EXECUTIVE EMPLOYMENT AGREEMENT
This
EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into
effective as of April 1, 2008 (the “Effective Date”), by and between Regency GP
LLC, a Delaware limited liability company (together with its successors and
assigns permitted hereunder, the “Company”), and Xxxxx X. Xxxxxx (the
“Executive”).
WHEREAS,
the Company and Executive desire to provide for Executive’s employment by the
Company commencing upon the Effective Date on the terms and conditions set forth
herein.
NOW,
THEREFORE, THE PARTIES HERETO HEREBY AGREE AS FOLLOWS:
1. TERM.
Subject
to Section 3, the Company hereby agrees to employ Executive, and Executive
hereby agrees to be employed by the Company, in accordance with the terms and
provisions of this Agreement. The term of this Agreement (the “Term”)
shall be the period commencing on the Effective Date and ending on the second
anniversary of the Effective Date; provided, however, that commencing on such
second anniversary date of the Effective Date, and on each anniversary of such
date occurring thereafter, the Term automatically shall be extended for one
additional year to the next anniversary of the Effective Date unless at least
365 days prior to the ensuing expiration date, the Company or Executive shall
have given written notice to the other that it or he, as applicable, does not
wish to extend this Agreement (a “Non-Renewal Notice”). If the Term
ends due to a non-renewal, Executive shall continue after such termination as an
“at will employee.” Notwithstanding, the foregoing, in the event a
Change in Control occurs during the Term, the Term automatically shall be
extended to the second anniversary of the effective date of such Change in
Control. For purposes of this Agreement, a “Change in Control” means
and shall be deemed to have occurred only upon the date that the GE EFS Group
ceases to be the “beneficial owner” (as such term is defined in Rule 13d-3 and
Rule 13d-5 of the Securities Exchange Act of 1934, as amended), directly or
indirectly, of at least 50% of the combined voting power of the then outstanding
voting securities of the Company. For purposes of this Agreement, “GE
EFS Group” means Regency GP Acquirer L.P., a Delaware limited partnership,
Regency LP Acquirer LP, a Delaware limited partnership, and any Person (as
defined in Section 9(e)(iv)) that, directly or indirectly, controls Regency GP
Acquirer LP or Regency LP Acquirer LP and their respective directors, officers,
shareholders, members, managers, representatives of management committees and
employees (and members of their respective families and trusts for the primary
benefit of such family members).
2. TERMS OF
EMPLOYMENT.
(a)
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Position
and Duties.
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(i) During
the Term, Executive shall serve as the Chief Executive Officer and President of
the Company and, in so doing, shall report to the Board of Directors or
comparable managing body of the Company (the “Board”). In addition,
Executive shall be appointed as a member of the Board and, if elected, serve as
the Chairman of the Board. Executive shall have supervision and
control over, and responsibility for, such management and operational functions
of the Company currently assigned to such positions, and he shall have such
other powers and duties as may from time to time be prescribed by the Board, so
long as such powers and duties are reasonable and customary for the Chief
Executive Officer of an enterprise or division comparable to the
Company.
(ii) During
the Term, Executive agrees to serve, if elected or appointed to any such
positions, as a member of the board of directors of each subsidiary and
affiliate of the Company, and as an officer of each subsidiary and affiliate of
the Company; provided, however, that Executive is indemnified for serving in any
and all such capacities in a manner acceptable to the Company and
Executive. Executive agrees that he shall not be entitled to receive
any compensation for serving as a member of the Board or as an officer or
director of any other Person as provided in this Section 2(a)(ii) other than the
compensation to be paid to Executive pursuant to this Agreement or any other
written agreement between the Company and Executive.
(iii) During
the Term, and excluding any periods of vacation and sick leave to which
Executive is entitled and periods of Disability (as defined in Section 3(a)),
Executive agrees to devote substantially all of his business time and attention
to the business and affairs of the Company and perform his lawful duties and
responsibilities in good faith. During the Term, it shall not be a
violation of this Agreement for Executive to manage his personal investments, so
long as such activities do not materially interfere with the performance of
Executive’s duties and responsibilities under this
Agreement. Executive agrees that, without the written approval of the
Board he shall not serve on the board or committee of any Person (other than
charitable non-profit organizations) or engage in any other business activities
without the prior consent of the Board, which consent shall not be unreasonably
withheld.
(iv) The
parties expressly acknowledge that any performance of Executive’s duties and
responsibilities hereunder shall necessitate, and the Company shall provide,
access to and the disclosure of Confidential Information (as defined in Section
6(a) below) to Executive and that Executive’s duties and responsibilities shall
include the development of the Company’s goodwill through Executive’s contacts
with the Company’s customers and suppliers. Such access to and
disclosure of Confidential Information by the Company to Executive, and such
development of goodwill by Executive on behalf of the Company, shall commence
immediately upon the Effective Date.
(b)
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Compensation
During the Term.
