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EXHIBIT 10.(k)
CONFIDENTIALITY AND NONCOMPETITION AGREEMENT
This AGREEMENT is made by and between Xxxxxx X. Xxxxxx (the
"Executive") and MAPCO Inc. (the "Corporation") and is dated as of November 23,
1997.
W I T N E S S E T H:
WHEREAS, the Corporation has agreed to enter into a merger
agreement (the "Merger Agreement") with The Xxxxxxxx Companies, Inc. (the
"Parent"), pursuant to which the Corporation will merge with or into a direct
wholly owned subsidiary of the Parent (the "Merger"), and as a result, will
become a direct wholly owned subsidiary of the Parent, effective as of the
effective time of the consummation of such Merger (the "Effective Time");
WHEREAS, the Parent is concerned that critical executive
officers of the Corporation can terminate employment following the Merger and
immediately enter into the employment or other service of a competitor of the
business of the Corporation and its subsidiaries (the "Business"), thereby
causing substantial and significant damage to the Business;
WHEREAS, the Parent has indicated that it would not enter into
the Merger Agreement unless and until certain officers of the Corporation,
including the Executive, had entered into an agreement embodying appropriate
restrictions on the ability of each such officer to enter into such competitive
service and to solicit customers and/or employees of the Business;
WHEREAS, the Corporation has concluded that it would`not be in
the best interests of shareholders to make the execution of such agreements by
such officers a condition to the effectiveness of the Merger Agreement;
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WHEREAS, by reason of the attention that will be focused on
such officers due to the proposed merger, the Corporation is also concerned
that there is substantially greater risk that such officers would explore other
employment opportunities and could enter into competitive employment after the
Effective Time or after the date, if at all, that the Merger Agreement is
abandoned in accordance with its terms;
WHEREAS, the Corporation has concluded that the events and
circumstances related to the Merger requires it to obtain commitments from its
senior officers, including the Executive, of the nature and kind set forth
herein, both to induce the Parent to enter into the Merger Agreement and to
assure itself that the Business will not be damaged by the competitive
activities of such officers;
WHEREAS, the Executive owns shares of Common Stock of the
Corporation and options to purchase shares of Common Stock of the Corporation
and wishes to induce the Parent to enter into the Merger Agreement so that the
Executive will receive for his equity interest in the Corporation the
consideration called for under the Merger Agreement with respect to shares of
Common Stock and options to purchase shares of Common Stock of the Corporation;
WHEREAS, the Executive is willing to enter into this Agreement
in consideration of the additional compensation provided for herein, and to
obtain the other benefits and rights that the Executive will become entitled to
receive, in the event that the Merger Agreement is consummated, pursuant to the
Corporation's generally applicable plans, policies and procedures and any
individual agreement to which the Executive is or may be a party.
NOW, THEREFORE, in consideration of the mutual promises and
obligations contained herein, the Corporation and the Executive agree as
follows:
1. Period of Restriction. The period during which the
Executive shall be subject to the restrictive covenants set forth in Sections
4, 5, and 6 (the "Restricted Period") shall be the period (i) commencing on the
date of the termination of the Executive's employment for any reason (the
"Termination Date") and (ii) ending on the second anniversary of the
Commencement Date.
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2. Payment to Executive. In consideration of the
negative covenants provided for the benefit of the Corporation hereunder, the
Corporation will pay the Executive a single lump sum cash amount equal to
$5,150,000 as soon as practicable after the date hereof, but in no event later
than December 31, 1997. Any amount payable hereunder shall be subject to any
and all applicable Federal income and employment tax withholding required at
law to be withheld therefrom.
