1
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into this 1st day
of April, 2000, by and between DUKE ENERGY FIELD SERVICES ASSETS, L.L.C. ("DEFS
Assets"), with its principal executive offices in Denver, Colorado, and Xxxxxxx
X. Xxxxxxxx ("Executive").
WHEREAS, Executive is now and for a number of years has been in the
employ of GPM, a division of Xxxxxxxx Petroleum Company ("Xxxxxxxx"); and
WHEREAS Duke Energy Corporation ("Duke Energy") and Xxxxxxxx have
announced their intention to create a joint venture combining certain assets
into a company called Duke Energy Field Services, L.L.C. ("DEFS, L.L.C."); and
WHEREAS DEFS Assets desires to continue the employment of Executive
and to receive the benefit of the Executive's knowledge, experience, reputation
and contacts; and
WHEREAS, the parties desire that this Agreement set forth the terms
and conditions of Executive's employment by DEFS Assets and that it represents
the entire agreement of the parties with respect to that subject;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained herein, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Employment. Upon the satisfactory completion of the planned joint
venture transaction between Duke Energy and Xxxxxxxx, DEFS Assets hereby
employs Executive, and Executive hereby accepts such employment, upon the terms
and conditions set forth herein.
1
2
2. Position and Duties.
(a) Position. At all times during the term of employment
under this Agreement, Executive shall hold a position of responsibility and
importance with the functions, duties and responsibility of Vice Chairman of
the Board of DEFS, L.L.C. and will report directly to the position of Chairman,
President and CEO. It is expressly understood that nothing in the immediately
foregoing sentence shall preclude the Board of Directors of DEFS, L.L.C.
("Board") from making such organizational and reporting changes as well as
promotions as the Board may in good xxxxx xxxx desirable for the good of DEFS,
L.L.C. The parties acknowledge that Executive's duties and responsibilities
enumerated herein with respect to DEFS, L.L.C. will be transferred to a new
entity to be formed and to be known as Duke Energy Field Services Corporation
("DEFS Corporation").
(b) Duties. Executive's duties shall include, in addition to
those enumerated in the governing documents of DEFS, L.L.C., managing such
functions or segments of DEFS, L.L.C.'s business as may be directed from
time-to-time by the Chairman of the Board. Executive acknowledges and agrees
that whatever his duties hereunder may be he owes DEFS, L.L.C. a duty of
loyalty, fidelity and allegiance to act at all times in the best interests of
DEFS, L.L.C. and to do no act that would injure DEFS, L.L.C.'s reputation.
(c) Performance. Throughout the period of employment
Executive shall devote his full time and undivided attention during normal
business hours to the business and affairs of DEFS, L.L.C., except for
reasonable vacation periods and except for periods of illness or incapacity.
Executive may reasonably participate as a member in community, civic or similar
organizations and may pursue personal investments that do not interfere with
the normal business activities of DEFS, L.L.C., DEFS Corporation, or Duke
Energy.
(d) Loyal and Conscientious Performance. Executive shall act
at all times in compliance with the policies, rules and decisions adopted from
time-to-time by DEFS, L.L.C. and perform all duties and obligations required of
him by this Agreement in a loyal and conscientious manner.
(e) Location. Executive's office shall be located in Houston,
Texas or such other location as the Board may designate and the Executive
agree.
2
3
(f) Authority. Executive shall be vested with all authority
reasonably necessary to carry out his duties and responsibilities as set forth
in this Section 2.
3. Term of Employment. The term of employment pursuant to this
Agreement shall commence on the effective date of the joint venture transaction
between Duke Energy and Xxxxxxxx and shall continue for a period of two (2)
years thereafter unless this Agreement is otherwise amended pursuant to its
terms.
4. Base Compensation. Executive's monthly base salary is $32,000. This
base compensation will be payable in installments as specified by the policies
of DEFS Assets and subject to applicable state and federal income tax and
social security tax withholding requirements. Executive's base salary shall be
subject to increases recommended by the Compensation Committee of the Board of
Directors of DEFS, L.L.C. ("Compensation Committee"), and approved by the Board
which shall review the Executive's salary and total compensation periodically.
5. Annual Cash Incentive Payment. Executive shall be eligible to
participate in the annual bonus program for executive officers of DEFS Assets.
The target under such bonus shall be 60% of base salary. Such bonus shall be
determined under the provisions of the incentive plan established by the
Compensation Committee of the Board of Directors.