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(i) Base
Salary. Executive shall receive an annual base salary (the “Annual
Base Salary”), which shall be paid in accordance with the customary payroll
practices of the Company, at the rate of $475,000 (prorated for any partial
calendar year of the Term). The Annual Base Salary shall be reviewed
by the Board (or the compensation committee thereof) at least as often as the
compensation of other senior executives of the Company is reviewed, and may be
increased (but not decreased below the amount set forth in the first sentence of
this Section 2(b)(i)) at any time in the sole discretion of the Board (or the
compensation committee thereof). Any increase in Annual Base Salary
shall not serve to limit or reduce any other obligation to Executive under this
Agreement. The term “Annual Base Salary” as utilized in this
Agreement shall refer to the Annual Base Salary as then in
effect. Notwithstanding anything in this Agreement to the contrary,
amounts paid to Executive under the Company’s short-term disability plan or
policy shall reduce the amount of Annual Base Salary otherwise then payable to
Executive.
(ii) Bonuses. Executive
shall be eligible to receive an annual performance bonus (a “Bonus”) in
accordance with the annual bonus plan of the Company for executives (the “Bonus
Plan”). The Bonus Plan shall have objective performance standards
established annually by the Board. Executive has a targeted bonus
equal to his Annual Base Salary, if such performance standards are
achieved. Without regard to the standards achieved, for the 2008
calendar year Executive shall receive a Bonus of not less than $400,000 and for
the 2009 calendar year a Bonus of not less than $200,000. The Bonus
shall be payable on the first day of the first calendar month after the
determination of the extent to which the Company achieved such performance
targets for the calendar year to which the Bonus relates, but not later than the
March 15 following the completion of such calendar year.
(iii) Incentive,
Savings and Retirement Plans. Executive shall be entitled to
participate in all incentive, savings and retirement plans, practices, policies
and programs applicable generally to other executives of the
Company.
(iv) Welfare
Benefit Plans. Executive and Executive’s family shall be eligible to
participate in all employee welfare benefit plans, practices, policies and
programs provided by the Company to the extent applicable generally to other
executives of the Company.
(v) Expenses. Executive
shall be entitled to receive prompt reimbursement for all reasonable business
expenses incurred by Executive in accordance with the policies, practices and
procedures of the Company applicable generally to executives.
(vi) Vacation
and Holidays. Executive shall be entitled to 27 days of paid vacation
time each calendar year (prorated for any partial calendar year of employment),
accrued in accordance with the Company’s vacation policy, in addition to those
days designated as paid holidays in accordance with the plans, policies,
programs and practices of the Company for its executive
officers. Unused vacation time may not be carried over to the next
year.
(vii) Perquisites. Executive
shall be entitled to receive (in addition to the benefits described above) such
perquisites and fringe benefits appertaining to his position in accordance with
any practice established by the Board. Executive shall be furnished
with all such facilities and services suitable to his position and adequate for
the performance of his duties.
(viii) LTIP
Awards. As of the Effective Date, the Board will grant to Executive
the following awards under the Regency Gas Long Term Incentive Plan
(“LTIP”): a grant of 56,300 Restricted Units substantially in the
form of the grant agreement attached hereto as Attachment A; and a grant of
50,000 Restricted Units substantially in the form of the grant agreement
attached hereto as Attachment B.
(ix) Additional
Award. Upon Executive providing proof from his former employer that,
as a result of his resignation from such employer, Executive has forfeited any
portion of the benefits he had accrued under his former employer’s Executive
Retirement Plan, Supplemental Retirement Plan or Supplemental Savings Plan, the
Board will grant to Executive up to an additional 7,500 Restricted Units under
the LTIP effective as of April 1, 2008, under the same terms and conditions of
this Agreement and Attachment A. The total number of Restricted Units
granted pursuant to this Section 2(b)(ix) shall be equal to (a) 7,500,
multiplied by (b) a percentage derived by dividing the dollar amount forfeited
by Executive at the date of his termination by $225,000.
(x) Allowances
and Travel Expenses. The Company shall promptly pay or reimburse
Executive, on a grossed-up basis (as provided below), for the following expenses
he reasonably incurs in commuting to and from work between Houston and
Dallas: (1) the cost of airplane tickets (for travel that is
consistent with the Company’s policy) and for the actual vehicle mileage for
trips to and from Houston at the Company mileage rate and any direct automobile
expenses incurred on such trips, and (2) the cost of staying in a hotel in
Dallas (or other similar temporary residence) The reimbursement for
the cost of hotel expenses in Dallas shall be limited to a two-month period
following the Effective Date. The grossed-up amount shall be
determined by dividing actual expenses by a factor of
..63. Additionally, the Company shall pay monthly to Executive a
monthly living allowance of $4,500, less applicable taxes and withholdings,
until the date Executive and his family’s permanent residence is within 50 miles
of the Company’s headquarters.
(xi) Reimbursements. Notwithstanding
anything to the contrary contained herein, and whether or not this Agreement has
been terminated for any reason, any reimbursement by the Company to Executive of
any costs and expenses under this Agreement shall be made by the Company upon or
as soon as practicable following the receipt of supporting documentation
reasonably satisfactory to the Company, but in no event later than the close of
Executive’s taxable year following the taxable year in which the cost or expense
is incurred by Executive. The expenses incurred by Executive in any
calendar year that are eligible for reimbursement under this Agreement shall not
affect the expenses incurred by Executive in any other calendar year that are
eligible for reimbursement hereunder and Executive’s right to receive any
reimbursement hereunder shall not be subject to liquidation or exchange for any
other benefit.
