RESIGNATION AND NON-COMPETE AGREEMENT
This Agreement ("Agreement") is entered into this 21st day of July,
2004 between KMGP Services, Inc. (on behalf of itself and the other persons
and entities included in the definition of KM (as defined below), and Xxxxxxx
X. Xxxxxx ("Employee").
WHEREAS, Employee is currently employed as an at-will employee of KM;
WHEREAS, Employee has decided to resign from his position as President
of Xxxxxx Xxxxxx, Inc. ("KMI"), Kinder Xxxxxx X.X., Inc., Xxxxxx Xxxxxx
Management, LLC and as an officer and director of their respective affiliates
in order to pursue other opportunities, including as a principal of
Portcullis Partners, L.P., while remaining an unpaid employee and retaining
his membership on KMI's Board of Directors (the "Board");
WHEREAS, the parties wish to provide for certain terms and conditions
associated with this resignation;
WHEREAS, the parties negotiated certain terms to extend past employment,
including, without limitation, terms relating non-competition and
confidentiality;
WHEREAS, Employee agrees that ample consideration was provided to ensure
enforcement of such provisions;
NOW THEREFORE, in consideration of the foregoing premises and the
following promises, the parties agree as follows:
1. Intent of the Parties. It is the intent of the parties that all rights
under any previous agreement(s) or understandings concerning Employee's
employment by KM shall be waived and forfeited upon execution of this Agreement,
except as described on Schedule 1 attached hereto.
2. Definitions.
(a) KM. "KM" as used in this Agreement shall mean and include Xxxxxx
Xxxxxx Energy Partners, L.P., Xxxxxx Xxxxxx, Inc., Xxxxxx Xxxxxx Management, LLC
and their respective divisions, subsidiaries, parents and/or affiliates,
successors or assigns, and, for purposes of this Agreement, the term
"affiliates" shall have the same definition as the term "affiliated group" in
Section 1504(a) of the Internal Revenue Code of 1986, as amended from time to
time.
(b) Confidential Information. "Confidential Information" shall
include all information comprising, concerning or relating to (i) KM's Customers
(as defined below), providers, suppliers, and other business affiliates; (ii)
KM's policies, practices, operating information, pricing, profits, margins,
costs, expenses, return expectations, financial information, business plans,
economic models and market approaches; and (iii) other information, techniques
or approaches used by KM and not generally known or applied in KM's industry. KM
believes that some or all of this information constitutes trade secrets;
however, the Confidential Information covered in this Agreement need not satisfy
the legal definition or requirements of a
"trade secret" to be protected from disclosure hereunder. Confidential
Information shall not include any information that is generally known in KM's
industry and information already known to any future employer of Employee
through no fault of Employee, and any information disclosed by KM in public
filings including without limitation SEC or FERC filings.
(e) Customer. "Customer" shall include any person or entity to whom
at any time during the Employment Period (as defined below) services are being
sold by KM, and any person or entity with which, at any time during the
Employment Period, KM has established a strategic marketing alliance.
(f) Effective Date. This Agreement shall be effective upon execution
hereof by both parties.
3. Resignation. Employee hereby resigns his position as an officer and
director of each entity included in KM, other than his position as a director
of KMI.
4. KM's Promises. In consideration of Employee's performance hereunder:
(a) Bonus. Employee will be eligible for a 2004 annual incentive bonus
under the terms of the KM bonus program. All Bonus Payments shall be subject to
applicable required withholdings. Employee shall not be eligible for an annual
incentive bonus for any periods flowing calendar year 2004.
(b) Medical Benefits. KM agrees to provide best efforts to allow
Employee to participate, at Employee's cost, in those health benefit plans that
active employees are eligible to participate in to the extent permissible by
applicable law and subject to the terms and conditions of the applicable
plan(s).
