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EXHIBIT 10(x)
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, is made and entered into this 21st day of
March, 1996, by and between K N Energy, Inc., a Kansas corporation (the
"Company") and Xxxxxx X. Xxxxx ("Executive").
W I T N E S S E T H:
WHEREAS, the Company wishes to employ Executive and Executive wishes
to take advantage of the business opportunities offered by the Company; and
WHEREAS, the Company wishes to assure itself of the services of
Executive for the period provided in this Agreement, and Executive is willing
to serve in the employ of the Company for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, and intending to be
legally bound hereby, the parties hereto agree as follows:
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Section 1. Employment. The Company agrees to employ Executive, and
Executive agrees to be employed by the Company, for the period stated in
Section 3 herein and upon the other terms and conditions herein provided.
Section 2. Position and Duties. During the period of Executive's
employment hereunder and except for temporary illness and vacation periods in
accordance with the Company's policies for executive employees as modified by
this Agreement, Executive shall devote all of the Executive's business time,
attention, skill, and efforts to the faithful performance of Executive's duties
hereunder. Executive shall be an executive officer of K N Energy Services,
Inc., a wholly owned subsidiary of the Company, and shall use his best efforts
to perform such duties as are necessary to carry out Executive's
responsibilities as Senior Vice President - Communications and Marketing for K
N Energy Services, Inc., a wholly owned subsidiary of the Company, including
such duties as may be assigned to Executive from time to time by the President
and Chief Operating Officer of K N Energy, Services, Inc. Executive shall have
responsibility, and commensurate authority for development of communications
tools, strategies and services and marketing of products and services in
various business segments of the Company including retail consumer and total
energy management. Executive shall also have such communications, marketing
and other responsibilities as requested by the President and Chief Operating
Officer of K N Energy Services, Inc.
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Section 3. Term of Employment. The period of Executive's employment
under this Agreement shall commence as of April 1, 1996. It shall continue,
subject to the other provisions of this Agreement, until April 1, 1998.
Section 4. Base Salary. For all services rendered by Executive in
any capacity during Executive's employment under this Agreement, including,
without limitation, services as an executive, officer, director, or member of
any committee of the Company or of any subsidiary, affiliate or division
thereof, the Company shall pay Executive a base salary at the annual rate of
not less than $160,000. Such base salary shall be payable in accordance with
the customary executive payroll practices of the Company, but in no event less
frequently than monthly; provided, however, that Executive shall not be
entitled to any salary while receiving payments under any written policy with
respect to disability which may be adopted by the Company and then in effect.
Executive's base salary shall be reviewed on November 1, 1996, and thereafter
at the same time and in the same manner as other officers of the Company and
may be increased from time to time if the Company determines that an increase
is appropriate in its sole discretion.
Section 5. Benefits. Executive shall receive such sick leave,
disability pay, retirement benefits, savings plans, 401(k) plans, health
insurance and other benefits in addition to salary and bonuses as are provided
to, and on the same basis, as the other executive management employees of the
Company.
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Section 6. Vacation. Executive shall receive four weeks of paid
vacation per year.
Section 7. Reimbursement of Expenses. The Company shall pay or
reimburse Executive for all reasonable, ordinary and necessary travel and other
expenses incurred by Executive in the performance of Executive's obligations
under this Agreement, in accordance with the Company's travel and expense
reimbursement policies for executive management employees.
Section 8. Relocation Costs. Executive shall receive the Company's
standard relocation allowance in an amount equal to 20% of Executive's Base
Salary, pursuant to the Company's Relocation Policy. In addition, Executive
shall receive a housing allowance and other relocation benefits in accordance
with the Company's relocation policies for executive management employees,
specifically including all costs associated with the move of the Executive's
personal and household belongings, temporary housing allowance for a period not
to exceed three months, all title, legal, appraisal, survey and related costs
relating to the sale at Executive's current residence and purchase of a new
residence, reimbursement of the cost of Executive and his spouse making not
more than two house hunting trips and the cost of transportation and lodging
for the Executive and his family members during the actual time of the move.
