Exhibit 10.10
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of the
4th day of December, 2000, by and between Inergy Partners, LLC, a Delaware
limited liability company (the "Company"), and X. Xxxxxx Xxxxxxx Xx., an
individual (the "Employee").
1. Employment. The Company agrees to employ the Employee and the
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Employee agrees to be employed by the Company as the Vice President - Chief
Financial Officer of the Company upon the terms and conditions of this
Agreement, commencing on the date hereof and continuing until terminated as
provided in Section 11 below. The Employee shall report to the President of the
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Company. The Employee shall be appointed to the Company's Senior Management
Team which sets the strategic direction of the Company.
2. Compensation.
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(a) For all services rendered by the Employee to the Company, the
Company shall pay the Employee a salary at the annual rate of One Hundred
Twenty-Five Thousand Dollars ($125,000) (the "Salary") payable bi-monthly
in arrears.
(b) In the event that the Company (i) arranges for the organization
of a master limited partnership (the "MLP") and effects a public offering
of units of the MLP (the "IPO") in a manner similar to public offerings
made by publicy traded master limited partnerships that are engaged in the
distribution and sale of propane, or (ii) arranges for any other public
equity offering registered by the Company with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended, within 30
days after the date of the closing of the IPO or such other public equity
offering, as applicable, the Company shall pay the Employee a bonus equal
to Fifty Thousand Dollars ($50,000).
3. Expenses. The Company shall reimburse the Employee for all
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ordinary and necessary expenses incurred and paid by the Employee in the course
of the performance of the Employee's duties pursuant to this Agreement and
consistent with the Company's policies in effect from time to time with respect
to travel, entertainment and other business expenses (including, without
limitation, relocation expenses), and subject to the Company's requirements with
respect to the manner of approval and reporting of such expenses.
4. Additional Benefits.
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(a) The Employee shall be eligible for such fringe benefits, if any,
by way of insurance, hospitalization and vacations normally provided to
other members of the executive management of the Company generally and such
additional benefits as may be from time to time agreed upon in writing
between the Employee and the Company.
(b) It is expected that during fiscal year 2001, the Company will
have in place a key employee equity plan that the Employee will participate
in, such that, assuming (i)
the value of the units (or other securities pursuant to such key employee
equity plan) grows at a fifteen percent (15%) annual rate (compounded
annually) from the date of their issuance, and (ii) the Employee is
employed by the Company continuously for a five (5)-year period from the
date of such issuance, the Employee would have equity value (computed as
the difference between the value of the units (or other securities pursuant
to the key employee equity plan) and the strike price) under such key
employee equity plan equal to Five Hundred Thousand Dollars ($500,000) on
the fifth anniversary date of such issuance. The Employee will vest in
accordance with the provisions of such plan.
(c) Subject to Section 4(d) below, the Company agrees to pay the
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Employee certain performance bonuses based on targeted Operating Cash Flow
(as defined below) for each fiscal year, beginning with the fiscal year
beginning October 1, 2000. For each fiscal year during the term hereof the
Company shall establish a targeted Operating Cash Flow for such fiscal
year, and the Employee will receive a cash bonus to be paid within three
months after the end of such fiscal year in the amount of: (i) $50,000, if
the Company has Operating Cash Flow equal to or greater than targeted
Operating Cash Flow for such fiscal year but less than 110% of such
targeted Operating Cash Flow; or (ii) $75,000, if the Operating Cash Flow
is equal to or greater than 110% of targeted Operating Cash Flow for such
fiscal year but less than 120% of such targeted Operating Cash Flow for
such year; or (iii) $100,000, if the Company has Operating Cash Flow of
equal to or greater than 120% of targeted Operating Cash Flow for such
fiscal year; provided, however, for the fiscal year beginning October 1,
2000, the Employee shall receive a bonus under this Section 4(c) equal to
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$25,000 in the event that the Company has Operating Cash Flow less than
targeted Operating Cash Flow for such fiscal year and the Employee is
continuously employed by the Company from the date hereof until December
31, 2001, with such bonus to be paid in January of 2002; provided, further
that for fiscal year beginning October 1, 2000, the $50,000, $75,000 and
$100,000 amounts shall be reduced to $41,667, $62,500 and $83,333
respectively (with such amounts representing 10/12ths of the original
amounts because of the Employee's start date occurring two months after the
beginning of the Company's fiscal year). For purposes of this Section
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4(c), "Operating Cash Flow" means net income in accordance with generally
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accepted accounting principals plus (i) income taxes, (ii) interest, (iii)
depreciation, and (iv) amortization of intangibles, to the extent used in
computing such net income, and minus capital expenditures made to maintain
and service existing business expended by the Company during the fiscal
year in question. Notwithstanding the foregoing, in order to receive a
bonus pursuant to this Section 4(c), the Employee must have been
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continuously employed by the Company from the date hereof until the end of
the relevant fiscal year.