(c) Restricted Stock. In consideration for Employee's promises set
forth in Section 5 below (but not in consideration for Employee's service as a
director of KMI) and subject to Section 6 below, Employee shall continue to hold
23,333 shares of restricted stock of KMI (as described on Schedule 1 attached
hereto) on the same terms and conditions as are set forth in that certain
Restricted Stock Agreement (the "July 16, 2003 Grant"), dated July 16, 2003,
between Employee and KMI; provided that (i) 8,333 shares shall vest and cease to
be subject to forfeiture restrictions on July 16, 2006 and 15,000 shares shall
vest on July 16, 2008; (ii) 76,667 shares subject to the July 16, 2003 Grant
shall be forfeited; and (iii) to the extent the approval of the shareholders of
KMI is not necessary for Employee to continue to hold such 23,333 shares or to
cancel the July 16, 2003 Grant and issue Employee a new grant of 23,333 shares
of restricted stock of KMI, KM may substitute cash payments in lieu of the value
of the restricted stock and the dividends paid thereon. Such payments shall be
made (x) on July 16, 2006 and July 16, 2008 in the case of the value of the
shares of restricted stock and (y) on the date(s) KMI pays dividends to its
shareholders in the case of dividends.
5. Employee's Promises. Employee acknowledges and agrees that; 1) KM and
its affiliates are engaged in, among other things, owning and/or operating
integrated natural gas assets, products, chemicals and bulk terminals, refined
products, natural gas, natural gas liquids and carbon dioxide pipelines,
electricity generating assets, crude oil production assets and other midstream
energy assets; (the "Business"); 2) the Business is conducted throughout the
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United States; 3) his work for KM gave and will continue (during the Employment
Period) to give him access to Confidential Information, proprietary information
and trade secrets of and concerning KM, KM's actual and potential Customers,
providers, suppliers, and other business affiliates; 4) his work for KM gave and
will continue (during the Employment Period) to give him access to KM's actual
and potential Customers, providers, suppliers, and other business affiliates
with whom KM has expended substantial efforts to successfully establish
goodwill; and 4) the agreements and covenants contained in this Paragraph 4 are
essential to protect the Business and the trade secrets, Confidential
Information, proprietary information, goodwill and other legitimate interests of
KM. Accordingly, Employee agrees and covenants as follows:
(a) Confidential Information. Employee agrees and covenants that he
shall not at any time, directly or indirectly, (i) use or apply any Confidential
Information for any purpose not expressly authorized by an officer of KM, alone
or with any other person or entity; or (ii) disclose or provide any Confidential
Information to any person or entity not expressly authorized by an officer of KM
to receive such Confidential Information provided, however, that Employee shall
not be held in breach of this provision should Employee be required to testify
pursuant to subpoena under oath or as otherwise required by law, provided
additionally that Employee testifies truthfully and that, prior to providing
such testimony, Employee notifies KM within 48 hours that his testimony is being
sought so as to permit KM to seek to prevent or limit such testimony or
otherwise seek to obtain a protective order.
(b) Non-Disparagement Agreement. Employee agrees and covenants that
he will not in any way knowingly disparage KM, its officers, directors,
employees, consultants, agents, or business performance, methods, practices,
operations, decisions or plans; provided, however, that Employee shall not be
held in breach of this provision should Employee be required to testify pursuant
to subpoena under oath or as otherwise required by law, provided additionally
that Employee testifies truthfully and that, prior to providing such testimony,
Employee notifies KM within 48 hours that his testimony is being sought so as to
permit KM to seek to prevent or limit such testimony or otherwise seek to obtain
a protective order. KM likewise agrees not to disparage Employee, in the same
manner and subject to the same limitations set forth in this Section 5(b).
(c) Non-Solicitation of KM Employees. Employee agrees and covenants
that prior to the earlier of (i) July 21, 2008 or (ii) for one (1) years
following the date of termination of Employee's membership on the Board for any
reason whatsoever, he will not hire, encourage, entice, or otherwise solicit any
employee of KM, or aid any third party to hire, encourage, entice or solicit any
employee of KM, to leave employment with KM in order to accept employment
elsewhere. For purposes of this paragraph, "employment elsewhere" shall include
any relationship of employer/employee, any relationship of principal/independent
contractor and any relationship of client/consultant.
