
approval of the President and Chief Executive Officer of PanEnergy Corp or
his designee and upon receipt of proper documentation, PanEnergy shall
reimburse Xxxxxxx for any reasonable expenses incurred in connection with
consulting services performed under this Agreement. Xxxxxxx shall be
entitled to utilize first class commercial air travel. In order to
minimize its costs, PanEnergy encourages, but does not require, Xxxxxxx to
utilize PanEnergy's travel department in arranging any travel where the
costs and expenses of which would otherwise be reimbursable under this
Agreement.
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3. Death or Disability. In the event of Xxxxxxx'x death or
disability during the term of employment described in clause (a) of
paragraph 1 of this Agreement, PanEnergy's obligation to pay base salary as
described in clause (b) or (c) of paragraph 1 of this Agreement, whichever
is then applicable, shall end with its prorated payment thereof for the
semi-monthly pay period during which such death or disability occurs. In
the event of Xxxxxxx'x death or disability during the period for which he
is to perform consulting services as described in clause (a) of paragraph 2
of this Agreement, PanEnergy's obligation to pay the monthly retainer
described in clause (a) of paragraph 2 of this Agreement shall end with its
payment thereof for the month during which such death or disability
occurred.
4. Non-Disclosure Agreement. As a part of the consideration for the
compensation provided in this Agreement and for the other covenants made by
PanEnergy in this Agreement, Xxxxxxx shall hold in a fiduciary capacity for
the benefit of PanEnergy all of PanEnergy's trade secrets and confidential
and proprietary information. Xxxxxxx shall not, without the prior written
consent of PanEnergy Corp, at any time (whether before, on or after
December 31, 1998) following the termination of Xxxxxxx'x employment with
PanEnergy, utilize or communicate or divulge to anyone other than PanEnergy
and those designated by it, any of PanEnergy's trade secrets and
confidential and proprietary information. Xxxxxxx shall provide PanEnergy
with prompt notice of any subsequent employment, including, but not limited
to, the name and address of any subsequent employer and the title and
duties of Xxxxxxx'x position therewith so that PanEnergy can take whatever
steps it deems appropriate in order to protect its interests under this
Agreement. Xxxxxxx understands that PanEnergy can xxx Xxxxxxx and/or any
of Xxxxxxx'x future employers for tortious interference with PanEnergy's
contracts, interference with PanEnergy's prospective business relations,
and/or misappropriation of PanEnergy's trade secrets or confidential and
proprietary information. Except with respect to the monthly retainer
described in clause (a) of paragraph 2 of this Agreement, in no event shall
an asserted violation of the provisions of this paragraph 4 constitute a
basis for deferring or withholding any amounts otherwise payable to Xxxxxxx
under this Agreement.
The prohibition against Xxxxxxx'x use of PanEnergy's trade secrets
and confidential and proprietary information, other than for the benefit of
PanEnergy, includes, but is not limited to, (a) the exploitation of any
products or services that embody or are derived from PanEnergy's trade
secrets or confidential and proprietary information, and (b) the exercise
of judgment or the performance of analysis based upon knowledge of
PanEnergy's trade secrets and confidential and proprietary information.
Xxxxxxx represents, warrants and agrees that Xxxxxxx has no proprietary or
ownership rights or title to any of PanEnergy's trade secrets or
confidential and proprietary information and no legal right to use,
disclose, disseminate, or publish any of PanEnergy's trade secrets or
confidential and proprietary information in any locality.
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5. Definition of Confidential Material. PanEnergy's "trade secrets"
and "confidential and proprietary information" include, but are not limited
to, any and all memoranda, software, data bases, computer programs,
interface systems, pricing and client information, and records pertaining
to PanEnergy's methods or practices of doing business and marketing its
services and products, whether or not developed or prepared by Xxxxxxx
during the term of his employment with PanEnergy or in connection with his
providing consulting service to PanEnergy. PanEnergy's trade secrets and
confidential and proprietary information also includes "writing" or
"writings" which shall mean and include all works, expressed in words,
numbers or other verbal or numerical symbols, regardless of the physical
manner in which they are embodied, including, but not limited, to books,
articles, manuscripts, memoranda, computer programs, computer software
systems, maps, charts, diagrams, technical drawings, manuals, video and
audio tape recordings, and photographs, whether or not developed or
prepared by Xxxxxxx during the term of his employment with PanEnergy or in
connection with his providing consulting services to PanEnergy.
PanEnergy's trade secrets and confidential and proprietary information
shall mean any information or material not generally known to the public
(other than by act of Xxxxxxx or his representatives in breach of this
Agreement) which gives the holder thereof an opportunity to obtain an
advantage over competitors without knowledge of such information.
