SEPARATION AGREEMENT AND RELEASE
--------------------------------
In consideration of Inergy GP, LLC, a Delaware limited liability company
(the "Company") providing to me the consideration described in this Separation
Agreement and Release (this "Agreement"),
I, DEAN WATSON, agree to the following:
Termination of Employment
- -------------------------
1. I understand and acknowledge that my employment with the Company will
terminate effective as of the end of the business day on August 27, 2005.
Consideration; Vesting of Options
- ---------------------------------
2. I acknowledge that in exchange for my commitments set forth in
paragraphs 4 through 12 of this Agreement, the Company will pay me the gross sum
of $500,000, less appropriate payroll deductions. Such sum will be paid to me on
September 15, 2005. I understand that the amount payable under this paragraph is
in lieu of any bonuses or other amounts that would otherwise be payable to me if
I were employed by the Company on September 30, 2005, including the performance
and subordination bonuses described in Section 4 of the Employment Agreement,
dated August 30, 2002, between the Company and me (the "Original Employment
Agreement").
a. I understand and acknowledge that I am entitled to the above
consideration only as a result of my execution of this Agreement and not
otherwise.
b. I understand that no amounts will be made by the Company to me
under the Original Employment Agreement, including those payments contemplated
by Sections 4 and 12 of the Original Employment Agreement.
c. I understand and acknowledge that all employee benefits paid to
me or on my
behalf will terminate as of the end of the business day on August 27, 2005.
3. I understand that although I will not be employed on August 28, 2005,
the Company will consider my Option (as defined in the Unit Option Agreement,
dated August 28, 2002, between the Company and me) to be 60% vested and that I
may exercise the Option in accordance with the terms of Section 6(iv) of the
Unit Option Agreement (regardless of whether Section 6(iv) would have been
available to me otherwise), but that all other terms and conditions contained in
the Unit Option Agreement are otherwise in full force and effect.
Release of All Claims
- ---------------------
4. I hereby release the Company and all of its parents, subsidiaries,
joint ventures, affiliates (as such term in defined in Rule 405 of the
Securities Act of 1933, as amended), assigns and successors, and all of its
past, present and future officers, directors, members, managers, agents,
employees, representatives, insurers and attorneys (collectively, the "Released
Parties")
from all claims, damages, lawsuits, injuries, liabilities and causes of action
that I may have, whether known to me or not.
Release of All Employment Law Claims
- ------------------------------------
5. I understand and agree that I am releasing the Released Parties from
all claims, damages, lawsuits, injuries, liabilities and causes of action that I
may have under any express or implied contract (including the Original
Employment Agreement), or any city ordinance or state, federal or common law
meant to protect workers in their employment relationships (including, without
limitation, claims under Title VII of the Civil Rights Act of 1964, as amended,
the Age Discrimination in Employment Act, the Older Workers Benefit Protection
Act, the Missouri Human Rights Act, the Americans with Disabilities Act, the
Equal Pay Act, 42 U.S.C. ss.ss. 1981, 1983 and 1985, 18 U.S.C. ss. 1514A, the
Family and Medical Leave Act, the Employee Retirement Income Security Act, the
Fair Labor Standards Act, the Missouri Service Letter statute, the Labor
Management Relations Act and workers' compensation laws) and under which I may
have rights and claims, whether known to me or not, arising, directly or
indirectly out of my employment by the Company or any Released Party or the
termination of my employment with the Company or any Released Party.
Release of Any Age Discrimination Claims
- ----------------------------------------
6. I understand and agree that I am releasing the Released Parties from
all claims, damages, lawsuits, injuries, liabilities and causes of action that I
may have, under the Age Discrimination in Employment Act, the Missouri Human
Rights Act, and any other federal, state or local laws prohibiting age
discrimination in employment, whether known to me or not, past or present,
suspected or unsuspected, arising, directly or indirectly out of my employment
by the Company or any Released Party or the termination of my employment with
the Company or any Released Party or any statements or actions of any Released
Party.
Return of All Company Property
- ------------------------------
7. I agree to return, on or before August 31, 2005, all property
(including, but not limited to, all keys, tools, credit cards, computer
equipment and Company files and documents and all copies thereof) of the Company
or any of its affiliates that is in my possession or under my control.
Cooperation
- -----------
8. I agree to cooperate with the Company and its legal counsel in any
litigation or disputes in which the Company or any Released Party is, or may
become, involved, including but not limited to providing information I may have
concerning any such dispute and appearing as a witness for the Company or any
Released Party.
