XXXXXX XXXXXX ENERGY PARTNERS, L.P.
EXECUTIVE COMPENSATION PLAN
Section 1. Purposes of the Plan. Section 6.4 (c) of the Partnership
Agreement provides that the General Partner in its sole discretion and without
the approval of the Limited Partners may propose and adopt on behalf of the
Partnership employee benefit plans (including, without limitation, plans
involving the issuance of Units), for the benefit of employees of the General
Partner, the Partnership, the Operating Partnerships or any Affiliate of any of
them in respect to services performed, directly or indirectly, for the benefit
of the Partnership or the Operating Partnerships. The Xxxxxx Xxxxxx Energy
Partners, L.P. Executive Compensation Plan (the "Plan") is intended to provide a
method for attracting, motivating and retaining key executive personnel for the
Partnership. The primary purpose of the Plan is to link incentive compensation
for such key personnel to the ongoing success and performance of the
Partnership.
Section 2. Administration of the Plan.
2.1. The Committee. The Plan shall be administered by the Board of
Directors of the General Partner (the "Board") acting as an administrative
committee of the whole or by another administrative committee appointed from
time to time by the Board and which committee shall be comprised of two or more
members of the Board who are not employees of the General Partner, the
Partnership, the Operating Partnerships or any Affiiate, (in each case the
"Committee"). The Committee shall have all of the powers and duties specified
for it under the Plan, including, without limitation, the selection of
Participants and the determination of grants of Incentive Compensation to be
granted to each Participant. The Committee may from time to time establish rules
and procedures for the administration of the Plan which are not inconsistent
with the provisions of the Plan, and any such rules and procedures shall be
effective as if included in the Plan.
2.2. Meetings. A majority of the members of the Committee shall constitute
a quorum for the transaction of business. All action taken by the Committee at a
meeting at which a quorum is present shall be by the vote of a majority of those
present at such meeting, but any action may be taken by the Committee without a
meeting upon written consent signed by all of the members of the Committee.
Members of the Committee may participate in a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear or see the comments of one another. No
member of the Committee shall vote on any matter directly affecting the amounts
payable under the Plan to such member, but any such interested member(s) of the
Committee may be counted for purposes of determining the existence of a quorum.
2.2. Committee Determinations. All determinations of the Committee shall be
final, binding and conclusive upon all persons.
Section 3. Eligibility and Participation.
3.1. Eligible Employees. Employees of the General Partner are eligible to
be selected by the Committee for participation in the Plan. Participation in the
Plan and the grant of Incentive Compensation to such eligible employees shall be
in the discretion of the Committee, and the Committee may from time to time
establish further eligibility requirements for participation in the Plan.
Subject to provisions of the Plan, Incentive Compensation granted to each
Participant shall be determined in the sole discretion of the Committee.
3.2. Grant Agreements. The terms and provisions of each grant of Incentive
Compensation, as determined by the Committee in its sole discretion, shall be
set forth in a written Grant Agreement, which shall incorporate by reference,
and be subject to, the terms and provisions of the Plan. Each Grant Agreement
shall contain such provisions not inconsistent with the Plan as the Committee
deems appropriate. The terms and provisions set forth in Grant Agreements may
vary among Participants. Participants shall be granted an amount of Incentive
Compensation specified as a percentage between 0% and 2% of the Incentive
Compensation Value. Incentive Compensation and all rights attendant thereto are
transferable only by will or the laws of descent and distribution, and are only
redeemable while the Participant remains an employee of the General Partner or
dies while an employee of the General Partner unless otherwise provided by a
provision of the Plan or of the Participant's Grant Agreement. Subject to the
foregoing, the Committee has complete authority to determine the identity of
Participants, the time of Grant, time and provisions for redemption and duration
of a Grant of Incentive Compensation and any other conditions or limitations
applicable to the Grant and redemption of a Grant of Incentive Compensation.