Each of the foregoing amounts, including the relocation allowance, will be
"grossed up" assuming a combined state and federal tax rate of 35%. To the
extent
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Executive is unable to sell his existing residence in Alpharetta, Georgia prior
to April 1, 1996, the Company shall purchase or cause to be purchased, for cash
such residence at the higher of (i) Executive's cost of such residence or (ii)
the average of two appraisals of such residence. The purchase will be closed,
and the purchase price paid to Executive in immediately available funds, on a
date to be agreed to between the parties not later than May 31, 1996.
Following completion of Executive's move, Executive will not be required to
relocate without Executive's consent.
Section 9. Incentive Bonus. On an annual basis, the Compensation
Committee of the Board of Directors of the Company shall review Executive's
performance, the results of the Company for the prior year and such other
factors as are deemed to be appropriate from time to time and determine what
incentive bonus, if any, is appropriate to be paid to Executive. Such
incentive bonus shall be awarded in accordance with the terms of the Company's
Executive Incentive Plan and shall be based on the Level III Benefits with a
midpoint base salary comparison of $200,000, all subject to approval of the
Compensation Committee of the Board of Directors. During the first year of
this Agreement, Executive shall be paid at the maximum rate allowable under
Level III of the Executive Incentive Plan and such payment shall not be pro-
rated for service in 1996. The Executive Incentive Plan Level III Benefits
provisions shall not be modified as they apply to Executive in any manner
materially detrimental to Executive except for modifications that apply
similarly to all executives of the Company who participate in the Company's
Executive Incentive Plan based on Level III Benefits.
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Section 10. Restricted Stock. On April 1, 1996 Executive shall be
issued 3,000 shares of Restricted Stock, subject to performance-based criteria
set forth in a restricted stock agreement to be agreed to by Executive and the
Company. Vesting will accrue at the rate of 1,000 shares on April 1, 1996 and
1,000 shares each April 1 thereafter for the next two years. Any dividends
upon restricted stock which has not vested shall be held by the Company until
the stock vests. Withholding taxes on compensation earned through the vesting
of the 3,000 shares shall be paid by the Company and held as a receivable
payable to Executive, on a full recourse basis. The taxes will be invoiced to
Executive when the shares are distributed.
Section 11. Stock Options. On April 1, 1996 the Company shall grant
to Executive 10,000 Incentive Stock Options pursuant to the Company's Long Term
Incentive Compensation Plan. Vesting will accrue at the rate of 2,000 shares
on April 1, 1996 and 2,000 shares each April 1 thereafter for the next four
years. Any of such options that are not qualified Incentive Stock Options for
federal income tax purposes will be covered by a separate option agreement.
The option price shall be the fair market value of the stock on the date such
options are granted.
Section 12. Signing Bonus. The Company shall award to Executive a
signing bonus of $27,000 payable on April 1, 1996.
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Section 13. Severance Agreement. Executive shall execute a Key
Employee Severance Agreement similar to such agreements signed by other
executive management employees of the Company, provided, however, that if the
failure of the Company to renew this Agreement pursuant to Section 14(b) occurs
as a result of a change in control of the Company, as that term is defined in
the Company's Articles of Incorporation, such failure shall be deemed a
termination for purposes of the Key Employee Severance Plan.
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Section 14. Termination.
(a) For cause. The Company may at any time, in its sole
discretion, terminate the employment of Executive hereunder, for cause, by
written notice to Executive. For purposes hereof, "cause" shall mean (i) a
material breach of this Agreement by Executive which causes material harm to
the Company (ii) gross negligence or willful misconduct by Executive in the
performance of his duties under this Agreement which causes material harm to
the Company (iii) conviction of a felony; or (iv) conviction of a misdemeanor
involving moral turpitude.
(b) Mutual. Either party may terminate this Agreement
effective at the end of the initial two-year term by written notice to the
other delivered on or before the date two weeks prior to the end of such
initial term.