(xii) Indemnification/D&O
Insurance. Executive shall be indemnified and receive advances of
expenses from the Partnership in accordance with Section 7.7 of the Agreement of
Limited Partnership of Regency Energy Partners LP, and Section 9.1 of the
Limited Liability Company Agreement of the Company, each as amended from time to
time. The Company shall, or shall cause the Partnership to, maintain
D&O Insurance coverage at levels consistent with industry
standards.
3. TERMINATION
OF EMPLOYMENT.
(a) Death or
Disability. Executive’s employment shall terminate automatically upon
Executive’s death during the Term. If a Disability occurs during the
Term, the Company may give to Executive written notice in accordance with
Section 12(b) of its intention to terminate Executive’s
employment. In such event, Executive’s employment with the Company
shall terminate effective on the 30th day
after such notice is given to Executive (the “Disability Effective Date”),
provided that, within the 30 days after such receipt, Executive shall not have
returned to the full-time performance of Executive’s duties. For
purposes of this Agreement,
“Disability”
shall mean Executive’s inability to perform his duties and obligations
hereunder, with or without reasonable accommodation, for the period contained in
the Company’s effective long-term disability plan (“LTD Plan”) and in the event
no such LTD Plan exists, such period shall be 180 consecutive days, due to a
mental or physical incapacity as determined by a physician mutually selected by
the Company and Executive or his representative. Notwithstanding
anything in this Agreement to the contrary, in the event of any incapacity or
Disability of Executive, the Company may, for the period of such incapacity or
Disability, assign Executive’s duties to any other employee of the Company or
may engage or hire a third party to perform such duties and any such action
shall not be deemed “Good Reason” for Executive to terminate this Agreement
pursuant to Section 3(c).
(b) Cause. The
Board may terminate Executive’s employment during the Term for Cause or without
Cause. For purposes of this Agreement, “Cause” shall mean (i) a
breach by Executive of Executive’s obligations under Section 2(a) (other than as
a result of physical or mental incapacity or other Disability) which constitutes
a material nonperformance by Executive of his obligations and duties under
Section 2(a); (ii) commission by Executive of an act of fraud upon, or willful
misconduct with respect to, the Company or an affiliate; (iii) a material breach
by Executive of Section 6 or a breach by Executive of Section 7, 9 or 11 hereof;
(iv) the conviction of Executive of any felony or a misdemeanor involving moral
turpitude, or a plea by Executive of other than not guilty to a felony or such a
misdemeanor; (v) conduct that results in the Company or any of its affiliates
suffering a public disgrace or public disrepute, or (vi) the failure of
Executive to carry out, or comply with, in any material respect, any directive
(in compliance with law) of the Board consistent with the terms of this
Agreement. Notwithstanding the foregoing, no act or omission shall
constitute “Cause” for purposes of this Agreement unless the Board provides
Executive written notice clearly and fully describing the particular acts or
omissions which the Board reasonably believes in good faith constitutes “Cause”
and, with respect to acts or omissions in clauses (i) and (vi), Executive fails
to remedy such acts or omissions within 10 days of his receipt of such
notice. Executive shall have the right to contest a determination of
Cause by the Board by requesting arbitration in accordance with the terms of
Section 12(h) hereof, but such request shall not affect the Company’s right to
terminate or to have terminated Executive’s employment hereunder.
For
purposes of this Agreement, “without Cause” shall mean a termination of
Executive’s employment during the Term by the Board for any reason other than a
termination for Cause (it being understood that a termination resulting from
Executive’s death or Disability shall not constitute a termination “without
Cause”).
(c) Good
Reason. Executive’s employment may be terminated during the Term by
Executive for Good Reason or without Good Reason; provided, however, that
Executive may not terminate his employment for Good Reason unless (i) Executive
has given the Company prior written notice of his intent to terminate his
employment for Good Reason, which notice must be given within 30 days of the
event alleged to constitute Good Reason and must specify the facts and
circumstances constituting Good Reason, and (ii) the Company has 30 days after
its receipt of such notice to remedy the event if and to the extent the event is
described under Section 3(c)(i) and (iii). If the Company has not
remedied such event constituting Good Reason under Section 3(c)(i) and (iii) by
the end of such 30-day period, Executive’s employment shall be terminated by
Good Reason on the 31st
day. If the Company timely remedies such event,
Executive’s
employment shall continue. For purposes of this Agreement, “Good
Reason” shall mean:
(i) a
material reduction in Executive’s authority, duties or responsibilities as
contemplated by Section 2(a), excluding for this purpose (A) an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company after receipt of notice thereof given by Executive), (B)
any diminution during any period of Executive’s incapacity or Disability, and
(C) the failure to elect or re-elect Executive as Chairman of the Board or the
removal of Executive as the Chairman of the Board;
(ii) a
reduction in Executive’s Annual Base Salary;
(iii) without
limiting the foregoing, any other material breach by the Company of a material
provision of this Agreement; or
(iv) the
relocation of the Company’s corporate office to any location outside of
Texas.