3.3. Limit On Incentive Compensation. The sum of the percentages (each
being a percentage of the Incentive Compensation Value) of Grants of Incentive
Compensation, including Grants of Incentive Compensation which have been
redeemed, shall not exceed ten percent (10%). For example, if two percent (2%)
aggregate Grants of Incentive Compensation have been redeemed, and there are
outstanding unredeemed aggregate Grants of Incentive Compensation of four
percent (4%), then only an additional four percent (4%) of aggregate Incentive
Compensation may be granted. If a Grant of Incentive Compensation is forfeited
before its redemption, then the percentage attributable to such forfeited Grant
is available for Grants of Incentive Compensation subsequent to such forfeiture.
Section 4. Plan Accounts. A bookkeeping account (each, a "Plan Account")
shall be established for each Participant on books kept by the Partnership. Such
account shall be unfunded and shall set forth the initial Grant of Incentive
Compensation to a Participant, the Incentive Compensation Value of such
Incentive Compensation (if any) at the time of such Grant, and the Incentive
Compensation Value as of the end of each successive calendar quarter. A
statement of a Participant's Plan Account shall be provided to such Participant
on written request within 45 days of the Partnership's receipt of such request
(but not more frequently than once per quarter).
Section 5. Provisions Regarding Incentive Compensation.
5.1. Redemption. A Grant of Incentive Compensation shall become redeemable
according to the provisions of the Grant Agreement.
5.2. Notice of Redemption. Subject to the provisions of a Participant's
Grant Agreement the Redeemable Portion of Incentive Compensation granted to
Participant may be redeemed in whole or in part from time to time by written
notice (the "Redemption Request") received by the Committee. The Redemption
Request must specify what portion of the redeemable Incentive Compensation is
being redeemed (e.g., "all of the Redeemable Portion" or "40% of the Redeemable
Portion"). If a Redemption Request is for less than all of the Incentive
Compensation granted to Participant under a Grant Agreement, it must be for at
least the lesser of (i) twenty five percent (25%) of the total Incentive
Compensation (whether redeemed, redeemable, or to become redeemable in the
future) granted to such Participant or (ii) the Redeemable Portion of Incentive
Compensation under the Grant Agreement.
5.3. Redemption Payment. Within thirty (30) days of the Committee's receipt
of a Redemption Request, the Partnership will pay or cause to be paid to the
Participant making the Redemption Request a Redemption Payment of the Incentive
Compensation being redeemed in Units of the Partnership or in cash, as
determined in the sole discretion of the Committee. A cash Redemption Payment
shall be the product of (a) Incentive Compensation Value as of the Determination
Date multiplied by (b) the applicable percentage Grant of Incentive Compensation
to the redeeming Participant (expressed in the Grant Agreement as a percentage
of the Incentive Compensation Value) multiplied by (c) the portion expressed as
a percentage of the Incentive Compensation being redeemed. Attached Exhibit A
gives an example of the method of computation of a cash Redemption Payment. A
Participant may request in his Redemption Request that such payment be made
partially in cash and Units of the Partnership according to percentages
requested by the Participant. The Committee shall have final discretion in
determining the method and form of the Redemption Payment. The number of Units
of the Partnership paid, if any, pursuant to a Redemption Request shall be
determined using the value of a cash Redemption Payment for the Redemption
Request and the closing price of a Unit as reported on the New York Stock
Exchange on the day before Units of the Partnership are transferred to a
Participant. The Partnership will file, as and when appropriate, and maintain
the effectiveness of its Registration Statement on Form S-8 (or other
appropriate form under the Securities Act of 1933) so that all Units which are
issued to Participants pursuant to this Plan are issued pursuant to such
effective Registration Statement; and the Partnership will, promptly upon
receipt of written request from a Participant, file and maintain for a
reasonable period of time the effectiveness of any post-effective amendment(s)
to such Registration Statement (in the form of a re-offer prospectus or
otherwise) as may be necessary for such Participant to sell such Units received
pursuant to this Plan in market transactions effected on the principal
securities exchange on which the Units are then listed. Unless this Plan is
amended by the Board, the Committee may not cause the Partnership to issue more
than 200,000 Units in the aggregate in satisfaction of any and all Redemption
Requests. Units will not be
issued to a Participant hereunder unless and until such Units have been listed
for trading on the principal securities exchange on which the Partnership's
Units are then listed. If the Partnership is unable to effect such listing with
respect to Units which the Committee has determined will be issued in
satisfaction of a Redemption Request, then the Redemption Payment shall be made
to such Participant in cash (or a combination of cash and Units that have been
duly listed).