(c) Obligations following termination for cause. In the
event of termination of Executive's employment by the Company pursuant to
paragraph 14(a) neither party shall have any further obligations to the other
under this Agreement except the Company's obligations under paragraph 14(e),
obligations that accrued prior to the date of termination and Executive's
obligations under Section 15 hereof.
(d) Obligations following non-renewal. Upon a
termination of Executive's employment by the Company at the end of the initial
term, the Company shall have no further obligations to Executive, except as set
forth in Section 14(e) hereof. In the event Executive materially
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breaches any of his obligations under Section 15 hereof the Company shall be
entitled to discontinue such benefits.
(e) Insurance and Stock. Upon any termination of
Executive's employment hereunder, the Company shall (i) permit Executive to
continue insurance benefits at Executive's expense in accordance with the terms
of the Company's benefit plans and insurance policies, and applicable law; (ii)
deliver to Executive certificates representing shares of the Company's stock to
which Executive's rights under any restricted stock plan or agreement vested
prior to the date of termination, and (iii) allow Executive to exercise, in
accordance with the terms of applicable stock option plans and agreements, any
stock options which vested prior to the date of termination.
Section 15. Non-Competition Covenant. Executive shall not, during the
term of Executive's employment by the Company and for the one-year period
immediately following termination of Executive's employment by the Company
pursuant to paragraphs 14(a) or by either party pursuant to paragraph 14(b),
(a) act as an officer, director, employee, partner, or agent of, or invest in
or lend money to, or own, directly or indirectly, any interest in, or
participate in the control of, any corporation, partnership, joint venture or
other business organization which is engaged in the provision of any product or
services which may be offered or sold by the Company from time to time in the
future prior to the end of Executive's employment; (b) solicit from any
employee or consultant of the Company, or supply to any person, information
pertaining to any customer or customer prospect of the
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Company or; (c) interfere with the contractual relationship between the Company
and any customer of the Company. For purposes of this Agreement, "Customer"
shall refer, in addition to those persons to which services are sold by the
Company, to those persons with which the Company has established strategic
marketing, services or other alliances.
Notwithstanding anything to the contrary in clause (a) of the first
sentence of this Section 15, Executive shall be permitted, at any time after
any termination of Executive's employment with the Company:
(i) to invest in and own not more than 1% of the outstanding stock
of any publicly traded corporation;
(ii) to have any of the relationships described in clause (a) with
any business organization engaged primarily in the
telecommunications business;
(iii) to have any of the relationships described in clause (a) with
any business that is not primarily a utility that is pursuing
a strategy to integrate services; and
(iv) to have any of the relationships described in clause (a) with
any business organization that is not marketing to consumers
in the same geographic areas where the Company offers and
sells products and services to consumers as of the effective
date of termination of Executive's employment under this
Agreement.
Executive (i) recognizes the significance of the provisions of this
Section 15 and that they are required for the protection of legitimate business
interests of the Company; (ii) that the Company
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would not, in the absence of such provisions, employ Executive or entrust to
Executive the significant management responsibilities and customer development
and customer satisfaction responsibilities for major customers of the Company
which will be entrusted to Executive; (iii) there will be no practical way to
separate the portions of the Company's information which is confidential
information (as hereinafter defined) created by the Company's investment and
that information which is discernible from other sources; (iv) acknowledges
that the provisions of this Section 15 are reasonable in terms or duration,
geography, and types and limits of activities; and (v) acknowledges that the
Company will be making major investments based to a considerable degree upon
Executive's advice in reliance upon Executive's covenant not to compete
contained in this Section 15. If the covenant not to compete in this Section
15 is found by any court to be overly-broad in extent, as to the time period or
as to the geographic area designated, the parties agree that it shall
nevertheless be effective, but it shall be deemed to be amended to the extent
determined by such court to be reasonable and enforceable to the greatest
possible extent, and as so amended, shall be fully enforced.