6. Long Term Incentive. Commencing with the public offering of DEFS
Corporation shares, Executive shall receive stock grants annually with a value
as determined by DEFS Corporation to be 220% of base salary, composed of stock
options valued at 150% of base salary and restricted stock valued at 70% of
base salary. The Compensation Committee will determine the specific provisions
of the awards; provided, however, that any awards made during the initial term
of this Agreement will vest on the second anniversary of the public offering.
The terms of the awards will govern their administration; provided, however,
that if Executive violates any restrictive covenants as provided in Sections 9
or 10 of this Agreement, during the term of employment specified in
3
4
Section 3 of this Agreement or within a six-month period following termination
of employment for any reason, Executive will repay any income realized or
realizable from the long-term incentive awards granted under this Section 6.
7. Retention Award. Executive will be awarded a restricted stock
retention award (the "Retention Award") valued by DEFS Corporation at 250% of
base salary on the date of the public offering. One-half of the Retention award
will vest on the first anniversary of the effective date of this Agreement and
one-half will vest on the second anniversary of the effective date of this
Agreement. Vesting of the Retention Award will occur only if Executive is an
active employee on the vesting date. If the Executive violates any restrictive
covenants as provided in Sections 9 or 10 of this Agreement, during the term of
employment specified in Section 3 of this Agreement or within a six-month
period following termination of employment for any reason, Executive will repay
any income realized or realizable from the Retention Award.
8. Executive Benefits. Executive shall participate in all benefit
plans available to similarly-situated executives of DEFS Assets. The
availability and terms of such benefit plans are set by the Compensation
Committee and subject to change from time-to-time. There is no assurance that
the benefit plans will not be changed or eliminated.
9. Confidentiality. Executive shall not, at any time, use (other than
in the ordinary course of fulfilling his duties as an employee of DEFS Assets),
divulge or otherwise disclose, either directly or indirectly, any confidential
or proprietary information (including without limitation any customer or
prospect list, supplier list, acquisition or merger targets, business plans or
strategies, data, records, or financial information) concerning the business,
policies or operations of DEFS, L.L.C., or its affiliates, which Executive may
have learned on or prior to the date hereof or during the term of Executive's
employment by DEFS L.L.C. (as employee, consultant, shareholder, officer,
controlling person, agent or otherwise) and which information is not generally
known to the public. Executive's obligations under this Section 9 shall survive
any termination of his employment.
4
5
10. Covenant Not To Compete. In exchange for the consideration being
paid under this Agreement and in order to protect the goodwill, business and
privacy interests of DEFS, L.L.C., DEFS Corporation, and their affiliates,
Executive shall not, for a period of six (6) months following the termination
of Executive's employment for any reason, engage in the following activities in
any locality:
(a) Executive shall not be employed by or render services to
a third party or on a self-employed basis involving the same type of work and
responsibilities he performed for DEFS, L.L.C., including but not limited to
the management of enterprises engaged in the transportation of natural gas and
the gathering, processing, transportation and marketing of natural gas liquids
and condensate.
(b) Executive shall not compete in any form or fashion with
DEFS, L.L.C. by utilizing or disclosing or causing to be utilized or disclosed
DEFS, L.L.C.'s trade secrets or confidential and proprietary information.
(c) Executive shall not solicit, directly or indirectly,
DEFS, L.L.C.'s customers, suppliers, or employees.
Except as otherwise provided in Section 11 hereof, the provisions of
this Section 10 shall survive the termination of this Agreement.
11. Termination.
(a) Notwithstanding anything to the contrary contained
herein, Executive may terminate his employment at any time by (i) resigning or
(ii) for cause. For the purposes of this subsection 11(a), "cause" is defined
as the failure of DEFS Assets to fulfill its obligations under any of the
provisions of this Agreement, including, but not limited to, compensation,
benefits, awarding titles or changing reporting relationships.