(d) In the event that the Company effects the IPO, effective at the
beginning of the fiscal year of the Company next succeeding such IPO, in
lieu of any payments under Section 4(c) above, the Company agrees to pay
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the Employee certain performance bonuses based on targeted Distributable
Cash Flow ("DCF") (as defined below) for each fiscal year. For each fiscal
year as to which there is to be a bonus under this Section 4(d), the
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Company shall establish a targeted DCF, and the Employee will receive a
cash bonus to be paid within three months after the end of such fiscal year
in the amount of: (i) $50,000, if the Company has DCF equal to or greater
than targeted DCF for such fiscal
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year but less than 110% of targeted DCF for such fiscal year; (ii) $75,000,
if the Company has DCF equal to or greater than 110% of targeted DCF but
less than 120% of targeted DCF during such fiscal year; or (iii) $100,000,
if the Company has DCF equal to or greater than 120% of targeted DCF during
such fiscal year. For purposes of this Section 4(d), Distributable Cash
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Flow shall have the same meaning as such term (or any comparable term, such
as "Available Cash") is defined in the documents relating the MLP.
Notwithstanding the foregoing, in order to receive a bonus pursuant to this
Section 4(d), the Employee must have been continuously employed by the
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Company from the date hereof until the end of the relevant fiscal year.
(e) It is anticipated by the parties hereto that in the event that
the Company effects the IPO:
(i) The Company will receive Subordinated Units in the MLP that
will have a yield equal to (but subordinated to) the yield on the
publicly-traded common units;
(ii) At the expiration of the subordination period, the
Subordinated Units will convert to common units of the MLP on a one-
for-one basis and will receive distributions pro rata with all other
common units;
(iii) The subordination period will terminate based on the
performance of the MLP in achieving certain earnings and distribution
levels.
The Employee shall receive cash bonuses totaling $200,000 as the
subordination period of the Subordinated Units terminates, such bonuses to
be paid within sixty (60) days after the date of such termination on a
proportional basis, so that by way of example, if the subordination period
terminates with respect to 25% of the Subordinated Units on December 31,
2004, the Employee will receive a cash bonus in the amount of Fifty
Thousand Dollars ($50,000) on or before March 2, 2005. Notwithstanding the
foregoing, in order to receive a bonus with respect to the termination of
the subordination period for any Subordinated Units, the Employee must have
been continuously employed by the Company from the date hereof until the
date of such termination.
5. Duties. The Employee agrees that so long as he is employed under
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this Agreement he will (i) to the satisfaction of the Company devote his best
efforts and his entire business time to further properly the interests of the
Company, (ii) at all times be subject to the Company's direction and control
with respect to his activities on behalf of the Company, (iii) comply with all
rules, orders and regulations of the Company, (iv) truthfully and accurately
maintain and preserve such records and make all reports as the Company may
require, and (v) fully account for all monies and other property of the Company
of which he may from time to time have custody and deliver the same to the
Company whenever and however directed to do so.