5.4. Participants Not Shareholders or Unitholders.
(1) The existence of the Plan and Grants of Incentive Compensation do
not restrict the right or power of the Partnership or the General Partner
to effect any organizational actions, including, but not limited to,
issuance of securities, changes of capital structure, and mergers or other
reorganizations. Participants will not have any rights of equity or
ownership in either the Partnership or the General Partner as a result of
receiving or holding Grants of Incentive Compensation.
(2) If an event occurs which results in the withdrawal of the General
Partner pursuant to the provisions of Section 13.1 of the Partnership
Agreement (an "Event of Withdrawal"), then within thirty (30) days of an
Event of Withdrawal all unpaid grants of Incentive Compensation shall
become fully redeemable and shall be surrendered to the General Partner by
each Participant, and shall be canceled by the General Partner; provided,
however, each Participant (or the Participant's estate in the event of
death) shall receive a cash Redemption Payment for such Incentive
Compensation from the Partnership in an amount equal to the Incentive
Compensation Value of such canceled Incentive Compensation using as the
Determination Date, the date of Event of Withdrawal as determined by the
Committee.
(3) If an event occurs which results in a Participant's employment with
the General Partner being Involuntarily Terminated, then within the earlier
of the Plan Termination Date or twelve months following an affected
Participant's Involuntary Termination, such Participant may redeem all of
the unredeemed, outstanding Incentive Compensation previously granted to
the Participant which shall become fully redeemable by the Participant as
of the date of such Involuntary Termination.
5.5. Deferral of Redemption Payment. If the Committee shall determine, upon
advice of its independent certified public accountants that prepare the
Partnership's tax returns, that the provisions of Section 162(m) of the Internal
Revenue Code, or any successor or similar provision, limit the deductibility of
the amount of any Redemption Payment to be made to a Participant in any taxable
year (in whatever combination of payment of cash or Units that the Committee has
determined is appropriate to satisfy such Redemption Request), then,
notwithstanding anything herein to the contrary, the Committee may defer the
payment of that portion of the Redemption Payment (whether in cash or in Units,
as determined by the Committee) that the Committee believes would be
non-deductible. Upon making any
such determination that a portion of a Redemption Payment will be deferred, the
Committee will notify the Participant of such action and will make the remaining
portion of the Redemption Payment to the Participant (or the Participant's
estate in the event of death) promptly upon the commencement of the next taxable
year, subject, however, to the Committee's right to continue to defer such
amounts as it shall reasonably determine would be non-deductible for tax
purposes after taking into account all other remuneration which is anticipated
to be paid to such employee during each succeeding taxable year.
Section 6. No Right of Employment. Neither the adoption of the Plan nor a
Grant of Incentive Compensation or crediting of amounts with respect thereto
shall confer on any person the right to continued employment by the Partnership
or General Partner or affect in any way the right of the Partnership or General
Partner to terminate such employment at any time.
Section 7. Prohibition Against Assignment or Encumbrance. Except as
provided in Section 3.2, no right, title, interest or benefit hereunder shall
ever be transferable or liable for or charged with any of the torts or
obligations of a Participant or any person claiming under or through a
Participant, or be subject to seizure by any creditor of a Participant or any
person claiming under or through a Participant. No Participant or any person
claiming under or through a Participant shall have the power to anticipate or
dispose of any right, title, interest or benefit hereunder in any manner until
the same shall have been actually distributed free and clear of the terms of the
Plan.
Section 8. Amendment and Termination of Plan.
8.1. Amendment of Plan. The Board shall have the right to alter or amend
the Plan or any part thereof from time to time, except that the Board of
Directors shall not make any alteration or amendment which would impair the
rights of a Participant without that Participant's consent with respect to
amounts, rights or provisions theretofore granted.