Section 16. Confidential Information. Executive shall not, except in
the performance of Executive's duties hereunder and for the benefit of the
Company, disclose or reveal to any unauthorized person any confidential
information of the Company relating to the Company, to its subsidiaries or
affiliates, or to any of the businesses operated by them, and Executive
confirms that such information constitutes the exclusive property of the
Company.
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Section 17. Company's Remedies Upon Breach. Executive acknowledges
that the Company's remedy at law for a breach by Executive of the provisions of
Sections 15 and 16 hereof will be inadequate. Accordingly, in the event of the
breach or threatened breach by Executive of any of Sections 15 and 16 hereof,
the Company shall be entitled to injunctive relief in addition to any other
remedy to which it may be entitled.
Section 18. Tax Withholding. The Company may withhold from any
benefits payable under this Agreement all federal, state, city or other taxes
as shall be required pursuant to any law or governmental regulation or ruling.
Section 19. Nonassignability. This Agreement shall inure to the
benefit of, and be binding upon, Executive and Executive's personal or legal
representatives, executives, administrators, successors, heirs, distributees,
devisees and legatees, and the Company, and its successors and assignees,
provided, however, that neither Company nor Executive may assign any of
Executive's or its rights or benefits hereunder without the prior written
consent of the other.
Section 20. No Attachment. Except as required by law, the right to
receive payments under this Agreement shall not be subject to anticipation,
commutation, alienation, sale, assignment,
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encumbrance, charge, pledge, or hypothecation or to execution, attachment, levy
or similar process or assignment by operation of law, and any attempt,
voluntary or involuntary, to effect any such action shall be null, void ab
initio and of no effect.
Section 21. Amendment of Agreement. This Agreement may not be
modified or amended except by an instrument in writing signed by the parties
hereto.
Section 22. No Implied Waiver. No forbearance from enforcing any
right hereunder shall be deemed to be a waiver of such right. No provision of
this Agreement shall be deemed to have been waived, nor shall there by any
estoppel against the enforcement of any provision of this Agreement, except by
written instrument of the party charged with such waiver or estoppel. No such
written waiver shall be deemed a continuing waiver unless specifically stated
therein, and each such waiver shall operate only as to the specific term or
conditions waived and shall not constitute a waiver of such term or condition
for the future or as to any act other than that specifically waived.
Section 23. Notice. For the purposes of this Agreement, notices and
all other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when received in fact.
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Section 24. Severability; Enforceability. If, for any reason, any
provision of this Agreement is held invalid, such invalidity shall not affect
any other provision of this Agreement not held so invalid, and each such other
provision shall to the full extent consistent with law continue in full force
and effect. If any provision of this Agreement shall be held invalid in part,
such invalidity shall in no way affect the rest of such provision not held so
invalid, and the rest of such provision, together with all other provision of
this Agreement, shall to the full extent consistent with law continue in full
force and effect.
Section 25. Headings. The headings of sections and paragraphs herein
are included solely for convenience of reference and shall not control the
meaning or interpretation of any of the provisions of this Agreement.
Section 26. Governing Law This Agreement has been executed and
delivered in the State of Colorado, is intended to be performed primarily
within such State, and its validity, interpretation, performance, and
enforcement shall be governed by the laws of such State.
Section 27. Entire Agreement. This instrument contains the entire
agreement of the parties with respect to the subject matter hereof and shall
supersede all other prior written or oral
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representations and agreements, if any, between the parties with respect
thereto; and neither party is relying upon such prior representations or
agreements in entering into this Agreement.
Section 28. Counterparts. This Agreement may be executed in as many
counterparts as may be deemed necessary and convenient, and by the different
parties on separate counterparts, each of which shall be deemed an original but
all of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and Executive have caused this
Agreement to be executed as of the day and year first above written.
K N ENERGY, INC.
By
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Xxxxxx X. Xxxxxxxx
Vice President
EXECUTIVE
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Xxxxxx X. Xxxxx
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