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6. Disclosure and Assignment of Inventions.
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(a) The Employee agrees that any Inventions (as hereinafter defined)
that he, alone or with others, may conceive, develop, make or perfect, in
whole or in part, during his employment by the Company which relate or
pertain in any way to the existing or reasonably anticipated scope of the
Company's or any subsidiary, parent or affiliate of the Company's business,
or that he, alone or with others, may conceive, make or perfect in whole or
in part, in the performance of the duties of his employment by the Company,
shall be promptly and fully disclosed in writing immediately by the
Employee to the Company (but to no other person or persons prior to
procuring patents therefor). All of the right, title and interest in and
to any Invention shall be and hereby is assigned exclusively to the Company
or its nominee regardless of whether or not the conception, development,
making or perfection of such Inventions involved the use of the Company's
time, facilities or materials and regardless of where such Inventions may
be conceived, made or perfected and shall become the sole property of the
Company or its nominee. For purposes hereof, the term "Inventions" shall
mean inventions, discoveries, ideas, concepts, systems, works, trade
secrets, know-how, intellectual property, products, processes or
improvements or modifications of current products, processes or designs, or
methods of manufacture, distribution, management or otherwise (whether or
not covered by or able to be covered by a patent or copyright).
(b) The Employee agrees to execute and deliver all documents and do
all acts which the Company shall deem necessary or desirable to secure to
the Company or its nominee the entire right, title and interest in and to
said Inventions, including, without limitation, applications for any United
States and/or Foreign Letters Patent or Certificates of Copyright
Registration in the name of or for the benefit of the Company or, in the
discretion of the Company, in the Employee's name, which patents and
copyrights shall then be assigned by the Employee to the Company. Any
document described above prepared and filed pursuant to this subsection
shall be so prepared and filed at the Company's expense. The Employee
hereby irrevocably appoints the President of the Company as his attorney-
in-fact with authority to execute for him and on his behalf any and all
assignments, patent or copyright applications, or other instruments and
documents required to be executed by the Employee pursuant to this
subsection, if the Employee is unwilling or unable to execute same.
(c) The Company shall have no obligation to use, attempt to protect
by application for Letters Patent or Certificates of Copyright Registration
or promote any of said Inventions; provided, however, that the Company, in
its sole discretion, may reward the Employee for any especially meritorious
contributions in any manner it deems appropriate or may provide the
Employee with full or partial releases as to any subject matter contributed
by the Employee in which the Company is not interested.
7. Covenant Not to Disclose Confidential Information. The Employee
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acknowledges that during the course of his employment with the Company he has or
will have access to and knowledge of certain information and data which the
Company or any subsidiary, parent or affiliate of the Company considers
confidential and that the release of such information or data to unauthorized
persons would be extremely detrimental to the Company. As a
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consequence, the Employee hereby agrees and acknowledges that he owes a duty to
the Company not to disclose, and agrees that, during or after the term of his
employment, without the prior written consent of the Company, he will not
communicate, publish or disclose, to any person anywhere or use any Confidential
Information (as hereinafter defined) for any purpose other than carrying out his
duties as contemplated by this Agreement. The Employee will use his best efforts
at all times to hold in confidence and to safeguard any Confidential Information
from falling into the hands of any unauthorized person and, in particular, will
not permit any Confidential Information to be read, duplicated or copied. The
Employee will return to the Company all Confidential Information in the
Employee's possession or under the Employee's control when the duties of the
Employee no longer require the Employee's possession thereof, or whenever the
Company shall so request, and in any event will promptly return all such
Confidential Information if the Employee's relationship with the Company is
terminated for any or no reason and will not retain any copies thereof. For
purposes hereof the term "Confidential Information" shall mean any information
or data used by or belonging or relating to the Company or any subsidiary,
parent or affiliate of the Company that is not known generally to the industry
in which the Company or any subsidiary, parent or affiliate of the Company is or
may be engaged, including without limitation, any and all trade secrets,
proprietary data and information relating to the Company's or any subsidiary,
parent or affiliate of the Company's past, present or future business and
products, price lists, customer lists, processes, procedures or standards, know-
how, manuals, business strategies, records, drawings, specifications, designs,
financial information, whether or not reduced to writing, or information or data
which the Company or any subsidiary, parent or affiliate of the Company advises
the Employee should be treated as confidential information.
