Exhibit 10.7
AMENDED AND
RESTATED
EXECUTIVE EMPLOYMENT
AGREEMENT
This AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT is made and entered into as of
November 24, 2008, by and between Regency GP LLC, a Delaware
limited liability company (together with its successors and assigns
permitted hereunder, the “Company”), and Byron R.
Kelley (the “Executive”).
WHEREAS, the Company employs
Executive on the terms and conditions set forth in an Employment
Agreement (the “Agreement”) dated effective
April 1, 2008 (the “Effective Date”);
and
WHEREAS, the Company and Executive
have agreed to make certain modification to the Agreement to comply
with the provisions of section 409A of the Internal Revenue Code of
1986, as amended (the “Code”).
NOW, THEREFORE, in consideration of
the premises and the mutual covenants set forth below, to avoid
adverse tax consequences under section 409A of the Code and for
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties 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) Position and Duties.
(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) Compensation During the
Term.
(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
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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; provided, however, that any such
reimbursement shall be made to Executive in compliance with the
requirements of Section 2(b)(xi) below.
(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
Paid-Time-Off (“PTO”) 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.
(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.
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(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), and in compliance with the
requirements of Section 2(b)(xi) 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
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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 30 th 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.
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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 31 st 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.
(d) 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.
(e) 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
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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