3. Confidential and Trade Secret Information. The
Executive will keep in strict confidence, and will not, directly or indirectly,
at any time during or after his or her employment with the Corporation,
disclose, furnish, disseminate, make available or, except in the course of
performing his or her duties of employment hereunder, use any trade secrets or
confidential business and technical information of the Corporation or its
customers or vendors, without limitation as to when or how the Executive may
have acquired such information. Such confidential information shall include,
without limitation, the Corporation's unique selling, manufacturing and
servicing methods and business techniques, training, service and business
manuals, promotional materials, training courses and other training and
instructional materials, vendor and product information, customer and
prospective customer lists, other customer and prospective customer information
and other business information. The Executive specifically acknowledges that
all such confidential information, whether reduced to writing, maintained on
any form of electronic media, or maintained in the mind or memory of the
Executive and whether compiled by the Corporation, and/or the Executive,
derives independent economic value from not being readily known to or
ascertainable by proper means by others who can obtain economic value from its
disclosure or use, that reasonable efforts have been made by the Corporation to
maintain the secrecy of such information, that such information is the sole
property of the Corporation and that any retention and use of such information
by the Executive during his or her employment with the Corporation (except in
the course of performing his or her duties and obligations hereunder) or after
the termination of his or her employment shall constitute a misappropriation of
the Corporation's trade secrets. If the Executive is legally compelled (by
deposition, interrogatory, request for documents, subpoena, civil investigative
demand or similar process) to disclose any confidential or trade secret
information, the Executive will provide the Corporation with prompt written
notice of such required disclosure so the Corporation may seek a protective
order or other appropriate remedy and/or waive compliance with the terms
hereof. The Corporation will be responsible for all costs incurred to protect
confidentiality or trade secret information pursuant to the immediately
preceding sentence.
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4. Covenant Not to Compete. In consideration of the
obligations and commitments of the Corporation as set forth in this Agreement,
which constitute good and valuable consideration, the Executive covenants and
agrees that, without the written consent of the Corporation, the Executive will
not provide any services, whether as an owner, director, manager, supervisor,
employee, adviser, consultant or otherwise, and/or derive any compensation,
whether directly or indirectly (including but not limited to through the
receipt of stock or stock options), during the Restricted Period relating to
the advertising, promotion, distribution or sale of any petroleum, natural gas
liquids and propane products by any entity if a principal portion of such
entity's business is in direct competition with the Business or, if the
Effective Time occurs prior to September 30, 1998, the business of the Parent
at the Effective Time (the Business and the business of the Parent at the
Effective Time hereafter referred to as the "Combined Business") or which sells
or distributes the products of a competitor of the Combined Business.
Notwithstanding anything else contained herein to the contrary, such
restriction shall specifically apply solely to services performed or any
compensation derived from activities conducted in any geographic area where the
Business currently markets, distributes and/or sells such products. For
purposes of clarification, this Section 4 shall not prevent the Executive from
providing services to any entity in any capacity, including any entity that
advertises, promotes, distributes or sells petroleum, natural gas liquids and
propane products that are competitive with those of the Combined Business, so
long as the Executive provides no material services to, and has no direct
responsibility for or oversight regarding, the portion of such entity's
business which is competitive with the Combined Business. Moreover, this
Section 4 shall not prohibit the Executive from obtaining or maintaining a
portfolio investment (i.e., less than 1% of the outstanding voting or income
interests) in any publicly traded entity.
5. Covenant Not to Solicit Employees. The Executive
agrees that during the Restricted Period the Executive will not, directly or
indirectly, solicit, recruit, hire or cause to be hired for employment, any
individual or individuals who are employed by the Combined Business. The
Executive shall also not directly or indirectly, solicit, recruit, hire or
cause to be hired for employment, any individual or individuals who have
entered into covenants not to compete with the Corporation and/or its
subsidiaries during the periods of those covenants not to compete, such that
those employees would be engaged in any activity which violates the terms of
any such non-compete.
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6. Covenant Not to Solicit Customers. The Executive
agrees that during the Restricted Period, the Executive will not directly or
indirectly, influence or attempt to influence customers of the Combined
Business to direct their business away from the Combined Business and/or
towards any competitor of the Combined Business.
7. Injunctive Relief. The Executive hereby acknowledges
and agrees that the provisions set forth in Sections 3, 4, 5 and 6 of this
Agreement are both reasonable and necessary to protect the legitimate business
interests of the Business and the Combined Business. The Executive further
acknowledges that the geographic area and the scope of the limitation on the
Executive's activities set forth in Section 4 of this Agreement and the length
of the Restricted Period are reasonable and fair, and none of the foregoing
will prevent or materially impair the Executive's ability to earn a livelihood
or otherwise cause him/her undue harm. The Executive further acknowledges and
agrees that any breach of Sections 3, 4, 5 or 6 of this Agreement by the
Executive would cause irreparable injury to the Business (and, if applicable,
the Combined Business) for which legal damages alone would be inadequate.