(f) Notice of
Termination. Any termination by the Company for Cause or without
Cause, or by Executive for Good Reason or without Good Reason, shall be
communicated by Notice of Termination to the other party hereto given in
accordance with Section 12(b). For purposes of this Agreement, a
“Notice of Termination” means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon and (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of Executive’s employment under the provision
so indicated. The failure by Executive or the Company to set forth in
the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of Executive or the
Company hereunder or preclude Executive or the Company from subsequently
asserting such fact or circumstance in enforcing Executive’s or the Company’s
rights hereunder.
(g) Date of
Termination. “Date of Termination” means (i) if Executive’s
employment is terminated by his death, the date of his death; (ii) if
Executive’s employment is terminated by a Disability, as specified in Section
3(a); (iii) if Executive’s employment is terminated by the Company for Cause,
then the date specified in the Notice of Termination; (iv) if Executive’s
employment is terminated by Executive for Good Reason, as specified in Section
3(c); and (v) if Executive’s employment is terminated for any other reason, the
effective date of termination as stated in the Notice of Termination, which
shall not be before the expiration of the 60-day period following the date on
which the Notice of Termination is given, unless mutually agreed to by the
parties. Effective upon his termination of employment for any reason,
Executive hereby resigns as an officer and director of the Company and each
affiliate for which he may serve as an officer or a director.
4. OBLIGATIONS
OF THE COMPANY UPON TERMINATION.
(a) Good
Reason; by the Company Other Than for Cause, Death or Disability. If,
during the Term, (i) the Company shall terminate Executive’s employment other
than for Cause (it being understood that a termination resulting from
Executive’s death or Disability shall not
constitute
a termination “other than for Cause,” which such events are addressed in Section
4(b)) or (ii) Executive shall terminate his employment for Good
Reason:
(i) The
Company shall pay to Executive (or the executor of his estate or representative,
if applicable), within 10 days after the Date of Termination, a lump sum in cash
equal to (1) Executive’s Annual Base Salary through the Date of Termination to
the extent earned but not yet paid, (2) the unpaid Bonus due Executive, if any,
with respect to the calendar year immediately preceding the calendar year in
which Executive’s employment is terminated, (3) the value of any vacation
accrued, but not taken, in the calendar year in which Executive’s employment is
terminated, and (4) the amount due for any reimbursable expenses incurred by
Executive prior to the Date of Termination (together, the “Accrued
Obligations”).
(ii) The
Company shall pay to Executive (or the executor of his estate or representative,
if applicable), within the 60-day period provided in Section 4(d) below, a lump
sum in cash (less applicable taxes) equal to four times Executive’s Annual Base
Salary; provided, however, if the Company, in its sole discretion, elects to
waive the non-competition restrictions contained in Section 9(a)(i) through
9(a)(iii) and Section 9(b), the amount to be paid Executive shall be reduced to
two times his Annual Base Salary; provided further, however, if Executive’s Date
of Termination occurs within three months preceding or on or within two years
following a Change in Control, then the amount of severance payable pursuant to
this Section 4(a)(ii) shall be four times Executive’s Annual Base Salary,
whether or not the Company waives the non-competition restrictions in Section 9
(with respect to a Date of Termination that occurs within the three-month period
preceding a Change in Control, if Executive has already been paid pursuant to
this Section 4(a)(ii) before the Change in Control occurs and Executive is
entitled to an additional amount pursuant to this Section 4(a)(ii), such
additional amount shall be paid within 10 days of the Change in
Control).
(iii) Subject
to Section 4(d), if Executive (and the eligible members of his family) timely
elect COBRA continuation coverage, the monthly premium for the first 12 months
of such COBRA continuation coverage shall be the monthly premium charged to an
active employee for similar coverage.
(b) Death or
Disability. If Executive’s employment is terminated by reason of
Executive’s death or Disability during the Term, the Company shall pay to
Executive or his legal representatives, as applicable, the Accrued Obligations
in a lump sum in cash within 10 days after the Date of Termination and, if such
termination is a result of Executive’s Disability, until the earlier of such
time as Executive reaches age 65 or dies, if the LTD Plan limits the disability
payments to an amount less than 60% of Executive’s Annual Base Salary, the
Company shall pay to Executive on a monthly basis the difference between the
disability payments Executive actually receives under the LTD Plan and the
disability payments Executive would have received thereunder but for such
limitation. The Company shall have no further obligations to
Executive or his legal representatives under this Agreement.
(c) Cause; by
Executive Other than for Good Reason. If, during the Term, the
Company terminates Executive’s employment for Cause or Executive terminates his
employment without Good Reason, the Company shall have no further obligations to
Executive
under
this Agreement other than for the payment of any Accrued Obligations within 10
days after the Date of Termination.
(d) Release. Notwithstanding
anything in this Agreement to the contrary, Executive shall not be entitled to
receive the payments provided under Sections 4(a)(ii) and (a)(iii) of this
Agreement unless, within 60 days of his Date of Termination, (i) he executes a
general release and waiver agreement in a form reasonably acceptable to the
Company and (ii) such release has become nonrevocable by Executive.