(d) Non-Competition. Employee agrees and covenants that prior to the
earlier of (i) July 21, 2008 or (ii) one (1) years following the date of
termination of Employee's membership on the Board for any reason whatsoever,
Employee will not, directly or indirectly, engage or become interested, as
employee, owner, consultant, advisor, officer, director or partner, or through
stock ownership, investment of capital, lending of money or property, or
rendering of services or otherwise, either alone or in association with others,
in any
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type of business or enterprise which is in competition with or which is directly
or indirectly detrimental to KM's Business, provided, however, that the record
or beneficial ownership by Employee of one percent (1%) or less of the
outstanding publicly traded capital stock of any such business or enterprise
shall not be deemed to be in violation of this Paragraph 5(d), provided further
that Employee is not an employee, consultant, advisor, officer, director or
partner of such business or enterprise.
(e) Confidentiality of this Agreement. KM and Employee agree not to
divulge, disclose or publicize in any manner to any third party, including
but not limited to current or former employees of KM, the existence or terms
and conditions of this Agreement, except, with respect to disclosure by
Employee: (1) insofar as is necessary to enforce the Agreement, comply with
this Agreement, applicable laws or regulations, or to respond to an order of
a court or administrative agency for disclosure, (2) to Employee's legal
counsel, spouse, or tax or financial advisors, on condition that any such
person to whom the terms or conditions of this Agreement are disclosed shall
be instructed not to disclose the terms or conditions to anyone else; and
with respect to disclosure by KM: (1) insofar as is necessary to enforce the
Agreement, comply with this Agreement, applicable laws or regulations, or to
respond to an order of a court or administrative agency for disclosure, (2)
to KM's legal counsel, KM's directors and officers, and KM's internal human
resources and accounting personnel and auditors (only to the extent necessary
for reporting purposes), on condition that any such person to whom the terms
or conditions of this Agreement are disclosed shall be instructed not to
disclose the terms or conditions to anyone else.
(f) Employee acknowledges and agrees that any breach by him of the
covenants, commitments and agreements in Paragraph 5 of this Agreement shall
constitute a material breach of this Agreement and is likely to result in
irreparable injury to KM that could not be compensated by money damages
alone. Employee therefore agrees that, notwithstanding any other provision
of this Agreement, in addition to any other remedies KM may have at law
and/or equity, in the event that KM determines that Employee has breached any
of said provisions of this Agreement, KM shall be entitled, at its election,
to immediately stop making any payments hereunder and/or to terminate the
vesting of, or otherwise cancel or terminate, the unvested portion of the
restricted stock referenced in Section 4(c) hereof and/or to enforce the
specific performance of this Agreement by Employee and/or to seek to enjoin
Employee from activities in breach of said provisions of this Agreement
without having to show that there are no other adequate remedies available,
whether such breach of said provisions occurs during the Employment Period or
thereafter. KM acknowledges and agrees that, without limiting the remedies
set forth above, its sole remedy with respect to monetary damages shall be
forfeiture of unvested restricted stock described in Section 4(c) hereof.
(g) The parties stipulate and agree that the terms, covenants,
commitments and agreements contained in this Paragraph 5 are fair and reasonable
in all respects, and that these restrictions are necessary for the reasonable
protection of the legitimate business interests of KM. If, at the time of
enforcement of any of these provisions, a court holds that the restrictions
stated herein are unreasonable under the circumstances then existing, the
parties hereto agree that the maximum period, scope or geographical area
reasonable under such circumstances will be substituted for the stated period,
scope or area. In such event, but only in such event, the parties hereto hereby
specifically request a trial court or other tribunal presented
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with this Agreement for enforcement to reform it as to time, geographic area
or scope of activities prohibited to the fullest extent allowed by law and to
enforce this Agreement as so reformed.