(b) Executive's employment may be terminated by DEFS Assets
at any time as follows:
(i) due to the death of Executive;
(ii) due to a disability which prevents Executive
from performing the essential functions of his full duties for a period of
ninety (90) consecutive business days at anytime during the term of this
Agreement;
5
6
(iii) for cause, which shall mean (w) the willful
and continued failure by Executive to substantially perform his duties with
DEFS, L.L.C. or its affiliates (other than any such failure resulting from his
incapacity due to physical or mental illness) after demand for substantial
performance is delivered to him by the Chairman which specifically identifies
the manner in which DEFS, L.L.C. believes the Executive has not substantially
performed his duties, (x) the willful engaging by the Executive in gross
misconduct materially and demonstrably injurious to the property or business of
DEFS, L.L.C. or any of its affiliates, (y) the willful material violation of
paragraphs 9 or 10, or (z) fraud, misappropriation or commission of felony. For
purposes of this subsection, no act or failure to act on the Executive's part
will be considered "willful" unless done or omitted to be done, by him not in
good faith and without reasonable belief that his action or omission was in the
best interest of DEFS, L.L.C. or its affiliates or not opposed to the interests
of DEFS, L.L.C. or its affiliates.
(iv) for any reason other than death, disability or
for cause.
(c) In the event of Executive's resignation or early
termination pursuant to subsections 11(b)(i), (ii), or (iii) directly above,
Executive shall be entitled only to his base salary earned through the date of
termination. Executive's rights to any bonus shall be forfeited, but the
termination shall not affect any rights of Executive that have been vested
under any employee benefit plan or arrangement.
(d) In the event that DEFS Assets terminates Executive
pursuant to subsection 11(b)(iv) above, or Executive voluntarily resigns
pursuant to subsection 11(a) (ii) above, Executive shall be entitled to
severance in accordance with the provisions of Section 12 of this Agreement.
(e) In the event DEFS Assets decides to terminate Executive,
DEFS Assets will cooperate with Executive in determining when and how to
announce such termination. Executive shall not receive any compensation for any
period of time post-termination, except for the severance benefits provided in
Section 12 hereof.
12. Severance Payment.
(a) In the event Executive terminates his employment pursuant
to subsection 11(a)(i) hereof within 12 months of the effective date of this
Agreement, he
6
7
shall forfeit the Retention Award under Section 7 hereof and other long term
incentives granted pursuant to the provisions of Section 6 hereof.
(b) In the event DEFS Assets terminates the employment of
Executive within 12 months of the effective date of this Agreement pursuant to
the provisions of subsection 11(b)(iii) hereof, Executive shall forfeit the
Retention Award under Section 7 hereof and other long term incentives granted
pursuant to the provisions of Section 6 hereof.
(c) In the event (i) DEFS Assets terminates the employment of
Executive prior to the expiration of the term specified in Section 3 hereof
pursuant to the provisions of subsection 11(b)(iv) hereof or (ii) Executive
terminates his employment prior to the expiration of the term specified in
Section 3 hereof pursuant to the provisions of subsection 11(a)(ii) hereof, the
Retention Award under Section 7 and other long term incentives granted
Executive pursuant to the provisions of Section 6 hereof shall immediately vest
and Executive shall be paid a pro-rata bonus earned during the year of
termination of his employment.
(d) In the event (i) Executive terminates his employment
pursuant to subsection 11(a)(i) hereof after the expiration of 12 or more
months after the effective date of this Agreement but prior to the expiration
of the term specified in Section 3 hereof, or (ii) DEFS Assets terminates the
employment of Executive pursuant to the provisions of subsection 11(b)(iii)
hereof, Executive shall forfeit any long term incentive awards issued pursuant
to the provisions of Section 6 hereof and one-half of the Retention Award under
Section 7 hereof.
13. Change In Control.
(a) In the event of a Change in Control of DEFS Corporation
prior to the expiration of the term of this Agreement pursuant to Section 3
hereof, should Executive's employment be terminated (a) pursuant to subsection
11(b)(iv) hereof, or (b) by Executive pursuant to subsection 11(a)(ii) hereof,
all long term incentive awards and any unvested restricted stock awards issued
pursuant to the provisions of Section 6 and 7 hereof shall immediately vest. In
addition, Executive shall be entitled to a lump sum severance payment equal to
two hundred percent (200%) of his base annual salary in effect at the
7
8
time of termination plus his target bonus. Finally, for a period of up to two
years following such termination of employment, the Executive shall be eligible
to participate in the group medical plan sponsored by DEFS Assets for its
employees, or its equivalent on the same basis as active employees of DEFS
Assets unless the Executive becomes eligible to participate in the group
medical plan offered by a subsequent employer.