8. Covenant Not to Compete. The Employee acknowledges that during
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his employment with the Company he, at the expense of the Company, has been and
will be specially trained in the business of the Company, has established and
will continue to establish favorable relations with the customers, clients,
accounts and lenders of the Company or any subsidiary, parent or affiliate of
the Company and will have access to Inventions, trade secrets and Confidential
Information of the Company or any subsidiary, parent or affiliate of the
Company. Therefore, in consideration of such training and relations, his
employment with the Company, and to further protect the Inventions, trade
secrets and Confidential Information of the Company or any subsidiary, parent or
affiliate of the Company, the Employee agrees that for a period commencing on
the date hereof and ending on the later of (i) the third anniversary of the date
hereof, or (ii) the date of termination of the Employee's employment with the
Company; provided, however, that the Company shall have the option to extend
such period of time by an additional one year period by electing to continue to
pay the Employee's salary at the time of termination (including, without
limitation, a termination due to the fulfillment of the term of this Agreement
pursuant to Section 11(a) hereof), payable bi-monthly in arrears, he will not,
directly or indirectly, without the express written consent of the Company,
except when and as requested to do in and about the performing of his duties
under this Agreement:
(a) own, manage, operate, control or participate in the ownership,
management, operation or control of, or have any interest, financial or
otherwise, in or act as an officer, director, partner, member, principal,
employee, agent, representative, consultant or independent contractor of,
or in any way assist any individual or entity in the conduct of, any
business located in or doing business within a fifty (50) mile radius of
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any current or future business location of the Company or any subsidiary,
parent or affiliate of the Company which is engaged or may become engaged
in any business competitive to any business now or at any time during the
period hereof engaged in by the Company or any subsidiary, parent or
affiliate of the Company, including, but not limited to, any business which
markets or distributes propane gas and other petroleum-related products or
sells, services and installs parts, appliances or supplies related thereto;
(b) divert or attempt to divert clients or customers (whether or not
such persons have done business with the Company or any subsidiary, parent
or affiliate of the Company once or more than once) or accounts of the
Company or any subsidiary, parent or affiliate of the Company; or
(c) entice or induce or in any manner influence any person who is or
shall be in the employ or service of the Company or any subsidiary, parent
or affiliate of the Company to leave such employ or service for the purpose
of engaging in a business which may be in competition with any business now
or at any time during the period hereof engaged in by the Company or any
subsidiary, parent or affiliate of the Company.
Notwithstanding the foregoing provisions, the Employee may own not more than
five percent (5%) of the outstanding equity securities in any corporation or
entity (including, but not limited to, units in a master limited partnership)
that is listed upon a national stock exchange or actively traded in the over-
the-counter market. Notwithstanding the foregoing provisions, the Employee
shall not, directly or indirectly, without the express written consent of the
Company, except when and as requested to do in and about the performing of his
duties under this Agreement, engage in any actions under subsections (a), (b) or
(c) above, at any time the Company is making payments to the Employee pursuant
to this Agreement.