8.2. Early Termination of Plan. Notwithstanding any other provision of the
Plan to the contrary, the Board may, in its sole discretion, terminate the Plan
at any time prior to the Plan Termination Date, and upon such termination all
unpaid Grants of Incentive Compensation shall become fully redeemable and shall
be surrendered to the General Partner by each Participant, and shall be canceled
by the General Partner; provided, however, each Participant (or the
Participant's estate in the event of death) shall receive a Redemption Payment
for such Incentive Compensation in an amount equal to the highest Incentive
Compensation Value using as the Determination Date any day within the previous
twelve (12) months, multiplied by 1.5. If not earlier terminated under the
provisions of this Section 8, the Plan shall terminate as of the Plan
Termination Date.
Section 9. Source of Payments. The Plan shall constitute an unfunded,
unsecured obligation of the Partnership to make payments of
Incentive Compensation benefits from its general assets in accordance with the
provisions of the Plan. Neither the establishment of the Plan nor the allocation
of Incentive Compensation or crediting of Plan Accounts with amounts with
respect thereto shall be deemed to create a trust. By virtue of being a
Participant in the Plan, no Participant shall have any security or other
interest in any assets or equity of the Partnership or General Partner. The
Participant, his or her beneficiary and any other person or persons having or
claiming a right to payments hereunder or to any interest in Incentive
Compensation or this Plan shall rely solely on the unsecured promise of the
Partnership set forth herein, and nothing in this Plan shall be construed to
give the Participant, beneficiary or any other person or persons any right,
title, interest or claim in or to any specific asset, fund, reserve, account or
property of any kind whatsoever owned by the Partnership, General Partner or in
which either may have any right, title or interest now or in the future; but
Participant shall have the right to enforce his claim against the Partnership in
the same manner as any unsecured creditor. Further, the General Partner shall
have no obligation to pay or fund any grant made under the Plan.
Section 10. Plan Binding. This Plan shall be binding upon the Partnership,
its successors and assigns. The Partnership shall not be a party to any merger,
consolidation or reorganization, unless and until the Plan and the Partnership's
obligations hereunder shall be expressly assumed by its successor or successors
or the Board exercises its right pursuant to Section 8.2 to terminate the Plan.
Section 11. Administration of Plan.
11.1. Committee Powers and Duties. The Committee, in good faith, shall
supervise the administration and enforcement of the Plan according to the terms
and provisions hereof and shall have the sole discretionary authority and all
powers necessary to accomplish these purposes, including, but not by way of
limitation, the right, power, authority and duty:
1) to make rules, regulations and procedures for the administration of
the Plan which are not inconsistent with the terms and provisions hereof,
provided such rules, regulations and procedures are evidenced in writing
and copies thereof are delivered to the General Partner;
2) to construe and interpret all terms, provisions, conditions
and limitations of the Plan;
3) to correct any defect, supply any omission, construe any ambiguous
or uncertain provisions, or reconcile any inconsistency that may appear in
the Plan, in such manner and to such extent as it shall deem expedient to
carry the Plan into effect;
4) to employ and compensate and delegate responsibilities to such
accountants, attorneys, investment advisors and other agents and persons
as the Committee may deem necessary or advisable in the proper
and efficient administration of the Plan;
5) to determine all questions and issues relating to eligibility;
6) to determine the amount, manner and time of payment of any
benefits under the Plan and to prescribe procedures to be followed by
Participants in obtaining benefits;
7) to cause to be prepared, filed and distributed, in such manner
as the Committee determines to be appropriate, such information and
material as is required by the reporting and disclosure requirements
of applicable statute or regulation; and
8) to make a determination as to the right of any person to receive
an amount payable under the Plan.
11.2. The General Partner to Supply Information. The General Partner shall
supply full and timely information to the Committee relating to Participants and
such pertinent facts as the Committee may require. When making a determination
in connection with the Plan, the Committee shall be entitled to rely upon the
aforesaid information furnished by the General Partner.
11.3. Reliance. The Committee and the Board shall not be liable for any
decision or action taken in good faith in connection with the administration of
the Plan. Without limiting the generality of the foregoing, any such decision or
action taken by the Board or the Committee in reliance upon any information
supplied to them by the General Partner, the General Partner's legal counsel, or
by the General Partner's independent accountants in connection with the
administration of the Plan shall be deemed to have been taken in good faith.
Section 12. Governing Law. This Plan shall be subject to, and governed by,
the laws of the State of Texas.