(b) For the purposes of this Section 13, a "change in
control" is defined as:
(i) the consummation of a merger or consolidation of
DEFS Corporation with one or more corporations, business trusts, common law
trusts or unincorporated businesses, including, without limitation, a general
partnership or limited partnership, pursuant to a written agreement of merger
or consolidation in which DEFS Corporation is not the surviving entity or in
which DEFS Corporation survives only as a subsidiary of another entity; or
(ii) any person other than Duke Energy or Xxxxxxxx
is or becomes the beneficial owner, directly or indirectly, of securities of
DEFS Corporation representing more than 50% of the combined voting power of
DEFS Corporation's then outstanding voting securities; or
(iii) all or substantially all of the assets and
business of DEFS Corporation are sold, transferred or assigned to, or otherwise
acquired by, any other person or persons other than Duke Energy or Xxxxxxxx; or
(iv) the dissolution or liquidation of DEFS
Corporation; or
(v) adoption by the Board of Directors of DEFS
Corporation of a resolution to the effect that any person other than Duke
Energy or Xxxxxxxx has acquired effective control of the business and affairs
of DEFS Corporation.
(c) The term "beneficial owner" shall have the meaning set
forth in Section 13(d) of the Securities Exchange Act of 1934, as amended and
in the regulations promulgated thereunder. The term "person" shall mean an
individual, corporation, partnership, trust, unincorporated organization,
association or other entity; provided that the term "person" shall not include
(i) Duke Energy, (ii) Xxxxxxxx, (iii) any affiliate of Duke, or (iv) any
affiliate of Xxxxxxxx, or (v) any employee benefit plan maintained by Duke or
any affiliate of Duke, or (vi) any employee benefit plan maintained by Xxxxxxxx
or any affiliate of
8
9
Xxxxxxxx. The term "affiliate" or "affiliated" as used in this Agreement shall
mean when used with respect to a specified person or entity, any other person
or entity directly or indirectly controlled by, controlling, or under direct or
indirect common control with the specified person or entity. For the purpose of
this Section 13, "control" or "controlled" when used with respect to any
specified person or entity means the power to direct the management and
policies of that person or entity whether through the ownership of voting
securities, membership interest or by contract.
(d) Notwithstanding the provisions of this Section 13, a "change in
control" shall not include a change in the ownership interest of Duke Energy or
Xxxxxxxx, nor shall it include a change in the percentage of ownership interest
of DEFS Corporation by either Duke Energy or Xxxxxxxx.
14. Notice. Any notice to be given hereunder by either party to the
other party may be effectuated either by personal delivery in writing or by
mail, registered or certified, postage prepaid, with return receipt requested.
Mailed notices shall be addressed to the parties at the following addresses:
If to DEFS, L.L.C.:
X. X. Xxxx
Chairman of the Board
Duke Energy Field Services, Inc.
000 00xx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
If to Executive:
Xx. Xxxxxxx X. Xxxxxxxx
Vice Chairman
Duke Energy Field Services, Inc.
(address)
Houston, Texas (zip)
9
10
15. Waiver of Breach. The waiver by any party to a breach of any
provision in this Agreement cannot operate or be construed as a waiver of any
subsequent breach by a party.
16. Severability. The invalidity or unenforceability of any particular
provision in this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if the invalid or
unenforceable provision were omitted.
17. Entire Agreement. Except as otherwise provided herein, this
Agreement contains the entire understanding of the parties as to the employment
of Executive, superseding all prior understandings and agreements, and no
modifications or amendments of the terms and conditions herein shall be
effective unless in writing and signed by the parties or their respective duly
authorized agents.
18. Governing Law. This Agreement shall be interpreted, construed and
governed according to the laws of the State of Colorado, without reference to
conflicts of law principles thereof.
19. Dispute Resolution. In the event any dispute arises concerning the
provisions of this Agreement or Executive's employment with DEFS, L.L.C., the
parties agree that such dispute shall be resolved in accordance with the
Employment Dispute Resolution procedures of the American Arbitration
Association and that any arbitration pursuant to such procedures shall be held
in Denver, Colorado.
20. Consent to Jurisdiction. Employee hereby consents to the
nonexclusive jurisdiction of any state court within Denver, Colorado or any
federal court located within the same city for any proceeding instituted
hereunder or arising out of or in connection with this Agreement.
10
11
21. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their permitted successors,
assigns, legal representatives and heirs, but neither this Agreement nor any
rights hereunder shall be assignable by Executive.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
DUKE ENERGY FIELD SERVICES, INC.
By: /s/ X. X. Xxxx
------------------------------
X. X. Xxxx
EXECUTIVE
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Xxxxxxx X. Xxxxxxxx
11