9. Specific Performance. Recognizing that irreparable damage will
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result to the Company in the event of the breach or threatened breach of any of
the foregoing covenants and assurances by the Employee contained in Sections 6,
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7 or 8 hereof, and that the Company's remedies at law for any such breach or
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threatened breach will be inadequate, the Company and its successors and
assigns, in addition to such other remedies which may be available to them,
shall be entitled to an injunction, including a mandatory injunction, to be
issued by any court of competent jurisdiction ordering compliance with this
Agreement or enjoining and restraining the Employee, and each and every person,
firm or company acting in concert or participation with him, from the
continuation of such breach and, in addition thereto, he shall pay to the
Company all ascertainable damages, including costs and reasonable attorneys'
fees sustained by the Company by reason of the breach or threatened breach of
said covenants and assurances. The obligations of the Employee and the rights of
the Company, its successors and assigns under Sections 6, 7, 8, 9, 10, 12, 16
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and 18 of this Agreement shall survive the termination of this Agreement. The
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covenants and obligations of the Employee set forth in Sections 6, 7 and 8
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hereof are in addition to and not in lieu of or exclusive of any other
obligations and duties of the Employee to the Company, whether express or
implied in fact or in law.
10. Potential Unenforceability of Any Provision. If a final judicial
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determination is made that any provision of this Agreement is an unenforceable
restriction against the Employee, the provisions hereof shall be rendered void
only to the extent that such
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judicial determination finds such provisions unenforceable, and such
unenforceable provisions shall automatically be reconstituted and become a part
of this Agreement, effective as of the date first written above, to the maximum
extent in favor of the Company that is lawfully enforceable. A judicial
determination that any provision of this Agreement is unenforceable shall in no
instance render the entire Agreement unenforceable, but rather the Agreement
will continue in full force and effect absent any unenforceable provision to the
maximum extent permitted by law.
11. Term and Termination.
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(a) Subject to Sections 11(b) and 11(c) below, the term of the
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Employee's employment under this Agreement shall be three (3) years from
the date hereof.
(b) Notwithstanding Section 11(a) above, this Agreement shall
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terminate immediately upon the death, disability or adjudication of legal
incompetence of the Employee, or upon the Company's ceasing to carry on its
business or becoming bankrupt. For purposes of this Agreement, the Employee
shall be deemed to be disabled when the Employee has become unable, by
reason of physical or mental disability, to satisfactorily perform his
essential job duties and there is no reasonable accommodation that can be
provided to enable him to be a qualified individual with a disability under
applicable law. Such matters shall be determined by, or to the reasonable
satisfaction of, the Company.
(c) Notwithstanding Section 11(a) above, the Company may terminate
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the Employee's employment at any time for Cause or without Cause. "Cause"
means (i) the Employee has repeatedly failed to perform the duties assigned
to him, (ii) the Employee has been convicted of a felony or misdemeanor
involving moral turpitude, (iii) the Employee has engaged in acts or
omissions against the Company constituting dishonesty, breach of fiduciary
obligation, or intentional wrongdoing or misfeasance, (iv) the Employee has
acted intentionally or in bad faith in a manner which results in a material
detriment to the assets, business or prospects of the Company, (v) the
Employee has been guilty of habitual absenteeism, chronic alcoholism or
other form of addiction, or (vi) the Employee has breached any obligation
under this Agreement.
(d) In the event (x) the Company elects to terminate the Employee's
employment with the Company for Cause or as a result of the death,
disability, adjudication of legal incompetence of the Employee or the
Company's ceasing to carry on its business or becoming bankrupt, or (y) the
Employee terminates his employment with the Company for any reason or no
reason, the Company shall pay or provide to the Employee:
(i) such Salary as the Employee shall have earned up to the
date of his termination;
(ii) such earned but unpaid performance bonus, if any, pursuant
to either Section 4(c) or 4(d) hereof, as applicable;
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(iii) such earned but unpaid subordination bonus, if any,
pursuant to Section 4(e) hereof; and
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(iv) such other fringe benefits normally provided to employees
of the Company as the Employee shall have earned up to the date of his
termination.