Section 13. Construction. In the event any parts of this Plan are found to
be void, the remaining provisions of this Plan shall nevertheless be binding
with the same effect as though the void parts were deleted.
Section 14. Withholding. Any payment provided for under the Plan shall be
made by the Partnership as provided herein and shall be reduced by any amount
required to be withheld by the Partnership under applicable local, state or
federal withholding requirements.
Section 15. Definitions. For the purposes of this Plan, the terms defined
below shall have the following meanings:
"Available Cash" shall have the same meaning as defined in Article II of
the Partnership Agreement.
"Determination Date" shall mean the date as of which Incentive Compensation
Value is calculated.
"Distributions to the General Partner" shall mean, as of a Determination
Date, the sum of Available Cash actually distributed by the Partnership to the
General Partner pursuant to the provisions of
the Partnership Agreement for the preceding four calendar quarters, including,
without limitation, cash distributed to the General Partner pursuant to Section
5.4 of the Partnership Agreement and cash distributed to the General Partner in
its capacity as general partner of the Operating Partnerships, but excluding
cash distributed due to its ownership of Units.
"General Partner" means Kinder Xxxxxx X.X., Inc., a Delaware corporation,
and its successors as general partner of the Partnership.
"Grant" means an award of Incentive Compensation pursuant to a Grant
Agreement.
"Grant Agreement" means a written making of a grant of Incentive
Compensation to a Participant.
"Incentive Compensation" shall mean the interest granted, which shall be
expressed as a percentage of the Incentive Compensation Value to a Participant
pursuant to a Grant made by the Committee pursuant to the provisions of the
Plan.
"Incentive Compensation Value" is a dollar value determined by the formula
ICV = (D X 8) - PAF, where ICV shall mean Incentive Compensation Value, D shall
mean Distributions to the General Partner, and PAF shall mean Participant
Adjustment Factor specified in the individual Grant Agreement. Attached Exhibit
A gives an example of the method of computation of Incentive Compensation Value
as of June 1, 1997 and other hypothetical dates.
"Involuntary Termination" shall have the meaning set forth in Participant's
Grant Agreement.
"Participant" shall mean an eligible employee of the General Partner who
has been selected by the Committee to participate in the Plan and who, with the
Partnership, has entered into a Grant Agreement.
"Participant Adjustment Factor" shall have a value as provided for in a
Participant's Grant Agreement.
"Partnership" shall mean the limited partnership formed and continued
pursuant to the Partnership Agreement; presently, as of the effective date of
this Plan, Xxxxxx Xxxxxx Energy Partners, L.P., a Delaware limited partnership.
"Partnership Agreement" shall mean the Amended And Restated Agreement of
Limited Partnership Of Enron Liquids Pipeline, L.P., dated as of July ___, 1992.
"Permanent Disability" shall mean an injury or illness to or of a
Participant for which the Committee makes a determination that the Participant
is permanently and totally unable to perform his or her duties for the General
Partner as a result of any medically determinable physical or mental impairment
as supported by a written medical opinion satisfactory to the Committee by a
physician selected by the Committee, or if earlier, the date the Participant
becomes
entitled to receive long term disability benefits under the long term disability
plan, if any, sponsored by the General Partner for its employees generally.
"Plan Termination Date" shall mean January 1, 2007.
"Redeemable Portion" shall mean that portion of the Participant's Grant of
Incentive Compensation that has vested and is then available for redemption
pursuant to the terms of the Participant's Grant Agreement.
"Redemption Payment" shall mean a payment of Incentive Compensation Value
according to the provisions of the Plan.
"Units" or a "Unit" of the Partnership shall have the same meaning as
"Unit" is defined in the Partnership Agreement.
In addition, unless the context indicates otherwise, capitalized terms used
herein but not otherwise defined shall have the same meaning as assigned to such
term in the Partnership Agreement.
Executed this 17th day of July, 1997
XXXXXX XXXXXX ENERGY PARTNERS, L.P.
By: Kinder Xxxxxx X. X., Inc., its
General Partner
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Chairman
Attest:
/s/ Xxxxx X. Xxxxx
Secretary