6. Non-Compete Covenants. (a) In order to protect and safeguard
PanEnergy's trade secrets and confidential information, and also
PanEnergy's goodwill with its customers, during the period beginning
November 1, 1996 and ending December 31, 1998, Xxxxxxx will not, within a
50 mile radius of any location where PanEnergy had an office at any time
during such period or of any location where a customer of PanEnergy (which
is a customer at any time during such period), had an office at any time
during such period, directly or indirectly and without the prior written
consent of PanEnergy Corp, engage in or be interested in (as owner,
partner, shareholder, employee, director, agent, consultant or otherwise),
any business which is a competitor of PanEnergy, as hereafter defined, or
any business which is such a customer. For purposes of this Agreement, a
"competitor" of PanEnergy is any entity, including without limitation, a
corporation, sole proprietorship, partnership, joint venture, syndicate,
trust or any other form of organization or parent, subsidiary or division
of any of the foregoing, which, during such period or the immediately
preceding fiscal year of such entity, was engaged in the transportation,
purchase, brokering, marketing, or trading of natural gas or other energy
products or services.
(b) The terms of this paragraph 6 shall not apply to (i) Xxxxxxx'x
present or future investments in the securities of companies listed on a
national securities exchange or traded on the over-the-counter market to
the extent such investments do not exceed 2% of the total outstanding
shares of such company, (ii) Xxxxxxx'x employment with a competitor of
PanEnergy provided such employment is limited to areas unrelated to the
transportation, purchase, brokering, marketing or trading of natural gas or
other energy products or services, or (iii) Xxxxxxx'x engagement in or
interest in any business with the prior written consent of PanEnergy Corp.
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(c) For a period of one (1) year after the expiration or termination
of this Agreement for any reason, Xxxxxxx shall not induce or otherwise
entice any employee of PanEnergy to leave PanEnergy, nor shall Xxxxxxx
attempt to hire any of PanEnergy's employees.
(d) The foregoing restrictions contain reasonable limitations as to
the time, geographical area, and scope of activity to be restrained and
these restrictions do not impose any greater restraint than is necessary to
protect the goodwill and other legitimate business interests of PanEnergy.
7. Obligations, Enforcement. Except as otherwise provided in
paragraph 4 of this Agreement, PanEnergy's obligation to make the payments
provided for in this Agreement shall not be affected by any set-off,
counter-claim, recoupment, defense or other claim, right or action which
PanEnergy may have against Xxxxxxx or others. In no event shall Xxxxxxx be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to him under any of the provisions of
this Agreement. PanEnergy shall pay, or promptly reimburse Xxxxxxx, for
all legal fees and expenses reasonably incurred by Xxxxxxx in connection
with Xxxxxxx'x successful enforcement of this Agreement or the 1989
Agreement.
8. Binding Consideration. Xxxxxxx understands, represents, warrants
and agrees that the consideration provided under this Agreement is in
addition to anything of value to which he is entitled and that PanEnergy
has no contractual obligation or legal duty to pay Xxxxxxx severance
compensation or wages in lieu of notice of termination.
9. Binding Agreement. This Agreement is and shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors, heirs, executors, administrators and assigns. Xxxxxxx
represents, warrants and agrees that he has read, understands and intends
to be bound by this Agreement and its recitals, terms, conditions and
representations. Xxxx Xxxxxxxx, President & Chief Executive Officer of
PanEnergy Corp, who executes this Agreement on behalf of PanEnergy Corp,
represents and warrants that he has all necessary power and authority to do
so.
10. Miscellaneous. (a) This Agreement contains and states the
entire agreement of the parties hereto and, except as otherwise provided in
clauses (c) and (f) of paragraph 1 of this Agreement, supersedes and
cancels all prior written and oral agreements and understandings with
respect to the subject matter of this Agreement. This Agreement has no
effect upon any awards under PanEnergy Corp's 1990 or 1994 Long Term
Incentive Plans or, except as otherwise provided in clauses (c) and (f) of
paragraph 1 of this Agreement, upon entitlements under the Texas Eastern
Deferred Income Plan, the Texas Eastern Executive Service Supplement Plan,
PanEnergy Corp's Key Executive Deferred Compensation Plan or PanEnergy
Corp's Key Executive Retirement Benefit Equalization Plan.
(b) The term "affiliate" as used in this Agreement with respect to a
party, means any individual or entity which owns or controls, is owned or
controlled by, or is under common ownership or control with, such party.
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(c) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to Xxxxxxx:
Xxxxxx X. Xxxxxxx
000 Xxxx Xxxxx Xxxxx
Xxxxxxx, XX 00000
If to PanEnergy:
PanEnergy Corp
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Chief Executive Officer
or to such other address as either party shall have furnished to the other
in writing in accordance herewith. Notices and communications shall be
effective when actually received by the addressee.
(d) This Agreement shall be governed by the laws of the State of
Texas and may be amended or modified only by written agreement signed by
both parties.
(e) The obligations of Xxxxxxx hereunder are personal and cannot be
assigned.
(f) The invalidity or unenforceability of any provision shall not
affect the validity and enforceability of the remainder of this Agreement.
(g) The headings in this Agreement are not part of the provisions
hereof and shall have no force or effect.
(h) Except as otherwise provided herein, this Agreement shall
terminate on December 31, 1998.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written
XXXXXX X. XXXXXXX
___________________________________
PANENERGY CORP
By:________________________________
Xxxx X. Xxxxxxxx
Its: President and Chief Executive Officer