Accordingly, the parties agree that in the event of a breach of the Executive's
obligations under Sections 3, 4, 5 or 6 of this Agreement, the Corporation
shall be entitled to seek and obtain preliminary or injunctive relief in a
court of appropriate jurisdiction. The right to seek injunctive relief shall
not be exclusive and shall not limit in any way the right of the Corporation to
pursue any other remedy that may be available at law or in equity, including,
without limitation, the right to receive monetary damages from the Executive or
to seek rescission of this Agreement. The Executive also expressly agrees and
acknowledges that the Corporation has entered into this Agreement to obtain the
benefit of the covenants set forth in Sections 3, 4, 5 and 6, and agrees that
if at any time he shall affirmatively challenge the enforceability of such
covenants as a matter of law (as opposed to the enforceability of such
covenants as to a particular set of facts), whether in an action for
declaratory judgment, as an affirmative defensive or otherwise, the Corporation
shall be entitled to rescind this Agreement and the Executive shall be
obligated to return to the Corporation any and all amounts paid to the
Executive hereunder.
8. Successors; Binding Agreement. As used in this
Agreement, "Corporation" shall mean the Corporation and any successor to its
business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise. This Agreement shall inure to the
benefit of and be enforceable by the Executive and the Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributee, devisees and legatees. If the Executive should die while any
amount would still be payable to the Executive hereunder had the Executive
continued to live, all such amounts, unless otherwise provided herein, shall
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be paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee or other designee or, if there is no such designee, to the
Executive's estate.
9. Notice. For the purpose of this Agreement, notices
and all other communications provided for herein shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to, in the case of the Executive, his principal place of residence
as set forth in the records of the Corporation, and in the case of the
Corporation to the office at which it maintains its executive offices, provided
that all notices to the Corporation shall be directed to the attention of the
Board of Directors (the "Board") with a copy to the Secretary of the
Corporation. Either party may furnish the other with a different address to
use for purposes of this Agreement by providing notice in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt.
10. Validity; Governing Law. The validity,
interpretation, construction and performance of this Agreement shall be
governed by the laws of the State of Delaware without regard to that night
otherwise govern under its conflicts of law principles. The Executive and the
Corporation hereby each consent to submit to the personal jurisdiction of the
Delaware state courts and agree that, given that the Corporation is a Delaware
corporation, Parent is a Delaware corporation, the Merger Agreement is governed
by Delaware law and this Agreement is being entered into, among other things,
to induce the Parent to enter into the Merger Agreement for the benefit of the
stockholders of the Corporation (including the Executive), such courts shall
have sole and exclusive jurisdiction over the subject matter hereof and shall
be the sole covenant venue for any action brought hereunder. The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
11. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreement, promises, covenants, arrangements,
communications, representation or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior
agreement of the parties hereto in respect of the subject matter contained
herein is hereby terminated and canceled. This Agreement shall not be
interpreted or construed as a contract of employment or to modify, amend,
terminate, supersede or in any other way alter any agreement now in effect
between the Executive and the Corporation that does not specifically pertain to
competitive activities, confidential information or the solicitation of
employees or customers.
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12. Legal Fees and Expenses. If either the Executive or
the Corporation is successful in asserting or defending any claim (whether
initiated by the Executive or by the Corporation) as to the breach of any
provision of this Agreement, the other party shall pay the successful party's
legal expenses, including, without limitation, the successful's party's
reasonable attorney's fees, upon presentation of proof of such expenses.
13. Options. The Executive covenants and agrees that he
will exercise, on or before December 31, 1997, all stock options outstanding on
the date hereof which are exercisable as of the date hereof and which become
exercisable on or before December 31, 1997. Notwithstanding the provisions of
Section 2, this Agreement shall be rendered void and without effect if the
Executive breaches the covenant set forth in the preceding sentence. The
Executive also hereby acknowledges that his stock options outstanding at the
Effective Time will be cancelled at the Effective Time by converting the excess
of the aggregate spread value related thereto into a number of shares of the
common stock of the Parent, on the terms and conditions set forth in the Merger
Agreement.
14. Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
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15. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such officer of the
Corporation as may be authorized by the Board. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
IN WITNESS WHEREOF, the duly authorized officer of the
Corporation and the Executive have each executed this Agreement as of this 23
day of November, 1997.
MAPCO INC.
/s/ XXXXX X. XXXXXX
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By:
XXXXXX X. XXXXXX
/s/ XXXXXX X. XXXXXX
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