(e) 409A
Delay in Payments. Notwithstanding anything in this Agreement to the
contrary, if on the date of Executive’s separation from service Executive is a
“specified employee,” as defined in Section 409A of the Code, then all or a
portion of any payments, benefits, or reimbursements under this Agreement that
would be subject to the additional tax provided by Section 409A(a)(1)(B) of the
Code if not delayed as required by Section 409A(a)(2)(B)(i) of the Code shall be
delayed until the first business day of the seventh month following his
separation from service date (or, if earlier, Executive’s date of death) and
shall be paid to Executive in a lump sum (without interest) on such
date.
5. FULL
SETTLEMENT, MITIGATION.
In no
event shall Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to Executive under any of the
provisions of this Agreement, and such amounts shall not be reduced whether or
not Executive obtains other employment. Neither Executive nor the
Company, shall be liable to the other party for any damages in addition to the
amounts payable under Section 4 arising out of the termination of Executive’s
employment prior to the end of the Term; provided, however, that the Company
shall be entitled to seek damages for any breach by Executive of Sections 6, 7,
9 or 11 or his criminal misconduct.
6. CONFIDENTIAL
INFORMATION.
(a) Executive
acknowledges that the Company and its affiliates have trade, business and
financial secrets and other confidential and proprietary information,
observations and data, including information concerning acquisition
opportunities in or reasonably related to the Company’s business of which
Executive will become aware during the Term (collectively, the “Confidential
Information”). As defined herein, Confidential Information shall not
include information that (i) is already in Executive’s possession as of the
Effective Date and which information is not known by Executive to be subject to
another confidentiality agreement with the Company, (ii) has previously become
available in the public domain, (iii) is required to be disclosed pursuant to
any applicable state, federal or other laws, including securities laws, or (iv)
becomes available to Executive on a non-confidential basis from a source other
than the Company, so long as such source is not known by Executive (after
reasonable inquiry) to be subject to another confidentiality agreement with the
Company.
(b) The
Company shall, during the time that Executive is employed by the Company,
disclose or entrust to Executive, or provide Executive with access to, or place
Executive in a position to create or develop trade secrets or confidential
information belonging to the Company;
(c) place
Executive in a position to develop business goodwill belonging to the Company;
and disclose or entrust to Executive business opportunities to be developed for
Company.
(d) During
his employment with the Company and thereafter, Executive shall (i) hold such
Confidential Information in confidence and (ii) not release such information to
any Person (other than Company employees and other Persons to whom the Company
has authorized Executive to disclose such information and then only within the
limits of any authorization for disclosure).
(e) Executive
shall not use any Confidential Information for the benefit of any Person other
than the Company.
(f) As used
in this Section 6, “Company” shall include the Company and any of its direct or
indirect subsidiaries and affiliates, including the Partnership.
7. SURRENDER
OF MATERIALS UPON TERMINATION.
Upon any
termination of Executive’s employment, Executive shall promptly return to the
Company all copies, in whatever form, of any and all Confidential Information
and other properties of the Company and its affiliates that are in Executive’s
possession, custody or control.
8. SUCCESSORS.
(a) This
Agreement is personal to Executive and, without the prior written consent of the
Company, shall not be assignable by Executive otherwise than by will or the laws
of descent and distribution. This Agreement shall inure to the benefit of and be
enforceable by Executive’s legal representatives.
(b) This
Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.
(c) The
Company may assign its rights hereunder (including the benefit of Executive’s
performance hereof) to any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company. The Company shall require such
successor to assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform this Agreement
(by express agreement or operation of law) as if no such succession had taken
place, and no such assignment of this Agreement or transfer of Executive’s
employment in conjunction with such assignment shall constitute a termination of
Executive’s employment for purposes of this Agreement or shall entitle Executive
to any payments, benefits or other rights under Section 4 (except as
specifically provided therein) solely as a result of such assignment or
transfer, without prejudice to any other rights or privileges of Executive under
this Agreement.
9.
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NON-COMPETITION
AND NON-SOLICITATION.
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(a) As part
of the consideration for the compensation and benefits to be paid to Executive
hereunder and the covenants made by the Company in Sections 2, 4 and 6, to
protect the trade secrets and Confidential Information of the Company that have
been and will be entrusted to Executive immediately upon commencement of the
Term and thereafter, the business goodwill of the Company and its subsidiaries
and affiliates that will be developed in and through Executive and/or the
business opportunities that will be disclosed or entrusted to Executive by the
Company and its subsidiaries and affiliates immediately upon commencement of the
Term and thereafter, and as an additional incentive for the Company to enter
into this Agreement, from the Effective Date through two years following the
Date of Termination (the “Restricted Period”), Executive will not (other than
for the benefit of the Company pursuant to this Agreement), and will not permit
any member of the Restricted Party Group (as defined in Section 9(e)(v)) to,
directly or indirectly, individually or as an officer, director, employee,
shareholder, consultant, member, contractor, partner, joint venturer, agent,
equity owner or in any capacity whatsoever (including without limitation
assisting any other member of the Restricted Party Group to):
(i) conduct,
engage in, carry on or assist any other Person in conducting, engaging in or
carrying on, in any capacity, any Competing Business (as defined in Section
9(e)(ii).