Confidentiality
- ---------------
9. I acknowledge that during the course of my employment with the Company
I had access to and knowledge of certain information and data that the Company
or any of its affiliates considers confidential and that the release of such
information or data to any unauthorized person
2
or entity would be extremely detrimental to the Company. As a consequence, I
hereby agree and acknowledge that I owe a continuing duty to the Company not to
disclose, and agree that, without the prior written consent of the Company, I
will not communicate, publish or disclose, to any person or entity anywhere or
use (for my own benefit or the benefit of others) any Confidential Information
(as defined below) for any purpose. I will not permit any Confidential
Information to be read, duplicated or copied. On or before August 31, 2005, I
will return to the Company all originals and copies of documents and other
materials, whether in printed or electronic format or otherwise, containing or
derived from Confidential Information in my possession or under my control and
will not retain any copies thereof. The term "Confidential Information" means
any information or data used by or belonging or relating to the Company or any
of its affiliates, or any party to whom the Company owes a duty of
confidentiality that is not known generally to the industry in which the Company
or any of its affiliates, or any party to whom the Company owes a duty of
confidentiality, is or may be engaged, including all trade secrets, proprietary
data and information relating to the Company's or any of its affiliates', or any
party to whom the Company owes a duty of confidentiality past, present or future
business and products, price lists, customer lists, acquisition candidates and
criteria relating to potential acquisition candidates, processes, procedures or
standards, know-how, manuals, hardware, software, source code, business
strategies, records, marketing plans, drawings, technical information,
specifications, designs, patent information, financial information, whether or
not reduced to writing, or information or data that the Company or any of its
affiliates or any party to whom the Company owes a duty of confidentiality
advised or advises me should be treated as confidential information.
Non-Disparagement
- -----------------
10. I warrant I will not make any disparaging comment in any format,
whether written, electronic or oral, to any customer, vendor, employee, the
media, or any other person or entity regarding the Company or any of the
Released Parties that relates to the Company's or any of the Released Parties'
respective businesses or related activities or my relationship with the Company
or any of its affiliates.
Covenant Not to Compete
- -----------------------
11. I acknowledge that during my employment with the Company I, at the
expense of the Company, had access to the intellectual property, trade secrets
and Confidential Information of the Company or any of its affiliates. Therefore,
in consideration of the payments made hereunder, and to further protect the
intellectual property, trade secrets and Confidential Information of the Company
or any of its affiliates, I agree that for a period of two years, commencing on
August 28, 2005 and continuing until August 27, 2007, I will not, directly or
indirectly, without the express written consent of the Company:
a. own, manage, operate, control or participate in the ownership,
management, operation or control of, or have any interest, financial or
otherwise, in or act as an officer, director, partner, manager, member,
principal, employee, agent, representative, consultant or independent
contractor of, or in any way assist, any person or entity with revenues
generated substantially from a business that (i) trades, markets, sells,
distributes, transports or stores propane gas (at retail or wholesale) so
long as the activities
3
to which I am engaged do not relate to the trading, marketing, selling,
distribution, transporting or storage of propane gas (at retail or
wholesale) (e.g . I cannot be employed by Ferrellgas, however, I can be
employed by Koch Industries, as long as I am not engaged in activities
related to trading, marketing, selling, distribution, transporting or
storage of propane gas) or (ii) is located west of the Continental Divide
and engages in operations similar to the operations of Inergy Propane, LLC
at its west coast NGL business (which includes natural gas processing, NGL
fractionation, NGL rail and truck terminals, bulk storage, trucking and
marketing operations); provided, however, that I may act as a consultant to
any person or entity that engages in the activities described in clauses
(i) or (ii) so long as the activities for which I am engaged as a
consultant do not relate, directly or indirectly, to such described
activities;
b. divert or attempt to divert clients or customers (whether or not
such persons have done business with the Company or any of its affiliates
once or more than once) or accounts of the Company or any of its
affiliates; or
c. entice or induce or in any manner influence any person who is or
becomes in the employ or service of the Company or any of its affiliates to
leave such employ or service for the purpose of engaging in a business that
may be in competition with any business now or at any time during the
period hereof engaged in by the Company or any of its affiliates.
However, I understand that I may own up to 5% of the outstanding equity
securities in any corporation or entity (including units in a master limited
partnership) that is listed upon a national stock exchange or actively traded in
the over-the-counter market.
Non-Admission of Liability
- --------------------------
12. I understand that the Released Parties deny that I have any legally
cognizable claims against them but that the Released Parties desire to amicably
settle all disputes they may have with me. I further understand and agree that
neither this Agreement nor any action taken hereunder is to be construed as an
admission by the Released Parties of violation of any local, state, federal, or
common law - in fact, I understand that the Released Parties expressly deny any
such violation.