(h) Employee shall have the right to request in a special exception
to Section 5 of this Agreement. Such request shall be in writing, directed to
KM's General Counsel, and shall clearly and specifically identify the exemption
sought and the bases therefore. KM shall have thirty (30) business days to
respond to such written request for a special exception. If, after a timely
review, KMI determines in its sole discretion that no significant issues exist
regarding the protection of its trade secrets, proprietary information and/or
Confidential Information, the preservation of its goodwill, or a conflict of
interest, KMI shall not withhold the granting in writing of said special
exception. In the event that KM does not respond to a request for a special
exception with the thirty day period described above, KM shall be deemed to have
granted the request for special exception. KMI's decision to grant a special
exception (or failure to respond to a response therefore) shall not be
considered to be a waiver of the provisions of Section 5 except as to the
specific activities on behalf of the specific entity for which Employee sought
such waiver.
6. Payment Conditions. In the event that KM determines that Employee has
breached any of the provisions of Paragraph 5 of this Agreement, KM shall be
entitled to immediately stop making any payments of any type under Paragraph
4(c) of this Agreement and/or to terminate the vesting or exercisability of
23,333 shares of restricted stock reference in Section 5 hereof (to the extent
vesting has not occurred at the time of breach), or to require that Employee's
stock option grant of October 9, 1999 shall expire on the thirtieth day after KM
provides Employee notice of such breach.
7. Adequacy of Consideration. By executing this Agreement, KM and
Employee acknowledges the receipt and sufficiency of the consideration provided
by the other in conjunction with executing this Agreement and the Further
Release. Each acknowledges and confirms to the other that the consideration
provided by the other is good and valuable consideration legally supportive of
each party's respective rights, duties and obligations hereunder and under the
Further Release. By executing this Agreement, KM and Employee shall be estopped
from raising and hereby expressly waive any defense regarding the receipt and/or
legal sufficiency of the consideration provided by one to the other with respect
to this Agreement and the Further Release.
8. Assignability. This Agreement shall inure to the benefit of, and be
binding upon, Employee and Employee's personal or legal representatives,
employees, administrators, successors, heirs, distributees, devisees and
legatees, and KM, its successors and assignees, provided, however, that neither
KM nor Employee may assign any of Employee's or its obligations, rights or
benefits hereunder without the prior written consent of the other.
9. Headings. The headings of sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
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10. Controlling Law. This Agreement shall be governed and construed in
accordance with the laws of Texas. The parties agree that any legal action
regarding this Agreement must be filed in the state of Texas.
11. Entire Agreement. This document constitutes the entire agreement of
the parties on the subject matters addressed herein and may not be expanded or
except by express written agreement executed by both.
12. Counterparts. This Agreement may be executed in as many counterparts
as may be deemed necessary and convenient, and by the different parties on
separate counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same instrument.
[Remainder of page intentionally left blank - signature page to follow]
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KMGP SERVICES, INC.
XXXXXX XXXXXX ENERGY PARTNERS, X.X.
XXXXXX XXXXXX, INC.
KINDER MORGABN MANAGEMENT, LLC
(each on its own behalf and on behalf of
the other persons or entities included
within the definition of KM)
/s/ Xxxxxx Xxxxxxxxxx
-------------------------------------
By: Xxxxxx Xxxxxxxxxx
Title: Vice President and General Counsel
EMPLOYEE
/s/ Xxxxxxx X. Xxxxxx July 21, 2004
-------------------------------------- ---------------------
Xxxxxxx X. Xxxxxx Date
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Exhibit A
FURTHER RELEASE
For good and valuable consideration set forth in Paragraph 3 of the
Retention and Non-Competition Agreement of which this Exhibit is a part (the
"Agreement"), the receipt and sufficiency of which is hereby acknowledged,
Xxxxxxx X. Xxxxxx ("Xxxxxx") and KM (as defined in the Agreement) hereby
agree as follows:
1. General Release. Xxxxxx, for himself and his representatives, heirs, and
assigns, hereby releases and forever discharges KM, and any present or former
parent, sister, affiliate or subsidiary company, partnership, limited
partnership or entity, and each of its and their shareholders, unit holders,