(ii) induce or
attempt to induce any customer, supplier, licensee or other business relation of
the Company or any subsidiaries or affiliates of the Company with whom Executive
has had direct business contact in dealings during the Term in the course of his
employment with the Company, to cease doing business with the Company or any of
its subsidiaries or affiliates, or in any way interfere with the relationship
between any such customer, supplier, licensee or business relation and the
Company or any of its subsidiaries or affiliates;
(iii) own,
acquire, attempt to acquire or solicit the acquisition of, directly or
indirectly, any equity interest in any Competing Business;
(iv) hire,
attempt to hire or contact or solicit with respect to hiring any individual who
was an employee of the Company or any of its subsidiaries during the Term;
provided, however, that the foregoing clause shall not prohibit (A) any general
advertisement or solicitation by Executive that is not directed towards any such
employee or group of employees of the Company or any subsidiary thereof, (B)
Executive from hiring any individual who responds to such general advertisement
or solicitation, so long as such individual is not an employee of the Company or
any subsidiary thereof at the time such individual responds to such general
advertisement or solicitation or (C) Executive from hiring any individual who
has not worked for the Company or any of its subsidiaries at any time during the
180-day period immediately preceding the date that Executive hires such
individual; or
(v) cause,
influence, induce, encourage or attempt to persuade any individual employed by
the Company or any subsidiary thereof to terminate his or her employment
relationship with the Company or any subsidiary thereof.
(b) Nothing
in this Section 9 shall prohibit any investment by Executive or any other member
of the Restricted Party Group in securities of any class of the equity
securities of a Competing Business, which are regularly traded or quoted on a
national securities exchange or an inter-dealer quotation system, provided that
the Restricted Party Group directly or indirectly collectively owns no more than
5% of such class of securities, and no member of the Restricted Party Group has
the right, through the ownership of an equity interest, voting securities or
otherwise, to direct the activities of the Competing Business.
(c) Executive
acknowledges that each of the covenants of Sections 9(a)(i) through (vii) are in
addition to, and shall not be construed as a limitation upon, any other covenant
provided in Section 9(a). Executive agrees that the geographic boundaries, scope
of prohibited activities, and time duration of each of the covenants set forth
in Sections 9(a)(i) through (v) are reasonable in nature and are no broader than
are necessary to maintain the confidentiality and the goodwill of the Company’s
Confidential Information, plans and services and to protect the other legitimate
business interests of the Company, including the goodwill developed by Executive
with the Company’s customers, suppliers, licensees and business
partners. Executive further acknowledges that, during the Term,
Executive’s engagement hereunder shall necessitate, and the Company will
provide, access to or the disclosure of Confidential Information to Executive
and/or that Executive’s responsibilities shall include the development of the
Company’s goodwill through Executive’s contacts with the Company’s customers,
suppliers, licensees and business relations.
(d) The
parties hereto intend that the covenants contained in each of Sections 9(a)(i)
and (v) be construed as a series of separate covenants, one for each county or
other defined province in each geographic area in which the Company conducts its
business. Except for geographic coverage, each such separate covenant
shall be deemed identical in terms to the applicable covenant contained in
Sections 9(a)(i) and (v). Furthermore, each of the covenants in Sections 9(a)(i)
through (v) hereof shall be deemed a separate and independent covenant, each
being enforceable irrespective of the enforceability (with or without
reformation) of the other covenants contained in Sections 9(a)(i) through (v)
hereof. In the event that any arbitrator or court of competent
jurisdiction shall determine that the scope, time or territorial restrictions
set forth in this Section 9 are unreasonable, then it is the intention of the
parties that such restrictions be enforced to the fullest extent that the
arbitrator or court, as applicable, deems reasonable and the Agreement shall
thereby be reformed.
(e) For
purposes of this Agreement:
(i) “affiliate”
means, with respect to any Person, each other Person that directly or indirectly
(through one or more intermediaries or otherwise) controls, is controlled by or
is under common control with such Person. The term “control”
(including the terms “controlled by” and “under common control with”) means the
possession, directly or indirectly, of the actual power to direct or cause the
direction of the management policies of a Person, whether through the ownership
of stock, by contract, credit arrangement or otherwise.
(ii) “Competing
Business” means any activity that is directly or indirectly competitive with the
business of the Company or any of its subsidiaries or affiliates as conducted
during the Term on or with respect to the Lands;
(iii) “Lands”
means (a) when used with respect to any action during the Term, each and every
county, parish or analogous geographic area in the United States in which the
Company or any of its subsidiaries or affiliates is conducting business at the
time of any action in question arising under this Section 9, and (b) when used
with respect to any action after the Date of Termination, each and every county,
parish or analogous geographic area in the United States in which the Company or
any of its subsidiaries or affiliates (i) was conducting business or (ii)
with respect to which (1) the Board or management of the Company or its
subsidiaries or Affiliates was actively considering commencing conducting
business and (2) Executive was involved in planning the Company’s entry, or the
entry of any of its subsidiaries or affiliates, into those geographic areas or
jurisdictions), as of the Date of Termination;
(iv) “Person”
means an individual or a corporation, partnership, limited liability company,
trust, joint venture, unincorporated organization, association or other entity;
and
(v) “Restricted
Party Group” means Executive, together with (A) the Executive’s immediate family
members and (B) any Business Enterprise in which Executive and/or any of
Executive’s immediate family members collectively own or have the right to
acquire an equity interest in excess of 5% or otherwise have any right, through
the ownership of a voting interest or otherwise, to direct the activities of
such Business Enterprise.