Time to Consider this Separation Agreement and Release and 7-Day Revocation
Period
- ---------------------------------------------------------------------------
13. I acknowledge that I have been given the option to consider this
Agreement for up to 21 days before signing it. I further acknowledge that I have
been advised to consult with an attorney prior to signing this Agreement.
14. I understand that after signing this Agreement, I have seven days in
which to consider it and, if desired, to revoke it by giving written notice of
such revocation to the Company in care of Laura Ozenberger, Vice President -
General Counsel, Two Brush Creek Blvd., Suite 200, Kansas City, Missouri 64112,
fax number (816) 471-3854, prior to the expiration of the seven-day revocation
period, but that upon such revocation, I shall forfeit all rights to all
consideration otherwise to be provided to me under the terms of this Agreement.
I
4
also understand that this Agreement will not become effective or enforceable
until the expiration of the seven-day revocation period.
Taxation
- --------
15. None of the Released Parties, including their attorneys, have made any
express or implied representations to me with respect to the tax implications of
any settlement payment made in this Agreement.
Missouri Law Applies; Missouri Courts to Hear
- ---------------------------------------------
16. This Agreement is governed by the laws of the State of Missouri,
without regard to its choice or conflict of law provisions. I hereby irrevocably
and unconditionally submit to the jurisdiction of any court of the State of
Missouri and any federal court located in the Western District of Missouri with
respect to any proceeding relating to this Agreement. Further, I hereby
irrevocably and unconditionally waive any objection or defense that I may have
based on improper venue or forum non conveniens to the conduct of any such
proceeding in any such courts.
Use of Headings
- ---------------
17. The headings in this Agreement have been inserted for convenience of
reference only and do not in any way restrict or modify any of its terms or
provisions.
Agreement May Not Be Modified
- -----------------------------
18. No provision of this Agreement may be waived, modified, altered or
amended except upon the express written consent of the Released Parties and me.
Full Agreement
- --------------
19. This Agreement sets forth the entire terms of the agreement between
the Company and me. I affirm that in making this agreement I am relying upon my
own counsel and I am not relying upon any representations not set forth in this
Agreement.
Potential Unenforceability of Any Provision
- -------------------------------------------
20. If a final judicial determination is made that any provision of this
Agreement is an unenforceable restriction against me, the provisions of this
Agreement will be rendered void only to the extent that such judicial
determination finds such provisions unenforceable, and such unenforceable
provisions will automatically be reconstituted and become a part of this
Agreement, effective as of the date of this Agreement, to the maximum extent in
favor of the Company that is lawfully enforceable. A judicial determination that
any provision of this Agreement is unenforceable will not render the entire
Agreement unenforceable, but rather this Agreement will continue in full force
and effect absent any unenforceable provision to the maximum extent permitted by
law.
5
Waiver of Breach
- ----------------
21. Failure of the Company to demand strict compliance with any of the
terms, covenants or conditions of this Agreement will not be deemed a waiver of
the term, covenant or condition, nor will any waiver or relinquishment by the
Company of any right or power under this Agreement at any one time or more times
be deemed a waiver or relinquishment of the right or power at any other time or
times.
Consult With an Attorney
- ------------------------
22. I have been advised to consult with an attorney prior to signing this
Agreement.
Specific Performance
- --------------------
23. I recognize that irreparable damage will result to the Company in the
event of my breach or threatened breach of paragraphs 9, 10 or 11, and that the
Company's remedies at law for any such breach or threatened breach will be
inadequate. Therefore, the Company, in addition to any other remedies that may
be available to it, will be entitled to an injunction, including a mandatory
injunction, to be issued by any court of competent jurisdiction ordering
compliance with this Agreement or enjoining and restraining me, and each and
every person and entity acting in concert or participation with me, from the
continuation of such breach and, in addition thereto, I will pay to the Company
all ascertainable damages, including costs and reasonable attorneys' fees
sustained by the Company by reason of the breach or threatened breach of such
covenants and assurances. My covenants and obligations set forth in paragraphs
9, 10 and 11 are in addition to and not in lieu of or exclusive of any other
obligations and duties that I owe to the Company, whether express or implied in
fact or in law (including those obligations and duties in the Original
Employment Agreement that survive the termination of my employment by the
Company).
Have Read, Understand and Have Voluntarily Signed Agreement
- -----------------------------------------------------------
24. I have read this Agreement, and I understand its contents. I have
signed this Agreement voluntarily and knowingly.
Signed and Dated
- ----------------
25. I have signed this Separation Agreement and Release on August 27, 2005.
/s/ Dean Watson
-----------------------
DEAN WATSON
6