partners, general partners, limited partners, officers, directors, employees,
agents, representatives, legal representatives, accountants, successors,
predecessors, and assigns (the "KM Releasees"), from all claims, demands, and
actions of any nature, known or unknown, which Xxxxxx may have against the KM
Releasees as of the Effective Date of this Further Release, and specifically,
but not limited to, any and all claims, known or unknown, in any manner
arising out of or involving any aspect of his employment with any of the KM
Releasees, and including, but not limited to, any rights or claims under the
Texas Anti-Discrimination Act, the Age Discrimination in Employment Act
("ADEA"); Title VII of the Civil Rights Act of 1964; the Vocational
Rehabilitation Act; the Americans with Disabilities Act; Executive Order
11246; the Civil Rights Act of 1871; the National Labor Relations Act; the
Worker Adjustment and Retraining Notification Act; the Employee Retirement
Income Security Act of 1974; the Equal Pay Act (all as may have been or may
be amended from time to time); and any and all other municipal, state, and/or
federal statutory, executive order, or constitutional provisions pertaining
to employment, an employment relationship, sexual harassment and/or employee
benefits; provided, however, that this release and waiver shall not apply to
any rights which, by law, may not be waived, or any rights expressly set
forth in the Agreement. This release and waiver also specifically includes,
but is not limited to, any known or unknown claims in the nature of tort,
statutory law, common law or contract claims, including specifically but not
limited to any claim of wrongful refusal to hire, wrongful discharge,
retaliatory discharge, unpaid wages, unpaid vacation, unpaid bonuses,
unvested stock or stock options, unpaid benefits, intentional or negligent
infliction of emotional distress, defamation, or other such claims in any
manner arising out of or involving any aspect of Xxxxxx'x employment, the
terms and conditions of such employment, or termination of employment with
KM. This release also includes, without limitation, any and all known or
unknown claims concerning attorney fees, costs, and any and all other
expenses related to the claims released herein.
2. ADEA Release. By executing this Further Release, Xxxxxx knowingly and
voluntarily waives any and all claims under the Age Discrimination in
Employment Act ("ADEA"), and further agrees with respect to the ADEA that:
(a) This waiver is part of an Agreement that is written in a manner that
he understands.
(b) This waiver specifically refers to rights and claims arising under
the ADEA.
(c) Xxxxxx does not waive any claims under the ADEA that may arise after
the date that he executes this Further Release.
(d) Xxxxxx waives ADEA rights or claims.
(e) Xxxxxx has had an opportunity to consult with an attorney before
executing this Further Release insofar as it relates to waiver of
claims under the ADEA and has been urged to do so.
(f) Xxxxxx has been afforded a minimum of 21 days from the date he
received the Further Release within which to consider this Further
Release insofar as it relates to claims under the ADEA.
(g) Xxxxxx shall have 7 days from the date he accepts and signs this
Further Release within which to revoke his acceptance of this Further
Release. To be effective, such revocation must be made in writing and
delivered to the Executive Vice President Human Resources and
Administration, Xxxxxx Xxxxxx, One Xxxxx Center, 000 Xxxxxx Xxxxx
0000, Xxxxxxx XX 00000, on or before the seventh (7th) day after
Xxxxxx signs it. If Xxxxxx revokes this Further Release it shall not
be effective or enforceable and he shall not receive the additional
consideration set forth in Paragraph 4 of the Retention and
Non-Compete Agreement that has not yet been paid to Xxxxxx.
(h) This Further Release shall become effective immediately upon the
eighth (8th) day after Xxxxxx signs this Further Release, assuming
such Further Release is not revoked as provided in Paragraph 2(g)
above.
Date: July 21, 2004 /s/ Xxxxxxx X. Xxxxxx
------------------- ---------------------------------------
Xxxxxxx X. Xxxxxx
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SCHEDULE 1
Restricted stock granted on January 17, 2000 and January 16, 2001 shall not
be affected in any way by this agreement.
Stock Option Agreements, dated April 20, 2000, and October 9, 1999, shall not
be affected in any way by this agreement.
Restricted Stock Agreement, dated July 16, 2003, shall be amended to provide
that 8,333 shares shall vest on July 16, 2006 and 15,000 shares shall vest on
July 16, 2008. All other shares subject to that agreement shall be
forfeited. The remaining terms and conditions of the Restricted Stock
Agreement shall apply with respect to the 23,333 shares that are not
forfeited in connection with this Agreement.
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