10. EFFECT OF
AGREEMENT ON OTHER BENEFITS.
Nothing
in this Agreement shall prevent or limit Executive’s continuing or future
participation in any benefit, plan, program, policy or practice provided by the
Company and for which Executive may qualify, nor shall anything herein limit or
otherwise adversely affect such rights as Executive may have under any other
contract or agreement entered into after the Effective Date with the
Company. Amounts which are vested benefits or which Executive is
otherwise entitled to receive under any benefit, plan, policy, practice or
program of, or any contract or agreement entered into with the Company shall be
payable in accordance with such benefit, plan, policy, practice or program or
contract or agreement except as explicitly modified by this
Agreement.
11. NO PRIOR
AGREEMENTS.
Executive
hereby represents and warrants to the Company that the execution of this
Agreement by Executive and his employment by the Company and the performance of
Executive’s duties hereunder will not violate or be a breach of any agreement,
obligation or contract between Executive and a former employer or any other
Person. Further, Executive agrees to indemnify the Company for any
claim, including attorneys’ fees and expenses of investigation, by any such
Person that such Person may now have or may hereafter come to have against the
Company based upon or arising out of any noncompetition agreement, invention or
secrecy agreement between Executive and such Person which was in existence as of
the Effective Date. For purposes of clarity, this Agreement does not
require or obligate Executive in any way to disclose or use for the benefit of
the Company, any information that would result in the breach or violation of any
agreement with a former employer and Executive covenants that he will not breach
or violate any such agreement.
12. MISCELLANEOUS.
(a) Governing
Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas without reference to principles of conflict
of laws.
(b) Notices. All
notices, requests, claims, demands and other communications hereunder shall be
in writing and shall be given by hand delivery, or by mail (registered or
certified mail, postage prepaid, return receipt requested) or by any nationally
recognized overnight courier service, providing proof of
delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to
Executive:
Xxxxx X. Xxxxxx
at his
most recent address
in the
records of the Company
With a
copy (which shall not constitute notice) to:
Gardere
Xxxxx Xxxxxx LLP
0000 Xxx
Xxxxxx
Xxxxx
0000
Xxxxxx,
XX 00000
Attn:
Xxxx X. Xxxxxxx
If to the
Company:
Regency Gas Services LLC
0000
Xxxxxxx, Xxxxx 0000
Xxxxxx,
XX 00000
Attn: General
Counsel
or to
such other address as either party shall have furnished to the other in writing
in accordance herewith. Notice, requests, claims, demands and other
communications shall be deemed to have been received (i) the same day as sent if
given by hand delivery, (ii) five business days after sent if given by mail
(registered or certified mail, postage prepaid, return receipt requested) and
(iii) the next business day after sent if given by a nationally recognized
overnight courier.
(c) Severability. In
the event that any provision of this Agreement, or the application thereof to
any Person or circumstance, is held by a court of competent jurisdiction to be
invalid, illegal, or unenforceable in any respect under present or future laws
effective during the effective term of any such provision, such invalid, illegal
or unenforceable provision shall be fully severable, this Agreement shall then
be construed and enforced as if such invalid, illegal, or unenforceable
provision had not been contained in this Agreement, and the remaining provisions
of this Agreement shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
from this Agreement. Furthermore, in lieu of each such illegal,
invalid, or unenforceable provision, there shall be added automatically as part
of this Agreement a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and
enforceable. Notwithstanding the above, in the event any such
invalidity, illegality or unenforceability of any portion of Section 9(a) is
caused by such provision being held to be excessively broad as to time,
duration, geographical scope, activity or subject in any jurisdiction, then such
provision shall, at the option of the Company, remain a part of this Agreement
and shall be reformed and construed within such jurisdiction by limiting and
reducing it so as to be enforceable to the extent compatible with then
applicable law.
(d) Tax
Withholding. The Company may withhold from any amounts payable under
this Agreement such federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) Amendment;
Waiver. This Agreement may not be amended or modified otherwise than
by a written agreement executed by the parties hereto or their respective
successors and legal representatives. Executive’s or the Company’s
failure to insist upon strict compliance with any provision of this Agreement,
or the failure to assert any right Executive or the Company may have hereunder,
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.
(f) Entire
Agreement. The provisions of this Agreement and the grants of
Restricted Units attached hereto constitute the complete understanding and
agreement between the parties with respect to the subject matter hereof and this
Agreement supersedes all other agreements (written or oral) and understandings
prior to or contemporaneous with this Agreement pertaining to the subject matter
hereof.
(g) Counterparts. This
Agreement may be executed in two or more counterparts.