(e) In the event the Company elects to terminate the Employee's
employment with the Company during the three (3)-year period referred to in
Section 11(a) above and such termination is without Cause, the Company
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shall pay to the Employee:
(i) the unpaid amount of the Employee's Salary for the
remainder of the term of this Agreement, with such amount to be paid
bi-monthly in arrears;
(ii) such earned but unpaid performance bonus, if any, pursuant
to either Section 4(c) or 4(d) hereof, as applicable;
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(iii) such earned but unpaid subordination bonus, if any,
pursuant to Section 4(e) hereof; and
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(iv) such other fringe benefits (other than any bonus, severance
pay benefit or participation in the Company's 401(k) employee benefit
plan) normally provided to employees of the Company as the Employee
shall have earned up to the date of his termination.
12. Waiver of Breach. Failure of the Company to demand strict
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compliance with any of the terms, covenants or conditions hereof shall not be
deemed a waiver of the term, covenant or condition, nor shall any waiver or
relinquishment by the Company of any right or power hereunder at any one time or
more times be deemed a waiver or relinquishment of the right or power at any
other time or times.
13. No Breach. The Employee represents and warrants to the Company
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that neither the execution nor delivery of this Agreement, nor the performance
of the Employee's obligations hereunder will conflict with, or result in a
breach of, any term, condition, or provision of, or constitute a default under,
any obligation, contract, agreement, covenant or instrument to which the
Employee is a party or under which the Employee is bound, including without
limitation, the breach by the Employee of a fiduciary duty to any former
employers.
14. Entire Agreement; Amendment. This Agreement cancels and
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supersedes all previous agreements relating to the subject matter of this
Agreement, written or oral, between the parties hereto and contains the entire
understanding of the parties hereto and shall not be amended, modified or
supplemented in any manner whatsoever except as otherwise provided herein or in
writing signed by each of the parties hereto.
15. Headings. The headings of the sections of this Agreement have
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been inserted for convenience of reference only and shall in no way restrict or
otherwise modify any of the terms or provisions hereof.
16. Governing Law. This Agreement and all rights and obligations of
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the parties hereunder shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Missouri applicable to agreements made
and to be performed entirely within the State, including all matters of
enforcement, validity and performance; provided, however,
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that to the extent any provision herein is deemed unenforceable in the State of
Missouri, then this Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Delaware.
17. Notice. Any notice, request, consent or communication under this
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Agreement shall be effective only if it is in writing and personally delivered
or sent by certified mail, return receipt requested, postage prepaid, or by a
nationally recognized overnight delivery service, with delivery confirmed,
addressed as follows:
If to the Company:
Name: With Copy To:
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Inergy Partners, LLC Xxxxxxx, Mag & Fizzell, P.C.
1101 Walnut, Suite 1500 1201 Walnut, Suite 2800
Kansas City, Missouri 64106 Xxxxxx Xxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxx Attn: Xxxx X. XxXxxxxxxx
If to the Employee:
X. Xxxxxx Xxxxxxx Xx.
0000 X. Xxx Xxxxx Xx.
Xxxxxxx, Xxxxxxx 00000
or such other persons and/or addresses as shall be furnished in writing by any
party to the other party, and shall be deemed to have been given only upon its
delivery in accordance with this Section 17.
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18. Assignment. This Agreement is personal and not assignable by the
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Employee but it may be assigned by the Company without notice to or consent of
the Employee to, and shall thereafter be binding upon and enforceable by, any
affiliate of the Company, and any person which shall acquire or succeed to
substantially all of the business or assets of the Company (and such person
shall be deemed included in the definition of the "Company" for all purposes of
this Agreement) but is not otherwise assignable by the Company.
19. Expenses. If any action at law or in equity is necessary to
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enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
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IN WITNESS WHEREOF, the Company has caused this Employment Agreement
to be duly executed, and the Employee has hereunto set his hand, as of the day
and year first above written.
INERGY PARTNERS, LLC
/s/ XXXX X. XXXXXXX
By: ___________________________________
Xxxx X. Xxxxxxx, President
/s/ R. XXXXXX XXXXXXX
________________________________________
X. Xxxxxx Xxxxxxx Xx.
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