(h) Arbitration. The
Company and Executive agree to the resolution by binding arbitration of all
claims, demands, causes of action, disputes, controversies or other matters in
question (“claims”) arising out of this Agreement or Executive’s employment (or
its termination), whether in contract, tort or otherwise and whether provided by
statute or common law, that the Company may have against Executive or that
Executive may have against the Company or its parents, subsidiaries and
affiliates, and each of the foregoing entities’ respective officers, directors,
employees or agents in their capacity as such or otherwise; except that this
agreement to arbitrate shall not limit the Company’s right to seek equitable
relief, including injunctive relief and specific performance, as provided in
Section 12(i). Notwithstanding the foregoing, however, this Section
12(h) shall not apply in the event Executive asserts any claim arising under or
related to ERISA. The arbitrator may make an interim award granting
equitable relief to either party and such award may be enforced like a final
award. Claims covered by this agreement to arbitrate also include
claims by Executive for breach of this Agreement or other claims arising out of
his employment, including but not limited to, wrongful termination,
discrimination (based on age, race, sex, disability, national origin, religion
or any other factor), statutory leave entitlements and
retaliation. The Company and Executive agree that any arbitration
shall be in accordance with the Federal Arbitration Act (“FAA”) and, to the
extent an issue is not addressed by the FAA, with the then-current National
Rules for the Resolution of Employment Disputes of the American Arbitration
Association (“AAA”) or such other rules of the AAA as applicable to the claims
being arbitrated. The arbitration shall be conducted by a single
arbitrator, who shall be selected by agreement of the parties or if they do not
agree on an arbitrator within 15 days after either the Company or Executive has
made a demand for arbitration then the arbitrator will be selected pursuant to
the rules of the AAA. If a party refuses to honor its obligations
under this Agreement to arbitrate, the other party may compel arbitration in
either federal or state court. The arbitrator shall apply the
substantive law of the State of Texas (excluding Texas choice-of-law principles
that might call for the application of some other state’s law), or federal law,
or both as applicable to the claims asserted. The arbitrator shall
have exclusive authority to resolve any dispute relating to the interpretation,
applicability, enforceability or formation of this Agreement to arbitrate,
including any claim that all or part of this Agreement is void or voidable and
any claim that an issue is not subject to arbitration. The parties
agree that the exclusive venue for arbitration will be in the county in which
the Company’s headquarters are then located, and that any arbitration commenced
in any other venue will be transferred to such county upon the written request
of any party to this Agreement. If permitted by law, the party in
whose favor the arbitrator renders the award may, in the discretion of the
arbitrator, also be awarded all costs and expenses actually incurred, including
reasonable attorneys’ fees, and costs, but excluding expert witness
fees. Any and all of the arbitrator’s orders, decisions and awards
may be enforceable in, and judgment upon any award rendered by the arbitrator
may be confirmed and entered by, any federal or state court having
jurisdiction. All proceedings conducted pursuant to this agreement to
arbitrate, including any order, decision or award of the arbitrator, shall be
kept confidential by all parties except to the extent such disclosure is
required by law, or in a proceeding to enforce the rights
hereunder. THE PARTIES ACKNOWLEDGE THAT, BY SIGNING THIS AGREEMENT,
THEY ARE WAIVING ANY RIGHT THAT THEY MAY HAVE TO A JURY TRIAL OR A COURT TRIAL
OF ANY EMPLOYMENT-RELATED CLAIM.
(i) Specific
Enforcement. Executive acknowledges that the covenants of Executive
contained in Sections 6 and 9(a) of this Agreement are special and unique, that
a breach by Executive of any term or provision of either of Sections 6 or 9(a)
hereof may cause irreparable injury to the Company and/or other affiliates of
the Company, and that remedies at law for the breach of any terms or provisions
of Sections 6 or 9(a) hereof may be inadequate. Accordingly,
notwithstanding the provisions of Section 12(h), in addition to any other
remedies it may have in the event of breach, the Company shall be entitled to
enforce specific performance of the terms and provisions of Sections 6 or 9(a)
hereof, to obtain temporary and permanent injunctive relief to prevent the
continued breach of such terms and provisions without the necessity of posting a
bond or of proving actual damage. The party prevailing in any such
action shall be entitled to be reimbursed by the other party for reasonable
attorney fees incurred in respect of the foregoing. For purposes of
this Section 12(i) and Sections 6 and 9(a) hereof, each affiliate of the Company
shall be deemed a third party beneficiary entitled to the benefits of such
Sections and shall be entitled to enforce Sections 6 and 9(a) of this Agreement
in accordance with this Section 12(i).
(j) Survival. Sections
4, 5, 6, 7, 8, 9, 11 and 12 of this Agreement shall survive the termination of
Executive’s employment during the Term.
(k) Interpretation. The
captions of this Agreement are not part of the provisions hereof and shall have
no force or effect. Whenever the terms “hereof”, “hereby”, “herein”,
or words of similar import are used in this Agreement they shall be construed as
referring to this Agreement in its entirety rather than to a particular section
or provision, unless the context specifically indicates to the
contrary. Any reference to a particular “Section” or “paragraph”
shall be construed as referring to the indicated section or paragraph of this
Agreement unless the context indicates to the contrary. The use of
the term “including” herein shall be construed as meaning “including without
limitation.”
IN
WITNESS WHEREOF, Executive has hereunto set his hand and, pursuant to the
authorization from the Board, the Company has caused this Agreement to be
executed in its name on its behalf, all as of the Effective Date.
EXECUTIVE
Xxxxx X.
Xxxxxx
REGENCY
GP LLC
By:
Name:
Title: